Isn't the money for the gold, whichever way it comes into the country, going from India's kitty??Aditya_V wrote:Nope, why can't the Goverment make some revenue, 3-4% will make smuggling unviable, at the same time contribute to reduce India's Huge Deficit.
The official explanation for the big rise is the CSS restructuring, under which the number of such programmes have been cut to 83 from the earlier 146, by combining or dropping smaller ones. Beyond this, there has also been a change in the process in which the funds will henceforth be transferred from the Centre to the states.
Former Planning Commission member Abhijit Sen says the fund will be transferred directly to the state treasuries as against the earlier practice of these being transferred to the central ministries and then to the respective state departments and ministries.
"It will be the responsibility of the state treasuries to ensure that funds earmarked for a certain project moves to the societies, implementing agencies and nodal ministries," he told Business Standard.
As the money goes to state treasuries, the state arms of the Comptroller and Auditor General can examine its use. "It will be the state's responsibility to use the fund transferred to the state treasury under the guidelines mentioned in the Central scheme. These are not untied funds. In fact, these are very much tied funds and can only be used for the schemes allocated for, to be monitored by central government officials," Sen said.
Recently I had an interesting experience at the airport. I was helping a lady with immigration forms and went thro the customs with her. At the Xray machine they noticed she had a gold biscuit with her and the gentleman asked her very politely about it and she opened her suitcase and showed it to him. He then wrote on customs form 'one biscuit' and asked her to go to the red channel. I was with her at the red channel and we met a young uniformed officer who looked up a chart and told her she owed 10% of $1377 or about $138. The gold price then was around $1300 in NY and so I do not know how he arrived at that price but he looked into an official printout and so I assumed it to be correct. The lady had $140 with her and the cashier did not have change. So we were walking away with a receipt for $138 (the cashier did put $140 on the side) but we were stopped by the officer who insisted that we should wait for the change. Another lady with the same problem paid her duty with change and we got our $2 back. I was impressed that the whole matter was handled very professionally and with courtesy. No raised voices, no lectures and no sarcastic remarks. In US we would have had far more difficult times. So she paid $205 for one biscuit of $1300 or 15.7%ramana wrote:New ways to smuggle gold into India
~2.36 tonnes out of 250 tonnes smuggled.
Need to get rid of the cess that PC put.
How ignorant are majority Hindus and takes cheap pot-shots without knowing a thing. I (Sane Indian) have given reply to some insane/idiotic comments.chandturakhia wrote:http://firstbiz.firstpost.com/life/tiru ... 92563.html
Red Alert !!!!! Last boom When tirumala gold was traded in local markets remember where did it land up.
Did Tirupati Balaji just save SBI from deep trouble? If yes, this is slap in face of all those who were crying over Padmanabhswamy temple gold deposits. That gold belongs to Hindus and when Hindus feel it, they will use that gold to save their country..TIRUPATI: A whopping 1,800 kg of gold offerings made by devotees of Lord Venkateswara at the famous hill shrine at Tirumala was today deposited with the State Bank of India, taking the total deposits made by it so far with various banks to more than 5,000 kg.
Executive officer of the Tirumala Tirupati Devasthanams (TTD), which manages the cash-rich temple, M G Gopal handed over the gold to State Bank of India (SBI) Chairperson Arundhati Bhattacharya at the TTD Headquarters here, in the first deposit of the precious metal by the temple in the last two years.
The gold offered by devotees in the hill temple hundi was deposited under SBI Gold Scheme for a period of five years at the rate of interest of one per cent, which effectively would mean addition of 12 kg of gold per year, Gopal told reporters.
"TTD has not made any gold deposits in the last two years as the banks have stopped accepting gold due to restrictions imposed by the RBI. After negotiating with various banks, SBI has first come forward to accept the gold deposits at one per cent interest rate per annum and we welcomed it," he added.
Bhattacharya said in terms of quantity, this was the largest single deposit of gold made with the bank in the entire country.
"We are fortunate to be a part of this divine mission. The deposited gold will be taken to Government Mint at Mumbai by SBI by incurring transportation charges, transit insurance, melting and refining charges and pure gold of 0.995 purity is taken as gold deposit," she explained.
The interest on gold deposit was likely to fetch TTD around 12 kg of pure gold every year, netting a total of around 60 kgs in the five year period, temple sources said.
Since 2010, on maturity of gold deposits, TTD has been converting the interest earned also into gold which would again be kept as deposits, they said.
Excluding today's deposit, TTD was having around 4,335 kg of pure gold under gold deposits with the SBI, Corporation Bank and Indian Overseas Bank.
These gold deposits earn an interest of 70 kg of pure gold approximately every year to the TTD coffers, they added.
Atri wrote:If a leader like LBS asks the ppl of this country to donate gold for saving the economy and if people genuinely believe in that leader, they will gladly donate. India demands a credible leader. People will follow. Not sure of NaMo is such a leader as yet. But he is best contender to grab that spot of next Hindu-hriday Samraat.
This term has interesting history. The first person who was given this title by people was Savarkar. Two-three years after his death, rise of Bal Thakre started and he became second Person post 1980's. with death of BT, the post is vacant. NaMo can clinch that position nationally. He should aim for this, everything else will follow.
As of July 25, India's forex reserves were $320.5 billion, just about $200 million shy of the record level reached in September 2011.]MUMBAI: The RBI's efforts to buy dollar from the market to give stability to the rupee over the last few months have pushed up India's foreign exchange reserves to within a touching distance of its all-time high level of $320.7 billion, data released on Friday showed. FII and FDI inflows also added to India's forex reserves.As of July 25, India's forex reserves were $320.5 billion, just about $200 million shy of the record level reached in September 2011. Also, in comparison to the current high level of forex reserves, just a year ago, forex reserves had fallen to a low of $275 billion, during the currency crisis in July-August 2013 when the rupee had dipped to its all-time lowest closing level of 68.83 to a dollar. Since last July, FIIs alone have pumped in $29 billion into Indian equity and debt markets.Economists said RBI's move to shore up the forex reserves also improves India's import cover, the number of months the total forex reserves can support before it gets exhausted.
Environmental clearance process streamlined:More than six decades after it achieved independence, India has yet to have a single internal market, with its economy divided up by state taxes on commerce.
Success would mean replacing more than a dozen types of tax that increase incentives for corruption, and offer the economy a boost of as much as 1.7 percent, according to the National Council of Applied Economic Research in New Delhi. Modi, who once said the levy was “impossible” to implement, now needs the revenue to trim a federal deficit.
“This is the easiest and most important reform for the new government to push forward,” Sudhir Kapadia, a partner for Ernst & Young LLP in India, said by phone. “There are huge leakages in the current system. With a uniform system, businesses will finally be able to make decisions purely on the grounds of profit.”
Photographer: Sanjit Das/Bloomberg
A truck driver prepares his papers for inspection at the excise and taxation booth on... Read More
Modi is under pressure to raise revenue after keeping the previous government’s fiscal deficit target of 4.1 percent of gross domestic product in the year ending next March. A weak monsoon and rising oil prices threaten to inflate a subsidy bill that has risen fivefold over the past decade.
“I would not call it a flip-flop,” Aman Sinha, a spokesman for Modi’s Bharatiya Janata Party, said by phone of his position. “He is just executing a plan which the previous government failed to do.”
The Modi administration’s parliamentary mandate -- India’s largest in 30 years -- raises the likelihood of success where former Prime Minister Manmohan Singh failed. Passing the tax law would require votes in both houses of parliament, plus the support of 15 of the 29 states to amend the constitution.
The GST would streamline the tax administration and result in higher revenue for the federal government and states, Finance Minister Arun Jaitley said in his July 10 budget speech. Businesses selling across states face a border tax, local sales tax, central service tax, federal excise, central sales tax and other duties that often vary by state and product.
Amit Saigal, owner of yarn-maker Eskay Yarntex Pvt. in New Delhi, estimates a GST would allow him to double the company’s 1.5 billion rupees ($25 million) in annual sales within a year. He now sells to only seven states after halting shipments to Punjab because his trucks filled with spools of cotton yarn must pay two taxes to cross the border.
“Right now, businesses look for ways to circumvent state taxes,” Saigal, 42, said by phone from Delhi. “Local politicians have made a joke of the tax system.”
Singh introduced India’s first GST bill in 2008 and set a two-year deadline to implement it. After repeated delays, Singh told reporters in 2011 that Modi’s BJP in Gujarat “has taken a hostile attitude.”
Modi countered that GST couldn’t be implemented without a proper computer network to support it. That’s still a concern.
The GST network has been under development since 2010, when Singh tapped Infosys Ltd.’s co-founder Nandan Nilekani to lead an IT infrastructure committee. Four years later, Nilekani has left and the network remains incomplete, said Abdul Rahim Rather, head of India’s GST committee.
In his budget speech, Jaitley said the government will garner the two-thirds majority needed to pass the GST bill in both houses of parliament by April. While states would get part of the revenue for the new unified levy, some are reluctant to surrender their right to tax, he said.
“I assure all states that government will be more than fair in dealing with them,” Jaitley said.
Karnataka, Tamil Nadu and Kerala -- hubs for manufacturing, services and technology -- stand to lose the most if the government bans them from collecting local taxes without offering a substitute, according to the Reserve Bank of India. Madhya Pradesh may oppose the GST if alcohol and petroleum aren’t exempted, said Ashwini Kumar Rai, the state’s principal secretary of commercial tax.
The constitutional amendment would pass if Modi’s five BJP-led states are supported by the 11 states controlled by the opposition Congress Party, which introduced Singh’s version of the GST bill.
Constitutional hurdles mean the GST will probably be implemented some time in 2017, according to R. Muralidharan, an executive director at PricewaterhouseCoopers India. Still, even a watered-down GST would spur manufacturing and create jobs, he said by phone from Mumbai.
“The early fears of GST are gone,” Muralidharan said. “Everyone understands the positive impact it will have.”
A lot of facilitation measures, which aren't glamorous to report, but have tremendous impact on the ground.Through a quick series of notifications, the Union environment ministry has eased rules for mining, roads, power and irrigation projects and other industrial sectors. It has diluted a host of regulations related to environment, forest and tribal rights. Besides, sources in the ministry say, more changes in regulations are in the pipeline.
Environment Minister Prakash Javadekar had earlier done away with the requirement of public hearing for coal mines below 16 million tonnes per annum (mtpa) wishing to expand output by up to 50 per cent. This has now been extended to mines above 16 mtpa, permitting them to mine up to five mtpa more without consulting affected people. Public hearings, the only occasion when affected people are consulted for clearances, have in the past turned violent at times, or seen protests leading to litigation.
Union Power & Coal Minister Piyush Goyal had approached the environment ministry in May requesting similar rules for expansion of coal output in big and small mines. The environment ministry had on May 30 exempted public hearing if the increased mine output was up to four mtpa. The Centre, on the request of the coal ministry, had in June also decided to consider group clearances for Coal India Ltd mines that were in close proximity, rather than individual project proposals.
The need for consent from gram sabhas for prospecting in forests has also been done away with. This dilutes the Forest Rights Act, which requires the consent of tribals before forest land is diverted to industrial activity. Alongside, inspection of mining projects by ministry officials for plots less than 100 hectares has been removed. The ministry has also set aside the requirement of compensatory afforestation for prospectors.
The government recently laid down that instead of tribal village councils certifying their rights had been settled and they had consented to projects, the district administrations would be empowered to do so in 60 days, regardless of the number of villages affected by the projects. Settling of rights is a lengthy process and in many parts of the country it is far from complete.
Besides these, the government has also amended the environment impact assessment notification of 2006, letting several industries up to a certain size go to state governments for clearance, instead of approaching the Centre. Industry has usually found it easier to get clearance from state governments.
The National Democratic Alliance (NDA) has also permitted mid-sized polluting industries to operate within five km of national parks and sanctuaries with state clearances, compared with the 10-km limit imposed by the Supreme Court. This has been done by changing the pollution-related classification of industries.
Also, the amended environment impact assessment notification allows coal tar processing units to get clearances from state governments.Mineral beneficiation projects up to 0.5 mtpa will also be cleared by state governments. Earlier, only those up to 0.1 mtpa capacity were allowed to approach the states.
Irrigation projects below 2,000 hectares need not apply for clearances anymore and those between 2,000 and 10,000 hectares can be cleared by state governments. By also separating power from irrigation projects, developers can now take projects piecemeal to different agencies for clearance.
Reserve Bank of India (RBI) governor Dr Raghuram Rajan says global markets are at risk of a "crash" should investors start bailing out of risky assets created by the loose monetary policies of developed economies.
The comments, carried in an interview with Central Banking Journal, reiterate Dr Rajan's previous warnings that emerging markets were especially vulnerable to big shifts in capital flows brought on by the unprecedented monetary accommodation in rich nations.
The former chief economist at the International Monetary Fund compared the current global markets to the 1930s - a period marked by the Great Depression.
Dr Rajan said back then countries were engaged in a period of competitive devaluation, in a similar way to central banks now being engaged in ever more accommodative policies.
"We are taking a greater chance of having another crash at a time when the world is less capable of bearing the cost," Dr Rajan said in an interview on the journal's website dated Wednesday.
Dr Rajan said he worried about the impact of investors exiting markets all at once after buying heavily into assets inflated by these loose central bank policies.
"There will be major market volatility if that occurs. True, it may not happen if we can find a way to unwind everything steadily. But it is a big hope and a prayer," Dr Rajan said.
http://in.rbth.com/blogs/2014/08/08/gre ... 37289.htmlMurthyB wrote:So if the Ruskies go ahead and ban agri imports from EU and US, does India benefit? India has always complained of unfair subsidies given to first world farmers. Does this create an opportunity for more agricultural exports to the Russians now?
In the wake of Russia’s one-year ban on imports of food products that imposed sanctions on Russia, India could become a major exporter of buffalo meat, processed food and dairy products to the country.
The years following the 1998 financial crisis and subsequent Russian debt default presented one of the best opportunities for exporters of Indian agricultural produce to enter the Russian market. A lack of interest, information and prevalence of stereotypes about Russia kept Indian exporters from entering Russia. It was precisely around that time the Europeans, Americans and even the Chinese moved back in and completely captured the Russian market.
A visit to any supermarket in a Russian city will show how much the country depends on imported food. One would be hard pressed to find anything of Indian origin besides certain spices and tea. The Russian government’s decision to ban fruit, vegetables, meat, fish, milk and dairy imports from the U.S. the European Union, Australia, Canada and other countries that have imposed sanctions on Moscow, is a great opportunity for Indian exporters to enter the Russian food market.
According to India’s Agricultural and Processed Food Products Export Development Authority (APEDA), buffalo meat exports amounted to $4.3 billion in the 2013-14. India houses almost 60 percent of the world’s buffalo population, and the animal is not considered sacred unlike cows, making it the ideal beef substitute. There were some concerns in Russia about the conditions that buffalo grazed in India, but Indian buffalo meat has been exported to countries like Malaysia, Mauritius and the Seychelles, which have had no outbreak of foot-and-mouth disease. Russian agriculture and veterinary sanitation inspectors should be invited to India to inspect the conditions for themselves. This should help address their concerns about buffalo meat exported from India ....
There’s also a great opportunity for one of India’s biggest success stories, Amul, to get a presence in Russia. The serious shortfall in dairy and cheese products means, the Indian cooperative can at least manage to get a small presence in Russia. India exported $540 million worth of dairy products in the last financial year according to APEDA figures.
Is there surplus production in India of farm products that could to be rerouted to Russia to make up the shortfall? Or would you suggest reneging on current orders from the West to sell to the Russians? Cash on delivery perhaps from the Russians may be? Or, as a third option, perhaps take the current production that is earmarked for domestic consumption and sell to the Russians? What happens if the West and the Russians strike a deal in six months and lift barriers to each others' produce?panduranghari wrote:We must enter the Russian market with gusto and displace the other providers. This is the time to do it. What a great opportunity.
All good points Sir. I am not very aware of the status of our agriculture output etc. I however feel this is a good opportunity. Its like the guaranteed delivery of O&G to China from Russia which is expected to start in a few years. India could strike some long term deals too.anupmisra wrote:Is there surplus production in India of farm products that could to be rerouted to Russia to make up the shortfall? Or would you suggest reneging on current orders from the West to sell to the Russians? Cash on delivery perhaps from the Russians may be? Or, as a third option, perhaps take the current production that is earmarked for domestic consumption and sell to the Russians? What happens if the West and the Russians strike a deal in six months and lift barriers to each others' produce?panduranghari wrote:We must enter the Russian market with gusto and displace the other providers. This is the time to do it. What a great opportunity.
I wish we would learn a lesson from the Russians. When will we ban Dell for imposing sanctions on BARC and other research institutions. Sanctions can work both ways.Avarachan wrote:http://in.rbth.com/blogs/2014/08/08/gre ... 37289.htmlMurthyB wrote:So if the Ruskies go ahead and ban agri imports from EU and US, does India benefit? India has always complained of unfair subsidies given to first world farmers. Does this create an opportunity for more agricultural exports to the Russians now?
In the wake of Russia’s one-year ban on imports of food products that imposed sanctions on Russia, India could become a major exporter of buffalo meat, processed food and dairy products to the country.
NEW DELHI: Exports to Iran in Indian rupee will also be entitled for trade benefits as available to exporters realising proceeds in freely convertible currencies."Export proceeds against exports to Iran realised in Indian rupees are permitted to avail exports benefits/ incentives under the Foreign Trade Policy, 2009-14, at par with export proceeds realised in freely convertible currency," the Director general of Foreign Trade (DGFT) has said in a notification.Indian exporters mainly trade in freely convertible currencies including US dollar and euro. The government provides export incentives under different schemes, including Focus Market Scheme, to exporters realising their proceeds in such currencies.Iran makes payment in rupees to Indian exporters after the Western countries imposed sanctions on it.To increase bilateral trade, the government in April had also waived the value addition norms for exporters shipping imported items like food and pharmaceuticals to Iran.Besides food products, India mainly exports to Iran pharmaceuticals, machinery, transport equipment, chemicals, man-made yarns and fabrics and steel.The bilateral trade between the two countries stood at $15.25 billion in 2013-14.India is one of the biggest oil importers from Iran. Since February 2013, when the US blocked payment channels to Iran for its nuclear programme, India has been paying 45 per cent of its Iran oil bill in rupees through a Uco Bank branch in Kolkata.India has steadily cut imports from Iran as the sanctions from US and other Western countries blocked payment channels and crippled shipping routes.Crude oil imports from Iran were reduced to 13.14 million tonnes in 2012--13, the year when the US had tightened screws on Iran.
AHMEDABAD: Gujarat is set to get its first semiconductor wafer fabrication manufacturing facility by late 2017 in Prantij of Sabarkantha district.
To be set up by Hindustan Semiconductor Manufacturing Corporation (HSMC), the facility will employ over 25,000 people including 4,000 direct employees.
Last year in September, the central government had approved setting up of two semiconductor wafer fabrication (FAB) manufacturing facilities in the country including one in Gujarat with an aim to provide a big boost to the electronics system design and manufacturing eco-system in the country.
HSMC along with ST Microelectronics (France/Italy) and Silterra (Malaysia) will set up two manufacturing units each with capacity of producing 20,000 wafers per month. Of the two, the first will come up by 2017.
"We got the go ahead in March this year and are in the process of finalizing the land and working on detailed project reports. We will be hiring 4,000 direct employees in the initial phase," said Vishal Verma, president, HSMC. The company is also in talks with top device manufacturers of the US for tie-ups.
The central government will get 11% equity in the project. The state government has cleared 1,000 acre of land for setting up the manufacturing facility in the proposed electronic park in Prantij. Siemens will be IT partner for the project and Fairwood Consultants will be the design and architect partner.
The facilities are expected to attract more than Rs 30,000 crore investments in the region of which more than Rs 6,000 crore will be invested by the central government.
The other unit is being set up by Jaiprakash Associates along with IBM (USA) and Tower Jazz (Israel) in Greater Noida. The outlay of the proposed project is about Rs 26,300 crore.
India currently imports $8 billion of semiconductors and is likely to import more than $20 billion of semiconductors by 2020. Government believes that the setting up of semiconductor manufacturing facility will not only stimulate flow of capital and technology and create employment opportunities, but will also reduce India's dependence on imports and help higher value addition in the electronic products manufactured in the country.
The latest concern in trading rooms is whether India is headed towards another battering in case the US Federal Reserve begins to increase interest rates next year. The rupee has lost ground in recent days while the equity markets have also been under pressure.It is now widely accepted that India is in a better position to navigate through choppy waters than it was a year ago. The macro numbers look far better now compared with the weeks in which India was considered to be among the five most fragile major economies in the world. Inflation has drifted down. The current account deficit has narrowed. The new government says it remains committed to fiscal consolidation. India has done better than Indonesia, Turkey, South Africa and Brazil in addressing its macro imbalances even though there are two important micro risks that can harm financial stability: the unhedged dollar liabilities of large companies as well as the problem loans in bank balance sheets.Global interest rates are actually lower now than they were when the US central bank first hinted in May 2013 that it would begin to normalize monetary policy by reducing its monthly bond purchases. The yield on 10-year US Treasuries is currently around 90 basis points down from its level when 2014 began. What this means is that the bond markets are not anticipating higher interest rates anytime soon.However, there is no doubt that global interest rates will begin to rise. The debate is actually about timing rather than direction. The Indian central bank has to eventually prepare for such an eventuality. There is enough historical evidence to show that a tightening of US monetary policy can be a negative for the emerging markets; the Mexican Tequila crisis of 1994 is a case in point.
The Reserve Bank of India has done well to add to its foreign exchange reserves over the past few months. The bigger war chest is the natural first line of defence in case money is suddenly pulled out of India. Two factors have helped: the repayment of swaps by oil marketing companies and a surge in capital inflows far in excess of what the country needed to fund the current account deficit.What is more important is that the Indian central bank has credibility about its ability to control inflation. In his conference with economists after he announced the new monetary policy last week, Raghuram Rajan did well to point this out: “My sense is that for the most part we would be driven by domestic conditions rather than external conditions in determining the interest rate, which is precisely why we are fighting very hard to build inflation credibility, because I think once you get some inflation credibility it gives you a certain amount of flexibility in focusing on domestic conditions rather than trying to act knee-jerk towards external developments. So a combination of macro-stabilization, of which inflation credibility is an important component, I think will give us much more room as and when the Fed tightening happens.”There are growing signs that the extraordinary monetary policy conducted by the developed economies after 2009 cannot continue for long. The massive monetary expansion has not led to inflation but there are growing signs of a new round of irrational exuberance in the global financial markets: a rapid rise in asset prices, low implied volatility and a compression of risk premiums.India will have to prepare for tighter global financial conditions. It has taken some welcome corrective action since the run on the rupee last year. But more needs to be done, especially in bringing down inflation rapidly. A high-inflation country such as India will be in no position to ease monetary policy when global interest rates begin to harden.
Excellent step by the government.India's dilapidated infrastructure and real estate market is set to get a boost after the nation's securities regulator gave the green light for the creation of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (IIT) on Sunday.
"The decision just announced by the Indian securities regulator... after years of delays is great news," said Rajiv Biswas, chief economist for Asia-Pacific at IHS.
"It will support domestic and international investment inflows for the development of Indian smart cities, as well as mobilizing foreign investment inflows into other Indian real estate and infrastructure projects," he added.
India's real estate stocks surged on the news. DLF Ltd, India's largest real estate company, gained 3.5 percent in Monday morning trade, while Prestige Estates Projects Ltd rose 2.9 percent and Indiabulls Real Estate Ltd jumped 3.8 percent, amid hopes that the rule change would give the cash-strapped, debt-ridden sector a fresh source of financing.
"Companies like DLF own a lot of commercial real estate on their balance sheet so this development means they will be able to de-leverage their balance sheet significantly," said Shobhit Agarwal, managing director of Capital Markets in India at property research firm JLL.
REITs are listed instruments with exposure to income-producing real estate assets, which are normally commercial. Earnings from these assets are distributed to shareholders through dividends.
The Securities and Exchange Board of India (SEBI) also approved infrastructure investment trusts, REIT-like structures that allow developers to monetize their infrastructure assets through a stock exchange listing.
A full-blown revival in the country's industrial activity might be a protracted process, even as a nascent recovery is on, the Index of Industrial Production (IIP) estimates for June suggested on Tuesday. Though the index reflected an expansion in industrial output, for a third straight month, the rate of growth fell to 3.4 per cent from the previous month's revised estimate of five per cent.
Data on retail inflation, also released on Tuesday, seems to reaffirm the Reserve Bank of India's (RBI's) decision to maintain the status quo on the repo rate. The inflation rate, as measured by the consumer price index, rose to 7.96 per cent in July from 7.46 per cent the previous month.
A slower expansion in industrial output in June was primarily on account of a weak show by the manufacturing sector, which has a weight of 75 per cent on the index. Manufacturing growth slowed to 1.8 per cent from five per cent in May. Of the twenty-two industries that the index is comprised of, seven registered a contraction in output during the month, compared with six in May.
On a use-based classification, capital goods production, considered a proxy for investment demand, grew 23 per cent, against 4.3 per cent in May. But growth in this sector was erratic, owing largely to data-related issues. The biggest decline was seen in the consumer goods sector, with consumer durables output declining 23.4 per cent.
Over the past year, the consumer durables segment has expanded in only one month. This appears to be in line with RBI's consumer expectation survey, which showed the current-situation index in June was at the threshold level of March. The survey also noted that net responses on the current economic condition remained negative.
Suraj wrote:Some strange IIP numbers for June: overall IIP up 3.4% only, yet electricity output is up 15.7%, exports are up 10.2%, but manufacturing is up only 1.8% . Either something's wrong with the data, or domestic output remains very weak.
Industrial growth disappoints in JuneA full-blown revival in the country's industrial activity might be a protracted process, even as a nascent recovery is on, the Index of Industrial Production (IIP) estimates for June suggested on Tuesday. Though the index reflected an expansion in industrial output, for a third straight month, the rate of growth fell to 3.4 per cent from the previous month's revised estimate of five per cent.
Data on retail inflation, also released on Tuesday, seems to reaffirm the Reserve Bank of India's (RBI's) decision to maintain the status quo on the repo rate. The inflation rate, as measured by the consumer price index, rose to 7.96 per cent in July from 7.46 per cent the previous month.
A slower expansion in industrial output in June was primarily on account of a weak show by the manufacturing sector, which has a weight of 75 per cent on the index. Manufacturing growth slowed to 1.8 per cent from five per cent in May. Of the twenty-two industries that the index is comprised of, seven registered a contraction in output during the month, compared with six in May.
On a use-based classification, capital goods production, considered a proxy for investment demand, grew 23 per cent, against 4.3 per cent in May. But growth in this sector was erratic, owing largely to data-related issues. The biggest decline was seen in the consumer goods sector, with consumer durables output declining 23.4 per cent.
Over the past year, the consumer durables segment has expanded in only one month. This appears to be in line with RBI's consumer expectation survey, which showed the current-situation index in June was at the threshold level of March. The survey also noted that net responses on the current economic condition remained negative.
If the new Prime Minister Narendra Modi succeeds in what still are early experiments in cutting the legal red tape that dissuades hiring and crushes productivity, the economy's growth potential will be significantly higher.
The need for change is urgent. Reforms over the past two decades have focused almost entirely on fixing product and capital markets. But while lowering import barriers, implementing a federal sales tax, and making banks allocate capital more efficiently are all crucial tasks, unshackling the labour market from some 60 different federal laws is equally pressing.
The near-vertical rise in Chinese labour productivity since that country joined the World Trade Organization in 2001 shows just what an opportunity India has missed. While global demand may not recover to its pre-financial-crisis levels any time soon, India could still garner large economic benefits from allowing its blue-collar workers to participate in the global supply chain as freely as its software code-writers can.
The trouble is that labour in the formal economy has a small share in the total workforce: only one in five Indian workers is a regular wage earner. All the laws are aimed at safeguarding the rights of this person. The cost of that protection, though, is large. It inhibits new investment in labour-intensive industries, and keeps the other four workers stranded on farms or limited to doing odd jobs. Trade unions oppose labour-law reforms because they have more to gain by siding with a minority that has something to lose. The voiceless majority's only hope is that entrepreneurs will cry so loudly about not being able to compete globally that the government will have to listen.
Early signs suggest Mr Modi's administration is indeed listening. Starting next month, labour inspectors will lose their discretionary powers. These much-dreaded officials will no longer be free to pay a visit to any factory owner or shopkeeper they fancy harassing. From October, companies can file the bulk of their labour-related returns online, Business Standard reported recently.
These reforms may not sound like much. But they can go a long way in improving India's investment climate. Doing away with silly regulations - such as requiring companies to maintain a "register of lime washing" under the 66-year-old Factories Act - can add up, saving businesses time and money.
With reduced compliance costs, companies will have a bigger incentive to be on the right side of the law. At present, it makes more sense for small enterprises to operate in a legal grey area, putting workers at risk and defeating the whole point of regulation. As a textile businessman recently tweeted, if small and mid-sized companies in India followed all existing rules, "your underwear will cost what your jeans cost today".
The country's labour laws, hand-me-downs from British colonialists, have always been a little harsher in independent India than in Britain. That was understandable: the relatively poorly educated and underpaid workforce required stronger protection. But Indian laws started to become draconian in the 1970s when then prime minister Indira Gandhi adopted a populist, anti-business posture. The gap widened furthered when Margaret Thatcher came to power in Britain and began deregulating. That never happened in India. The result: Indian labour laws today are among the most restrictive globally. While they may be able to secure the livelihoods of a tiny minority, they have a pernicious effect on the vast majority.
But a big change is sneaking in through the back door. Acting on the advice of Columbia University economist Arvind Panagariya, Mr Modi is letting state governments, which have a major say in regulating labour, update archaic laws and make them more investor-friendly.
A test case is the state of Rajasthan in north-western India. It recently increased the maximum number of employees that can be fired without government permission to 300 from 100. A business owner can now hire up to 50 contract workers without requiring prior approval of the labour department; the present limit is 20. Really tiny businesses will be exempted from laws that have high compliance costs.
Making even these small tweaks at the federal level has proved to be politically impossible. For instance, a very modest goal of allowing companies to sack up to 1,000 workers without prior permission has not been realised in 13 years because of pressure from trade unions. After becoming prime minister in May 2004, Mr Modi's predecessor, Manmohan Singh, announced that his government would refrain from "an uncritical endorsement of the hire-and-fire approach". That was the end: for the last 10 years, labour reforms haven't even figured on the policy agenda.
That's a wasted opportunity. Research has shown that Indian states, such as Rajasthan and Tamil Nadu, which have slightly more employer-friendly rules than others, have 11 per cent higher productivity in industries that face volatile demand, and, hence, need the flexibility to adjust the size of their workforce. If these gains become the norm, two things will happen. One, higher productivity will translate into higher wages; that will kick-start a virtuous cycle: increased demand will lead to more job creation and production. Two, as production increases, inflation - a big headache in recent years - will come under control.
India's workers missed the chance to ride the global economy's boom years. But rising Chinese wages have presented the country with a second chance. Labour-intensive manufacturing can find a home in India. But for the country to be ready for it, physical infrastructure will need to improve, and the government will need to boost investment in education and health. It will also have to simplify the inordinately lengthy and contentious process of land acquisition, which prevents industrialisation.
vina wrote:Ah.. There they come crawling out of the woodwork! A very quick and efficient way to kill the economy and go back to 1970 and the disastrous autarky of the 70s. Welcome back to the future ji. Acche din aagaye!
Is this something to be made fun of? Is it wrong?They cite the country's stand at the WTO against the Trade Facilitation Agreement to underscore the new "independent economic policy" initiatives of the new government.
"The Modi government has independent foreign and economic policies which are not bound by the expectations and interests of super powers, multi-national companies. The foreign policy vision is unfolding, and soon Arun Jaitley will present the blueprint for the economic agenda, which too will be nationalistic," explai ..
This chart should be posted on the desk of every minister and babucrat above IAS. Right there is everthing you need to know on where we are going and how fast.Suraj wrote:
Export growth so far this fiscal year:After two months of double-digit growth, exports expanded at a slower 7.3 per cent to $27.7 billion in July, compared to $25.8 bn in the corresponding period of last year.
These had risen 10.2 per cent in June and 12.4 per cent in May. The growth declined in July mainly on account of a fall in shipments of electronic goods, gems and jewellery, and textiles, showed official data issued on Thursday.
Imports rose 4.3 per cent to $40 bn in July, compared to $38.3 bn in the corresponding month last year. As such, the trade deficit rose to a year’s high of $12.2 bn in July, against $11.8 bn in May. However, it was lower than the $12.5 bn in July 2013.
Imports were largely driven by petroleum and oil lubricants. Oil imports in July rose 12.8 per cent to $14.4 bn as against $12.7 bn a year before. Non-oil imports rose 0.03 per cent to $25.6 bn in July from $25.6 bn in the same month last year.
Import of gold fell 26.4 per cent to $1.8 bn, compared to $2.5 bn last year this month.
Code: Select all
Month Exports Growth
July $27.7B 7.3%
June $26.4B 10.2%
May $28B 12.4%
April $25.6B 5.3%The government has decided to borrow less for the first half of the financial year, though the figure for the year’s overall borrowing has not been altered. This has been done by reducing the bond auction amount by Rs 2,000 crore every week till September.
The decision comes after the Reserve Bank of India (RBI) transferred a surplus amounting to Rs 52,679 crore for the year ended June 30 to the government.
On Thursday, too, the auction amount was cut to Rs 8,000 crore, compared with the Rs 14,000 crore announced earlier. The move is seen as positive for the bond market, beside improving the liquidity scenario.
“The rally in bonds had already happened. Yields might drop by another five basis points next week, due to the cut in auction amount,” said K Ramanathan, chief investment officer at ING Investment Management.
The yield on the 10-year bond ended at 8.52 per cent on Thursday, compared with the previous close of 8.54 per cent.
Looks like we missed the Bus during 1990 to 1995.Theo_Fidel wrote:This chart should be posted on the desk of every minister and babucrat above IAS. Right there is everthing you need to know on where we are going and how fast.Suraj wrote:
Its a shame this data is not provided by RBI. GOI should issue a rule asking RBI to calculate it every 6months or so. Who or what is Conference Board and their total economy database. One wonders.