Indian Economy - News & Discussion 27 May 2012

[Aditya_V]

Even though this is an unpopular move I belive it is a step in the right direction.

Rs 10/litre hike in diesel, kerosene if oil ministry proposal okayed

Looks like with our massive Budget deficits due to corruption, salary hikes, free schemes we have to suck it out for next 5 years before we can balance out books. Between 2004-09 UPA I Spent all the funds for 2009-19.

Our books are in real bad shape.

[subhamoy.das]

sir; Villagers are poor, uneducated and live from hand to mouth. I think you are misinformed of the welfare claim for villagers. It is not as if they are eating desi ghee on the gov. expense. However i do agree that in stead of welfare spending, the government had got better results by investing in roads and other infrastructure. The problem with Bengalis, is that they have too many intellectuals. Who in the right mind could turn down a auto plant (nano), for the sake of some farm land. I mean how many potatos could you have grown on that land, which could have created thousands of jobs. Worst, even educated Bengalis supported the nonsense. Bengal is a gone case. Hopefully they can learn from.

When u see a able bodied begger at a street light - uneducated, poor, hand to mouth - what do u do ? Give him bhik or ask him to find some kind of job? If u truely care for him then the advice will be second one, at least that is what i what I do.

Regarding nano plant, the same villagers are now in even worse shape and cursing their action and yes Bengal is a lost case for now and we educated middle class Bengalis will continue to fly out to far away lands in search of jobs and a good life

[Theo_Fidel]

When u see a able bodied begger at a street light....

To call our destitute class able bodied is not correct.
They may be 30 years old but often their bodies are like 70 year olds, ridden with arthritis, weak eyesight and chronic anemia/fatigue.
Eyes need to be kept on the reality on the ground.

[subhamoy.das]

Even though this is an unpopular move I belive it is a step in the right direction.

Rs 10/litre hike in diesel, kerosene if oil ministry proposal okayed

Looks like with our massive Budget deficits due to corruption, salary hikes, free schemes we have to suck it out for next 5 years before we can balance out books. Between 2004-09 UPA I Spent all the funds for 2009-19.

Our books are in real bad shape.

This is basically the same modus operandi - steal from urban Indian and give welfare to rural India. This punch line "our energy prices are lowest by international standard" omits that fact that our jobs does not pay in internation currency but in Indian Rupees and if we consider the % of a months salary we pay towards enenery it is already 4 to 5 times that of international standard assuming a year adjusted montly electricy bill of Rs.10,000 for a upper middle class family running multiple ACs etc in summer time and making about 20L in a year in a job. An equivalent job in US will be around 1L USD and the enery charges will be around USD 150 per month.

[subhamoy.das]

When u see a able bodied begger at a street light....

To call our destitute class able bodied is not correct.
They may be 30 years old but often their bodies are like 70 year olds, ridden with arthritis, weak eyesight and chronic anemia/fatigue.
Eyes need to be kept on the reality on the ground.

I am sure u are not saying that most of rural India is full of these destitute class? I am ok with direct cash transfer for these class as they are not able to work. But if able to work then cash transfer form of welfare is haram in long run

[sum]

Looks like with our massive Budget deficits due to corruption, salary hikes, free schemes we have to suck it out for next 5 years before we can balance out books. Between 2004-09 UPA I Spent all the funds for 2009-19.

Only now am i able to appreciate the NDA rule of 98-2004.

If the INC had ruled during that period also, we would have heard excuses like dotcom bubble burst etc to explain why Indian economy plunged during that period!!

[sum]

Firstpost mentions about some Shangai statistics being pulled up by MMS-Chidu combo. Am not a economics expert to figure how true it is:

Faulty accounting may help FM meet budget goals

At the heart of India’s bad accounting system is the treatment of revenues and expenditures on a “cash” basis—which means if money is not in the bank account or not spent for the purposes it was earmarked, the accounts do not reflect the real picture.

For example, if money payable as subsidies in 2011-12 is actually paid out on 1 April 2012 instead of 31 March 2012, the 2011-12 budget deficit will look smaller. As for the next year’s budget, one can always put a small deficit figure and let the year decide where the actual numbers will go.

This is what Pranab Mukherjee did in the March budget, where he rolled over the balance subsidy payments due to oil companies for 2011-12 to this year, but failed to provide enough money even in this year’s budget. He provided around Rs 43,500 crore for oil subsidies this year, but almost all of it went to pay last year’s subsidies. This year’s kitty for oil subsidies started with zero.

This year, though, Chidambaram has other things working for him. While the subsidy bill is not going to disappear – it can be rolled over to next year at best—most government departments are failing to spend the money allotted to their schemes and projects.

The government is not only delaying expenses, but also taking its time making refunds to taxpayers. According to Chidambaram, this year refunds have totalled Rs 57,000 crore till mid-December against last year’s Rs 70,000 crore. One reason is the government’s decision to give priority to taxpayers who are owed loose change rather than big sums. He said: “Somebody who has to get Rs 5 lakh can wait. Somebody who has to get Rs 5,000 should get first,” the minister said.

It is an equitable principle, but if not all the big refunds are paid quickly, the government benefits in two ways by accounting for it on a cash basis: the refund value does not account for the time value of the money, and the money owed may get shifted to the future, or even next year.

Isn’t it time the government stopped playing such accounting games to get the deficit in order?

[subhamoy.das]

Since there is no national level mass leader in UPA they are not able to govern and instead using the easy route of cash to come back to power. The same goverance issue has impacted the business sentiment which in turn has lowered TAX collection. Thus the Indian public treasury is being subjected to double whammy here - wasteful/political spending and a shrinking income. They are now cutting cost by raising taxes, taxing everything, reducing subsidy to the cities, rasing energy chargeges, raising money by PSU sales....If the Indian electorate continues to mandate this group then they are to be blamed for this misfortune.

[vera_k]

Labour laws confiscate half of gross salary

I would like to make the case that the explosion in informal jobs since 1991 has been driven by three reasons: a) a move to Cost-to-Company (CTC) by companies where all benefits were monetised and included in compensation, b) labour laws which mandate confiscation of 49.2% of gross salary.

[Don]

http://www.nytimes.com/2012/12/30/techn ... .html?_r=0

An Idea Promised the Sky, but India Is Still Waiting

NEW DELHI

THE idea was, and still is, captivating: in 2011, the Indian government and two Indian-born tech entrepreneurs unveiled a $50 tablet computer, to be built in India with Google’s free Android software. The government would buy the computers by the millions and give them to its schoolchildren.

Enthusiasts saw the plan as a way to bring modern touch-screen computing to some of the world’s poorest people while seeding a technology manufacturing industry in India. Legions of customers placed advance orders for a commercial version of the tablet, thrilled at the prospect of owning tangible proof that India was a leader in “frugal innovation.”

Even the secretary general of the United Nations, Ban Ki-moon, lavished praise on the audacious project, called Aakash, the Hindi word for sky. “India is a superpower on the information superhighway,” Mr. Ki-moon said at a ceremony in November at the United Nations headquarters in New York.

Stoking expectations was Suneet Singh Tuli, the charismatic C.E.O. of the small London-based company that won the bid. “I am creating a product at a lower price than anyone else in the world with the hope that it impacts people’s lives and I make money out of it,” he said in a recent interview.

But over the last few months, it has become increasingly evident that Mr. Tuli, 44, and his older brother, Raja Singh Tuli, 46, are unable to deliver on most of their ambitious promises.

The Tulis acknowledge that their company, DataWind, will not even come close to shipping the 100,000 tablets it has promised to India’s colleges and universities before its year-end deadline. Most of the 10,000 or so tablets delivered through early December were made in China, despite the company’s early pledge to manufacture in India. Financial statements filed with British regulators show that the company is deeply in the red.

And the project’s entire premise — that India can make a cheap tablet computer that will somehow make up for failures of the country’s crippled education system — is fundamentally flawed, according to some experts in education and manufacturing.

Leigh L. Linden, an assistant professor of economics and public affairs at the University of Texas at Austin who has studied the use of technology in schools in India and other developing countries, said that, at best, computers merely match the performance gains from far less costly projects that involve hiring additional teachers or teaching assistants. And in some cases, Professor Linden said, the introduction of computers can actually lower students’ test results.

“Based on the available research,” he said, “this would not be the most effective strategy for education in developing countries.”

The notion that India’s weak manufacturing sector can catch up to China in advanced computer hardware also strikes some experts as far-fetched. “China became the manufacturing center of the world, and India missed that boat,” said Surjit S. Bhalla, an economist and managing director of Oxus Investments.

So far, the Indian government is standing firmly behind the project.

“All pathbreaking ideas do look too ambitious when conceived,” the Ministry of Human Resource Development, which oversees the Aakash project, said in an e-mailed statement. Aakash is “an all-encompassing project,” not just the creation of a tablet computer, the ministry said. With it, the government plans to create “an entire manufacturing ecosystem” in India.

INTERVIEWS with DataWind executives, government officials, Chinese manufacturers, business partners and former and current employees paint a picture of a small family company that was overwhelmed by a complex project that even China’s cutthroat technology manufacturers would find challenging to execute at the price expected by the government.

Leading a tour last month of the company’s small touch-screen factory in downtown Montreal, Raja Tuli, DataWind’s co-chairman and chief technology officer, said he had initially opposed his brother’s desire to bid on the Aakash contract, and he expressed lingering regrets.

“We got stuck in it,” he said. “We’re doing our best.”

DataWind’s real goal, Mr. Tuli said, is to sell low-cost wireless Internet access for tablets in developing countries like India. He said DataWind’s proprietary data compression technology, which made its debut in Britain years ago with a device called the PocketSurfer, efficiently delivers Web pages over older, slower cellphone networks.

“Our biggest contribution is our software,” Mr. Tuli said. “The fact that we’re making the actual hardware is a sideline that we got into in the process. We never meant to do it, but here we are.”

For India’s government, the Aakash project was supposed to usher in a computer revolution.

Although India pioneered the information technology outsourcing business, and still does much of the computing work for many big companies, only a small portion of the population has access to computers or the Internet.

Others had tried to bring cheap computing to developing countries like India — most notably the One Laptop Per Child project. Founded by Nicholas Negroponte of the Massachusetts Institute of Technology and backed by a host of Western technology companies, that effort aimed to bring $100 laptops to children around the world but faltered amid a host of technical, manufacturing and competitive challenges.

“This is our answer to M.I.T.’s $100 computer,” said Kapil Sibal, the minister of communications and information technology, when he announced the Aakash project in 2010.

Suneet Tuli, whose family emigrated from India to Canada when he was a boy, certainly bought into that vision. Just as the huge drop in the price of mobile calling prompted a communications revolution in India, a cheap tablet could transform India’s classrooms and eventually all of the country’s poor, he said in an interview in October 2011.

In India, “there are one billion people left out,” he said, “and the way to include them is lower the price.”

BUT DataWind was in over its head from the start.

The government’s specifications were challenging, and none of India’s information technology giants, like HCL or Wipro, competed for the contract. DataWind made the lowest bid, promising to supply the tablets for 2,276 rupees, including delivery — about $50 at exchange rates at the time, and about $40 now.

In a recent interview, Suneet Tuli said DataWind figured that it could cut costs by improving on standard industry designs and by making touch screens itself, in Canada, at a lower price than it could buy them in China.

In a fateful decision, Mr. Tuli also promised to build the tablet in India, even though the country’s manufacturers had no real experience in building such hardware. While not required by the government, the pledge added to the patriotic fervor surrounding the project and generated publicity for DataWind’s plan to sell more expensive commercial tablets and $2-a-month wireless Internet service to the public.

Rather than build its own plants, DataWind sought out Indian partners, starting with Quad Electronic, from Andhra Pradesh, which had made cash registers, electronic typewriters and printers but never tablets.

Within months, though, the two had parted ways.

According to Suneet Tuli, the problems started when the university overseeing the project rejected the early tablets and demanded improvements. The relationship collapsed after DataWind discovered that Quad planned to produce a rival tablet, he said.

But Raminder Singh Soin, Quad’s managing director, said DataWind’s product “was not good enough.” “Many things were missing in the Aakash tablet,” he said in a phone interview this month, noting that its microprocessor could not support the tablet’s advertised features.

Mr. Soin said DataWind never paid for the tablets Quad did produce, or for the components Quad bought to build an additional 30,000 units. He estimates that the failed partnership cost him 150 million rupees, or about $3 million. Suneet Tuli said DataWind didn’t owe Quad any money.

COMPOUNDING DataWind’s problems, the company started taking orders for the commercial version of its tablet, the UbiSlate, just a week after unveiling the Aakash tablet. Within six weeks, it had 300,000 orders, Suneet Tuli said in an interview in early 2012. Last month, he said, orders for the UbiSlate tablets had reached about four million.

Yet DataWind still lacks the manufacturing, marketing and customer service capacity to handle even a substantial fraction of those orders. A result has been a wave of customer fury.

Edwin Richard Toppo, 25, a human resources professional in Delhi, placed an order in August for an UbiSlate. Weeks after he received the tablet, he said in a phone interview, its two USB ports stopped working. Then the slot for a SIM card went dead, and now the touch screen is unresponsive, he said.

“It’s like a dummy,” Mr. Toppo said, adding that several dozen calls to DataWind customer support went unanswered.

In a recent interview, Suneet Tuli acknowledged that the company has struggled. “Unfortunately, the scale of everything here has been beyond our imagination,” he said.

DataWind is trying to prioritize orders, he said, delivering about 2,500 tablets a day and offering refunds to people who don’t want to wait. Customers “will get a world-class product, I think, at a fraction of the price,” he added.

To help clear the huge backlog of orders, DataWind said it had signed up four new Indian partners to help make the tablets.

Still, the company won’t meet the Dec. 31 deadline to deliver 100,000 tablets to the Indian government. It recently received an extension until March 31, and Raja Tuli said he expects DataWind to fulfill the government contract by that time.

In an attempt to meet its commitments, the company moved production to China in the fall. At least three Chinese companies have been manufacturing an improved tablet, known as Aakash-2, for DataWind, and shipped thousands to India, according to interviews with Chinese manufacturers and documents reviewed by The New York Times.

Officials at the Chinese companies, who said they make as little as $1 in profit on each tablet, expressed doubts that India would ever be able to compete in electronics manufacturing.

“DataWind’s tablets can be made in Shenzhen, but not in India, because Shenzhen has a fully developed industry chain,” said a project manager with Kalong Technology, one of the companies, who spoke on the condition that his full name not be used, because he wanted to avoid media attention. “It’s just like, if you want to open a bakery, you need to know where to get the best flour both near you and at a good price.”

A recent visit to DataWind’s three-story Indian plant in the Amritsar neighborhood known as Ghee Mandi showed just how far the company has to go.

On the ground floor, rows of brown shipping boxes were piled atop one another, some printed with “Easydy,” the name of a Shenzhen tablet manufacturing company. Ibadat Singh, DataWind’s vice president for operations, said DataWind was not buying finished tablets from China, but just recycling boxes that happened to come from there. “Why use new boxes?” he said.

Two floors up, 16 men at a rectangular table were programming tablets and adding standard applications, Mr. Singh said. One man was working on an opened tablet with a big green screwdriver. Others were soldering wires or testing units. One man diligently wrapped tablets in Bubble Wrap and packed them into white boxes.

The factory makes about 1,000 units a day, Mr. Singh said. Each tablet takes five minutes to assemble and two to program. It’s so easy, he told a reporter, “even you can do it.”

DURING the November interview in Montreal, however, Raja Tuli described the difficulties of manufacturing in India, citing issues like prolonged border delays and poor infrastructure.

“Listen, it’s obviously easier in China just because the whole infrastructure is set up, capital is so much cheaper,” he said. “In India, it can be done but the process is longer.”

He declined to say whether DataWind would bid on future Aakash supply contracts from the government. But he said the company would not abandon its plans to build and sell inexpensive tablets in India.

“We’re not going to give up because of these little issues,” he said. “We’re committed to it. Always in life, it’s tougher than you think it was going to be.”

Pamposh Raina reported from New Delhi and Amritsar, India, Ian Austen from Montreal and Heather Timmons from New Delhi. Mia Li contributed reporting from Beijing.

[Theo_Fidel]

Only now am i able to appreciate the NDA rule of 98-2004.

If the INC had ruled during that period also, we would have heard excuses like dotcom bubble burst etc to explain why Indian economy plunged during that period!!

Actually the economic growth rate did plunge during that period, though it did recover towards the end. Much of it was due to the bomb test however.

The claim always is that NDA did the necessary reforms, but that is a different argument.

[sum]

Actually the economic growth rate did plunge during that period, though it did recover towards the end. Much of it was due to the bomb test however.

Exactly...my feeling is that had the INC been in power at that time ( and actually had the pair to test the bomb), all blame on the economic collapse in the early 2000s( due to unbelieveable looting, hare-brained freebies and with eminent panels like NAC setting economic agendas) itself would have been laid on excuses like the sanctions or the dotcom busrt etc!

[member_23007]

Major Indian law firms who recruited in dozens over the last 10 years or so are saddled with offices full of lawyers and no deals. Capital markets teams at major firms had the busiest lawyers with fattest bonuses. They now sit for weeks hoping for a deal to arrive and whilst previously a mid size deal would be handled by a team of 2-3 lawyers, it's now shared amongst all. Mergers and private equity deals have witnessed a similar precipitous fall. It's bleak all around except the litigation teams who are immune to economic cycles. Not enough appetite for India amongst investors on both equity and debt fronts.

[rgosain]

Hi Theo re: the soft economic performance figures between the period 97-99 had more to do with Asian financial crises sweeping the region from 96-98, the Russian default and subsequent LTCM collapse in 98, than the May tests. In fact the Indian economy survived that period far better than most of its Asian peers, and emerged in 1999 far stronger than 1997/98. A lot of the non-proliferationist crowd tend to forget this - not that you are, I hasten to add.

[vina]

Major Indian law firms who recruited in dozens over the last 10 years or so are saddled with offices full of lawyers and no deals. Capital markets teams at major firms had the busiest lawyers with fattest bonuses. They now sit for weeks hoping for a deal to arrive and whilst previously a mid size deal would be handled by a team of 2-3 lawyers, it's now shared amongst all. Mergers and private equity deals have witnessed a similar precipitous fall. It's bleak all around except the litigation teams who are immune to economic cycles. Not enough appetite for India amongst investors on both equity and debt fronts.

Very true. I was speaking to someone in Infra finance yesterday and the scene is bleak. No one is giving loans, every project is running way behind schedule, deliquencies are seriously up and all they are spending time is on collections!

On top of that , a "lucrative" if shady business seems to be "refinancing" for a few weeks or so, loans of corporates (a huge number of large corporates are very very stressed) that allows banks to window dress their true NPA positions allowing them to get away with lower provisioning and lower hits to profitability.

The consensus seems to be that it is far worse than the scene in 2008 .Back then, India is buoyant, even if outside it sucked. The UPA inaction in the past 2 years and the scams and other stuff in Infra have it it so bad (mining and other scams), that it is extremely worse. Kangress and the NAC jokers seem to have run things to the ground, and the rescue act that began some 2 months ago needs around 6 to 8 months more before anything tangible turns around at ground level and that is hoping that the NAC monkeys and the RajMata and Yuvraj dont get other ideas.

[Aditya_V]

Top Indian Business COmmunity leaders who in the wake of US pressure in Jan 2002 when operation Parakram was one to go the whole way backing the INC must be really kicking themselves. In Hind sight the period of Jan to June 2002 coupled with the failure of the 2002-03 monsoon shaped the national thinking the wrong way. It will take many years of correct thinking, policy and Governance to correct and get the country on track.

[Theo_Fidel]

Since it is going to be 2013 in a matter of hours and 2014 is only a hearts beat away I think it might be time to ask this question.

Other than 'good governance', what would be the economic reform agenda of a NDA type alliance. So far it is opposed to oil price hikes, opposed to Multi retail, opposed to land acquisition, opposed to labor law reforms(IIRC), opposed to SEZ's, opposed to shutting down Air India, opposed to increasing tolls on NH's, etc. AFAIK, despite the talk of NM, Advani plans to be PM at the ripe young age of 87.

So what would change?

And don't give some airy fairy mood will change nonsense.
-------------------------------------

BTW here is the growth rate chart from RBI.
There was a point in 2003 that the growth rate was 3.6%. Yes really.
The question is not 96-98 when the NDA was not in power.



Since 2004 the GDP in real terms has tripled in size.
The claim is that all of this growth was due to NDA reforms, though the NDA too was paralyzed by 2002 when it could not even touch labor laws and the RSS kelladu's were on the war path.

[Arjun]

So what would change?

The attitude towards GDP growth. Very simply, under Modi, the underlying economic thesis would be that of Jagdish Bhagwati. Under the Dynasty - it will continue to be a moth-eaten version of Amartya Sen.

I think we all know enough about economics to determine which way our votes go.

[Aditya_V]

Only now am i able to appreciate the NDA rule of 98-2004.

If the INC had ruled during that period also, we would have heard excuses like dotcom bubble burst etc to explain why Indian economy plunged during that period!!

Actually the economic growth rate did plunge during that period, though it did recover towards the end. Much of it was due to the bomb test however.

The claim always is that NDA did the necessary reforms, but that is a different argument.

The results of GOvernance are not immediate, growth follows good foundation, what was done in 1995-99, results will come in 99-2003, what was done in 1999-2003, results will come in 2003-07, what was done in 2004-08, results will be seen in 2008-12, so even if good policies are implemented today results will take atleast 2016 to show.

[nawabs]

Asset quality on the wane: RBI

http://m.financialexpress.com/news/asse ... i/1051522/

Indian banks’ asset quality and soundness indicators have weakened since March, but the overall banking system is resilient enough to withstand extreme stress scenarios, said the Reserve Bank of India in its sixth financial stability report on Friday.

RBI said banks must shore up their provision coverate ratios (PCR) and warned the PCR of Indian banks is lowered compared with global peers.

Most public sector banks have cut back on their PCR over the last three quarters after RBI made 70% PCR non-mandatory. Central Bank of India, for instance, maintained a PCR of just 40% in the September quarter.

The RBI report also said stress tests show public sector banks' capital erosion due to rising non-performing assets (NPA) could bring down their capital adequacy ratio to just 10.9% by March 2014 against the regulatory mandate of 9%.

“The Banking Stability Map, which reflects the relative changes in the vulnerabilities since the previous FSR, further reveals that the asset quality and soundness indicators have deteriorated vis-à-vis their position in March 2012...,” said the RBI report.

The report projects that bank NPAs could rise to 4% by March end and 4.4% by March 2014. Under extreme stress conditions, the system’s NPA could rise to as high as 7.6% by March 2014, the RBI said. Within the banking system, public sector banks' NPAs could rise to 4.3% by March 2013. Further, the biggest contributor to NPAs would be agriculture sector, the RBI said.

The central bank's systemic risk survey shows that bankers rated risk from global financial events as the biggest risk on domestic financial stability.

“Respondents feel there is a large probability of a high impact event occurring in the global financial system in the period ahead,” said the report. The probability of an impact event occuring within the domestic macroeconomy is medium, RBI said.

Liquidity risks reduce

The banking system’s vulnerability towards liquidity risk have reduced since the previous financial stability report was published, RBI said. The ratio of liquid assets to total assets has increased from 28.9% as on end March to 30.1% as on end September.

While retail deposits are the most stable form of funding, some banks continue to rely heavily on bulk deposits, the RBI said. Foreign banks had large proportion of bulk deposits in their total deposits, the RBI report said. Maintainance of statutory liquidity ratio (SLR) gave cushion to some banks whose liquidity position weakened significantly when subject to extreme stress conditions, RBI said. Banks have to invest 23% of their deposits in government securities under SLR norm.

In wake of the global financial crisis, the central bank has been publishing a stability report twice a year to monitor the domestic financial system since December 2010. RBI released its sixth financial stability report on Friday.

[Theo_Fidel]

The attitude towards GDP growth. Very simply, under Modi, the underlying economic thesis would be that of Jagdish Bhagwati. Under the Dynasty - it will continue to be a moth-eaten version of Amartya Sen.

Not necessarily disagreeing with you but you are going to have to make a better case than that if you have any desire to win. Thats like a CEO talking down to an employee. Won't get very far in rural India.

[Aditya_V]

THe real purpose behind the cash transfer scheme.

10 lakh kirana shops to be backbone of UPA’s direct cash transfer scheme

he government has decided to involve these stores across the country giving them micro ATMs and a commission of 3% on the value of cash transactions.

Dont know but somehow given our record, this is not going to go the needy.

[subhamoy.das]

Other than 'good governance', what would be the economic reform agenda of a NDA type alliance. So far it is opposed to oil price hikes, opposed to Multi retail, opposed to land acquisition, opposed to labor law reforms(IIRC), opposed to SEZ's, opposed to shutting down Air India, opposed to increasing tolls on NH's, etc. AFAIK, despite the talk of NM, Advani plans to be PM at the ripe young age of 87.

So what would change?
.

Basically the approach will be to sink the money in the bank ( public treasury ) in INFRASTRACUTURE - investment, social and physical - to achieve high GDP growth ( read sales ) which in turn will bring more money in the bank and which can then be used to offset the price rise of all kinds and citizens - urban and rural - will have freedom - both social and economic. If NM is not made the PM candidate then village power will continue to run the country and the cities will burn till the villages also start to burn and then the whole country will go up in smoke like the Europrean PIGs - too much welfare and no jobs ! God give NM 10 years or else this country in doomed!

[Theo_Fidel]

Umm! isn't the public treasury bondi. A better policy would be reduce the deficit so the private sector has lower interest rates to follow its investment needs.

And this business of 'Apres NM, la deluge' is a little over dramatic no.

Still if you want to take this message, how would you articulate it to the rural folk. They want to know whats in it for them.

[subhamoy.das]

Deficit will be automatically lowered when the earning - TAX income from higher GDP growth - goes up and a low interest regime will prevail. I would look at the literacy rate of India to drive home the message to rural india. Rural India is already committing its children to better education - this is the area in HDI where we are racing neck to neck with China. So the message will be to take the next logical step next - JOBS! to monetize your education. JOBs and JOBs and lots of JOBs.... and well paying JOBs... So i can see a slogan like this "sadak, bigli, pani, siksha, suraksha AUR ucha rojgar".

This UPA has the goal right "inclusive growth" but the means wrong. Instead of cash doles they should enable JOB creation by the millions to achive inclusion in urban and rural side.

[ashi]

From ‘Superpower’ to ‘Time for a Reboot’

[Hari Seldon]

x-post:

^thx sushupti for that article. Many recurring myths and canards debunked in this wonderful piece of erudition by two great economics minds who know what they're saying and are under no pressure to downplay Guj's (or NM's) achievements.

Here's one excerpt:

[Interviewer]Professor Bhagwati has said in an interview that growth in Gujarat is on track. So far, it hasn't shown any impact on social indicators. Do you believe in trickle-down effect?

[Bhagwati and Panagriya] First, we have always argued that the use of the conservative phrase "trickle-down" is misleading. We prefer to use the more radical phrase "pull up". By reducing poverty, the growth strategy increases incomes which, in turn, can be expected to improve most social indicators (though nutrition in particular may get worse if the diet shifts to less nutritious but tastier foods).

Most social indicators have in fact seen a lot of progress in Gujarat and in many of these, the changes (which economists call "first difference") in social indicators make Gujarat look pretty good indeed. Gujarat inherited low levels of social indicators and it is the change in these indicators where Gujarat shows impressive progress. The literacy rate has risen from 22% in 1951 to 69% in 2001 and 79% in 2011. The infant mortality rate per thousand has fallen from 144 in 1971 to 60 in 2001 and 41 in 2011.

[peeved interviewer] Why do you say all seems to be well in Gujarat? In literacy, too, Gujarat ranks 18th out of 35 states and Union Territories. In sex ratio, the state is way behind the national average of 940 females per 1,000 males. In poverty reduction of 8.6% in 5 years (2005-10), it is still behind states like Odisha (19.2%), Maharashtra (13.7%) and Tamil Nadu (13.1%).

[the economists] But you are again failing to distinguish between low levels and changes therein. On the latter criterion, which is the relevant one, Gujarat is making good progress in most areas. The additional good news is that with relatively high per-capita incomes as well as a high growth rate, it will continue to generate high and rapidly rising levels of revenues that, when combined with its good governance (which predates the current chief minister Narendra Modi), promise continued accelerated and all-around progress.

[more peeved interviewer]There are more reasons to worry: 44.6% of children below the age of five suffer from malnutrition in Gujarat whereas nearly 70% of the children suffer from anaemia. States like UP and Bihar have fared better in malnutrition.

[the economist gents] Such comparisons selectively focusing on one or the other social indicator, especially their levels, are not particularly meaningful; one must consider the changes in several indicators. By that test, Gujarat has done quite well. But we also need to appreciate, and this is what one of us (Panagariya) has ceaselessly argued in recent writings, that the nutrition measurements leave a lot to be desired.

That bolded part above was likely inserted by the peeved ET outlet only.

BTW, excellent articulation of the Guj model, what it stands for, what it has done remarkably well and how it can extend easily to the rest of India. Read it all, only.

[RoyG]

Chidambaram trying to curb gold imports at a time when currencies are depreciating in value. Only he knows what's in the best interest of the citizenry. He is trying to limit our dharmic traditions to prop up an unproductive populist economic model. With individuals like these at the helm of financial affairs, India will never reach it's economic potential.

[suryag]

Somehow majority of Indian politicians have disappointed me with exception of ABV(okie he was a mukhota etc but nevertheless), LKA. Chidu started off so promisingly but he is now like them

[subhamoy.das]

UPA alone is a mighty enemy. Who needs China. Yesterday there was a USD 2Bn cut in defense outlay. Energy prices will soon reach unaffordable levels. Food and consumer goods are already becoming un affordable. We will all be sitting in our houses, swealtering in heat, skipping a few meals, watching our army mowed down by Chinese and Pakis and those folks in rural India will be sipping morning tea and waiting for the next cash dole via ADHAAR while eating free meal cooked over free energy. But wait, since most of the foot soldiers in IA are from rural India, they will be receiving body bags, a lots of them and may be then there will be mass pressure in rural areas and finally the UPA will do a humpty dumpty...

[Abhijeet]

I posted in the roads thread about a recent trip from Chennai to Pondicherry (tl;dr roads are very good). Pondicherry itself, however, seems to follow the typical Indian model of unfulfilled potential, constrained supply and shoddy products at high prices.

Our hotel was on the main road along the beach and cost a nice developed world price of Rs. 10K per night for a sea-facing room. It was not in any way deserving of that price. The rooms were small and badly maintained with leaks in the bathrooms, non-functional lights and indifferent service (we had to call multiple times to get simple things like towels).

The beach stretch is quite nice and reminiscent of the Waikiki Beach stretch or South Beach. It should have been buzzing with hotels, cafes, restaurants and shops. Instead, the majority of the promenade seems taken up by government buildings. Next to us was a dilapidated, seemingly disused building from the Revenue Department, occupying a high value plot that could have been used to generate who knows how much tourist revenue per year.

There seemed to be only two or three hotels along the entire beach promenade, which must be at least 2 km end to end, and zero independent restaurants, cafes or shops -- all the restaurants are in one of the hotels.

Our hotel could get away with charging the rates they did -- and they were full -- because of the extreme supply constraints, and they really did not need to do anything to improve their standards because of such little competition. Meanwhile tourists are overcharged, many will go back with a poor impression of the place as we did, and the local government is leaving money on the table that people would happily spend if they had the option. My guess is that the hotels actually there will try to keep competition out by restricting development along the beach front.

I often think that India must have the widest gap between realized and actual potential of any country on the planet.

[Arjun]

Economic freedom: Gujarat is No 1, Bihar at bottom

[wig]

while wetern banks seem to be handmaidens of money launderers it seems that walmart wilfuly bribes government officials to smoothe the way for itself

The giant American retailer, which also has stores in Brazil, Argentina, Chile and several Central American countries, has been accused of systematically paying bribes in Mexico that total more than $24 million over the course of several years. The bribes were used to get permission to build in places where it is illegal to do so.

There is ample evidence that Walmart was not forced to pay bribes to do business, but rather that the company actively encouraged corruption in the country by establishing an aggressive policy of offering bribes to Mexican officials who broke the laws and regulations of the country.

http://www.worldcrunch.com/business-fin ... /c2s10558/

[vishvak]

And Indians see it as example of modern first world the best retail chain only managed by first world post-modern born-civilized onlee.

Such bribe scandals won't find mention in management books though. All which is sufficient to run local supply chain of foreigners is good enough only. while foreigners themselves bribe their way ahead.

Ideally such bribe throwers would be in jail ideally no? Wonder where these born-civilized are taught the dirty tricks which they seem to learn very well in rather greedy sort of personality disorder.

[Vipul]

Chidambaram trying to curb gold imports at a time when currencies are depreciating in value. Only he knows what's in the best interest of the citizenry. He is trying to limit our dharmic traditions to prop up an unproductive populist economic model. With individuals like these at the helm of financial affairs, India will never reach it's economic potential.

Behind the economic mumbo-jumbo the Congressi game plan is clear.They want to encourage Gold Smuggling. Congress leadership and the gold smuggling syndicate have a long history. Anything for election funds!!!

[vina]

Hmm .. Most revered company has had a good quarter and that has squeezed the testimonials of EVERY short seller of that stock .. The dimwits at all the brokerages had a "consensus" that pointed towards a poor quarter and an earnings downgrade.

The stock is up 15% and will gain further in the weeks to come as the shorts cover their Musharrafs that has been whipped to a bloodied pulp.

[member_20292]

^^^ Vina ji

What do you think of Imperial Tobacco Co as a company. They have had some really good stock prices, earnings etc. Market cap is 50 billn USD. Pretty Fancy.

Y C Deveshwar is the 7th best ceo world wide acc to HBReview.

[Arjun]

Sibal warns against foreigners who come to India to do business

Pointing to history, communication and IT minister Sibal said, "People from foreign countries have come to India for business and then became rulers of the country. Today, they are again coming to do business here and divide us. We must be careful of them."

Is the Dynastic party led by the great Liberalizer, having a change of heart on trade liberalization ? Wonder what event could have provoked this - is it 'Vibrant Gujarat', one wonders?

[vina]

Finally found the time to type this out.. Just wanted to put a perspective of how India has been changing in the past 20 years in my opinion.

This Chrismas/ New Year weekend, we were in Chennai visiting my in-laws. This time,I went fully "native". I tied up a dhoti, wore a T shirt (okay.. not the old faded one from the madrassa), and took the trains and buses and went all over.. To West Mambalam , suburban train to Tambaram, visited the old 'hood where dad grew up, the then bastion of the lower middle class Tam Brahms , Triplicane, Besant Nagar, Mylapore ...

To start off, Adayar seemed cleaner. In the earlier visits I remember garbage strewn all over the place, dumped right in the middle of the road, right from 1st main rd Gandhinagar to nearly every street. Now, everything cleaned up , and no garbage lying around. I remember dad's old hood as full of large herds of buffaloes competing space with humans and vehicles on the road (the stretch between Vivekananda House and Parthasarathy Temple) . This time, I took the bus to just before Anna Square on Marina, then walked from Triplicane High road side towards Parthasarthy temple. Charming old world neighborhood, with very narrow lanes and everything, and fine.. Visited the temple and then walked out towards V. House and took the bus back from there. No (few) Buffaloes! Gone.. Where there were swarming herds, none. All in all, Madras seems to have cleaned up. The ever present olfactory assault of the Cooum even being felt in Adayar bus stand notwithstanding. From triplicane, took the bus to Mylapore/Luz and went to the temple there and rode the MRTS back to Adayar.

Later took the train to Tambaram and back. The MRTS and suburban system stations are filthy, lacking in maintenance and upkeep. I just hope the Chennai Metro system doesn't follow the Indian Railway route, but keeps up the Chi-Chi squeaky cleanness, maintenance and attention to detail (until now atleast of Bangalore) and from what I hear Dilli metro.

What literally rocked me back on my feet was the number of folks who spoke some languages like bengali, oriya ? (sounded a bit like bengali, but wasn't ) and languages I couldn't recognize. While temples like Parthasarathy and Mylapore have full of names of patrons with recognizably Telugu names and of course writings and murals chiseled in Telugu , I was surprised when someone asked me in the Triplicane temple the way to the exit in Hindi! In the Mylapore temple, there was a Bengali couple offering pujas in the sanctum. . (not the well settled tamil speaking types, but identifiably newer folks, who obviously don't speak Tamil). The trains to Tambaram and the MRTS had crowds of laborers speaking in Bengali, Oriya and some dialect of Hindi, many women as well. Many restaurants had folks from the N.E kind of places (that kind of face.. definitely said..from the hills)

It was amazing to see a huge number of such folks in Chennai. The TN and Chennai I knew of in the 70s and 80s were a largely mono cultural place , with a few sprinking of folks in certain places (Sowcarpet..) and others who were largely well settled and been there for a long time. Never this huge numbers of "outsiders" (for want of a better term) and definitely not in the working class and casual labor class.

It just points to a few things... 1) mass mobility within India , moving where the opportunity is 2) definite opportunity and labor demand in chennai 3) The usual melding, mingling and adjusting happening.. All those years ago, I would have been absolutely astounded to have been spoken to in Hindi inside the Parthasarathy temple and in Kapaleeswarar temple. While that was sort of probably, i wasn't prepared to hear labor class everywhere speak languages I could not identify!

It seems, that the "Bangalorification" of Chennai is happening. What happened earlier and faster in Bangalore is happening in Chennai and other cities in TN (I would bet it happening in Coimbatore).. Welcome to the new India . All for the good.

Amazing how the country moves on with it's natural sane and good instincts despite all the hoopla and stuff and chauvinism of the DK, DMK and their ilk of "resistance" to outsiders and "Pure Tamil" exclusivism. Now those self same former Tamil only "chavunisits" are out hunting for labor and soliciting people to move in to sustain and grow their businesses! .. Touche. Poetic justice or what?

[shyamd]

I was around at the same time last month, First landed in Chennai - very similar experience to yourself - the workers at the hotel are from the north (WB I think) - so I was practicing my broken hindi. Friends say wherever you go in Chennai you can hear people speak in hindi.

Even in small towns/rural TN now you can see people from Orissa, Bihar. Mills, farms, chicken farms now employ a good 50% from orissa/Bihar. Shops usually have staff from these states.

Coimbatore is growing a lot - over the next 6 months about 55k IT vity jobs will be created and a lot of the majors are setting up their offices out there (in Tidel Park, Saravanampatti etc) - don't know if its because Coimbatore/Erode is more of a ADMK bastion (I think most of the MLAs from Coimbatore are ADMK) and the govt is encouraging companies to do more for Coimbatore.

On the infra side - Coimbatore seriously needs to do something on this front - everything is just stuck on paper - from water, roads to underground electricity. Speaking to a minister - he was saying that they are trying to fast track projects to place underground electricity in major cities. So hopefully this will change. On the electricity shortages (the biggest pain in da butt for aam aadmi/businesses in TN) - they have set target to sort the problem out by June 2013 (but to what extent remains to be seen as electricity requirements are growing by 12%).

NH47 is best avoided imo - the traffic is just ridiculous.

Property prices in Coimbatore are higher than in Chennai. This gives you the indication of the wealth that is floating around in Coimbatore, Tirupur, Erode side of TN. Apparently the prices in Madurai side and southern districts are still low - maybe 2 lakh per cent on a main road. In Coimbatore side of TN, prices are just ridiculous - looking at 5-7 lakh per cent on a main road - more in cities and small towns (in my town which is close to Sathyamangalam - a baker just paid 22 lakh per cent of land for a 3 cent land to set up a bakery on the main road).

WHy is there a huge migrating population in the North? Well, the answer for this is cost of labour is a lot higher in Coimbatore. In Coimbatore a driver costs around Rs12k per month, in Mumbai I hear it is Rs3k-4k and similar in delhi. And same for masons, carpenters and so on.

Coimbatore malls have a fair amount of North easterners. Surprised to hear chinese being spoken among (youngsters - looked like students). I must have seen about 100 or so africans in my trip - both on the flight into Chennai, on the streets in Coimbatore and back out. As elections approach - the black money will probably come out to play once again.

Rural areas even employ Bangladeshi illegals for construction work, in the town I am from we estimated there were about 500+ from Bangladesh. They are bringing with them their salafi ways too.

TN is totally changing and some places I have been even just a year back look so different. Buildings everywhere and a lot under construction. Things are happening there for sure.