Indian Economy: News and Discussion (Apr 1 2011)

Virupaksha · Post by **Virupaksha** » 29 Oct 2011 01:57

Prasad wrote:If its private money, what goes my father? As long as tax moneys aren't used, it will live or die by the sword of public appeal/interest.

it is tax exempted apart from land benefits
http://economictimes.indiatimes.com/new ... 401360.cms

rohitvats · Post by **rohitvats** » 29 Oct 2011 02:18

What everyone forgets is the huge multiplier effect such developments have on the upstream and downstream industries - from small time contracts to labor to security guards etc. Everyone makes money. Government has taken money for the land...if it chooses to give indirect incentive by waving certain taxes, so be it. What is this nonsense about the game being elitist and all the associated BS? As if the x amount that I spend on the ticket came from someone elses pocket and not from my heard-work.

Stan_Savljevic · Post by **Stan_Savljevic** » 29 Oct 2011 02:28

Rohit, the multiplier argument was used for CWG and is used for AG/OG too. OG hosting is an unrewarding story, only LA in 84 made profits, that too barely. Sydney was a bit of a loss, Greece massive loss I think they are still reeling from some of those loans, beijing was a h&d dhamaka which went kaboom and the crow's nest

flew away. This despite much of the west planning well for post-games use of constructed infra.

Much of the infra built rots when there is no F1. So its essentially a one time boom for jobs etc. And there is no guarantee that there will be a F1 event in the coming years, it depends on the profitability as seen by the world body, not that it gets bestowed as a grant to the world's second largest nation. Many F1 circuits get thrown out very quickly. Outskirts of Madras (Irungattukottai) has been having a good (not F1 level) race track for looong (from the 70s) and Madras is the center for all things motorsportsy (Karun, Narain, Armaan Ebrahim, Karivaradhan, you can check the long laundry list). There is no guarantee that F1 crowd will swoon in Gurgaon, it has almost always been a flop show even in Madras. So there is no guarantee that spectator cash will recover opex, let alone capex.

PS: I am just saying caution is needed in evaluating the cost-benefits of such events to India. CWG was a massive bust in terms of moneys spent to egos massaged. Lets wait for the CAG report on this, there will definitely be one

.

rohitvats · Post by **rohitvats** » 29 Oct 2011 03:53

Stan Sir,

This one cannot be compared with CWG and OG. Those were state sponsored extravaganzas - this is a private set. And AFAIK, the land has been alloted at market rates. The only losses from state government POV are the concessions given in terms of excemptions. The money spent on land and infra is private, so skin off my back as a taxpayer. Let the market forces decide the longevity of this one. The main expense would be in terms of land cost - infra is generally a fraction of that.

Stan_Savljevic · Post by **Stan_Savljevic** » 29 Oct 2011 04:04

There is a lotta takleef from a lotta people such as PT Usha etc., on purely extraneous considerations. I too have takleef on F1 cos I am biased for hickey and no more

.

Ignoring those, I dont think we will know very quickly as to what the taxpayer indirectly contributed. The CAG is eagle eyes for these kindsa violations and as much as I used to hate them, they are a needed body in India. The UP audit for 2010-11 will be up in early 2012, so you will know. I am impressed by their nailing of the bipartisan thievery on behalf of the CWG. I will hold my horses and not form an opinion either way till I see some more info on F1.

vera_k · Post by **vera_k** » 29 Oct 2011 04:54

Virupaksha wrote:it is tax exempted apart from land benefits
http://economictimes.indiatimes.com/new ... 401360.cms

There should be a consistent policy, that is all. Which pretty much means that as long as cricket gets favourable tax treatment, all other sport events should be entitled to the same treatment.

Plus, what is with the Supreme Court wasting its time hearing trivial state tax issues? Shouldn't a matter of UP taxation end at the UP high court?

Stan_Savljevic · Post by **Stan_Savljevic** » 29 Oct 2011 22:01

vera_k wrote: There should be a consistent policy, that is all. Which pretty much means that as long as cricket gets favourable tax treatment, all other sport events should be entitled to the same treatment.

There is a big misunderstanding that all crikkit events get tax exemption, bilateral series dont get any exemption to my best knowledge. It will be spectacular if there are no consistent policies in India, much may be due to the lack of clear understanding of what the policies are. For example, (http://www.thehindu.com/news/national/a ... 591761.ece)

The income tax exemption was granted to the World Cup as it met criteria specified under Section 10(39) of the Income Tax Act 1961. To qualify for tax exemption, an event has to be recognised by a global body governing the sport, and more than two nations should take part in the event.

Some events need a sovereign/governmental guarantee of tax exemption before the world federation under whose auspices the event is conducted can allow India to host these events once the bid has been won. I remember seeing one such clause in the bid document for the Asian Games bid we lost and the CW Games we won. In the case of F-1, we dont know if tax exemption was sought on either of these grounds or other extraneous conditions.

Prem · Post by **Prem** » 30 Oct 2011 00:45

http://www.nationofchange.org/does-redi ... 1319818686
Jagidsh Bhagwati

Many on the left are suspicious of the idea that economic growth helps to reduce poverty in developing countries. They argue that growth-oriented policies seek to increase gross national product, not to ameliorate poverty, and that redistribution is the key to poverty reduction. These assertions, however, are not borne out by the evidence.Since the 1950’s, developmental economists have understood that growth in GNP is not synonymous with increased welfare. But, even prior to independence, India’s leaders saw growth as essential for reducing poverty and increasing social welfare. In economic terms, growth was an instrument, not a target – the means by which the true targets, like poverty reduction and the social advancement of the masses, would be achieved.
n almost willful ignorance of the fact that the growth-centered model has proved itself time and again, skeptics advocate an alternative “redistributive” developmental model, which they believe will have a greater impact on reducing poverty. Critics of the growth model argue that it is imperative to redistribute income and wealth as soon as possible. They claim that the Indian state of Kerala and the country of Bangladesh are examples where redistribution, rather than growth, has led to better outcomes for the poor than in the rest of India.Yet, as Columbia University economist Arvind Panagariya’s recent work shows, Kerala’s social statistics were better than those in the rest of the country even before it instituted its current redistributive model. Moreover, Kerala has profited immensely from remittances sent home by its émigré workers in the Middle East, a factor unrelated to its redistributive policy. As for Bangladesh, the United Nations’ Human Development Index, admittedly a problematic source, ranks it below India.At the same time – and more importantly – the poor need greater access to education in order to increase their economic opportunities and social mobility. “Less excess and more access” must become the principle that guides development policy

vera_k · Post by **vera_k** » 30 Oct 2011 02:57

Stan_Savljevic wrote:There is a big misunderstanding that all crikkit events get tax exemption, bilateral series dont get any exemption to my best knowledge. It will be spectacular if there are no consistent policies in India, much may be due to the lack of clear understanding of what the policies are.

Oh come on! Sports taxation is administered as if it were a banana republic, particularly when it comes to treating cricket and cricketers differently.

For example -

In a report placed before the Lok Sabha on Tuesday, the Standing Committee on Finance said the income tax (IT) department had been "very lenient" with the Board of Control for Cricket in India (BCCI), and sought a consistent policy to ensure that high-profile events such as the Indian Premier League (IPL) come into the tax net.

Standing Committee on Finance questions Rs 45 crore tax exemption to ICC

SwamyG · Post by **SwamyG** » 30 Oct 2011 22:11

Among the NRI naysayers of Indian growth, are one set of people who point how all the growth in India is JUST because of IT/BPO. They almost portray the picture of India in an ICU with the USA and Western Europe providing life support. Well I might be exaggerating, but some fringe elements sometime go to that extent. I repeatedly use opportunities to point out that IT exports do not contribute, in a major way, to the India growth story. I do not know belittle Indian IT accomplishments.

So here is some data, from almost-horse-mouth. It is from NASSCOM.

Key Highlights
* The IT-BPO sector in India is estimated to aggregate revenues of USD 88.1 billion in FY2011, with the IT software and services sector (excluding hardware) accounting for USD 76.1 billion of revenues.
* During FY 2011 direct employment is expected to reach nearly 2.5 million, an addition of 240,000 employees, while indirect job creation is estimated at 8.3 million.
* As a proportion of national GDP, the sector revenues have grown from 1.2 per cent in FY1998 to an estimated 6.4 per cent in FY 2011.
* The share of IT-BPO industry in the total Indian exports (merchandise plus services) increased from less than 4 per cent in FY1998 to 26 per cent in FY2011.
* Export revenues (including Hardware) estimated to reach USD 59.4 billion in FY2011; Domestic revenues (including Hardware) of about USD 28.8 billion; total industry estimated to reach USD 88.1 billion
* Software and services revenues (excluding Hardware), comprising over 86 per cent of the total industry revenues, expected to post USD 76.1 billion in FY2011; estimated growth of about 19.1 per cent over FY2010
* The upbeat domestic IT-BPO spending trend will continue in FY2012 as the industry is expected to grow at 16 per cent to reach USD 20 billion.
* IT spending expected to significantly increase in verticals like automotive and healthcare while the government, with its focus on e-governance, will continue to be a major spender.

Pratyush · Post by **Pratyush** » 01 Nov 2011 10:35

Plan B is to mug cash-rich PSUs if disinvestment fails

Pratyush · Post by **Pratyush** » 01 Nov 2011 10:48

India’s fiscal deficit killing hopes of economic recovery

The GOI, is doing every thing that it can to make sure the Yuvraj can become the PM. By indulging in all sorts of harebrained schemes without conduction further administrative reforms.

Aditya_V · Post by **Aditya_V** » 01 Nov 2011 11:37

Pratyush wrote:India’s fiscal deficit killing hopes of economic recovery

The GOI, is doing every thing that it can to make sure the Yuvraj can become the PM. By indulging in all sorts of harebrained schemes without conduction further administrative reforms.

In a way its good, the powerful industrialists who made a killing in UPA-1 thought this is the future will now realise that UPA is bad news. As if business men think this government damages them, the tide will turn and slowly media outlets will become anti-dynasty.

But first they need a shock treatment to see the consequences of the Govt. they have supported. A govt. which will not undertake Parakam type steps which will harm thier interests, so they thought. But soon everybody, domestic and international interests will realise that a Government with short sighted looking for just self preservation above national interest is not good news for anybody.

P.S- its not MNERGA which caused this but the wholesale looting of the treasury by Politicos and beauracrats.

Meanwhile

Fuel retailers pushing for Rs 1.82/litre petrol hike

While Moped owners, 100CC bikers will now pay Rs. 75 per litre for petrol, Rich Politicos /Businessman will Zip around in Audi's and BMW's etc. equipped with Diesel engines. What to say, such is the way GOI functions.

Vipul · Post by **Vipul** » 01 Nov 2011 21:46

Exports up 36% in Sep to $25 bn.

Theo_Fidel · Post by **Theo_Fidel** » 01 Nov 2011 23:05

The coal disaster continues...

Prem · Post by **Prem** » 01 Nov 2011 23:46

http://www.businessweek.com/news/2011-1 ... eases.html
India Manufacturing Quickens, Weathers Record Rate Increases

Nov. 1 (Bloomberg) -- India’s manufacturing accelerated in October, a sign the economy is weathering record interest-rate increases and a faltering global recovery.The Purchasing Managers’ Index rose to 52 from 50.4 in September, HSBC Holdings Plc and Markit Economics said in an e- mailed statement today. Readings above 50 indicate expansion.The Reserve Bank of India last week signaled it’s nearing the end of monetary tightening after it raised rates for the 13th time since mid-March 2010, seeking to support growth as Europe’s debt crisis clouds the outlook for exports. In China, a manufacturing index dropped to the lowest level since February 2009, bolstering the case for fiscal or monetary loosening.“Indian manufacturing bounced back on resilient domestic demand, but is still expanding at a historically slow pace,” said Leif Eskesen, a Singapore-based economist at HSBC.The yield on the 7.80 percent government bond due April 2021 climbed 7 basis points, or 0.07 percentage point, to 8.95 percent as of 12:09 p.m. in Mumbai. The BSE India Sensitive Index fell 0.8 percent. The rupee weakened 0.7 percent to 49.05 against the dollar.Governor Duvvuri Subbarao has increased the central bank’s repurchase rate by 375 basis points since mid-March 2010 to tame inflation that has exceeded 9 percent since the start of December. That’s the fastest round of increases since the central bank was established in 1935, Bloomberg data show. The repurchase rate is 8.5 percent.
Capital Expansion“
The high interest rates may lead to delays or deferment of capital expansion plans,” Ravi Sud, chief financial officer at Hero MotoCorp Ltd., India’s largest motorcycle maker, said on Oct. 25. “Down the line, when inflation is under control, and global factors such as the European situation become normal and when the industry starts to grow, there may be a capacity shortage.”Inflation in India is being stoked by higher food and fuel costs and the rupee, which has weakened 8.7 percent since Jan. 1, the worst performer in Asia.The government’s “large” budget deficit has also been an “important source” of demand pressure, the central bank said Oct. 25. India’s budget shortfall in the six months through September was 70.8 percent of the annual goal, the Controller General of Accounts said yesterday.

Pratyush · Post by **Pratyush** » 02 Nov 2011 12:44

How clueless can you be Mr PM. Indian prosperity lies in generating 250 million sustainable jobs in India. Not on what happens outside the country. That is just a side show.

In Europe’s prosperity lies India’s prosperity: PM

Instead on aiming of becoming so large that the world follows us. This GOI, will let us remain followers for ever.

abhischekcc · Post by **abhischekcc** » 02 Nov 2011 14:34

Every time the Dhakkan of Delhi opens his mouth, he shows how clueless he is. Wish we had Shastri at this time.

Suraj · Post by **Suraj** » 03 Nov 2011 01:02

Folks, please avoid political rhetoric against personalities here. There's clearly a vested interest on everyone's part to see that the Europe issues sort themselves out with the least pain, and MMS is just doing his part to say so. Catastrophic economic recession in Europe *will* have worldwide repercussions; they are, as far as I can recall, our largest trading partner. Similar messages have come from others for the same reason.

Prem · Post by **Prem** » 03 Nov 2011 03:45

A Look At Why India's Luxury Market Is Exploding
http://www.businessinsider.com/indian-l ... z1caZCcnFn

During the past year, the Indian luxury market has grown 20 percent, with the most growth among luxury products, according to a new report from global consultant management firm AT Kearney (via AFP).
The jewelry, electronics, fine dining, and cars sectors have jumped the most, growing between 30% and 40% in the past year. Apparel, accessories, wine and spirits have continued a steady growth rate of around 25% to 30%.Overall, the country's luxury market reached $5.75 billion in 2010, including goods and services, the report said.The report said it expects growth in the luxury sector to continue as the space grows and the impression remains that India will be largely insulated from the turmoil in the global financial markets.
One major change in India's luxury market is that goods and services are no longer confined to the major cities of Delhi, Mumbai and Bangalore. Today, secondary cities like Chennai, Hyderabad and Pune collectively have more than 30 stores in luxury apparel, accessories, watches and personal care combined.Consumers have also become more conscious of global trends, and less focused on logo-driven brands.Digital media has also played an increasingly important role in high-end markets, the report said.Challenges, of course, remain. There's still relatively little "Indianization" of luxury goods, though there have been some attempts, like a line of saris announced by Hermes earlier this year. And "domestic production of luxury goods needs to be attempted," the report said.

Aditya_V · Post by **Aditya_V** » 03 Nov 2011 12:43

[quote=http://timesofindia.indiatimes.com/indi ... 587319.cms] Singur was a mistake,says Prakash Karat [/quote]

i.e Development is a mistake.

Basically as per left thinking people, it is to thier advantage if significant % of Indians are poor and Indians are self flagelating themselves. While they Jet set, take month long holidays in Switzerland and party in 5 star hotels. Sometimes I wonder is there a difference between India's leftist elite and Rape.

Here is a man condemning one of the few good steps the left has ever undertaken.

Pratyush · Post by **Pratyush** » 03 Nov 2011 15:44

^^^

Reading the article, purely in the interest of fairness. It is not clear to me that he is condemning the effort made by the left govt. It seems that he is condemning the choice of the location it self during the time line in which the decision was made and the circumstances which developed as a result of the choice made by the left. Because politically the ground was controlled by the TMC.

PS; the comment made by him is in context of a larger discussion between Guha and himself and I have not seen the original comments of either of the authors.

Theo_Fidel · Post by **Theo_Fidel** » 03 Nov 2011 23:35

In retrospect the Left government simply did not have the political capital to push through Singur. There are certain places areas one walks on egg shells and expends lots of political capital to get things done. The Left government was deeply unpopular already when it attempted to brush off the protestors. It paid the price in Singur and in the State Capital ultimately.

I suspect if DIDI tried to push through the project now it would go a lot smoother. Not that she would even dream of doing so... ..still state government still owns the land... ..so..

Theo_Fidel · Post by **Theo_Fidel** » 03 Nov 2011 23:47

BTW.. ..this is why things like F-1 are conducted despite being a poor country. A cautious one finger salute to Mayawati as well. Despite the numerous scams, seems she has toned down some of her excesses and is at least thinking a bit on governance. UP seems to have numerous ongoing projects and kidnapping/security problem has been much improved. Hope it gets better. Industrializing UP would be best thing to happen to India.
-------------------------------------------------
http://www.thehindubusinessline.com/opi ... epage=true

One way to explain the above divergent experiences would be to showcase India's private sector, which today has proved its ability to efficiently execute large infrastructure projects and events such as the F-1 Grand Prix. The comparison with sloppy government undertakings and sporting bodies headed by venal politicians couldn't be more obvious (though, the CWG also provides a case of taxpayers' money lining private pockets). While the credit to the F-1 show's success goes largely to its promoter in India – the Jaypee Group – one cannot also ignore the role played by the Uttar Pradesh (UP) Government under Ms Mayawati. The BIC track is part of the 2,500-odd hectares of land, for which Jaypee was granted property development rights in exchange for funding the construction of a 165-km six-lane expressway from Noida to Agra. If that — a road project of this scale awarded by a State Government without any Central involvement — was a bold gamble in itself, the hosting of the Indian Grand Prix was no less so, being a virtual joint venture between the Jaypee Group and Ms Mayawati's administration. This was best underlined by the absence of the Union Sports Minister, Mr Ajay Maken, at the inauguration ceremony.

-----------------------------------------------------------
Trifurcation of UP now seems inevitable.

http://www.tehelka.com/story_main50.asp ... radesh.asp

Uttar Pradesh Chief Minister Mayawati is all set to bring a resolution in State Assembly seeking trifurcation of the state into Bundelkhand, Harit Pradesh (West UP) and Poorvanchal Pradesh (East UP).

The state Cabinet, which met here on Thursday, has endorsed the proposal for convening the winter session of the Legislature from 21 November. UP has a bicameral Legislature which includes State Assembly and the Legislative Council. This is likely to be the last session of the Legislature as UP goes to Assembly polls in early 2012. The 16th or the next Assembly has to be constituted by 13 May, 2012.

The state Cabinet, which met here on Thursday, has endorsed the proposal for convening the winter session of the Legislature from 21 November. UP has a bicameral Legislature which includes State Assembly and the Legislative Council. This is likely to be the last session of the Legislature as UP goes to Assembly polls in early 2012. The 16th or the next Assembly has to be constituted by 13 May, 2012.

Pratyush · Post by **Pratyush** » 04 Nov 2011 12:19

Gates is right and Manmohan wrong on global Tobin tax

Rahul M · Post by **Rahul M** » 04 Nov 2011 15:34

Theo_Fidel wrote: I suspect if DIDI tried to push through the project now it would go a lot smoother. Not that she would even dream of doing so... ..still state government still owns the land... ..so..

she is already doing it for railways. compensation paid for the land acquired for a new line has been refused by more than 50% of the owners.

as for singur, the location was a bad choice on a matter of principle, you do not need to build industry on land that returns 3 crops a year, given our ever increasing food requirements. there is enough barren land in WB that would have served just as well.

Prem · Post by **Prem** » 06 Nov 2011 01:48

India's financial sector priorities to remain unchanged: Manmohan Singh

CANNES: Against the backdrop of the battle against the sovereign debt crisis in the Eurozone, Prime Minister Manmohan Singh has said there will be no change in India's financial sector priorities to sustain high rates of economic growth."Financial inclusion, provision of long-term funding instruments for infrastructure, the development of liquid bond markets to improve monetary policy transmission, among others, were financial sector priorities in India before the crisis," Singh said in his intervention at the Summit of world's leading 20 economies yesterday."Nothing has happened in Indian financial markets or globally that warrants changing these priorities. We need to be sure that the regulatory reforms being introduced globally will not hamper this process," he added.

http://articles.economictimes.indiatime ... an-economy

shyam · Post by **shyam** » 06 Nov 2011 03:19

Pratyush wrote:Gates is right and Manmohan wrong on global Tobin tax

This article is crap. The author is deliberately mixing the fraud and in wall street and subsequent events with Government of India decisions. Unlike in western world, Reserve Bank of India is a GoI institution. So far they have made decisions that averted crisis in India.

Prem · Post by **Prem** » 06 Nov 2011 09:55

Tata Said to Consider Bidding for Australian Miner New Hope
http://www.businessweek.com/news/2011-1 ... -hope.html

Nov. 4 (Bloomberg) -- Tata, India’s largest business group, may bid for New Hope Corp., the Australian company valued at A$4.9 billion ($5.1 billion), to secure thermal-coal mines, three people familiar with the plan said.Tata Steel Ltd., India’s largest producer of the alloy, and Tata Power Ltd. may jointly make an offer for Ipswich, Queensland-based New Hope, said the people, declining to be identified because discussions are at an early stage. Both Tata Steel and Tata Power require coal to run their plants.New Hope, which has no debt and A$1.67 billion in cash, operates the Acland coal mine and an export terminal, making it attractive for power producers in China and India. A buyout of New Hope could be the largest coal deal since U.S. based Alpha Natural Resources Inc. agreed to buy Massey Energy Co. for about $7.1 billion in January.“There’s a rush for coal assets as companies look to hedge commodity risk and expect prices to rise sharply in the coming years,” said Alex Mathews, head of research at Geojit BNP Paribas Financial Services Ltd. in Kollam in southern India

Singha · Post by **Singha** » 07 Nov 2011 08:21

Nod for rapid transit system in three NCR corridors
IANS India Private LimitedBy Indo Asian News Service | IANS – 12 hours ago

New Delhi, Nov 6 (IANS) The central government has given 'in principle' approval to a Regional Rapid Transit System (RRTS) in three important corridors of National Capital Region (NCR) -- Delhi-Gurgaon-Alwar, Delhi-Sonepat-Panipat and Delhi-Ghaziabad-Meerut -- to provide high speed connectivity of these burgeoning urban centres with the national capital.

According to an official press statement Sunday, union Urban Development Minister Kamal Nath gave in-principle to the concept and asked the NCR Planning Board(NCRPB) to explore innovative funding mechanisms like monetisation of land and the public private partnership model for implementing the capital-intensive projects.

He also said RRTS should be integrated with the Delhi Metro.

The minister, who is chairman of the NCRPB, said high speed connectivity between the regional centres of NCR and Delhi will make physical distance shorter and allow these regional towns to capture the economic impulse and density generated by Delhi.

This faster connectivity will reduce pressure on national capital's infrastructure by opening up the regional housing market, he added.

The minister said that to achieve the rationale of NCR, it would be necessary to focus on the sub-urbanisation and infrastructure development outside Delhi to enable the neighbouring towns to absorb the load on the capital's resources.

member_20134 · Post by **member_20134** » 07 Nov 2011 12:23

Inflation in India to 'drop considerably' by March 2012: Nomura

vina · Post by **vina** » 08 Nov 2011 12:32

Hmm. There is a news report in the TOI(let) that thanks to high growth in Bihar, the net migration rate has dropped considerably and it is very difficult to find cheap labor in construction , farming and other unskilled work in other parts of the country.

This is the most heart warming news I have seen in a long long time. Nitish Kumar has worked wonders in Bihar and I hope he stays on for another decade atleast and fixes Bihar and sets it firmly and irreversibly on the road to progress.

If only that buffoon who ruled earlier for a decade and a half had atleast half a better vision than some random caste politics without any broader aim (mind you, that Social Engg was applauded by the JNU ding dings and other social "science" idiots in Dilli and it's cottage industry of intellectual scofflaws as the ideal and a necessary "churning"), things could have been so much better without the attendant collapse.

I think it is apposite that Nitish's stars are flying high while Laloo is in the dog house. May both remain where they are forever. It is their "Karma".

Aditya_V · Post by **Aditya_V** » 08 Nov 2011 12:55

vina wrote:Hmm. There is a news report in the TOI(let) that thanks to high growth in Bihar, the net migration rate has dropped considerably and it is very difficult to find cheap labor in construction , farming and other unskilled work in other parts of the country.

This is the most heart warming news I have seen in a long long time. Nitish Kumar has worked wonders in Bihar and I hope he stays on for another decade atleast and fixes Bihar and sets it firmly and irreversibly on the road to progress.

If only that buffoon who ruled earlier for a decade and a half had atleast half a better vision than some random caste politics without any broader aim (mind you, that Social Engg was applauded by the JNU ding dings and other social "science" idiots in Dilli and it's cottage industry of intellectual scofflaws as the ideal and a necessary "churning"), things could have been so much better without the attendant collapse.

I think it is apposite that Nitish's stars are flying high while Laloo is in the dog house. May both remain where they are forever. It is their "Karma".

The Buffon was then applauded by the JNU ding dings and other social "science" idiots in Dilli and it's cottage industry of intellectual scofflaws while he went an messed up the Indian Railways.

Nihat · Post by **Nihat** » 08 Nov 2011 14:23

"The Buffon of Bihar" - nice way to remember Lalu by.

vera_k · Post by **vera_k** » 08 Nov 2011 21:51

The news about economic growth in Bihar underlines how the governing procedures and institutions are in need of serious reform. That reform should be accomplished to prevent a return to the status quo after leaders like Modi and Nitish demit office.

Muppalla · Post by **Muppalla** » 08 Nov 2011 22:29

Too much spin goes around the labor market in India. Yes there is an artificial shortage and it has become expensive. Just drop the damn Mahatma Gandhi National Rural Employment Gurantee Act (MGNREGA). It will save a lot of money for the government and will reduce the cost of labor in India. It will inturn reduce the inflation too.

This correction is badly needed but will not be done for political reason. IMO rest is all hotair discuss about labor market.

Neshant · Post by **Neshant** » 09 Nov 2011 01:21

i don't think its labor costs causing the inflation.

rather its commodity costs and massive money printing to hold down the value of the rupee.

inflation is always a monetary event.

Pratyush · Post by **Pratyush** » 09 Nov 2011 10:58

Ok......

To the economists on the thread.

The GOI has announced the over the next 10 - 20 years they intend to generate

100 million manufacturing Jobs
25 million jobs in the tourism sector.

What effect will such a stimulus have on the Inflation and the already chocked Infrastructure & raw materials supply conduction in the country.

Pratyush · Post by **Pratyush** » 09 Nov 2011 11:22

The GOI needs a kick in its butt for not going forward with reforms. I hope that this step is merely the first one.

Moody’s downgrades India’s banking outlook

vina · Post by **vina** » 09 Nov 2011 11:34

Hmm. By all objective accounts, it seems like that UPA-II have run the economy into the ground. I have kept saying this forum that the UPA-II budgeting is a "Hail Mary" exercise which will work ONLY when all the ducks line up and line up perfectly.

They committed to huge inflationary spending programs, much of it wasteful and faced a deteriorating macro econ and external situation and now it is coming to bite them in the ass.

The stage was set when the doofus Mani Shankar Aiyar was the petroleum minister and the oil prices started to rise. That was the right time to bite the bullet and decontrol oil prices , putting a natural cap on demand rise and leading to demand destruction. But no, the tried and tested impulse of thinking of 'managing the rise' as a "temporary" phenomenon saw the issuance of the tired old oil bonds .. Next to no reforms in the power sector in terms of price decontrol, all this sees India spend a ridiculous 9% to 10% of it's budget on energy subsidy!

Now that there is zero fiscal wiggle room and the the old adage of "Markets may be irrational, but they can remain irrational longer than you can be solvent" has come true and crude remaining at very high levels (Brent above $115), and exports stagnating , imports exploding (weaker rupee , oil imports becoming expensive and trade deficit with China reaching unsustainable levels), the govt is caught in a trap with widening fiscal deficit and current account deficit and weak capital flows.

This so called "Economic dream team", has made piss poor decisions economically , driven by hope rather and political strategy to pump in populist subsidies, rather than any clear longer term constructive economic program. It is a shame really,the govt has driven the macro economy to near shambles (expect the govt to revise the fiscal deficit upwards in the mid term ) and it is caught in a populist cleft stick of trying to increase energy prices massively in one go to make up for mounting deficits, all the while the "holy cow" of the "National Advisory Council" programs of Rajmata remain untouched and sacrosanct.

The only thing this UPA-II will be remembered for will be for being the most venal and corrupt govt this country has seen till date. It is a shame though. MMS stood up for the nuke deal and got it done, he showed some spine. If only he had shown the spine to push through a reform program in the untouched areas and taken it forward, we would have been in far better shape. But no, the reform agenda is in cold storage.

Oh, well. In India things happen only if there is a crisis. So maybe, that is exactly what the doctor ordered and it will only be a macro crisis that will force Dr MMS' govt to do the right things.