Indian Economy News & Discussion - Aug 26 2015

Gus · Post by **Gus** » 29 Dec 2015 09:11

i did not even know that we have a path to citizenship for total foreigners that are non-PIO descent, non-marriage to PIO folks

we probably need a PR program that can tax them on their home country as well

Picklu · Post by **Picklu** » 29 Dec 2015 10:05

Mulla Suraj and other economy gurus,

Would like your opinion on this: http://forums.bharat-rakshak.com/viewto ... 0#p1957170

Based on your feedback would send a mail to PMO

Picklu · Post by **Picklu** » 29 Dec 2015 16:16

Picklu wrote:Mulla Suraj and other economy gurus,

Would like your opinion on this: http://forums.bharat-rakshak.com/viewto ... 0#p1957170

Based on your feedback would send a mail to PMO

On further thinking:

I think we need to change our current deductions to 2 parts - a standard deduction and a point based one

Apply a limit like Rs 2 lakh per anum for standard deduction. Anybody earning below this should be in 'Non-Taxable' category and above this, should get this much as standard deduction from their taxable income.

On top of this, I think the following points based deduction should be applied

a. 2 points for 'non-taxable' spouse
b. 1 point each for 'non-taxable' unmarried kids below 21 years provided spouse of assessed is also non-taxable - capped to max of 2 pts irrespective of number of kids the family have
c. 1 point if assessed is not male
d. 1 point if assessed is senior citizen
e. 1 point if the 'non-taxable' spouse of assessed is senior citizen.

Use self-declaration for points but also get the pan and aadhar for assessed as well as family members for verification. Have positive bias towards assessed; allow points even if qualified for a second within the financial year.

For each point, allow Rs 25k deduction provided the income of the assessed is less than some cutoff limit - say 25 lakh. So, mostly people would have at the most 4 points but in very rate cases it can go upto 7 as well.

Based on this, a single income family of husband, wife and 2 kids get 3 lakh as total deduction but a single income unmarried person gets 2 lakh as total deduction. For double income couples, if both are taxable, the deduction is total 4 lakh. Single income family with income more than 25 lakh do not get the pt based deductions and gets 2 lakh as total deduction.

The other rebates and slab limits can be changed without changing any fundamental rules of application.

I think going into this point based deduction system will make the indirect tax code more tuned to social norms and hence more acceptable politically. This makes removal of various subsidy types(LPG, food, kerosene) a bit more palatable to the people since giving out these categories for various points create the optics that the govt is there for everyone based on their economic condition.

Also, needless to say, provides tax relief to the needier section of the society. It has been a common grouse in recent times that the tax code does not differentiate between double income and single income families. The percentage of double income families have increased in the society in the last decade or so and hence the section benefiting from having one standard deduction is not insignificant. I know for sure that both US and Australia follows similar point based tax relief, so this is not something new.

Given the current proposal, single income families with 10.5 lakh total income would not get subsidy but double income families with 19.5 lakh total income will continue to do so. The LPG subsidy is peanuts but when food, kerosene, various incentive schemes etc comes into picture, the amount would not be so small.

Gurus, any comment? Anyone knows if any such proposal presented to finmin? Budget time is coming

Suraj · Post by **Suraj** » 30 Dec 2015 00:09

Doesn't sound much different from what the US income tax system has. Go ahead and send it. You have nothing to lose

Suraj · Post by **Suraj** » 30 Dec 2015 00:26

Investment in an Indian start-up every 8 hours

Indian start-ups raised $5.5 billion (Rs 36,000 crore) from venture capital (VC) firms and angel investors in 1,096 deals during 2015, as they looked to participate in the country’s economic growth story, according to VCCEdge, the research arm of online publisher VCCircle that tracks start-up funding.

Nearly two-thirds of the investments or 632 deals were made by angel and seed investors, pitching in with small funding in the initial stage of the start-ups. Angel and seed investors funded $313 million in 2015. VC investments stood at $5.18 billion in 464 deals, said the study reported on techcircle.in. In fact, there was an investment in an Indian start-up every eight hours. The share of private investments contributed by angel and VC firms in India rose to 25.4 per cent in 2015, compared to 17.2 per cent during 2014. Private equity investments in India clocked in at $11.8 billion, lower than its peak of $12.5 billion in 2012.

Paswan writes to commerce ministry to expedite pulses import

Expecting a second consecutive year of low production which might lead to spurt in pulses prices, food minister Ramvilas Paswan on Tuesday said he has asked the commerce ministry to direct trading firms such as MMTC and STC to quicken the process of imports in order to tide over any possible shortfall.

Paswan's request comes in the wake of reports that price of pulses - mainly arhar and moong - might once again flare up in 2016 because of little improvement in domestic production as compared to 2015.

Officials said pulses production in 2015-16 (July-June) is expected to be much below the earlier estimate of around 18 million tonnes because of poor sowing of rabi crops, mainly masur. Production in 2014-15 was 17.38 mt almost 10 per cent less than the year before.

The missive comes days after the Union Cabinet cleared a proposal to import around 10,000 tonnes of pulses over the next few months.

Global sovereign, pension funds to invest in NIIF: Jaitley

Finance Minister Arun Jaitley said on Tuesday that several sovereign funds and pension funds from Russia, Singapore, UK and UAE were willing to participate in the Rs 40,000-crore National Investment and Infrastructure Fund (NIIF).

The NIIF, announced in the 2015-16 Budget as part of the government’s major infrastructure push this year, has been set up and its chief executive will be likely be finalised by January-end.

“We hope the CEO selection process is completed over the next few weeks,” Jaitley said after the first meeting of the NIIF Governing Council.

While the government will invest Rs 20,000 crore in NIIF from the Budget, another Rs 20,000 crore is expected to come from private investors. Market regulator Securities and Exchange Board of India (Sebi) has approved the setting up of the NIIF. It has been registered with Sebi as Category II Alternative Investment Fund (AIF) on Monday.

The NIIF would invest in greenfield, brownfield and stalled projects. The finance ministry had in October formed a selection panel, headed by Economic Affairs Secretary Shaktikanta Das, for selecting a CEO for the Investment Management Company under the NIIF.

The Investment Management Company would be responsible for taking investment decision of NIIF corpus.

RBI panel for direct transfer of cash, abolishing farm subsidy

A Reserve Bank of India (RBI) committee on financial inclusion has suggested that the government should transfer cash directly to persons instead of giving subsidies, and should replace interest subvention on agriculture loans with affordable universal crop insurance scheme.

The committee on medium-term path on financial inclusion, headed by RBI executive director Deepak Mohanty, also recommended linking credit accounts with unique identification number, or Aadhaar number, and share information with credit information companies to enhance stability of the credit system and improve access.

The committee was set up in mid-July after Prime Minister Narendra Modi told RBI in its 80th anniversary that a road map should be built to include 90 per cent of India’s unbanked population in the financial fold.

The group opined that the most efficient way for an effective financial inclusion is direct cash transfer.

suryag · Post by **suryag** » 30 Dec 2015 07:17

am zero on economics however how would the following sound, aplogise in advance
1. in the budget pass a rule that all salaried class with Tax deduction at source will get their full tax money after three years, so the tax you pay today will come back to you after three years. The tax money directly goes to infra and investment bonds
2. invest a large part of the bond money on infra building and raise the economy pace, specifically target intra city roads and infrastructure. Most of the salaried class in big cities spend 4 hours on road to and fro from work, the situation is really pathetic. Cutting down this time to 1.5 hrs in itself will have a big impact on GDP and happiness quotients(agreed any infra project will take atleast 2 years to get through) for example the kundalahalli gate in BLR or the HAL road
3. Part of bond money give it as loans to industries to fund their expansion of course with iron clad guarantees on return
4. part of bond money to be given to VCs so that startups can be seeded
5. sell the bonds to others and the Govt gets to keep a part of the profit on bonds as the money invested starts making more money

end result a scheme like selling treasury bonds but we will have enough money to kickstart the economy and the middle class will also be happy as they don't pay tax

Yagnasri · Post by **Yagnasri** » 30 Dec 2015 09:28

Interesting take from Jaggi guru.

http://swarajyamag.com/biz/india-incs-d ... and-focus/

http://www.livemint.com/Companies/ny8Wp ... rates.html

From personal knowledge I can say that the problems of major groups is quite extensive and much more serious than we know.

Picklu · Post by **Picklu** » 30 Dec 2015 10:32

Sent the below, let's see.

-------------------------------------

Change income tax deductions to 2 parts: standard deduction (3 lakh) and a point based one (when income below Rs 25 lakh pa) for
a. 2 pts for 'non-taxable' (i.e. earning less than 3 lakh pa) spouse
b. 1 pt each (max 2 pt per tax-payer) for 'non-taxable' unmarried kids below 21 years when spouse 'non-taxable'
c. 1 pt for non-male tax-payer
d. 1 pt for senior citizen tax-payer
e. 1 pt for 'non-taxable' senior citizen spouse
with Rs 25k deduction per pt. Helps Single Income Families more.

Yagnasri · Post by **Yagnasri** » 30 Dec 2015 10:47

All this things will not work in reality. In our nation there are many cases wherein divorces were taken to save property from being acquired under land ceiling acts. There is no use on taxing people with 3 Lacs income which comes to 25k per month which is not sufficient for living in any major city in India and purchase a very small flat of your own.

What we need is return of wealth tax with 1% on all the no agri immovable properties and 1% of the shares, gold, precious stones etc. There can be exception from the tax just like that of income tax exception. We can net lot of money from urban propertied and landed class.

Suraj · Post by **Suraj** » 05 Jan 2016 02:36

UDAY has 15 takers, Jharkhand first state to sign MoU

Mineral-rich but energy-deficit Jharkhand will become the first state to sign a memorandum of understanding (MoU) with the Centre, on Tuesday, for the Ujwal Discom Assurance Yojana (UDAY) reforms for state-owned power distribution companies (discoms).

The MoU is a tripartite agreement is between the state government, the power distribution companies and the Union ministry of power.

With this, the total number of states that would be joining UDAY will become 15. The other states that are on board UDAY are Andhra Pradesh, Jharkhand, Punjab, Jammu & Kashmir, Himachal Pradesh, Uttarakhand, Rajasthan, Gujarat, Haryana, Chhattisgarh and Madhya Pradesh.

Besides, four major states — Uttar Pradesh, Bihar, Maharashtra and Odisha — have already given their in-principle approval to join UDAY.

“Close to 90 per cent of the discom losses is under reform plan with these four major states joining UDAY,” said Piyush Goyal, minister of state for coal, power and renewable energy.

The Centre is hopeful that 21 states would join UDAY by March 2016. For the states that sign up for UDAY, one of the first steps is to take over 75 per cent of discom debt as on September 30, 2015 over two years - 50 per cent in 2015-16 and 25 per cent in 2016-17.

Manufacturing PMI slips to 28-month low in December

India’s manufacturing activity shrank for the first time in two years in December as business conditions deteriorated on account of Chennai floods besides the persistently muted domestic demand, a private survey showed on Monday. The sustained weakness in economic growth combined with controlled inflation could prompt the Reserve Bank of India (RBI) to cut policy rates further.

Snapping the 25-month growth sequence, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI), compiled by Markit, fell to a 28-month low in December to 49.1 points from 50.3 in the previous month. The rate of contraction was the sharpest in seven years.

Work on $1-bn Chinese industrial park in Sanand to begin soon

Work on the $1 billion (over Rs 6,500 crore roughly) Chinese industrial park near Sanand in Gujarat is set to begin soon, China Development Bank (CDB) vice managing director Xiao Meng Zhen told the state government on Monday.

In a meeting with Gujarat chief minister Anandiben Patel to discuss the project, Zhen briefed the state government about steps being taken by the bank for setting up of the park and investments. A memorandum of understanding (MoU) was signed for the industrial park between CDB and Gujarat government during the Vibrant Gujarat Summit 2015.

China Development Bank will invest $1 billion to set up industrial park near Sanand in Gujarat. The bank vice-managing director met Gujarat Chief Minister and other officials to discuss the project.

Yagnasri · Post by **Yagnasri** » 05 Jan 2016 08:37

This is not good news for job creation and the entire MII mantra of NM. May be need to reduce the rate of interest further.
http://www.firstpost.com/business/all-e ... 70552.html

Suraj · Post by **Suraj** » 05 Jan 2016 12:42

The PMI data (which indicates either positivity or negativity in purchasing manager sentiment) is not exactly correlated with IIP data. PMI data is sequential in nature, while IIP data is Y-o-Y . One month data is too noisy to conclude anything out of; sequentially it is expected that December manufacturing sentiment will be negative due to the floods affecting output.

VKumar · Post by **VKumar** » 05 Jan 2016 22:34

India ranks in the top 3 producer of very many agricultural commodities, yet has amongst the lowest food processing industry in the world. In the past decade, Indians have begun to enjoy processed food but unfortunately the Food Safety Authority of India, has such ancient food standards that only a very limited range of processed foods can be produced. If the standards were to modernise, such as per Codex Alimentarius, the food processing industry would boom. Wastage of food would be reduced, rural employment would be generated, processed food exports would become significant. Processed food would be another IT industry, if only FSSAI would modernise. Ask the Ministry of Food Processing Industry, if you can, and they will confirm this.

KrishnaK · Post by **KrishnaK** » 06 Jan 2016 02:49

The government’s target is to move to 8% growth first and then exceed it: Shaktikanta Das, Economic Affairs Secretary

Will india make it – 2016? How to revive Investment

Column: The crisis of credibility

A_Gupta · Post by **A_Gupta** » 07 Jan 2016 03:59

"India services PMI hits 10-month high in December | Reuters"
http://www.firstpost.com/fwire/india-se ... 73420.html

Growth in India's services firms rose at its fastest pace in 10 months in December as demand picked up, a business survey showed on Wednesday.

The Nikkei/Markit Services Purchasing Managers' Index surged to 53.6 in December from November's 50.1, marking a sixth month above the 50-level that separates growth from contraction.

That should provide some comfort to policymakers after a related survey showed India's factory activity contracted for the first time in more than two years on dwindling demand.

But demand for Indian services was up in December.

Suraj · Post by **Suraj** » 08 Jan 2016 01:04

Expect big rural push in Budget

In a move to boost rural consumption and alleviate distress in the hinterland, the government is likely to give an allocation push in Budget 2016 to programmes on irrigation, rural roads, soil health cards and agriculture.

According to officials, the Union Budget for 2016-17 could see a significant increase in allocation to marquee programmes like the Pradhan Mantri Krishi Sinchai Yojana, Rashtriya Krishi Vikas Yojana, Pradhan Mantri Gram Sadak Yojana, and the one to provide soil health cards to the country's 140 million farmer families over three years. The increase is likely to be over the allocations in 2015-16 (according to the revised estimates).

Centre hopes to commission 47% of 258 stalled projects in 2015-16

* A majority of the projects expected to be commissioned this year will be in the power sector numbering around 30, followed by roads at 20 and petroleum at 10
* 87 projects are expected to be commissioned after March 2016, while 51 projects do not have any firm commissioning date
* The total investments in stalled projects have come down from around 8-9 per cent of GDP (according to the old series) three years back to around 7 per cent as on December 2014

Top Indian cities absorb 38 mn sq ft office space, highest in 5 years

The country’s top seven cities absorbed 38 million sq ft of prime office space last year, the highest till date, says a new study.

The absorption in 2015 is 18 per cent higher than the previous year.

The annual office demand was led by Bengaluru with a 32 per cent share of the total absorption across leading cities during the year, followed by the National Capital Region with a 23 per cent share. Suburban and peripheral office districts of major cities attracted steady occupier demand in the fourth quarter of 2015. Prominent micro-markets included Gurgaon in Delhi-NCR; Powai, Vikhroli, Kanjurmarg and Thane-Navi Mumbai in Mumbai; the Outer Ring Road (ORR) in Bengaluru; the IT Corridor in Hyderabad; the Old Mahabalipuram Road stretch along Perungudi in Chennai; Viman Nagar in Pune; and Salt Lake Sector V in Kolkata.

According to the findings of CBRE’s latest report, India Office Market View for Q4 2015, absorption of Grade-A office space across key cities in India witnessed a quarterly growth of approximately 26 per cent during the October-December period, translating into more than 12 million sq ft of leased office space.

vina · Post by **vina** » 08 Jan 2016 05:09

Well folks, it is tipping point for the Indian economy now. Either it falls into the side of safety and growth it tips back into the abyss. Which way it goes will be totally dependent on what this govt does.

Now, the govt's track record in the two roughly two years it has been in office has been very mixed and hugely disappointing to say the least. There has been next to no reforms, the govt got lucky with commodity prices and has done tinkering around to unclog stuck projects.

On the ground it has been largely the same. Even basic stuff which are purely administrative in nature, doesnt require any legislative actions whatsoever, have not been done. In short very little has happened on the ground despite all the tall talk.

Rather than act, the Govt repeated the exact same mistake of UPA2 of trying to match the election cycle with economic policy lethargy and broke no new fresh ground. There was no restructuring, no reforms , no major break through happenings or change in direction (for eg, closing Air India would have had absolutely no effect on any of the state elections, it would be a non issue for eg in Bihar!). Rather than sitting with the Congress and getting the GST bill done as the first order of business, the govt was absolutely churlish until the Bihar elections with the Congress.

Still, the govt can do a huge lot of things. First, the deficit NEEDs to be NARROWED not postponed or enlarged as it seems the politicos want. India still suffers from high inflation . That HAS to be killed and killed forever. There needs to be greater aggression and movement in farm and urea subsidies via direct transfer. Same thing needs to be done with power. Unless power is totally billed and accounted for, and free blanket power is done away with, this restructuring business is a dead end.

The Congress govt gave the Aadhaar /direct transfer mechanism to this govt (despite the best efforts of Pranab Mukherjee to kill it, if there ever was a case of the old adage of an incompetent getting kicked upstairs holds good, it must be Pranab Mukherjee becoming President. That guy has had the distinction of wrecking the Indian economy whenever he was FM, including under Indira Gandhi) . This Govt has pushed bank accounts to everyone .

Subsidies must be via direct transfers. The terrible Indian habit of interfering in product markets and it's pricing and the absolutely disastrous cross subsidy (railway train, model of cross subsidy of sleeper and unreserved) model of the Baboons must be canned forever. That is the only way out of the senseless economic mess of the past 40 years created by the Nehruvian economic Stalinism and the lingering effects of not dismantling it fully.

disha · Post by **disha** » 08 Jan 2016 05:19

^^ Vina Saar., really - how much burnol do you need?

You have forgotten the remarkable change in the coal production., energy generation and reaching out to some 16000 villages (by 2017) where electricity never reached before. And of course the massive turn around in road building.

So even if the government does not do anything further., the items above itself are major major major policy moves.

Hari Seldon · Post by **Hari Seldon** » 08 Jan 2016 05:19

vina wrote:On the ground it has been largely the same. Even basic stuff which are purely administrative in nature, doesnt require any legislative actions whatsoever, have not been done. In short very little has happened on the ground despite all the tall talk.

Some concrete examples would be nice rather than vague-speak. Can then tweet all an sundry - especially the mantri and PMO handles repeatedly with them. At least. Only.

Suraj · Post by **Suraj** » 08 Jan 2016 07:47

Note to posters: Please don't feed trolls.

Tribal ministry relents over Forest Rights Act

Setting a precedent for the entire country, the Union tribal affairs ministry has revised its views to re-interpret the Forest Rights Act (FRA) and allow the Maharashtra forest department to get control back over forest management and a grip on the lucrative trade worth crores in forest produce such as tendu leaves and bamboo. The ministry had previously concluded that only tribals and other forest dwellers had rights to manage their forests under FRA.

But after a meeting in November at the Cabinet Secretariat between the environment and the tribal affairs ministries, the latter has made a turnaround and re-interpreted the legal provisions of FRA to give the state government control back over the forests with some conditions. The move also comes after personal intervention by two Union ministers from Maharashtra, Nitin Gadkari and Prakash Javadekar. The latter is the environment and forests minister, which gave his ministry a say in the issue. Gadkari does not hold a portfolio that is involved in issues of forestry.

In 2014, the state government had passed regulations that ensured its forest department retained control over forest management, which includes the large-scale trade and sale of forest produce. The tribal affairs ministry found this in violation of FRA, which empowers tribals and other forest-dwellers to hold sole rights to manage the forests, including sale of forest produce in areas where they have traditional claims. The tribal affairs ministry repeatedly told Maharashtra that its rules were prima facie in violation of and irreconcilable with the law.

This could now open the Pandora’s box with some states such as Madhya Pradesh having already followed suit to put similar regulations in place and states such as Jharkhand, Chhattisgarh and Odisha working towards such rules as well.

Railways behind freight target due to tepid demand from core industry

Badly hit by the tepid growth of core industry, Indian Railways is estimating annual freight traffic of less than 1,110 million tonnes (mt), against the target of 1,190 mt.

"The growth expected in various core sectors (steel, cement etc.) has not come. Thus, we would be closing at much lower number," said a senior government official. According to the government data, core industry growth in April to November period in 2015-16 was only two per cent, compared with six per cent in the same period a year ago.

While presenting the 2015-16 budget, Railway Minister Suresh Prabhu had said, "The freight traffic is pegged at an all time high incremental traffic of 85 MT, anticipating a healthier growth in the core sector of economy, specially where rail co-efficient is high and by tapping full railway potential to cater maximum to demand-side."

Railways has transported 816.52 mt of goods between April and December 2015-16, compared with 808.57 mt in the corresponding period last year. "This is moderate growth. We wanted robust growth," said a government official.

In April-December period, freight traffic fell in cement sector by 3.8 mt , food grain sector by 7.64 mt and container services sector by 2.3 mt . "70 to 80 per cent of food grain is moved by Food Corporation of India (FCI). Food grain is lifted from Punjab and Haryana and moved to southern region, northeast region, etc. Earlier, we were moving around 900 trains every month (30 trains per day)… This has gone down on certain months to 400 trains per month because food grain is being procured locally by the state," said the official.

In the same period, railways saw an increase in freight traffic by one mt from finished steel, 0.6 mt from petroleum products, 2.25 mt from iron ore and 1.3 mt from the raw material used in steel plants.

India's luxury market to cross $18.3 bn by 2016: Assocham

Increasing brand awareness among the youth and higher purchasing power beyond big cities is likely to boost India's luxury market around 20% to $18.3 billion this year, says a study.

The current size of the country's luxury market $14.7 billion, says a Assocham study.

"The factors that have fuelled the luxury industry's growth are the rise in disposable income, brand awareness among the youth and purchasing power of the upper class in Tier II & III cities in India," Assocham Secretary General D S Rawat said.

Five star hotels and fine-dining restaurants, electronic gadgets, luxury personal care items, and the jewellery sector have performed well in the year 2015 and are expected to grow by 30-35% over the next three years, the study noted.

Big ticket spends on items like luxury cars mainly in the SUV section is likely to continue, with an estimated growth projected at 18-20% over the next three years, driven by consumption in smaller towns and cities, the study added.

Moreover, with the luxury market expected to grow at over 25% year on year, Private Equity investments (PE) in the respective segment is expected to increase and support the enhanced size of the Indian luxury market.

India's exports may dip 13% to $270 bn in 2015-16

India's exports are expected to decline about 13% to $270 billion in the current financial year due to global demand slowdown and fall in crude oil prices, a top official said today.

The country's merchandise exports had aggregated $310.5 billion last fiscal.

According to an official, Commerce Secretary Rita Teaotia in her presentation during an interaction with the industry chambers including CII and Ficci stated that it would be difficult for India's exports to exceed $270 billion.

Teaotia has also stated that imports during the fiscal would stand around $390 billion. So the trade deficit would aggregate at $120-125 billion in 2015-16.

vina · Post by **vina** » 08 Jan 2016 09:47

You have forgotten the remarkable change in the coal production., energy generation and reaching out to some 16000 villages (by 2017) where electricity never reached before. And of course the massive turn around in road building.

Didn't you read what I wrote about subsidies in power ? What is the point in doing all this if you are going to bankrupt the exchequer in any case ? Many SEBs are not able to lift the power that can be generated resulting in plants getting idled, because they are well, bankrupt already !

The Govt needs to put in a good fool proof DBT via bank accounts in place. All , including the state govts must be made to use that for all the "benefits" they dole out and be forced to stop interfering in products and services markets.

Prasad · Post by **Prasad** » 08 Jan 2016 11:15

Suraj wrote: Tribal ministry relents over Forest Rights Act
Setting a precedent for the entire country, the Union tribal affairs ministry has revised its views to re-interpret the Forest Rights Act (FRA) and allow the Maharashtra forest department to get control back over forest management and a grip on the lucrative trade worth crores in forest produce such as tendu leaves and bamboo. The ministry had previously concluded that only tribals and other forest dwellers had rights to manage their forests under FRA.

But after a meeting in November at the Cabinet Secretariat between the environment and the tribal affairs ministries, the latter has made a turnaround and re-interpreted the legal provisions of FRA to give the state government control back over the forests with some conditions. The move also comes after personal intervention by two Union ministers from Maharashtra, Nitin Gadkari and Prakash Javadekar. The latter is the environment and forests minister, which gave his ministry a say in the issue. Gadkari does not hold a portfolio that is involved in issues of forestry.

In 2014, the state government had passed regulations that ensured its forest department retained control over forest management, which includes the large-scale trade and sale of forest produce. The tribal affairs ministry found this in violation of FRA, which empowers tribals and other forest-dwellers to hold sole rights to manage the forests, including sale of forest produce in areas where they have traditional claims. The tribal affairs ministry repeatedly told Maharashtra that its rules were prima facie in violation of and irreconcilable with the law.

This could now open the Pandora’s box with some states such as Madhya Pradesh having already followed suit to put similar regulations in place and states such as Jharkhand, Chhattisgarh and Odisha working towards such rules as well.

This is a very very slippery slope. I'm all for development and removing jairam tax type of obstacles but tribal rights and ownership/partnership(?) in areas traditionally held by them. Without rehabilitation or appropriate compensation or alternate arrangements for whatever disruption is brought to them and the forested areas in the same period as the disruption itself. Same with monies generated from whatever trade is done using resources from these forests. I'd assume a portion is due these tribals.

Prasad · Post by **Prasad** » 08 Jan 2016 11:16

Vinaji,
have you by any chance taken a look at the discom bankruptcy/rehab program UDAY?

vina · Post by **vina** » 08 Jan 2016 11:29

have you by any chance taken a look at the discom bankruptcy/rehab program UDAY?

I have read about it. I see assertions by Goyal that it wont be a "repeat" of the earlier restructuring where the SEBs still went bankrupt anyways.

The trouble with the power sector is this.

1. State govts in pursuit of vote banks want to dole out free /subsidised power to farmers and certain other groups.
2. They don't have the cash to dole out this subsidy
2.1 What they do is to put that subsidy on the backs of the SEBs.
2.2 The state govts put the subsidy burden on the SEBs
2.2.1 The State Govts are hence financially unviable. They try to make this up by doing some cross subsidy. i.e. industry and commercial and some classes of household customers pay some very high rates of power. Others get free power / massively subsidised power , but are unviable all the same, resulting in long term underinvestment and lack of capacity creation and investment leading to brown outs and black outs.
2.2.2 The SEBs get loans from the central power finance companies. That puts the deficit burden up the chain and everyone gets shafted.

So basically it is this. The subsidy should be accounted for and paid by the govt out of it's budget. It cannot and must not be financed via deficits on someone else's books. That is the simple point . I am not sure UDAY addresses this fundamental point. If it does good. If else, it is a repeat of the same things that happened forever . Sector by sector, same case (including water supply, or any other public good that is provided by the state and local govt) and that is the reason why it is so dysfunctional and broken and sub par.

kvraghav · Post by **kvraghav** » 08 Jan 2016 11:35

^^
But even now, isn't all the DISCOMS liabilities with the state government. What UDAY does is to move it from the DISCOM head to State Head. Even though overall liabilities remain the same, the states will have to get more serious and reign it in since after the third year, it will effect their financials solvency when they try to keep the debt within mandated 4% of the GDP.

Gus · Post by **Gus** » 08 Jan 2016 12:27

disha wrote:So even if the government does not do anything further., the items above itself are major major major policy moves.

those who are so confident that everything is going to crapper..should put their money where they mouth is and bet against the economy and tell us all a few years later how they were right

Suraj · Post by **Suraj** » 08 Jan 2016 13:18

vina: stop trolling in this thread . I will quote you from two separate posts:

A definitive:

There has been next to no reforms

Followed by an admission of lack of knowledge of reform:

I am not sure UDAY addresses this fundamental point.

It's not for others to prove you wrong after you come here trolling with flamebait on a subject you later confess you yourself don't know enough about . Consider this an informal warning .

Supratik · Post by **Supratik** » 08 Jan 2016 17:21

UDAY shifts the fiscal responsibility to state govts. So if you want to give free power like Amma in TN or SAD in Punjab you do it on your own books. I don't know if Vina wants the central govt to put a gun on the head of CMs to stop them from giving free power. That kind of reform is not possible.

Hari Seldon · Post by **Hari Seldon** » 08 Jan 2016 18:13

RBI Governor Raghuram Rajan & other bankers lead campaign to clean up banking system

MUMBAI: When Raghuram Rajan declared after taking charge as the governor of Reserve Bank of India ( RBI) that promoters have 'no divine right' to continue running a business after messing it up, many thought it was just another rhetoric from a new administrator.

The reality is beginning to bite. In 2016, many like the Thakurs of Jyoti Structures, Khaitans of Electrosteel and even well-known names like Mallyas or Ruias run the risk of losing empires in case of defaults, thanks to Rajan following up on his words with action. Banks tightening the screws on defaulters has forced many to put units on the block.

Given the relentless pursuit by bankers, valuation expectation of promoters are also getting realistic and transactions are beginning to happen. Go-getter bankers such as Arundhati Bhattacharya of State Bank of India, Chanda Kochhar of ICICI, Shikha Sharma of Axis Bank, PS Jayakumar of Bank of Baroda and Bill Winters of Standard Chartered Bank and are making the most of the 'freedom' from the political class, whose meddling has reduced, say bankers.

Well, methinks the bolded part is a hopeful sign (and yes, a wee bit of credit does go to the govt of the day). Bank NPAs remain a huge systemic risk in our economy.

vina · Post by **vina** » 09 Jan 2016 04:48

UDAY shifts the fiscal responsibility to state govts. So if you want to give free power like Amma in TN or SAD in Punjab you do it on your own books. I don't know if Vina wants the central govt to put a gun on the head of CMs to stop them from giving free power. That kind of reform is not possible.

It doesnt. What it shifts is the EXISTING liabilities from the Discoms to the State Govt for which they will issue bonds to pay back . Now what if the state govts default on their bonds at a later date (which I assure you will happen).. The "price cuts" on power under Uday will come from operational/systemic improvements, and reduce the cost of borrowing by the SEBs. Yes. But it cant bring the cost of power to zero.

All I am saying is , sure of Amma and SAD want to give free power, do so by all means. But pay for that from the budget and transfer the funds via the DBT. Dont interfere with product pricing of power . Very easy way to do that. Stop loans to the discoms either from banks or the PFCs /Infra companies if state govt dont play ball.

kvraghav · Post by **kvraghav** » 09 Jan 2016 11:27

That's what will happen vina. The independent regulator will keep increasing the price and if state govt wants to give free stuff, they need to pay like Delhi govt had to do if u sign up to Uday. The existing loans will be taken over by states and they won't be allowed to take loans further till they get it below 4% and for this, they have initial 3 years. Example is Karnataka govt has taken a loan of nearly one lakh crores recently and it is OK as long as they are below the 4% mark. Its not about default. Its about not being allowed to take loans further. Govt needs money even if they do not do development.

JTull · Post by **JTull** » 09 Jan 2016 13:21

This fixes a structural problem that has state govts. uncontrollably feeding the national fiscal deficit and total debt used by rating agencies to determine India's rating. This has direct bearing on the rates Indian govt. and private sector have to pay for their debt. China, being a centrally driven economy from the beginning, had tight control over this and were able to cheaply finance it's growth. Current 10Y Chinese yield is about 2.92% compared to India's 7.74%. So India is paying almost 3 times.

This kind of structural reforms are needed to prevent local politicians from giving away entire nations wealth.

Someone has already mentioned coal block auctions. Lakhs of crores will be generated by a transparent process.

But what I really like are the village toilet scheme by involving private companies. CSR is a huge part of global companies and by encouraging private CSR initiatives govt. has achieved at a fraction of the cost (to anyone) as any govt. budget would have been eaten up the layers of babudom.

Same is with the Jan Dhan Yojana. Great initiative for financial inclusion and rural empowerment. There needs to be a way to provide subsidies directly rather thru the corrupt layers of the govt. 20 crore accounts have been opened which total hold Rs 30,000 crores (Link) = only Rs 1500 per account. But not only this provides direct access, it has cheap medical and life insurance components. Then this volume of deposits does wonders for the Banking system by greasing the economy even more (and cheaply).

vina, if these are not out-of-the-box structural reforms then what are? Another Indira/Rajiv Gandhi yojana to finance the greed just before elections? You perhaps read the National Herald to understand what constitutes structural reform? Like in cricket a bad ball must be hit to score runs, lower oil prices must be used too.

vina · Post by **vina** » 10 Jan 2016 11:28

Like in cricket a bad ball must be hit to score runs, lower oil prices must be used too

And pray, what is it being used for ? Enhanced indirect taxes are being used to plug the gap in the unrealistic direct tax expectations to plug fiscal deficit targets (which have anyway been relaxed).

Okay. Let me drill it down to the basics. It is the quality of spending financed by the deficit of the NDA vs UPA. Yes , the NDA's spending quality is better, but not by a earth shaking margin and not anything that is fundamentally changing the nature of spending from un productive handouts to actual productive spending that is creating assets (both hard and soft).

Suraj · Post by **Suraj** » 10 Jan 2016 12:59

vina wrote:not anything that is fundamentally changing the nature of spending from un productive handouts to actual productive spending that is creating assets (both hard and soft).

Wrong.
Modi triples spending on roads, construction stocks soar
India to spend $137 billion to upgrade railways
Modi's infrastructure splurge revives investment in India
Coal India output up 9% year on year

Unfortunately you're nothing more than a sophisticated troll. See you in a month.

JTull · Post by **JTull** » 11 Jan 2016 14:19

vina wrote: Okay. Let me drill it down to the basics. It is the quality of spending financed by the deficit of the NDA vs UPA. Yes , the NDA's spending quality is better, but not by a earth shaking margin and not anything that is fundamentally changing the nature of spending from un productive handouts to actual productive spending that is creating assets (both hard and soft).

Do you have data supporting your assertions? Do you even understand quality of public spending?

Also, any economic benefit of lower oil prices must be seen in context of it's production competitors. Energy prices are lower for all, so cost of goods imported from them are also lower. Then there is a question of certain country lowering it's exchange rate when it's exports start dropping and keeping them fixed when they were building huge reserves.

Austin · Post by **Austin** » 11 Jan 2016 16:24

Check Prannoy Roy interview with Morgan Stanley's Ruchir Sharma , India seems to be in bad shape

Global Recession Arriving? 10 Big Trends For Economy

http://www.ndtv.com/video/player/ndtv-s ... eststories

Atish · Post by **Atish** » 12 Jan 2016 02:50

That ndtv interview is very confusing. How can growth be 7%, exports negative and corporate sales flat? Some growth can come from gvt spending and private capex, but 7%? What are we missing?

Suraj · Post by **Suraj** » 12 Jan 2016 02:59

AP signs MoUs worth Rs 1.9 lakh cr on second day

As many as 245 memoranda of understanding (MoU) with investment proposals worth Rs 1.9 lakh crore were signed on Monday, the second day of the three-day Partnership Summit being organised by the Andhra Pradesh government and the Confederation of Indian Industry (CII).

With this, the total investment commitments at the summit rose to nearly Rs 4 lakh crore. On Sunday, MoUs worth Rs 1.95 lakh crore, mostly from the energy sector, were signed. Among those signed MoUs on Monday include Jasper Chemicals, Amara Raja Batteries, Indian Oil Corporation, Dr Reddy's Laboratories, Walmart, Rashtriya Ispat Nigam, Petrogas, Future group, Spencer's, Arvind Lifestyle, Trimex group, Colgate-Palmolive, Thermax and Isuzu.

The Andhra Pradesh government signed 63 MoUs with small and medium sector players in the information technology (IT) sector with total investment of Rs 3,165 crore.

Chief minister N Chandrababu Naidu thanked the investors for reposing their confidence in his government and in himself by coming forward to sign the MoUs in a big way. The government is expected to sign a set of MoUs on the last day of the event on Tuesday.

Among the foreign investment proposals, Australia-based Queensland Coal Corporation signed an MoU to set up a 5,280-Mw thermal power project at an investment of over Rs 30,000 crore.

Andhra will become India's growth engine: Jayant Sinha

Assuring all support to Andhra Pradesh, Minister of State for Finance Jayant Sinha today expressed hope that the state will clock 14-15% GDP rate in coming years to become India's growth engine.

Addressing the CII Partnership Summit, he invited investors to participate in the development of Andhra Pradesh saying amongst the states, it was only second to Gujarat in the ease of doing business ranking.

"I am sure that Andhra Pradesh will become the economic engine for India certainly with the GDP growth rate at 14 or 15%... We at the Centre are determined to help and support you in every possible way," Sinha said.

Bullion body plans big boost to gold monetisation scheme

The Indian Bullion and Jewellers Association (Ibja) says it plans a big boost to the gold monetisation scheme announced by the prime minister before Diwali.

The scheme is yet to take off. Most banks, hallmarking centres and refineries are still in the process of signing the tripartite agreements needed. Consumers feel the process for depositing is tedious, as they have to go to hallmarking centres they are not familiar with, or which are not easily accessible.

Mohit Kamboj, the Ibja president, said: “We propose to set up 1,000 centres for promoting gold monetisation, using our member-jeweller network. These will on-the-spot assay the purity of the gold consumers want to deposit and also accept gold.” They were awaiting government approval for this, he said.

The centre will, under the proposal, issue a certificate, based on which a bank will open a deposit account. Gold will be deposited by the centre with a refinery’s vault, by earlier arrangement. As customer trust jewellers the most on gold jewellery and the latter will act as banks’ agents, this should push the scheme.

Customersare worried at queries on the source of jewellery. Kamboj says bullion dealers, jewellers and customers must learn to live with on-record transactions. “All government policies are now trying to bring off-market transactions on record. It is our duty to follow that, rather than trying to find fault and promote a parallel economy,” he said.

Domestic car sales rise 12.87% in December: SIAM

Domestic passenger car sales rose 12.87% to 1,72,671 units in December from 1,52,986 units in the same month a year ago.

Motorcycle sales declined 5.93% to 7,24,807 units last month from 7,70,519 units a year ago, according to the data released by the Society of Indian Automobile Manufacturers (SIAM).

Total two-wheeler sales in December declined 3.10% to 11,67,633 units as against 12,04,942 units in the same month last year.

Sales of commercial vehicles were up 11.45% to 56,840 units in December 2015, SIAM said.

disha · Post by **disha** » 12 Jan 2016 09:07

Atish wrote:That ndtv interview is very confusing. How can growth be 7%, exports negative and corporate sales flat? Some growth can come from gvt spending and private capex, but 7%? What are we missing?

There is a good reason why folks should not watch rNDTV.

The corporate sales are flat for certain corporates., particularly the ones which have grown too fast and diversified too much based on a debt binge. Exports are negative for certain commodities since the world over there is a downturn. For example if you are selling Bauxite or Iron ore., you are in serious trouble. Not just sales flat - but negative. And of course this pulls down the overall average of all corporates. But again if you are into value added aluminium or iron (for example selling steel for cars or even high grade steel) then you are in a sweet spot. Again rubber is going to be a problem., but again there are bright spots within Rubber industry.

What is happening is that "middle India" is buying. And buying big. The India that is not tracked in the rNDTV or any elite studio. The India which buys sachets of sun silk and uses lifebuoy and nirma. That India which foregoes clothes washer but buys refrigerators. Again this is not tracked by rNDTV and the bombay based eCONomists. And of course, education and health care and other services are ever growing sectors in India.

And then the government has increased its expenditure. GOI has started spending some @$90B on road building alone under various categories. You can see the activity of the metro projects thread. You can see the activity on the railways thread. Coal in itself is a stellar story. And that feeds into electricity. The demand/supply gap now stands at 2%. At one stage, all over India in December, the price per unit of electricity came in below Rs. 3/-. All this explains your 7% growth.

But wait., the story is not complete yet. As 2016 kicks in, with low commodity prices (iron ore, coal, oil, gas) - input prices will be low (for fertilizers for eg) which will lead to tame inflation and with all the capital building kicking in, the growth will zoom to 9-10%. It will trickle down to rest only in 2017/2018 time frame.

That is why, I have called out earlier that India is entering into a goldilocks phase - a phase for moderate inflation and high growth. Yes there are several things that can derail that goal. For example agricultural productivity. But if the farmers are smart, they can do what Gujarat and MP's farmers have done. Go for more crop per drop (or basically go the Israeli way of drip irrigation) and use the soil health cards.

Hence follow the news outside of rNDTV.

Aditya_V · Post by **Aditya_V** » 12 Jan 2016 09:24

vina wrote:
UDAY shifts the fiscal responsibility to state govts. So if you want to give free power like Amma in TN or SAD in Punjab you do it on your own books. I don't know if Vina wants the central govt to put a gun on the head of CMs to stop them from giving free power. That kind of reform is not possible.
It doesnt. What it shifts is the EXISTING liabilities from the Discoms to the State Govt for which they will issue bonds to pay back . Now what if the state govts default on their bonds at a later date (which I assure you will happen).. The "price cuts" on power under Uday will come from operational/systemic improvements, and reduce the cost of borrowing by the SEBs. Yes. But it cant bring the cost of power to zero.

All I am saying is , sure of Amma and SAD want to give free power, do so by all means. But pay for that from the budget and transfer the funds via the DBT. Dont interfere with product pricing of power . Very easy way to do that. Stop loans to the discoms either from banks or the PFCs /Infra companies if state govt dont play ball.

Truth be told since 2011 Power tariffs in TN have gone up significantly and Digital Meters . Before that it was 160Volt power for 18 hours with supercharged 270-280 volt power after 11 PM. There was little or no investment in power in 2006-11 in the state, further centre in May 2011 to 2014 suddenly started giving a Higher allocation in power from TN to Kerala.