Indian Economy - News & Discussion Oct 12 2013

hanumadu · Post by **hanumadu** » 16 May 2015 21:18

kmkraoind wrote:De-Reservation of remaining 20 items reserved for Micro and Small Enterprises Sector
Posting in full. Its time to give tough competition to Chinese Fire Works.

Removing another 20 from the reservation list will not do much for manufacturing or exports or reduce imports if removing 800 items before it did not do it. Obviously, there are other reasons apart from MSES reservation that are preventing India from becoming a manufacturing hub to even cater to the domestic sector. Either China is undercutting the prices or its still expensive to manufacture in India or red tape and labour rigidity are stifling manufacturing in India. Things move too slow in India and every time India takes any corrective measures, it is invariably too little too late.

Supratik · Post by **Supratik** » 16 May 2015 21:37

Removing the remaining cap is just another step along with mutiple other steps. It is not a good idea to look into it in isolation. Obviously manufacturing agarbattis is not going to make us an industrial power.

hanumadu · Post by **hanumadu** » 16 May 2015 23:14

My concern is what those steps are, are they being taken and what is the time frame? If our labour laws are the reason for lack of enthusiasm for manufacturing in India, then that will be a tough nut to crack. I don't expect any improvement in the short to medium term.

Melwyn · Post by **Melwyn** » 17 May 2015 08:20

If jobs do not start raining down, Modi will soon see signs of enormous despair.
- Tavleen Singh

Tavleen Singh does make some valid points in this article.
There is no real "black" money stashed away in some fancy swiss accounts. It just gets laundered back into the system and becomes white.

However, if no law is passed then Modi will get a stick for that also.
Do it or not Modi is in a tough place.

The Finance Minister says that his new black money law should frighten only a handful of Indians who have illegal foreign bank accounts. He could have added that these belong mostly to politicians. And, if he glances around Parliament at the handbags, shoes, pens and watches our humble MPs flaunt, he will see signs of much ill-gotten wealth, but there is no point. His tax sleuths rarely raid politicians.
There is no point either in looking for black money abroad because it is usually not in bank accounts but in real estate and other assets owned by shell companies. So the tax inspectors will make many trips to foreign lands, as they did in pretend pursuit of Ottavio Quattrocchi, and come back with nothing. In frustration they will start harassing middle-class taxpayers travelling abroad for hard-earned holidays. Or as Sadanand Dhume put it so well in The Wall Street Journal, they will start ‘quizzing middle-class grandmothers on how much they spend while visiting their grandkids in Europe or the US’.

What the new law will also do is frighten away investors just as continued use of the awful retroactive law has already done. And, if investment does not pick up, there will be no creation of new jobs and no ‘Make in India’. There will be even less chance of investment picking up if the hunt for black money is pursued within India because every Indian entrepreneur is forced to have a little black money because of bad policies, corrupt politicians and very corrupt tax officers. Decades of ‘socialist’ policies have created a vast infrastructure of corruption that can only begin to be dismantled when power is reduced in the hands of petty officials. When you instruct them to go after black money, they will create an atmosphere so ugly that every paanwala and small shopkeeper will fall into the dragnet. Tax terrorism will acquire a whole new meaning

M Joshi · Post by **M Joshi** » 17 May 2015 12:33

Breakup of what the GST rates are being proposed & why:

Supratik · Post by **Supratik** » 17 May 2015 13:10

Please read the back issues of this thread. Many steps have been taken to make it easier for businesses and have been discussed on this thread.

hanumadu · Post by **hanumadu** » 17 May 2015 16:58

Supratik wrote:Please read the back issues of this thread. Many steps have been taken to make it easier for businesses and have been discussed on this thread.

I know. But is it enough? Is there more that needs to be done? Until we have seen the results we cant be sure.

Supratik · Post by **Supratik** » 17 May 2015 20:12

More needs to be done. He has done the easier things in the first year e.g. LAB is extremely critical. The UPA model if followed will take us 5000 yrs to develop. But it is tricky. You don't want to anger farmers. The CPIM collapsed in WB because after Singur-Nandigram rural population thought govt is going to forcefully acquire all agri land. That was the propaganda of the opposition. India is a big country and you will need to acquire only a fraction of the land. As you can see from RG nautanki they are waiting for a similar situation. LAB requires the best brains. How to speed up things without comprising farmer interests. Hence, these things will take time. You don't want to rush through and loose 2019. The other one is labor laws. The left and INC trade unions are salivating at the prospects of agitation. The BJP one is not on board as it is the largest trade union and doesn't want to loose influence. So it is not as easy as some of the anti-Modi idiots are pontificating on print and TV. They are waiting for him to trip and fall. Typical Indian mentality. Rather than himself succeed expect others to fail. So have patience.

A_Gupta · Post by **A_Gupta** » 17 May 2015 20:21

^^^ Closer look at core sector growth.
http://articles.economictimes.indiatime ... oal-output

The core index captures output in eight infrastructure industries — coal, electricity, crude oil, natural gas, steel, cement, fertilisers and refinery products. It has a 38% weight in the Index of Industrial Production (IIP). The IIP rose 2.6% in January against an upwardly revised 3.2% in the previous month.
...
Output contracted in five industries - crude oil, natural gas, refinery products, fertilisers and steel. Coal output grew at a threemonth high of 11.2% versus 1.7% in January and is expected to improve over the next financial year....
...
Electricity and cement grew by 5.2% and 2.7%, respectively, in February.

IMO, crude oil would shrink in rupee terms but perhaps should go up in volume terms. With the slowdown in China and its huge overcapacity in steel, I can see why steel output in India would go down. Not sure why fertiliser production should shrink. Is it a result of policy failure of the past?

http://www.indiatvnews.com/business/ind ... 18639.html

No significant investment was made in the fertiliser sector during 2010-14 period even after the launch of Nutrient Based Subsidy scheme to promote the domestic industry, says a report by government auditor CAG.

"Audit observed that no significant investment was made in the fertiliser sector to increase either the number of fertiliser plants or their installed capacity even after introduction of NBS Policy," CAG said in its performance audit on 'Nutrient Based Subsidy Policy for Decontrolled Phosphatic & Potassic Fertilisers'.

Promoting growth of indigenous fertiliser industry was one of objectives of NBS policy, there was neither any addition in the number of fertiliser plants nor was there any increase in the installed capacity of these fertiliser plants during 2010-11 to 2013-14, said the report, which was tabled in Parliament last week.

A_Gupta · Post by **A_Gupta** » 17 May 2015 20:34

Likewise, is slow credit growth because of past karma?
http://businesstoday.intoday.in/story/m ... 17700.html

Between 2009/10 and 2013/14, India Inc more than doubled the total debt on its balance sheets - from Rs 20 lakh crore to over Rs 41 lakh crore.

After that borrowing binge, wouldn't this be the result, Modi or no Modi?
http://timesofindia.indiatimes.com/busi ... 939402.cms

Bank credit growth dropped to a 18-year low while deposit growth fell to a 19-year low in 2014-15 with fresh investment proposals from corporates drying up completely and projects announced in the past remaining stuck because of legacy issues. Credit growth would have been substantially lower had it not been for the smart pick-up in personal loans.

member_22733 · Post by **member_22733** » 17 May 2015 20:38

What goes into borrowing? Are they importing using that money? If so dollar fluctuation can explain it.

The other reason why it could increase is that they are expecting high demand driven inflation in the near future. The ramp up will be evident next year/quarter.

RamaY · Post by **RamaY** » 17 May 2015 20:45

Suraj & others,

Please help me understand...

India's GDP is $2000B
It's annual savings rate is about 30% of GDP or $600B
Let's assume all of it is in formal banking sector
About 10% goes as cash reserve ratio per RBI guidelines $60B
About 40% goes to support priority sectors like Agri-loans & weaker sections etc $240B (14,00,000 Crores) https://rbi.org.in/Scripts/FAQView.aspx?Id=87

Does priority sector include infra development?

That leaves about 50% of these savings for other sectors = $300B. How is this split?

Is there a better way to organize this?

Suraj · Post by **Suraj** » 18 May 2015 12:08

Social sector services are not funded out of the household, public sector and private sector savings. That falls entirely under the head of government spending, through a combination of tax and non-tax revenues, and govt borrowing. CRR is 4%, not 10%: RBI rates. The rest is lent out by banks. Depending on the deposit base, banks can and do lend out credit in excess of GDP: World Bank data . For example, we have domestic credit of ~70% of GDP, while Japan has 330% of GDP, i.e. Japanese banks have loans of 3.3 * $4.5 trillion or close to $15 trillion in loans out, while Indian banks have only 10% of that loaned out. In other words, our banking system is fairly small potatoes, without large banks capable of lending out large sums at low rates. Modi's banking inclusion efforts attempt to build the deposit base, which in turn can fund credit growth at better rates, driving growth.

Suraj · Post by **Suraj** » 18 May 2015 12:33

Time-bound targets for major infra projects

To boost connectivity and lower congestion on key routes, the Railways plans to double or quadruple nearly 11,000 km of the total track length of 64,000 km by 2019-20.

The target was discussed at a recent meeting chaired by the prime minister, to review infrastructure projects. The Railways, it has been decided, should focus more on doubling and quadrupling of existing lines over the next four to five years, rather than new projects, except those in the Northeast and Jammu and Kashmir. The aim is to ensure existing tracks are decongested, rather than laying new projects.

Railways Minister Suresh Prabhu, in a recent interview with Business Standard, had acknowledged that with an investment plan of Rs 8.5 lakh crore over the next five years, they were focusing more on decongesting the network and improving the earning capacity.

For roads, officials said, a target of awarding around 10,000 km of new projects had been fixed for 2015-16. Under the Pradhan Mantri Gram Sadak Yojana, the ministry plans to construct around 26,000 km of rural roads in 2015-16. In ports, officials said, the meeting felt the existing target of 2,400 million tonnes of capacity by 2019-20 was good enough to handle the projected traffic of 1,600 mt. The current capacity in ports is 1,700-1,800 mt, which handles a traffic of 1,200-1,300 mt. For irrigation projects, the government is looking at bringing an additional 600,000 hectares under irrigation potential in 2015-16. Another 300,000-400,000 hectares will be created under command area development and 3.7 mn hectares brought under micro irrigation.

Vishwas Udgirkar, senior director of infrastructure at Deloitte, said: "I feel, for infrastructure projects, factors like land, detailed project reports, technical consultants, etc, are of much more importance than funding… meeting even 70-80 per cent of these targets will be a big challenge."

According to official data, 46 per cent of India's net sown area of 140.8 million hectares was under irrigation till 2011-12. In 2000-01, around 40.5 per cent of net sown area was under irrigation, a rise of 5.8 percentage points in a decade.

National capital goods policy on anvil

The department of heavy industry has constituted a joint task force with the Confederation of Indian Industry (CII) for a comprehensive national capital goods policy to realise the potential of this sector under the Prime Minister's Make in India project.

The task force will take up issues faced by the industry with to evolve a roadmap for the sector, comprising textile machinery, machine tools, electrical and power equipment, plastic machinery, construction equipment, process plant equipment and dies, moulds and press tools.

The initial framework for the policy, to be formulated by the next few months, has been articulated in a paper published by the ministry.

The paper outlines key strategic pillars for the Indian capital goods sector. The areas of focus include creation of an enabling system, expansion of market, promotion of exports, development of human resources, enhancement of technology and intellectual property rights, standards, focus on small and medium enterprises, and building necessary support services.

Sub-sector specific strategies have also been formulated for giving special direction and focus.

These strategies include elements such as access to capital, trade remedial measures, taxation, customs duties, preferential trading arrangements, World Trade Organization issues, attracting foreign direct investment, technological upgradation, safety and environmental awareness.

With a market size of $92 billion and production valued at $32 billion, the sector currently contributes to 12 per cent of India's manufacturing output. The vision of the proposed policy is to increase the share of capital goods contribution from the present level to 20 per cent by 2022 and establish India amongst the major capital goods producing nations in the world.

Finance Minister expects RBI rate cut

Ahead of the Reserve Bank of India (RBI)'s second bi-monthly monetary policy review, Finance Minister Arun Jaitley on Sunday said his “expectation” from Governor Raghuram Rajan was the same as general expectation on an interest rate cut.

“My expectation is the same as your expectation,” he said when asked about what he expected the RBI to do in the June 2 policy review.

“I expect what you expect,” when he was told during an interview with PTI that the expectation was of a rate cut by the RBI. The RBI has lowered its policy rate twice so far in 2015, but maintained a status quo in its first bi-monthly monetary policy released on April 7 on fears of unseasonal rains impacting food prices.

The repo rate, at which the RBI lends to the banking system, currently stands at 7.5 per cent and the cash reserve ratio, which is the amount of deposits parked with the central bank, is 4 per cent.

According to analysts, the mix of slowing inflation and weaker-than-expected growth are indicating that a policy rate cut is on the anvil. While a rate cut on or before June 2 is most likely, beyond that, room for additional rate cuts depend on structural reforms that the government undertakes.

Austin · Post by **Austin** » 18 May 2015 12:48

Enough Space for China Banks to Complement India Story: Chanda Kochhar

Austin · Post by **Austin** » 18 May 2015 12:57

Suraj wrote:Depending on the deposit base, banks can and do lend out credit in excess of GDP: World Bank data . For example, we have domestic credit of ~70% of GDP, while Japan has 330% of GDP, i.e. Japanese banks have loans of 3.3 * $4.5 trillion or close to $15 trillion in loans out, while Indian banks have only 10% of that loaned out. In other words, our banking system is fairly small potatoes, without large banks capable of lending out large sums at low rates. Modi's banking inclusion efforts attempt to build the deposit base, which in turn can fund credit growth at better rates, driving growth.

Isnt that thing called QE and have its own pitfall , looks like bank print money out of thin air

Yagnasri · Post by **Yagnasri** » 18 May 2015 13:24

Austin wrote:Enough Space for China Banks to Complement India Story: Chanda Kochhar

We need bigger banks ASAP. But there will be serious problems with mergers of the Banks - particularly PSU ones. Further the fear of CBI and internal accountability should go immediately. Unless that is removed bankers will not lend actively, particularly in SME sector.

Suraj · Post by **Suraj** » 18 May 2015 20:43

Austin wrote:Isnt that thing called QE and have its own pitfall , looks like bank print money out of thin air

Banks can have a deposit base in excess of GDP. The latter is just the cumulative output in one year. The deposit base is accumulated over time.

Austin · Post by **Austin** » 18 May 2015 21:02

Suraj wrote:
Austin wrote:Isnt that thing called QE and have its own pitfall , looks like bank print money out of thin air
Banks can have a deposit base in excess of GDP. The latter is just the cumulative output in one year. The deposit base is accumulated over time.

But all those deposit are not necessary your savings , Banks would well be selling G Sec Bonds to the market and the accumulated wealth would be shows as Deposit but it is essentially Debt for GOI for which the latter also have to pay interest. So this can be complicated isnt it ?

hanumadu · Post by **hanumadu** » 18 May 2015 21:18

Austin wrote:Enough Space for China Banks to Complement India Story: Chanda Kochhar

Looks like Indians will be the only ones paying the Chinese banks their money back.

Suraj · Post by **Suraj** » 18 May 2015 21:41

Austin wrote:But all those deposit are not necessary your savings , Banks would well be selling G Sec Bonds to the market and the accumulated wealth would be shows as Deposit but it is essentially Debt for GOI for which the latter also have to pay interest. So this can be complicated isnt it ?

Not all central banks are authorized to issue bonds. In fact, very few are. RBI is not. As far as I know, neither is BOJ. The only one I know of is Peoples Bank of China.

hanumadu · Post by **hanumadu** » 19 May 2015 00:19

Chinese companies to invest $500 million in Kakinada SEZ

An investment of $500 million has been planned by the Chinese consortium to develop the infrastructure and other facilities in the industrial park which will house some of the leading Chinese manufacturing industries.

"These Chinese companies would additionally invest $2-3 billion in setting up their operations over next five years," the company said.

Will they be getting their labour too from china? If they do, I hope India doesn't give them the visas.

Supratik · Post by **Supratik** » 19 May 2015 18:47

Maybe top and some middle level managers like the Japs and Koreans.

panduranghari · Post by **panduranghari** » 19 May 2015 18:51

Suraj wrote: Not all central banks are authorized to issue bonds. In fact, very few are. RBI is not. As far as I know, neither is BOJ. The only one I know of is Peoples Bank of China.

Whoa! Any central bank is allowed to issue bonds. That the bonds will be bought by someone else is a different question. But any central bank is allowed to issue bonds. All the 60 members of Bank of international settlements issue bonds. The BIS provides supervisory services and technical assistance to them. The other countries which are non members probably do not matter enough from the perspective of bonds. They tend to approach IMF and WB for loans as they have difficulty raising funds. They either sell assets like mining rights in return for funds or they may trade voting rights for getting additional funds.

RamaY · Post by **RamaY** » 19 May 2015 19:58

Suraj,

If/when you have a moment please read this economist article http://www.economist.com/news/leaders/2 ... n?fsrc=rss

I think Islamic banking is coming in new package!

Suraj · Post by **Suraj** » 19 May 2015 20:43

panduranghari wrote:
Suraj wrote: Not all central banks are authorized to issue bonds. In fact, very few are. RBI is not. As far as I know, neither is BOJ. The only one I know of is Peoples Bank of China.
Whoa! Any central bank is allowed to issue bonds. That the bonds will be bought by someone else is a different question. But any central bank is allowed to issue bonds. All the 60 members of Bank of international settlements issue bonds. The BIS provides supervisory services and technical assistance to them. The other countries which are non members probably do not matter enough from the perspective of bonds. They tend to approach IMF and WB for loans as they have difficulty raising funds. They either sell assets like mining rights in return for funds or they may trade voting rights for getting additional funds.

Not the kind that Austin asked about. They may be allowed to manage the bonds, but the issuing authority is the corresponding Finance Ministry / Treasury Department / Exchequer. That's why we hear about gilts / GoI bonds etc, but not RBI bonds. RBI cannot independently issue them.

panduranghari · Post by **panduranghari** » 19 May 2015 21:08

Ah! I am sorry to have misunderstood.

panduranghari · Post by **panduranghari** » 19 May 2015 21:18

Ridiculous assumptions/assertions by Keynesians;

1. Start with the fragility. Economies biased towards debt are more prone to crises, because debt imposes a rigid obligation to repay on vulnerable borrowers, whereas equity is expressly designed to spread losses onto investors.
2.Under a more neutral tax system, firms would sell more equity and carry less debt.
3.A neutral tax system would also lead to more efficient choices by savers and lenders.
4.Investment in new ideas and businesses that enhance productivity would become relatively more attractive, in turn boosting economic growth.
5.The wisest step would be to phase out tax relief gradually, Getting rid of the tax breaks for corporate debt will be harder
6.The best approach is gradually to phase out tax breaks for debt at the same time as lowering the corporate-tax rate.

The author (whoever it may be) still does not get the problem. Debt is but a symptom of the underlying problem. Though debt is causing many problems, the understanding that debt is bad is stupid.

Apparently Oprah once did a shooting in a house somewhere in Maryland. She loved the house so much she made an offer to buy it. Say it was your house. She comes to you and says I will pay you 50 million $ for this house. You say 52 million and she shakes your hand. That is credibility backing the debt. She has the moolah to make such a deal. The problem currently is most countries globally are making deals without having the credibility to make and follow through with such deals.

Debt is not a problem. The problem is the settlement of the debt from supra national levels to the individual levels and absence of any settlement mechanisms.

RamaY · Post by **RamaY** » 19 May 2015 22:16

^^^^ economic indicators in ShauryaTji's post!

Looks like the railway freight isn't at 18month low!

chaanakya wrote:Railway's April freight earnings up by over 17 per cent from last year

Vamsee · Post by **Vamsee** » 20 May 2015 02:02

Government releases draft rules on monetisation plan to mobilise gold held by public

Nitesh · Post by **Nitesh** » 20 May 2015 10:27

Will any woman will apart away with gold jewellery? Especially when they know that it is going to get melted.

kvraghav · Post by **kvraghav** » 20 May 2015 10:48

depends of the amount of wastage they charge. If it is less than normal jewellery shop, they will deposit old ornaments, wait till they collect enough money and earn interest and buy new jewellery later. Also since the interest can be in terms of gold, they can treat it like savings.

wig · Post by **wig** » 20 May 2015 11:11

IMVHO
Bonds are issued by Governments. Because they create the fiction of a sovereign guarantee through the medium of the country's constitution. Central banks manage the modalities of issue and book keeping of bonds which are issued by the central govt or state govt. Hence in general terms of trade they are termed Govt bonds.
The bonds issued by bodies corporate and sundry other commercial organisations might be better termed as debentures.

Nitesh · Post by **Nitesh** » 20 May 2015 15:49

kvraghav wrote:depends of the amount of wastage they charge. If it is less than normal jewellery shop, they will deposit old ornaments, wait till they collect enough money and earn interest and buy new jewellery later. Also since the interest can be in terms of gold, they can treat it like savings.

Thanks kvraghav, but I just asked my wife, and told her let's deposit, she said no way

.
One question, since it will not come under income tax or any other thing, doesn't it opens another good avenue for smuggling gold, and converting the black money in to white? Sorry if this has been answered before

kvraghav · Post by **kvraghav** » 20 May 2015 16:38

I think the interest is exempt from tax but not the deposits. My mom was ok to part with her old jewellery provided i tell her how much wastage will be deducted and if it is less than the neighbourhood jewellers. She has the habit of exchanging her jewel sets every 2 years and i think ladies who have this habit might be more open to this scheme

Yagnasri · Post by **Yagnasri** » 20 May 2015 17:07

Crazy mango alert.

May be time to have a second currency - 100 gold based one. Can be done. 1000th of a gram can be a unit and 4000 T gold can create 1200000 units of currency 100% backed by gold. Any citizen can go to designated branches of the Banks and pay the amount and take gold at fixed rate as above.

How far practical I do not know. May be a crazy idea. But will be a popular one. Fully digital one with no printed notes. Take all payments for exports as gold etc are other crazy ideas. Digital gold units which can be used to purchase sell other goods may beat inflation etc.

Do you know Senior Counsels in Mumbai take their payment in gold even today? Interesting thing i found out few months back.

Suraj · Post by **Suraj** » 20 May 2015 21:01

Regarding the link between monetization of gold, and women's jewelry, it seems to be taken for granted that gold holdings primarily equate to ladies jewelry. Is there data to prove it ? Not empirical observations, but data, showing that most of the gold consumption and purchases are held in the form of wearable ladies jewelry, as opposed to standard holding form like biscuits, coins or otherwise.

The goal of monetization can be viewed the same way as that of banks holding deposits. They don't need to have every last Rupee deposited by everyone, always ready to lend out. Rather, they only need a small fraction of it. The rest they can recycle within the economy in the form of fractional reserve lending. They don't always hold 100% of every Rupee in every account; they hold only the equivalent of the cash reserve ratio, and the rest if held in bonds, their loan ledger or otherwise.

The monetization of gold accomplishes the same end. Rather than import additional gold to satisfy everyone's incremental personal need, it is achieved by encouraging those who hold it for the sake of the value of holding it to keep it with the public banks, which can then use that accumulated stock to satisfy incremental demand without incrementally importing all that additional gold. It also offers an interest in cash to the depositors.

Could all this go wrong ? Maybe. Is it for everyone ? No, of course not, not everyone will participate, at least not immediately, when people will 'wait and see'. Could there be a 'bank run on gold' ? It's possible, and depends on how well run it is. But then, the success of the entire thing depends on how well executed it is. But the goal is an interesting one.

It's the government's job to create this market, and that is what they are doing. It's been tried before and yes, it has failed. But then even 'bank accounts for everyone' has been tried before. In fact, Indira Gandhi nationalized the banks in 1971 with this goal in mind. Modi finally accomplished the saturation coverage within a year via PMJDY, that successive governments from 1947 to 2014 did not come close to doing.

So it's not the plan that's the problem, it's the effective execution. Any number of plans and schemes have been previously proposed and botched. If someone told you in August 2014 that 150 million new bank accounts would be added by May 2015, you'd have rolled your eyes and laughed at the PSU banks' ability to do that. But the number has already crossed 160 million new accounts, and essentially every household has an account now. The next step is seeding it, providing insurance cover, direct cash transfer based entitlement cover, and more.

kmkraoind · Post by **kmkraoind** » 20 May 2015 22:21

Major firms creating slowdown to hit back at PM: Ambit report - Business Standard

Posting in full.

A few major power, infrastructure, metals & mining companies are planning to consciously hold back capital expenditure to “create an economic slowdown”, according to a report by Ambit Capital Research released on Wednesday. Quoting sources close to Prime Minister Narendra Modi, the report said the move has been prompted by their disappointment over the PM’s crackdown on crony capitalists.

The Ambit report also launched a spirited defence of the PM and talked about its "growing conviction that the PM is prioritising a clean-up of the system over pursuit of near-term GDP growth”. The report repeatedly quotes “sources close to the PM” as saying that Modi has got multi-decadal ambitions and will not be panicked into generating short-term results which could compromise his longer-term goals.

Claiming that the findings are a result of the research team’s repeated visits to Delhi and other state capitals, Ambit made other startling allegations against a section of Indian companies, without naming any. “The forthcoming Black Money Bill seems likely to result in an exodus of Indian businessmen seeking residentship abroad. We have already heard about promoters of several prominent small-midcap companies who have taken tax residentship abroad in the past few weeks. Also, a significant proportion of white collar professionals working in India for MNCs are contemplating leaving the country,” the report said.

The sheer lack of clean and capable civil servants, public sector chiefs and contractors means that public sector and government capex growth will disappoint in FY16, the report said. “Our sources in Delhi say that the government has realised that if it hastily kicks-off major capex projects without cleaning up the ecosystem of corrupt officials and bent contractors then it will simply perpetuate the rot that had set in over the past 10 years”,” Ambit said..

Asking everybody to be prepared for a short-term pain, Ambit cut its FY16 Gross Domestic Product Growth estimate to 7% from 7.5% estimated by it in March.

Terming it as the “PM’s detox diet for India”, Ambit said the clean-up has four facets: pressurising crony capitalists and contractors into re-thinking their traditional approach to rigging the system; attacking the subsidy fraud through Direct Benefits Transfer (DBT) and use the Aadhar as a means of identification; pressuring civil servants and public sector company chiefs to deliver in their day job and desist from graft and attacking the “black economy” which has acted as a medium of trade in the murky world.

Macquarie Capital has come out with a note titled "Modi Meter - One year later: 7/10". The rating is much higher than what corporate CEOs would give the government. Authored by Rakesh Arora & Arun Bhattacharya, the report states that the Modi government is a study in contrast to the UPA government, thanks to its decisive action, transparency and development focus.

Like Ambit Capital, Macquarie's Arora too says that the government has done away with crony capitalism by moving all approval processes online, introducing an auction system for resources and focusing on improving ease of doing business. Macquarie Capital says: "Corporates that are used to receiving doles and fiscal incentives are finding themselves thrown at the deep end of the pool and tackling competition to survive. However, the govt’s efforts to ease land acquisition has been jeopardised by populist opposition."

SaraLax · Post by **SaraLax** » 20 May 2015 23:26

kmkraoind wrote:Major firms creating slowdown to hit back at PM: Ambit report - Business Standard

Posting in full.

A few major power, infrastructure, metals & mining companies are planning to consciously hold back capital expenditure to “create an economic slowdown”, according to a report by Ambit Capital Research released on Wednesday. Quoting sources close to Prime Minister Narendra Modi, the report said the move has been prompted by their disappointment over the PM’s crackdown on crony capitalists.

The Ambit report also launched a spirited defence of the PM and talked about its "growing conviction that the PM is prioritising a clean-up of the system over pursuit of near-term GDP growth”. The report repeatedly quotes “sources close to the PM” as saying that Modi has got multi-decadal ambitions and will not be panicked into generating short-term results which could compromise his longer-term goals.

Claiming that the findings are a result of the research team’s repeated visits to Delhi and other state capitals, Ambit made other startling allegations against a section of Indian companies, without naming any. “The forthcoming Black Money Bill seems likely to result in an exodus of Indian businessmen seeking residentship abroad. We have already heard about promoters of several prominent small-midcap companies who have taken tax residentship abroad in the past few weeks. Also, a significant proportion of white collar professionals working in India for MNCs are contemplating leaving the country,” the report said.

The sheer lack of clean and capable civil servants, public sector chiefs and contractors means that public sector and government capex growth will disappoint in FY16, the report said. “Our sources in Delhi say that the government has realised that if it hastily kicks-off major capex projects without cleaning up the ecosystem of corrupt officials and bent contractors then it will simply perpetuate the rot that had set in over the past 10 years”,” Ambit said..

Asking everybody to be prepared for a short-term pain, Ambit cut its FY16 Gross Domestic Product Growth estimate to 7% from 7.5% estimated by it in March.

Terming it as the “PM’s detox diet for India”, Ambit said the clean-up has four facets: pressurising crony capitalists and contractors into re-thinking their traditional approach to rigging the system; attacking the subsidy fraud through Direct Benefits Transfer (DBT) and use the Aadhar as a means of identification; pressuring civil servants and public sector company chiefs to deliver in their day job and desist from graft and attacking the “black economy” which has acted as a medium of trade in the murky world.

Macquarie Capital has come out with a note titled "Modi Meter - One year later: 7/10". The rating is much higher than what corporate CEOs would give the government. Authored by Rakesh Arora & Arun Bhattacharya, the report states that the Modi government is a study in contrast to the UPA government, thanks to its decisive action, transparency and development focus.

Like Ambit Capital, Macquarie's Arora too says that the government has done away with crony capitalism by moving all approval processes online, introducing an auction system for resources and focusing on improving ease of doing business. Macquarie Capital says: "Corporates that are used to receiving doles and fiscal incentives are finding themselves thrown at the deep end of the pool and tackling competition to survive. However, the govt’s efforts to ease land acquisition has been jeopardised by populist opposition."

Which among the below big firms in power, mining, metal & infra sectors would be attempting to strangle the country's economic output ?. Any ideas
- JINDAL (Power, Cement, Steel and etc) - A true blue congress politician run business organization.
- Reliance (woh bada bhai ka Oil refining & exploration business aur uski amreeki Shale oil fields investments)
- Reliance ADAG (woh chota bhai ka Power, Road Infra aur Cement business) ?
- Vedanta group (mining, zinc, oil exploration ) ?
- Essar (oil refining, steel & ports business) ?
- Aditya Birla group (cement & aluminium - but doesnt seem like a company that would play politics with central govt ) ?
- GMR / LANCO / GVK ( Andhra Pradesh origin promoters - all in power, airport, road infrastructure sectors and riding on large debts)
- HCC (Hindustan Construction Company of Lavasa fame ... but primarily a company similar to ECC type division of L&T)
- Punj Lloyd (This is an infra company that is just about crawling out of its bad days) ?
- DLF (just a reality company - right ?)
- Jaypee (Debt ridden with power, cements and road infra involvements)

Power, Infra, Metal & Mining PSUs (that NDA is attempting to set right to achieve more productivity)
- NTPC, NLC, NHPC, NPCIL and a few more PSUs are in Power production side
- Powergrid in Power Transmission infra sector
- SAIL is in Iron & Steel (along with Tata)
- Coal India is in Coal mining
- NMDC, NALCO are in Iron ore & Alumunium production
- ONGC, HPCL, OIL, BPCL in oil & gas production

Unfortunately - No big PSU company seem to exist in Cement production side in India but there are lots of MNCs in the same area.

I am personally unable to call companies belonging to Tata's, L&T, Adani Power and etc as those private sector corporates which might be trying to hit back at the NDA for their closing of avenues to bribe & collect favourable project conditions and sleep their way to profits.

hanumadu · Post by **hanumadu** » 20 May 2015 23:57

A few major power, infrastructure, metals & mining companies are planning to consciously hold back capital expenditure to “create an economic slowdown”, according to a report by Ambit Capital Research released on Wednesday. Quoting sources close to Prime Minister Narendra Modi, the report said the move has been prompted by their disappointment over the PM’s crackdown on crony capitalists.

This is the chance for honest companies not afraid of competition to leap frog over the crony capitalists.