Indian Economy: News and Discussion (Apr 1 2011)

Vipul · Post by **Vipul** » 01 Aug 2011 20:26

The Indian economy: A trillion dollar baby twice over.

India will almost have a $2 trillion economy by the end of March 2012, falling a mere $6 million short of the mark, according to a new report by the Prime Minister’s Economic Advisory Council (PMEAC) released on Monday.

Data released by the PMEAC shows that India doubled both the size of its economy and its per capita income in five short years. The average income of an India is estimated to be $1664 a year. Though economies do not move in a straight line, a simple extrapolation suggests that we could have a $4 trillion economy and an average annual income of $3328 by FY17 in case the next five years are similar to the past five years, admittedly a brave assumption. As a point of comparison, it is sobering to note that China had that level of per capita income around two years ago, which already puts us ten years behind it.

The real question then is whether India will indeed move along the same trajectory as it has done in the past five years. Or will its path out of poverty be even steeper? Or will growth flatten out?

What actually happens in the next five years has tremendous implications for everybody ranging from the richest to the poorest. The former may continue to prosper, but higher economic growth will give the latter avenues to move out of poverty as well as provide the government tax revenues to help those in danger of being left behind. This is why the thrust of policy should be to encourage fast economic growth, to ensure that India keeps on the current flight path and does not crash land as many Latin American countries did in the 1970s.

The signs do not seem good right now, with slowing growth and higher inflation clouding the prospects of the Indian economy in the next few quarters. Some of the current pain could be cyclical. The bigger danger is that the slowdown in growth and rise in prices could become structural, in which case the problem cannot be tackled by the Reserve Bank of India but needs urgent attention from a distracted government, especially getting economic reforms off the ground once again.

Manmohan Singh could go down in history as the man who helped energize the Indian economy after 1991 and the man who was at the helm when it lost speed after 2011.

Suraj · Post by **Suraj** » 02 Aug 2011 04:08

So the PMEAC forecasts GDP of $1999.004 billion at the end of this year ? Either they can forecast exchange rate that precisely so many months out, or someone there likes Bradman's batting average of 99.4

I hope economic progress is also accompanied by greater awareness of maternal and child nutrition, healthcare and education. Money only matters upto a point - as Theo and others described, attitudes too need to change.

Rahul M · Post by **Rahul M** » 02 Aug 2011 04:34

without those things the demographic dividend will become a demographic burden.

Theo_Fidel · Post by **Theo_Fidel** » 02 Aug 2011 07:33

We need to throw some serious money at our social problems. Pay people if necessary to keep their girls in school, pay mothers to go get checkup, vaccines, deliver in hospital, etc, pay adults to attend vocational training, pay adults to socially desegregate their communities, pay/protect couples that inter-marry, etc. Lack of money is no longer an excuse.

The UID project should allow us to track and target these individuals. Don't know what to do about the foreign illegals however. About 200,000 in Chennai alone per my police commissioner relative.

RamaY · Post by **RamaY** » 02 Aug 2011 07:40

+1 to all the three posts above.

I sincerely pray that a couple of UPA 2 ministers show their evangelism in these matters. Throw money on woman and child care like they are going behind Yindoo terror or RSS hindutva.

Virupaksha · Post by **Virupaksha** » 02 Aug 2011 07:44

http://sakshi.com/main/FullStory.aspx?c ... subcatid=0

farmers in the west godavari declare crop holiday for paddy because of rising input cost. govt tried to make them stop crop holiday and farmers refused. West godavari is the delta area of the godavari river and it is one of the three districts collectively called the granary of south india.

great going MMS and Sonia and KKR.

Theo_Fidel · Post by **Theo_Fidel** » 02 Aug 2011 07:58

In Kanya Kumari district about 40% of the Rice area is now fallow. Including sadly, this year, my little farm as well. I know 5 Acres is not much but in my mind that is about 100 people with out rice this year. My cousin was telling me that even Agricultural land in the thousands of acres is being abandoned to the Jungle.

Here's a sad report in the Hindu from a couple of weeks ago. It makes for painful reading. Cash crops are really hard to market from this distant corner. They are a sign of desperation.

http://www.thehindu.com/todays-paper/tp ... 235238.ece

Even the total cultivable area is shrinking in the district. The total area under cultivation during 2008-2009 was 88,788 hectares, while it was 90,998 hectares the previous year, said officials at the Economics and Statistics Department of the district administration. The total area under paddy cultivation in both ‘kar' and ‘samba' seasons in the district during 2004-2005 was 22,016 hectares; 21,709 ha in 2005-06; 21,406 ha in 2006-07; 20,349 ha in 2007-08; and 18,187 hectares in 2008-09.

Meanwhile, the area under cash crop is increasing year by year. The area under banana cultivation during 2008-09 was 6,149 hectares — it was 5,471 during the previous year. Also the total area under rubber cultivation was 20,498 hectares in 2008-09 and it was 20,267 in the previous year.

From 28,229 hectares in 2001-02, total area of paddy cultivation has come down to17,437 hectares in 2009-10, according to data available with the Department of Agriculture. Sources also said that production of paddy during 2008-09 in the district was 1.28 lakh tonnes and during 2009-10, the production figure stood at 1.22 lakh tonnes. As farmers do not get a good price for paddy, they are opting for rubber cultivation, because it fetches them good revenue. Agriculture department sources also admit that transformation of paddy fields into housing plots was another reason for the decrease in paddy cultivation.

Farming was not a profitable venture any more, particularly paddy farming when compared to other cash crops. A study in 2003-2004 said that for producing one quintal of rice, the farmer had to spend Rs. 900 as the input cost. Labour shortage also affected the farmers and it's time the Government made farming sustainable.

Sometime back someone had posted how agriculture was improving in Kerala and all was 'Peace and prosperity'. I had wanted to give a sharp remark but held my tongue. Kerala does not even produce 20% percent of the food, esp. rice, that they consume. Such is the nature of our 'peace and prosperity'. Coming soon to every state near you.

Aditya_V · Post by **Aditya_V** » 02 Aug 2011 10:02

Theo_Fidel wrote:We need to throw some serious money at our social problems. Pay people if necessary to keep their girls in school, pay mothers to go get checkup, vaccines, deliver in hospital, etc, pay adults to attend vocational training, pay adults to socially desegregate their communities, pay/protect couples that inter-marry, etc. Lack of money is no longer an excuse.

The UID project should allow us to track and target these individuals. Don't know what to do about the foreign illegals however. About 200,000 in Chennai alone per my police commissioner relative.

WHo are they BD's, I stay in Chennai and dont seem to have met any, but then again 200K can easily melt in a Metropolitan population of 15 million.

sugriva · Post by **sugriva** » 02 Aug 2011 10:17

^^^^
More likely illegal Sri Lankan Tamils.

vera_k · Post by **vera_k** » 02 Aug 2011 10:27

Unless the SRS and other census products take citizenship into account when calculating statistics, it is not productive to worry about the illegals. A malnourished person or one who lives on the street affects the quality of life for everyone around regardless of whether he is illegal or not. And such a person will be counted against whatever progress is made on the HDI indicators.

RamaY · Post by **RamaY** » 02 Aug 2011 22:31

Aditya_V wrote:
Sri wrote:
Pakistan scores lowest in speculative rating. Just tard above junk...
OT- But that Map shows why ratings are Bollocks, how does UK stan with GBP 1.4 Trillion and GBP 4 Trillion Debt get rated AAA, last I heard they have huge problems paying thier Government Debt and Interest Commitements?

OOT but per {deleted} it has to do with child mortality rates, health care coverage, calorie intake, religious tolerance, corruption perception index and so on...

Basically it means that if you look good, health, and wear a (sic) secular shirt then you will get AAA rating.

Nandu · Post by **Nandu** » 03 Aug 2011 00:17

RamaY, the real question is, can it be arbitraged?

RamaY · Post by **RamaY** » 03 Aug 2011 00:28

What do you want to arbitrage, the bond or the HDI rank?

How does it differ if your bond is denominated in the same currency, say USD?

saip · Post by **saip** » 03 Aug 2011 01:35

Theo_Fidel wrote:We need to throw some serious money at our social problems. Pay people if necessary to keep their girls in school, pay mothers to go get checkup, vaccines, deliver in hospital, etc, pay adults to attend vocational training, pay adults to socially desegregate their communities, pay/protect couples that inter-marry, etc. Lack of money is no longer an excuse.

Theo:

These are all good ideas but did not Kerala achieve these very objectives without all these payments? How did it do it and what is holding other states from implementing same schemes?

Rahul M · Post by **Rahul M** » 03 Aug 2011 02:11

Marten wrote:Gold surged today after South Korea fessed up to buying 25 tonnes to make their total holding 39.4t. How much is India's projected holding and estimated private holding?

I think RBI holds around 400 tonnes. pvt holdings at some thousands of tonnes.

saip · Post by **saip** » 03 Aug 2011 04:05

India bought nearly 200 tonnes in 2010 at around $1140 or so. According RBI, Gold reserves are valued at 24.7 Billion dollars as of 7/29/11. At $1600 an ounce it translates to 425 tonnes or so.

Theo_Fidel · Post by **Theo_Fidel** » 03 Aug 2011 04:17

saip wrote: Theo:

These are all good ideas but did not Kerala achieve these very objectives without all these payments? How did it do it and what is holding other states from implementing same schemes?

Two things. Kerala is not all the way there yet. Just looks good in India.

For instance, child malnutrition is similar to Assam. Maternal mortality is better than India but only marginally in numbers. For such an educated population it is shockingly high and says that the health and status of women is still quite poor by world standards.

Second Kerala's success was due to the progressive nature of its society and some help from the Government. Similar to Goa. Or parts of Punjab. We don't have the time to change social attitudes all over India to that level. We have 30 years tops to benefit from the Demographic Dividend. Ergo we need a crash program to start right now.

chetak · Post by **chetak** » 03 Aug 2011 05:31

Aditya_V wrote:
Theo_Fidel wrote:We need to throw some serious money at our social problems. Pay people if necessary to keep their girls in school, pay mothers to go get checkup, vaccines, deliver in hospital, etc, pay adults to attend vocational training, pay adults to socially desegregate their communities, pay/protect couples that inter-marry, etc. Lack of money is no longer an excuse.

The UID project should allow us to track and target these individuals. Don't know what to do about the foreign illegals however. About 200,000 in Chennai alone per my police commissioner relative.
WHo are they BD's, I stay in Chennai and dont seem to have met any, but then again 200K can easily melt in a Metropolitan population of 15 million.

BDs are present even in the rural areas.

Jobs like security guards, helpers at local eateries etc are places where one can usually find them.

Rahul M · Post by **Rahul M** » 03 Aug 2011 06:06

saip, I checked, it is ~ 614 tonnes and 11th largest in the world. total nationwide gold reserve is largest in the world.

Jaspreet · Post by **Jaspreet** » 03 Aug 2011 06:20

We need to throw some serious money at our social problems. Pay people if necessary to keep their girls in school, pay mothers to go get checkup, vaccines, deliver in hospital, etc, pay adults to attend vocational training, pay adults to socially desegregate their communities, pay/protect couples that inter-marry, etc. Lack of money is no longer an excuse.

I foresee:

Girl student scam.
Mother checkup scam.
Vocational training scam.
Desegregation scam.
etc
etc

I'm not being flippant.
There's a huge amount of money being poured into another scheme (what's that - something called NREGA or Noriega

)that people have opposed so vehemently even though another member has pointed out that its outcomes are being monitored very strictly. What makes us think money poured into these will succeed?

Singha · Post by **Singha** » 03 Aug 2011 07:26

TOI today:

central govt has agreed to a 19,000 crore bailout package for west bengal to accomodate the UPAs most important ally Mamata banerjee.

pranab mukherjee agreed to the bailout despite the bengal FM failing to submit a recovery roadmap through augmenting state revenue that is expected from a state committed under the FRBM act.

----
so its all loud and clear , you can run anything into the ground repeatedly and then demand bailouts - if you are munna it will be done, if you are not in good books of delhi (like say a BJP state govt), then forget about it only free lectures on fiscal prudence and sikularism will be given.

RamaY · Post by **RamaY** » 03 Aug 2011 07:34

Jaspreet,

There is a lot of difference between NREGA and what we are suggesting. I envision
- free health insurance coverage for all woman, children
- extending mid-day meal program to 2-meals a day program (10AM and 4 PM)
- vocational training associated with SEZs

There will definitely be some wastage. As long as it is <20% it is good, IMHO.

NREGA on the other hand gives cash (don't know to whom).

gakakkad · Post by **gakakkad** » 03 Aug 2011 07:37

Theo_Fidel wrote:
For instance, child malnutrition is similar to Assam. Maternal mortality is better than India but only marginally in numbers. For such an educated population it is shockingly high and says that the health and status of women is still quite poor by world standards.

Second Kerala's success was due to the progressive nature of its society and some help from the Government. Similar to Goa. Or parts of Punjab. We don't have the time to change social attitudes all over India to that level. We have 30 years tops to benefit from the Demographic Dividend. Ergo we need a crash program to start right now.

MMR (2006) figures for India was 301/100,000 births. Kerala was about 110 births. ie it was 1/3 of the rest of the country. The present day estimate is about 226 or something of that sort for India and 86 for Kerala. The difference is not marginal.

We do have a cash program for conducting hospital deliveries . (Janani suraksha yojana) . It gives Rs 700 cash for conducting hospital deliveries . And 500 for attended deliveries. How far it is effective is questionable. During my MBBS intern-ship I was posted in a PHC. The PHC received about 5-7 lakh cash annually each year for JSY. So we can calculate that 1000 deliveries must be conducted their each year ie about 2-3 per day. But in the 30 days I spent their only 10-15 deliveries . ie one every 2 days or so. So I estimate that at that centre 65 % of the JSY money was eaten up by the social worker and the MO responsible for dispensing the money.

Another thing I found is that the refrigerator that was officially provided for storage of vaccine was used for storage of several other things as well. (their food icecream etc). Not all PHC's are as bed. Some function decently. But most are pathetic.

The MMR in US is about 12-18 / 100,000 . That in northern Oirope is even better. (about 4) . My Brooklyn based teaching hospital (where i did residency) caters to the lower Income Americans and has a lot of medicaid patients. (ie poor americans who cannot afford to Buy insurance) . US has great emergency services. Though the elective services are mediocre in comparison to Oirope , No one matches Unkil in emergency. The ER of downstate centre is amongst the busiest in the world. What I found here is that poor single moms often can in the ER when they were about to deliver. That is what saved them. In India what usually happens is that such moms never reach the hospital and are delivered by Dai's of village who are unskilled.

If we break down the causes of maternal mortality hemorrhage is the most common in India. This is further a problem as most India women are Anaemic . To counter this anaemia GOI provides IFA tablets during pregnancy free of cost. But again their are compliance issues. If anyone of you has take Iron over a long period you know that it is not a pleasant thing. Iron by very nature is constipating. So women quite often don't take them. Other common cause of maternal death is pregnancy induced hypertension. Due to factors that are yet unknown some women develop high BP during pregnancy . The thing is it is treatable and death can be prevented in almost all cases. But I imagine in remote UP and Bihar it may not even be detected. In each case hospital delivery is essential. In the college I did MBBS (BJ MC ahmedabad , one of the largest hospital in Asia) > 20 deliveries were conducted everyday. The deliveries were mainly conducted by interns and MBBS students and were supervised by residents. Hardly anyone ever died. So 100 % hospital delivery is the key .

As far as immunisation is concerned we have done decently. (apart from BIMARU states). Polio is eradicated from most states. About 50-100 cases come up , mostly in UP and Bihar. (actual infection may be much more as most cases of polio are not even symptomatic. It is only the unlucky ones who get infected).

gakakkad · Post by **gakakkad** » 03 Aug 2011 07:50

RamaY wrote:Jaspreet,

There is a lot of difference between NREGA and what we are suggesting. I envision
- free health insurance coverage for all woman, children
- extending mid-day meal program to 2-meals a day program (10AM and 4 PM)
- vocational training associated with SEZs

There will definitely be some wastage. As long as it is <20% it is good, IMHO.

NREGA on the other hand gives cash (don't know to whom).

Treatment in all medical colleges and Gov't hospitals is almost free so we don't need free insurance cover. The American have made a big mess with the health insurance. We need to be a lot more careful in it. If some one collected statistics according to social class than we ll find that the middle class of India has similar health stats as the American middle class at much lower expense.
Our poor stats are linked to poverty. And once poverty is eliminated the stats will approach that of Unkil. The percapita income of Gujarat is twice that of Kerala . But kerala's MMR is much better. But the thing is that Guj health stats are improving very rapidly. And 5 years down the line they will be the best in the country. While Kerala stats are no longer improving all that rapidly. They will not achieve unkil level by 2016 as someone predicted. That is because its economic growth rate is not fast. You can achieve only some improvement with welfare schemes. Over all focus has to be economic growth. Welfare schemes should not be at the cost of growth . Infra development is far more important than janani suraksha yojana.

Airavat · Post by **Airavat** » 03 Aug 2011 07:59

India one of key markets: HSBC

Hongkong and Shanghai Banking Corp. Ltd (HSBC) on Tuesday said pre-tax profit from India rose 33% to $451 million (Rs.1, 993 crore) in January-June 2011, driven by rising fee income from global banking and markets division, even though its loan book did not grow because the bank was cautious in lending.

Asia, led by Hong Kong, contributed 59% or $6.8 billion of HSBC’s $11.5 billion pre-tax profits, mainly due to a 17% rise in fee income to $2.7 billion. HSBC, the fourth largest financial institution in the world by market value, said India along with China, Singapore, Indonesia, Malaysia and Australia are key markets because of economic growth in the region even as concerns remain in the developed markets including the US and Europe.

“Markets like India and China are strategic markets and we will continue to feed both. In India, especially, the attrition rate is high and there is a war for talent,” Wong said via a video conference.

Theo_Fidel · Post by **Theo_Fidel** » 03 Aug 2011 08:35

G,

Your experiences make for interesting reading. Way back when (mid 80's) I did some survey work for Quasi-state agencies that did regular surveys of State hospitals. Very sobering experience for me, in terms of who got left out.

The JSY does not run in my area. I'm not sure, but I doubt it runs in Kerala either. Not sure where your PHC was. In any case Rs 700 is a measly amount for a new mother. It should be at least Rs 5000 in a bank account with coupon type access to food & baby care. That should provide support for the critical first 6 months. For Kerala's HDI MMR should be 10/10,000 or so. You should judge Kerala by it peer group Southern states. It is only marginally better. Its already behind Goa and likely to fall behind Maharashtra soon.

The way I've heard it 75%+- of deaths occur within 48 hours of labor. The majority are actually happening in rural hospitals. The women are getting to the PHC's with serious complications already in progress.You are right that nutrition problems for girls/women/pregnant women cause many of these issues.

Any ideas why Kerala's Child Malnutrition rate is 32%, approaching Assam's 38%.

vera_k · Post by **vera_k** » 03 Aug 2011 08:51

gakakkad wrote: But the thing is that Guj health stats are improving very rapidly. And 5 years down the line they will be the best in the country. While Kerala stats are no longer improving all that rapidly.

Gujarat IMR is 48. Kerala is 13. Based on this, Gujarat looks about 20 years away from getting to where Kerala is. Of course, Kerala may deteriorate, but that's hardly how Gujarat should match Kerala.

Big problem I noticed is that there are not enough specialists on the ground in the rural areas, even in what would qualify as rurban areas. Even to churn out more needs big investment in medical colleges and training doctors, and even then results would be visible only after 10 years or so, because that's how long it takes to train a specialist.

There's no getting around the unpleasant fact that spending on health has to rise maybe 300% or more to get to where it should be given that the government is supposed to provide universal health care.

gakakkad · Post by **gakakkad** » 03 Aug 2011 09:06

^^^ Doctors need money to operate in the Rural area . After studying so much we deserve a decent lifestyle which rural area's cannot offer. I can propose several solution's to this problem . But the Govt will never implement any of them. The IMR and other stats of Guj will improve very rapidly in the coming years . I ll soon post the reasons.

@ Theo - Malnutrition is an important an complicated topic. I don't know the answer to your question on Kerala now. But this is topic worth discussing . Regarding labour death you are right. Most deaths do occur within 2 days of labour. Their are several medical reasons for this. The problem with PHC's is that they are understaffed. Salary is only about 30k-40k per month . The best docs will always specialise and join a decent lucrative private practise. (where incomes approach and often exceed europe and US). What comes in a PHC is often the residue. They will often remain absent for most of the time . They will open a private clinic nearby and collect fees from the patient while never attending the PHC . And going only when salaries are given. A solution would be privatization. Giving contracts to private players to operate a PHC in rural area. Coupons can be given to the poor patients depending upon their income. Antenatal services should be free. Vaccines are supplied free by gov't even today. They should be supplied to these players too. A retainer should be paid to them . This will ensure that they remain in profit and docs are well paid. There should be checkpoint mechanisms and provisions to complain malpractice. The centres should be subjected to random inspections. Overall the cost will not increase much. But the quality would be great.

wig · Post by **wig** » 03 Aug 2011 09:46

times seem to be changing => India to give $2bn to fund bailouts in Europe

India is set to fund bailouts in financially-stricken Europe, marking a dramatic role reversal from 20 years ago when it went knocking on the doors of the International Monetary Fund (IMF) to avert a balance of payments crisis.

The government on Tuesday sought parliamentary approval to provide over Rs 9,003 crore (over $2 billion) in loans to the multilateral agency's New Arrangements to Borrow (NAB), a fund whose corpus was raised to over $500 billion in March when the debt crisis in Europe showed no signs of abating.

So, from Greece, which has received $300 billion so far, to Portugal's $100 billion bailout, India could be playing a part in the international rescue operations.

There are already suggestions that more funding would be required from the European Union as well as multilateral bodies.

Over the past two years, amid increased stress in the global economy, the IMF has been pressed into service on several occasions and has financed bailouts in European countries facing a crisis due to high levels of debt.

The 10-fold rise in the NAB corpus was the result of the new global financing order created by G20, a group of the world's most powerful economies, in the post-financial crisis era. Along with the jump in corpus, membership to the elite club of NAB contributors was also expanded to include 13 emerging economies, which included India.

http://timesofindia.indiatimes.com/indi ... 463341.cms

Dhiman · Post by **Dhiman** » 03 Aug 2011 10:49

wig wrote:times seem to be changing => India to give $2bn to fund bailouts in Europe

What a massive waste of $2b.

sumishi · Post by **sumishi** » 03 Aug 2011 11:31

Dhiman wrote:
wig wrote:times seem to be changing => India to give $2bn to fund bailouts in Europe
What a massive waste of $2b.

Can anyone please explain what exact route this money, and its returns, will take? Who will be the final beneficiaries?

Bade · Post by **Bade** » 03 Aug 2011 21:36

Much is being talked always about the demographic dividend and how it needs to be used before time runs out. I still do not get it or even buy it, that one needs a large population base to remain wealthy or even climb towards it. With productivity gains from the working population over many decades one should be able to catch up in quality of life, no ? What have the unwashed masses to contribute if they cannot already.

Why throw money away in populist programs when NREGS have failed or leaked as claimed by many. Why not have a culling in population and increase living standards and other HD indices over time. What is wrong with that approach ? Why the need to subsidize population explosion in certain geographies of the country. This will only encourage welfare dependency in the poorest of the lot and create more problems down the road.

If you take the Kerala example, where population growth if below replacement level perhaps already, it has not really meant lowered quality of life. Sure there will be migration from other parts with excess poor to the state, but that is exactly the solution to the problem elsewhere. Just need to replicate that all over the country in steps. Giving money to people to stay and over populate is not the solution.

Providing for healthcare at some minimum level that happens already in the southern states is where money needs to be pumped in, not a welfare check to spend at the local arrack shop.

SwamyG · Post by **SwamyG** » 03 Aug 2011 21:55

^^^
If you do not have the population base, then you need some other country to do the work for you so that you can be wealthy. That is wealthier than other countries. For rich to exist, there must be poor - somewhere.

Bade · Post by **Bade** » 03 Aug 2011 22:18

Mechanization means less hands required and no need to "exploit" the poor. We just need less people

for certain tasks. It also means exploit the natural resources more efficiently instead using modern methods. Invest in those areas which leads to it, like in education at all levels, all the way up to higher education.

Currently the people are not taxed enough in India where it matters, so people lock up their assets in gold and land. With the kind of property tax that is paid currently in desh one cannot ensure massa level quality of life or sustain it for long. What needs to be done is perhaps lower income taxes further, but increase property taxes for local infrastructure use.

NRIs invest in real estate in India not because it is cheaper to buy land there than in massa, but the taxes and maintenance costs are much lower there than in massa. Not to mention the current RoI is also large as the population base is large there and will remain so for some time.

SwamyG · Post by **SwamyG** » 03 Aug 2011 22:43

^^^
You cannot generalize all the reasons for buying in desh. If one wants to deepen the roots in desh, then that is one good way.

Suraj · Post by **Suraj** » 04 Aug 2011 00:56

Demographic dividend is not about population. It is about the worker:dependent ratio.

Bade · Post by **Bade** » 04 Aug 2011 01:16

Thanks for that crisp reply. So if we can replace workers with robots, then we can move all workers to the dependent side of the ratio. In that scenario the value of the ratio being low, due to increased dependents should not hurt as productivity gains from robots should compensate.

So a large number of workers is not critical for increased productivity and wealth generation. Decreasing the number of dependents in that changed scenario in the long term may not be bad at all or become inevitable slowly.

In the interim the ratio will look like (workers+robots):dependents and workers numbers being decreased constantly with time.

krisna · Post by **krisna** » 04 Aug 2011 01:28

The leaking PDS

This is the story of India’s Public Distribution System [PDS] as brought out by an Asian Development Bank Working Paper, How Can Food Subsidies Work Better? Answers from India and the Philippines [pdf here]. PDS aims to deliver highly subsidised food grains to the poor but the deserving poor received only 10% of intended benefits from the system. Nearly 19% of the subsidy goes to the non-poor, illegal diversion consumes 43% while the excess administrative expenses eat away the balance 28%.

Based on the draft submitted by the National Advisory Council, the empowered group of ministers on food has approved a draft Right to Food bill which will cost the government Rs 95,000 crore at current rates.

No state government is going to oppose this Right to Food bill, especially if the Centre is going to fund it fully. Firstly, popular and overt pro-poor policies make for good electoral politics in a developing country like India and a political party would have to be suicidal to oppose this plan. Secondly, fair price shops of the PDS are one of the biggest means of dispensing patronage for the political parties ruling the states. The greater the money pumped into the PDS, the greater is the opportunity provided to the ruling parties in the states to oblige their political agents by granting them licenses to run the fair price shops.

Does the NAC not know that 73% of wheat and 40% of rice under the PDS in India is illegally diverted? Stopping that pilferage should be its top-most priority if it genuinely wants to help the poor.

The NAC’s obsession with using the leaky PDS system when the pressing need is to improve the efficiency of the subsidy delivery system defies all logic. A case of perhaps what Einstein defined as “Insanity: doing the same thing over and over again and expecting different results”!
.

Suraj · Post by **Suraj** » 04 Aug 2011 01:37

Bade wrote:Thanks for that crisp reply. So if we can replace workers with robots, then we can move all workers to the dependent side of the ratio. In that scenario the value of the ratio being low, due to increased dependents should not hurt as productivity gains from robots should compensate.

So a large number of workers is not critical for increased productivity and wealth generation. Decreasing the number of dependents in that changed scenario in the long term may not be bad at all or become inevitable slowly.

In the interim the ratio will look like (workers+robots):dependents and workers numbers being decreased constantly with time.

Ah yes. And who makes the robots ? And if you say buy it from Japan, who creates the wealth to pay the Japanese for the robots ?

abhishek_sharma · Post by **abhishek_sharma** » 04 Aug 2011 01:40

Science magazine had a good article on population trends of different countries (including India).