Indian Economy - News & Discussion Oct 12 2013

[Rahul M]

is this the correct thread ?

Bibek Debroy RT'ed this btw.
http://devinder-sharma.blogspot.in/2012 ... 0-per.html

Food wastage in India is not 40 per cent but 5.8-18 per cent in fruits; 6.8 to 12.4 percent in veggies; and 4.3 to 6.1 per cent in cereals.

[Cosmo_R]

self deleted. Wrong thread

[Cosmo_R]

Foreign Investment which is does not improve manufacturing or provide technology just produces inflation. We can print our own currency without handing over assets to foreigners or suffering massive price escalation as in reality.

So where would AirAsia-India fit into this model? Not manufacturing, no technology and ticket prices fall.

Also, they bring their own assets (leased A320s).

FDI reality is complicated. For example, if let's say Chanel popularized (by investing in a supply chain) 'Banaras Saree cloth' in a high end designer line, the weavers would not have to compete on price alone.

What I do agree with is that manufacturing ought to be the focus along with tourism enabling projects. Both are labor intensive and don't require high skill levels.

We are 40 years late to the manufacturing party but if we leverage the huge domestic market, we can be very price/value competitive globally and the next success story.

[Yagnasri]

FDI is ok in a nation which is quite powerful institutionally and less prone for external manipulations due to powerful and nationalistic ruling establishment. It is not in our case. So the serious danger of creating hundereds of East India Companies is there.

On the other hand study domestic savings which are quite huge in India will help you to develop handsomely.

[Suraj]

Sorry, that's some licence permit era raj thinking. The 'FDI is bad and dangerous' bus has long since left the stop. Inbound cumulative FDI in the last decade is around $325 billion, and is only going to accelerate in future.

[Cosmo_R]

FDI is ok in a nation which is quite powerful institutionally and less prone for external manipulations due to powerful and nationalistic ruling establishment. It is not in our case. So the serious danger of creating hundereds of East India Companies is there.

On the other hand study domestic savings which are quite huge in India will help you to develop handsomely.

There is an old adage in banking: "You owe the bank $5,000 they've got you over a barrel. You owe them $5 billion, you've got them over a barrel." Point is they have a big stake in your success. Same applies to FDI. Particularly if that FDI serves both a huge domestic market and is an indispensable part of their global supply chain.

[Yogi_G]

Sorry, that's some licence permit era raj thinking. The 'FDI is bad and dangerous' bus has long since left the stop. Inbound cumulative FDI in the last decade is around $325 billion, and is only going to accelerate in future.

I remember reading that the Indian investment in the US over this period has been in the tune of 300 billion dollars. Is this money borrowed from Indian banks or are they borrowed in US and invested there?

[Cosmo_R]

I remember reading that the Indian investment in the US over this period has been in the tune of 300 billion dollars. Is this money borrowed from Indian banks or are they borrowed in US and invested there?

Where did you read this? Sounds very high.

[Yogi_G]

I remember reading that the Indian investment in the US over this period has been in the tune of 300 billion dollars. Is this money borrowed from Indian banks or are they borrowed in US and invested there?

Where did you read this? Sounds very high.

I read this in an article in firstpost. The article was on why India and US need each other, came in two to three weeks ago. I am trying to search and retrieve it now.

[Suraj]

I remember reading that the Indian investment in the US over this period has been in the tune of 300 billion dollars. Is this money borrowed from Indian banks or are they borrowed in US and invested there?

You'll have to provide a source. Here's the source for my claim:
Department of Industrial Policy and Promotion, Ministry of Commerce & Industry, Govt of India, March 2014 FDI Statistics

[Yogi_G]

My bad, apologies, its 33 billion and 300 billion,

Source is here, Clicky

[Vayutuvan]

What I do agree with is that manufacturing ought to be the focus along with tourism enabling projects. Both are labor intensive and don't require high skill levels.

Cosmo_R: For manufacturing, whether we have the right number of semi-skilled labor is a question mark as of now. For that you one needs very strong K-12 since most processes are complicated and people need to know how to take instructions and execute them. Also they need to know how to learn. Literacy (in the current lingua franca), curiosity, and scientific bent of mind (that is required even in these semi skilled jobs) is missing in majority of public schools across the country. We should not be swayed by a few KVs, English convents, IITs (and even the large number of engineering colleges). Delist the bottom half of engg. colleges and convert them to super ITIs, i.e. 2 year vocational degrees post 12th grade. What is the status of polytechnics? May be bottom half of engineering colleges, ITIs, polytechnics can be consolidated into community colleges offering post 10th grade 2 year, 3 year (ITI like skills), 4 year (LME, LCE etc.), paralegals, health care technicians, nursing, computer technicians etc. There are several who are in engg. colleges today (one case I can think of is a district HQ in T. which had 25 years back one degree college and the quality of some of its students is quite pathetic) has about 19 engg. colleges. But the school system in that district hasn't improved all that much. In fact the school system has gone down in terms of teaching concepts. Private tutoring for entrance exams is rampant - people take up jobs in LIC, banks etc. All are clerical jobs. How many clerks do we want?

[Cosmo_R]

@matrimc ^^^

I think the best way to respond to what you have posted is to suggest that unqualified engineering graduates consider manufacturing as a job

http://indiatoday.intoday.in/story/nati ... 48970.html

The point I'm making is that is that you can have all the book learning you want and still be unable to operate an electric saw.

What we are doing is burdening millions of K12 deficient kids who will never catch up but are steamrolled into the engineering stream via regional eng. colleges who have second rate teachers who teach them a third rate curriculum. I've met reg eng 'graduates' who are IT guys and they are out of their depth. They are only saved by the even lower comprehension of the client's employees.

Pressure is on from family because son has to be valuable in marriage marketplace and to take care of parents.

Germany had the same problem —not parents and marriage stuff but what do with 2/3rd of K12 grads who could not make it into the "Universities".

So, the Germans evolved the two track system: university grads who slog the exams and hope to wind up at Deutsche Bank, and the apprentices who work with master craftsmen who are part of the SMEs.

Research has it that the apprentice track has been doing better financially than the Heidelberg von *.* types as a group.

What we have get across is that you can have a very prosperous life without killing yourself to be the IIT type that you cannot be.

We need to broaden the funnel. Doing things with your hands even if it's construction (carpenter, plumber, electrician) can be very rewarding, not taxing and making them honorable occupations.

In short. we need to make occupations that are hand-eye-physical on a par with book learning and the theory of doing something. You can do that if they can buy the same things that run of the mill I-bankers can without the 70 hour work weeks.

Guilds!

[Manish_Sharma]

Economy gurus please visit the 100% FDI in Defense: Understanding Pros and Cons thread in 'Military & History Forum' :

http://forums.bharat-rakshak.com/viewto ... f=3&t=6805

Waiting for some questions answered & some answers questioned.

TIA

[Suraj]

My bad, apologies, its 33 billion and 300 billion,

Source is here, Clicky

Yes, I was pretty sure you were off by an order of magnitude. $30B over a decade is not such a big deal. Aggregate incoming capital of all forms was probably around $1 trillion between 2000-2014; $30-50 billion outward capital flow seems small actually.

[Theo_Fidel]

So, the Germans evolved the two track system: university grads who slog the exams and hope to wind up at Deutsche Bank, and the apprentices who work with master craftsmen who are part of the SMEs.

Not matrimc but curious about this.

Do you know how many years of training this apprenticeship/internship thing involves?

[ArmenT]

So, the Germans evolved the two track system: university grads who slog the exams and hope to wind up at Deutsche Bank, and the apprentices who work with master craftsmen who are part of the SMEs.

Not matrimc but curious about this.

Do you know how many years of training this apprenticeship/internship thing involves?

We've talked about the German apprenticeship system here before. The apprenticeship system is based on the apprenticeship system used in Europe since the middle ages, except with modern labor regulations (e.g. no taking in underage applicants). There are apprenticeship programs available for a variety of professions (and for some professions in Germany, you can't even work in that profession unless you've gone through the apprenticeship program). Of course, depending on the profession, the # of months to graduate can vary. E.g. most professions can take 2 to 3 years before the apprentice can be called a journeyman, but some professions require something like 3.25 or 3.5 years.

And once a person graduates from an apprentice to a journeyman, they can now start charging fees for their work. but they cannot hire other apprentices yet. In some professions (especially the traditional ones from the middle ages like baking, carpentry, tailoring etc.), the journeyman is expected to take a 2 or 3 year + 1 day wandering trip from town to town (anywhere that is more than 50 km. away from his hometown), picking up small jobs, working in different master craftsmen shops and honing his skills in general. In Germany, this journeyman period is called "auf der Walz", which is where the Aussie popular folk song "Waltzing Mathilda" gets it title from. Interestingly, one can still see journeymen wandering the German countryside in traditional costumes today and people usually stop and give them a ride to the next town. In some traditional professions, the journeyman is supposed to start his journey with a small sum of money and after 3 years, come back with exactly that same amount in his pocket. See this link for more details.

After coming back from the walz, a journeyman can optionally pursue an additional master program (which can take anywhere from 1 to 4 years more, depending on job and whether they are working fulltime or part time), after which a journeyman can call himself a master. A master can open his own shop and hire apprentices.

[Arjun]

I have a question for forum members.

When you look at the Top 10 states in India by per capita income and prune out those ones which are effectively city-states or having low population - you are left with the following: Maharashtra, Tamil Nadu, Karnataka, Gujarat, Andhra Pradesh, Punjab, Himachal, Uttarakhand, Haryana, Kerala.

Geographically - this is a swathe that starts from the South (all 4 leading states) goes across India's West and then reaches Punjab and its contiguous states. The only odd man out is Rajasthan. It is not among the top 10 and not even close....

Why is this ? So far, from what I have seen excessive dependance of GSDP on agriculture seems to be one issue, as is low literacy. Any other reasons why Rajasthan does not fit into the broader trend - despite it being home to one of India's most dynamic and entrepreneurial ethnic communities ?

[muraliravi]

If a company puts FDI in the roads sector, the domestic companies from good transport to produce transport utilize it and helps the economy. So even if they take the money out, it does not hurt us.

BTW, http://www.business-standard.com/articl ... 611_1.html

Read that, it is an excellent piece, i must say

[Lilo]

I have a question for forum members.

When you look at the Top 10 states in India by per capita income and prune out those ones which are effectively city-states or having low population - you are left with the following: Maharashtra, Tamil Nadu, Karnataka, Gujarat, Andhra Pradesh, Punjab, Himachal, Uttarakhand, Haryana, Kerala.

Geographically - this is a swathe that starts from the South (all 4 leading states) goes across India's West and then reaches Punjab and its contiguous states. The only odd man out is Rajasthan. It is not among the top 10 and not even close....

Why is this ? So far, from what I have seen excessive dependance of GSDP on agriculture seems to be one issue, as is low literacy. Any other reasons why Rajasthan does not fit into the broader trend - despite it being home to one of India's most dynamic and entrepreneurial ethnic communities ?

Low women's participation in workforce coupled with extensive rainfed agriculture and its vicissitudes.
Low education levels ,mainly again as a result of low women's education are probably causes for general backwardness in Raj countryside.

If you are refering to Marwaris and Jains - methinks they cant put to work their enterprising skills(of the old style trading classes variety) with the poor base in primary sectors like agriculture and mineral extraction (ancient mines in Aravalli hills are becoming emptyier with time) and poor human resources(low population density too) in rajasthan.
So they tend to operate outside Rajasthan. Their wider families may still be domiciled in Rajasthan but they invest little of the profits as capital into the economy back home - all their investments go into their business expansions where they are working- except a minuscule portion which sometimes goes into building beautiful,grand and colorful houses back in their ancestral villages.

Raj needs to emulate the Gujarat model in rainfed (desert) agriculture and focus on gaining a skilled workforce targeting growth in services sector(Tourism,hospitality,ITES).Maybe DMIC will be the best thing to happen for reviving this state's moribund industrial sector.

[Theo_Fidel]

Thanx ArmenT,

So if I get my head around it.

12 years of Grade school + 3-4 years of apprentice ship + 4? Years as journeyman = Master.

So about 20 years of learning.

[Rishirishi]

I have a question for forum members.

When you look at the Top 10 states in India by per capita income and prune out those ones which are effectively city-states or having low population - you are left with the following: Maharashtra, Tamil Nadu, Karnataka, Gujarat, Andhra Pradesh, Punjab, Himachal, Uttarakhand, Haryana, Kerala.

Geographically - this is a swathe that starts from the South (all 4 leading states) goes across India's West and then reaches Punjab and its contiguous states. The only odd man out is Rajasthan. It is not among the top 10 and not even close....

Why is this ? So far, from what I have seen excessive dependance of GSDP on agriculture seems to be one issue, as is low literacy. Any other reasons why Rajasthan does not fit into the broader trend - despite it being home to one of India's most dynamic and entrepreneurial ethnic communities ?

From a national perpective the greatest unlocked potential lies in Uttar Pradesh and Bihar/Jharkhand. Some better law and order, with better roads and general infrastructure would have a huge impact on on the entire Indian economy. The states have some spectacular potential:
Tourism
, Agra, Varanasi, Budh Gaya, numerous temples.

Agriculture, both states have great potential with some of the worlds most fertile lands

Raw material; coal, iron and other minerals are located in Jharkahand

Both states boost of hard working and entrepreneurial people.

Uttar Pradesh is too large. it should be divided into 3-4 new ones. One can be Noida and Gaziabad. Another can be from Mathura to Agra, Another could be centred arround Gwalior and the last one arround Kanpur/Lucknow.

[Suraj]

Modi starts undoing one of Nehru's pet entities, the Planning Commission:
PlanCom, PMEAC wings might be clipped

The Narendra Modi government is looking for an adviser in the Planning Commission, even as the deputy chairman is yet to be appointed, perhaps a sign of the current priorities.

'The Commission’s role might be truncated to an advisory body alone. The Prime Minister's Economic Advisory Council (PMEAC) might also see its role severely diminished.

The department of personnel & training has advertised a vacancy for an adviser's post in the Commisison, a joint secretary rank, on its website. The post is to be filled by August. The deputy chairman has Cabinet minister rank; the other members are in the rank of minister of state (MoS).

Rao Inderjit Singh's appointment as MoS (independent charge) for planning comes after quite a while. A minister was earlier appointed to have independent charge of the Commission in 1990, when there was someone of Cabinet rank.

A senior official explained, “This means all Parliament questions and files hitherto sent to the Prime Minister in view of him being the chairman of the Commission will be handled by the minister himself, without concerning the PM.”

The official said he believed the Commission might not be abolished (it was formed by an executive order in 1950) but would remain in the current state of limbo for a few more months, without the deputy chairman and members, to be replaced later with only a few advisers and members.

Officials said some talk had already started on appointing only senior sectoral advisers instead of full-time members or otherwise appointing only two or three full-time members, not as powerful as earlier.

Earlier, ministers of planning have been deputy chairmen of the Commission as well.

Prime Minister Narendra Modi in his earlier role as chief minister of Gujarat had been critical of the functioning of the Commission.

Officials also said for allocation of plan funds, a basic function of Commission, the new government might turn to a report of a committee headed by C Rangarajan, former chairman of PMEAC. The committee had proposed abolition of the distinction between Plan and non-Plan expenditure for both Centre and states.

It had said the budgetary plan allocation currently decided by the Commission for both Centre and state governments should be given to the finance ministry. On the other hand, the Planning Commission should widen its ambit to include non-Plan expenditure as well but only as an advisory body. Non-Plan spending includes subsidies, salaries and pensions, and devolution of taxes to states as decided by the Finance Commission, beside defence expenditure.

PMEAC might also see its role diminished, even as it was an advisory body earlier as well. Rangarajan has already resigned from its chairmanship. The new government has to take a call on its reconstitution, officials said.

As a quick recap for those who are unaware, the Planning Commission was created to run the 5-year plans. It was not a constitutional body, but was instead an arm of GoI with PM as the chairman, and an appointed Dy Chairman with cabinet rank. Certain other cabinet members (e.g. FinMin, HomeMin, HRD, agriculture etC) gained ex officio membership in the commission.

Eliminating the powers of the Planning Commission follows Modi's approach of devolving powers and empowering individual ministries while simultaneously making them accountable for decision-making. This is a good approach, that ensures decisions are made quickly, rather that resulting in policy paralysis and the creation of a set of lowest common denominator decisions.

GDP projections are being revised upwards for this fiscal year and future ones:
Economy to grow 6.2% in 2014-15: Ernst & Young

The economic growth rate will improve to 6.2 per cent in current fiscal and can go up to 8 per cent in the next three years on back of favourable domestic and global environment, tax consultancy firm Ernst & Young (E&Y) said.

"A combination of structural correction, confidence in new government and favourable global conditions could propel economic growth to beyond 8 per cent in three years," it said.

The economic growth rate remained below 5 per cent for the second year in a row recording 4.7 per cent in 2013-14. In order to boost growth, the tax consultancy firm urged Finance Minister Arun Jaitley to hike income tax exemption limit to Rs 4 lakh and extending additional tax benefits to small investors in the forthcoming budget in July.

Merchandise exports estimated to grow to $360 billion this fiscal: FIEO

India's exports are expected to touch $360 billion in the current fiscal from $312.35 billion in 2013-14, Federation of Indian Export Organisations (FIEO) today said.

"This fiscal export may reach $350-360 billion. But the government has to take several steps to boost exports further," FIEO President Rafeeq Ahmed said.

He said he met Commerce and Industry Minister Nirmala Sitharaman and apprised her about the country's export scenario.

"The minister wants to discuss all the export related issues with us," he said.

Further, he said that the commerce ministry should fix export target for five years and not annually.

"After five years, our export may reach $750 billion, But there is an urgent need to improve infrastructure and resolve issues related to revenue," he added.

India's exports in the last three years have been hovering around $300 billion. India's exports in 2013-14 fall short of the $325 billion target and managed to reach $312.35 billion. The country's exports stood at $300.4 billion in 2012-13 and $307 billion in 2011-12.

The Ministry of Commerce and Industry is expected to announce the new five-year foreign trade policy (2009-14) after the Budget as it seeks to boost manufacturing and exports.

India is currently the 15th largest exporter. Increasing exports to $500 billion should put us among the top 10. $750 billion is a large number, and may put us at #4 behind China, US and Germany, and ahead of Japan.

DMIC gets a big push
Delhi Mumbai Industrial Corridor Trust to provide Rs 6,000 crore for Dholera, Shendra-Bidkin

: The Delhi Mumbai Industrial Corridor (DMIC) Trust will provide Rs 3,000 crore each for the launch of trunk infrastructure in two industrial cities of Dholera and Shendra-Bidkin this year as momentum picks up for the planned mega development.

"We will launch two cities this year and give Rs 3,000 crore each for the development of trunk infrastructure in two cities - Dholera, Gujarat and Shendra-Bidkin, Maharashtra," Talleen Kumar, CEO and Managing Director, DMIC Development Corp Ltd, told PTI on the sidelines of the World Cities Summit in Singapore last night.

Construction work on the Dholera Special Investment Region Gujarat and Shendra-Bidkin Industrial Park Maharashtra will start early next year, he said.

Work at Dholera would begin from a 22 sq km activation zone to expand the industrial region development as part of DMIC in Gujarat, while 32 sq km of land has already been acquired for the Shendra-Bidkin development, he said.

Additional 8 sq km of land was in the process of acquiring for Shendra-Bidkin, giving a 40 sq km start for the mega park near Aurangabad.

Master planning for almost all the cities has been completed, he added.

Special purpose vehicles, each of a 50:50 partnership between the government of India and the state governments, were being formed for the development of the cities.

Status of Rs 6.5 lakh cr ($110 billion) of pending projects being reviewed. All 'cleared' by UPA but no movement towards execution.
Narendra Modi government to review Rs 6.5 lakh crore projects cleared by outgoing UPA

The Narendra Modi government has decided to review the progress of all projects worth Rs 6.5 lakh crore cleared by the outgoing UPA government's Cabinet Committee on Investments (CCI), which was set up to revive the investment cycle and shore up the economy by resolving red-tape hurdles facing big-ticket projects.

The Namo mantra for spurring the economy back to higher growth - part of the key message he conveyed to his council of ministers on Monday night - is to go beyond facilitating clearances for such investments and focus on making them operational on the ground.

With CCI having cleared projects worthRs 6.5 lakh crore since January 2013, the government has now written to all those project promoters to ascertain if they have started production yet and if not, why. Such monitoring is expected to be the norm for all other projects that the government manages to rescue from red tape in the coming months.

"Just granting approvals such as environment and forest clearances or fuel supply agreements for power projects won't be enough to revive the economy. It is equally important to ascertain if these projects actually started production and if not, what else is holding them up," said a senior government official aware of the development.

Modi is doing the right thing. Mere clerarances are not enough. The projects need to be monitored towards execution. With this kind of project monitoring, it would not be a surprised if GDP growth rapidly returns to 8% range within a fiscal or two. $110 billion of investment is more than 5% of GDP. Such a boost in investment/GDP will also boost growth by ~1.2-1.5%, which explains the current increase in GDP growth estimate from just under 5% to 6.2% . Continuously feeding more investment will drive growth even higher.

[Arjun]

Low women's participation in workforce coupled with extensive rainfed agriculture and its vicissitudes.
Low education levels ,mainly again as a result of low women's education are probably causes for general backwardness in Raj countryside.

If you are refering to Marwaris and Jains - methinks they cant put to work their enterprising skills(of the old style trading classes variety) with the poor base in primary sectors like agriculture and mineral extraction (ancient mines in Aravalli hills are becoming emptyier with time) and poor human resources(low population density too) in rajasthan.
So they tend to operate outside Rajasthan. Their wider families may still be domiciled in Rajasthan but they invest little of the profits as capital into the economy back home - all their investments go into their business expansions where they are working- except a minuscule portion which sometimes goes into building beautiful,grand and colorful houses back in their ancestral villages.

Raj needs to emulate the Gujarat model in rainfed (desert) agriculture and focus on gaining a skilled workforce targeting growth in services sector(Tourism,hospitality,ITES).Maybe DMIC will be the best thing to happen for reviving this state's moribund industrial sector.

Lilo, Thanks. Good points.

Punjab & Haryana also score low in women's participation in workforce going by official figures, but then literacy rates and land fertility are much higher. The combination of illiteracy, low women's participation in workforce, arid land seems to be the issue for RJ - but with concerted effort I am very hopeful on the state.

[Suraj]

Punjab, like Kerala, has a substantial money order economy. Haryana benefits from the externalities of its proximity to the national capital region.

[Arjun]

From a national perpective the greatest unlocked potential lies in Uttar Pradesh and Bihar/Jharkhand. Some better law and order, with better roads and general infrastructure would have a huge impact on on the entire Indian economy. The states have some spectacular potential:
Tourism
, Agra, Varanasi, Budh Gaya, numerous temples.

Agriculture, both states have great potential with some of the worlds most fertile lands

Raw material; coal, iron and other minerals are located in Jharkahand

Both states boost of hard working and entrepreneurial people.

Uttar Pradesh is too large. it should be divided into 3-4 new ones. One can be Noida and Gaziabad. Another can be from Mathura to Agra, Another could be centred arround Gwalior and the last one arround Kanpur/Lucknow.

UP / Bihar afford maximum bang-for buck potential - given their sheer population sizes. Being close to Delhi is another advantage for UP. Odisha is another candidate for high growth if managed well..

[Suraj]

The number of stalled projects is mindboggling. Rs.16 lakh crore = $275 billion of stalled investments
Rs 16 lakh crore stalled investment greets Narendra Modi-led BJP govt

As many as 285 projects, involving investment over Rs 16 lakh crore, are pending with the government, part of the legacy the new government has inherited from the UPA. These have been held up either for want of clearance or because of obstacles created as a result of turf wars among various ministries during the UPA regime.

Amid the perception of policy paralysis in turn paralysing the economy during the previous regime, a project monitoring group (PMG) was set up under the cabinet secretariat last June. The PMG, headed by Anil Swarup, an additional secretary-ranked officer, was assigned 437 projects worth over Rs 21 lakh crore. It has resolved issues relating to 152 projects in the last one year, paving the way for investments worth Rs 5.32 lakh crore.

The PMG was given 62 projects to start with, but within months found itself facing a rush from industries seeking resolution of issues in various sectors. By January, the number of projects had crossed 400. Of the 437 that reached the PMG eventually, 342 entail investments over Rs 1,000 crore.

The 437 projects were burdened with about 1,200 issues, say sources briefed about the investments being monitored by the PMG. While most of the stalled investments related to projects in the energy sectors (power, coal and petroleum), the majority of the issues that stalled these investments pertained to the ministries of environment and coal.

Modi has responded quickly by giving the abovementioned PMG more powers:
Modi gives PMG more teeth

While the present mandate of PMG, which operates as a division under the cabinet secretariat, is to coordinate with line ministries to expedite the required clearances for stuck projects, sources said the new NDA government wants the PMG to go beyond that. In fact, the government is thinking of revamping the entire project clearance mechanism.

"The PMG could be morphed into a different institution. Chances are it will be strengthened," an official told FE, adding the division could continue to remain under the oversight of the cabinet secretariat. It may act as a nodal body that synchronises clearances with similar bodies at the state level.

Already, PMG has been asked to gauge actual investment and production from the projects already cleared so far. "The message has been that we should go beyond clearances and find the actual economic activity —production of goods and services, power generation — after the clearances," said the official.

Since 2013, PMG has facilitated clearance of 150-odd projects involving Rs 6 lakh crore of investment. Despite this, the investment cycle has not seen any upswing and GDP growth remained subdued at 4.7%, a shade higher than the decade's slowest pace of 4.5% recorded in 2012-13.

[Arjun]

Punjab, like Kerala, has a substantial money order economy.

Good point.

Another way of looking at the high-growth states is that these are the ones with traditionally strongest connections with overseas developed economies (partly due to location, partly due to other circumstances). KA, KL, TN, AP, GJ, MH, PB fit in this category. HR, UT, HP benefit by proximity to Delhi which as National Capital has the same high linkage to overseas economies.

Foreign Policy which focuses on boosting overseas trade, investment, remittance & other links will be crucial to the success of Modi Sarkar.

[Theo_Fidel]

It is hard to remember that back in the 60’s TN was the basket case with a poverty rate ~ 70% while Bihar had a poverty rate ~ 20% and one of the better economies. Even back then TN had a higher literacy rate and better status for women, more urban population, better industry etc. Fat lot of good it did, desperate poverty reigned. As recently as the 80’s TN, UP & Bihar were at similar income levels. When liberalization happened TN jumped in with both legs and has changed at a staggering pace and has benefited from change.

India and the economy changed and these states failed to respond well to changes. They still have trouble with change, preferring inertia. In terms of structure these states are almost exactly as they were back in 1950. They have to find a way to respond better to change, even embrace it, the future is better and upward. It is hard to know how India will be in 20 years but it’s a safe bet that it will look very different than it does today. Who knows Bihar may embrace the changes and TN may reject the coming changes and fall behind. Seems unlikely right now.

[Uttam]

It is hard to remember that back in the 60’s TN was the basket case with a poverty rate ~ 70% while Bihar had a poverty rate ~ 20% and one of the better economies. Even back then TN had a higher literacy rate and better status for women, more urban population, better industry etc. Fat lot of good it did, desperate poverty reigned. As recently as the 80’s TN, UP & Bihar were at similar income levels. When liberalization happened TN jumped in with both legs and has changed at a staggering pace and has benefited from change.

India and the economy changed and these states failed to respond well to changes. They still have trouble with change, preferring inertia. In terms of structure these states are almost exactly as they were back in 1950. They have to find a way to respond better to change, even embrace it, the future is better and upward. It is hard to know how India will be in 20 years but it’s a safe bet that it will look very different than it does today. Who knows Bihar may embrace the changes and TN may reject the coming changes and fall behind. Seems unlikely right now.

Another aspect that is likely to have played a role in the widening income gap between coastal states like TN and inland states like UP and Bihar is the rise of global trade. The coastal state definitely are better placed in taking advantage of increasing global trade because of their proximity to shipping lanes, etc. (inland transportation cost is always higher) Natural resource poor states like UP that traditionally depended on agriculture will have a natural disadvantage as agriculture becomes a smaller portion of global GDP. The difference in education level itself is driven in large part by difference in incomes. Whether high income comes first or higher literacy is more of "chicken-egg" problem.

Similar disparities between coastal and inland states can be seen in China, US, and other large countries.

[svinayak]

It is hard to remember that back in the 60’s TN was the basket case with a poverty rate ~ 70% while Bihar had a poverty rate ~ 20% and one of the better economies. Even back then TN had a higher literacy rate and better status for women, more urban population, better industry etc. Fat lot of good it did, desperate poverty reigned. As recently as the 80’s TN, UP & Bihar were at similar income levels. When liberalization happened TN jumped in with both legs and has changed at a staggering pace and has benefited from change.

India and the economy changed and these states failed to respond well to changes. They still have trouble with change, preferring inertia. In terms of structure these states are almost exactly as they were back in 1950. They have to find a way to respond better to change, even embrace it, the future is better and upward. It is hard to know how India will be in 20 years but it’s a safe bet that it will look very different than it does today. Who knows Bihar may embrace the changes and TN may reject the coming changes and fall behind. Seems unlikely right now.

UP and Bihar got caught in the politics of JayaPrakash Narayan in the 70s. This socialist politics and social engineering went on until the mandal controversy of 1989. Entire 20 years was wasted in the rebellion politics of opposing IG, and central govt.
Also after 1991 the state politics got into mandal politics and caste politics of Kanshiram and M. If you see the pattern there has been a continuous political movement to disrupt a stable polity which is required for growth.

We see that the JP movement was extended to these two states of Bihar and UP for almost 20(1977-1989) years plus another 15(1991-2009) years which was to create a state govt which opposed the central govt.

Any clues shows up that these two states were primed to secede from the union? Social engineering shows up everywhere which was used for an extended period of time. Go back and check the Hindi movies in that period from 1977-1990 to get some clues to the leftist thinking.

The population of these two states doubled in these period and current status is what we find here.

[nachiket]

Desperately needed step to reverse the damage done by Jairam Ramesh and Jayanti Natarajan

Investments to get push as Modi govt takes green clearances online

...

Of the 285 projects that have been stalled, around 44 percent are blocked due to pending environment clearances. Most of the projects are in the field of energy - power, coal and petroleum. Prakash Javadekar, the new minister of state for Environment, Forests and Climate Change, announced the online service system for TOR (Terms of Reference) and environment clearances. "For 25 days, submissions can be done both online and in the form of hard copies. But from 1 July, it will be fully online. That is our beginning of transparency. One need not visit the office but submit their proposals online," Javadekar said. The new system will allow applicants as well as authorities to keep a check on the entire process while adhering to the timeline of various clearances\rejections. The government is likely to launch an online system for forest department clearances as well.

...

[Suraj]

A full 60% of stalled projects, amounting to around $140 billion, was stuck in either the environment or coal ministry. Jairam Ramesh , Jayanti Natarajan and whoever was the UPA coal minister(s) should be beaten on the head repeatedly about this - they caused a backlog of 7% of GDP worth of investments with their ineptitude.

[svinayak]

Another aspect that is likely to have played a role in the widening income gap between coastal states like TN and inland states like UP and Bihar is the rise of global trade.

India has least external trade for almost 40 years from 1950-1990. The total sea cargo handling of entire India was smaller than the one single port of Rotterdam.

Even now Indian external sea trade is small compared all the large economies of the world.

[Uttam]

India has least external trade for almost 40 years from 1950-1990. The total sea cargo handling of entire India was smaller than the one single port of Rotterdam.

Even now Indian external sea trade is small compared all the large economies of the world.

and so it India's GDP as compared to large economies of the world.

The more relevant stats to understand the advantage/disadvantage of coastal/inland states is contribution of external trade to GDP, which has shown a healthy growth over the comparison period (1980 - current) for income of coastal and inland state.



Also relevant is drop in share of agriculture (where the inland states had advantage in terms of water for irrigation) and rise in share of services and manufacturing (where coastal states have advantage) over the same period.

[Theo_Fidel]

A full 60% of stalled projects, amounting to around $140 billion, was stuck in either the environment or coal ministry. Jairam Ramesh , Jayanti Natarajan and whoever was the UPA coal minister(s) should be beaten on the head repeatedly about this - they caused a backlog of 7% of GDP worth of investments with their ineptitude.

That is a horror show. Looks like for every prominent POSCO there was a 100 other projects being quietly tied up in red tape!! What is it about government that causes these self-destructive tendencies.

[Suraj]

FIIs bring in $1.2 billion into the market since May 26:
With Modi at helm, FIIs pump in $1.2 bn

The markets on Friday continued to scale new highs, as foreign investors pumped in dollars amid the improved sentiment surrounding the new government. Since the Narendra Modi-led National Democratic Alliance government took charge at the Centre on May 26, the markets have gained about three per cent, while foreign investors have pumped in about Rs 6,600 crore ($1.2 billion) into Indian stocks.

The positive momentum in the secondary market and the availability of foreign capital has helped India Inc tap the market to raise capital.

Strong market is a good time for equity divestment:
NDA govt flags off disinvestment with Hindustan Zinc

The government holds 29.5 per cent in Hindustan Zinc. In January this year, it had decided to sell its stake through auction. At the current share price of Rs 173.10, the government will get about Rs 21,500 crore but it is expected the value through auction will be much higher, as HZL is sitting on huge cash reserves and investments worth Rs 25,500 crore. As of March 31, 2013, the company had paid-up capital of Rs 845 crore.

Interim Budget 2014-15 had pegged disinvestment proceeds at Rs 36,925 crore, while another Rs 15,000 crore was expected from stake sales in Hindustan Zinc and Bharat Aluminium Company Ltd (Balco). A higher valuation will help the new government increase spending on infrastructure, while containing its fiscal deficit, pegged at 4.1 per cent of gross domestic product for this financial year.

During the previous NDA government in 1998-2004, Vedanta Resources Chairman Anil Agarwal had bought controlling stakes in HZL and Balco, through divestment. The London-based Vedanta holds 64.92 per cent stake in HZL and 51 per cent in Balco.

PowerMin's Goyal to use Gujarat model for power distribution

Minister of State for Power, Coal and New and Renewable Energy Piyush Goyal on Friday announced that his ministry would replicate Gujarat government’s Jyotigram Yojna, or rural electrification scheme, in other states to provide 24x7 power supply to every household.

The scheme was started by Prime Minister Narendra Modi when he was chief minister of the state.

Goyal and a team of officials visited Gandhinagar to study initiatives taken by the state in the power sector. They had a five-hour meeting with state Energy Minister Saurabh Patel and senior bureaucrats. “I have received training of the highest order from colleagues of Gujarat, who have demonstrated not only to the nation but to the world what government can do for the people,” said Goyal. “I will take this scheme to other states to provide 24-hour power supply across the country.”

He, however, added that though the model was successful in Gujarat it can’t be suitable for all states. “One size does not fit all. This model will have to be calibrated as per each state's need. Lesson on cutting down transmission and distribution losses and power theft is what other states need to learn. The first task of my ministry is to provide 24x7 electricity across India. We have to learn lessons from Gujarat on how to escalate power generation, cut down on transmission and distribution losses, control the every increasing cost of power and maintain efficiency.”

BSE market capitalization rises to $1.5 trillion

Indian stock market investors are laughing all the way to the bank with the total market value of domestic listed companies soaring to a record USD 1.5 trillion on a day when the benchmark BSE Sensex ended at a new closing high of 25,396.46. Market-capitalisation (m-cap) of all the listed companies stood at Rs 89,31,898 crore.

The stable government has raised hopes of a quick economic revival buoyed by continuing reform initiatives cutting across sectors.

India had first entered the trillion-dollar club in June 2007, but moved out in September 2008, amid the global slowdown. It again got back into the elite league in May 2009 and had largely remained there since then, except for some brief periods including once in 2012. In August 2013, it had, however, slipped out of the elite list.

Monsoon hits Kerala 4 days late

After four years of normal and above-normal monsoon, India is expected to have below normal monsoon this year with rainfall projected to be 95 per cent, which will be disappointing for the farming community.

Officials in the weather department had said the monsoon is expected to be below normal because of El-Nino effect, which is generally associated with the warming of ocean water.

Since 2005, monsoon rains have arrived over the Kerala coast only once on June 1 — last year. Other years, the arrivals have been earlier or delayed by a few days.

“Delay in arrival of monsoon rains for a couple of days is normal as the rains spread across three to four months,” an IMD official said.

[Surya]

muraliravi

Is there a data page for all Indian PSUs (or most) losses?

Also any world bank\Imf or some group comparing major PSUs globally?

thanks

[Austin]

Foreign-aided NGOs are actively stalling development, IB tells PMO in a report

[chetak]

Foreign-aided NGOs are actively stalling development, IB tells PMO in a report

emboldened, no doubt, by the termite queen and her anti national NAC