Indian Economy - News & Discussion 27 May 2012

abhishek_sharma · Post by **abhishek_sharma** » 28 Jul 2013 08:05

RamaY · Post by **RamaY** » 28 Jul 2013 09:04

Walk the talk with Aravind Panagaria http://www.ndtv.com/video/player/walk-t ... iya/284689

Hope some of the posters will start brushing their teeth moving forward.

Bade · Post by **Bade** » 29 Jul 2013 04:53

India and its Contradictions: A dialogue with Amartya Sen, Gurcharan Das, Meghnad Desai
http://www.ndtv.com/article/india/india ... sai-398175

Wish Panagariya was also in the mix.

abhishek_sharma · Post by **abhishek_sharma** » 30 Jul 2013 05:01

Interview: Arvind Panagariya

svinayak · Post by **svinayak** » 30 Jul 2013 05:39

The Indian State can deliver a nuclear bomb and launch satellites but not universal primary education or decent public health. This is not an accident. It is a choice made by the elite who have been in power for 60 years and reflects their values. Indian progressives love to talk about socialism but what they mean by it is very different from what it means in the West. Western socialism used the State to help poor masses. Indian socialists used the State to project elite power. The reason is that Indian society lacks a very basic element, which is present in most societies. This is the equality of respect, the basic idea that all human beings have equal status.

http://www.indianexpress.com/news/the-h ... s/1147631/

Nobody talks that one generation of Indian leaders of INC created this situation

Singha · Post by **Singha** » 30 Jul 2013 07:26

> Indian socialists used the State to project elite power

that is a complete lie. whatever power happened took place despite the indian socialists, due to closet patriots hiding in the woodwork. indian socialists mainly focussed on failed models of economic development.

vina · Post by **vina** » 30 Jul 2013 13:39

This Amartya Sen and Jean Dreze business of "learning from everyone" and quoting East Asia specifically S. Korea, Taiwan and Singapore to justify their case for education and healthcare spending (not that I disagree with that bit) is just breathtaking in it's audacity and Chutzpah!

It makes it seem that as if the Indian development model was "self evolved" (I was tempted to use the word Swayambhu, but was shivering in my dhotis of being accused of You Yindoo Fundamentalist) . Nothing can be further from the truth.

If you all remember the "Civics" text book from your CBSE K-12 days, we were informed that the Soviet Union's "rapid development" and modernization from a feudal state to an industrial economy so impressed the "founding fathers" (here meaning specifically JLN), that we adopted that model and the 5 year plans . In fact, the entire existence of the Planning Commission is a result of that choice.

Sen, Bhagwati, Manmohan et al were an intrinsic part and important players in that endeavor and their intellectual mentors and godfather (atleast Sen's) PC Mahalnobis of the ISI (an uber ding-dong). Sen and his mentor were key progenitors of the "mixed economy" model , and has direct responsibility for he miserable failure of the Indian economy to grow from 1947 to 1991 in any meanigful way and to tackle both poverty and social deprivation. In fact, without growth to finance any meaningful attack on poverty and deprivation , it was a non starter.

Infact, it takes some serious Chutzpah to disown ALL responsibility (including the advocacy of losses in PSU because they dispensed "welfare") of their own miserable failure and the mass misery that got inflicted on the Indian people as consequence of their mad scientist experiment.

Sen , in fact OPPOSED liberalization , with an active wink and nod to the Commie scoundrels who spouted his rhetoric as opposition . Today, Sen and his acolytes (Jayati Ghosh of JNU for eg) will say that of course growth is needed (still qualifed as a mean mind you) and that it is "banal" to say so. That of course is the evolved and continually changed Sen , the un-exterminable New York City cockroach, as said by Bhagwati.

Well, if it banal to say to Sen and Jayati Ghosh that you need growth as the foundation, then it is easy to turn around and tell Ghosh and Sen that their assertions of advocating spending and intervention on Education and Healthcare is equally banal, as everyone knows that the govt is the best to provide public goods , especially in places where markets dont work very well !

As for that stuff about East Asia (S.Korea, Taiwan and Singapore) and the new found admiration for Lee Kwan Yew (for all the things , treating minorities properly..wtf, Sen doen't know what he is talking about, Singapore has absolutely no special treatment for any minority, no affirmative action, no special packages, no special financing and Sen and acolytes will scream murder if Singaporean terms for minorities are replicated in India!), he is just plainly lying.

Back in the 60s, the Nehruvian clique in Delhi had utter contempt for the newly independent countries such as Singapore (oh.. it is a small backwater, which we ruled from Calcutta!), and places such as S. Korea (the classic definition of basket case) and Taiwan. They were parodied as "American Lackeys" and laughed off as "Bag and Shoe stitchers" . You see, we had the GREAT DEVELOPMENT MODEL , developed by ultra gifted folks with doctorates from Oxbridge (Mahalanobis, Sen, Bhagwati, and a whole host of other luminaries) , which ran a "four factor" model on a computer (that I think must be Bose Mullah's grandpa's creation) (soon a 16 factor model) , and we have a secret sauce that in the "long run" (thanks to investment in capital goods, we will achieve utopia , as it was "scientific"). So we were building steel plants and nationalizing everythign, while those guys were stiching shoes and bags and sucking upto America for market access, financing, and of course security .. Humpph, those low lives, we were the uber self dependent autarkic "scientific ones" who will in the "long run" achieve Nirvana.

Fast forward 50 years, oh, how the mighty have crashed. Sen and his acolytes are miserable failures , thoroughly discredited for their record and disowing their own creations (License permit Raj ? -- Oh, that is not socialism, Nationalization (banks, industry etc) ? -- Oh that is not socialism.. Ok, so WTF IS Socialism?) while the countries they had absolute contempt for S. Korea, Singapore and Taiwan are first world nations, with far better economies, lower unemployment and healthier and wealthier and happier people than the "British Master" the Amartya Sen and other pre and immeditely post independence GungaDins were so much in awe of and voluntarily moved their a**es over for mind f***ing.

It is a massive comedown for Sen & Co to point to East Asia as example. If only the national media were not such servile purveyors of second hand propaganda with an aim to boost up Sen and Jean Dreze and by extension the entire NAC /JNU/ISI and Congress and Nehurvian legacy of bungling, they would have shot back the hard questions back to Sen when he opened his mouth on East Asia and learning from others.

1) Prof Sen. India DID learn from the outside world for it's development policies. In fact, you were one of the key architects of that. You wanted to emulate the Soviet Union here in India and that turned out to be a miserable failure. How about owning up to your own failure ?

2) Now you are saying emulate East Asia and seem to somehow say that the achieved health and nutrition first before growth, but every evidence is that they had high growth rates for 30 years , even back in the 60s, when their human indices were comparable to India's. So the evidence seems to be that growth and social development go together !

What Sen historically advocated with his "Kerala" model (he did that nearly 40 years ago, Sri Lanka was another example) was that you could have near first world like health and education indices without growth and hence he derided growth as a "fetish" . His advocacy was that with redistribution and strong govt involvement, you could replicate a Kerala all over India. That the commies came to power (in the 50s and ruled briefly by the time he came up with that model) and it fit in with his wider world view was perfect. He just appropriated the record of Kerala and attributed it to his pet thesis and the commie scoundrels jumped around with joy. Sen's closest model for India to follow economically was Cuba. In fact that remains the pet fetish of the likes of Karat & Co.

Kerala was unique in the sense that the reforms in Kerala predated atleast 50 years before that and Kerala always had a "Money Order" economy. There were no jobs in Kerala even a 100 years ago, nor are they even today. Nearly everyone moved to Madras or Bombay or somehwere else before Independence (my folks for eg) and the mass migration in the wake of the "Gelf" boom put money in the had of Keralites. No Gelf and no moving to other parts of India, Kerala would be Kaput , with no income to finance it's social sector. That part is something Sen & CO will never talk about. For their pet thesis to work, it needs an exernality like Sugar Daddy with endless cash to keep pouring into the black hole you create (like the Soviet Union was to Cuba) or a Money Order Economy (like Gelf and employment in rest of India was to Kerala) . Cuba fell apart when the Soviet Union could not be sugar daddy anymore. If anything happens to Gelf, Kerala will writhe in pain.

For you to have a sustainability here (think Taiwan, Singapore, S. Korea), you NEED growth , without that, the Sen & Karat model of Kerala/Cuba is just a chimera.

Singha · Post by **Singha** » 30 Jul 2013 17:21

well dont worry, like you said the INC will change course and fix things. there is absolutely no need for regime change here. all INC needs is another 60 years of power to fix what went wrong

RoyG · Post by **RoyG** » 30 Jul 2013 18:44

Bade wrote:India and its Contradictions: A dialogue with Amartya Sen, Gurcharan Das, Meghnad Desai
http://www.ndtv.com/article/india/india ... sai-398175

Wish Panagariya was also in the mix.

At 11:18 Lawd Desai reveals his true self when he pretty much says that the cause of social ills in India is because of the "hindu caste" system. The Brahmins control everything and are keeping the other castes oppressed.

Supratik · Post by **Supratik** » 30 Jul 2013 19:06

Vina, like Theo there is incongruency in your economic and political thought. You are expecting the elephant to do gymnastics like the Chinese champion starting tomorrow. Unless the failed socio-political thought process of the family-led INC undergoes genetic changes it is going to remain wishful thinking. For that purpose many of us feel it needs complete rest from governance for at least a couple of decades and let other ideas run the show. PVNR is an ugly word in the current INC dispensation but he may well turn out to be India's Deng.

Arjun · Post by **Arjun** » 30 Jul 2013 19:53

Guys - Vina has realized the need for regime change and has stated quite explicitly that the Congress needs to go in the upcoming Lok Sabha elections. The change in his stance is a few weeks old now - in case some of you missed it.

svinayak · Post by **svinayak** » 30 Jul 2013 21:15

Supratik wrote:Vina, like Theo there is incongruency in your economic and political thought. You are expecting the elephant to do gymnastics like the Chinese champion starting tomorrow. Unless the failed socio-political thought process of the family-led INC undergoes genetic changes it is going to remain wishful thinking. For that purpose many of us feel it needs complete rest from governance for at least a couple of decades and let other ideas run the show. PVNR is an ugly word in the current INC dispensation but he may well turn out to be India's Deng.

Also people are asking why there is a large demand for gold in India. When false economic models and their supporters have been running the show for 50 years what else can the people do.

Theo_Fidel · Post by **Theo_Fidel** » 30 Jul 2013 21:39

Bade · Post by **Bade** » 30 Jul 2013 21:47

I wonder what stopped all the private enterprise and entrepreneurship which was suppressed by Indian socialism post independence, not to blossom under British imperialism before. Other than the Tatas, of course who did start under British rule and flourished.

There is a disconnect in the two extreme positions taken by economists.

Theo_Fidel · Post by **Theo_Fidel** » 30 Jul 2013 21:51

Yayavar · Post by **Yayavar** » 30 Jul 2013 22:05

Theo-ji: I dont know the basis of your analysis or your definition of what comprises north or south. But am particularly confused by this :

...the midday meal scheme is controversial in the north because the poor 'may' benefit (lazy sods) and god forbid a few muslims benefit. ..

Where did you see the above sentiment expressed?

Supratik · Post by **Supratik** » 30 Jul 2013 23:03

Every body on this board supports mid-day meal scheme, education, women's empowerment, etc. Kerala has been commended for doing an excellent job on social indicators by everyone. However, if someone claims that there is actually a "Kerala model of economic development" then what many of us are asking is "where is the economy in Kerala?". I hope that is a fair point.

Supratik · Post by **Supratik** » 30 Jul 2013 23:08

If Prof Sen can show us a roadmap of a welfare state for 1.8 billion people with a per capita income of $40000 by 2080 we will be hugging him with glee like we will Tendulkar or Dhoni.

nachiket · Post by **nachiket** » 30 Jul 2013 23:10

Supratik wrote:If Prof Sen can show us a roadmap of a welfare state for 1.8 billion people with a per capita income of $40000 by 2080 we will be hugging him with glee like we will Tendulkar or Dhoni.

He'll conjure up all the plans and roadmaps you want. None of them are likely to work even half as well as they would be promised to.

Supratik · Post by **Supratik** » 30 Jul 2013 23:49

As a non-expert I haven't seen any roadmap. Unless it is in some journal or publication.

Bade · Post by **Bade** » 31 Jul 2013 00:17

It will be fair to say that the so called "Kerala model" did half of the things well, but did not follow up with the other half which are equally important. But just beating it up for lack of vision on part of the politicos there is not going to help explain why social indicators are still poor in places which are far and above Kerala in the other half which Kerala did not do well.

If you take the example of China, it did both those things well and one sees they are relatively better off then India in both social indicators (sans democratic rights) and industrial economy. So whatever Sen has said has some amount of data to backup elsewhere if not in Kerala. I think the only reason he brings it up is as it is a part of India. He also has mentioned Himachal Pradesh recently. TN too has been doing both relatively better than Kerala.

Theo_Fidel · Post by **Theo_Fidel** » 31 Jul 2013 00:57

Every time someone points to Kerala you must also point to Kanyakumari district.
One little data point.
Average Rice yield in KKY district is 4.5 tons per hectare.
Average rice yield in Thiruvananthapuram across the border is 1.2 tons per hectare.
My family lives on both sides and yet the results are night/day, by brothers in the same family no less.
Always scratch my head over this.
I have some ideas why this is so but not sure it is relevant here.

Yayavar · Post by **Yayavar** » 31 Jul 2013 01:10

Theo, had a question for you a little above wrt mid-day scheme and social views.

Theo_Fidel · Post by **Theo_Fidel** » 31 Jul 2013 01:19

I have had my comments deleted so I'll respond in off-topic thread later...

RamaY · Post by **RamaY** » 31 Jul 2013 01:22

Theo_Fidel wrote:Every time someone points to Kerala you must also point to Kanyakumari district.
One little data point.
Average Rice yield in KKY district is 4.5 tons per hectare.
Average rice yield in Thiruvananthapuram across the border is 1.2 tons per hectare.
My family lives on both sides and yet the results are night/day, by brothers in the same family no less.
Always scratch my head over this.
I have some ideas why this is so but not sure it is relevant here.

Please post why it is so when both sides have access to almost similar resources (land/soil, seeds, fertilizers, technology etc) because they both belong to same family.

You can post in any thread you want, at least in OT thread.

ramana · Post by **ramana** » 31 Jul 2013 01:24

Businees Standard an Ambani paper has this op-ed:

India's Darkest Hour

India's Darkest Hour

Companies, bankers and experts have all given up hope of an economic recovery

I recently spent a week in India meeting a wide range of economic participants - companies (both large and small), banks, industry experts and economic commentators. As a result, I was exposed to a diverse cross section of opinion. What is clear is that the economy is entering another down leg. The bountiful monsoon may save us to an extent, but things are getting worse in terms of industrial production and private sector capital expenditure. We may end up showing higher gross domestic product (GDP) growth in print than last year's growth of five per cent, but this will be solely because of agricultural growth on account of good monsoon rains. On a like-for-like basis, independent of agriculture, GDP growth in 2013-14 should be lower than what it was in 2012-13.

Of the factors that were expected to lead to an acceleration in the rate of economic growth - falling interest rates, unclogging of the investment cycle and some pickup in exports - none seem to be playing out. In meeting after meeting, I felt that people had finally given up. All the enthusiasm generated by Finance Minister P Chidambaram in his first six months in office has dissipated. People have realised that things cannot turn on a dime. It is extraordinarily difficult to implement most of the policy.

Industrialists have absolutely no interest in making any fresh investments, and have very little confidence that projects that are currently stuck will start moving. Capital goods providers also seem to see little sign of the public sector investment step-up that the finance minister talks about. Domestic order books remain subdued. Even consumption seems vulnerable; most of the participants agreed that consumption beyond a point couldn't keep growing independent of the broader economy.

Everyone is convinced that this growth slowdown is largely self-inflicted. We have lost the plot and cannot blame our travails on external factors. The business class has given up the hope that the country would ever get back to the high growth rates achieved in 2003-07. Most have made business plans assuming that growth will be at best six per cent over the coming few years. Cost cutting and asset rationalisation, not growth, are at the top of their agenda. While there has been some improvement in competitiveness among many sectors, such as engineering and auto components, a large number of companies still complained, surprisingly, about the rupee, which is now at 60. There was no sense of a broad-based export surge around the corner. The complaint that India was uncompetitive in terms of infrastructure, land, labour (adjusted for productivity) and capital remains. If this is true, how will any new manufacturing investment happen?

Corporate India believes the rupee will remain weak. Everyone is hoping that, now that the Reserve Bank of India (RBI) has seemingly drawn a line in the sand at 60, they succeed in protecting the currency. Government decision making continues to be unpredictable - take, for instance, the delay in approving Mylan's $1.2-billion purchase of an injectables facility in India. At a time of serious foreign exchange stress, one would think that we should welcome foreign direct investment (FDI).

Another example that was highlighted was FDI in retail. After seemingly risking its tenure on this issue, why did the government make the fine print so cumbersome that no one was willing to invest?

The finance ministry is trying to do what it can, but few others in government seem to demonstrate their sense of urgency. On infrastructure, the issues of land, access to equity and government policy clarity remain. Nothing much seems to have changed on the ground.

Most small and medium-sized entrepreneurs seem to be fed up with the daily harassment of doing business in India. Basically, when India was booming, the sheer adrenaline of growing at nine per cent was exciting enough for investors to put up with the hassles of doing business. Now at five per cent growth - and dropping - the upside of doing business here does not seem to justify the hassles. Every industrialist I met had bought property overseas in the last 18 months and was in the process of creating a parallel establishment as a hedge.

Bankers spoke of balance sheet stress on an unprecedented scale, and of the worsening credit quality. Unhedged foreign exchange exposures are a real issue, and most wonder how credit growth will cross 10 per cent.

Those who rely on the wholesale markets are even more depressed since, as a result of recent measures by the RBI, both the cost of funds and access have deteriorated. If these measures continue beyond two or three months, both the profitability and growth of their business models will be impaired. The decimation in the stock prices of public sector banks is also a worry. How will they recapitalise at these valuations?

What does it signal about the state of an economy that almost 70 per cent of its banking system is trading at below book? Are banks' share prices a lead indicator of a systemic problem?

There appears to be a total breakdown in trust and co-operation in the system. We seem to be back to the mid-1970s. Businessmen are once again seen only as rent seekers who are trying to monopolise national resources. The bureaucracy seems to be making sure that no one or no industry is earning more than it should. Trying to promote or grow an industry no longer seems the primary focus of most regulators. The political discourse in the country has lurched very much to the left, with capitalism in retreat.

Most felt that we needed fundamental, root-and-branch reform of our governance structures. The way we function is no longer appropriate for a country of our size, complexity and growth potential. This fundamental reform requires somebody to take on vested and entrenched interests head-on. In today's political set-up, no one seems ready for this initiative. There was not much hope of a decisive verdict in the elections, either.

In short, the mood was deeply pessimistic. Many now fear for the country's future. It is always darkest before the dawn, and this deep pessimism may be a contrarian indicator, but even rational and sensible people now seem to have given up. While it is truly difficult to be positive at present, one should not forget that we are a democracy with checks and balances. We have a very young and hugely aspirational population. The political system will eventually have to adapt to the needs and wishes of this huge demographic. We will have to make the systemic changes to bring growth back. It is wrong to think that we have permanently lost our way. The risk is that we could have some more pain ahead, maybe even a crisis before the required changes happen.

The writer is fund manager and CEO of Amansa Capital

Bade · Post by **Bade** » 31 Jul 2013 01:26

Soil variety is not uniform all over Kerala. There could be myriad reasons. The coastal parts of Travancore went to Kanyakumari district. Trivandrum city area and surroundings are mostly hilly compared to Kuttanad area in Alapuzha. So not sure what Theo is referring to here.

http://www.ecostat.kerala.gov.in/pdf/areappt.pdf

There are some overall numbers for the state in Agri usage patterns and productivity for paddy with a more than 50% drop in paddy production by area over the last many decades.

The numbers for Kuttanad are like 6-7 Tons/Ha, despite being below MSL with saline intrusion. More here, http://210.212.24.72/~kscsteuser/digita ... /05-85.pdf

RamaY · Post by **RamaY** » 31 Jul 2013 01:47

I will await for Theoji's answer. If the same owner is doing the cultivation, he can bring everything on to the table except for Soil. If land is of different soil variety, there is nothing one cane do.

Rishirishi · Post by **Rishirishi** » 31 Jul 2013 01:47

ramana wrote:Businees Standard an Ambani paper has this op-ed:

India's Darkest Hour

India's Darkest Hour

Companies, bankers and experts have all given up hope of an economic recovery

I recently spent a week in India meeting a wide range of economic participants - companies (both large and small), banks, industry experts and economic commentators. As a result, I was exposed to a diverse cross section of opinion. What is clear is that the economy is entering another down leg. The bountiful monsoon may save us to an extent, but things are getting worse in terms of industrial production and private sector capital expenditure. We may end up showing higher gross domestic product (GDP) growth in print than last year's growth of five per cent, but this will be solely because of agricultural growth on account of good monsoon rains. On a like-for-like basis, independent of agriculture, GDP growth in 2013-14 should be lower than what it was in 2012-13.

Of the factors that were expected to lead to an acceleration in the rate of economic growth - falling interest rates, unclogging of the investment cycle and some pickup in exports - none seem to be playing out. In meeting after meeting, I felt that people had finally given up. All the enthusiasm generated by Finance Minister P Chidambaram in his first six months in office has dissipated. People have realised that things cannot turn on a dime. It is extraordinarily difficult to implement most of the policy.

Industrialists have absolutely no interest in making any fresh investments, and have very little confidence that projects that are currently stuck will start moving. Capital goods providers also seem to see little sign of the public sector investment step-up that the finance minister talks about. Domestic order books remain subdued. Even consumption seems vulnerable; most of the participants agreed that consumption beyond a point couldn't keep growing independent of the broader economy.

Everyone is convinced that this growth slowdown is largely self-inflicted. We have lost the plot and cannot blame our travails on external factors. The business class has given up the hope that the country would ever get back to the high growth rates achieved in 2003-07. Most have made business plans assuming that growth will be at best six per cent over the coming few years. Cost cutting and asset rationalisation, not growth, are at the top of their agenda. While there has been some improvement in competitiveness among many sectors, such as engineering and auto components, a large number of companies still complained, surprisingly, about the rupee, which is now at 60. There was no sense of a broad-based export surge around the corner. The complaint that India was uncompetitive in terms of infrastructure, land, labour (adjusted for productivity) and capital remains. If this is true, how will any new manufacturing investment happen?

Corporate India believes the rupee will remain weak. Everyone is hoping that, now that the Reserve Bank of India (RBI) has seemingly drawn a line in the sand at 60, they succeed in protecting the currency. Government decision making continues to be unpredictable - take, for instance, the delay in approving Mylan's $1.2-billion purchase of an injectables facility in India. At a time of serious foreign exchange stress, one would think that we should welcome foreign direct investment (FDI).

Another example that was highlighted was FDI in retail. After seemingly risking its tenure on this issue, why did the government make the fine print so cumbersome that no one was willing to invest?

The finance ministry is trying to do what it can, but few others in government seem to demonstrate their sense of urgency. On infrastructure, the issues of land, access to equity and government policy clarity remain. Nothing much seems to have changed on the ground.

Most small and medium-sized entrepreneurs seem to be fed up with the daily harassment of doing business in India. Basically, when India was booming, the sheer adrenaline of growing at nine per cent was exciting enough for investors to put up with the hassles of doing business. Now at five per cent growth - and dropping - the upside of doing business here does not seem to justify the hassles. Every industrialist I met had bought property overseas in the last 18 months and was in the process of creating a parallel establishment as a hedge.

Bankers spoke of balance sheet stress on an unprecedented scale, and of the worsening credit quality. Unhedged foreign exchange exposures are a real issue, and most wonder how credit growth will cross 10 per cent.

Those who rely on the wholesale markets are even more depressed since, as a result of recent measures by the RBI, both the cost of funds and access have deteriorated. If these measures continue beyond two or three months, both the profitability and growth of their business models will be impaired. The decimation in the stock prices of public sector banks is also a worry. How will they recapitalise at these valuations?

What does it signal about the state of an economy that almost 70 per cent of its banking system is trading at below book? Are banks' share prices a lead indicator of a systemic problem?

There appears to be a total breakdown in trust and co-operation in the system. We seem to be back to the mid-1970s. Businessmen are once again seen only as rent seekers who are trying to monopolise national resources. The bureaucracy seems to be making sure that no one or no industry is earning more than it should. Trying to promote or grow an industry no longer seems the primary focus of most regulators. The political discourse in the country has lurched very much to the left, with capitalism in retreat.

Most felt that we needed fundamental, root-and-branch reform of our governance structures. The way we function is no longer appropriate for a country of our size, complexity and growth potential. This fundamental reform requires somebody to take on vested and entrenched interests head-on. In today's political set-up, no one seems ready for this initiative. There was not much hope of a decisive verdict in the elections, either.

In short, the mood was deeply pessimistic. Many now fear for the country's future. It is always darkest before the dawn, and this deep pessimism may be a contrarian indicator, but even rational and sensible people now seem to have given up. While it is truly difficult to be positive at present, one should not forget that we are a democracy with checks and balances. We have a very young and hugely aspirational population. The political system will eventually have to adapt to the needs and wishes of this huge demographic. We will have to make the systemic changes to bring growth back. It is wrong to think that we have permanently lost our way. The risk is that we could have some more pain ahead, maybe even a crisis before the required changes happen.

The writer is fund manager and CEO of Amansa Capital

To call this "darkest hour" is an outright insult. The economy is still growing at a decent 5%. India is running a deficit, but no where near any crisis. I

Theo_Fidel · Post by **Theo_Fidel** » 31 Jul 2013 02:30

Bade,

It is the same land and soil. As your paper shows stellar yields are possible, yet....
http://www.jtropag.in/index.php/ojs/art ... le/180/168
This paper shows that on average yield is 1/3 of possible. More or less my experience between 1.2 to 4.5 ton per hectare.

while at it take a look at this FAO document.
http://www.fao.org/docrep/003/x6905e/x6905e09.htm
Note that not a single Keral district is above average yield of 2.5 tons per hectare.
7 TN districts are above 3.5 tonnes per hectare. Essentially off scale high. KKY is one of them.

Like I said I have my reasons for pointing this out. And why this is so.

vera_k · Post by **vera_k** » 31 Jul 2013 02:47

Luxury goods may cost more

We have to look at goods which we can produce and therefore need not import in such large quantities or goods which are clearly non-essential, which some may call luxuries

Back to import substitution as a policy? It would be better for the longer term if the IMF loan route was pursued.

Kakkaji · Post by **Kakkaji** » 31 Jul 2013 03:05

RamaY wrote:I will await for Theoji's answer. If the same owner is doing the cultivation, he can bring everything on to the table except for Soil. If land is of different soil variety, there is nothing one cane do.

I would venture a guess.

Since the original question about the difference in yields in adjoining districts was raised by Theo Saheb, I think the reason has something to do with the evil Hindu caste system?

vina · Post by **vina** » 31 Jul 2013 04:38

Bade wrote:also has mentioned Himachal Pradesh recently

Excellent. I hope Sen and Dreze get called out for their charlatanism on this in particular.

Himachal Pradesh is a another perfect example of a "Sugar Daddy" fed welfare state. What Soviet Union was to Cuba, Gelf and other parts of India is to Kerala, the Central Govt is to Himachal Pradesh!

HP is classified as a "hill state" and has huge subsidies and funding and fiscal support from the central govt (I looked around Uttarakhand recently, again, you will find very little poverty, all the kids went to school and I am sure will have first class HDI indicators).

A ridiculous percentage of the population of HP are govt servants (something of the order of 25% or 30%). Now in such a state , tell me, how can you NOT have the kind of HDI that you have, if you have a halway decent immunization and health care and basic food and welfare , in addition to the cash transfers (which the govt job essentially is).

Now what happens if the Central Govt cuts out the fiscal support and subsidies to HP. It goes Kaput just like Cuba went when the Soviet Union could not support it any longer.

In fact, the ONLY true state with growth led sustainable state with a top tier HDI is TN. TN of course is something that fits the Sen world view and the commies dont have a hope in hell to get close to power and influence the discourse and hence is conveniently not talked about except in mention.

Soon, Maharashtra and Gujarat will join TN with HDI levels at the top tier (these things take 20 years) and if in that a Congress govt comes to power in Guj at that point in time, those scoundrels will immediately point to those numbers and say that Cong aaaya, HDI bada as if by magic and ignore the previous 20 years of work that led to that outcome.

Bade · Post by **Bade** » 31 Jul 2013 05:29

vina, I think you are reading too much between the lines of what he has said. Anyways each to his own pet peeves.

I bet China's HDI was high long before its reverse revolution with capitalism. Could China have done that without the HDI first being there at high levels. It is no Singapore either being as large or even larger than India in population. Everything isn't hunky dory there even now but still.

Has any other country large enough, been able to set up the growth part without getting their social indicators high enough. If people can point to low HDI for USA say in the 1900 time frame before explosive growth, then the thesis that growth is more fundamental than HDI and independent of it in early stages can be understood as the truth. Or else it is all just philosophical posturing.

What has happened in places like Cuba and Kerala is, they have not built on their good HDI to the next level. In Kerala's case IMO, they were happy to empower the labour class but did not have any clue how to get to the next level during the 60's to 80's era. Slowly it has dawned on them that they need to focus on developing to the next higher levels in education and industrial growth. It will take time to chart the new path with the next generation.

Suraj · Post by **Suraj** » 31 Jul 2013 07:58

vera_k wrote:Luxury goods may cost more
We have to look at goods which we can produce and therefore need not import in such large quantities or goods which are clearly non-essential, which some may call luxuries
Back to import substitution as a policy? It would be better for the longer term if the IMF loan route was pursued.

That's a little harsh. The old autarkic policies suffered because they weren't combined with export promotion. Import substitution is nothing new - Japan, SoKo and PRC all do it one way or the other, even now. They just happened to combine it with export promotion. While we don't have a properly integrated export promotion system, our exports have still grown significantly in the past decade. Discouraging luxury goods imports via taxes when the Rupee is this weak, isn't such a bad idea.

Prasad · Post by **Prasad** » 31 Jul 2013 08:02

What exactly are these 'luxury' goods? Lambos?

Arjun · Post by **Arjun** » 31 Jul 2013 08:28

Amartya Sen & Jagdish Bhagwati and Congress & BJP agree on development, disagree only in degree

Dynasty apologist pitches in with unusually high degree of tripe this week...Had imagined Swaminathan Aiyar to be somewhat above succumbing to this disease that afflicts all Indian 'thinkers' at some point, but seems I was wrong: All religions are equal, All academic viewpoints are equal, all political parties are equal....all differences are maya only.

If the consequences of two courses of actions are far different - then clearly the two deserve to be treated very differently. The differential economic impact of following the Bhagwati course vs the Sen course is enormous, as is rooting for Modi as opposed to the Dynasty.

Arjun · Post by **Arjun** » 31 Jul 2013 10:10

A good article on the same theme that appears surprisingly enough in the Hindu: Two visions of India – woolly and pragmatic

Touches upon the Bhagwati-Sen and Modi-Dynasty divides and notes that the pragmatic option in both cases is the former.

nachiket · Post by **nachiket** » 31 Jul 2013 10:14

Prasad wrote:What exactly are these 'luxury' goods? Lambos?

I think the Indian list would begin with TV's.

vera_k · Post by **vera_k** » 31 Jul 2013 10:39

Suraj wrote:The old autarkic policies suffered because they weren't combined with export promotion.

No. Import substitution necessarily means drawing up lists of items, and then promoting their manufacture locally via subsidies. In the Indian context, it also meant various PSUs set up to manufacture these goods.

The higher duties proposed would be fine as a bridge, if they came with an expiration date. In the event, they will likely just draw out the pain and postpone eventual adjustment.