Indian Economy: News and Discussion (Apr 1 2011)

nawabs · Post by **nawabs** » 30 Mar 2012 12:48

Green clearance for Posco, India's biggest FDI, scrapped

http://www.hindustantimes.com/India-new ... 32907.aspx

The National Green Tribunal on Friday suspended the Jan 2011 environmental clearance to Posco's mega steel project in Orissa. The tribunal has slammed the environment ministry for the way the clearance was provided. It has also asked the Ministry of Environment and Forest (MoEF) to review it afresh.

The cancellation of the environmental permission for the Posco project, the biggest FDI investment in India, comes after Prime Minister Manmohan Singh assured South Koreans their "investment" was safe.

"Investment from Korea is a priority for India," Singh said in Seoul on Monday. "We will take pro-active steps to address investor grievances and improve the business climate in the country. I urge Korean industry to have faith in India," he said.

Hari Seldon · Post by **Hari Seldon** » 30 Mar 2012 19:05

Suraj wrote:I don't understand what 'rolling back reforms' even means. What exactly does it entail ? Who goes about it and how ?

I interpret it as the state crowding out the private sector from different areas of economic activity using a variety of means - green clearances, regulatory requirements, inspection raj and such.

The tendency of the state to use its discretion in economic matters has gotten worse of late, especially under UPA II with the red bogey gone.

gakakkad · Post by **gakakkad** » 30 Mar 2012 20:22

this gov't has set us back by 2-3 years at least..

Vipul · Post by **Vipul** » 30 Mar 2012 20:59

who would give weightage to or take MMS seriously? He has just last week in Korea promised POSCO that he will ensure the project work starts by June.
(Con)grass is a bunch of jokers on a agenda/mission to screw India.

svinayak · Post by **svinayak** » 31 Mar 2012 01:02

Suraj wrote:
Various WSJ/Economist and other articles about the topic should be seen for what they are - western efforts to mould and influence policymaking in their favor.

This is the right way to look at it. Now the international MNC world has fragmented. They are trying to gang up together to force India to change its laws in their favor.
Indian foreign relations have to march side by side with the MNC favors and business.
MNC want all the business favor but there is nothing in the foreign relations front with that country. Then this is really a trap for India.

Suraj · Post by **Suraj** » 31 Mar 2012 02:18

Hari Seldon wrote:I interpret it as the state crowding out the private sector from different areas of economic activity using a variety of means - green clearances, regulatory requirements, inspection raj and such.

The tendency of the state to use its discretion in economic matters has gotten worse of late, especially under UPA II with the red bogey gone.

Interesting perspective. With respective to POSCO itself though, I'd like to say the project has become more a talisman than anything now. Let's look at it numerically: at the time of initiation in 2005 it was a $12 billion project proposal in a ~$800B economy when investment/GDP was about 29-30%, i.e. the proposed figure was 5% of annual investment by the economy. Today it's a $12 billion proposal (in progress) in a $2T economy with ~32-33% investment/GDP, or ~1.8% of what's being invested annually. Yes, the whole saga is a political minefield, but in concrete terms, much is actually happening on the ground, regardless of the political statis of this administration. And yes, the problems begin with a leader who lacks sufficient standing or assertiveness within his administration.

Prem · Post by **Prem** » 31 Mar 2012 02:26

Acharya wrote:
Suraj wrote:
Various WSJ/Economist and other articles about the topic should be seen for what they are - western efforts to mould and influence policymaking in their favor.

I thought they have learned the lesson witn Enron.

Ambar · Post by **Ambar** » 31 Mar 2012 07:32

Suraj wrote:
Hari Seldon wrote:I interpret it as the state crowding out the private sector from different areas of economic activity using a variety of means - green clearances, regulatory requirements, inspection raj and such.

The tendency of the state to use its discretion in economic matters has gotten worse of late, especially under UPA II with the red bogey gone.
Interesting perspective. With respective to POSCO itself though, I'd like to say the project has become more a talisman than anything now. Let's look at it numerically: at the time of initiation in 2005 it was a $12 billion project proposal in a ~$800B economy when investment/GDP was about 29-30%, i.e. the proposed figure was 5% of annual investment by the economy. Today it's a $12 billion proposal (in progress) in a $2T economy with ~32-33% investment/GDP, or ~1.8% of what's being invested annually. Yes, the whole saga is a political minefield, but in concrete terms, much is actually happening on the ground, regardless of the political statis of this administration. And yes, the problems begin with a leader who lacks sufficient standing or assertiveness within his administration.

That loss of ~2% investment/GDP cannot be seen as an isolated event. It will trickle down to other sectors/other investors who'll have second thoughts about investing in a country with such glorious uncertainties. Hyundai Motors plant in India is their second largest export & manufacturing base in the world after Korea,.If we have situations like POSCO or closer to Hyundai's home,Kudankulam, it is obvious that they'll think twice before expanding their operations. Cannot be good in long term. Toyota's woes in Karnataka spooked auto MNCs that they all chose TN,GJ or even MH as a better choice. Similarly if we keep spooking investors, someday they may think Indonesia,Phillipines or Vietnam to be a better place to set up factories in.

vera_k · Post by **vera_k** » 31 Mar 2012 07:38

When is the next BoP crisis expected?

Singha · Post by **Singha** » 31 Mar 2012 10:09

what is the charter, legal status vs Env ministry and the composition of this National Green Tribunal ? I had never heard of it until today. the name itself smacks of soviet union type nomenclature.

http://en.wikipedia.org/wiki/National_G ... ibunal_Act

nawabs · Post by **nawabs** » 31 Mar 2012 10:45

The members of the tribunal are:
Judicial Members:
Justice L.S. Panta, Former Judge of the Supreme Court as Chairperson
Justice M.N. Krishnan,Formers Judge at Kerala High Court
Justice A. Suryanarayan Naidu,Former Judge at Orissa High Court
Justice C. Venkata Ramulu,Former Judge at Andhra Pradesh High Court
Expert Members:
Prof. R. Nagendram Environment Faculty,Anna University
Dr. Devendra Kumar Agarwal
Vijai Sharma Retd. Secretary Ministry of Environment and Forests
Dr. Gopal Krishna Pandey

The Tribunal has jusrisdiction over all Civil cases where a substantial question relating to Environment is involved.It can provide relief and compensation to the victims of pollution and other environmental damages or restitution of property or environment damaged.Tribunal shall not be bound to procedure laid down by Code of Civil Procedure but shall be guided by principle of natural justice and shall regulate its own procedures.While discharging its functions,it shall have same powers as vested in the civil courts.While making a decision,it will apply the principles of sustainable development,precautionary principle and polluter pays principle.

In a sense,it is an autonomus body.
Link to the NGT Act:
http://moef.nic.in/downloads/public-inf ... GT-fin.pdf
Link to the NGT site:
http://greentribunal.in/index.php

uddu · Post by **uddu** » 01 Apr 2012 07:46

There is some good news
India secretly brings back black money from foreign tax haven
http://ibnlive.in.com/news/india-brings ... 574-3.html
New Delhi: The Indian government's best kept secret for the past one year is out. The embattled Congress-led United Progressive Alliance (UPA) government is sitting on the financial coup of the century. The content of a set of highly sensitive documents from the Finance Ministry could not only salvage the deadlocked politics of a scam-riddled coalition but help push India ahead of China as the world's second largest economy as early as 2015.

The documents, a series of top secret internal memos that have been in existence since the first quarter of 2011 but recently accessed by IBNLive, indicates that the government has reclaimed almost all of the black money lying in offshore tax havens - a staggering Rs 1412 lakh crore. This is almost 70 times higher than the figure of Rs 70 lakh crore put forward by a BJP think tank and crusader Ramdev in 2011.

Earlier, Finance Minister Pranab Mukherjee had said that there are no reliable estimates of black money inside and outside the country. According to reports, an interim task force in 2009 found illicit funds to range between $500 billion and what is now the size of India's economy of $1.4 trillion. But the new estimate has led economists into believing that India could easily beat China and emerge as a global superpower if the black money is brought back to the country.

The implications of the huge recovery and the subsequent fattening of Indian coffers are immense. When added to India's GDP, which currently stands at Rs 228 lakh crore, the recovered money will help India overtake China and push its position to number two in the list of global economies. It is precisely the kind of boost the Indian economy was hoping to get while the existing scenario looks grim.

At Rs 528 lakh crore, India is marginally ahead of its arch rival which currently stands at $10,300 billion (roughly Rs 524 lakh crore).

So we are with China. I had always thought how can a nation like China which is the size of India be far ahead while we battle out with small and tiny economies. So this was the reason. The sixty years of looting. Finally India will reclaim the position it deserves.

uddu · Post by **uddu** » 01 Apr 2012 08:06

Politics:
There is huge opportunity for the congress. They must not let it go.
This can help form the next govt or even make it fall.

Since the news is public. MMS must come online and proclaim that so and so much black money has been brought back and India is now the second largest economy after U.S.
A la Pokhran style like that done by Vajpayee.

He must do it quick and today morning itself.

Else the opposition will take this issue to their advantage. Then it will be the govt hiding this info, taking money from govt coffers their purpose etc etc accusations and the govt will lose the golden opportunity.

Interesting times ahead. Get some pop corn.

rohiths · Post by **rohiths** » 01 Apr 2012 08:09

^^
Spoiler Alert: April Fools Joke

uddu · Post by **uddu** » 01 Apr 2012 08:31

Rahul M · Post by **Rahul M** » 01 Apr 2012 08:50

correspondent flora ipol !

Akshut · Post by **Akshut** » 01 Apr 2012 22:24

1412 lakh crore = 1/4/12 - today's date.

gakakkad · Post by **gakakkad** » 02 Apr 2012 20:14

http://www.livemint.com/2012/04/0214360 ... -manu.html

Supply constraints hobble manufacturing growth in March

is analysis echoes the RBI governor’s oft-quoted remark that India’s sustainable or non-inflationary rate of growth is around 7% per annum, because of supply constraints. There’s little the RBI or indeed anybody can do in the short-term about these constraints, which can only be eased by policy reforms. In the circumstances, despite signs of a deceleration in growth, the RBI must continue to be cautious. While monetary easing is needed for growth, until supply-side pressures ease, inflation, like Banquo’s ghost, will continue to haunt the central bank.

gakakkad · Post by **gakakkad** » 02 Apr 2012 20:16

http://www.livemint.com/2012/04/0211052 ... still.html

Jewellers strike..

IMHO it is a senseless policy which ll lead to an increase in underground trade..

Re-affirms our point..worst gov't ever...

gakakkad · Post by **gakakkad** » 02 Apr 2012 20:45

http://www.thehindubusinessline.com/ind ... 251602.ece

According to a new proposal in Budget 2012-13, “The seller of bullion and jewellery shall collect tax at the rate of one per cent of sale consideration from every buyer of bullion and jewellery if the sale consideration exceeds Rs 2 lakh and the sale is in cash.”

Rather than collect 1% tax for sales above 2 lakh , why not do under ground "bill-less" business.. or make multiple bills of less than 2 lakh..(eg.. buy jewelerry of 2.5 lakh, make 2 bills of 1.8 lakh and 70k) Another instance of GOI idiocy ..

Yogi_G · Post by **Yogi_G** » 02 Apr 2012 21:31

First I am sure that report must be either some april fool's joke or some journo's wet dream to get his first BIG story! Next is 1.4 trillion which is stated as India's GDP. India's is actually 1.8 trillion as of now and if we take into account the unaccounted black economy we could easily cross 3 trillion dollars worth of goods and services produced in this great nation.

GDP is not a one trick pony, it needs to happen every year so the journo's report on size of Indian economy becoming second largest is rubbish! On the other hand, although highly improbable being the case of any part of that black money coming back to India with the help of govt, of it does happen will lead to chaos in the economy and a sort of implosion of sorts. The economy will not be able to handle some large liquidity infusion and either we will see Wiemar republic inflation or some other riot-inducing aberration.

Suraj · Post by **Suraj** » 02 Apr 2012 21:33

Sigh, Yogi_G... Please read the author's name and work it out

Yogi_G · Post by **Yogi_G** » 02 Apr 2012 21:49

Suraj wrote:Sigh, Yogi_G... Please read the author's name and work it out

I know its a ruse but such similar quality of reporting is not uncommon for DDM even in normal times. But dissecting and rubbishing such reports point by point makes this somewhat economically-less knowledgeable mujahid feel like Alan Greenspan

Manu · Post by **Manu** » 03 Apr 2012 14:40

gakakkad wrote:this gov't has set us back by 2-3 years at least..

Maybe I am pessimistic, but I think the damage is more or less permanent or very long lasting (10 years) at any rate.

A man who I always considered a Duffer, Jairam Ramesh, was in some respects right on the money with this (in 2006, when hope still sprung eternal).

Ney York Times

It is not exactly a relationship of equals. So measurably does India lag behind on virtually every indicator - except, notably, in the size of the software industry and the number of billionaires (India wins on both counts) - that the Indian minister for commerce, Jairam Ramesh, told an audience here Monday that Indians would do well to stop racing with the Chinese and start admiring.

"We are not in a race," he said at a seminar sponsored by the Confederation of Indian Industry. "They have already won the race."

This was UPA 1 of course. They made the damage permanent in UPA 2.

Hari Seldon · Post by **Hari Seldon** » 03 Apr 2012 17:12

Manu wrote:Maybe I am pessimistic, but I think the damage is more or less permanent or very long lasting (10 years) at any rate.

My assessment is also along these rather gloomy lines in the 'most likely' scenario. What scares me more is that a UPA3 will still have the largest numbers in parliament after 2014. Whether enough to form govt is not, hard to say. But their cash kitty by now is large enough to buy, bully, blackmail and bludgeon enough votes in the house, perhaps.

A man who I always considered a Duffer, Jairam Ramesh, was in some respects right on the money with this (in 2006, when hope still sprung eternal).

Ney York Times
It is not exactly a relationship of equals. So measurably does India lag behind on virtually every indicator - except, notably, in the size of the software industry and the number of billionaires (India wins on both counts) - that the Indian minister for commerce, Jairam Ramesh, told an audience here Monday that Indians would do well to stop racing with the Chinese and start admiring.

"We are not in a race," he said at a seminar sponsored by the Confederation of Indian Industry. "They have already won the race."
This was UPA 1 of course. They made the damage permanent in UPA 2.

Hey, the converse of that was my line in the PRC econ dhaga....

gakakkad · Post by **gakakkad** » 03 Apr 2012 17:55

Maybe I am pessimistic, but I think the damage is more or less permanent or very long lasting (10 years) at any rate.

A man who I always considered a Duffer, Jairam Ramesh, was in some respects right on the money with this (in 2006, when hope still sprung eternal).

The biggest policy messes made by UPA were the NREGA and OBC reservations in central instis besides fiscal profligacy.. today growth is down , savings is down , investment is down , infra is not being built as rapidly as it used to ..

Whether the damage is reversible or not cannot be predicted..

IIP was down even this month..

RBI said hat 7% is the maximum non inflationery growth that can be achieved due to policy constraints..

Regarding Jairam ramesh , besides being a fool , the guy is an known commie sympathiser . that might explain is adulation for Panda..

IMHO the race is far from over..it has yet to begin..

I too am concerned about upa regaining power..that would be an Armageddon..

Aditya_V · Post by **Aditya_V** » 03 Apr 2012 18:44

gakakkad wrote:

Maybe I am pessimistic, but I think the damage is more or less permanent or very long lasting (10 years) at any rate.

A man who I always considered a Duffer, Jairam Ramesh, was in some respects right on the money with this (in 2006, when hope still sprung eternal).

The biggest policy messes made by UPA were the NREGA and OBC reservations in central instis besides fiscal profligacy.. today growth is down , savings is down , investment is down , infra is not being built as rapidly as it used to ..

Whether the damage is reversible or not cannot be predicted..

IIP was down even this month..

RBI said hat 7% is the maximum non inflationery growth that can be achieved due to policy constraints..

Regarding Jairam ramesh , besides being a fool , the guy is an known commie sympathiser . that might explain is adulation for Panda..

IMHO the race is far from over..it has yet to begin..

I too am concerned about upa regaining power..that would be an Armageddon..

Well the UPA is smart, their aim to do a redux of Deve Gowda, IK Gujral, VP singh CHandrasekar type .dramas and in 2016 using short public memory put all the blame on them and be back in power with a 2 year break, that will be equally bad, unless people show thumbs up to paid media and declare thier freedom, nothing will change

Yogi_G · Post by **Yogi_G** » 03 Apr 2012 18:48

So China has won the race? I am glad they have won and we have lost, if that is what victory is all about.

Suraj · Post by **Suraj** » 03 Apr 2012 20:49

Please take the rona dhona to the whines thread. It serves no purpose here.

gakakkad · Post by **gakakkad** » 09 Apr 2012 16:58

Euro zone in recession, India slows

gakakkad · Post by **gakakkad** » 09 Apr 2012 16:59

India an attractive investment destination: Lord Paul

New Delhi: India is currently the “most attractive” investment destination, London-based industrialist Lord Swraj Paul said on Friday, underlining that retrospective amendment of laws to bring into the tax net Vodafone-type deals will not have any long-term negative impact.

gakakkad · Post by **gakakkad** » 09 Apr 2012 17:01

Imports of sensitive items up 42.6% during April-January

New Delhi: Imports of sensitive items including fruits, vegetables and edible oils went up by 42.6% to Rs83,714 crore during April-January 2012.

The value of sensitive items imported during the year-ago period was Rs58,697 crore.

Prem · Post by **Prem** » 10 Apr 2012 02:11

http://news.in.msn.com/business/article ... id=6002097
India to become largest beef exporter by 2013

New Delhi: India is likely to become the world's largest beef (buffalo meat) exporter by 2013 as there is consistent demand from price sensitive importers, primarily in Southeast Asia, Middle East and Africa, USDA has said.Given India's explosive export growth, India is likely to become the world's largest beef (buffalo meat) exporter by 2013, if not sooner," United States Department of Agriculture (USDA) said in its latest report.
Export growth is largely on account of consistent demand from price sensitive importers, primarily in Vietnam and Southeast Asia, Middle East and Africa. As a result, the number of export production units is increasing to meet growing export demand for low-cost Indian buffalo meat, it added.According to USDA, India's export of buffalo meat is estimated to rise by 25 per cent to 1.52 million tonnes in 2012 from 1.22 million tonnes in 2011.However, the dreaded Foot and Mouth Disease (FMD) in cattle could pose problems in the country's march towards the world's leading buffalo meat supplier, USDA said."While there are rumours of new market openings in Eastern Europe and Indonesia, no known trade has yet occurred in these regions and India's FMD status makes this seem unlikely," it added.Indian exporters are operating voluntary vaccination programs to combat FMD and the government of India has launched a Rs 4,000 crore programme to tackle the disease.

vera_k · Post by **vera_k** » 11 Apr 2012 07:38

India the only country in Asian region with current account deficit

Mainstream business press is beginning to write about the building BoP crisis. IMO it will take longer to build this time, since gradual depreciation of rupee can be used to buy time.

Aditya_V · Post by **Aditya_V** » 12 Apr 2012 19:50

WTF! We our having Huge Budget deficits and but Politicos delay defence purchase, blacklist key companies so we can buy 1000 cr shells for 4000 crore and then spend 30000 crores on Air parasite.

Air India to get Rs 30000 cr, govt to restructure airline

God Bless UPA.

gakakkad · Post by **gakakkad** » 12 Apr 2012 20:03

Ajit Singh is the next non forbes billionaire..

nawabs · Post by **nawabs** » 12 Apr 2012 21:02

Industrial growth drops to "disappointing" 4.1% in Feb

http://zeenews.india.com/business/news/ ... 45752.html

Pulled down by poor performance of manufacturing and consumer goods, industrial growth slipped to 4.1 percent in February prompting government to state that the "disappointing" numbers will have bearing on the Reserve Bank when it takes a call on the interest rates on April 17.

Index of Industrial Production (IIP) grew by 6.7 percent in February 2011.

Rising interest rates and poor domestic demand aggravated by global uncertainties hit the industrial investment, Finance Minister Pranab Mukherjee said.What is worse, the 6.8 percent industrial expansion in January has been drastically revised to 1.14 percent with Chief Statistician T C A Anant admitting "slippages" in data collection.

Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan said the government is setting up a committee to tighten sources of data gathering.

As per the IIP data released on Thursday, the growth in factory output for the cumulative April-February 2011-12 period more than halved to 3.5 percent from 8.1 percent from a year ago."These (IIP) figures will have bearing on monetary policy announcement scheduled for next week. The government along with RBI will take required steps to revive activity in the economy," Mukherjee said.

Key segments like manufacturing, consumer goods, consumer durables and intermediate items, are among the worst hit. In fact, consumer durables and intermediate goods slipped into negative zones.

Planning Commission Deputy Chairman Montek Singh Ahluwalia also described the IIP figures as "very very disappointing".

Industry said decline in industrial growth is a "cause for concern" and urgent steps are needed to bring reforms back to the forefront.

On the revision of IIP figure for January 2012 from 6.8 percent to 1.14 percent, Mukherjee said, "this is disappointing ... the revival in manufacturing in the last quarter of 2011-12 has not materialised as anticipated."

The revised growth rate in January will also have a bearing on the industrial output for the 2011-12 fiscal.

After taking into account the revised figures, the April-February 2011-12 IIP works out to be 3.5 percent, down from 8.1 percent in the corresponding period in the previous fiscal.

"There have been some slippages on that (IIP) and so we are reiterating that to ensure that such type of error do not occur (in future) ... I have taken up the matter with principal ministries and waiting for their response how they will respond to it. We will see that everybody improves the time of reporting," Anant said.

Mukherjee attributed the slowdown to, "uncertainty in the global economy coupled with monetary tightening in the past have impacted investment recovery".

According to the data, output of the manufacturing sector, which constitutes over 75 percent of the index, rose by just 4 percent in February, compared to 7.5 percent in February 2011.

Consumer goods output has also shown a slowdown as the production declined by 0.2 percent percent in February, as compared to 13.4 percent in the same month last year.

Besides, the consumer durables segment output contracted 6.7 percent in February, as against robust 18.2 percent growth in the same month last year.

However, the capital goods sector witnessed a growth of 10.6 percent, as against a contraction of 5.7 percent in the same month last year.

Mining output too has shown some improvement at 2.1 percent in February, as against 1.2 percent growth in the year-ago month.

Singha · Post by **Singha** » 12 Apr 2012 21:06

amazing...the bailouts AI keeps getting is truly amazing.

its employees all over are too few to be a vote bank.

there is no sickular brownie points to gather - are pvt airlines all HQ'ed in Guj?

all I can say is there must be truly some sweet arrangements in the opex contracts of AI that flow into political coffers to keep this dog n pony show going till infinity....

Theo_Fidel · Post by **Theo_Fidel** » 12 Apr 2012 22:43

Don't forget MP's get free flights for life on AI, anywhere in the world, for life. Even if they serve only 1 day. Some have taken this to mean entire extended kandhan. The employees too IIRC get free flights anywhere in the world for life.

Quite the sweet deal.

Prem · Post by **Prem** » 13 Apr 2012 03:45

Indian Grain May Rot After Bumper Harvest
http://online.wsj.com/article/SB1000142 ... 21044.html

NEW DELHI--As India prepares to harvest a record grain crop for the second year in a row, fears are rising that its state granaries won't be able to handle the surplus and food that could feed the nation's hungry millions will go to waste.Food ministry officials say the government will add between 3 million tons and 4 million tons of storage capacity by May or June, just ahead of this year's wheat harvest, and a further 11 million tons by the end of next year. The combination of plentiful monsoon rains and high minimum purchase prices for wheat and rice means the country is forecasting an all-time-high grain production of 250.42 million tons in the crop year ending June 30.The government says it will have 75 million metric tons of grain stocks by June, but state-run warehouses have a capacity of no more than 63 million metric tons.
Food Minister K.V. Thomas, in an interview, said the government was taking steps to reduce stockpiles, including allowing traders last year to export wheat and rice surpluses and increasing food allocations for poor people.Even if the government meets targets to expand storage capacity by June, that would still leave around 8 million tons of grains out in the open -- vulnerable to weather and attacks by rodents. The government will likely also have to store 20 million tons in makeshift spaces, covered by water-proof sheets and resting on wooden platforms erected over bricks. Pre-monsoon showers already have damaged some of the newly-harvested wheat crop in the breadbasket state of Punjab in western India."Harvest of the wheat crop is not yet in full swing...We fear that the storage problem will only increase when government procurement picks up," said a senior agriculture official in the Punjab state government.