Indian Economy - News & Discussion 27 May 2012

[svinayak]

Rajan said the primary role of the bank is monetary stability to sustain confidence in the value of the rupee.

"... but we have two other important mandates; inclusive growth and development, as well as financial stability," he said.

inclusive growth and development is an odd item here. It is a political scope and only the ruling govt and politics creates the policy.

[RamaY]

Rajan said the primary role of the bank is monetary stability to sustain confidence in the value of the rupee.

"... but we have two other important mandates; inclusive growth and development, as well as financial stability," he said.

inclusive growth and development is an odd item here. It is a political scope and only the ruling govt and politics creates the policy.

Rest of his speech is more like a financial engineer in wall street and not RBI governor.

[komal]

2.Increase duties on 100% finished goods across the board.Lesser hike for imported components.This will give a boost to local industry.

3.Reduce foreign exchange allowed to be moved out for investment by half,no restriction on business/travel expenses and funds for educational purposes.

8.Start barter trade with friendly nations,rupee payments,etc. Buy as much oil.etc., from Iran,Venezuela,etc. as we can and build up stocks for a year,so that petrol and diesel prices can be stabilised and not hiked every week or so.

Just observing these points are straight out of the Nehru Economics textbook

[komal]

Rest of his speech is more like a financial engineer in wall street and not RBI governor.

He actually says Further to develop the money and G-sec markets, we will introduce cash settled 10 year interest rate future contracts; 3. We will also examine the introduction of interest rate futures on overnight interest rates

Not to be too cynical here, but this level of technical specificity (cash settled vs deliverable futures) implies that he already has awarded the contract to create these futures to an American or European exchange.

[V_Raman]

At the risk of coming too late to the party, I just came back from 5-week India vacation. The lack of technology sophistication in India is glaring. For a multi-trillion dollar economy, it is in a very sorry state. It is extremely unstructured and unevolved. If we have to grow our economy, we need to make lot of improvements in our technology usage, manufacturing, and knowledge.

[vina]

He actually says Further to develop the money and G-sec markets, we will introduce cash settled 10 year interest rate future contracts; 3. We will also examine the introduction of interest rate futures on overnight interest rates

Not to be too cynical here, but this level of technical specificity (cash settled vs deliverable futures) implies that he already has awarded the contract to create these futures to an American or European exchange.

Err. What am I missing here. The F&O contracts in NSE are cash settled and not delivery settled (unlike in USA). You will need to import zilch. Same with MCX. In fact, those guys help set up exchanges around the world! I think you are missing the wood for the trees here.

[Arjun]

Arjun,

I have no idea why you feel personally assaulted by the idea that we pay peanuts to our engineers and get monkeys. Pay the designers/installers of our equipment better and you will get better performance. The Indian attitude is we can hire 4 unskilled folks to do the work of 1 skilled employee. As long as this continues our ability to manufacture will suffer.

Folks are importing equipment into India because they are unable to get world class quality out of our manufacturing. Gurumurthy is simple talking for the purpose of talking. Stopping the import of critical components will only mean a return to 1990 era of Ambassador and fiat & Bullet.

http://www.thehindubusinessline.com/com ... 166414.ece

Take a look at this. TaTa motors is importing $500 Million worth of auto components annually. All the critical parts of even the nano are imported. With all its resources why is TATA not making these critical pieces here?

Firstly, nobody (at least not me) is asking for the stopping of import of critical technology. That would be quite ridiculous. The point is to have a single-minded focus on creating an equally large export industry in capital goods (and in other spheres for that matter). China has that mentality - India doesn't. That lack of drive is NOT on the part of entrepreneurs or lack of skill on the part of workers - it is a drawback of the leadership in its ability to promote with the right set of policies, incentives and in the ability to promote a high-performance culture. I see that drive in some of our parties that are led by folks who have a stronger grounding in business - the rest of the 'babus' and vote-bank politicians are deadweights pulling the country down and it would be idiotic to even give them too much importance.

Very simply, let me reiterate again. If China can do it - so can India. Most analysts place Indian workers as better qualified than the Chinese for higher end work, and Indian entrepreneurs beat the Chinese in many other spheres. The problem is with the enabling environment in the country. Whose responsibility do you see that as being ?

You say there is no sustained business culture of high-quality manufacturing in the country. I agree with you. Except that I think there are some leaders who have the capability to bring about a change to that culture and others don't.

[vina]

Ah.. Raghuram Rajan. The kind of guy who brings a smile to your face and makes you proud to be an Indian (and for me personally a Tamil and a card carrying Tam Brahm).

A breathtaking shock and awe display of the good old Tam Brahm razor sharp intellect,focus and analytical skills and a great roadmap to the future. I think he will ram through his part of the bargain on the RBI side (this kind of thing would have required wide ranging consultations with the Finance ministry and RBI insiders before hand and they would have been in the know) . The govt has to keep it's side of the bargain on the fiscal side.

So the govt seems to have a plan after all. I expect a similar Shakina effect once the Parliament session gets over and a slew of meaningful actions forthcoming from the govt side. The Kangress can still pull it off in time for the elections if the Politico monkeys ( the Diggy Babas and the NAC jokers) keep their flea picking hands off the govt and allow them to do what needs to be done .

I just hope that that buffoon Oily Moily gets canned and one of the extremely smart folks from Karnataka come in to the oil ministry. You have the likes of Nilekani and Jayaram Ramesh from Karnataka, and in the presence of stalwarts like them, the Oily Moily clown sticks out like a sore thumb.

Y.V Reddy and Duvvuri Subba Roa led the RBI brilliantly in some very tough global times. All credit to them. Subba Rao did his part and should have ideally been able to hand over a stable economy with a golden period ahead to his successor. Unfortunately, the fiscal profligacy of the Govt (Pranab Mukherjee and his shenanigans) put paid to that and he leaves behind an economy in trouble.

Subba Rao's words "

I hope Finance Minister P Chidambaram will one day say, I am often frustrated by the RBI, so frustrated that I want to go for a walk and when I walk, I want to walk alone. But thank God that there is an RBI

are absolutely spot on. He took on the fiscally profligate UPA govt and stood his ground a did his bit for the country. My salutations to him.

While his words were a take of Chancellor Gerhard Schroeder's remark about the Duetsche Bank, I do hope that these words are emblazoned in gold and put in large letters at the entrance of the RBI HQ in Mumbai as a clear declaration of the independence of the RBI and that under Raghu it is entering a modern age and is single minded in it's focus of keeping the purchasing power of the currency intact.

[nachiket]

^^Unbelievable. Even after the disaster of the last nine years, you still have faith in this government.

[Arjun]

The Kangress can still pull it off in time for the elections if the Politico monkeys ( the Diggy Babas and the NAC jokers) keep their flea picking hands off the govt and allow them to do what needs to be done .

Pull what off before the elections ? A change in GDP growth numbers, a reduction in inflation, a reduction in fiscal deficit ??? You must be smoking something strong if you think there would be any meaningful difference on any of those fronts in the next 6 months.

[vina]

Pull what off before the elections ? A change in GDP growth numbers, a reduction in inflation, a reduction in fiscal deficit ??? You must be smoking something strong if you think there would be any meaningful difference on any of those fronts in the next 6 months.

Inflation and deficit .. Yes. There will be improvements from where we are. GDP will lag by a quarter or two. I expect by May next year, election time, we will be seeing 5% inflation with the CPI crashing from current levels on the back of improved food supply from the bumper harvest that is coming and commodity prices coming down (including oil) that will take he edge off the underlying inflation numbers. Growth will also have picked up thanks to the revival of investments on the ground.

[nachiket]

Inflation and deficit .. Yes. There will be improvements from where we are. GDP will lag by a quarter or two. I expect by May next year, election time, we will be seeing 5% inflation with the CPI crashing from current levels on the back of improved food supply from the bumper harvest that is coming and commodity prices coming down (including oil) that will take he edge off the underlying inflation numbers.

But this (if it even happens) will not be courtesy of any policy change by the government. So what is this "plan" of the government you are talking about? If the monsoon fails next year, and the current dispensation is persisted with we'll be in doodoo again.

Growth will also have picked up thanks to the revival of investments on the ground.

This remains to be seen. How can you be confident of such a revival on the back of one speech by the RBI governor?

[Arjun]

Inflation and deficit .. Yes. There will be improvements from where we are. GDP will lag by a quarter or two. I expect by May next year, election time, we will be seeing 5% inflation with the CPI crashing from current levels on the back of improved food supply from the bumper harvest that is coming and commodity prices coming down (including oil) that will take he edge off the underlying inflation numbers. Growth will also have picked up thanks to the revival of investments on the ground.

The weakening rupee makes inflation more likely. GDP growth is likely to record the abysmal level of 4.2% for FY '14. Fiscal deficit seems all set to overshoot Chidambaram's low standard of 4.8% given that two thirds of the deficit has already been reached within half year.

Any change in these figures and market mood will be felt only after a year or so, OR once there is a change in leadership.

[vina]

Growth will also have picked up thanks to the revival of investments on the ground.
This remains to be seen. How can you be confident of such a revival on the back of one speech by the RBI governor?

Well, the Govt has cleared some 1.44L Cr worth of projects where disbursements were already happening. They will kick in. The Public Sector has been ordered to bring forward their Cap Ex plans. All this will boost demand. It will take 3 to 4 months before you start seeing it in the headline numbers, but it will happen.

That is one of the plus points of being a quasi command economy like India. The Govt has lot of levers it can control directly (China has lot more and they do it very well to execute, which is their strength),if it summons the political will and the Politico monkeys are given a beating with the danda.

Now the Congress knows it is fighting a do or die battle. If the economy is like it is now a month before the election, it will be wiped out for sure. If it has a stable and decent economy on the uptick , it has a fighting chance, hoping that the public memory is short. I think the Politicos get it now and will keep their flea picking hands away . The NAC jokers and Diggy Babas will be told to shut up and stay away.

[vina]

The weakening rupee makes inflation more likely. GDP growth is likely to record the abysmal level of 4.2% for FY '14. Fiscal deficit seems all set to overshoot Chidambaram's low standard of 4.8% given that two thirds of the deficit has already been reached within half year.

That is the scenario if nothing is done. Even a comatose govt like the current one has a lot of levers to pull, if allowed to. There will be adjustments made and stuff happening now.

Remember, in India, things happen only if there is a crisis. This is a God Sent opportunity to get things moving. The Politicos know that it is their fat on the fire if they dont do it. Only then will these things happen.

[member_20317]

The Kangress can still pull it off in time for the elections if the Politico monkeys ( the Diggy Babas and the NAC jokers) keep their flea picking hands off the govt and allow them to do what needs to be done .

Pull what off before the elections ? A change in GDP growth numbers, a reduction in inflation, a reduction in fiscal deficit ??? You must be smoking something strong if you think there would be any meaningful difference on any of those fronts in the next 6 months.

Actually I am also of the same view right now. Though I admit I have not done too much due diligence. Not even on my own parameters. It is more like a primary feeling.

For the layman only the inflation counts. Everything else can be obfuscated as the will of God. I have asked 5-6 people around me about how the essence of FSB is different from PDS. And they do not remember. I asked a few managers about impact of devaluation and they are too busy managing the urgent. Most just are working on the belief that this is how it is. Meantime the client manager of a smaller private sector banks has indicated their internal guidelines to hold/go slow on disbursements on equipment finance.

The Gurumuthy article was a great one though. Points out the places where we need to work. But the work itself, is the will of God .

..................
VVV - As somebody pointed out on some other thread. For every CT there is a Chankyan Theory (also a CT!!). Lets burn down the barn.

[Sri]

Remember, in India, things happen only if there is a crisis. This is a God Sent opportunity to get things moving. The Politicos know that it is their fat on the fire if they dont do it. Only then will these things happen.

So, the current crisis is as per UPA's plan? They designed this to happen so that we have this God sent opportunity? Who is responsible for this mess?

After one messes things up and then wake up and make some cosmetic improvements then one can claim to redeem one self?

Policy is OK but I have little confidence right now on implementation part.

[habal]

Rest of his speech is more like a financial engineer in wall street and not RBI governor.

Raghuram Rajan seems like an WB/IMF guy without the overbearing burden of tight political oversight like MMS or Montek Singh Ahluwalia or Chidambaram ? Unless he can prevent money-market manipulation by speculators, there is nothing to arrest all of rupee. For eg, each time the Rupee falls to the dollar, it does so more than 30 paise. Now 25 paise seems to be the minimum margin acceptable to speculators to make their bets, and it so does happen magically that every time rupee depreciates, it does so by heavy margins indicating heavy speculator play. This has to be stopped because Dollar itself being a weak currency, artificially propped up through various tactical exigencies will take down other currencies with it, unless steep walls are created around the Indian rupee. Theoritically there is no limit to which rupee can fall because of these prevailing external conditions.

[krishnan]

PC blames pranab for the country's economic situation...blaming the current prez for the mess.

[vina]

Unless he can prevent money-market manipulation by speculators, there is nothing to arrest all of rupee

There we go. Straight from the JNU/CPI-M playbook. Why is the rupee falling ? Why it must be "manipulators" of course!

Forget about the fact that US and the rest of the world in general has had negligible inflation for the past decade (the fear was deflation in fact), while in India, we have had double digit inflation ! And if THAT doesn't account for the fall of an overvalued currency (rupee was rock solid at 55 for a long time) that falls steeply in a shock, I dont know what is.

So you want a strong rupee ? Get the friggin inflation under control. That is how you will get it. Not by tilting at the "speculator" windmill..

[habal]

There we go. Straight from the JNU/CPI-M playbook. Why is the rupee falling ? Why it must be "manipulators" of course!

hey ! there are only so many play-book isn't it ? Ok, let me rephrase, why does rupee fall by more than 50 paise each time it falls. That is not a entirely natural phenomenon. It can also fall by a few paise like 2 or 3 paise. But that rarely happens, if you can tabulate the stats of rupee-fall happening over the years.

If inflation is main reason behind rupee fall, then during peak years of inflation, the rupee stood steady at 55. That sort of created a crises where importing was cheaper than local manufacturing. So again, why has rupee fallen maximum in past one month alone. Why was not the fall gradual and linear ?

[vina]

So again, why has rupee fallen maximum in past one month alone. Why was not the fall gradual and linear ?

Lots of things in life and in financial markets are not gradual and linear. There has been a major event that happened, which is Bernanke opened his mouth and talked about tapering, which in all probability is happening in another 2 weeks. That is the trigger for capital to flow out and you see the fall in the rupee to real effective exchange rates and as usual in panics a big overshoot.

And in addition to that, the growth differential between India and Germany is now something like 1.25% this quarter, so it is a lot more attractive for funds to go to developed markets.

[Cosmo_R]

The NYT article encapsulates the problem at a micro level:

http://www.nytimes.com/2013/09/05/busin ... wanted=all

"India is not Greece — we never binged on debt on a grand scale, said Ajay Shah, a prominent economist at the National Institute of Public Finance and Policy in New Delhi."

We'll see but one saving grace is that we have a national currency.

@Habal ^^^: the dramatic slide is the result of many factors converging to break the dam. Chief among them is expectations: fear by importers driving them to sell INR and buy USD to lock in costs. Everybody runs for the exit because everyone is.

One other observation. Many of the things India imports are price inelastic. Oil, coal (yes coal!), bauxite (!!). Shekhar Gupta (KissMushTush) for once has written a fairly factual piece:

http://www.indianexpress.com/news/natio ... /1159250/0

The volumes on these items especially oil are not likely to fall in the short run. This means more INR chasing fewer dollars. Unless curtailed, subsidies will go up on critical imports—driving up the deficit and introducing more INR into the system etc. It's a full blown vicious cycle.

The point about keeping politics out of this thread is valid. However, the economic problems are the direct result of political 'compulsions'. As long as those stay, no tough love and no changes and no different results.

IMHO, the INR slide is not over by a long shot. If GS thinks 72, then it will certainly overshoot as more and more people bet against it by delaying investment into India, people buying gold now, etc.)

BTW, an under reported tragedy in the making: Indian students in the US/elsewhere whose parents took out USD/Sterling loans are screwed. The monthly remittances from parents don't go as far. And, these were the guys/gals who could not get into good schools in India because of limited seats. These are not the Ambani kids either.

[Garooda]

Rajan said the primary role of the bank is monetary stability to sustain confidence in the value of the rupee.
"... but we have two other important mandates; inclusive growth and development, as well as financial stability," he said.
inclusive growth and development is an odd item here. It is a political scope and only the ruling govt and politics creates the policy.
Rest of his speech is more like a financial engineer in wall street and not RBI governor.

Chicago(Obama Country)_Professor_Now_RBI_Big_Cheese

[Garooda]

At the risk of coming too late to the party, I just came back from 5-week India vacation. The lack of technology sophistication in India is glaring. For a multi-trillion dollar economy, it is in a very sorry state. It is extremely unstructured and unevolved. If we have to grow our economy, we need to make lot of improvements in our technology usage, manufacturing, and knowledge.

But need to change the thought process and mindset for certain segments of the population to start. There is still a very large segment of anti-change/technology crowd. The rest will follow (so we hope).

[member_27444]

Correction

Things happen in India only when a crisis looms or elections loom

Life and economics are multi dimensional on one dimension it might be linear on other it may not

In the case of Amirikhan

It is one nation under one currency unlike EU or India ( each state runs its own subsidy )
So the capital inflow from other nations was expected once the too big to fail were bailed out by Feds QE and also it multi trillion dollar and largest consuming economy. In addition of late US house hold is near balanced or surplus in savings and expenditures. The banks are flush with money and more restricted in left right center lending practices.
It is moving towards a equilibrium of sort even with real devalued dollar

[member_27444]

At the risk of coming too late to the party, I just came back from 5-week India vacation. The lack of technology sophistication in India is glaring. For a multi-trillion dollar economy, it is in a very sorry state. It is extremely unstructured and unevolved. If we have to grow our economy, we need to make lot of improvements in our technology usage, manufacturing, and knowledge.

But need to change the thought process and mindset for certain segments of the population to start. There is still a very large segment of anti-change/technology crowd. The rest will follow (so we hope).

Go to Tirupathi there is huge computerized reservation system for accommodation but the clerk will open a ledger and make entries manually. Reason

1) the power is off because of power cuts

2) the UPS doesn't work, no maintenance or pilferage of batteries

3) the scope for making a quick buck

The mind set need to change and the restoration of law and its swift and punitive pronouncement execution

[Cosmo_R]

Rajan said the primary role of the bank is monetary stability to sustain confidence in the value of the rupee.
"... but we have two other important mandates; inclusive growth and development, as well as financial stability," he said.
inclusive growth and development is an odd item here. It is a political scope and only the ruling govt and politics creates the policy.
Rest of his speech is more like a financial engineer in wall street and not RBI governor.

Chicago(Obama Country)_Professor_Now_RBI_Big_Cheese

That's Head Cheese.

[Sushupti]

RBI asks Kerala temples how much gold they have

http://www.ndtv.com/article/south/rbi-a ... te=classic

[Theo_Fidel]

The long running inflation in India has everything to do with our lack of capital. We don't make enough of anything ergo inflation. Our companies do not have access to low cost cash because we do not save enough. We need to save 40% of GDP not 30%. A lot of our problems will go away if we do that.

The rhona-dhona on Indian students in USA is way overdone. I’m baffled how folks who can’t get into the thousands of colleges in India find USA more attractive. Something does not smell right here. The vast majority of ‘worthwhile’ of Indian students come on aid and have earned their spots in USA. They don’t/can’t depend on remittance from India. If they need money I say get a campus job. There are thousands of such jobs, from painting walls to fixing roofs to working in the cafeteria, etc. My own opinion is if you don’t have aid don’t come to USA or think long and hard before coming for studies, unless it is for pee chaddi type stuff.

In any case India is not getting rich off these folks. The ones who will make India rich come from the small un-glorified colleges that dot our highways.
----------------------------------

My view is that there is limits to what the CG can do. The state governments hold a heck of a lot more power these days. Witness AMMA telling the NHAI to go take a hike and the GoI is powerless over the port road. Dynamic states are still growing rapidly. The problem states from CH, MP, OD, RJ , UP type states are the dead weight dragging Indian growth down. In Chattisgarh in particular there is very little movement visible towards a modern productive economy. The difference between the states of India are starting to approach 2nd world vs 3rd world levels. I have been saying this for some time but no one wants to focus on this problem.

Even the majority of well built houses in CH have surface mounted old school wiring, surface mounted wood panel box, untilled bathrooms, lime/cement plaster, bad fitting wood windows, red oxide/bare concrete floors etc. No moves have been made to using properly engineered manufactured stuff. There is no demand for a modern economy. There are no reliance fresh, no nilgiris on every corner, no bakeries, no Avin milk packets, no Saravana Bhavan type chain quality. This is an economy straight out of the 1950's. The majority of women do not work or are uneducated. The males are out of control and domestic violence is considered normal and the women's place is at the back of the house. How can you build a modern economy with this social structure?

I visited Naiyya -Raipur and the central Mantralaya and the government workers block looks really good and massive. But what annoyed me is I did not see any ongoing work at present. Many of the roads appear to not be used as dust and weeds have reclaimed some of them. The state official I spoke to said that when the CG money ran out the state simply stopped funding the project. This city building should have been a major economic growth center and job creator yet it is sleeping. Multiply this a couple of thousand times over all the sleeping projects around India and you can see why our growth has declined to 5%.

[Suraj]

We can do without such an absurd online fluff job on the new RBI governor. The guy has been in his job for a week. He's nowhere near worthy of such praise yet. He's an economist, but as RBI head, its not just his economist credentials, but his ability as a public policy wonk *and* his political weight that will be tested - if he cannot force FinMin and GoI to act prudently, then none of his resume details mean anything. PC, his FinMin counterpart, is an excellent example of a resume heavyweight and political lightweight. Rajan is under probation now, until he demonstrates results, or the inability to act because he has no backing.

Rs.1.44 lakh crore is not a large sum of money anymore. That is just 1% of GDP, and will take years to come onstream from clearance level. As a stimulus measure, it is too small. The speed of execution is tied to the cost of capital and energy, both of which are very expensive in local currency today, and no one wants to commit to significantly borrow more cheaply from external markets anymore, because of the currency crisis.

Energy costs will remain high due to a combination of rising European and Japanese output driven by QE actions there, the Syria/Iran issues, and the likelihood that whatever amounts to the Fed's taper will be just a sleight of hand - an actual elimination of the full $85B/month bondbuying program will send up treasuries high enough to damage the US budget due the higher borrowing costs.

The current account deficit puts a cap on how quickly India can turn around because it will pressurize the Rupee as well as keep inflation high due to high input costs. I find the proposal to lower the SLR rather... absurd. How does GoI intend to lower the SLR *and* pay for their monster FSB costs ? I suspect that the FSB will in reality be just lipstick on the PDS pig, and its stated costs will subsume the PDS ones, for the simple reason that the government cannot afford it.

The only good thing I can see from Rajan's statement is the focus on generating growth over inflation targeting, but that's not as if it's a choice for them to make - it's effectively TINA . Despite my agreement that a lot of the current crisis mentality is sentiment driven, I don't have enough confidence that a good monsoon will fix everything, because high gold consumption combined with high domestic currency costs have shown themselves to be a very good source of consumer demand destruction - every Rupee spent on it is money not spent on manufactured goods and services. The festival season is a little over a month away. If there's no non-gold demand uptick by then, it's not going to be good news for the government or the RBI.

[Garooda]

At the risk of coming too late to the party, I just came back from 5-week India vacation. The lack of technology sophistication in India is glaring. For a multi-trillion dollar economy, it is in a very sorry state. It is extremely unstructured and unevolved. If we have to grow our economy, we need to make lot of improvements in our technology usage, manufacturing, and knowledge.
But need to change the thought process and mindset for certain segments of the population to start. There is still a very large segment of anti-change/technology crowd. The rest will follow (so we hope).

Go to Tirupathi there is huge computerized reservation system for accommodation but the clerk will open a ledger and make entries manually. Reason

1) the power is off because of power cuts

2) the UPS doesn't work, no maintenance or pilferage of batteries

3) the scope for making a quick buck
The mind set need to change and the restoration of law and its swift and punitive pronouncement execution

Agree. IMO, its # 3 that leads to using # 1 and # 2 as excuses for the most part

[RamaY]

The long running inflation in India has everything to do with our lack of capital. We don't make enough of anything ergo inflation. Our companies do not have access to low cost cash because we do not save enough. We need to save 40% of GDP not 30%. A lot of our problems will go away if we do that.

The rhona-dhona on Indian students in USA is way overdone. I’m baffled how folks who can’t get into the thousands of colleges in India find USA more attractive. Something does not smell right here. The vast majority of ‘worthwhile’ of Indian students come on aid and have earned their spots in USA. They don’t/can’t depend on remittance from India. If they need money I say get a campus job. There are thousands of such jobs, from painting walls to fixing roofs to working in the cafeteria, etc. My own opinion is if you don’t have aid don’t come to USA or think long and hard before coming for studies, unless it is for pee chaddi type stuff.

1. Indian middle class contributes to 80% of national savings. The poor doesn't have much to save anyway and the rich can save only in Swiss Banks. The real problem is for successive Congress govts to follow Nehruvian socialism cursing the poor to poverty alone and not lifting them to middle-class.

2. Thousands of Indian students are going out of India for education for they cannot do well in the entrance exam for they have to be good on that specific day. More importantly this years cut-off marks in to IIT/NITs require that Andhra students to get 91% marks in 12th greade, that means only A+ grade students from Andhra are qualified for these institutions, and then too they have do well on that specific day. There are thousands of them who couldnt do well in that stupid entrance exam on that day.

The real issue is the structure and policy of successive congress govts. Blaming commoners has become fashion this forum for they cannot reply to it while the Congress gets away with economic murder.

[Garooda]

Rajan said the primary role of the bank is monetary stability to sustain confidence in the value of the rupee.
"... but we have two other important mandates; inclusive growth and development, as well as financial stability," he said.[/b]
inclusive growth and development is an odd item here. It is a political scope and only the ruling govt and politics creates the policy.
Rest of his speech is more like a financial engineer in wall street and not RBI governor.

Chicago(Obama Country)_Professor_Now_RBI_Big_Cheese

That's Head Cheese.

Just as long as the RBI's policies doesn't turn into one, I guess its all good.

Head_Cheese_Or_Bheja_Fry/Masala

Head cheese or brawn is a cold cut that originated in Europe. A version pickled with vinegar is known as souse. Head cheese is not a cheese but a terrine or meat jelly made with flesh from the head of a calf or pig (sometimes a sheep or cow), and often set in aspic. The parts of the head used varies, but the brain, eyes, and ears are usually removed. The tongue, and sometimes even the feet and heart, may be included.

Head cheese may be flavored with onion, black pepper, allspice, bay leaf, salt, and vinegar. It is usually eaten cold or at room temperature as a luncheon meat. It can also be made from quality trimmings from pork and veal, adding gelatin to the stock as a binder.

Historically, meat jellies were made of the cleaned (all organs removed) head of the animal, which was simmered to produce stock, a peasant food made since the Middle Ages. When cooled, the stock congeals because of the natural gelatin found in the skull. The aspic may need additional gelatin, or more often, reduction to set properly.

[Theo_Fidel]

RamaY,

Don’t usually engage you on this and this will be my last post on this.

I said we need to get our savings rate to 40%, not attack the middle class as you immediately assume with little thought.

Savings is a combination of household+government+corporate savings. If you had bothered to follow the conversation you would know that I have repeatedly pointed out that the real decline is in PSU savings. Which have declined from 8% of GDP to 2%. But yes recently household/corporate savings have declined as well, but a couple of percentage point uptick is all we need here. No sort of discussion can be held when you refuse to even think before posting. Another random talking point has now popped up apparently that folks are now attacking the common man. Which means that you no longer have to think before post. Trot out the canned response, rinse repeat.

Again my last on this. Deracinated, macaulayite, westernized, etc out.

[V_Raman]

Even the majority of well built houses in CH have surface mounted old school wiring, surface mounted wood panel box, untilled bathrooms, lime/cement plaster, bad fitting wood windows, red oxide/bare concrete floors etc. No moves have been made to using properly engineered manufactured stuff.

My experience is similar in Chennai as well. I hired a "Maesthiri" to close the open sewer in front of the house and the construction methods he used is the same when I was a child. Very low quality work.

Home Plumbing -- same old same old -- faucets don't have the ability to attach anything to them like filters etc...

The side panel on the door of my M800 came off and the mechanic said that there is no glue in India that can stick this. They have glue from Maruti itself that is imported from Japan!

Majority if not all compressors in new split A/Cs seem to be imported. Same with Refrigerator.

3M glue stick is made in india -- only the packaging -- glue is imported

the stickers on SS vessels from shops in Chennai -- still unremoveable!!! and leave a big mess to clean later :-( the vessels are of higher grade SS and expensive.

In our zeal to modernize, we opened the consumer economy. But the Industries seem to have not modernized to keep pace...

Neither is the consumer truly modernized. They use similar conveniences like before -- A/C -- now with imported compressor instead of the old voltas one. Car -- imported instead of Amby. Many many household things are imported now. Heck even TVs which used to be made in india -- now flat screen -- imported.

[RamaY]

Theo garu,

It is your call. None of us are criticizing the individuals but the PoV and thought process (which is Deracinated, macaulayite, westernized, etc) . When you like rhetoric, instead of substance, then you should learn to expect criticism.

Coming to PSU savings - The % comparison is fraught with inaccuracies. The % decline of PSU savings can be attributed to (A) growth of GDP and reduction of PSU role compared to pre-economic liberalization era and (B) divestment in PSUs etc., In an ideal world we want least amount of PSU saving contribution for we want to move away from GoI doing business instead of governance.

8% of $500B GDP is $40B and 2% of $2T GDP is also $40B and there are no large scale PSU setup in past 20 years.

[disha]

In our zeal to modernize, we opened the consumer economy. But the Industries seem to have not modernized to keep pace...

Industries have not been allowed to modernize to keep pace.

There is no "entreprenuership" culture in India - some pockets of entreprenuership exists only in TN and Guj and they are also being destroyed thanks to the central govt. socialist policies.

[Jarita]

Ah.. Raghuram Rajan. The kind of guy who brings a smile to your face and makes you proud to be an Indian (and for me personally a Tamil and a card carrying Tam Brahm).

A breathtaking shock and awe display of the good old Tam Brahm razor sharp intellect,focus and analytical skills and a great roadmap to the future. I think he will ram through his part of the bargain on the RBI side (this kind of thing would have required wide ranging consultations with the Finance ministry and RBI insiders before hand and they would have been in the know) . The govt has to keep it's side of the bargain on the fiscal side.

So the govt seems to have a plan after all. I expect a similar Shakina effect once the Parliament session gets over and a slew of meaningful actions forthcoming from the govt side. The Kangress can still pull it off in time for the elections if the Politico monkeys ( the Diggy Babas and the NAC jokers) keep their flea picking hands off the govt and allow them to do what needs to be done .

I just hope that that buffoon Oily Moily gets canned and one of the extremely smart folks from Karnataka come in to the oil ministry. You have the likes of Nilekani and Jayaram Ramesh from Karnataka, and in the presence of stalwarts like them, the Oily Moily clown sticks out like a sore thumb.

Y.V Reddy and Duvvuri Subba Roa led the RBI brilliantly in some very tough global times. All credit to them. Subba Rao did his part and should have ideally been able to hand over a stable economy with a golden period ahead to his successor. Unfortunately, the fiscal profligacy of the Govt (Pranab Mukherjee and his shenanigans) put paid to that and he leaves behind an economy in trouble.

Subba Rao's words "

I hope Finance Minister P Chidambaram will one day say, I am often frustrated by the RBI, so frustrated that I want to go for a walk and when I walk, I want to walk alone. But thank God that there is an RBI

are absolutely spot on. He took on the fiscally profligate UPA govt and stood his ground a did his bit for the country. My salutations to him.

While his words were a take of Chancellor Gerhard Schroeder's remark about the Duetsche Bank, I do hope that these words are emblazoned in gold and put in large letters at the entrance of the RBI HQ in Mumbai as a clear declaration of the independence of the RBI and that under Raghu it is entering a modern age and is single minded in it's focus of keeping the purchasing power of the currency intact.

I want to smoke what you are smoking

[Bade]

some pockets of entreprenuership exists only in TN and Guj

Everyone is smoking their own brand of pisko beedis in this thread.