Indian Economy - News & Discussion 27 May 2012

Supratik · Post by **Supratik** » 11 Jun 2012 15:22

@Theo

GOI is passing the buck giving Didi as excuse. When you have the support of SP/BSP, Didi alone cannot stop reforms. The current situation is a culmination of numerous misgovernance and corruption issues of UPA2 which had nothing do with Didi.

Supratik · Post by **Supratik** » 11 Jun 2012 18:04

For arguments sake if Didi looses tomorrow and the INC is back in bed with the Left they are still going to cry that the Left blocked reforms just as they did with UPA1.

Theo_Fidel · Post by **Theo_Fidel** » 11 Jun 2012 18:36

Yes that is certainly possible but you must admit voters have sent mixed signals on the economy.

Suraj · Post by **Suraj** » 11 Jun 2012 20:55

How did the voters send mixed economic signals ? In the midst of the global economic crisis they voted back the UPA with the strongest majority of any administration since 1985. They voted for continuity, with the stability of a stronger mandate to enable growth. Yet, this administration has squandered that. One may not agree with the choice of party they voted in, but the fact is they voted for growth, stability and continuity. All they got out of it was continuity.

vera_k · Post by **vera_k** » 11 Jun 2012 21:08

S&P: India may become first BRIC nation to lose investment grade

Seems like there is a disconnect between the finance ministry and rating agencies. If the credit rating matters, it is necessary to staff the finance ministry with people who understand how credit rating works.

Theo_Fidel · Post by **Theo_Fidel** » 11 Jun 2012 22:02

Well, that may have been their intent, which is debatable, but really who knows. The chattering class claimed it was all NREGA. But WRT DIDI it is obvious they did not think through the consequences of putting her in power with such an overwhelming majority. Esp. such power at the center. The TMC is different from BSP as the BSP is supporting from outside. Parties explicitly do this to avoid another general election nothing more. The left was hammered at Nadigram where it technically tried its hand at industrializing the state. Did they do it shoddily, yes but it seemed like no one at all was in their corner. AMMA did something similar I remember when NH45 needed to be widened, she summarily acquired land on either side, knocked down temples, mosques and churches by the dozen, took over hundreds of acres of agricultural land on both sides. There was a huge uproar, riots for days, but there was also a large group that defended her actions as necessary and back her to the hilt. No such group popped up in WB. Even now despite DIDI's craziness WRT the Railways/Price increases/Budget/entire GOI she has won most of the by elections/civic polls in WB. AFAIK she has succeeded in driving even more investment out of WB and the people have rewarded her for this. Shrug.

gakakkad · Post by **gakakkad** » 11 Jun 2012 22:06

country grew decently from 2002 to 2009..

people were not aware of the why the growth occured..but were aware of the growth through rising income ...So upa won...

this time growth has slowed and there is inflation ..so con will be voted out.

SaiK · Post by **SaiK** » 11 Jun 2012 23:44

the point is not just down-grading on major economic indicators, but on the policy drivers.. I wonder when was Indian parliament really drove economy? leave alone MMS and sphagetti ji.

The global rating agency points to the operational roles of Congress president Sonia Gandhi and the "unelected" Manmohan Singh as Prime Minister for the current economic impasse

the crux of the current political problem in going forward with economic liberalisation was the nature of leadership within the Central government and not “obstreperous” allies or an “unhelpful” Opposition.

http://www.thehindu.com/business/Econom ... epage=true

of course one could argue about few tickers MMS brought in earlier in the decade.. but without the real 20% of the economic people drivers, especially the technology sector, whatever these men have done has only brought in 80% of the economic problems.

again, if everyone looks at India as Bihar.. then I agree what MMS has done is fantastic, and on par with nitish kumar.

is that all we are capable? do we billion planet do not have the capability?

nachiket · Post by **nachiket** » 12 Jun 2012 00:05

Which major central govt. economic reform has Didi blocked apart from the FDI in retail? Yes, Didi and WB may be a drag on the economy, but they are not responsible for the current situation. Didi did not make the central government spend like billionaires on ill-thought out dole schemes and totally ignore all warning signs of a slowdown.

Theo_Fidel · Post by **Theo_Fidel** » 12 Jun 2012 01:08

She is preventing the doing of both. Reform (pot stirring) + Profligacy (NREGA) has now been reduced to profligacy onleee.

Is there any chance she would have even allowed some thing like the power bill to be passed now, foreign investment and all. The answer is no.

svinayak · Post by **svinayak** » 12 Jun 2012 02:31

vera_k wrote:S&P: India may become first BRIC nation to lose investment grade

Seems like there is a disconnect between the finance ministry and rating agencies. If the credit rating matters, it is necessary to staff the finance ministry with people who understand how credit rating works.

Why are they using BRIC mention here when it is independent nation policy here.

Unless they are trying to beat BRIC down and spread false image of BRIC.

http://www.travelmarketreport.com/busin ... =7262&LP=1

TRAVELER RISKS ARE NOT WHAT YOU THINK
by Fred Gebhart
May 31, 2012

Quick, what are the greatest risks your travelers face? Most business travelers and travel managers worry about the big stuff: terror attacks, earthquakes, kidnappings – especially if their travelers are headed for the so-called BRIC countries of Brazil, Russia, India and China.

Suzanne Garber

Think again, says Suzanne Garber, COO of travel safety and security firm International SOS. While those headline disasters, what Garber calls “CNN events,” do happen and can exact a terrible toll, they don’t occur very often.

So what are the real risks travelers to BRIC countries face? Based on millions of global travelers and their calls for help, the number one risk in Russia and India is vehicular accidents. The number one risk in Brazil and China is gastrointestinal.

svinayak · Post by **svinayak** » 12 Jun 2012 02:35

SaiK wrote:the point is not just down-grading on major economic indicators, but on the policy drivers.. I wonder when was Indian parliament really drove economy? leave alone MMS and sphagetti ji.

The global rating agency points to the operational roles of Congress president Sonia Gandhi and the "unelected" Manmohan Singh as Prime Minister for the current economic impasse

the crux of the current political problem in going forward with economic liberalisation was the nature of leadership within the Central government and not “obstreperous” allies or an “unhelpful” Opposition.
http://www.thehindu.com/business/Econom ... epage=true

Rating agency should focus only on the facts and not on prescription

nachiket · Post by **nachiket** » 12 Jun 2012 02:37

Theo_Fidel wrote:She is preventing the doing of both. Reform (pot stirring) + Profligacy (NREGA) has now been reduced to profligacy onleee.

Is there any chance she would have even allowed some thing like the power bill to be passed now, foreign investment and all. The answer is no.

Again, this argument would be valid if the govt. was actually trying to do something useful and she had stalled it. There is no evidence to suggest that the government is even trying to remedy the situation aside from the usual RBI attempts at tackling inflation and the fall of the rupee which don't address the underlying problems anyway.

KJo · Post by **KJo** » 12 Jun 2012 02:42

India did well mainly because of cheap labor. Not because we are kick ass smart people. Now prices have gone up, so the advantage has gone away. This was only to be expected. It's a cycle.

Fidel Guevara · Post by **Fidel Guevara** » 12 Jun 2012 03:29

The Indian economy was like a freshly-started garden with newly-laid fertile soil. All factors were there to drive fast growth...it was just waiting for the seeds to be planted. Even if the gardener did nothing much, the plants would grow wonderfully.

Now the soil is mature, and the garden needs constant, active management...soil organic content is depleted, the sun is alternately too strong or too weak, rain is unpredictable and fluctuates between flood and drought, weeds have laid roots and are continuously sprouting.

A good gardener will manage all this and keep the crops up to spec. If the gardener thinks he can take off for a day or two and still the plants will grow (as in the old days), he will be sadly mistaken.

Theo_Fidel · Post by **Theo_Fidel** » 12 Jun 2012 03:37

In one way or another DIDI has helped stall these items. Many she stopped dead in its tracks single handedly. Now you can claim the government was not serious anyway but that is merely your opinion with little evidence for it.

- Pension fund regulation
- Development authority (land acquisition)
- Land acquisition bill
- Companies bill.(one window)
- NIMZ labor policies (hire/fire)
- Dismantling existing SEZ's
- Railway Budget (Famously)
- Organized Retail (Famously)
- Petrol price increase
- Anti-terrorist legislation
- Anti-corruption legislation

She is against all these items. WRT SEZ she just scrapped Infosys's SEZ meaning another company has been chased away with stick & broom. She is refusing to give her consent for notifying SEZ's in other states as well now.

She has even opposed the food security bill but for the main reason that the money does not flow through her hands.

I could go on. I have been reading up quite a bit and the ammunition is quite clear.

She is using her thumping electoral win to say NO to anything and everything. AFAIK I have read she has not proposed a single progressive reform or new economic idea.

OK. Your turn...

gakakkad · Post by **gakakkad** » 12 Jun 2012 08:33

KJoishy wrote:India did well mainly because of cheap labor. Not because we are kick ass smart people. Now prices have gone up, so the advantage has gone away. This was only to be expected. It's a cycle.

most of Indian economy is domestic consumption..outsourcing of ITES forms a very minor portion of the economy in any case and is over credited for its role in Indian growth.. And ITES has grown rapidly last year even (14% iirc) in spite of the perceived increase in labor prices...

india has as many kick asses and dumb asses as rest of the world..

abhishek_sharma · Post by **abhishek_sharma** » 12 Jun 2012 09:40

The End of the Asian Miracle

Singha · Post by **Singha** » 12 Jun 2012 09:41

^we have gone over this point many times. a few NRIs in IT industry tend to think IT industry is a huge factor in our GDP absolute nos and growth, but its not. other than a half dozen cities with say 10 mil workers, the IT export industry is nonexistent elsewhere, most people have no stake in it and dont care either way...the selective educational opportunities needed to 'participate' in that sector are not available as yet to 75% of our school going population.

vina · Post by **vina** » 12 Jun 2012 09:46

most of Indian economy is domestic consumption..outsourcing of ITES forms a very minor portion of the economy in any case and is over credited for its role in Indian growth.. And ITES has grown rapidly last year even (14% iirc) in spite of the perceived increase in labor prices...

A critical one, nevertheless. This is the sector which enabled India to come out of the "forex poverty" (remember FERA anyone ? I traveled with around $10 as travel allowance the first time i traveled out of India) and the "export pessimism" , imposed on us by the ISI/DSE/Planning Commission/JNU ding dongs.

Freeing the Indian economy from the "Forex" constraint was a major enabler for wider growth in the Indian economy.

Singha · Post by **Singha** » 12 Jun 2012 10:04

and exporters of textiles, gems, leather, handicrafts, shoes, machinery, automobile parts, food, chemicals, medicines, spices, tea, coffee, plastics from india dont earn in forex?

Al kabeer sending buffalo and goat meat to the gulf would have earned enough forex to match many a highly strung 'IT giant'

vina · Post by **vina** » 12 Jun 2012 10:28

Singha wrote:and exporters of textiles, gems, leather, handicrafts, shoes, machinery, automobile parts, food, chemicals, medicines, spices, tea, coffee, plastics from india dont earn in forex?

Actually, the "traditional" exports of India didn't earn enough (that includes the Gelf remittance) to cover imports. It is IT/Vity that bridged the gap (remaining being capital flows) , now that has opened up again with the big current account deficits we are running..

Al kabeer sending buffalo and goat meat to the gulf would have earned enough forex to match many a highly strung 'IT giant'

Ah, but the "dharmic" folks traditionally put a stop to that. Killing buffaloes for meat for them comes under "cow progeny" I think (though buffaloes and cows are genetically different , having different ancestors)

kit · Post by **kit** » 12 Jun 2012 11:35

Any pointers as to why BJP opposed FDI in retail ? Just the elections ?

Austin · Post by **Austin** » 12 Jun 2012 13:05

April IIP flat at 0.1%, worse than expected

Sanku · Post by **Sanku** » 12 Jun 2012 14:26

Theo_Fidel wrote: OK. Your turn...

I will take this. Let me take few points of agreement first
1) The populace did indeed send out mixed signals on economy, while we are berating UPA-II, most of the pains today are essentially result of UPA-I policies (massive mining scams followed by total mining freeze, lack of enabling legislation in power sector, NREGA profligacy etc) -- yet the populace voted them back in and so did they vote Didi for her anti-Industrial plank (more left than left, with raving lunatics like Maoist arms and Mahashweta devi by her side -- whom incidentally she then proceeded to shaft, showing that he has brains aplenty) -- so it stands to reason that the populace takes a fair share of flack for supporting poor economics. (My guess is people just didnt understand the real reasons of economic growth in India and took India shining for granted and did not relate it to the policies of NDA regime)

2) Didi has indeed been some what of a conundrum, some what, with swinging both ways on certain topics.

However that said, I see a problem with your list, viz that we dont know what Mamata-didi actually blocked or did not block, for example she DID NOT block the petrol price hike (for all her posturing) -- it was left for NDA + left to make the most noise about it. She merely hemmed and hawed and distanced herself politically. Similarly her real political stand on any of those is not know. It is ambiguous and I think she is just posturing if for the short term political "hurt" that some of those measure cause, she is compensated by a "Bengal package" which enables her to keep her political capital intact. So basically she wont carry water for Congress and bail them out. She is in a game of political transactions and she wont be cut short.

So its not economics from her perspective, but politics, she has to break 25 years of left, and she needs both good politics and good economics (with Center paying for having the cake and eating it too) The ONUS is on CONGRESS, to decide whether they want her support and at what price.

So whether Didi is just a good excuse in current scenario or a real factor is not known. I think Congress is merely playing diversion here, so basically, UPA-I inaction is due to lefties, and UPA-II due to didi.

In reality, the issue is because Congress does not want to hand out political victories to its allies, either then or now. Its distaste for sharing power and ensuring that it is parsimonious with actions that would benefit others politically while hurting itself even a little, makes it do nothing and blame others.

If Congress was serious about Economy, they would have paid Mamata off and did what they had to -- in the belief that a revived economy would bring them back support. However I think they don't want to risk that, since India has not shown to have voted for good economics -- yet.

vina · Post by **vina** » 12 Jun 2012 15:32

Sanku wrote:If Congress was serious about Economy, they would have paid Mamata off and did what they had to -- in the belief that a revived economy would bring them back support. However I think they don't want to risk that, since India has not shown to have voted for good economics -- yet.

Trouble is it is not Didi alone. Now Mulayam too is dropping hints that the UP economy is deeply troubled. And then it will be others. Congress needs to rope in BSP on their side . They are the ones with least leverage. The antidote for Mamata is NOT Mulayam, but rather BSP.

Theo_Fidel · Post by **Theo_Fidel** » 12 Jun 2012 20:35

Well if she is in a game of Political transactions whyfor did she cancel INFOSYS SEZ and chase them out with stick & Broom, hain ji. Its one thing to hold gun to head and ask for cash, but she is blowing her brains out first and then asking for cash!

The last time GOI gave a bailout grant was for Bihar. Roughly Rs 350 Billion, IIRC and only a portion was grants. For this babudom got a long list of hard hard reforms implemented by Nitish. Nitish also did not blow his brains out before getting the cash. What Mamata is asking for is a complete write off, This is on the order of Rs 2,000 Billion. This would cause a India deficit of 2.5% all by itself!!

But even that is not a problem, the real problem is the state continues to run horrific deficits. At present it is running at Rs 220 Billion annually mostly because it refuses to raise revenue internally. It takes a 'Grant' of Rs 350 Billion annually just to keep up with WB's existing deficit problem. Mamata is committed to not increasing revenues. The only thing keeping her profligate instincts in check is her bankruptcy. Babudom will fight tooth and nail before granting her money and she has shown no willingness to reform. In fact she wants to go the other way and wants India, meaning the South & West to fund her craziness. That was not Nitish's MO. She would do well apprentice herself to Nitish for a while but she is unlikely to...

In any case that is the list of policies that she has refused to back as the largest internal ally. Her thumping win given by the voters gives her a disproportionate influence on everything as it should. Even keeping quiet on a major policy is opposition enough. WRT the fuel price increase she lead a morcha through the heart of Kolkatta during peak hour no less against it. Think about that for a csecond, a CM leading a morcha against her own government technically. Like I said, insanity. That would count as vocal opposition in my book. How can anyone possible say that is hemming and hawing janab.

http://www.hindustantimes.com/India-new ... 61714.aspx

http://www.business-standard.com/india/ ... e-/468623/

West Bengal had set a revenue deficit target of 3.4 per cent of gross domestic product (GDP) in 2010-11 financial year, whereas the fiscal deficit target was 4.6 per cent of the GDP. Its accumulated debt is Rs 2,06,000 crore. The original borrowing limit was Rs 17,828 crore, but the Centre has already enhanced it by Rs 2,706 crore in view of the dire state of finances. However, the state has gone for an additional Rs 1,000 crore market borrowing to meet its committed expenditure.

gakakkad · Post by **gakakkad** » 12 Jun 2012 20:37

http://www.livemint.com/2012/06/1122260 ... l?atype=tp

Maruti wants to transport more by rail, pushes for auto hub

“Maruti alone will be manufacturing three million vehicles by 2015-16 and all these vehicles cannot go by road,” said a senior Maruti Suzuki official, who didn’t want to be named. “A viable option is required.”

Meanwhile, the company is also trying to persuade the railways to move ahead with a proposal for an automobile hub at Bijwasan near Gurgaon. The terminal is aimed at enabling the smoother transit of vehicles from various plants in the Gurgaon-Manesar industrial belt to the rest of the country. “Currently, the proposal is under discussion. The auto hub, built on railway land, would be operated by a private licensee and would be open to all auto companies wanting to use it,” said the railway official.

Indian Railways formulated the auto hub policy in 2010 to gain a higher share of the automobile transport traffic, drawn by attractive margins. Under the policy, facilities for loading and unloading at an auto hub are to be provided by the railways, while the service area of the hub in and around the terminal will be developed by the licensee. The licensee, which has to be an automobile or logistics company with an annual turnover of at least Rs.20 crore, will be allowed a maximum of one year to complete construction and make the hub operational.

This clearly demonstrate how infra can solve the growth problems ..Also demonstrate how gobermint places infra bottlenecks...

gakakkad · Post by **gakakkad** » 12 Jun 2012 20:41

doing rounds in Facebook via some connected friends of mine: new fin min may be a non political ..perhaps an ex RBI governor ...

vina · Post by **vina** » 12 Jun 2012 20:43

Well if she is in a game of Political transactions whyfor did she cancel INFOSYS SEZ and chase them out with stick & Broom

I think Mamata did send in the recommendation to the the Center to grant Infosys all the benefits of an SEZ in Kolkata , just didn't put the name SEZ on it, because she is "opposed" to SEZs in Bengal.

gakakkad · Post by **gakakkad** » 12 Jun 2012 20:58

Misplaced targets & priorities

The Prime Minister’s call to push for power capacity addition in the country highlights just one aspect of what is required today. For instance, in the first quarter of this year, only one-third of the targeted of 3,807 megawatts (MW) has been added. No doubt the targets have been enhanced—over the next five years the government expects 90,000MW capacity to be commissioned. In contrast, over the previous five years, 50,000MW was added. However, given the shortages, the targets are well justified and the rising power demand must be met by competitively priced electricity supply. Industry’s competitiveness will improve if it is assured adequate supply, else it will resort to setting up captive units that produce expensive electricity. Having said that, merely accelerating the pace of power generation alone will not solve the power crisis. This is because most of the distribution utilities that purchase this electricity and distribute to the end consumers are in a financial mess. On average, they charge consumers less than what it costs to supply. At the end, the more the utilities sell, the more they lose. Unfortunately, the pace of reforms is hardly adequate.

The first signs of a crisis were felt a few months ago when banks and lending institutions such as Power Finance Corp. became wary of lending more money to the utilities. The situation eased after utilities raised consumer tariffs which, on average, had not been raised for several years. Importantly, it was more a knee-jerk reaction to the financial freeze rather than the initiative of the regulatory commissions that were supposed to make this happen at regular intervals so that tariffs were constantly aligned to costs. Several power regulators have succumbed to the wishes of the ruling state governments, their loyalties often born of the appointment process which is driven by the political class. The Union government should have a say in this appointment process. This should be part of the conditions while offering financial assistance to the states in the power sector. Also, the efforts to reduce technical losses and curb thefts should be sharply defined and even-handed. For instance, if there is any reversal in the loss-reduction achievements, this should lead to financial disincentives for the states. Will adding power generation capacity alone help India?

gakakkad · Post by **gakakkad** » 12 Jun 2012 21:02

http://www.livemint.com/2012/06/1200380 ... e-tax.html

Govt proposes to increase tax scrutiny, reduce refunds
‘Given the overall sentiment post the recent controversy around the GAAR and the retrospective amendments, the government’s move will be taken in a negative way’

New Delhi: With slowing economic growth impacting tax revenue collections, the finance ministry is proposing to make good the shortfall by shifting its focus to companies operating in the still rapidly growing consumer economy and a closer scrutiny of the top 100 assessees to check for any tax evasion.

Signalling this, finance secretary R.S. Gujral, who was addressing the annual income-tax (I-T) commissioners’ conference, also directed field staff to go slow on I-T refunds, which had aggregated a record Rs95,278 crore in 2011-12.

The move could potentially draw a sharp response from Indian industry.

“Given the overall sentiment post the recent controversy around the general anti-avoidance rules and the retrospective amendments, the government’s move will be taken in a negative way. There could be an adverse impact on the markets as well,” said Soumya Kanti Ghosh, director (economics and research) at industry lobby group Federation of Indian Chambers of Commerce and Industry. The tax department should instead focus on bringing more assessees under the tax net, he said.

Vipul · Post by **Vipul** » 12 Jun 2012 21:28

The reserves story.

Echoing former RBI governor C Rangarajan, Ashima Goyal, a member of the RBI’s technical advisory committee has now called upon the Reserve Bank of India to use foreign currency reserves to support the rupee. However, as the data for 1 June show, India’s foreign currency reserves fell for a sixth straight week. While the total figure of $285 billion looks comfortable enough, note that the cover they provide is dwindling. In 2007, the forex kitty amounted to 3 times the external financing requirements (short-term debt pus current account deficit), according to Citigroup estimates. That has fallen to 1.7 times for 2012.

Note that the country has seen a 12% decline (about $35 billion) in foreign exchange reserves from their peak in early September. Of course, this decline is not due to RBI’s intervention alone. For example, during the period September- April, while forex reserves fell by about $25billion, the central bank sold about $20 billion worth US dollars. That suggests that the rest of the decline was owing to depreciation in other foreign currencies which the RBI holds.

Part of this 12% erosion would be due to the recent surge in the US dollar against other currencies; note that the dollar index gained 5.3% in May. This decline is unparalleled in recent history except during the North Atlantic financial crisis when reserves fell by more than a fifth. On that occasion, a fair portion of reserves were clawed back during the latter half of 2009; but now, refilling this tank could prove a bit more difficult.

To be sure, there is optimism from sharply lower prices of crude oil and declining gold imports, which has prompted economists to prune their estimates for this fiscal’s current account deficit. However, that alone might not be enough for reserves to be topped up.

Part of the reason why reserves went up in 2009 was that capital inflows, particularly into equity, were very strong. In other words, global markets were back in the “risk-on” mode. It also helped that crude prices were around $70 to start with, even if they increased and the current account deficit was within manageable limits.

Now, as the drop in commodity prices show, markets are in a risk-off mode. Given the uncertainty around Grexit, it may continue for some time, thereby painting a bleak picture for the capital account. Thus, even if the current account improves slightly, the danger is that capital inflows might shrink especially with deleveraging abroad. India’s current policy environment only makes conditions worse. Therefore, a further drawdown in reserves seems likely unless the RBI issues dollar bonds. But then, borrowing in foreign currency is sure to increase risks.

Singha · Post by **Singha** » 12 Jun 2012 22:00

the bankruptcy of ideas and lack of self confidence in GOI is evidenced in many areas. one such is the sending of high level officials to foreign univs on longish exec education courses in governance and many other fields. yes, learning how to govern a developing country from the hallowed wisdom of countries that were at this level a hundred years ago and whose soln to crises is use geopolitical leverage , gora bhaichara networking and printing more money!

satya · Post by **satya** » 13 Jun 2012 00:59

Never seen nor heard before when many interests coming together to replace MoF but he is not ready . This man should have never seen the corridors of power in 90s but then his poojas . This man has done such damage to the finances of the country that even corrupts are crying out for he is a curse on everyone . This man no nationalist . He is worse than first family itself . Distribute sweets the day this man leaves MoF & pray it happens soon. Mark my words till this man is here only reform will happen is of selling our national interests . Talks of increasing share of FIIs in govt. debt paper is his brainchild with no support from anywhere else ! Chiddu looks like dhoodh ka dhula .
Knew of his daughter's new found love for home in gurgaon but never knew he was so hated without any exception. No new idea as one of my friends from Chennai use to say never ever a man too short or too tall . Fits well with this man .

ramana · Post by **ramana** » 13 Jun 2012 02:42

satya, Is he wrecking INC from inside?

There seems to be a ground swell to promote him upstairs.

http://business-standard.com/india/news ... ms/477161/

vina · Post by **vina** » 13 Jun 2012 09:38

Satya wrote:This man has done such damage to the finances of the country that even corrupts are crying out for he is a curse on everyone . This man no nationalist

.
This man is a walking disaster in the MoF, not just now, but in his earlier terms as well.He is a back room schemer ,muddler and might be a fine political maneuverer, but is no leader. The typical old school bureaucratic control, commanding height oriented boy, with no instinct for anything different , with short term political calculations driving his actions (not even long term political vision, that takes leadership and visionary skills). He is a dinosaur /relic from the command and control years, who should have retired long ago. Atleast kick him out (sideways,upstairs /wherever), before he does irreparable damage.

Problem is that the Congress party lacks any intellectual leadership and conviction. No one has looked inside to see the Congress and defined what it stands for in this day and age and what it looks to do to transform this country in 20 years.

Whatever, said and done the Congress in the Nehru years had a strong transformative and nation building program and a vision of modernity. However flawed that policy might have been in terms of economics, one could not argue with the vision and in fact got a lot of buy in.

So what does the Congress stand for today. Some tired old shibboleths and some repulsive and creepy underlings like Digvijay and others and that insufferable token Muslim, Salman Kursheed, and others, paper tigers all, and a shpinx like silence from Sonia Gandhi and Manmohan Singh!

In fact the last time a congress led govt had a Leader was with Narasimha Rao. I keep repeating that he is probably the best PM we ever had. He ran a minority govt, but look at the things he accomplished. And Sonia Gandhi didn't even give him air cover, but kept sniping at him from the sides. With all the air cover that Sonia Gandhi gave, look at what Manmohan has achieved as PM since 2004! Nothing worthwhile in terms of reform and progress (Indo US nuke deal aside, which is a major achievement) . Manmohan Singh has served as a place holder /paper weight keeping that chair warm, but has been simply useless otherwise. The economy ran on autopilot /inertia, despite the damage the UPA and allies did to it. It is a wonder it ran for as long as it did!

vina · Post by **vina** » 13 Jun 2012 09:52

A great Op-Ed in First Post A fine mess you have landed the economy in , Pranab-da!

In one of his anthemic songs that fed the counterculture movement, Bob Dylan observed wryly that "you don't need the weatherman to know which way the wind blows."

Much the same can be said of rating agency Standard & Poor's most recent report that prepared the ground for a downgrade of India's sovereign rating. You didn't need the S&P weatherman to know which the economic wind was blowing.

For everyone except Finance Minister Pranab 'Micawber' Mukherjee, who is perennially living in the hope that "something will turn up" to miraculously fix the economy, it has been evident for a long while now that the Indian economy has been grinding down, that structural deficiencies are piling up, that policy paralysis afflicts the UPA government, and that the government is clueless about how to fix a decidedly broken economy.

The government is yet again passing the buck to the RBI. PTI
Yet, the government's response to the release of the report has been extraordinarily prickly. Mukherjee "rejected" the report - whatever that means - and Finance Ministry mandarins and Congress lackeys have begun to tilt at windmills by ridiculing the rating agency's "understanding of Indian politics".

More insidiously, a whisper campaign is on to paint S&P's report as a "political hit-job": this bizarre conspiracy theory holds that the primary S&P credit analyst who authored the report, Joydeep Mukherji, is a relative of a BJP leader from Paschim Banga. And that the candid comments in the report about the dysfunctional nature of the relationship between Prime Minister Manmohan Singh and Congress president Sonia Gandhi point to the political nature of the report.

The only thing missing is for Digvijaya Singh to miraculously connect the dots and establish an RSS conspiracy behind S&P's report.

Rating agencies are, of course, far from infallible (as was made clear by their ratings fiasco that contributed to the 2008 financial crisis); and yes, the business of credit ratings is intensely politicalÂ (as we've observed here). But for Pranab Mukherjee and his mandarins to go to town to "shoot the messenger" and make yet more out-of-whack projections about the robust nature of the economy shows up the government as being acutely in denial.

The fact of it is that the government's failure to address structural deformities in the system for years together has played havoc with Pranab-da's fiscal numbers. Worse, at precisely the wrong time in the macroeconomic cycle, the UPA government, under Sonia Gandhi's stewardship, has gone on a spending binge on grandiose, ill-conceived and underfunded welfarist schemes. These in turn have bloated the deficits and stoked inflation.

Rather than address these through supply-side initiatives and bold reforms, the feckless UPA government has in recent years "outsourced" all Â macroeconomic policy to the RBI, which has responded to double-digit inflation in the only way it could: by hiking interest rates.

That has predictably ground down economic growth rates - yesterday's IIP numbers were only the latest validation of that - but has not entirely vanquished inflation. Data due out tomorrow will likely confirm that inflation is runningÂ Â higher than real GDP growth - as it has been for some time now.Â In other words, we're in stagflation territory.

After yesterday's IIP data, the predictable outcry for a cut in interest rates has gone out again. In one of the most bizarre responses ever, the stock market actually rose despite the anaemic data - because it believed that the prospects for a rate cut now stand enhanced.

The stock market is a "rate cut" junkie looking for a quick fix; but the inflation data due out tomorrow will likely rob them of the fix they crave for.

Sure, the RBI may yet deliver a rate cut - under political pressure and against its own wisdom. But that will only compound the fundamental structural problems in the economy, fixing which will take a lot longer.

As CLSA economist Rajeev Malik observes, the call for Â interest rate cuts appears to ignore the fact "government inaction" is more to blame (than high rates) for the "precipitous drop in economic growth". And given the entrenched inflation levels, cutting rates now will worsen things.

"BoostingÂ aggregate demand via interest rate cuts rather than enhancing aggregate supply will only worsen the inflationary pressures in the near term," Malik notes. "Even if an investment upturn adds to aggregate supply, it does so with a lag. In any case, boosting aggregate demand from, say, higher investment should be matched by shrinking the fiscal overhang and moderating consumption growth. In the absence of such finely balanced recalibration " itself a challenge " India will suffer a more protracted macro adjustment."

The pressure being brought to bear on the RBI to cut rates amounts to the most egregious instance of buck-passing by Mukherjee. And now, it appears that having landed the economy in a fine mess, he is preparing to give up his post in return for a sinecure in the Rashtrapati Bhavan.Â In the annals of political history, it's about the biggest reward for policymaking failure as one can hope to expect.

Any serious person will tell you that the problem with India is that the macro economic fundamentals are imbalanced. We have a high current account deficit, and all this fundamentally can be traced back to the fiscal deficit and the "all ducks line up everytime for my budget to work" kind of budgets that got presented in the past few years. The Congress and the unelected NAC blow hards spent the "future" growth, as if it was a fixed deposit scheme that will give guaranteed revenues in the future without any work. They took the growth for granted and abused the growth plant. That plant is sick and is on the verge of collapse.

Aditya_V · Post by **Aditya_V** » 13 Jun 2012 10:00

Yje new proposed Hike in excise dury on Diesel cars from 1.75 lac to 2.5 lacs with resultant VAT< life tax increase should have been in the Autos thread.

But my gut feeling it should be here since I see really hiting a lot of Industries 1) the Car Industry 2) the Call TAxi/ Tourist Car Industry 3) which in turn is going have the Hospitality Industry reeling.

While the Fat cats Buying a Q7 or BMW 5 series or E Class will consider this a parking Ticket, induvidual and tourist car industry is going to reeling with this development. I think this is like amputating a foot to save a toe.

Arjun · Post by **Arjun** » 13 Jun 2012 10:01

vina wrote:More insidiously, a whisper campaign is on to paint S&P's report as a "political hit-job": this bizarre conspiracy theory holds that the primary S&P credit analyst who authored the report, Joydeep Mukherji, is a relative of a BJP leader from Paschim Banga. And that the candid comments in the report about the dysfunctional nature of the relationship between Prime Minister Manmohan Singh and Congress president Sonia Gandhi point to the political nature of the report.

The only thing missing is for Digvijaya Singh to miraculously connect the dots and establish an RSS conspiracy behind S&P's report.

We're witnessing a party with paranoid delusions of persecution in its terminal gasps. This government saw 'Hindutva forces' behind the movement for governance reform, the anti-corruption wave, praise for Gujarat's development & the Army leadership. Finally its come to this - S&P being accused of being 'Hindutva' !!!

What would it take to put this party of supreme jackasses out of its misery ?