Indian Economy: News and Discussion (Apr 1 2011)

[Muppalla]

I never saw inspite of open evidence, Reliance or its honchos getting convicted. Before someone tries, the government of the day will just collapse.

read all pages either from
http://www.scribd.com/doc/3924530/Polye ... d-in-India
or from
http://www.wattpad.com/265192-polyester ... ambani?p=1

[Muppalla]

A perspective from YS on Indian economy. I belive he has a point.

Shellshocked UPA lets economy sink

There is no end to the UPA government’s troubles. Corruption charges against its functionaries are pouring in torrents. Public protest is not confined to the media and Parliament; it has spilled over to the street. Manmohan Singh has given a new definition of honesty according to which nobody is really corrupt, he/she has only been misled; nobody is guilty because the system is flawed; the prime minister is never in the wrong because he is always uninformed and unaware of all developments. In this atmosphere, one thing which is being lost sight of is the crisis looming large on the economic front. The government appears helpless in the face of ever-rising inflation and has abdicated all its responsibility to the RBI. The only option available to the bank is to go on raising interest rates, squeezing liquidity in the market and, thus, making money not only expensive but also scarce.

We are back to the bad old days of high inflation and high interest rates. Predictably, this is having an adverse impact on investment and the economy’s growth rate. The latest data shows that the economy grew at the rate of 7.8 per cent in the fourth quarter of 2010-11 and though for the whole year the economy expanded 8.5 per cent compared to 8 per cent in 2009-10, tell-tale signs of slowdown are already evident. Investment growth, or increase in gross capital formulation, declined to 0.4 per cent in the last quarter of 2010-11, so did private consumption growth. Industrial growth is showing sign of slackening despite the slight recovery in March 2011. The six core industries—crude oil, petroleum refinery products, coal, electricity, cement and finished steel—rose at their slowest in five months by only 5.2 per cent in April 2011.

The Indian economy went through a phase of unprecedented high growth between 2003-04 and 2007-08. While all of us celebrated the high growth rate, few of us paused to ask the question as to what made it possible. The strategy which made it possible was simple and I know it first hand because I had a hand in formulating it. It consisted of unleashing the bottled up demand— both consumption and investment—in the economy; controlling inflation through a mix of fiscal and monetary policy and supply side measures; lowering interest rates to make cheaper money available for both the consumer and the investor; create a burst of activity on the infrastructure front to sustain the investment demand and start a housing revolution in the country. The key, therefore, was low inflation and moderate interest rates.

The UPA government has abandoned this strategy. In the name of tackling the global financial crisis but in reality to improve electoral prospects, it went for a fiscal expansion in the last two years of UPA I. It is now finding it difficulty to put the genie back in the bottle. Housing is slowing down, highways are not being built, infrastructure bottlenecks are reappearing and high interest rates have emerged as the biggest road block to investment.

Given the problems that the Government is facing on all fronts, it is highly unlikely that it will have the willpower to tackle this economic malaise. In any case, it is now evident that two USPs that propelled Manmohan Singh to the post in May 2004—honesty and economic expertise—have let him down badly. He has earned the dubious distinction of leading the most corrupt government in Independent India’s history and he may soon acquire the dubious distinction of ruining an economy which he had inherited in the pink of health in May 2004.

I used to firmly believe that we had put the economy on auto-pilot and its forward march could not be stopped. Now, I am not so sure.

[somnath]

YS is an absolute ass, doesnt know what he is talking about - the main purpose of the article seems to be this..

The strategy which made it possible was simple and I know it first hand because I had a hand in formulating it.

Really? Mr "Rollback" Sinha, who has the dubious record of presiding over the lowest average GDP growth rates of all Finance Minister since 1991! He talks of "unleashing bottled up demand" as if it is a genie taken out by Aladin...He talks of "fiscal measures" - someone should point out his record on fiscal deficits, as also his statements on the FRBM Act soon after it was passed ("It is only a guidance" et al)..."Lowering interest rates" - of course interest rates were lowered multiple times in his time by RBI - with growth plumetting to 3.8% (reminiscnet of the "hindu rate of growth"), RBI was trying to do its bit...

Barrng a bunch of platitudes ("revolutionary", "brst of creativity"), there is nothing insightful in here...

In the meanwhile, some good sense - Sushil Modi takes it upon himself to convince his party about the GST!
http://www.indianexpress.com/news/gst-g ... e/805960/0

[vera_k]

The laggard states don't have as much to lose from the GST. The consistent theme is that the more industrialised states that want GST to be reduced to the bare minimum such that it doesn't achieve much.

Maharashtra Octroi hurdle in GST

I believe better (+faster?) results would be achieved if the government invested in a technology solution that allows local jurisdictions to keep taxing authority, thereby obviating the need for a constitutional amendment, while providing consolidated tax collection.

[somnath]

I believe better (+faster?) results would be achieved if the government invested in a technology solution that allows local jurisdictions to keep taxing authority, thereby obviating the need for a constitutional amendment, while providing consolidated tax collection

The issue isnt about a tech solution to ease transaction of tax processing...The fundamental issue is about setting up an Indian "common market"...Today, differential taxes are charged on goods (services) in different states, with cascading impact on the final price and a complicated compliance regime...GST aims to cut through that and have simple, 2 or 3 step taxes with credits allowed for each successive step..A tech solution by itself doesnt achieve this...

The reason why states are being cussed really is the fact that they lose autonomy on setting tax rates...There are already sops in place to compensate states for revenue losses in the first few years...

Its a bit like the EU - all member states have given up substantial decision-making authorities to a common rules-based system...Here, we are talking of doing it (only in parts, for indirect taxes) within India! Govt should just go ahead and do it...We have prevaricated too much already....If requird, just let states that dont sign up (Mah and Guj for example) be - implement minus them..

[vera_k]

We have prevaricated too much already....If requird, just let states that dont sign up (Mah and Guj for example) be - implement minus them..

Yes, it would be better to avoid dilution and start out with the states that agree to come on board. IIRC, that was how VAT was rolled out.

[VenkataS]

Since no one seems to have posted this:
Exports surge 57% in May
Interesting that there's been such a massive spike in the import of gold and silver. At $25B+ per month we should hit $300 billion exports this year.

Great prospects now for hitting 1Trillion target in total export of goods and services by 2015.

The total merchandise trade in 2011-12 is likely to be $750-$800 billion range (if recent trends continue). So our total merchandise trade should be over $1 trillion by 2013-14 if there are no setbacks (this does not include the services component).

[Suraj]

RBI has started reporting services export data on a monthly basis now. In April 2011, exports were $11.5 billion and imports $6.8 billion, the simple annualized figures rounded to nearest $10B therefore being exports of ~$140B and imports ~$80B, for a cumulative ~$220B services trade this year.

Therefore if we do accomplish ~$780B merchandise trade then the $1T cumulative trade target is already there this year onlee.

[SaiK]

we are importing $10b more from china than we could export.. this imbalance is not correct especially with a friend of our enemy in one sense, and in the economic sense. thoughts?

[Prem]

With Currnt trend , our economic engagement with rest of the world will be "lilla' north of 2Tn in next 5 years. This will be our first baby step in carving a friendly , strategically independent space in near abroad. Call it Shaturmurgh Choocha coming out of thick eggshell ceremony. Another 5 years will transform india into 798 pound Jamwant.

[somnath]

^^^While we have done well, there is no major "trend breaking" here..Our growth has been largely in line with rest of Asia...A good RBI report on India's trade performance last year..

http://rbi.org.in/scripts/BS_ViewBulletin.aspx?Id=12256

Some of the major trading countries, Japan, Korea, of course China have doen equally well or better, at a much higher base...

[Prem]

This is about Indian economy and not of non Indian economic achievements which are plenty but not relevant here .

[somnath]

This is about Indian economy and not of non Indian economic achievements which are plenty but not relevant here .

???"Achievements" are not measured, usually, on a standalone basis, they are always relative...Especially true when you talk of "influence" exerted by nation states..For example, when you say,

With Currnt trend , our economic engagement with rest of the world will be "lilla' north of 2Tn in next 5 years. This will be our first baby step in carving a friendly , strategically independent space in near abroad. Call it Shaturmurgh Choocha coming out of thick eggshell ceremony. Another 5 years will transform india into 798 pound Jamwant

FOr the bolded portion, if you are referring to trade, if India keeps growing its trade only in line with its peers elsewhere (largely ASia), then we would be as big (or small) a giant 5 years hence as we are today...

To be sure, in 5 years, India is going to be a bigger daddy in most respects, thanks primarily to the growth absolute terms - and there, we are standing out because we are so much ahead of most of Asia (barring China)...But specifically on trade, we arent doing anything nearly so "trend breaking", not yet in any case...

Net net, have some perspective.........

[Theo_Fidel]

???"Achievements" are not measured, usually, on a standalone basis, they are always relative...Especially true when you talk of "influence" exerted by nation states... Blaaah Blaaah Blaah...To be sure, in 5 years, India is going to be a bigger daddy in most respects, thanks primarily to the growth absolute terms - and there, we are standing out because we are so much ahead of most of Asia (barring China)...But specifically on trade, we arent doing anything nearly so "trend breaking", not yet in any case...

What BS. Honestly I try to hold my tongue but seriously peddle this somewhere else. In commie land perhaps. Or maybe in TSP land where they need 'creative' economists.

WTF is 'trend breaking' and who decided this was the miracle standard for India. We are big enough we can tell the rules to go for a hike. And this is most definitely the India Economy thread. Whyfor you bring in Panda land and Japan (honestly) and SK.

[somnath]

What BS. Honestly I try to hold my tongue but seriously peddle this somewhere else. In commie land perhaps. Or maybe in TSP land where they need 'creative' economists

Its not even economics, its common sense...And no miracle standard...

If China, with exports of 2 trillion dollars grow @ 30%, and Japan with exports of 1 trillion grow @ 30% and South Korea with 500-600 billion grow @ 40%, then Indian exports of 250 billion growing @ 30% isnt "trend breaking", ie, doesnt break the trend set by other large Asian trading nations, and doesnt really take up material marketshare...Ergo, if the same trend continues, India's relative heft (to Asian competitors) in trade terms isnt going to be any different 5 years hence....

When India grew @ 3% or 5%, no one took notice, India was still "growing", but way behind its peers in Asia...When we started growing @ 7% and then 8%, people sat up, because we started outperforming everyone at those levels..

What is so difficult to understand?

[Suraj]

???"Achievements" are not measured, usually, on a standalone basis, they are always relative...

They're relative, both in comparison to others AND in comparison to past growth rates achieved. Had we *not* achieved the current rate of growth in trade, we'd not even be keeping up with EA/ASEAN region states in terms of trade development - something that was the case for the better part of half a century. It is therefore 'trend breaking' as you call it, just to get out of that stagnant rut and achieve consistent fast-paced trade growth, something that has not been a facet of Indian economic performance until the very recent past.

[raajneesh]

If China, with exports of 2 trillion dollars grow @ 30%, and Japan with exports of 1 trillion grow @ 30% and South Korea with 500-600 billion grow @ 40%, then Indian exports of 250 billion growing @ 30% isnt "trend breaking", ie, doesnt break the trend set by other large Asian trading nations, and doesnt really take up material marketshare...Ergo, if the same trend continues, India's relative heft (to Asian competitors) in trade terms isnt going to be any different 5 years hence...

- Japan and SK are not emerging economies and markets.
- What that means is, most of these are saturated or near-saturation. After 3-4 years, you won't see any 40% or even 15% export-growth from SK.
- China is emerging economy, sure! So, we can talk about that. But then there are 20 other economies in region and 4 trade regions, within which India is definitely breaking trends already.
- Imagine, if India doesn't exist. Now, would you say that Chinese, Japanese, SK trade figures wouldn't have jumped by a huge margin? Oh well, they would have sunk actually by tens of percentages, since we lost out a huge 1.2B marketspace, to which they can export to or trade with.

[Suraj]

From the current economic survey, here are some 2000-07 export growth CAGRs:
India: 19.8%
China: 25.4%
HK: 7.9%
Korea: 11.6%
Singapore: 11.7%
Taiwan: 7.6%
Mexico: 7.3%
Malaysia: 8.7%
Brazil: 16.5%
Thailand: 12.1%
South Africa: 12.8%
Russia: 18.9%

From the Japan government site, I get their data as 12.7%.

In other words, excluding PRC, we've outdone the entire ASEAN/EA and the BRICS for most of the past decade in export growth. The closest performer in average growth rate is oil/gas/coal-driven Russia, and even they are a percent short. Ditto for Brazil, and they're further behind. Note that this period includes 2000-03, when our export growth rate was stagnant - it really picked up only from 2003-04, since when we've achieved 20% or higher export growth every year except 2008-09.

Refs: International Trade
Figure 7.1, Table 7.4

[somnath]

From 1990 to now, India's share of world exports has gone up from ~1.2% to ~2.4%, whcih btw was our aprpox level in 1947...The basic issue is that our base is small, and merely being in line in terms of growth, or even outperforming by 20-30%, with rest of the Asian or other biggies (China, Japan, SoKo) doesnt take us up all that much in relative terms...

Thats the limited point, made in the context of "798 lb gorilla" and all that...

- Imagine, if India doesn't exist. Now, would you say that Chinese, Japanese, SK trade figures wouldn't have jumped by a huge margin? Oh well, they would have sunk actually by tens of percentages, since we lost out a huge 1.2B marketspace, to which they can export to or trade with

In terms of potential, yes...In terms of actual trade today, India's imports represent fairly small %s in Japan's or China's resp. export baskets...

In terms of India's exports, 250 billion is about 7-8% of Japan+China+SoKo exports combined - so yes, their exports would have gone up by 7-8% if India disappeared...this includes agri/primary products/minerals as well, which none of these countries export in large measures...

So either on exports or imports, the impact on their growth wouldnt have been in "tens of %s", far from it..

Net net, on trade, we have huge potential commensurate with our increased eonomic heft...But lets not count the chickens (or gorillas) right now - we have a lot to catch up to...

[Hari Seldon]

Suraj saar,

No doubt India's done well and all that in CAGR terms but as super-comprehension says, its all low base only. And that we achieved after losing tax revenue to SEZs under some lame headed policy, as somebody was lamenting the other day in this dhaga.

I'm happy our exports are doing OK given the global economic climate change underway. I'm happier still that India's private consumption remains healthy (sure, it could always be much better) and the primary driver of domestic economic growth into the foreseeable future. Resource shortages now loom on the horizon and pray, we will have fortitude enough to negotiate them.

Hari om, jai ho.

[vina]

No doubt India's done well and all that in CAGR terms

But isn't that the basic factor behind ALL high growth (whether in piss-ness or anything of consequence). The bigger your base, the rate at which you can grow comes down.

In fact e-Con-o -comic "history" shows that growth rates tend to plateau and converge over the long term to "developed country" standards (largely due to base effect of course ..or law of diminishing returns setting in in e-con-o-mix gobbledecock) , and case after case of Japan, Newly Industrialized Asia etc, all converging to around 2% long term growth in the same trend line as the Amir Khan in it's history.

In fact, there was a country that was founded some 400 years ago and averaged a growth of 2% per annum througout it's history and today is the uber Gorilla e-con-omically and also in every sense of the term. Stat-is-sticks trendlines show that very few countries in the world managed to do that for extended periods of time. For the bulk of history of mankind, over millions of years, "growth" was next to nothing with giant leaps happening probably when man moved from hunter gatherer to farming,..long millenia of stagnation and little growth, and then the industrial revolution when science was harnessed for human welfare (take that you welfare doling ding dongs in Dilli!. it is not you doling welfare that creates universal prosperity, but a capitalist society harnessing science for human welfare).

India and China "catching" up is the lag effect of industralization in these societies. As we industrialize we will grow faster than those that already did and then when we "catch" up , we will tend to the long run 1.5 % or 2%.

In the end , everyone gets into the "Hindoo Rate of Growth" onree.. .. As Darth Vader said.. "It is your DEStiny"

[somnath]

Hari Seldon-ji, I often say, sarcasm comes out better when a little bit of substance is injected in it...

And that we achieved after losing tax revenue to SEZs under some lame headed policy, as somebody was lamenting the other day in this dhaga.

Hmmm, SEZs...the focus on them as "scams" have gone down only becaus of the enormity of the other "scam stories" right now...Plus, the sage Pranab Mukherjee did some quick retraction in the budget this year, by imposing MAT on SEZs, just to try and nip it in the bud...

The result? On expected lines..
http://articles.timesofindia.indiatimes ... t-tax-code

With tax breaks on Real Estate profits gone, might as well stick to the existing plants/units, whats the point in relocating to SEZs?

Of course, this still doesnt prevent a Gurumurthy from examining how RIL's Jamnagar refinery overnight became an SEZ, and some more like that....

A bit like the gas policy, where a lot of noise was done to explain it as "socialist ding dong", when it was little more than good old fashioned cronyism...

I'm happy our exports are doing OK given the global economic climate change underway

"Global economic climate change" - on trade, maybe it will interest you to know that 2010 had perhaps the fastest growth in global trade in 15-20 years...

So celebrate our success, but be aware of what others are managing to do, or are doing, or have already done....Because that is what will determine whether we are "gorillas" in the next 5 years, or only a bigger baboon...

[wig]

this release by the Press information bureau refers to the steps initiated by the govt to convert the govt accounting process to accrual based double entry system. a very important step in my opinion if accountably is to be brought into the system

The Finance Minister Shri Pranab Mukherjee has said that a robust comprehensive and transparent accounting system is a must for any government. He was inaugurating a day- long national conference of the State Finance Ministers on “Accrual Based Financial Reporting in Government”, here today. Shri Mukherjee stated that accrual based financial reporting in the Government is an important initiative in the reform of the system of accounts and financial reporting in the public domain. He said that the Government has already accepted the recommendation of the Twelfth Finance Commission for introduction of the accrual accounting in principle. Accordingly, the Government Accounting Standards Advisory Board (GASAB) in the Office of the Comptroller & Auditor General of India has prepared an operational framework and a detailed road map for its implementation.

http://www.pib.nic.in/newsite/erelease.aspx?relid=0

[SwamyG]

Theo saar: Talking about mechanization ityadi, I want your opinion on this Afghanistan's Last Locavores article, maybe a reply in off-topic or any other (and point out it here).

[Theo_Fidel]

If China, with exports of 2 trillion dollars grow @ 30%, and Japan with exports of 1 trillion grow @ 30% and South Korea with 500-600 billion grow @ 40%, then Indian exports of 250 billion growing @ 30% isnt "trend breaking", ie, doesnt break the trend set by other large Asian trading nations, and doesnt really take up material marketshare...Ergo, if the same trend continues, India's relative heft (to Asian competitors) in trade terms isnt going to be any different 5 years hence....

Suraj just blew up all your silly numbers. Can I now call them lies now. What now. Huh! Your conclusion is complete garbage right there.

Honestly when you can't appreciate the growth of India, without putting such stupid qualifiers in, one questions your point of view. Much of Pandaland numbers are caused by round tripping, premature booking and inflated invoicing. But no these are only problems in India.

Apparently we are one of the 'peers' only, no matter that Panda is a dictatorship, SK/Japan are a homogenous racist societies, Singapore/HK are even more racist openly, and that their industrial export structures are very weird compared to normal states or India. Nope, we are all peers. Garbage! I'm sure that's how it seems in that spreadsheet seminar you attended last week.
----------------------------
SwamyG,

The question to ponder is to having a high standard of living AND be sustainable.

Afghanistan and most of India are relatively sustainable but have sacrificed their standard of living for this purpose. In a sense this itself is unsustainable.

Also the Russki's tried long and hard to reform Afghans with tractors, combines, horticulture, fruit trees, etc. None of it really took hold.

[Hari Seldon]

Hari Seldon-ji, I often say, sarcasm comes out better when a little bit of substance is injected in it...

How true somnath-ji. Well, can I now dare to hope that thou shalt henceforth practise what thy preached so majestically only? TIA.

"Global economic climate change" - on trade, maybe it will interest you to know that 2010 had perhaps the fastest growth in global trade in 15-20 years...

Well, sir, whilst I almost nodded in agreement, super-comprehension from the heavens admonished my simplicity and said, "Isn't the rebopund of 2010 relative to the low base of the near-depressionary contraction in global trade circa 2008-09?" Anybody recall the baltic dry tanking like a paki jernail in ski mode? After that, some semblence of return to semi-nromal would look pretty in % terms, perhaps. But that is what it looks like in ordinary comprehension mode.

So celebrate our success, but be aware of what others are managing to do, or are doing, or have already done....Because that is what will determine whether we are "gorillas" in the next 5 years, or only a bigger baboon...

What to do saar, my ordinary comprehension condemns folks like moi to nanha baboon status only in a jungle full of super-comprehending gorillas. Theek hai, such is life. What to do only.

/More seriously, am not terribly interested in pi$$ing contests with animal motifs. Meaningful change for the better in the majority of Indian citizens' lives is all I crave. No, really, cross my heart. But that too is too much to ask for from our super-comprehending sarkar and its motley bevy of sarkari economystics. The median wage's sure going up impressively and all, that gladdens moi boor heart.

Peace. Hari Om and Jai ho.

[sugriva]

Suraj just blew up all your silly numbers. Can I now call them lies now. What now. Huh! Your conclusion is complete garbage right there.

How so? If at all it only proves Somnath's point. China's 40 % growth from a larger base compared to India's 30% growth. Not bad but as Somnath said, depending on what the others do, or don't do, we'll be either bigger baboons or gorillas.

Apparently we are one of the 'peers' only, no matter that Panda is a dictatorship, SK/Japan are a homogenous racist societies, Singapore/HK are even more racist openly, and that their industrial export structures are very weird compared to normal states or India. Nope, we are all peers. Garbage! I'm sure that's how it seems in that spreadsheet seminar you attended last week.

Exactly how is relevant to exports. If there are 5 shops in a market and one sells cheaper because he uses child labour, the other is a feudal who doesn't even want to pay the minimum wage rate and cribs about not getting workers in Internet forums, and 3 others ply fair and square which 2 will will? It doesn't require a genius to give out the answer. However the cold hard fact is that the 2 cheaters are making more money and the "dharmic" ones (to borrow a much abused word) will need to actually pull up their vestis to do better, no?

[Suraj]

People need to stop making up phantom "1T@30%" and "400B@30%" nonsense to make claims about other comparative countries, and if they do, they should be prepared to face criticism based on counterpoints that do use real data.

Yes our growth was on a low base. What's the point here ? It took us half a century to muddle our way to ~$40B in exports, and barely a decade to get up to $250B. If anything, both GDP growth and export growth have accelerated in recent years, as greater financial heft, resources and economies of scale make for ever more competitive participation in the world trade system. There were interesting articles from Tiruppur a few years ago describing how textile exporters had to forego several orders simply because they lacked the scale to accomplish it on time.

Data shows than except for one major exporter (PRC), we've outdone every other EA/ASEAN - by several percentage points - over a near-decadal duration. Despite Einstein's alleged quote, the importance of CAGR does not seem to strike people. If A has $400B exports growing at 12% and B has $250B growing at 20%, B will overtake A in just over 5 years, despite 'onlee' 8% differential growth. Increase A's growth rate to 15% and B will still catch up in ~10 years.

Fact is that the current trade growth peers in Asia were never historically our peers - we were the stagnant laggard until as little as less than a decade ago, while the others have focused on export-led growth for up to several decades before we did. Our economic engagement with the world, and their economic stake with us, was essentially negligible. That we're playing the game as fast, or as data indicates, reasonably faster, than nearly all EA/ASEAN, is a major departure from historical trends for us, something we have been doing for only ~7 of the last 65 years. There's nothing to be gained in nonchalantly dismissing this, or worse, attacking those who do appreciate the change in circumstances.

[Theo_Fidel]

Exactly how is relevant to exports. If there are 5 shops in a market and one sells cheaper because he uses child labour, the other is a feudal who doesn't even want to pay the minimum wage rate and cribs about not getting workers in Internet forums, and 3 others ply fair and square which 2 will will? It doesn't require a genius to give out the answer. However the cold hard fact is that the 2 cheaters are making more money and the "dharmic" ones (to borrow a much abused word) will need to actually pull up their vestis to do better, no?

Apparently you don't realize that you proved the point right there.

These countries are distorted at different levels both socially and economically and this is what allows for their export boom. Panda land in particular is beggaring its workers in order to export its way to growth. But apparently this should be our highest aspiration as apparently they are our 'Peer'. Bah! Humbug!

Just because others cheat does not mean we need to compare ourselves to them. This way is doom. The very fact that the Indian self flagellation always goes, "We are growing fast but look at blaah blaah blaah...." is stupid. We are growing fast, period. Nothing else matters.

This whole business of denigrating SEZ's has to end. The only metric must be reality. Is the economy growing fast and is the SEZ despite distortions contributing. The answer for both is a resounding yes. This is 90 % of the pudding. I don't give a damn about whether investment is getting diverted to SEZ or if SEZ's are being reclassified legally. All other comments are coming out of your collective Musharaff's.

[somnath]

People need to stop making up phantom "1T@30%" and "400B@30%" nonsense to make claims about other comparative countries, and if they do, they should be prepared to face criticism based on counterpoints that do use real data

Real data, indeed (though not sure which part of the data quoted by me was "phantom")...In the "real" world,

1. People do not take a monthly trade number X, multiply that by 12 and say, hey presto India will be at "12X" this year..

2. People do not take a 3 month growth number at its face value and extrapolate that to be "real growth"..They question the data, and try and figure out if the growth is due to structural factors or anomalies arising due to tax phase-outs...

3. People dont look at a headline number (like gold imports) and conclude there would be something "deeper" in it..Monthly/yearly numbers seldom reveal any structural shifts, usually they show well known interlinkages (the fact that jewellery exports are a hugely import-intensive sector)...

4. People compare, while talking of "798 lb gorilla" or whatever, relative performances...In the decade gone by, China started from a base pretty similar to India's today (they were ~210-220 billion dollars), and clocked a growth rate that is higher than us...

5. For the really "involved" people, they would also look at export baskets, and worry about the preponderance of low value addition items in the basket (as an example, the fastest growing item in our basket in the last 5 years is petroleum products - a huge bogey item on whether there is any economic benefit of importing oil and refining it for exports, refining margins are a small sliver of the price of petrol)...

6. People "strategically" inclined compare our contribution to other countries' export baskets - and for most large economic/political entities - US, EU, ASEAN - Indian imports contribute fairly small %s of their exports...

But really, there should not be much contentiousness on this...Have we done well on trade? Yes...Does it mean we are as "hefty" in trade terms as we are in sheer economic terms? Not at all..Does it mean that the situation's definitely going to change and we are going to be a "798 lb something"? There is no such inevitability about our trade (there are lots of reasons for that), unlike a measure of "hindu growth rate"-ness now to our headline economic growth numbers...

Of course, I wont ask Theo for any data/theory/justification on how China's export basket is "weird", or how perceived racism comes into play as a +ve for trade performance..

And SEZs? There isnt anything left to say on that...The govt has already conceded , tacitly, that the policy was at best "bad policy" (at worst, it was a scam, and the truth would be nearer to that), and changed the tax structure there...And the industry is voting with its feet by slowing down "SEZ"-isation........

[vina]

It took us half a century to muddle our way to ~$40B in exports, and barely a decade to get up to $250B. ....

Fact is that the current trade growth peers in Asia were never historically our peers - we were the stagnant laggard until as little as less than a decade ago, while the others have focused on export-led growth for up to several decades before we did. Our economic engagement with the world, and their economic stake with us, was essentially negligible.

Absolutely. When I look back at that particular idiocy, I cant but help feeling gob smacked. And why did that happen ? Because some Dilli -Ding dong e-con-o-mist cabal (with ISI/DSE models) "concluded" that India can't export and neither can export be a route to prosperity!. Country after country demolished that particular rubbish (Japan and Germany) in the 19th and early 20th centuries, Korea, Taiwan, Newly Industrialized Asia (Asean Block) in the mid 60s and 70s. All of them exported their way out of (in some cases deeper and more entrenched than India) poverty to first world status, while the Dilli Baboons and Netas were stuck with heads in sand and a*se in the air like ostriches and throwing curses at them ("American lackeys" , shoe stitchers), while these guys were gloriously muddling around in poverty and feeling ennobled by it because their "soup-e-rear" models said dole "welfare".

Ok, let go of that. Come 1990s, small tinku companies in S. India called Infosys and Wipro and TCS had grown to some $10 to $50 m in export revenues and then there were the self same ,self appointed "eggspurts" , primarily from Ding-Dong DSE & JNU and the commie parties and their apparathcicks and the govt of West Bengal were scathing in their disdain and contempt (eh.. Typists, "code coolies", produce nothing, services cant employ large numbers.. etc).. err. 2 decades later, it is a $50 b export industry growing at 25 to 30% and emplying upwards of 120,000 people per large company (forget about the furriners who set up shop, the smaller guys, the mom & pops.. etc) with wages that is atleast one ORDER of magnitude more than the normal Indian salary, and same ding-dongs still mouth off rubbish while wondering "it has never happened before that service exports managed to pay the country's oil import bill" . ,so we couldn't know.. And then the west bengal chief minister goes around trying to get IT/Vity boys to come to his state and admitting that they were wrong..(why does humility come only when you have get down on your knees in desperation, how about actually being able to think without blinkers and act rationally ?)

[somnath]

In the meanwhile some more setback to the "real" work that needs to be done...

GST set to miss the deadline, again...

http://www.indianexpress.com/news/gst-m ... n/806976/0

The reason is simple - cussedness of state govts...They should just go ahead and implement without the naysayers, at least make a start...

[Suraj]

Somnath: Nearly all your bullet items begin with 'people...'. You're right about that. 'People', aka, mango abduls, don't do that. It's the economists who do, especially the planners and statisticians like - hold your breath - bleeding heart Belgian Jean Dreze

[somnath]

Somnath: Nearly all your bullet items begin with 'people...'. You're right about that. 'People', aka, mango abduls, don't do that. It's the economists who do, especially the planners and statisticians like - hold your breath - bleeding heart Belgian Jean Dreze

Well, you missed out on the definition, "people" in the "real world", ie, those outside 1) pink paper breathless "rara", or 2) "I drove through Mahindra SEZ to know how SEZs work", or 3)"fiscal policies are @#$% in India because my father said so"..

Not sure if Jean Dreze worries himself too much with trade though, unless its about SEZ

[Theo_Fidel]

^^^^
Honestly, didn't you just come off a one week time out. Just because you post a link proves nothing. So far you have spouted nothing but garbage, and demonstrated a clear lack of knowledge about your country (or is it still your country). Your track record is very poor. I'll take my Dad's insights over you any day. He spent his life running a large chunk of a major bank and even now runs a medium size finance company w/ 100+ employees at age 70+.

Despite appearances occasionally (Benis thread), you are not talking to a bunch of 17 year old's here. There are enough PHD's and knowledgeable people here to run a small country. Just because your lack of knowledge has not been called out before does not mean you can spout garbage about India.

If you want to disprove any of my/others comments go find the data to prove it. We know where it is, now you go and learn, esp. learn about banking before you lot crash something else.

Suraj punked you. Go sit and eat crow for a while before speaking again...

---------------------------------------------------------------------------------------------------------

WRT GST, most of the economic benefits have already been captured through the VAT process. In some ways the GST would be regressive as states will no longer be able to designate 0% tax on certain items. And there many items that deserve zero regulation in lower sections of our economy. We can do it in our own time. Better yet the GOI could eliminate CST which would mostly remove the need of GST as well. The GST is a IMF agenda item. I'm not entirely sure why they are pushing it so hard. Always makes one suspicious.

---------------------------------------------------------------------------------------------------------

I want to post two news items. Reliance and TATA are worth about the same as all the Central PSU's put together. In other words they have just about created more wealth for Desh than all those dinosaur PSU's combined. If I was a PSU's I'd go and commit Sepuku at the moment. Might be the best thing to happen to India. Reality is a she dog and all...

http://www.google.com/hostednews/afp/ar ... 713dcd.ae1

India's leading conglomerate Tata Group has become the country's wealthiest in terms of market capitalisation, beating the combined wealth of the two Ambani brothers, stock exchange data showed Tuesday.

The salt-to-steel Tata Group, led by chairman Ratan Tata, was worth 4.32 trillion rupees ($96 billion) -- the highest for any Indian corporate group. The combined value of the two Reliance groups was 3.46 trillion rupees.

http://www.thehindubusinessline.com/tod ... 000663.ece

CAG said the market value of shares of 39 listed Government companies as of March 31, 2009, stood at Rs 8,15,606.31 crore, which compared favourably with the total book value of their shares at Rs 3,51,794.67 crore.

[sugriva]

Just because others cheat does not mean we need to compare ourselves to them. This way is doom. The very fact that the Indian self flagellation always goes, "We are growing fast but look at blaah blaah blaah...." is stupid. We are growing fast, period. Nothing else matters.

No, it does matter because it is called competition and we don't live in a vacuum. The competitors will use every trick in their book like undervaluing their currency to keep their exports competitive. Question is what is the SDRE to do? Yes we have grown our exports but most of it is in our areas of competitive strength, viz textiles and processed gems and minerals. Go to the RBI report that Somnath referenced and you can see the breakup of the exports basket. Services exports, primarily, outsourced software services is also a competitive strength. However one needs to look at the composition of the exports basket to determine if the increase in exports deserve one cheer, two cheer or three cheers. The only heartening feature I find is the minor increase in the share of engineering goods as a percentage of total goods. The rest are all SDRE strength years and have been so for dogs years.

[Prem]

Seems, While talking about Indian economic achievements and aspirations, Shalya Doctrine/ Niti must be taken in account. Regardless of naysayers, mai na manoo, tuu kaun, mai Kham-khai , there is always gonna be some one better than you/us etc , This decade is the most important for Indians to proove their metal. 2T two way trade is good enough target for 2016.
I dont see any cutomer country to absorb 2-4 Trillion annual Chinese export. If it ever gonna be such customer, it will be India only.

Question, Does the service export include remittence from NRIs or they are extra ( 50 Billion) ?

[sugriva]

I dont see any cutomer country to absorb 2-4 Trillion annual Chinese export. If it ever gonna be such customer, it will be India only.

You want India to absort 2-4 trillion of Chinese exports year over year. Seriously, whose side are you batting on?

[somnath]

So far you have spouted nothing but garbage, and demonstrated a clear lack of knowledge about your country (or is it still your country).

I will wait for you to point out the facts on the "garbage" that you allude to...I dont want to get into a pissing contest (adds no value) with you, but purely from memory, werent you arguing somewhere that "the only component of govt spending that is inflationary is the deficit, specifically rvenue deficits"? Or the fact the the Indian govt "prints money to fund deficits"? Or something like "tax exemptions are not revenue foregone"?

I am sure if I trawled through your posts I can find many more such gems, but useless exerrcise..Maybe you can refresh yourslef on your knowledge of India (as well as economic theory)...Of course, it would be too much to expect you to understand or respond to the points I made in my last post...

WRT GST, most of the economic benefits have already been captured through the VAT process. In some ways the GST would be regressive as states will no longer be able to designate 0% tax on certain items

Says who? Any studies? The Vijay Kelkar report (which I have posted here before) quantifies the benefits out of GST...I am sure you have some references? Or is it another case of "oh I run a small business and know how VAT/GST impacts me"?

Reliance and TATA are worth about the same as all the Central PSU's put together. In other words they have just about created more wealth for Desh than all those dinosaur PSU's combined.

What is the basis of this comparison? Only a small fraction of GOI's assets are listed, while almost all assets of Reliance/Tata are..So how can such a glorious conclusion reached?

Factually, Reliance+Tata together generate sales that would perhaps add up to something like 5-6% of GDP...Government accounts for ~30% of GDP, so who is creating more "wealth for the nation"?! Its an absurd comparison, but then the proposition itself is absurd...

BTW, talking of pure M-cap, per my BBG,

RIL - 2755 bill
Coal India - 2403 bill
ONGC - 2190 bill

There was an article yesterday how Coal India should become the largest MCap company in a month or so, given the travails of RIL!

[somnath]

Question, Does the service export include remittence from NRIs or they are extra ( 50 Billion) ?

No..