Indian Economy - News & Discussion Oct 12 2013

Supratik · Post by **Supratik** » 28 Feb 2015 19:12

It is Kejriwal economics to expect prices of things to come down by dictat. In a budget you can tinker here and there but that wouldn't make much difference to price. If you want Kejriwal economics you shouldn't have elected Modi. If you look at what he did in Gujrat he is focussed on building the neo-middle class which he successfully did in Guj. These are then his solid vote banks. So everything is being done to facilitate that. A solid economy in the next 4 yrs is going to benefit everyone. If the economy doubles to 4 trillion by 2019 your income is also going to roughly double. Having said that IT benefits are being given in fits and starts which is what it should be. Last time it was rise in exemptions this time in allowances. Please don't expect tax slabs to move every budget.

Also I wonder the posters economic sense when he says that you shouldn't plan ahead with a rosy picture in mind. You should plan as per situation and as ahead as possible. please don't make it a political excercise.

subhamoy.das · Post by **subhamoy.das** » 28 Feb 2015 19:40

As I said, working people care only about price of goods and service as a % of his earnings. If prices does not come down, either due to fall in cost of goods/service or due to increase in earning, then it is "bure din". So far, except of petrol, it has been a "bure din". It better changes in coming few years or "abiki bar kejri sarkar" will be the nara!

hanumadu · Post by **hanumadu** » 28 Feb 2015 19:43

SaiK wrote:can't talk to you if you are agitated without logical reasoning.

it is easier to increase industries and services towards agri services than some manufacturing and services sector taking over the share of the gdp.

biggest roadblocks of doing business is roads, transportation, guaranteed delivery and tax. infrastructure can't be injected in a jiffy.. it takes about 5 years to establish infrastructure projects. from energy to roads.. unless we do this, no WTF-er in the world will invest in doing business with India. China will ship things in 24 hours wheres India will struggle to move thru roads for 24 days.

whereas, I can easily move farming products, industrialized farming, irrigation systems, reduced labor and increased machinery to farming, etc, with existing infra.

well.. you gotta think more, and ask less

Well.. you gotta think before you post. You make a statement which has no basis in economic reality and when somebody calls out you come out with more inane statements. Why don't you take a look at the share of agriculture in developed economies. If we are to be a developed economy, what do you think our agriculture share of the GDP should be?

I don't even understand what you are trying to say here, but I will take a crack. So you are saying that we can increase the share of agriculture by 10% from 15% to 25% by moving farming products, industrialized farming, irrigation systems, reduced labor and increased machinery to farming, etc in 5 years time but cannot build infrastructure as fast as the above things. So you are saying we can build more dams faster than building more roads faster, make the farmers mechanize immediately to increase the share of agriculture to 25% in 5 years or 10 or 15 or 100? If we assume an industrial and service growth rate of a modest 5%, do you know at what rate agricultural output should grow to get to 25%?

Oh, btw even if you increase industry and services towards agri services (what ever that means in Saikology speak) it still won't be counted as agricultural output. Even if counted, it will be less than 5% in all developed economies which is what we are trying to become.

gakakkad · Post by **gakakkad** » 28 Feb 2015 19:47

as I said ,government does not decide the prices..they are market regulated...your restaurant bill is nowhere near as regulated by the budget as it is by the forces of the market..the "what became cheaper/expensice" thingy is a futile exercise as it it does not ever work that way..prices always have and would be regulated by the market..Jaitley could have subsidized everyone in the country...but that was a certain disaster...he could have chosen a budget of status quo...something that the loast gov't has done for a decade...look where it got us...so he did what he did...

lets see where khujli politics gets the working class...subsidize everything and make doing business become tough...thnigs will get more expensive even if negative taxes (subsidies) are levied.. would you have 50% cut in the power bill by power not being present 50% times ?

Supratik · Post by **Supratik** » 28 Feb 2015 19:54

Rising incomes is the key. If the economy doubles by 2019, your per capita income is going to roughly double. However, it can be jobless growth as seen in the boom years of UPA1. What Modi is trying to do through things like Make in India and infra is to create jobs. In one of his prep talks about a year before LS2014 he said that he is friendly to business not becoz he makes money out of it but becoz they are going to create the jobs that will bring people into the middle class. That is the acche din he is talking about. As far as inflation is concerned the numbers are about half of about a year back. There is always going to be 5-6% inflation in a rapidly growing country.

Having said that I think negi's idea of more granular tax slabs is good. I think the tax in the lower bracket can be reduced and more slabs introduced in the higher bracket as more people are moving to higher income category. Negi I think you should tweet it to Modi.

I am hearing that the next pay commission is going to nearly double the salary of say an Ass. Prof.

geeth · Post by **geeth** » 28 Feb 2015 20:10

IMO what NaMo is doing is tackling issues one by one. Things with higher gestation periods and systems for improving life of downtrodden are being put up first. Hence the focus on farmers banking accounts infrastructure etc. In a budget outlay of about 16 lakh crores the tax increase is only about 15000 crore I suppose (Manmohan words quoted by rrNDTV). So he has not disturbed the present tax structure much. Next yr when GST is rolled out, it will settle the indirect tax structure. If he starts giving too much sops to middle class/poor, then they will forget all in the election year and vote Kejru in...poor will start seeing the benefits by '19 and middle class can.e pect sops from '18 onwards IMO. He had already said 4 yrs governance and last one year politics..After Dilli elections, may be he tweaked it a bit in favour of more help to poor so that their flock is kept intact...

member_28352 · Post by **member_28352** » 28 Feb 2015 20:11

Today an Asst Prof on entry gets a salary of approximately 85,000/-. Increasing that to Rs 1,60,000/- range is quite high. Post tax that's a lot of money. Approximately 1,20,000/- ballpark figure. 6th PC and too some extent 5th PC IMHO equalized pay far far more than at any time in the past. Im guessing 7th PC will give lesser monetary increases but otherwise increase other benefits such as better health insurance, cheaper education loans for children, cheaper home loans through PSU banks etc.

saip · Post by **saip** » 28 Feb 2015 20:44

How did the defense fare in this budget?

About the wealth tax, how many people actually pay it and how much is the loss by getting rid of it?

Virupaksha · Post by **Virupaksha** » 28 Feb 2015 20:51

saip wrote:How did the defense fare in this budget?

About the wealth tax, how many people actually pay it and how much is the loss by getting rid of it?

it is not about paying it, it is about govt having a rough account.

Today most of the corruption at low and medium levels is shown as "stree dhana" or inheritances. With wealth tax, one can get a rough account which can expose it.

negi · Post by **negi** » 28 Feb 2015 21:05

Budget is not just about taking tough decisions for the future for nation's good , like a good parent you need to be able to sugar coat the bitter pill and administer that to your kid. Your budget should have some key salient points which the TV watching junta can feel happy about else negativity creeps in and you can kiss goodbye to your 10-20 year long plan for you might not be in power in the next term. Unfortunately despite all the hype which was built around decrease in oil prices, INR gaining strength , increase in forex , huge income from coal block auction and stuff like that the common man was not made to feel like a beneficiary of the good harvest . Leave the TV watching middle class , what has this budget done for the poor everything is in the long term be it RUpay being linked to Aadhar or report card for soil analysis all this stuff is too geeky and hardly strikes a chord with me leave alone with a farmer in village. Then they have some INR 300 per annum and INR 12 per annum life insurance schemes for the poor , do these idiots even know that poor in this country lives on a day to day basis life insurance is something bozos like me invest in just so that I can save some khota sikkas under section 80c, if you give a poor man choice between life insurance or same money in hand for buying 1 kg rice he will take the latter and I am not saying life insurance for poor is a bad decision all I am saying is it is a long term thing what was the SOP for them for say today, next 1 month or even this year ? If all this chootiyapa was not enough they also increased the outlay for MNREGA , remember until now BJP said MNREGA was crap . Finally increase in excise duty and service tax will just break the hearts of those who had taken achche din slogan to heart , arrey at least give people 1 lollypop to suck and feel good about .

In last year's budget at least the taxable income slab was increased by INR 50k which sent such a positive signal amongst the TV watching crowd. This year at least the INR 5 lakh or less income group should have been given a relief and rate slashed to 5% that alone would have made such a huge difference to this year's budget and it is doable , for lakhs of crores that our system leaks every year why can't we forgo a few thousands of crores by giving the actual working class under 5 lakh INR some relief ? GOI could have easily increased the rate for those say in INR 30 lakh or greater band to 35-40% , no one would have said a word against it. Jaitely sala poora good gobar kar diya.

Supratik · Post by **Supratik** » 28 Feb 2015 21:16

I agree with the working class bracket but you have to consider this is two budgets in less than a year. Too soon to do it. May be next year. The focus will shift to reducing interest rates. Most middle class have EMIs. Substantial reduction will happen if things move in the next couple of yrs. But you should tweet it.

Shankar, I am hearing the 1.5 lakh figure gross for Ass. Profs. But this varies for diff places e.g. IITs and IISERs are paid more than say some simple Univ.

johneeG · Post by **johneeG** » 28 Feb 2015 21:17

subhamoy.das wrote:I think AKJ single handedly sunk the NAMO ship. Are these folks stupid or middle class is not their vote bank any more. Hell, with 20L per annum, it is still basic living for me and all I can save is my EPF and that too when my house is paid for. I can image what will be the situation of somebody doing 5L per annum after this budget. He will be forced to work hard and pretty much stay at home on the week ends! WHAT A LET DOWN!

Exactly my thoughts when I first saw this budget. It seems to be pro-rich budget. Yes, it seems to me that modi is going to lose if this kind of economics continue. Maybe, the only thing which can be said to be positive for this budget is that this is like first ball in a cricket match. There are several more to come. But, this one seems like a dot ball. It is neither very good nor very bad.

If economy improves generally, then people may not complaint.

----
Negi saar,
so true! Exactly my thoughts!

Supratik · Post by **Supratik** » 28 Feb 2015 21:18

One important thing missing in budget - no mention of smart cities and the replacement of JNNURM in the budget.

SaiK · Post by **SaiK** » 28 Feb 2015 21:26

I doubt Shouri or S Swamy would have done this budget this way!

don't have to be big bang, but it can be at least a worm hole to the future, and there is no clear direction there.
--
hanumadu, I am not saying one does focus only on modernizing farming sector and aiding industries there. what I am saying is within the current infrastructure, we can move there faster than in other goods and services, business wise because most infrastructure projects (energy, roads, s&h, etc industries) takes much longer time to realize for the manufacturing to cash on. the number game there is just a feel factor the heck of arguing with you, and nothing more]

one must move towards freeways like in massa where one can guarantee shipments, time of delivery etc. remove structural hurdles first. container handling facilities and extra wide roads, or even dedicated freight rails are very important to realize increased share of global market share for India.

negi · Post by **negi** » 28 Feb 2015 21:27

Supratik wrote:Most middle class have EMIs. Substantial reduction will happen if things move in the next couple of yrs. But you should tweet it.

No middle class does not have enough to take loans, those who can take home loans are like us i.e. the upper middle class. People who are in INR 5 lakh or lesser bracket will hardly manage to send their kids to school and save anything forget about having credit/loan. Wait why are we even talking about it the tax rate on this group has not changed aside from increasing the exemption amount in last 10 years isn't this a valid reason enough to revisit it ?

The reason for not changing slabs is the fckn babus are lazy, they would have to make sure that leaks are plugged in the tax net should they give this working class any relief because fact is only the working class pays tax , the big fish hide their income and get away with it.

gakakkad · Post by **gakakkad** » 28 Feb 2015 21:32

the economics is good...the packaging could have been better...

Supratik · Post by **Supratik** » 28 Feb 2015 21:44

negi, as I said I agree with it and you should tweet it. I don't think it is wise to ask someone in that bracket to pay 10% tax with the current cost of living.

Suraj · Post by **Suraj** » 28 Feb 2015 22:33

saurabh.mhapsekar: all your post does is take whatever I posted as the budget summary and say it's all bad. That's not what I asked the critics to do. What would you have liked instead ? You've alrwady asserted you don't like the budget. Simply telling us that you don't like the individual points either does not add anything new .

negi: the 2.5lakh bracket (up to 4.5 lakh with all deductions) has a lot more people in it than the tax paying >10 lakh bracket . Yes indexing the slabs to inflation would be nice, but the brute fact is there are too few of you to matter . Focusing on the lower end of the scale is more politically sensible .

For those arguing 'budget did not reduce prices! Acche din means lower prices! Therefore budget is a fail!' may not have been following the news. The petroleum prices are been deregulated from fiat changes now. That means the prices change based on global prices. Besides with three months of flat WPI and more than 15% fall in petrol prices since last year this 'suffering middle class' has been gaining quite a bit of benefit .

Frankly this budge addresses the big picture items - sorting out the mess in public finances and lack of investment, ensuring a new investment cycle is fed to increase growth rate, developing debt market, bankruptcy code etc. This isn't a consumer focused budget, but it is a macroeconomy focused budget.

Here's a simple regression exercise for your criticism - look at the NDA budgets of 1999-2002 and tell us what's in it that fed the big economic growth of the 2000s . There were no major petrol price cuts there . No major tax slab changes . In fact, no one announced 'EMI rate will come down!' and yet they did. What happened then was government did several things to kickstart an investment cycle by increasing savings and investment . If this thread existed in 2000-01 and was this active, those budgets would have gotten the same condemnation.

Logically, if you can assert this is a bad budget, you should also be able to explain why the budgets of 1999-2003 drove 10 years of rapid economic growth too. In reality the genesis of the great EMIs of the mid 2000s start around 2000-01, when seemingly nothing big seemed to be destined and budgets did not excite anyone. But they did certain things then that are similar to what they announced in this budget.

If the government succeeds in the delicate act of recapitalizing corporate balance sheets and driving investment led growth, we will have 10% or higher growth in 2019. It's already forecast to be over 8% his coming year - far higher than estimates here in May 2014 after the election . 8-10% real growth for 4 year will in nominal terms double GDP in 5 years to 2019.

Suraj · Post by **Suraj** » 28 Feb 2015 22:53

Supratik wrote:One important thing missing in budget - no mention of smart cities and the replacement of JNNURM in the budget.

JNNURM has been replaced implicitly, with the recommendations of the 14th finance commission being accepted. JNNURM is a centrally funded urban renewal program. It existed because states themselves don't have the resources to fund urban renewal. They instead cross-subsidize their rural areas with money from urban areas, as a result of which latter suffered. What the finance commission did it to hand close to half of gross revenues to states (42% according to official breakdown, 47% when all numbers are added up for both statewise and local fiscal devolution). That means states and cities have a lot more resources available to themselves because of the way the resource collection is now restructured. That makes JNNURM - a stopgap - redundant.

kmkraoind · Post by **kmkraoind** » 28 Feb 2015 23:09

Budget 2015: FM Jaitley announces 5 UMPPs, extends 10-year tax holiday for power projects

For me, plug-and-play method in budget is best concept. Now, regulatory burden of environmental clearance and other headaches lies with bureaucracy (దొంగ చేతికే బీగాలు ఇవ్వడము). Now, no more delays for projects to get in execution mode, no more NPAs for banks because of regulatory hurdles.

SaiK · Post by **SaiK** » 28 Feb 2015 23:43

i was expecting revamping standards body to embolden them to take critical view of infrastructure in the country.. there is no clear future vision there

- how existing cities will have a road map to move to smart cities
- integrated system and regulated policies and standards to guide towards that
- inter connectivity - broader roads, more lanes and connectivity with least intercept in the path to destination
- systems and integration to control shipments, movements to guarantee delivery of manufactured goods

on the taxation, i think [for big bang make in india]
- make export duty zero for those products we want to make in India for exports [was this done?]
- make 50% all tax reduction on those products/companies we want to make in India for 10 years (holidays)
..ideas are plenty to invite them to India, but no road map here

that make in india lion will rust soon if we can't compete with china. this is not a joke folks.. energy +infra + taxation + procedures are so important.

disha · Post by **disha** » 28 Feb 2015 23:47

johneeG wrote:
SSundar wrote:This budget is evolutionary in a boring, bureaucratic way. Nothing major to complain about. Nothing to dance in the streets about either.
Seems like a very ordinary budget. So far, this modi govt seems underwhelming in most aspects.

I think that is a good thing. The focus in 2-3 years will start shifting to budget of states as it should be.

Picklu · Post by **Picklu** » 01 Mar 2015 00:02

I have no doubt about the structural systematic reform NaMo govt is working out. Having said that, the ground reality is such that other than fuel price there is no happy story for the poor and middle class so far. The inflation continues unabated on the ground despite statistics showing the downward turn.
I have serious doubt about the effectiveness of PMJDY; all we are hearing is the supply side from the govt and banks and nothing from the consumer side. May very well turn out to be the govt organized family planning camp story of same women, more than 70 years old, going through the surgery multiple times to get the benefit. In my surroundings I have not seen any actual effect on the ground and I would like to hear from people if their experience is otherwise. But no story of which bank employee opened how many new account, please!
There is really no mega story about new investment. All the economic growth engines like financial sector and IT etc has lost sheen and nothing, I repeat nothing, has replaced them despite lots of ad about make in India.
Last time the rail budget was crap and main budget was good. This time it looks the other way round.
However one thing has not changed between last and this year. Achchhe din abhi bhi "anewala" hai (somewhere in distant future, how much distant none can predict at this moment), till then ......
Again, i have no doubt the economy is getting repaired in many levels BUT, it needs to be seen and experienced and not to be just read in newspaper that okey GST is on track. I mean come on, what of my father goes if i do not see the improvement in my standard of living!
I am not saying that acche din means lower price only, but if not lower price, it should a. increase income and/or b. create lot of jobs - both of which are simply missing at the ground level. So, it really does not matter what the record book says.
And it is the perception at the ground that is all important.

panduranghari · Post by **panduranghari** » 01 Mar 2015 00:04

Excellent budget by Jet Li.

(I) Introduce a Gold Monetisation Scheme, which will replace both the present Gold Deposit and Gold metal Loan Schemes. The new scheme will allow the depositors of gold to earn interest in their metal accounts and the jewellers to obtain loans in their metal account. Banks/other dealers would also be able to monetize this gold.
(ii) Also develop an alternate financial asset, a Sovereign Gold Bond, as an alternative to purchasing metal gold. The Bonds will carry a fixed rate of interest, and also be redeemable in cash in terms of the face value of the gold, at the time of redemption by the holder of the Bond.

Stupid regressive move. There is a good reason why Indians buy gold. They do not trust the government.

(iii) Commence work on developing an Indian Gold Coin, which will carry the Ashok Chakra on its face. Such an Indian Gold Coin would help reduce the demand for coins minted outside India and also help to recycle the gold available in the country.

South Africa, Australia, USA and Canada sell minted gold coins because they mine gold and gold is no normally held by the population. I doubt many Indians have heard of forget holding kruggerands, maple leafs, kookaburras, eagles etc. What about premium on these coins? THE first mint lot will have numismatic value hence I would buy them irrespective of the price. But what after that? Not that we cant compete. Joint venture between Pamp and GOI is the reason why we have this coin idea.

I also see this as a way to compete with Shanghai Gold Exchange. it cant happen unless people start putting trust into GOI and keep their gold for safe keeping with them and earn interest. I doubt this will take off.

disha · Post by **disha** » 01 Mar 2015 00:10

Suraj wrote:If the government succeeds in the delicate act of recapitalizing corporate balance sheets and driving investment led growth, we will have 10% or higher growth in 2019. It's already forecast to be over 8% his coming year - far higher than estimates here in May 2014 after the election . 8-10% real growth for 4 year will in nominal terms double GDP in 5 years to 2019.

Macro-economically we are talking about USD 4T dollar economy and if the trend continues into 2025 - we will have a 8-10T dollar economy. Even half of it by 2019, we will end up with the following

1. 6 crore homes with 24x7 electricity, 2 hours of clean drinking water and a toilet, access to road infrastructure and at least 1 person in household employed.

2. Manufacturing will go from 10% of GDP current to 20% of GDP (a 4x increase!).

3. 62% of the revenue will be with the states.

4. Fiscal deficit will be <4% (@3%) of GDP.

5. This will lead to high growth low interest - basically a goldilocks economy from 2019 to 2025.

6. Compositional shift into investment into real infrastructure instead of digging holes.

Kakkaji · Post by **Kakkaji** » 01 Mar 2015 00:42

Suraj Saar:

For us laymen, can you please write the main points in this budget that are different from/ better than what a Chidambaram budget would have been in this situation?

Thanks in Advance

panduranghari · Post by **panduranghari** » 01 Mar 2015 00:44

Picklu wrote:There is really no mega story about new investment. .

Government has only one job. Governance. Law&Order and Defence is the mandate for maximum governance and minimum government. Didn't you vote for this?

saurabh.mhapsekar wrote: Its all good projecting an economic growth of 8% or even in double digits but we cannot and should not plan our policies around the projected growth.

You either don't understand what you are talking about or you have only one agenda - ~~dharna~~ - uh sorry - opposition for the sake of opposition.

The expectation is the implementation of the budget will help rise the indices which are used to calculate the growth rate. What is wrong with that? Besides we all look at CPI and WPI. Do we look at any other metrics? No.

What would you have? Seems you have answers to all the questions. Some one once said - he who has all the answers, has not been asked all the questions. Don't you agree, Prometheus?

panduranghari · Post by **panduranghari** » 01 Mar 2015 00:49

disha wrote:Macro-economically we are talking about USD 4T dollar economy and if the trend continues into 2025 - we will have a 8-10T dollar economy. Even half of it by 2019, we will end up with the following

What if in 2025, 1 dollar is worth 0.01 paisa? Time to deracinate yourself from measuring economy with a meaningless number. Need a better benchmark. Try something on the lines of wellness index, happiness index, dharmic index, ahimsa index.

Seriously, we have been conditioned to think about Indian economy in western terms.

The world is changed, I feel it in the water, I feel it in the earth. I smell it in the air . Much that once was is lost; for none now live who remember it.

durvasa · Post by **durvasa** » 01 Mar 2015 00:51

panduranghari wrote: South Africa, Australia, USA and Canada sell minted gold coins because they mine gold and gold is no normally held by the population.

Well I doubt if Switzerland mine gold as India imports gold worth $17bn/year, mostly coins and biscuits, from that chit of a country. http://www.thehindu.com/news/national/s ... 690907.ece

Melwyn · Post by **Melwyn** » 01 Mar 2015 01:24

Our View: Arun Jaitley delivers a landmark budget

There are three broad issues worth noting.

One, this is the first budget that has been designed against the backdrop of the new fiscal federalism. The commitment to transfer more tax resources to the states means that the finance minister has had to work with a near stagnation in tax revenues. Other sources of revenues such as dividends paid by public sector banks or telecom spectrum charges will not grow. New Delhi will operate under a stringent resource constraint.

Two, Jaitley has decided to slow down the pace of fiscal consolidation. This newspaper has never quite understood the position of the finance ministry on this score. The claim that the Indian economy is in a sweet spot does not gel with the simultaneous plea for fiscal activism

Three, Jaitley has spoken about several important structural reforms that will create a new institutional base for the Indian economy. The Economic Survey published on Friday had already downplayed the expectations about big bang reforms. However, there was enough in the budget speech on tax reforms, the new monetary policy framework, the creation of a national market for farm produce, a bankruptcy law, creating liquidity out of gold holdings, governance of banks and restructuring the welfare system. It would have been good if there were more signals about issues such as the creation of a fiscal council that will act as a budgetary watchdog or the ways to address the toxic mess in the balance sheets of public sector banks.

Suraj · Post by **Suraj** » 01 Mar 2015 02:11

A lot of what people religiously state as 'perception on the ground matters onlee' are things that cannot (eg inflation) or should not (eg hydrocarbon prices) be addressed by government fiat order, but should come from effective policy system. There's a reference to prices on the ground rising faster than official statistics. Therefore what should the government do ?
* revamp statistics collection (something it just did a major exercise in just a month ago)
* have the people determine the budget AAP style

The people want largesse today . They may know that diligent policy making can give them better rewards tomorrow at the cost of nothing today but even with that knowledge given the choice there are enough marginal cases that they will vote for largesse today . The whole 'public perception' based immediate solution politics are currently being already espoused in at least one state in India by a new party - the Aam Aadmi Party . It's very good politics, but the economics are quite another matter.

The whole point of Modis mandate is a minimum of 5 years to fix structural issues . I'll repeat the same challenge I made earlier - look at the 1999-2003 budgets and explain where any of them said we would grow at close to 10% within a couple of years, that inflation would moderate to historic lows and that for the first time people could afford things on cheap EMIs because interest rates fell so much ? I am certain that most people would not be able to explain, and in fact would argue that I'm being rude .

That's fine. My point is that it is very easy for the government to give quick relief . It's a hell of a lot harder to provide sustained relief . The population has already had quick relief for years . The UPA budgets were blockbusters. Millions get Rs 100 for an hour or two of digging a ditch and then covering it up. Instant gratification, when offered, begets more instant gratification demands. When people demand 'some sops should have been offered' the subtext they avoid is 'and those sops must keep getting bigger every year (until the proverbial economic camels back breaks).

Again, look at the 2000 or 2001 budgets and see what it is about them that suggests that from 2003 to 2012 we would grow at close to 9% ? In 2001 we barely managed 4% . NDA was being mocked for the 'computer chips, not potato chips' assertion.

I'll be happy to accept the criticism of some things in this budget. For example inflation indexing tax slabs is a reasonable suggestion . Other things are not really meaningful . For example, I'm surprised by the claim that PMJDY is useless . It has just about been implemented! This is like handing out cards to everyone and then immediately asserting that the game is useless because no one has the winning hand . The purpose of PMJDY is to move from a subsidy based system to a cash transfer based system.

If you really wish to understand what the government is trying to accomplish over 5 years please read the new Economic Survey . It's not a full accounting document but a vet readable policy statement about what the government plans to do and how various initiatives tie together.

johneeG · Post by **johneeG** » 01 Mar 2015 02:16

hanumadu wrote:
SaiK wrote:can't talk to you if you are agitated without logical reasoning.

it is easier to increase industries and services towards agri services than some manufacturing and services sector taking over the share of the gdp.

biggest roadblocks of doing business is roads, transportation, guaranteed delivery and tax. infrastructure can't be injected in a jiffy.. it takes about 5 years to establish infrastructure projects. from energy to roads.. unless we do this, no WTF-er in the world will invest in doing business with India. China will ship things in 24 hours wheres India will struggle to move thru roads for 24 days.

whereas, I can easily move farming products, industrialized farming, irrigation systems, reduced labor and increased machinery to farming, etc, with existing infra.

well.. you gotta think more, and ask less

Well.. you gotta think before you post. You make a statement which has no basis in economic reality and when somebody calls out you come out with more inane statements. Why don't you take a look at the share of agriculture in developed economies. If we are to be a developed economy, what do you think our agriculture share of the GDP should be?

I don't even understand what you are trying to say here, but I will take a crack. So you are saying that we can increase the share of agriculture by 10% from 15% to 25% by moving farming products, industrialized farming, irrigation systems, reduced labor and increased machinery to farming, etc in 5 years time but cannot build infrastructure as fast as the above things. So you are saying we can build more dams faster than building more roads faster, make the farmers mechanize immediately to increase the share of agriculture to 25% in 5 years or 10 or 15 or 100? If we assume an industrial and service growth rate of a modest 5%, do you know at what rate agricultural output should grow to get to 25%?

Oh, btw even if you increase industry and services towards agri services (what ever that means in Saikology speak) it still won't be counted as agricultural output. Even if counted, it will be less than 5% in all developed economies which is what we are trying to become.

Dairy industry is closely connected to agriculture.

Agriculture is basic industry which ensures food security.

I am not sure if mechanized agriculture suits Bhaarath and cheen. Providing jobs to the large populations would be more important. Agriculture and dairy industry can provide jobs to large number of rural population.

It seems to me that the main concern should be to make agriculture profitable. It needs infrastructure to store and transport the goods. Decrease input costs.

To me the main problem with forcible land acquisition by govt is that it is forcible. If govt wants to take people's property, then they should convince the landowners. If owning land beyond a limit is not good, then govt should have appropriate land ceiling act.

But, govt should not have the right to throw people from their possessions arbitrarily.

----
BTW, MSM seems to be all praise for the budget. Nice management by jet-li. The question is: why didn't he manage them during dilli election?

SaiK · Post by **SaiK** » 01 Mar 2015 02:22

jaan-e-ji, empowering the agriculture in the most indic, sdre way and still bring in home grown technology into farming is very important for growth. we should continue to maintain the traditional methods, but only improvise it.

yes, it will benefit both the farmer and the farming process. it need not be TFTA massan types, but pure SDRE machines, that really is working for the process established.

productivity improvement can't come at the cost of environment or health.. this is where GMO needs to go! go away from desh.

--

btw, here is a nice take:
http://www.firstpost.com/budget/budget- ... 27671.html

--

RamaY · Post by **RamaY** » 01 Mar 2015 02:27

Virupaksha wrote:I do not agree with removing the wealth tax. It is only with wealth tax + income tax that a continuous stream of income counting can be done by govt.

It provides a disincentive for people who simply hoard wealth without putting it to productive use. It should not be large but it should exist.

Arun Jaitley clearly explained the issue with Wealth Tax. It is costing more for the Govt to collect the RS 2,000+ crore wealth tax that's out there.

Instead he simply raised the tax rate for people with incomes >RS 1Cr, which is estimated to bring an additional tax collection of RS 9000 cr. This is nothing but your wealth tax in a simpler way.

When you combine this with proposed law against black money & binami properties, things will come into tax system.

It's important to remember that in our Indic system wealth is Goddess Lakshmi and nothing wrong in accumulating it. We want to build a wealthy India.

hanumadu · Post by **hanumadu** » 01 Mar 2015 02:31

SaiK wrote: hanumadu, I am not saying one does focus only on modernizing farming sector and aiding industries there. what I am saying is within the current infrastructure, we can move there faster than in other goods and services, business wise because most infrastructure projects (energy, roads, s&h, etc industries) takes much longer time to realize for the manufacturing to cash on. the number game there is just a feel factor the heck of arguing with you, and nothing more]

On what basis do you say it is easier to increase farm output or farm related output than say electricity or construction? And how can you increase them to 25% of GDP when in none of the developed countries farm output exceeds 2% gdp and farm related gdp is no more than 5%?

disha · Post by **disha** » 01 Mar 2015 02:47

panduranghari wrote:
What if in 2025, 1 dollar is worth 0.01 paisa? Time to deracinate yourself from measuring economy with a meaningless number. Need a better benchmark. Try something on the lines of wellness index, happiness index, dharmic index, ahimsa index.

Saar - regarding the advice on racinated or deracinated - please keep the advice to yourself! All this dharmic index/ahimsa index/happiness index is "airy-fairy".

For now there is a well-known way of communicating and measuring an economy and till the next happiness index replaces it - it will stay. Now if you want the western index to go away, please come up with a better and well understood index yourself and I will help you make it popular.

Seriously, we have been conditioned to think about Indian economy in western terms.

The world is changed, I feel it in the water, I feel it in the earth. I smell it in the air . Much that once was is lost; for none now live who remember it.

Seriously, sometimes we are conditioned to a knee-jerk reaction to junk everything western! And talking about cliched' pithy quotes The more things change, the more it remains the same

So before you sir repost on my post and again advice to negate all the "indices of the western world" - "and remove all the pegs to the US Dollar"., please come up with a better index.

hanumadu · Post by **hanumadu** » 01 Mar 2015 03:21

johneeG wrote: Dairy industry is closely connected to agriculture.

Agriculture is basic industry which ensures food security.

I am not sure if mechanized agriculture suits Bhaarath and cheen. Providing jobs to the large populations would be more important. Agriculture and dairy industry can provide jobs to large number of rural population.

It seems to me that the main concern should be to make agriculture profitable. It needs infrastructure to store and transport the goods. Decrease input costs.

To me the main problem with forcible land acquisition by govt is that it is forcible. If govt wants to take people's property, then they should convince the landowners. If owning land beyond a limit is not good, then govt should have appropriate land ceiling act.

But, govt should not have the right to throw people from their possessions arbitrarily.

You got the issues upside down. Its not that we need agriculture to provide jobs, its that we need people willing to work on farms.

Slightly old article but relevant nevertheless.

http://www.livemint.com/Politics/dLvgZ8 ... -harv.html

Rising prices of farm inputs including seeds and fertilizer, a shortage of labour which, when available is becoming increasingly expensive, and lack of procurement by government agencies that have no space to store more foodgrain are responsible for the phenomenon known as “crop holiday”.

Now please don't say govt should build more storage and procure food because the govt. does not know what to do with the excess grains. The govt. is actually trying to reduce the grains it stock piled over and above its stipulated limit.

“It’s not an easy decision,” says Chinna Babu. “But we have no other option. Paddy cultivation is financially unviable. The input costs have shot up by 100-300% in the last two years. Forget minimum support prices, there is no one to procure the paddy.”
Chinna Babu lost around Rs 60,000 in the rabi season and has debt of Rs 1 lakh to repay. He still has 30 quintals of rice unsold from the rabi crop.

“Getting farm labour here is a major problem, and mechanization is not feasible as paddy fields are small and scattered. Even if we take a risk, we are not getting minimum support prices,” Reddy says.

The solution is consolidation of holdings along with mechanization. That is fewer people working on farms and not farming soaking up excess labour like you say.

“There is an undeclared crop holiday in Anantapur district; at least 20% lesser paddy will be cultivated in this kharif season,” says 55-year-old T. Sarat Chandra, a farmer from Tarimela in Singanamala mandal. Chandra holds 40 acres. “This time we are going for cotton, as it has somewhat better margins.”

It costs Rs 780-800 to cultivate 1 quintal, or 100 kg, of sona masuri, a premium-grade medium-size rice variety. The minimum support price for paddy set by the government was Rs 1,080 per quintal, but farmers received only around Rs 600-700 per quintal from rice millers who procure their produce, translating into a loss of Rs 100-180 per quintal. If the loss is calculated on a per acre basis, it ranges between Rs 2,200 and Rs 3,600 on an investment of Rs 19,500-24,000.

Food Corporation of India (FCI) has the capacity to store 3.6 million tonnes of rice in Andhra Pradesh, while its warehouses are brimming with stocks of over 120%.

You are worried about food security while the situation is of excess food.

Vayutuvan · Post by **Vayutuvan** » 01 Mar 2015 03:33

saurabh.mhapsekar wrote:Even a crap movie like Ab Tak Chappan 2 has a ticket of Rs. 280 today for basic seat in multiplexes.

If people have money to pay 280 for that cr*p, then they will pay 285 - no problem.

Frederic · Post by **Frederic** » 01 Mar 2015 03:54

panduranghari wrote: I can try. But I am not that knowledgeable about it. I will try to explain it as I understand it.
.....
I hope this answers your question.

Saar, that's some explanation, I must say.

I need a couple of days to just understand and digest this info. Will come back with possibly more qns.

Meanwhile, please accept my Pranaams.

Frederic · Post by **Frederic** » 01 Mar 2015 03:56

Saars, some qns:

1* Why so much of revenue transfer to the states? Quoting from Jaggi's article in FirstPost :
"Second, the budget completely rebalances centre-state fiscal power in favour of the states,
in line with the report of the 14th Finance Commission. The
commission had recommended the transfer of 42 percent of gross central tax receipts to states,
but the real devolution is much larger – Rs 1,82,000 crore more in 2015-16 compared to the year before.

Another Rs 3.04 lakh crore would be transferred by way of grants and plan transfers.
Thus, states will spend about 62 percent of the total tax receipts of the country.
This rebalancing of fiscal resources means that states, which have the larger burden of implementation responsibilities,
will now have the money to do so. The centre’s fiscal role will shrink relatively."

As long as decent chief ministers are at the helm, fiscal prudence is somewhat guaranteed. I shudder to imagine
Mamata Didi and that nincompoomp O.PannerSelvam licking their chops just at the thought of increased state funding.
For them it is just pelf and not people's money!

2* This rudimentary social security scheme is a game changer. But will the funds be trasnferred through the JAM trinity
directly to the beneficieries? If so, it is a masterstroke by the Modi - JetLee combo. Together with cleaner, more efficient
and faster rail services, this scheme alone will catapult NaMo into Modi Baba for the downtrodden. They will bestow him their
ample blessings and even ampler votes