Indian Economy - News & Discussion 27 May 2012

[Vadivel]

Must watch, there is enough truth in it which makes it worth it , though i think it is entirely not true,

[amritk]

Mass manufacturing represents a huge untapped opportunity for India. I am not educated in economics but I have been told that even manual work in manufacturing is better (i.e. economic contribution) than much of farming, and certainly better than NREGS/doing nothing.

As others have pointed out, the many western companies are slowly pulling out of China. This is due to a) steep rises in labour costs, especially along the east coast, b) pressure on working capital and lead times and to some extent c) (belated) concerns about blatant IP theft and lack of legal recourse. Despite this, China still is the world's factory for mass manufactured goods. In my opinion, their model has been the replacement of robots with humans. When you hire workers in China, they come with a skill report issued by the local labour department listing education, experience and the usual things, but also includes ratings for things like manual dexterity and color vision. Thus China has been able to offer a huge advantage to companies who want to avoid investing in hard automation and tooling costs. It's not just about the capital investment - humans are far more adaptable than machines and the changeover to a different product design is much easier. Given today's shortening product release cycles, this can actually be an advantage.

What's holding India from tapping into this opportunity is infrastructure (got to have that next day shipping) and supply chain, and to some extent labour laws (Though labour laws in China are far more draconian than, say, in the USA. Forex is a pain there as well). However, infrastructure and supply chain can be addressed at least regionally. There is plenty of manpower with the added benefit of more English and a legal system that is perceived to be more familiar and fair. Consider this: in China, an English-speaking worker (factory work and office work) earns 2x of a non-English speaking one, all other things being the same. Working on and off in China over the last 8 years I have seen the incredible amount of skill, awareness and exposure of young people to technology that this very manual manufacturing has produced in the country. They know how things are built. We can do it too, and we don't need to give up on all the other great services and high-end technical work we are doing already. It's totally separate.

[Abhijeet]

So...what's the reason that India's HDI indicators have moved slowly or not at all over the last few decades -- any explanations/guesses?

Or is the data wrong?

[Arjun]

So...what's the reason that India's HDI indicators have moved slowly or not at all over the last few decades -- any explanations/guesses?

Or is the data wrong?

The correlation between per capita income ranking and HDI ranking seems to be high based on a cursory look. India is ranked 139 in GDP per capita and is 134 in HDI.

If you look at the HDI ranking of states within India, again based on a cursory look - it seems to be generally correlated with state per capita income rank. If any body wants to do an actual statistical analysis of this correlation - that would of course be welcome and revealing.

But if what I surmise is right - as we go up the ranking of per capita income, we would also go up the HDI ranks. Hence - the key is to maximize GDP growth.

[vera_k]

^^

Yes, this appears to be true. Case is point is that Delhi is rated as having the second best HDI in India just behind Kerala. However, it is far behind Kerala, TN or MH in the infant mortality rate.

[Gus]

sad state of affairs that we cannot even compete in mosquito bats

http://www.thehindubusinessline.com/ind ... epage=true
At New Hindustan Electronics, a small shop on buzzing Ritchie Street which teems with shops hawking all manner of electronic goods, swarms of buyers come for Chinese mosquito racquets. The price ranges from Rs 125 to Rs 250, he said.

“There is no home in the city without a Chinese racquet ,” says M. D. G. Khalefuthullah, owner of the shop.

The Hunter mosquito racquet manufactured in Coimbatore is the only alternative to Chinese ones. However, due to the prevailing power shortage, the company is unable to keep up supplies allowing the Chinese ones to dominate, says Khalefuthullah.

[subhamoy.das]

Some[/i] factories are automated, and the need for skilled workers goes beyond the requirement to just use the automated tools. There are several sectors (in India and in the West) where the need for skilled human hands is unlikely to diminish even in the face of increased automation.

This applies not just to factories, but every place where automation is being introduced. Buildings, for instance. Earlier, there was this idea that automating the HVAC and lighting controls in large buildings would allow facilities management departments to trim their workforce. That didn't happen. The new systems required so much maintenance and upkeep, that these departments soon ended up employing greater numbers of technicians to ensure that everything was running smoothly!

In any case, not every industrial setup can afford to automate everything. The small and medium sized manufacturing units that form the backbone of industrialized economies still employ workers to do a majority of the manufacturing work – even if options for automation exist, these often are too expensive for the smaller players. A mid-size injection moulding shop that produces lunch boxes and foot rulers is as much a part of the industrialised economy as a high-end semiconductor fab where the process is automated from start to finish. The former cannot automate to the extent that the latter can.

You argument is running against those from leading gobal economic magazines like Economist or the charts available in this domain which are arguing constant gain in manufacturing productivity. Productivity increases can only happen when factories producing more in less time while keeping production cost same or lower. I can only image that this can happen as u replace more and more manual hours with machine hours or else u will not be in the business. Even if a small bakery is switching from a manual bread cutter to a bread cutting machine is an example of automation. Without this automation that factory would have employed 2 folks to produce the same number of breads but now it needs only 1 and the reductio is a flat 50%. I have actually witnessed this in my back ward. Service,on the other hand, needs minds and not hands and that is where the difference is in that it will be very very very difficult to introduce machines there and reduce the job count.

[subhamoy.das]

sad state of affairs that we cannot even compete in mosquito bats

http://www.thehindubusinessline.com/ind ... epage=true
At New Hindustan Electronics, a small shop on buzzing Ritchie Street which teems with shops hawking all manner of electronic goods, swarms of buyers come for Chinese mosquito racquets. The price ranges from Rs 125 to Rs 250, he said.

“There is no home in the city without a Chinese racquet ,” says M. D. G. Khalefuthullah, owner of the shop.

The Hunter mosquito racquet manufactured in Coimbatore is the only alternative to Chinese ones. However, due to the prevailing power shortage, the company is unable to keep up supplies allowing the Chinese ones to dominate, says Khalefuthullah.

I would say that we focus on manufacturing high value items which needs milions of hours IP ( researching,modelling, design,testing, prototyping ). Leave low end IP manufacturing to others and increase the power of our currency to import them at will.

[Supratik]

Assuming a 60% labor force and gender neutrality there are about 700 million Indians to employ. Assuming 20% of these to be left in the farm sector (US has just 2%) there are about 550 million people to employ. I am not sure how all these can be employed without mass manufacturing. Hi-tech manufacturing or niche services or even general services are not going to do it. They can work for small countries like Japan, SK, Taiwan, etc.

[subhamoy.das]

The employable % in INDIA is around 30% and not 60%. So we have about 400m folks to provide employment. Unemloyment is 10% which means the work pool size is 360m. If agri and manufacturing support 30% then service needs to support about 250m. Now assume that a single high skill service supports 5 other low skill worker then we need about 40m high skill service jobs. This should be an doable target.

I was standing out of my service delivery centre and looking at five 20 story gleaming buildings humming with activity right across the road and a few more being built at a frantic speed. To me they came across the knowledge factories of INDIA which does not pollute, does not gulp natural resources, employs both high and low skill worker and coming up in all directions. Now I juxtapose this with a jute factory i just visited and what a contrast.

See below for employment stats : http://labourbureau.nic.in/reports.htm

[Supratik]

When you have to plan you have to plan for the entire working age population looking at least 20-30 years into the future. You cannot plan for only a subset of people. There will be a vast section of population who will need employment who cannot become engineers or managers even if you bang their head with a hammer. Your argument of making 40 million hi-tech jobs (which in itself is a huge number) supporting 200 million supporting jobs is still not going to provide for 1.2 billion people. Suraj's argument that you need all kinds of jobs 'including" mass manufacturing is more suitable. A hi-tech job based society may work for small countries like Sri Lanka or Norway. At any rate the world's natural resources are going to run out in another 100 years. So we still have a window of opportunity to get into mass manufacturing. Infrastructure is a poor excuse. Even China was not born with infrastructure. This is where the "Gujrat model" is showing us the way where industry has led to the "neo-middle class".

[Theo_Fidel]

If you can not complete 12th standard in India you are doomed. No manufacturer worth his salt will ever hire a functional illiterate. We should not make these promises we can not keep.

I think people are making the mistake yet again of thinking India is not into mass manufacturing. It very much is. The fact is modern mass manufacturing does not produce jobs for the unskilled anymore. This is why despite producing 4 million cars the impact on unskilled employment is so low.

What India is not into is the mass manufacture of widgets and electronic goods for export to the world. For this to happen one of the states will have to make a huge sacrifice to drive the supply chains forward. For instance the electronics manufacturing SEZ's in Pandaland have an area of 50,000 acres or so and provide 24/7 water and electricity and first class roads while the villages around remain without.

Suprantik,

You are going to have a tough time supporting the claims that GJ has a neo-middle class because of manufacturing and a manufacturing system very different from the rest of India. There is no need to step out onto the ledge like that. The success of GJ does not need this sort of embellishment.

[shyamd]

Union Budget 2013-14: Defence and welfare spending to be slashed

NEW DELHI: Finance minister P Chidambaram is putting welfare, defence and road projects on the chopping block in a last-ditch attempt to hit a tough fiscal deficit target by March, risking short-term economic growth and angering cabinet colleagues.

The cuts will reduce spending by about 1.1 trillion Indian rupees ($20.6 billion) in the current financial year, some 8 percent of budgeted outlay, or roughly 1 percent of estimated gross domestic product, two senior finance ministry officials and a senior government adviser told Reuters.

It is the first time the scale of the cuts and details of where the axe will fall have been made public, with officials revealing startling details about delays to arms purchases and belt-tightening for politically sensitive rural welfare schemes in an election year.

"The Indian army would be hit hard due to budget cuts," said the official, noting that a defence deal worth more $12 billion for procuring 126 jet fighters from France's Rafale was already delayed by at least three months.

Up to $4 billion will be lost at the rural development ministry, which has the largest budget after defence, hitting spending on roads, housing, and the government's flagship rural job-guarantee programme, a senior official in the ministry said.

[/quote]

Surprising move given that we are in election year - spending on poor and populist policies should be the one shooting up while cutting back everywhere else. Can't really say it was a good move given they f'd it up and now trying to fix the mess they created.

[Hari Seldon]

Infrastructure is a poor excuse. Even China was not born with infrastructure. This is where the "Gujrat model" is showing us the way where industry has led to the "neo-middle class".

Good point. Guj's share of industry in SDP has always been on the higher side. The 'neo-middle-class' is in itself an interesting concept, a cautious recognition of a sizeable emerging class and all that.

But the imp point here is to examine (and hope+pray it goes well) to what extent the right vision+will thing can do for manufacturing in a state in our federal polity. For sure, infrastructural hurdles - both of the 'hard' physical infra variety as well as 'soft' (legal, regulatory etc) infra - can be tackled to some extent. Already we see that Guj is power surplus, has excellent roads+ports+telecom connectivity. Air connectivity is not in the state govt's hands, sadly. And soft infra in terms of edu institutions is being targeted for scaling up. How much of this will translate into labor intensive mass manufacturing capacity remains to be seen. I for one am keeping eyes and ears open for any economic and development news coming from Guj only.

To what extent will the impressive figures pledged in the Vibrant Guj summits translate into on-ground industrial capacity, to what extent they will create gainful employment for multitudes of people (and a skills reservoir that other plants elsewhere can then tap into), the GIFT city project, the deliberate attempt at creating industrial clusters, all point to the one thing other states like (say) Maharashtra lack - that same vision+will thing.

I hope and pray Guj will show the way that given vision+will, there's nothing in our constitutional provisions and in our cultural norms that prevents mass manufacture successfully taking root here. jai ho and other std disclaimers hold only.

[Suraj]

One of the problems with focusing on 'innovative' services-driven growth is that it implicitly requires excellent quality of human resources. We do not have that. 'Unlocking the greatness of the Indian mind' requires $$ into compulsory education, plus secondary/tertiary education AND then university and post-graduate education. Such a system for the whole country will cost in the 100s of billions of dollars, today. The central revenues themselves are maybe $250 billion today, and that's meant to cover everything, not just education (ignoring the fiscal deficit, of course).

Further, without broad-based education and active value generation in the economy that raises incomes for a significant majority of the population on a sustained basis, the sustenance of a model is not politically feasible in the long term. The idea of '1 innovative knowledge worker supporting 10 people doing menial supportive labour' assumes that those 10 people will be happy with the state of affairs in perpetuity and will vote to prolong such a state of affairs, when directly interacting with the cream of society who lives at the level of western standard of living.

They will not do that. They will vote to demand redistribution of wealth to them. In fact, that is what is already happening, and has been the primary political issue when it comes to economic liberalization and industrialization. A large number of people are not educated enough to be employed in manufacturing and productive employment that will raise their standard of living for a substantial period of time. Because there aren't enough qualified workers, wages and competitive labour attrition would be comparatively higher than otherwise, even for basic hands-on work. This results in manufacturers preferring automation, which ends up not utilizing a vast but not sufficiently qualified pool of labor.

Except for some notable exceptions, there's no focused economic policy attempting to build a feedback loop that attempts to take and employ the most employable, and channel back the productive gains to educate, train and employ more, and build up a sustainable economic model where more and more people believe their involvement will mean a gradual improvement in their quality of life.

Many of the roadblocks to economic development today exist due to the lack of a coherent policy that gives people enough assurance of an improvement in their standard of living over time if they become involved. With notable exceptions again, that also prevents people from giving up land for industrialization; they have no guarantee that the government/private sector are not out to screw them, or that they'll be employed or will have equity in the investment made upon their former land.

Can this be addressed at the central level ? To an extent, but I believe the major gains can only be made with focused administration at the state or regional level. As a result I don't necessarily buy the idea of, say elevating NaMo to the central level as PM, as a significant solution from an economic perspective . Instead, I would much rather see him mentor a number of other state leaders in effective administration and policymaking. That, I think would have far greater implications, especially if the focus is upon the BIMARU states, whose demographic bulge combined with their low HDI is the fundamental economic resource sink today.

[krisna]

Union Budget 2013-14: Defence and welfare spending to be slashed

NEW DELHI: Finance minister P Chidambaram is putting welfare, defence and road projects on the chopping block in a last-ditch attempt to hit a tough fiscal deficit target by March, risking short-term economic growth and angering cabinet colleagues.

The cuts will reduce spending by about 1.1 trillion Indian rupees ($20.6 billion) in the current financial year, some 8 percent of budgeted outlay, or roughly 1 percent of estimated gross domestic product, two senior finance ministry officials and a senior government adviser told Reuters.

It is the first time the scale of the cuts and details of where the axe will fall have been made public, with officials revealing startling details about delays to arms purchases and belt-tightening for politically sensitive rural welfare schemes in an election year.

"The Indian army would be hit hard due to budget cuts," said the official, noting that a defence deal worth more $12 billion for procuring 126 jet fighters from France's Rafale was already delayed by at least three months.

Up to $4 billion will be lost at the rural development ministry, which has the largest budget after defence, hitting spending on roads, housing, and the government's flagship rural job-guarantee programme, a senior official in the ministry said.

Surprising move given that we are in election year - spending on poor and populist policies should be the one shooting up while cutting back everywhere else. Can't really say it was a good move given they f'd it up and now trying to fix the mess they created.

They surely f'ed the good economy over decade. now belt tightening.
voters schemes are the last to be on the chopping block. If these are also under budget cuts in the election year , then I can safely say that Indian economy is totally scr*wed.
This govt has the maximum harvard/foreign pedigree spouting people runnning riot here.

BTW Iam a mango man.

[subhamoy.das]

Continuing further of factories having to support 100m jobs ( 30% of the work force of 360m ) let us do the maths. A factory doing mass production - since some of us drool over the fact that mass manufacturing = mass low skill jobs - such as a modern car plant creates about 5k jobs, direct and indirect, as per head of NISSAN speaking at DAVOS. So for 1m jobs we would need 200 car plants and for 100m jobs we would need 20,000 car plants. Every state of India would need to have 1000 car plants. Is this feasible?

And the idea that service requires "high quality people" is a myth. It just needs computer litaret gradurates from all disciplines. We are not asking for masters or phds here. They will learn on the job. To give u an example - when we graduated as that "creame-de-la-cream" tech shool in INDIA we were also branded "un-employable" by the industry and that was true. We just got some idea about engineering basis and were good in maths and science. On job experience improved our value and skill. So this myth about we need top class educational system only to product top class grads to deliver top class service is a myth.

[Arjun]

As a result I don't necessarily buy the idea of, say elevating NaMo to the central level as PM, as a significant solution from an economic perspective . Instead, I would much rather see him mentor a number of other state leaders in effective administration and policymaking. That, I think would have far greater implications, especially if the focus is upon the BIMARU states, whose demographic bulge combined with their low HDI is the fundamental economic resource sink today.

We need a person at the top who can focus on delivering growth, governance and leadership. Which other name comes to mind other than Modi that can deliver on these three ?

[Arjun]

I think we probably have around 10 Million or so working in higher-end or overseas-targeted service jobs across India. Getting this number upto 40 Million over the next decade is not impossible if the right strategies are adopted.

I am including all of the following: doctors, lawyers, accountants, all folks working in software or process outsourcing, education sector, science-related fields and the like.

Subhamoy - do you think 10 Mil is the right figure ? What other sectors do you think can be included?

[Suraj]

We need a person at the top who can focus on delivering growth, governance and leadership. Which other name comes to mind other than Modi that can deliver on these three ?

That is your contention, and if you feel so, that's fine. I just don't think that under the current circumstances, an inspirational leader at the top is of much benefit for getting things done at the local level; I would rather see several state CMs compete in effectiveness with Modi, who currently runs a system far more efficient than any large state.

[Arjun]

That is your contention, and if you feel so, that's fine. I just don't think that under the current circumstances, an inspirational leader at the top is of much benefit for getting things done at the local level; I would rather see several state CMs compete in effectiveness with Modi, who currently runs a system far more efficient than any large state.

So, you believe states more than the Center are responsible for Growth and Governance in India, given its federal structure ? That's something to think about...

Overall Fiscal deficit and current account deficit I would think though are more in the hands of the center ? So the current UPA government then, by your model - has basically ridden the states to deliver the growth that it touts and then has been a negative factor on top by letting the fiscal deficit run wild.

[Singha]

clearance for even large apartment/office projects needs MOEF (run by sonia loyalists) clearance now, not to speak of big things like steel plants, refineries, mines etc. ramesh and natarajan have single handedly defied even the PMO's direct calls for action and blocked all sorts of major clearances over the last few yrs per a magazine article. this is surely due to madam's protective chaya over them.

states can do very little in the face of such roadblocks.

old congressi motto is break any state govt they can, if not then block development and help anyone who wants to fight the state govt. this well honed system runs from assam to kanyakumari. only very strong incumbents like Modi or JJ are able to resist.

[subhamoy.das]

I think we probably have around 10 Million or so working in higher-end or overseas-targeted service jobs across India. Getting this number upto 40 Million over the next decade is not impossible if the right strategies are adopted.

I am including all of the following: doctors, lawyers, accountants, all folks working in software or process outsourcing, education sector, science-related fields and the like.

Subhamoy - do you think 10 Mil is the right figure ? What other sectors do you think can be included?

If we just focus on the ITenabled services then it is a 100b industry. We can assume a average billing rate of US 5.00 per hour ( to cater for local and export rates ) and that would translate to a 200usd per person week and to about 10,000 usd per person year. 1m will create 100jobs. 1b will create 10,000 jobs.100b will create 10m jobs. So the total folks doing ITes service work should be around the ball park figure of 10m.

Now we know that service sector accounts for 55% of 2T nomial rate GDP and which is 1.1T of service GDP and that would mean ITEs is 10% of the whole service. Now that would mean that about 100m service workers are out there who are outside of ITEs including workers in hotels, hospitals, schools, courts, transports, army,navy,airforce,police, babus, ministers, entertainment ...

[Arjun]

If we just focus on the ITenabled services then it is a 100b industry. We can assume a average billing rate of US 5.00 per hour ( to cater for local and export rates ) and that would translate to a 200usd per person week and to about 10,000 usd per person year. 1m will create 100jobs. 1b will create 10,000 jobs.100b will create 10m jobs. So the total folks doing ITes service work should be around the ball park figure of 10m.

ITES alone would not have 10 Mil jobs. See this link for Nasscom statistics: The IT-BPO Sector in India

Total employment by the $ 100B ITES industry is around 3 Mil.

There are about 1 Mil doctors in India. About 1.2 Mil lawyers, definitely more than 1 Mil accountants, about 1 Mil College teachers + science researchers, possibly more than 3 Mil engineers since India produces more than half mil every year. Don't have a count for finance professionals, designers, media, management etc.

Total higher-end services employment is probably closer to 13- 15 mil

[Supratik]

Subhamoy it is not "or" but "and". To get out faster from poverty it is easier to jump into manufacturing - I am not talking about hi-tech car manufacturing - but yes good quality widgets - because you have to employ what you have right now. All this talk about infrastructure and education is only maya. Theo - Hari already answered regarding Guj. You need 12th pass + good specialized technical education. I don't think you need engineering or science graduates to manufacture widgets. Suraj if the captain of the ship is not in control and the ship is moving on the instructions of a semi-educated Madam, the ship will go adrift as has happened. For any organization to succeed you need the best at the top but I agree one person alone cannot do it. Everyone has to contribute even the guy not cleaning your neighborhood garbage. But a good captain can steer the ship in the right direction. Regarding SEZs the UPA specifically Pranab killed it under leftist guidance even though it was proving to be successful. India as a whole has not even tried manufacturing properly.

[Supratik]

BTW, even if you talk about engineering and science graduates even a few years back there was a rush to Southern India from Bengal for college education. Now they have many colleges in Bengal. As there are not enough jobs many are going unfilled. So education will not be a problem for manufacturing.

[subhamoy.das]

Arjun:
NASSCOM might be using a usd 15/hour rate in which case my figure of 10m will come down to 3m but I would imagine usd 10/h to be more accurate and hence 5m will be employed. So we need to take the ITes sector to 600b to reach a 30m jobs figure in next 10years - about 10% of then projected 6T INDIAN economy. Right now it is 5% of the 2T economy. I strongly feel that it will happen.

Supratik:
I have clarified several times that it is service AND manufacturing with service component between 60 - 70% and the rest being pulled in by argi and manufacturing. But manufacturing will be for local consumption. The golden days of contract manufacturing your way out of poverty is now on a down hill due to parity in production cost between the host and contract country ( CHINA has 100% parity with US now and INDIA has 80% parity ). INDIA simply missed the offshore in manufactureing for what ever reason. That is a truth we cannot wish away. So looking forward we can only export service over information highway - and use that to drive local manufacturing and agri.

[subhamoy.das]

http://economictimes.indiatimes.com/tec ... 292424.cms

NEW DELHI: Geographic mapping and location-based services (geo services) generated $ 3 billion in revenue and created 1.35 lakh jobs in 2011 in the country, a study by Google has said.

[subhamoy.das]

This pay cut to IA is a blessing in disguise as they will now have to do more with less and will be at the door of DRDO for local products like Arjun and 155m howitzers.

The chicken has come home to roost on the welfare side. I think Chidambaram is hitting back at the welfare gang which was lead by Pranab. The world watch dogs will not allow the worlds 3rd largest economy to be screwed around even by its so called elected representatives

[Supratik]

Supratik:
I have clarified several times that it is service AND manufacturing with service component between 60 - 70% and the rest being pulled in by argi and manufacturing. But manufacturing will be for local consumption. The golden days of contract manufacturing your way out of poverty is now on a down hill due to parity in production cost between the host and contract country ( CHINA has 100% parity with US now and INDIA has 80% parity ). INDIA simply missed the offshore in manufactureing for what ever reason. That is a truth we cannot wish away. So looking forward we can only export service over information highway - and use that to drive local manufacturing and agri.

Good. We should aim for at least 25% manufacturing in next 20 years. IIRC, we are at 16%. So there is a huge opportunity which is being wasted. Education won't be a problem. The complaint I have heard of is "skills". We need to work on that. Infrastructure can be ramped up in 10 yrs if persistent effort is put in. I don't think mass exit of manufacturing from SE Asia and China is on the cards anytime soon even if there is cost parity. Availability of skilled labor is also important. Otherwise the export based service sector in India will also go kaput as the cost differential goes down. China is sitting on a 2T $$ reserve just through manufacturing. I would say let export drive manufacturing as well through SEZs. This will lead to innovation that will also fulfill the domestic market. Software did the same thing for services. Why not manufacturing.

[Suraj]

Arjun, and Singha: It's absolutely true that a manipulative central government can choke a state government's efforts. However, you may both be looking at something different from what I'm saying - that an enlightened central government in itself cannot guarantee very good administration at the state level, for the simple reason that we don't have a unitary system like PRC but a federal one, and that administration and organization are ultimately in the states' hands to accomplish.

I see more progress coming from a bunch of capable state administrations supported by a benign but not particularly heavyweight center, as opposed to a heavyweight center run by a people's hero, but a bunch of benign states. Of course the dream situation would be a capable center plus a set of capable state administrations, but under the present situation, where we have just a handful of well administered states, I consider that in the realm of fantasy...

The current central government really needs to go, but that's a different matter. They've demonstrated themselves to be the biggest disappointment of any central government in the history of the country, taking the second largest mandate in a quarter of a century and throwing it down the drain. I don't care if they elevate Sonia's pet cat to PM's role, but the way they've wasted the enormous political capital they had in 2009 is unpardonable.

[hnair]

I see more progress coming from a bunch of capable state administrations supported by a benign but not particularly heavyweight center, as opposed to a heavyweight center run by a people's hero, but a bunch of benign states. Of course the dream situation would be a capable center plus a set of capable state administrations, but under the present situation, where we have just a handful of well administered states, I consider that in the realm of fantasy...

The first of the bolded ones were the PVNR situation in a political sense and the second one was the NDA situation in an economic sense.

I had raised Shree Modi's coalition building skills and grooming a Tier II leadership in Gujarat, in the context of moving to Center. I see he has started off on coalition building (outside Gujarat) recently, but still not clear on a solid Tier II leadership grooming, that is happening in Gujarat. He needs such a leadership to support him in Center too, or it will end up as an Mrs G ver2.0, where allegations of autocracy will start gaining currency after a honeymoon period and state CMs will start getting annoyed and annoying.

Shree Modi needs a few trusted juniors and they should preferably have public visibility. Else things can fizzle out fast, after much promise.

The current central government really needs to go, but that's a different matter. They've demonstrated themselves to be the biggest disappointment of any central government in the history of the country, taking the second largest mandate in a quarter of a century and throwing it down the drain. I don't care if they elevate Sonia's pet cat to PM's role, but the way they've wasted the enormous political capital they had in 2009 is unpardonable.

Absolutely. I sort of lost hope in the current PM, after his gaffe at Oxford ("we are beholden to Brits"), but still was optimistic in an economic sense. But after repeated crappy policies led by PC and the final nail of indifferent leadership after Mumbai attacks, this PM climbed to the top of the worst ones ever.

We are in a sense, experimenting with a version of the Chinese communists - put in erudite geek with poor social skills as Chief Executive, because they "seem to know" stuff. It worked (sort of... despite Hu's recent bad reports) in China, because the public doesnt know better, due to lack of representational governance. But India needs a career politician, who can speak to the people as a PM. The rest of ministers can be the geeks, whatever, but the top five posts have to be career politicians

[Supratik]

In Bengal the CPIM made great political capital out of "kendriyo chakranto" (central conspiracy) which is correct in that the Congress central Govts hardly allowed any PSUs to come up in the state. It is another matter that trade unionism of the CPIM made things worse. However, with liberalization the scope for such manipulation has greatly reduced. Even then we hear complaints about delays in sanctions coming from the Center. A future Govt. should look into the possibility of giving more economic autonomy to the states e.g. why is it necessary to get environmental clearance from the center for industrial projects when a state body can do the job or why should the center decide whether to cut mangroves in Mumbai for infrastructure, etc. These are tools from the socialist past to keep control over states specially those that do not vote for the right party. The NDA did not dismantle this during their tenure. An industry friendly CG should look into how these things can be dismantled as they unnecessarily slow down economic progress.

[hnair]

Supratik-saar, the env clearance by Center is a final approval and is very much needed. Before reaching there, you need to show EIC reports prepared at state level etc. Every country that cares about env has a federal approval and regulatory body (infamous EPA in Khanland etc).

It should not be dismantled, or we get "Peking Smog Soup" or "Superfund site" situations. Rather the regulatory policies and approvals should be made transparent and easy to implement.

(chaiwallah talk says beez lac for clearance, despite the frizzy haired "clean" dude at top....)

[Suraj]

I absolutely support greater devolution of rights and fiscal autonomy to the state level. The NDA is more of a state's rights party, while INC is decidedly a top down rule-from-Delhi type.

hnair: aren't EPA, FAA etc functionally autonomous ? Do they have a history of torpedoing clearances from states run by the opposing party ? The current GoI environment ministry maintains no such sense of independence. If environmental clearance were in the hands of a functionally independent (to whatever extent possible) central regulatory body, then yes that would be good.

[Supratik]

Supratik-saar, the env clearance by Center is a final approval and is very much needed. Before reaching there, you need to show EIC reports prepared at state level etc. Every country that cares about env has a federal approval and regulatory body (infamous EPA in Khanland etc).

It should not be dismantled, or we get "Peking Smog Soup" or "Superfund site" situations. Rather the regulatory policies and approvals should be made transparent and easy to implement.

(chaiwallah talk says beez lac for clearance, despite the frizzy haired "clean" dude at top....)

I don't understand the logic of why you need multiple approvals from state and center for the same thing if you have clear guidelines as to what is acceptable and what not. IIRC, Posco which started in 2005 has still not got environmental clearance for its steel plant. It shows lack of clarity. Even if we accept you need federal approval for certain things we still need to look into how we can give more economic autonomy to the states. My argument is for cutting down red tape. India ranks low in the index of business freedom primarily for this reason and projects that take two years in developed countries take five years here even though the technology is now easily available.

[Suraj]

Environment is not, IMHO, a state's domain but a national one. As much as a politicized process today hampers a state from getting swift clearance, the opposite case of just state-level clearance may result in one or more states turning into gross polluters, as hnair explained. A functionally autonomous federal entity (as opposed to a ministry as is the case now) would be better.

[hnair]

EPA boss is usually a political appointee. The current one is one such, though the previous one was a career one, due to Bush jr's image issues after the horse-breeding gent's Katrina fiasco

AFAIK, the current frizzy haired dude in India has been even (heavy) handed against all state govts, including his own party's, when it comes to env clearances. He approves some, tosses out some.

(My take on the torpedoing in desh - comes more from security and FDI type clearances than env. Case in point are the Adani guys, who get consistently targeted for Sec clearance during port bids (gravpevinve: some alleged affinity to Gujarat's current administration). Of course they have a certain ripe reputation for sharp practices, but then so does the gigantic textile-bhai firm and even the MoD guys/Navy usually have no issues with the Adanis. My personal conclusion is that Grand Chetty R was getting personal there for some reason. Waiting to see how the current incumbent deals with them.)

[Theo_Fidel]

BTW, POSCO has environmental clearance. Its problem has to do with land acquisition and the militant nature of the locals. At first they lacked leaders so were easily diverted into random morchas, now commie types have arrived from all over and the resistance is ferocious. Still it does not inspire confidence that POSCO first asked for 8,000 acres, dropped it to 5,000 acres and now it is willing to put up the entire plant for 4,000 acres, with the first phase on 2,200 acres. Private companies need to take India more seriously and not BS like this constantly. This is what gets future development into such trouble.
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I see we are finally beginning to understand the scale of our manufacturing problem. 12th pass plus 2-3 years of skills education is the very minimum for all manufacturing.
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In India all strong central governments have attempted to mess with the states. Do witness even the NDA going after Laloo with Article 356 of all things, not that he did not deserve it, but this after all their pontificating on the freedom of states. It was a nauseating episode.

No. Power does funny things to people. A weak and distracted center has always been best economically.

[hnair]

The consensus driven center that PVNR ushered in was first interrupted by Shree Syed Sibtey Razi reverting back to old school Art 356 tactics. Whatever their track record on other matters, the NDA and Third-front folks had a lot of hesitation in doing such stuff.