Indian Economy - News & Discussion 27 May 2012

amit · Post by **amit** » 25 Sep 2012 07:51

RamaY wrote:In 2011 walmart's sales were $418b and profit margin was $25b. Their 2011 Cash in hand was hardly $7b. Please tell us how much FDI Walmart can bring into India.

So Walmart can't raise the cash to invest in India? Well then no need to worry, have curry! Jokes apart, I constantly bring up Walmart because if you notice that most other posters here seem to think somehow Walmart=FDI in retail. In fact I have posted previously that this is no just about Walmart.

Now you tell me what push GoI can give to Indian retail industry by creating a $10-20b cash pool to kick start its domestic retail industry. I am sure any ordinary kirana store owner makes an annual revenue of 6-10 times the working capital, that would be a minimum of $100-200b upgraded retail market within India.

You just don't seem to get it. A retail supply chain is successful only if there is total ownership from procurement stage to the consumer touchpoint. Cash - that is the money for investment - has never been the issue, it's the expertise, management skill, to run such a supply chain that's the issue. I gave you the example of Amul. Amul has been successful because it tightly controls all parts of the supply chain, you simply can't have many companies sharing the supply chain, because then there would be no ownership.

And surely if this can be executed successful there must be examples that you can cite? If you can't then it just remains a theoretical construct good for chai-biskut sessions.

The world has changed a lot since the days of only a western business can raise capital. An SDRE Tata raised enough capital to buy Cairn. The same can be achieved in retail sector too without losing the market and supply chain control to the new EICs. If Walmart can raise $20b, so can any Indian business house of that size. The GoI is supposed to help its local businesses to gain that critical mass by providing initial lift.

I hope you do realise that your paragraph above posits mutually contradictory POVs. On the one hand you very rightly point out that Indian industry has matured and can take on the best in the world by giving the Tata example. Yet at the same time you say the moment Walmart comes into India it will become the new East India company and totally vanquish local competition from the likes of Big Bazar, Reliance etc. And this is not even taking into consideration the resourcefulness of local kiranas - you need to keep in mind that when organised retail was allowed it controlled 25 per cent of the market, now its down to 17 per cent.

In short, you can't have it both ways. You can't say Indian companies are worldclass and then talk about how they will be decimated the moment Walmart enters India. - BTW I see you are just as much fixated with Walmart! Hello, there's other big brand retailers out there and they are also looking to come to India. How many EICs do you envisage invading India?

The MMS govt is so fixated over its Western masters that it completely lost the sense of nationhood, governance etc., it made India a 52nd state of United States, 51st being Pakistan.

This is a political statement. I'm not interested in discussing the merits or otherwise of your political views. My only request, in the interests of a good discussion kindly keep politics out of this thread.

RoyG · Post by **RoyG** » 25 Sep 2012 08:01

[youtube]rVRiyzn76rQ&feature=related[/youtube]

arnab · Post by **arnab** » 25 Sep 2012 08:50

I have seen a lot of breast beating on this thread regarding the wastage of money on NREGA (about Rs 40,000 crore in 2009-10). And I agree that the implementation of the scheme is massively mired in corruption (so what else is new!).
However, it might be pertinent to look at some other subsidies in India which do not get a lot of airtime on BRF:

The Indian budget has a 'Statement of revenue foregone' which lists the revenue foregone due to concessions provided on personal income tax, corporate income tax and indirect taxation - customs and excise duties. (Essentially these are subsidies to the wealthy)

http://indiabudget.nic.in/ub2012-13/sta ... nnex12.pdf

For 2010-11 the total revenue foregone through these subsidies were: Rs 459,705 crore!! So NREGA expenditure amounts to less than 10 per cent of these costs incurred by GOI.

kmkraoind · Post by **kmkraoind** » 25 Sep 2012 09:41

arnab wrote:I have seen a lot of breast beating on this thread regarding the wastage of money on NREGA (about Rs 40,000 crore in 2009-10). And I agree that the implementation of the scheme is massively mired in corruption (so what else is new!).
However, it might be pertinent to look at some other subsidies in India which do not get a lot of airtime on BRF:

The Indian budget has a 'Statement of revenue foregone' which lists the revenue foregone due to concessions provided on personal income tax, corporate income tax and indirect taxation - customs and excise duties. (Essentially these are subsidies to the wealthy)

http://indiabudget.nic.in/ub2012-13/sta ... nnex12.pdf

For 2010-11 the total revenue foregone through these subsidies were: Rs 459,705 crore!! So NREGA expenditure amounts to less than 10 per cent of these costs incurred by GOI.

Pardon my rudness, Arnab, you are just behaving like a communist who argues just for the sake of argument. Someone had a beautiful answer with stat for your rhetorical question.

Can Arvind Kejriwal change politics with populist rhetoric?

As for the so-called Rs 13 lakh crore tax concessions, once again Kejriwal shows he is a politician by using irrelevant figures to prove an unrelated point.

The Left is fond of using this figure to show that the rich get concessions, but not the poor.

There is no doubt at all that concessions to vested interests should be abolished, but most of the so-called revenue forgone figures given out in the budget relate to setting up export-oriented industries (which bring in foreign exchange to buy the oil we need), setting up industries in backward areas (Uttarakhand, north-east, etc), increasing investment in plant and machinery (accelerated depreciation), and middle class concessions like 80C deductions, et al.

As Firstpost noted before, a study by Rajiv Kumar and Soumya Kanti Ghosh of Ficci looked at the revenue forgone figure (around Rs 5 lakh crore) and concluded that it wasn’t exactly what the Left thinks it is. In an analysis published by The Indian Express (read this), they suggest if the so-called revenue forgone is taxed, growth could fall significantly.

According to Kumar and Ghosh, the revenue forgone (relating to 2010-11) largely comprises the following:

*Rs 1,98,291 crore of duty concessions for mass consumption goods like medicine, toothpowder, candles, kerosene, etc – withdrawing these will directly hit the poor that Kejriwal & Co want to protect.

*Rs 1,74,418 crore comprises import duty concessions for items meant to be re-exported. If these go, our export story also collapses.

*Rs 50,658 crore of exemptions relate to concessions on insurance premia, contributions to charities, interest payments on loans for higher education, etc. This is, admittedly, not going to the poor, but the salaried. But this is where Kejriwal draws his support from.

All these figures relate to 2010-11, but they do not change the underlying argument even for subsequent years.

arnab · Post by **arnab** » 25 Sep 2012 09:50

kmkraoind wrote:Pardon my rudness, Arnab, you are just behaving like a communist who argues just for the sake of argument. Someone had a beautiful answer with stat for your rhetorical question.

Can Arvind Kejriwal change politics with populist rhetoric?

As for the so-called Rs 13 lakh crore tax concessions, once again Kejriwal shows he is a politician by using irrelevant figures to prove an unrelated point.

The Left is fond of using this figure to show that the rich get concessions, but not the poor.

I'm sure Ficci is completely evenhanded in its analysis unlike the commies

But, if concessions are actually benefitting the poor - why not target it to the poor? why make it so broadbased that everybody has access to it?

And surely the 'growth' chestnut is cr@p. Given that we are a trade deficit country (imports are greater than exports) - trade must be detracting from our GDP growth rather than contributing to it. At least, NREGA is contributing to increased domestic consumption - leading to higher GDP growth.

Secondly - you improve export performance through better regulations and infrasructure - why provide subsidies? just like the anti-NREGA argument - no?

kmkraoind · Post by **kmkraoind** » 25 Sep 2012 10:00

^^^
I am not sure who in FICCI bought this stupid red paper without any logical explanations.

Regarding NREGA, its total BS program whose aim to keep sarpanch and their muscle men, and village level officials happy. With 35-50K crores we are not creating any tangible assets, its only making hard workers lazy and creating artificial labor shortages.

Would like to complete with economies who have 0-2% interest rates, and economies like China, where exporters get currency advantage, subsidies and flexible labor.

arnab · Post by **arnab** » 25 Sep 2012 10:08

kmkraoind wrote:^^^
I am not sure who in FICCI bought this stupid red paper without any logical explanations.

Regarding NREGA, its total BS program whose aim to keep sarpanch and their muscle men, and village level officials happy. With 35-50K crores we are not creating any tangible assets, its only making hard workers lazy and creating artificial labor shortages.

Would like to complete with economies who have 0-2% interest rates, and economies like China, where exporters get currency advantage, subsidies and flexible labor.

Well your link says 'ficci economists' did the study. I totally agree that NREGA has been a complete implementation failure, but I do not believe that the thought behind the program is BS. I'm not sure what tangible assets those various tax subsidies to the wealthy are creating - For example: if you want to buy an apartment, work hard, save money and buy it - surely you don't need subsidies (in the form of tax exemptions). all that does is create bubbles
Similarly, this need to do anything to increase exports creates the myth that only exports matter (even though one continue to import at a faster rate to finance these exports).

kmkraoind · Post by **kmkraoind** » 25 Sep 2012 10:14

Tangible assets means, village roads, village drainage, if not personnel toilets, community toilets; school buildings, hospitals, in South India where irrigation is dependent on ponds, pond repairs, etc. They will have trickle down effect like better standards. Tell me, after 5-7 years of implementation of NREGA, what India has gained,especially for villages.

arnab · Post by **arnab** » 25 Sep 2012 10:22

kmkraoind wrote:Tangible assets means, village roads, village drainage, if not personnel toilets, community toilets; school buildings, hospitals, in South India where irrigation is dependent on ponds, pond repairs, etc. They will have trickle down effect like better standards. Tell me, after 5-7 years of implementation of NREGA, what India has gained,especially for villages.

Yes sir - sure, but one can argue that the 'thought' behind NREGA was to provide assuredness of income to the most vulnerable in India. The ones whose livelihood depend on the vagaries of the weather and who do not have any access to insuring themselves against loss of income. If targeted properly - these people at the bottom of the economic chain actually could do with a little income security (unlike us who despite considerable income, appear to have easy access to a lot of subsidies that GOI provides).

So yes - all those village infrastructure that you listed can quite easily be funded by stripping away a small portion of the subsidies provided to the wealthy (corporates and people) which is apparently costing GOI Rs 460,000 crore annually.

Aditya_V · Post by **Aditya_V** » 25 Sep 2012 17:18

Arnab-> Doubt NREGA had such loftly ideals, it was meant to be a bribe to voters to be permantly loyal. Same villagers can be better employed through proper infrastructure funding in remote areas.

The problem if the TOP of the country are corrupt the it filters down all the way to the low level Panchayat head and Contractor.

Amitabh · Post by **Amitabh** » 25 Sep 2012 19:16

Montek S. Ahluwalia vigorously defends FDI in retail on Karan Thapar's Devil's Advocate

RamaY · Post by **RamaY** » 25 Sep 2012 20:02

arnab wrote:I have seen a lot of breast beating on this thread regarding the wastage of money on NREGA (about Rs 40,000 crore in 2009-10). And I agree that the implementation of the scheme is massively mired in corruption (so what else is new!).
However, it might be pertinent to look at some other subsidies in India which do not get a lot of airtime on BRF:

The Indian budget has a 'Statement of revenue foregone' which lists the revenue foregone due to concessions provided on personal income tax, corporate income tax and indirect taxation - customs and excise duties. (Essentially these are subsidies to the wealthy)

http://indiabudget.nic.in/ub2012-13/sta ... nnex12.pdf

For 2010-11 the total revenue foregone through these subsidies were: Rs 459,705 crore!! So NREGA expenditure amounts to less than 10 per cent of these costs incurred by GOI.

Arnab,

Our GDP to Tax Revenues ration is around 8-10%, which is healthy. It can be increased up to 15% only when GoI can provide First-World civic, industrial and military infra.

Everything else you wrote is hot leftist hawa. Those morons think they can collect 30-50% of the income as taxes, just because they can portray it as taxing the rich to feed poor.

NREGA's total cost in past 6 years is > Rs 300,000 crores. That is ~$60B. Imagine the benefit the nation would have got if it was directed properly instead of a vote-buying scheme.

Theo_Fidel · Post by **Theo_Fidel** » 25 Sep 2012 20:08

Amit,

The ICIER is an industry funded and staffed body. That report proves nothing of its wild and inaccurate claims and is questionable garbage. It is no better than the JNU funded study published earlier.

BTW Cencusud is a Chile based retailer, technically not Brazilian. WRT to Brazils still born manufacturing, it is a well known and documented phenomena. Per the link below its Industry has declined from 23% to 16 % of GDP and continuing to plummet. It is now less industrialized than India!Imports are surging as all the locals compete with Walmart, which by the way has a 16% share and rising of its retail trade. Brazil can get away with it due to its rentier state approach of selling its natural resources. We do not have that option.

http://brazilianbubble.com/opinion-the- ... y-problem/

WRT your market share argument I'm not sure if you understood what I said. Organized retail is not going to remain 5% of India retail. There is every chance that Walmart will capture 10% of retail and inflict a $50 Billion import from China penalty on India. Why in heavens name is this a 'sky is falling' moment! The wild statement baffles me.

sampat · Post by **sampat** » 25 Sep 2012 21:14

Walmart Took Over Chile In Only Three Years And Other Countries Are Terrified

Three years after entering Chile, Walmart controls a staggering 34 percent of the entire market.

Walmart entered Chile in 2009 when it acquired D&S, a leading food retailer there. It promptly changed its name to "Walmart Chile" and built off the existing infrastructure.

The stunning statistic about Walmart was part of a speech made by an Indian politician Anurag Thakur opposing foreign direct investments into the country. The country's "Big Bang" reforms will allow Walmart and other major retailers to sell directly to Indian consumers and will allow some retail stores to open there.

He gave the remarks in a speech opposing U.S. businesses entering the emerging market, the Economic Times reported. Thakur also said that Walmart has left many shopkeepers in Chile penniless and out of business.

This report by UNI Global Union explores the impact Walmart has on suppliers in foreign countries, including Chile:
"In the long term, Walmart pushes prices paid to farmers and manufacturers down rather than
raising them, and producers unable to accept such concessions simply go out of business. The company is so large that it has the power to dictate the terms of suppliers’ contracts, including turnaround time, quality, quantity and price."

And the control it has in the country:

"In urban Chile, when modern retail arrived in the early 1990s, a large number of small shops went out of business in the span of just a few years. As reported in ICRIER’s May 2008 report, between 1991 and 1995, “15,777 small shops went out of business, mainly in Santiago, a city of 4 million, “representing"21-22% of small general food, meat and fish shops, 25% of deli/meat shops and dairy shops, and 17% in produce shops. Chile’s food retail sector has continued the process of consolidation to the point of negatively impacting free competition. In December 2011, government competition authorities announced an investigation of Chile’s highly concentrated grocery sector, where Walmart is the largest player with 33.4% market share, for possible price collusion of basic products including meats and detergents."

It isn't hard to see why emerging markets are wary of U.S. businesses

arnab · Post by **arnab** » 26 Sep 2012 04:59

RamaY wrote:
Arnab,

Our GDP to Tax Revenues ration is around 8-10%, which is healthy. It can be increased up to 15% only when GoI can provide First-World civic, industrial and military infra.

Everything else you wrote is hot leftist hawa. Those morons think they can collect 30-50% of the income as taxes, just because they can portray it as taxing the rich to feed poor.

NREGA's total cost in past 6 years is > Rs 300,000 crores. That is ~$60B. Imagine the benefit the nation would have got if it was directed properly instead of a vote-buying scheme.

Sorry RamaY ji - that has to be one of your most ignorant statements on this thread (and believe me you have made a few!). Tax-GDP ratio of 8-9 % is pathetic (India's tax GDP ratio is around 17 per cent thanks to various indirect taxes. direct tax collections must be barely 6 per cent of GDP).
Secondly, you are talking of a chicken and egg problem (or the Tea Party logic). You don't want to pay taxes (or give up your subsidies)- but you want govt to provide first world infrastructure!

NREGA's total cost in 6 years is 300 000 crores (roughly 50,000 crore per year * 6 years).
Subsidies to the wealthy is roughly 460,000 crore * 6 years) . You do the math.

Effectively subsidies to wealthy in 1 year is > NREGA costs in 6 years.

Hari Seldon · Post by **Hari Seldon** » 26 Sep 2012 05:32

^^^Interesting arnab da.
Could you list what these subsidies are? Am sure diesel, LPG and power and among them and I support their (subsidy's) abolition. What else is included, btw? kerosene? govt hospitals? Courts+police+Defence? Just wondering only. TIA.

arnab · Post by **arnab** » 26 Sep 2012 06:10

Hari Seldon wrote:^^^Interesting arnab da.
Could you list what these subsidies are? Am sure diesel, LPG and power and among them and I support their (subsidy's) abolition. What else is included, btw? kerosene? govt hospitals? Courts+police+Defence? Just wondering only. TIA.

Have a look at the link I posted a few posts up. It lists a whole slew of personal and corporate deductions that are allowed by the GOI. I'm sure it is possible to rationalise that list.

BTW - as I have said before, please do not take this to mean that I support NREGA in its present form (I do like the thought behind it but not its implementation).

RamaY · Post by **RamaY** » 26 Sep 2012 06:26

ARnab,

Your JNU-nomics are so predictable

Yes, I (luckily and consciously) did not study the secular-socialist economics that they teach in JNU or the colonial-economics they teach in West. I learned the yindutvavadi economics and that is why I am so ignorant in your eyes. Don't think much about it, lest you will have a secular-diarrhea.

Just because I happen to have lot of money and it earns interest, it doesn't automatically become your fathers money to be collected as taxes. There are tax laws and if the tax laws allow people to pay lesser taxes then you should blame your JNU economist fathers for allowing such loop holes.

First of all, I don't know whose ass you pulled the 460,000 crore number you pulled from but I will let the stink stay on your fingers and will take that number for argument sake.

Secondly the government policy gives some sops for industry so the private individuals invest and create permanent jobs. It is calculated that (look at my alternative budget thread for source) 15000 permanent jobs are created per every 1000 crore investment.

Thirdly I took $1.7T GDP and calculated the ($180b) Rs 950,000 crore revenues at Rs 55/$. I don't know where you got your numbers.

Fourthly the direct tax revenues of Rs563,000 crore came from 3.5 crore IT payers, where as the 700,000 crores of indirect taxes came from all the 121 crore Indians. Now. You do the math and tell me whom you want to rob next.

Below link shows that Assocham predicted to create 10-15million jobs in India. That is the benefit of those business friendly Policies and 460,000 crore tax loss. Without this GoI tax base would be ~1 crore people less (thus making the direct tax revenues fall by ~20-40%)

http://www.livemint.com/Politics/EBD1Vm ... socha.html

Even if we assume those sops are unnecessary, it is not only the IT assessees that benefit from such industry output. Every Indian consumes the produce of that industry and your 460000 crore turns out to be mere Rs 3800 economic value per Indian.

So on one hand one year tax loss (the ghost in your JNU mind) of 460,000 ended up creating a minimum of 10,000,000 permanent jobs. By the way it is better than 15000 jobs per 1000 crore ratio if you use real maths and not JNU math.

On the other hand how many permanent jobs your Moorkhnomics created from its 300,000 crore wastage? 0

Now your Moorkh Singh cries that Money doesn't grow on trees. Where did it grow when he paid his commonwealth fee of $10b just a year ago? That too for some voting rights in IMF which is busy funding the EU orgy for next 10 years? Wouldn't it have been more beneficial if he created a Indo-Africa economic fund with that money, where Indians are buying/leasing millions of acres of land? Where did he get the Rs 50000 crore for NREGA? From JNU students association?

Finally nobody is asking to keep the poor like that forever. My Yindutvanomics tell me that the job of the government is to educate, equip and facilitate its citizenry in becoming economically self sufficient. It doesn't tell me to rob the rich and pay the poor because it will destroy the incentive to be productive, beyond a point. All we are asking is for GOI to think from policy perspectives and diligently use the taxes paid by its citizenry. The tax payers of India are also citizens of India. They have a right to demand good governance and nationalistic economic policy. Not some dhimmi slave of west policies.

Thank you.

arnab · Post by **arnab** » 26 Sep 2012 06:45

RamaY wrote:ARnab,

Your JNU-nomics are so predictable

Yes, I (luckily and consciously) did not study the secular-socialist economics that they teach in JNU or the colonial-economics they teach in West. I learned the yindutvavadi economics and that is why I am so ignorant in your eyes. Don't think much about it, lest you will have a secular-diarrhea.

Just because I happen to have lot of money and it earns interest, it doesn't automatically become your fathers money to be collected as taxes. There are tax laws and if the tax laws allow people to pay lesser taxes then you should blame your JNU economist fathers for allowing such loop holes.

First of all, I don't know whose ass you pulled the 460,000 crore number you pulled from but I will let the stink stay on your fingers and will take that number for argument sake.

Secondly the government policy gives some sops for industry so the private individuals invest and create permanent jobs. It is calculated that (look at my alternative budget thread for source) 15000 permanent jobs are created per every 1000 crore investment.

Thirdly I took $1.7T GDP and calculated the ($180b) Rs 950,000 crore revenues at Rs 55/$. I don't know where you got your numbers.

Saar I'm sure you must have received some sort of education

but apparently they omitted to mention that the precursor to education is to read and comprehend. That 460,000 crore (or rather 458,705 crore) figure is provided in GOI's budget on revenue foregone. Similarly I'm not sure why all this resorting to handwaving and assumptions about how much tax revenues have been collected when all one needs to do is look at India's budget papers - presumably yinddootvavadi economics taught you how to research and locate stuff

As for the rest of your rant - creation of jobs by the private sector should not require subsidies. Just good regulation and infrastructure should suffice. However, when a lot of GOI funds goes into vested interests (corporate and private), it is not surprising that there is no money left over for these critical issues.

I also find your sense of entitlement rather amusing, about "if I happen to have a lot of money, I should keep it" I am sure a lot of erstwhile maharajas and sultans felt the same way

RamaY · Post by **RamaY** » 26 Sep 2012 06:50

^ atleast I am claiming my entitlement on my money. You on the other hand sir, claiming ownership on others.

Again it is your JNUnomists and Slavenomists who have been in the power and making the policy. So go cry on them.

The revenue foregone is Rs3800 per capita and it is given to all Indians and not for rich individuals only.

arnab · Post by **arnab** » 26 Sep 2012 07:02

RamaY wrote:^ atleast I am claiming my entitlement on my money. You on the other hand sir, claiming ownership on others.

Again it is your JNUnomists and Slavenomists who have been in the power and making the policy. So go cry on them.

The revenue foregone is Rs3800 per capita and it is given to all Indians and not for rich individuals only.

er sure - but it doesn't entitle you to claim a higher share of taxes from people who were not lucky enough to have rich fathers

Taxation means paying a fair share of your income for public goods. After all - you want a lot of defence expenditure? why? because you have a lot of assets to protect. A poor person in a village earning Rs 20 a day may not share your wants - because he has no assets to protect. Yet - your requirements are being met, his aren't

Saar again - simply dividing 460,000 crore by population does not automatically mean that 'every' citizen is getting benefits of the revenue foregone. The advantages are occuring primarily to the corporates and the top 20% of the population who are able to acquire some sort of assets / savings. Please to comprehend.

RamaY · Post by **RamaY** » 26 Sep 2012 07:13

On one hand you proclaim that the industry, that creates employment, should not be given any sops.

On the other hand you support the ideas and policies that give free money (and not education or tools of finance to start their own industries) to individuals in return for their votes.

No wonder your JNUnomics kept India at this stage for so long.

Saar please educate me - how giving land, resources and others are benefiting only few rich? If a phara company gets tax sops who benefit from the products (at whatever price they are sold?)

I am really impressed for your crocodile tears for the poor. How many poor friendly policies your JNUnomics created in the past 60 years?

arnab · Post by **arnab** » 26 Sep 2012 07:24

RamaY wrote:On one hand you proclaim that the industry, that creates employment, should not be given any sops.

On the other hand you support the ideas and policies that give free money (and not education or tools of finance to start their own industries) to individuals in return for their votes.

No wonder your JNUnomics kept India at this stage for so long.

Saar please educate me - how giving land, resources and others are benefiting only few rich? If a phara company gets tax sops who benefit from the products (at whatever price they are sold?)

I am really impressed for your crocodile tears for the poor. How many poor friendly policies your JNUnomics created in the past 60 years?

Saar - is the industry doing india any favours by creating jobs? I'm told that is the capitalist system. Private sector is efficient and great and decides on the basis of market conditions. So why for they need sops?

Saar free money is being given to everybody. The rich who do not need it but fight tooth and nail against giving it up. I would have believed that you were truly in favour of government providing education, infrastructure etc - if you had argued against subsidies to all levels of society (rich and poor), however, I see that your ire is primarily against any advantages given to the poor - so excuse me if I think you are the one weeping crocodile tears

I'm sure that the Rs 40,000 crore NREGA is primarily a waste of money, but unfortunately, so is the Rs 460,000 crore subisidies to the rich. So I'm evenhanded in my approach - either improve implementation and targeting of both or get rid of both

But alas I'm told that private sector needs these subsidies because they are creating jobs and providing stuff cheap. I thought competition did that

RamaY · Post by **RamaY** » 26 Sep 2012 07:40

Reposting...

So on one hand one year tax loss (the ghost in your JNU mind) of 460,000 ended up creating a minimum of 10,000,000 permanent jobs. By the way it is better than 15000 jobs per 1000 crore ratio if you use real maths and not JNU math.

On the other hand how many permanent jobs your Moorkhnomics created from its 300,000 crore wastage? 0

arnab · Post by **arnab** » 26 Sep 2012 07:44

RamaY wrote:Reposting...

So on one hand one year tax loss (the ghost in your JNU mind) of 460,000 ended up creating a minimum of 10,000,000 permanent jobs. By the way it is better than 15000 jobs per 1000 crore ratio if you use real maths and not JNU math.

On the other hand how many permanent jobs your Moorkhnomics created from its 300,000 crore wastage? 0

Any credible source that backs up this data? That the corporate subsidies alone are responsible for the job creation while NREGA did not create any jobs? Afterall more money in people's pockets means greater consumption and hence more jobs?

We can't have it both ways can we?

amit · Post by **amit** » 26 Sep 2012 11:03

Theo_Fidel wrote:Amit,

The ICIER is an industry funded and staffed body. That report proves nothing of its wild and inaccurate claims and is questionable garbage. It is no better than the JNU funded study published earlier.

So just because you don't like the conclusions of the ICRIER study you rubbish the organisation? Interesting. Having grown up in West Bengal I'm quite familiar with such tactics. The Leftists were champions in this.

For your information and for the information of others, here is a list of the board of governors for ICRIER:

Mr. Tarun Das, Chief Mentor of Confederation of Indian Industry (CII) & President, Aspen Institute India; Ms. Janaki Kathpalia, Former Additional Secretary Ministry of Finance, Department of Economic Affairs; Dr. Vijay Kelkar Chairman
National Stock Exchange of India Limited; Ms. Chanda Kochhar, Managing Director and Chief Executive Officer
ICICI Bank Ltd; Mr. Uday S. Kotak Vice Chairman & Managing Director Kotak Mahindra Bank Ltd; Mr. Anand Mahindra
Chairman and Managing Director Mahindra & Mahindra; Dr. Rakesh Mohan, Distinguished Consulting Professor Centre Stanford Centre for International Development Stanford University; Mr. Nandan M Nilekani Chairman Unique Identification Authority of India; Dr. Raghuram Rajan Chief Economic Adviser Government of India; Mr. N. K. Singh Member of Parliament
Rajya Sabha; Mr. Malvinder Mohan Singh Group Chairman Religare & Fortis Healthcare; Dr. Kiran Mazumdar Shaw Chairman & Managing Director Biocon Limited and Mr. Nitin Desai

Even a Leftist loony would hesitate to rubbish findings of a not for profit outfit like ICRIER whose governing board consist of such distinguished names. However, you do have a tendency to rush into places where Angles fear to thread. What to do onlee?

Theo_Fidel wrote:BTW Cencusud is a Chile based retailer, technically not Brazilian. WRT to Brazils still born manufacturing, it is a well known and documented phenomena. Per the link below its Industry has declined from 23% to 16 % of GDP and continuing to plummet. It is now less industrialized than India!Imports are surging as all the locals compete with Walmart, which by the way has a 16% share and rising of its retail trade. Brazil can get away with it due to its rentier state approach of selling its natural resources. We do not have that option.

I'm perfectly aware of Cencusud. I highlighted it because it is doing very well despite the presence of "evil" Walmart. Which means that Walmart is not so invincible as its made out to be. Regarding Brazil's manufacturing woes, I'm mystified as to why you keep on harping about it. As I wrote in my previous post there are many causes for that but to imply that Walmart is responsible is childish IMO.

Theo_Fidel wrote:WRT your market share argument I'm not sure if you understood what I said. Organized retail is not going to remain 5% of India retail. There is every chance that Walmart will capture 10% of retail and inflict a $50 Billion import from China penalty on India. Why in heavens name is this a 'sky is falling' moment! The wild statement baffles me.

My apologies for the sky is falling statement.

However, you also IMO didn't understand the implications of what you are saying when threw in that number $50 billion. Let me elaborate on the calculation again:

You say Walmart will import $50 billion from China. In a simplistic binary scenario where Walmart sells goods only from China or India, that $50billion would represent 70 per cent of what they sell since the Govt has mandated that at least 30 per cent has to be procured from within India. Combining the two would give us a figure of around $72 billion worth of stuff available to Walmart to sell in one year.

I deliberately kept out the fact that Walmart would source from other countries as well because otherwise the numbers are going to become even larger. I’ve also have not factored in the fact that Indian customers have their own tastes and peculiarities and they may not like all stuff from India.

Coming back to the $72 billion number, Walmart’s typical cost of operations is 22 per cent. Source is here

So we can add another $16 billion to the $72 billion as OpEx. We then get - hold your breadth here - $88 billion. Now Walmart’s operating margin is around 6 per cent. Source is here.

Add all the figures up would give us $93-$94 billion for Bharti-Walmart in order for it to import $50 billion of stuff from China to sell in India. Again note that the turnover dollar number would probably be in excess of $100 billion if you factor in real world scenario that Walmart would be importing stuff from other countries as well and so that $50 billion China imports you talk about would be <70 per cent of Walmart's total procurement.

Keep in mind that total retail market in India is $500 million and growing at 15-20 per cent. You are essentially saying that Walmart would capture one-fifth of the market? Sorry boss that’s not gonna happen.

Note, I’m not saying that at some point of time in the future Bharti-Walmart cannot have a turnover in the region of $95 billion. But that will occur at a point of time when $50 billion of more imports from China would matter diddly squat because our GDP numbers would be higher by several quantums than what it is today.

And yes, Walmart's turnover in 2012 was $446 billion. Out of this figure $100 billion came from Walmart International. You are saying that Walmart can add another $51 billion (taking $100 billion turnover and the 51:49 arrangement with Bharti) from it's Indian operations alone? Wow!

I would suggest that before throwing in random numbers please think a moment on their implications.

Aditya_V · Post by **Aditya_V** » 26 Sep 2012 12:03

Amit-> good analysis , but one accounting nit pick, there is NO JV- Propotional consolidation in US GAAP and is going out in IFRS. When Turnover is reported by MNC's , it includes Minority Interests/ outside Interests as well, so If Bharti - Airtel with Walmart 51% stake and Assume it has control (passign Fin 46R test) and had 100 Billion turnover, it would report 100 billion in its sales and not 51 billion.

Aditya_V · Post by **Aditya_V** » 26 Sep 2012 12:12

Posting here.

Maruti offers 70% hike to workers over three years

I remember some members stating Maruti was undepaying its workers, please see this post.

The gross salary of an entry-level worker at Maruti is Rs 23000 at present, and the cash-in-hand comes out at around Rs 18,000. As per the new wage structure, the average entry-level salary will increase to Rs 37,800 over the next three years. The revision is considered to be very healthy, considering that the company had given an increment of Rs 9,300 in the last such exercise in 2009. "Inflation is a reality we kept in mind while working out the new wages," Siddiqui said.

That is more than what people make as Engineers in IT-Vity and what an entry level accountant makes. These guys are far from being underpaid.

The Union leaders must be making much more.

I am not complaining, they are building value and need to be paid for it, but had no business murdering anyone.

The biggest myth in India is that people sitting in a/c offices make the most money. Call taxis, landlords of commericial complexes, small shops in retail and whole bunch of people who are small businesses make much more money.

nakul · Post by **nakul** » 26 Sep 2012 12:17

I hope others take a leaf out of Maruti's books. They have been far too stingy to pay a measly 5k extra to workers. For a person earning 13k to jump to 18k is a huge difference. There are other reforms regarding labor laws that need to change as well. Daily wage laborers are paid Rs 100 per day when the contractor takes home almost as much as that per worker. This huge disparity needs to be checked in as well.

amit · Post by **amit** » 26 Sep 2012 13:37

Aditya_V wrote:Amit-> good analysis , but one accounting nit pick, there is NO JV- Propotional consolidation in US GAAP and is going out in IFRS. When Turnover is reported by MNC's , it includes Minority Interests/ outside Interests as well, so If Bharti - Airtel with Walmart 51% stake and Assume it has control (passign Fin 46R test) and had 100 Billion turnover, it would report 100 billion in its sales and not 51 billion.

Thanks for the correction Aditya ji.

If it's reported as $100 billion then it means, as per, the $50 billion China import figure then in India alone Walmart will have a turnover which is equivalent to what they get from their international operations.

member_20317 · Post by **member_20317** » 26 Sep 2012 15:03

Amit ji,

This is what Theo ji, said:

Theo_Fidel - “There is every chance that Walmart will capture 10% of retail and inflict a $50 Billion import from China penalty on India.”

That implies that he is talking about the ‘sale values’ and not about the ‘cost of sale’. So any analysis starting from Cost of Sales=50 Billion USD is ….

“10% of retail” implies 10% of what is the retail value in Indian market. Which is entirely believable. So I kind of doubt if your 30% gross up for domestic purchases, is going to help the matter. The words ‘penalty on India’ can only corroborate his other wordings as the penalty on India will amount to the value that could have been created and kept in India which for a big and resource endowed country like India is well “all of value”, not just the cost of imports. “All of value” is actually also what we need considering the challenges we face.

Also you have added the whole opex to the imported goods value when infact they would need to be loaded only with the differential cost of bringing the imported goods to the shop floor. IOW only the trucking cost. Which considering the fact that 3 out of 4 of our biggest cities are in coastal areas with port should be well negligible. So your 22% markup is also not really understandable.

We need to understand that anything that can be made anywhere can be made in India if Indians are allowed a level playing field.

Also for the benefit of myself and our other members, what Aditya_V ji pointed out implies is that amit ji is dividing the turnover up amongst the JV partners when in fact the US reporting does not do that. Which implies that the full 100 billion USD reported under the Walmart International line item should probably be divided further, to bring it in line with the amit ji’s logic or the full $93-$94 billion that amit ji has calculated should be added to Walmart International’s figure without dividing amongst JV partners, if the reporting is to be per the US standards. Aditya_V ji correct me if I am wrong here.

But while this seems like a credit to amit ji's POV, that is no consolation for us SDREs because the Walmart India already has (and other will likely learn from them) started as basically the wholesalers and they are taking this seriously. This implies that they will only be financing stocks for part of the market where they will take the financing income and they will be in the retail market also where they may choose not to do that and there will be enough Lawyers/CAs and Income Tax officers who will facilitate this. Whatever way the competition laws and transfer pricing laws put it, it is just plain bad to let that happen if one has his brain at the right place.

Since the Walmart types will be both in wholesale and retail the right way to see Theo ji’s statement would be as follows:

What percentage of retail business in India is dependent on China price?

Well 10% that Theo ji has guessed looks like the one on lower side because the China price is based on exchange rate ghotala, something for which nobody in the world has any response.

amit · Post by **amit** » 26 Sep 2012 16:23

Sigh! Ravi ji, I think you should read a post before bringing your considerable accounting skills to the fore.

First of all the $100 billion attributed to Walmart International is from their balancesheet - that is out of the $442 billion Walmart earned $100 billion came form their international operations. Maybe Walmart does not have brilliant accountants who can dice up the $100 billion to smaller parts but what to do? We humble folks with no accounting knowledge will have to depend on what published accounts are. At the end of the day its a listed company. And yes AFAIK the only instance of Walmart having a JV partner is in India. So good luck with your dicing.

Regarding what Theo said, it would have perhaps been better if you read the chain of posts. This is what he said initially:

There is a difference between a Subiksha or a Reliance Fresh that has a domestic supply chain and minimal access to a globalised chain vs a Wal-mart that has massive foreign supply chain and relatively zero Indian supply chain.

We are not in the position to suffer another $50 Billion deficit to Panda, which would be trivial for Walmart. It would mean an outflow of $500 Billion over the next 10 years. More than enough to completely drain our Forex reserves.

Even a modest 10% Walmart market share of our $500 Billion retail trade would cause this. People are underestimating the challenges to our trade balance.

The typical OpEx cost of Walmart is 22 per cent, I gave a source for that. And I'm sure you know what OpEX is. If you think it's only trucking cost - well then good luck to you! I can only say Wow!

Also I seem to get the impression that you have a problem with the value 30 per cent, not sure why. Earlier when I pointed out that Crisil said 30 per cent of India's food and vegetables are wasted you had problem with the number. Now you have a problem with 30 per cent domestic consumption which is mandated by GoI for multibrand retail.

Look at the end of the day you can nitpick all you want. All I an say that $50 billion worth of more imports from China due to Walmart's entry into India in a JV with Bharti is quite unrealistic to put it mildly. You may believe differently. However, unless you can show proof to convince me otherwise, I'm not buying it. Sorry.

Aditya_V · Post by **Aditya_V** » 26 Sep 2012 16:55

Ravi_G, currently Walmart can do only cash and carry business without FDI in retail, No credit.

I did not get this Lawyer/ CA/ Income Tax facilitating. What is the role in this? whole society should be having a role. Far more than the 3 category you mention, the Key is police Judicary and Babudom in various GOvt departments.

Accountants only do number crunching and publish them or write cheques as needed.

vishvak · Post by **vishvak** » 26 Sep 2012 18:35

amit wrote: ..

Look at the end of the day you can nitpick all you want. All I an say that $50 billion worth of more imports from China due to Walmart's entry into India in a JV with Bharti is quite unrealistic to put it mildly. You may believe differently. However, unless you can show proof to convince me otherwise, I'm not buying it. Sorry.

Amit ji, is it improbable?

If it is not improbable, would it not mean that there must be enough laws in India to retard and stop such probability and have rules that Walmart and other such, including Indian retail chains, use or create facilities/logistics/supply-chains in India?

RamaY · Post by **RamaY** » 26 Sep 2012 19:06

arnab wrote: Any credible source that backs up this data? That the corporate subsidies alone are responsible for the job creation while NREGA did not create any jobs? Afterall more money in people's pockets means greater consumption and hence more jobs?

We can't have it both ways can we?

Aaaha.. JNUrhetoric haa?

Go and search for private job additions in 2011. These are incremental permanent job additions in that year.

Then go and search for articles on NREGA and see if they talk about any permanent job creation.

Then come and educate us how cash doles to BPL people (or Are they? I remember reading news articles that suggest ~12000 crore went into Maoist funds from NREGA; and then include the congress-corruption quotient to it.) will fuel economy.

And then tell us how the NREGA funds are fueling the economy. A hint for your search is "impact of NREGA on farm sector labor availability".

It is so cute that you end your argument with "we cant have it both ways". Yes, we can't have it both ways. Your favorite moorkh MMS and JNUnomics+slavenomics have to go for Indian resurgence.

amit · Post by **amit** » 26 Sep 2012 20:18

vishvak wrote:
amit wrote: ..

Look at the end of the day you can nitpick all you want. All I an say that $50 billion worth of more imports from China due to Walmart's entry into India in a JV with Bharti is quite unrealistic to put it mildly. You may believe differently. However, unless you can show proof to convince me otherwise, I'm not buying it. Sorry.
Amit ji, is it improbable?

If it is not improbable, would it not mean that there must be enough laws in India to retard and stop such probability and have rules that Walmart and other such, including Indian retail chains, use or create facilities/logistics/supply-chains in India?

Last I checked, such rules have been put into effect. 30 per cent local procurement and the investment of, I think, of $100 million in supplychain infra.

Theo_Fidel · Post by **Theo_Fidel** » 26 Sep 2012 21:10

Amit,

I'm not sure why you have such trouble believing the $50 Billion number. In data challenged India, just the traceable retail trade in 2009 itself was ~ $500 Billion. It is very likely it will be $2 Trillion item by 2020 when GDP is ~ $6-$7 Trillion. Note that I kept it constant for 10 years. If anything $50 Billion might be a huge underestimate by 2020.

Walmart USA imports an incredible 60% of its goods from China, Mexico, NAFTA, etc. out of a total revenue of $250 Billion. I can very much see Wal-mart becoming a $100 Billion player in India after buying out several retailers with its Billions of 0% cash. Esp. as organized retail is in its infancy in India but is growing at 80% per annum.

Since China is the only low cost supplier in our area, other than BD or TSP, most of Wal-marts imports to India will have to come directly from Panda. I'm more concerned by the 'unprotected' 70% that Walmart can source from anywhere. BTW Walmart has even staunchly opposed the 30% clause. Gives you an idea of the Wal-mart India mindset.
-----------------------------------

WRT your defense of ICRIER, you mistake my attack as being personal. It is not. Organizations such as ICRIER follow the agenda of their sponsors. In any case I read the actual report which a was shallow summation of personal anecdotes and opinion surveys. How in heavens name does it prove and the authors arrogantly confidant that FDI in retail will have no impact. It tells me the authors had a predetermined agenda and they only found what they wanted to find. I would even hesitate to call it a scientific study or approach. No methodology was presented, no statistical analysis was done, no error bars were defined, no biases identified and no controlled experiments were done. Reminds me of Yum-Bee-Yea garbage that is essentially useless.

RamaY · Post by **RamaY** » 26 Sep 2012 21:55

Background:

Since independence and mainly the past 8 years

Our economic policy philosophy is determined by our (sic) secular constipation and socialist economic models. That is why we have none other than PM of India proclaiming Muslims (aak thooo secularists) having first right on Indian resources, birth-based affirmative actions and cash doles to defined-poor (the real poor are often sidelined based on artificial factors) etc.,

Then we have the whole JNU-scum and ISI-madrasa-mullahs who designed, architected and managed the Five-Year plans, control the budget planning, industrial policy, labor laws, license raj and worst subsidy raj on this planet.

These secular socialists also control the media and education system and thus control the public debate on any and every issue, be it NREGA or Reservations or Gas prices or FDI or you name it.

Recent Economic Environment

We have seen unprecedented economic growth in between 2000-2008, all economic indicators went upward.

We also have seen a new cash dole project (in addition to already existing subsidy regime) costing >Rs 50,000 crore per annum. At 100 guaranteed work days at Rs 150/day; it worked out to Rs 15000 per head. I am not sure but if we assume two adults of a single family come under this scheme, we are looking at Rs 30,000 guaranteed annual income to a family. So we can assume at least 1.5 crore families benefited from this scheme, even though it did not create a single permanent job (by industry definition), other than 10 or so NAC members and few Maoists.

Then we saw unprecedented scams under this administration. The few top level cases amount to >10,00,000 crores which could have singlehandedly financed a national project like Delhi-Mumbai industrial corridor or National-River-Linking project or any such project. However we did not hear a single uttering by the JNU-morons on this subject. Where were all these bleeding-heart socialists when their socialist govt was robbing public money in day light? Why do we see these Communists, E-con-mists support this moorkh MMS even after all these schemes?

Then we see this moorkh MMS paying his commonwealth tribute to his western masters with $10B of public money. We didn't hear a single squeek from this socialist-moral-morons. But somehow these morons give us sermons on lost-taxes for indian industries.

The climax to all this is the Moorkh Pradhan Mantri cries on TV that "Money doesn't grow on trees", that too after wasting lakhs of crores of exchequer's money. Shouldn't he be hanged for this obvious treason? Is it treason only when a ruler back-stabs a country and make it a colony of foreign power? Isn't it a treason when a ruler steals public money right under their nose and make its foreign policy a sub-set of foreign power's world view?

Understanding the problem

1. Here we have a FM who allegedly spearheaded the economic reforms after realizing that the old license raj system is a failure
2. Then he becomes the PM of India and is the second longest regime
3. This very PM unleashes the worst subsidy and license raj in Indian history stunting all important national projects while unleashing cash dole programs
4. Then the very PM blames (who? Indian public or opposition or NAC or RamaY?) that the current economic policy (which he was heading for past 8 years) is not good and that the "money doesnt grow on trees" and we (who we?) should take bold decisions.

My question

Why do some posters try to pontificate to us, common abduls, that every decision made by this slavish govt is somehow the best decision yet on our economic policy?

Why should we, the ignorant yindutvavadis, take this nonsense when the same people are at the helm, setting the direction, defining the policy, executing the policy and on top of it telling us that "money doesn't grow on trees"?

Why do we have to live with these secular-JNUconomic-slave migraine when they try to explain economic policy using individual actions of this corrupt leadership while hiding the overall economic philosophy, policy and leadership in plain view?

member_23629 · Post by **member_23629** » 26 Sep 2012 22:10

Esp. as organized retail is in its infancy in India but is growing at 80% per annum.

Modern retail is actually growing at 25 to 30 percent per annum in India, but is still about 7 percent of the overall retail trade. Another interesting fact: The cities most infiltrated by modern retail are not Mumbai or Delhi, but Bangalore and Hyderabad.

Theo_Fidel · Post by **Theo_Fidel** » 26 Sep 2012 22:33

Yes sorry, meant to type 30%. It will be 25% of retail by 2020 BTW.