Indian Economy: News and Discussion (Apr 1 2011)

[Austin]

India Inflation Persisting as Deficient Roads Conspire With Power Shortage

[Yogi_G]

There is talk of creating new roads and all, but no one seems to answer how to address the problem of expanding existing roads. 10 years ago, if we had moved to have major widened roads in the tier-II cities of then we could have seen even more growth. I drive 15 KMs every day through the East Coast Road (ECR) which is supposed to be a major road connecting Chennai and Pondicherry. It's a nightmare on this road with average speeds being 25-30 KMs. The alternative road, The Old Mahabalipuram Road (OMR) is even worse, they charge 35 rupees at toll for a half done road and this is supposed to be route 101 of Chennai's silicon valley. 6 lane road, 30 KMs average speed. No lane discipline, nothing and stray dogs are the order of the day.

a specific finance package with a court driven and monitored mandate to acquire land (forcibly) and widen roads and instill proper monitoring mechanisms in crucal roads across the country will surely drive up growth. but wat to do onlee, we r democracy onlee..we r like this onleee...

[gakakkad]

How come no ones began pissing and dissing the food security bill yet. Let me begin..

Seldon crisis for Yindia . Folks the Mayans were right - the world does end in 2012 ...

http://economictimes.indiatimes.com/opi ... 166320.cms

ET Now: The talking point this morning is the food security bill. Does it seem like the UPA government is losing the balance somewhat to say between populous measures as well as economically beneficial reforms at this point in time?

Jim Walker: I can only shake my head, the announcement about the food security bill. This really is not the time to be increasing the entitlement programmes in India. We have had NREGA, the rural employment guarantee act, we have had talk about the right to food, the right to education, the right to this, the right to that, but nobody has talked about how it is going to be paid for. And I am afraid that is what the rest of the world is concentrated on just now it is concentrated on governments who cannot afford to pay for the entitlements that they put in place. I do not know what the Indian government is doing. Has it been looking at all what was happening in Europe?

The European governments are in just deep-deep trouble because they failed to realise how badly the entitlements programmes are going to place their debt position over the course of the next few years. And India is going down exactly the same route. You will have thought they may do something, but instead we have got the food security bill that may worsen the entitlement programmes, may give the Congress a bit of chance in Uttar Pradesh. But I am afraid it is going to make foreign investors look at India and see this is not the place that we want to be.

ET Now: How much could the damage be for India's fiscal situation at a time when we in any case had a ballooning fiscal deficit? How much could it deteriorate because of the food security bill?

Jim Walker: The food security bill in itself probably would make it deteriorate that much, but it is just one additional entitlement programme, one additional increase in expenditure. We are going into a phase where economic growth in India is probably only going to be about 5% to 6% through fiscal year 2013 given the slowdown in investment. This already baked in a cake and a slowdown in exports is coming and as that takes place, I am afraid that the fiscal deficit is going to rise anyway.

So, a further programme which increases the deficit, we will be heading to 6% to 7% of GDP as a central government deficit over the course of the next 2 years, then add on 5% for state governments, then more for the electricity boards and all of a sudden, we have an Indian economy and an Indian position that looks probably the worst fiscal deficit in the world. That is just really not going to attract foreign investors and it is not going to attract Indian companies to invest again.

How come S&P has not threatened a downgrade yet? IMHO if the bill passes India should be given a category of its own . ie ZZZї . (yep thats right , a complex number) ..

UPA wants to burn the equivalent of 40K MW of elec generation capacity on this food inseurity bill , which will not lower the malnutrition levels any and will increase the corruption in PDS by 100k folds.


Abduls may sacrifice a goat and pray to allah almighty for the bill to somehow not pass and the NAC to STFU .

[vina]

This Govt NEEDS TO GO . They have been an ABSOLUTE and TOTAL disaster economy wise. They have shot themselves in the foot.

Bringing this "Food Safety Bill" without a single thought on how to fund it in perpetuity is the height of irresponsibility .

This is the classic bankrupt policy making that the St Stephens/DSE/ISE/JNU ding-dongs pushed in this country for 40 years with absolutely disastrous results .

Well, atleast THIS DU & DSE graduate (maybe her education in U.Washingthon and Princeton did her a world of good) a full tenured Harvard Prof at age 38, Prof Gita Gopinath .Food Security bill all about political gains disagrees with her fellow DU/DSE/Ding-Dongs and says it for what it is. I wonder what her husband, Iqbal Dhariwal, a fellow DSE graduate and IAS topper and now "professional poverty wallah, director of MIT's Poverty action center, in the hallowed traditions of Indian academics flogging the poverty horse for plum positions in the academia in the west" has to say about this though.

This is going to be an massive and perennial millstone around this country's necks . WE SIMPLY DO NOT HAVE THE FISCAL CAPABILITY TO PAY FOR THIS .

[Rahul M]

pandyan ji, he has the intellectual honesty of putting country before party, hopefully we can have such people across the political spectrum. so why the takleef ?

[Santosh]

L&T fears Navi Mumbai airport project may cost Rs 5000 cr more
"Navi Mumbai airport was moving reasonably well till the Land Acquisition Bill was introduced in Parliament. Now that has raised the expectation of farmers by 5-6 times. And if you go on that basis, no project will come up if the land cost itself is going up by Rs 5,000 crore," Naik told ET NOW.

And now this BS. Looks like congress government is shutting down all avenues of growth. The fiscal situation is such that there is nothing left for investment. Cash rich PSU's are being asked to offload their stash to gobermand khata. So no growth there. Private sector being the last resort of growth is being shutted out by making the cost of expansion prohibitive. How the hell can any development take place. We are in ghor kaliyug, our Dhritrastra rupi MMS is feigning ignorance while Shakuni rupi Sonia cavalcade is hell bent on taking Bharatvarsh down the drain with Eurozone. Where is our Krishna?

[Santosh]

Two years ago I would have glanced over this news with a smile, today amid deafening bad news it is a reason to rejoice.

TCS to set up new campus in Nagpur for Rs 600 crore

MUMBAI: The country's largest software exporter Tata Consultancy Services today said it will build a new software development unit in Maharashtra at an initial investment of Rs 600 crore, creating jobs for over 8,200 professionals.

Once the project is completed, the campus will accommodate 16,000 associates, the filing added.

[sum]

How come S&P has not threatened a downgrade yet? IMHO if the bill passes India should be given a category of its own . ie ZZZї . (yep thats right , a complex number) ..

UPA wants to burn the equivalent of 40K MW of elec generation capacity on this food inseurity bill , which will not lower the malnutrition levels any and will increase the corruption in PDS by 100k folds.

News flash today that Cabinet cleared the bill...so, fat chance of the bill becoming law within this session itself. is this the beginning of the end of the "India growing" story?

[Theo_Fidel]

Central government is rotten to the core.

All governments are rotten to the core. No exceptions. It is all a question of how much value you can extract out of them before complete paralysis.

[nandakumar]

I have slightly different take on the food security bill that the government has introduced. The BPL category of population would require about 42 million tonnes of food grains to support it. There is another 7 million tonnes needed to sustain a subsidised grain supply of a reduced quantity for those not in the BPL cateogry but nevertheless needing some financial support for their food budget.
The RBI data on procurement operations informs us that procurement is currently running at roughly 60 million tonnes. The Khariff procurement is already over and the Rabi procurement of last year (Usually between April and June) cumulatively gives us this number.
The same RBI data says that the stock is a little over 60 million tonnes. The build up of inventory in the last four years is close to 30 million tonnes. This means on a First In First Out (FIFO) basis at least half the stocks are more than four years old. Anyone familiar with the storage of food grains will know that storage beyond one year is virtually impossible. (Theo Fidel, your experrt assessment/confirmation is needed here). In India's case, by FCI's own admission only 25 million tonnes are stored in a covered silo which alone can permit of FIFO based offtake. (In covered silos fresh procurement is poured into the silo from the top and the tapping for distribution happens from the bottom). Open storage then is a sitting duck not only for rats to feast on but also one that is impossible to ensure an unidirectional flow of inventory. So there is every chance that a great majority of the stock is actually much older than four years. The quality of the food grain is therefore anybody's guess.
In every cycle of five to six years there is a huge outcry of rotting stocks of food grains in FCI godowns. In a calibrated move the Government says it is inviting tenders for export. Then 10 to 15 million tonnes of wheat and rice get sold in FCI tenders as cattle feed for export to South Korea and the like. Even then we get to hear sniggers from the South Koreans that they may not be fit for their cattle even.
I some times wonder if the whole process of procurement and distribution is charade barring a small quantity (10-12 million tonnes the current PDS offtake). Who then is to know that so much quantity was physically procured and eventually sold as cattle feed after five years. I know this sounds like scare mongering. But after 2G spectrum auction and Commonwealth games we now know that practically anything is possible.
Food Security Bill will force the Government to liquidate the stocks if they are actually procuring the stocks that they claim that they are doing.

[Yogi_G]

All cases where Sonia's PM did not show any b@lls (9/11, Sharm Al Sheikh) was swallowed up by us saying that the current govt is concentrating on economic growth and setting a strong foundation for future economic growth and any conflicts would come in the way. Now this no longer holds any water. The international rating agencies have every reason to downgrade our rating, when they can do it to unkil they can do it to us as well. No strong growth policies, no display of b@lls as well.

If every govt at center brings in policies which cater to their electoral prospects and not to the future of the nation then it casts doubts in the minds of the people on the very concept of elected governments.

[Singha]

if you look at it, almost every leader at central or state level is grooming and raising his family, relatives or close associates into positions of power after him. the jyotirajaditya scindias, sachin pilots, varun gandhis and omar abdullah's did not happen out of thin air...they were groomed from day1. even earlier we have the chautala's and ajit singhs.
at state level it is no better - either its the family enterprise of the great artiste, or the sons/daughters get into business and industry and become big shots in short time.

in that sense how different is it from the mughals after aurangzeb? their fitful writ did not run much beyond dilli and the ganga-jamuna doab stretching down to lucknow. rest of india was controlled by kings and warlords who paid some nominal name-only tribute to the 'great mughals' and did precisely whatever they wanted in their own zones. the env was one of economic decay and lack of improvement. afghans licked their lips and bided their time. society was in turmoil. european powers soon landed and played off one kingdom against another to first gain commercial and later military foothold.

[gakakkad]

>>I have slightly different take on the food security bill that the government has introduced. The BPL category of population would require about 42 million tonnes of food grains to support it. There is another 7 million tonnes needed to sustain a subsidised grain supply of a reduced quantity for those not in the BPL cateogry but nevertheless needing some financial support for their food budget.


A better solution would be , gov't quitting the business of food warehousing . BPLs (the number of which is grossly exaggerated to rationalize these commie loot schemes) can receive their food via discount coupons from store. That would save a lot of public money . The stores would be re-reimbursed the money discounted by the production of the coupons . The coupon would be for a fixed value of cash and will be redeemable for a variety of food. That would give the holder of the coupon option of what grains to buy with the discount coupon .

This is one of the many flaws of the FSB . The family has to buy rice , wheat and millet in a fixed quantity without having any options. Of course the other problems with the bill are far more gigantic . (Like for instance the selling price cannot be reviewed for a decade , I am sure that the 20 billion spend of year 1 of passage would magnify to 200 billion by the end of the decade ) .Theo will of course give a beter perspective on the logistics.

[gakakkad]

Well, atleast THIS DU & DSE graduate (maybe her education in U.Washingthon and Princeton did her a world of good) a full tenured Harvard Prof at age 38, Prof Gita Gopinath .Food Security bill all about political gains disagrees with her fellow DU/DSE/Ding-Dongs and says it for what it is. I wonder what her husband, Iqbal Dhariwal, a fellow DSE graduate and IAS topper and now "professional poverty wallah, director of MIT's Poverty action center, in the hallowed traditions of Indian academics flogging the poverty horse for plum positions in the academia in the west" has to say about this though.

[ot]

Gita Gopinath is a hot prof . How on earth does a capitalism minded hot Harvard prof , end up with a JNU type poverty mullah ? These JNU types seem to have some sort of love potion with them . One of my seniors in med school , was a real hot chick. Bright one too. Is now a practising pediatrician . married a sriram + JNU e-con wallah who looked atleast a decade older than her. the guy did not even seem the super rich type. Looked like the text-book jholawaala.

The guy iqbal may well be the biggest disgrace on MIT . far bigger than Ben Bernanke .
[/ot]

[RamaY]

if you look at it, almost every leader at central or state level is grooming and raising his family, relatives or close associates into positions of power after him. the jyotirajaditya scindias, sachin pilots, varun gandhis and omar abdullah's did not happen out of thin air...they were groomed from day1. even earlier we have the chautala's and ajit singhs.
at state level it is no better - either its the family enterprise of the great artiste, or the sons/daughters get into business and industry and become big shots in short time.

in that sense how different is it from the mughals after aurangzeb? their fitful writ did not run much beyond dilli and the ganga-jamuna doab stretching down to lucknow. rest of india was controlled by kings and warlords who paid some nominal name-only tribute to the 'great mughals' and did precisely whatever they wanted in their own zones. the env was one of economic decay and lack of improvement. afghans licked their lips and bided their time. society was in turmoil. european powers soon landed and played off one kingdom against another to first gain commercial and later military foothold.

This is a fact of life. Same with any other profession that can be carried over, example businesses and land ownership. If these things can be continued why not politics?

Only the professions that require modern education outside family influence can be made non-hereditary.

The Ancient Indians said, heck with it and made all trades/professions hereditary. The best form of reservation.

And people think that is backwardness.

[Theo_Fidel]

Nandakumar,

Not an expert here but it all depends on the Humidity level and maintenance of that humidity level. Temperature control is secondary. Procurement centers typically specify 12%-15% or so moisture level for Rice. The private traders pay higher price for lower humidity levels. It is the farmers responsibility to get it down to that level or procurement will not be done. Of course corruption always allows some bad apples through. There is no reason properly stored, un-husked, fumigated and dry air circulated rice can not last for 10 years+. Many western silo's are rated for 20 years. My grandmother had a dry attic storage where she had 8 year old rice rotated out constantly. Older rice tastes better esp. traditional varieties.

Northern India where Humidity can be low for long periods can store grain without too much spoilage. Monsoon is a challenge. Southern India does not have that advantage. But you are absolutely right that gunny bag type storage under plastic sheet is very very uncontrolled and spoilage is likely in less than 2-4 years.

My opinion on the Food Bill is that it is a way to make the majority of people depend on the government for their daily grain. These people are not starving right now even if there are occasionally difficult times. The food bill leaves the farmer and the consumer at the mercy of a corrupt and sclerotic government.
---------------------------------------------------

The problem with Nepotistic systems is guaranteed long term decline. Every new generation is worse than the previous one. Take a look at the Romans to see how bad it can get. Despite its horrible choices democracy allows some minimal churn within the system. As long as the Beta/Beti/Shrimati are functioning relatively well nothing wrong in it. People should always have the right to kick them out. That is where the problem has arisen historically. This is also the reason the Princeling is resisted, no way to kick the fool out.

[Supratik]

They are basically going back to the PDS schemes we used to have with all the leakages. The question is where are they going to get the money from and what about the logistics. But it will help them in 2014 elections just as loan waiver and NREGA helped in 2009.

[gakakkad]

^^ one never knows of the electoral outcomes. Tomorrow is the D-day . I hope the parliament does not function at all . Counting on team anna and BJP to ensure that the commie bill does not get passed . No one expected BJP to loose in 04. People were deserting the INC in droves. (noteworthy being Najma Heptullah , sangma being in talks etc). That lose was the worst thing that happened to India . Economy started accelerating in 02. By 04 almost 9% growth had been achieved . Fiscal deficit was brought down to 4 %.

The growth remained so in the UPA regime (they don't deserve the credit). In 09 UPA pocketed the benefits of NDAs good work . The growth in their period was due to the work of NDA. If NDA would have been re-elected Indian economy would have been double the present size. NREGA , OBC reservation etc would never have come into existence . Likewise , the nuclear deal too was negotiated in NDA regime. But MMS took the credit .

[chetak]

^^ one never knows of the electoral outcomes. Tomorrow is the D-day . I hope the parliament does not function at all . Counting on team anna and BJP to ensure that the commie bill does not get passed . No one expected BJP to loose in 04. People were deserting the INC in droves. (noteworthy being Najma Heptullah , sangma being in talks etc). That lose was the worst thing that happened to India . Economy started accelerating in 02. By 04 almost 9% growth had been achieved . Fiscal deficit was brought down to 4 %.

The growth remained so in the UPA regime (they don't deserve the credit). In 09 UPA pocketed the benefits of NDAs good work . The growth in their period was due to the work of NDA. If NDA would have been re-elected Indian economy would have been double the present size. NREGA , OBC reservation etc would never have come into existence . Likewise , the nuclear deal too was negotiated in NDA regime. But MMS took the credit .

Heard on twitter

With the NREGA, NAC and the foolish (in the present form) food security bill, the communal violence bill we are headed the North Korean way.

Only thing remaining is the installation of yuvraj as the fearless and dear leader and the peaceful abdication of the aging regent.

[Santosh]

BJP ruled states and Amma are my only hope now. We have quite sensible governments and CMs in Gujarat, MP, Bihar, Jharkhand and Chatisgarh. Amma needs to focus on development. Don't know when folks from UP, Andhra and Maharashtra will learn to vote for development over caste politics. More so in UP and Andhra. Maharashtra and Rajasthan IMO will determine if India can walk away from a crippling, despotic, communal, socialist leadership to a more forward looking one. Both have strong anti congraze opposition. Jai ho 2014.

[gakakkad]

IMHO , BJP has been poor at playing electoral politics. They lost Rajashthan narrowly . Reason was the gurjar-mina mess . (the mess was engineered by the CON party).

They are unable to market themselves. From my sources , I know that the RTI bill was enacted by the UPA with the hope of catching major corruption in the NDA. They intended to destroy bjp completely . (which they failed) . They found lot of irregularities at the clerical level and lower bureaucracy level. But nothing at the top (ministry level), The NDA was surprisingly clean. People may cite tehelka (which IMHO was a poorly carried out sting, with an malevolent intent ) or coffin scam . But I disagree with them . These days the con party state gov't have bigger and more sinister scams than the NDA centre did . In short the UPA was not able to find anything concrete against the NDA. When the NDA was in power , it played fair with the con party. The idiots even helped maino by not investigating the bofors scam .In 99 the public opinion against con was an all time low. If BJP wanted , they could have evicted maino from 10 janpath and arrested her for various reasons. sadly they did not.If it wanted , it could have destroyed the con party completely and cleanly. Sadly it never attempted such a thing. I hope , that the next time they come to power , CON party and commies are wiped out of the face of the nation.

[Theo_Fidel]

BJP ruled states and Amma are my only hope now.

Don't know about AMMA. She is in the midst what appears to have been an attempted Putsch. Governance is going to be the last thing on her mind for some time to come. She likes her vengeance hot, esp. when she is personally isolated. Look for some major fireworks in TN and skeletons to crawl out of her closet.

[Singha]

TN ministers are said to be a worried lot fearing a wholesale purge and A coming at them for misdeeds both real and imagined.

[Aditya_V]

Don't know about AMMA.

At least on this issue I support her.

Jayalalithaa opposes National Food Security Bill, says it is replete with confusion and inaccuracy

[Murugan]

gakakkad-ji

it is said that when CON is in power, parliament runs in electioneering mode always.

In con time

All the populist bills will be introduced when couple of elections will be around in state/s

All amendments will be introduced when Municipal Corporation elections are around

Subsidies will be offered around state/parliamentary elections

During this time:

Minorities will be shown quota carrot

Hindus and other dharmic institutions will be bashed

Modi will be at receiving end for one or another reason

Interest rates will be tweaked at the fag end of the parliamentary terms as per suitability.

Developement will be kicked hard. Ensures India never shines. Fooling of the people will go on. Divisions will be created to drive anti-national agenda in the garb of economic social development, e.g., senseless FDI bill or communal violence bill etc.

65 Years, not a single leader from CON has genuinely tried to unite people in the name of development except perhaps Rajiv Gandhi, who later on succumbed to minority appeasement politics of CON party

Need a mahaguru to teach better politics to these idiots.

[tejas]

Who are the idiots? The Kangress party or the people who continue to vote them into power after 60+ years of mis(non)-governance?

[Cosmo_R]

http://globalpublicsquare.blogs.cnn.com ... oken-bric/
"Last week marked exactly 10 years since the term BRIC was coined. The catchy acronym for Brazil, Russia, India and China used to describe the new powerhouse emerging markets. But the man who invented the moniker now says one of the four has been a great disappointment. No, not Russia, with all its recent troubles; not Brazil, whose economy contracted in the last quarter; and certainly not China, which continues to power on.

Goldman Sachs' Jim O'Neill says that the country that has been the biggest letdown has been India. He pointed out last week that India's inability to attract foreign investment could actually lead to a balance of payments crisis. From BRIC to basket case, "What in the World?" is going on?"



The party is coming to an end. The retail FDI fiasco was the last straw for foreign FDI

JMT

[chetak]

Don't know about AMMA.

At least on this issue I support her.

Jayalalithaa opposes National Food Security Bill, says it is replete with confusion and inaccuracy

True cost of Dynasty: Sonia sends us a Rs 5,45,000 cr bill

True cost of Dynasty: Sonia sends us a Rs 5,45,000 cr bill

R Jagannathan Dec 19, 2011


True cost of Dynasty: Sonia sends us a Rs 5,45,000 cr bill

Can India really afford dynastic politics of this irresponsible sort? Reuters

However, the damage caused by the FSB will be with us long after the UPA is gone. The Bill will result in the following dangers:

1) It will damage the exchequer and stoke inflation – causing the subsidy bill to go higher and higher every year, leading to a pile-up of debts. India will be Greece by 2014.

2) The huge procurement targets needed to feed 75 percent of rural households and 50 percent or urban ones will call for regular increases in food procurement prices. This will again feed inflation.

3) If the monsoon fails in any particular year, we will have to import grain. International food prices are already well above Indian levels. If we enter the market – which we have seldom done – prices will go through the roof. High imports will send the rupee crashing – raising prices again. This is a recipe for disaster.

4) High procurement means closing down three-fourths of the market system in grains since the government becomes a monopoly buyer everywhere.

5) Both poor and rich farmers will try to game the system. If the market gets you a price of Rs 20 a kg for rice, and you can get 35 kg of rice per family per month at Rs 3, who will not buy from the PDS and sell to the market? This is cash transfer by another name: graft will be the only result.

6) The massive bill of Rs 6,00,000 crore for the FSB over three years is essentially money down the drain. It works against the fundamental argument about teaching someone to fish as against feeding him indefinitely. It will create dependencies, when the amount could have been spent to create rural infrastructure to improve agricultural productivity, and incomes. What we have essentially done is consumed the seedcorn of the future by spending money to feed instead of investing in rural infrastructure.

Raghuram Rajan, who teaches at Chicago’s Booth School of Business, said the other day at a lecture organised by Business Standard that the root cause of poverty in India was poor rural productivity. But instead of raising productivity, Indian governments were busy offering palliatives through money transfer schemes like NREGA, higher support prices for food, and, now, the Food Security Bill. This can merely raise rural demand without improving agricultural productivity – causing inflation.

But with UPA-2 listen? Unlikely, for the government has just got its ears tweaked by Sonia Gandhi for delaying her Food Security Bill.

UPA-2 is hastening our tryst with economic disaster.

[gakakkad]

True cost of Dynasty: Sonia sends us a Rs 5,45,000 cr bill

True cost of Dynasty: Sonia sends us a Rs 5,45,000 cr bill

I gave the total 10 year estimate (2012-2022) at USD 6.4 Trillion a couple of pages earlier . Of course India would be bankrupt much before 2022 with the current policy . And this time around the GUBO would be much more massive that what was delivered in 91. Socialism will AoA become a gaali in India thereafter. But honestly speaking many people are quite terrified now. Sonia has the get her musharraf out of here.

[chetak]

True cost of Dynasty: Sonia sends us a Rs 5,45,000 cr bill

True cost of Dynasty: Sonia sends us a Rs 5,45,000 cr bill

I gave the total 10 year estimate (2012-2022) at USD 6.4 Trillion a couple of pages earlier . Of course India would be bankrupt much before 2022 with the current policy . And this time around the GUBO would be much more massive that what was delivered in 91. Socialism will AoA become a gaali in India thereafter. But honestly speaking many people are quite terrified now. Sonia has the get her musharraf out of here.

With the communal violence bill and the massive state enfeebling financial commitment in place irrevocably, it just makes fertile ground for planting the flag and harvesting of souls type of programs.

Watch next for huge cuts in defence spending, remember JLN saying that we don't need an army?

[gakakkad]

>>With the communal violence bill and the massive state enfeebling financial commitment in place irrevocably, it just makes fertile ground for planting the flag and harvesting of souls type of programs.

Watch next for huge cuts in defence spending, remember JLN saying that we don't need an army?


I fear , that I and my future generations will not be able to settle down in India . NAC and Sonia has single handedly succeeded in doing what China and TSP could not even dream of achieving . destroying india .my dads friends who are influential in politics have revealed some pretty nasty stuff going on. The next bill they are planning is to ban private practice of medicine and introduce universal healthcare. That will cause massive epidemics in India. No doctor who can flee the country will stay back . They want to single handedly transfer India into a communist state. reverse 20 yea of reforms. And destroy all opposition.

[Suraj]

Folks, please take all the rona dhona elsewhere; this thread doesn't gain much from professional mourning posts.

[Theo_Fidel]

Despite the doom and gloom we continue to grow. Exponentially at that.

GDP~

1998 - $400 Billion
2004 - $650 Billion
2010 - $1,700 Billion (1.7 Trillion)
2011 - $2,000 Billion (2 Trillion)

We will add another $200-$250 Billion in 2012 even at 6%-7%. This will be the dollar equivalent of entire India GDP of 1995! In one year.

Obviously we are still doing something right.

[nachiket]

We will add another $200-$250 Billion in 2012 even at 6%-7%. This will be the dollar equivalent of entire India GDP of 1995! In one year.

Obviously we are still doing something right.

Wouldn't the 10%+ inflation offset that growth to a large extent? Especially for the low income group who must spend most of their income on food?
It would be suicidal to take that growth for granted. New schemes increasing government expenditure even further seems to indicate that we are doing exactly that. To a layman like me it appears that the government must be banking on the expectation that the tax receipts will grow as the economy grows which can be used to bankroll their profligate schemes. If the growth and tax revenue increases slow down, they will no doubt take the easy way out and increase indirect and direct taxes and pass the burden on to the middle class.

[Theo_Fidel]

That $200 Billion increase is with a dollar inflation of 3%-4%. So yes already factored in. Our growth is calculated after inflation.

In rupee terms actual growth will be in the 15%-20% range with inflation of 8%-13%. GOI tax revenue increases are on top of this. Anything less than 20% tax revenue increase means tax dodging is going on. Last year for instance growth in rupee terms was 20%! Yes it is possible.

No one is taking growth for granted but the underpinnings of our growth story are largely independent of GOI now. If GOI improved we would grow a lot faster, -10%+ but that is vain hope right now...

BTW that Fareed Zakaria article has to be one of hte most empty headed demonstrations of jaw dropping manure I have read in a long time. Like FDI is going to save the nations growth rate. What kind of garbage is this. Undoubtedly commissioned for his western puppet masters. Imbecile!!

Also BTW tax in India is regressive in that the poor pay just as much in tax for GOI buffonery. As a proportion of their income it is a much bigger burden for them than it is for the middle class. Middle class typically receives a lot more in benefit than it contributes. Heres the sad chart, note the 9% for income tax, that says it all.

[Cosmo_R]

@Theo_Fidel ^^^:

"Like FDI is going to save the nations growth rate. What kind of garbage is this. Undoubtedly commissioned for his western puppet masters. Imbecile!!"

I am not an economist by training. You appear to be. From Samuelson 101, (very long time ago) I seem (vaguely) to recall that FDI is needed to balance the current account deficit. I also recall that in 1979 or so the PRC asking the Japanese invest $200bn (real money then) to fuel GDP which they did and fueled the Chinese growth.

I would like your take on how India can grow without FDI when it runs a merchandise trade deficit (oil) and a current account deficit and depends heavily on deposits by overseas Indians. FII 'investments' are flighty so where's the balance coming from? The INR can only go down so much before real inflation kicks in because of basic inputs (oil, fertilizer, petroleum products etc) rising in price.

There's no way I can think of short of additional borrowing from abroad to finance this. FDI is generally more stable than capital inflows.

As I said, I don't know. Perhaps there is a 'third way'. I'd appreciate guidance.

[Theo_Fidel]

Meant to say FDI in retail which is what Zakaria says if you had bothered to read the article. {edited}

We are growing because our savings/investment rate is ~35% of GDP or roughly $700 Billion annually. FDI is triffling next to this. Useful for the occasional technology not much more. We will do fine without it, much better with a lot lot more, but it would have to grow to $100 Billion before that happens.

[Prem]

http://online.wsj.com/article/SB1000142 ... lenews_wsj
India Revisits the '70s

The Indian economy hit choppy waters this year and investors fear it is about to get worse. Prime Minister Manmohan Singh's government has abandoned reforms, most spectacularly on foreign investment in retail this month. Some reassurance came from the central bank, which steadied the economy this year by fighting double-digit inflation. But that bit of stability is threatened after the Reserve Bank of India signaled Friday that it's about to give up the fight, too. Easy money is an easy response to flagging growth, but it's the wrong prescription. Mr. Subbarao seems to think he can trade off inflation in favor of growth, but the last 30 years of experience with priming the monetary pump—or even the last three—should have taught him that there is no such correlation in the long run. The RBI is now recapitulating this experience. After it kept credit too cheap in 2008-09, India is now stuck with inflation and slowing growth. If Mr. Subbarao doubles down in coming months, he risks even more monetary instability this time around, probably without helping the cause of growth. He would also then fritter away the gains made by tightening in the past year.Meanwhile, as the RBI's credibility dissipates, the rupee is being hammered against the dollar. In desperation, Mr. Subbarao has dug into his toolkit, liberalizing foreign inflows into government bonds and some banking deposits, which is good though not sufficient at the moment. More worryingly, he's tried to curb speculation by imposing new rules last week on currency derivatives. What the central bank needs to restore stability to the rupee is a mandate for price stability, ideally achieved by targeting the exchange rate. Instead Mr. Subbarao juggles multiple mandates, including promoting growth. Except growth at this point is being held back more by regulation, than by the cost of credit. India's policy makers may not admit it, but they are stumbling into stagflation. The right way out of this mess is for Mr. Singh to drive growth through reforms and for Mr. Subbarao to maintain stable prices. It's bad enough that India's prime minister appears to have abdicated his responsibility, but its central banker will make things worse if he tries to compensate for Mr. Singh's failings.

[Suraj]

Why is everyone running around with their pants on fire claiming FDI is falling off the cliff ? Here is some data:
Official FDI stats until Sept-2011 from DIPP/Commerce Ministry
FDI inflows between April-Sept 2011: $19.136 billion
Just for comparison, last year:
Official FDI stats until Sept-2010 from DIPP/Commerce Ministry
FDI inflows between April-Sept 2010: $11.005 billion
You can go back one more year further:
Official FDI stats until Sept-2009 from DIPP/Commerce Ministry
FDI inflows between April-Sept 2009: $15.312 billion
Or for 2008-09:
Official FDI stats until Sept-2008 from DIPP/Commerce Ministry
FDI inflows between April-Sept 2008: $17.210 billion

There's more than a little money changing hands behind all the words of an Indian FDI armageddon, particularly after a host of players recently had the door slammed in their faces thanks to the retail FDI fracas.

One would think at least ONE news outlet would mention that despite everything, the fiscal year so far has seen the highest ever FDI inflows in any fiscal H1 so far (exceeding even the pre-2008 crash zenith). But no, instead we see everyone talking of how we're headed for failed state status, returning to socialism etc

Since H2 typically sees higher inflows, it's not a gross exaggeration to estimate that annualized FDI inflows this year should still nudge $40 billion, despite the Walmart KLPD and all.

Fiscal year FDI inflows:
2009-10: $34.167B (link)
2010-11: $19.427B (link)
2011-12: $19.136B YTD

If anything, we've easily surmounted last years FDI blip. The tone of the news articles would seem to suggest this was late 2010, datawise. I'm yet to see a single article indicating this improvement in FDI inflows.

[James Blonde]

I for one am always upbeat about FDI in India everytime I see SG picture.
My only concern is only 9% comes from income tax into GOI kitty?