Indian Economy News & Discussion - Nov 27 2017

periaswamy · Post by **periaswamy** » 03 Dec 2017 23:29

I call shenanigans on Kaushik Basu's "figures", which are usually politically motivated -- the man is a politically partisan dbag, notwithstanding his credentials.

How Is the GDP of India Calculated?

The Central Statistics Office (CSO), under the Ministry of Statistics and Program Implementation, is responsible for macroeconomic data gathering and statistical record keeping.

There is no reason to put any faith in the figures thrown out by Delhi Babucracy during the socialist era -- they just made up figures, given that data collection in those times was patchy to non existent. This reality about lack of data/stats collection on the ground was true even in the previous decade. so "Garbage In, Garbage out" is applicable when the numbers needed for GDP computation are mostly fictional.existent.

For one, there is no correlation between the Indian economy's health and the oil shocks -- magically the GDP swings between extremes when there was no real change in economic policy in decades.

Suraj · Post by **Suraj** » 04 Dec 2017 00:00

Business Standard's read of the GDP numbers:
Manufacturing activity pushes up GDP growth; investments grow by 4.7% in Q2

Manufacturing activity in India rebounded in the second quarter (Q2) of FY18, as companies ramped up production to meet the festive demand, pushing up overall economic growth. Investment activity also witnessed an uptick after lacklustre performance in the last two quarters.

Over the last two quarters, economic growth in India had slowed down, as the economy dealt with the twin shocks of demonetisation and the goods and service tax (GST). But gross value added (GVA) rebounded in Q2 FY18, growing by 6.1 per cent, up from 5.6 per cent in Q1.

Core GVA, which excludes agriculture and government spending, grew by 6.8 per cent — up from 5.5 per cent in Q1, as government spending slowed down sharply. It had dipped to a low of 3.8 per cent in Q4 FY17.

This rebound in growth is driven by the manufacturing sector. The sector grew by 7 per cent in Q2, adding 1.28 percentage points to growth. In the previous quarter, manufacturing value added had grown by a mere 1.2 per cent as companies cut back on production and destocked inventory to prepare for the GST regime.

“Consumption growth eased mildly on a sequential basis, albeit to a multi-quarter low in Q2 FY2018. The surge in consumption post demonetisation and pre GST, may have led to some fatigue in demand, even as overall income levels and sentiments remain healthy,” said Nayar.

But slower consumption growth was offset by higher investment activity. Gross fixed capital formation, which connotes investments, grew by 4.7 per cent in the second quarter, adding 1.3 percentage points to growth. This is the fastest growth in the last five quarters.

Growth of eight core sector industries unchanged at 4.7% in October

Eight core sectors grew at a slower pace of 4.7% in October, chiefly due to subdued performance of cement, steel and refinery segments.

The eight infrastructure sectors -- coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity -- had clocked a growth of 7.1% in October last year.

Meanwhile, the industry ministry has revised downwards September growth print of these eight sectors to 4.7% from the earlier estimate of 5.2%.

Official data released this evening showed that cement production contracted by 2.7% as against an expansion of 6.2% in October 2016.

Output growth in the steel segment too slowed to 8.4% in the last month compared to 17.4% in the year- ago period.

Similarly, there was slowdown in refinery output, whose growth was 7.5% in October this year. This compares with 12.6% expansion in the same month last year.

Electricity generation, too, was slower on an annual basis.

Meanwhile, the coal segment has shown significant improvement as it expanded by 3.90%. It witnessed a decline of 1.9% in the year-ago period.

The fertiliser sector grew by 3% as against 0.7% last year.

A_Gupta · Post by **A_Gupta** » 04 Dec 2017 07:23

periaswamy wrote:I call shenanigans on Kaushik Basu's "figures", which are usually politically motivated -- the man is a politically partisan dbag, notwithstanding his credentials.

Then you can't claim that Nehruvian growth was slow (or fast). It has to be "we simply don't know".

But I think if you look at the fraction of Indian GDP that was in the agricultural sector over the years, and the monsoons, you will get an explanation of the volatility.

When agriculture contributes 30-50% of the GDP a monsoon has much greater effect on the growth rate than when agriculture contributes 15-20% of the GDP.

From Wiki:
https://en.wikipedia.org/wiki/Economy_o ... _India.png

disha · Post by **disha** » 04 Dec 2017 08:27

^ All the more reason for Nehruvian Secular economy to concentrate on removing impediments to manufacturing and services to grow the pie and sustain productivity in Agriculture., for example use of technology to actually increase the productivity of land. Other nations in desert have done it but we are still struggling towards getting clean and reliable water supply to the remotest corners of the nation. Irrigation or for drinking.

A_Gupta · Post by **A_Gupta** » 04 Dec 2017 10:16

Per http://www.igidr.ac.in/nag/Growth%20Rat ... %20GDP.pdf
R. Nagaraj, Growth Rate of India's GDP, 1950-51 to 1986-88, Table 3
Electricity, gas and water supply had a growth rate of 10.2% in the 1950-60 decade, 11.5% in the 1960-70 decade, 7.4% in the 1970-80 decade and 9.9% in the 1980-87 period.
Look at the chart above, it was starting from a very small base.

A_Gupta · Post by **A_Gupta** » 04 Dec 2017 10:36

http://www.globalharvestinitiative.org/ ... anagement/

Large scale irrigation schemes introduced during the Green Revolution to increase productivity and staple food production were concentrated in Punjab, Haryana and Uttar Pradesh. Dams and canals were built to channel water from rivers and catchments to farmers’ fields. Many of those systems are now in disrepair or do not reach the small-scale producers that predominate in Indian agriculture, resulting in declining use of surface water irrigation and increased reliance on groundwater extraction (Figure 20).

In the 1960s and 1970s, irrigation and improved technologies were instrumental in India’s agricultural productivity growth and achievement of food self-sufficiency. Now, over-extraction of groundwater and inefficient application practices are endangering both agricultural and economic growth. A third of the groundwater aquifers are already approaching or going beyond their sustainable yields, including in the irrigation- dependent northwestern states where cereal production is centered.145 There is less rain during the monsoon season than there used to be, thereby reducing a primary source of water for the 13 major river basins in India. Poorly planned extraction of water upstream reduces access to water and harms ecosystems downstream.

A_Gupta · Post by **A_Gupta** » 04 Dec 2017 10:47

Oh, wow, in 1947, India had a power generating capacity of just 1362 MW. That grew 9.5 times to 12957 MW by 1969. The next 10-folding took till 2007, when it reached 132,329 MW. It stands at 331,110 MW today.

Mostly from:
https://www.slideshare.net/ashishverma0 ... 47-to-2015

disha · Post by **disha** » 04 Dec 2017 13:15

Gupta'Sirji - are you defending Nehruvian secular rate of growth?

India is *not* a powerhouse in Agriculture and agriculture related produce (horticulture & aquaculture included) thanks to the Nehruvian secular rate of growth and all the statist-socialist policies including the arrogance of "commanding heights of economy".

More can be discussed in the agri thread., but please research on "millets". And more importantly you sir need to educate us on why the crop yields per acre is still less than the yield of developing countries (sometimes as low as just 30%). And why even after India is in top 5 in almost all of the agri product you can think of (maybe not corn

) - why is agri only @14% of the GDP but with 50% of the workforce?

Why is agriculture not a $3T (yes $3T size) and 50% of the Indian economy? Indian economy can easily be $6T with 50% employed in agriculture and still growing. Why indeed it is not?

A_Gupta · Post by **A_Gupta** » 04 Dec 2017 18:58

Since when is pulling up the data a "defense"?

Since when is pointing out that we can't both condemn the policies that produced a 3.5% averaged growth rate, and at the same time claim that the data is fake (then how do we know that the growth rate was 3.5% averaged?) a defense?

The utterly abysmal start India had in 1947 is probably forgotten by most. That too is not a defense. (I hesitated to post yesterday, but I'll say today, Pakistan started at Independence with 60MW of generating capacity, and in the time India increased 10-fold, Pakistan increased its generating capacity 20-fold. Is this a fair comparison, one Mangla dam did that for Pakistan, one could debate; but maybe India could have gone faster.)

Finally, it is fairly clear that India accelerated beyond the Nehruvian rate of growth in the mid-1970s already.

A_Gupta · Post by **A_Gupta** » 04 Dec 2017 19:01

1. India has been increasing the land under the plow steadily, it is now >60% of land area. I bet that includes a lot of marginal lands.
2. As I understand it, ancient Indian practice was to periodically give the land a rest, by not sowing. But the British would tax the land anyway, unlike previous Indian rulers (Hindu and Muslim alike). Therefore it was not possible to leave the land idle. Two centuries of that would do something to the productivity of the land, no?

PS: the biggest current drag on Indian economic growth are bank NPAs, and they are a product of crony capitalism. Also, the much laudable government pushes to get everyone in the bank system and to digitize the economy are not market capitalism. Clearly, ideological purity doesn't do India much good

Dipanker · Post by **Dipanker** » 04 Dec 2017 20:50

Per the data provided above, the growth rate till 1990-91 turns out to be around 4.1%, so if we are to compare the "Nehruvian" vs. "Post Nehruvian" growth rate, we should at least cite right figure of 4.1% instead of some fictitious "Hindu rate of growth" of 3.5%. Also per the same data average investment in the "Nehruvian" period was about 15% whereas in the "Post Nehruvian" period it turns out to be around 30%, or twice as much, and we would all agree that there is a positive correlation between investment and growth rate i.e. higher the investment higher the growth rate.

So why was investment so low for such a long period of time? May be we were not "rich enough" back then and it took us 40 years to get to a point where we could invest more? The data seems to suggest so. In other words much of the "Post Nehruvian" economy is being built on the back of progress made during the "Nehruvian" economy.

Poor productivity in the agriculture is due to most of agriculture in India ( approx 97+% ) being subsistence or marginal with land holding size varying between 0.8 acre to 3-4 acres. Upto 50% Indians may be engaged in Agriculture sector, but that certainly is not because that many people are needed, but because they do not have alternate source of employment. In fact if we apply the principle of marginal utility, the higher number of people "employed" in agriculture may in fact have adverse effect on productivity, as evident from the fact that while the agriculture production has grown up by leaps and bounds the over a period the number of people working in agriculture has come down from ~70% to ~50%?

periaswamy · Post by **periaswamy** » 04 Dec 2017 21:21

Dipankar:In other words much of the "Post Nehruvian" economy is being built on the back of "Nehruvian" economy.

That is a tautology, the only economic model followed before we got out of that hole is "Nehruvian economy", so what other choice does India have other than start at whatever pitiful end state the "nehruvian economy" left us at?

"Nehruvian economy" did nothing for large numbers of Indians for 60 years, rife as it was with crony capitalism and hard-core socialist industrial model bleeding public monies with sick and stagnant industries for decades. India is still trying to get out of this rut, so let's cut this fallacy about "Nehruvian economy" creating some sort of marvelous edifice that the current economy depends on. If anything, the license-raj and bureaucracy-heavy structures created by the Nehruvian economy has hindered implementation of economic reforms. whether growth for 3.5 or 4.1 makes little difference, considering the enormous opportunity costs incurred by running a sick socialist economy for decades, which precluded private industry of any sort -- sort of expected really, given that the moron Nehru thought "profit" was a bad word. The stark difference between 20 years of twice that growth rate in China compared with equivalent growth rate of India speaks for itself.

Suraj · Post by **Suraj** » 04 Dec 2017 22:21

The investment/GDP being low isn’t about ‘not being rich enough’ . It doesn’t work that way . SoKo was pushing 30-40% investment/GDP at the time, starting from a position of being even poorer . The developed world has investment/GDP on par with 1960s India .

Low GFCF is literally the result of not investing for growth. Its the consequence of policies that do no foster growth . One doesn’t look at low GFCF/GDP and say ‘gee we were poor then so we couldn’t invest in growth’ . No poor country would ever get rich by that logic . No, this is the consequence of Nehruvian policy , just as Korean growth in the 60s is due to Park Chung Hees policies .

Every rupee going into govt expenditure, subsidies, private spending and other headers that do not generate capital assets and infrastructure, is a rupee not being invested .

Various countries used various techniques to focus on savings and investment . SoKo for example . There was a ban in place on cosmetics , and later heavy duties . They idea was that cosmetics is wasteful spending , and people must instead be encouraged to bank their income, which gives banks money to lend to chhaebols like a fledgling Hyundai .

Of course this is an example from an authoritarian state . But instead of wasting time saying ‘oh but we are a democracy’, it’s more important to acknowledge that the sum total of policymaking was anti development and anti growth .

The first time in independent Indian history when investment to GDP exceeded 25% for more than a single year spike (a statistically useless datum) was during NDA1 , not during any of the regimes before it . It was the result of a concerted set of policies enabling the states and center to invest , and cut their own fiscal profligacy .

The mark of a good policy framework is that it sustains itself . From crossing 25% in 2002, investment/GDP peaked at 37% in the late 2000s as gains from investment triggered even more investment, ie growth .

However by late 2000s , government policy increasingly spent more on subsidies than capex, the result being that growth stalled . It takes years of policymaking to bring it back on track , something that’s happening now .

There was an Excellent picture of capex vs subsidies that I once posted here and which was reposted many times since . Could someone please find and repost it ?

disha · Post by **disha** » 04 Dec 2017 22:41

A_Gupta wrote:Since when is pulling up the data a "defense"?

Since when is pointing out that we can't both condemn the policies that produced a 3.5% averaged growth rate, and at the same time claim that the data is fake (then how do we know that the growth rate was 3.5% averaged?) a defense?

A Nehruvian rate of growth (vikas) is not something to crow about., and here you are pulling only one side of the number and calling it 'data' to put up a defense of the Nehruvian Vikas. Above is not data but mis-information., easy to taut but clearly misleading. Even though the number is real it's purpose is to put in a 'good word' for an indefensible and pathetic Nehruvian Vikas.

A growth rate of 3.5% averaged looks good on paper., can you correlate with the population growth (averaged) from 1950s to 1970s? From 1950s to 1970s the population growth was >2% averaged. And the world economy boomed in 1960s and 1970s. So while the world was progressing we were in fact regressing., just look at >2% population growth and @3.5% economic growth with inflation into account, we were regressing. The real growth was negative.

So to say 'but we grew at 3.5% y-o-y' is what the point is., that Nehruvian Vikas was useless and taking into account both the internal population growth and the external world economic growth points to the fact that it was a depression or at best stagnancy. A 'growth rate' that is indefensible.

Supratik · Post by **Supratik** » 04 Dec 2017 22:49

It is low base effect. Going from 1 MW to 10 MW is 10 fold growth but is much easier than going from 10K to 100K. As for lack of investments it was mainly due to severe restrictions on private enterprise. Nehru hated capital and profit. Govt investment is by tax or loan. In a poor country there is very little tax and loans can get you only so much. Finally, you should always compare with the first boy in the class not the last boy. Japan had 18 years of 10% plus growth which pulled a war devastated economy to a world leader. Nehruvian socialism is an utter failure. Lets not put band-aid on a pricked balloon but it is always good to know the data.

A_Gupta · Post by **A_Gupta** » 04 Dec 2017 23:04

^^^ Whatever, construe it whichever way you will.

From a 2008 paper,
https://www.bis.org/review/r080218c.pdf
we are told

Gross domestic savings have increased continuously from an average of 9.6 per cent of GDP during the 1950s to almost 35 per cent of GDP at present; over the same period, the domestic investment rate has also increased continuously from 10.8 per cent in the 1950s to close to 36 per cent by 2006-07. A very significant feature of these trends in savings and investment rates is that Indian economic growth has been financed predominantly by domestic savings. The recourse to foreign savings – equivalently, current account deficit – has been rather modest in the Indian growth process.

---

Korea's path:
https://kellogg.nd.edu/sites/default/fi ... /166_0.pdf
http://www.nber.org/chapters/c4063.pdf

The second one tells us that 1953-1960, 74% of Korea's investment was from foreign sources, and foreign aid financed 70% of Korea's imports.
The first one tells us that most government investment went into infrastructure.
After 1960, American aid tapered off. Nevertheless in 1966, 25% of government expenditures were financed from the USA.
During 1961-63 Korean gross domestic savings were just 4.3% of GNP, and foreign capital financed most investment, which was 12% of GNP.
Domestic savings stood at 11.7% of GNP in 1966.
Korea appears to have been a largely export-driven economy.

PS: graphs on my blog from World Bank data of Gross Domestic Savings and Gross Capital Formation of India, Korea, 1960-2017. India was always domestically financed, while Korea had significant foreign investment 1960-80.
http://arunsmusings.blogspot.com/2017/1 ... korea.html

Suraj · Post by **Suraj** » 04 Dec 2017 23:19

Investment can come both from domestic savings and foreign aid and investments . But the bottom line is you need to invest or you don’t get growth . This is entirely about policymaking . Policies that focus on driving investment, generate growth .

Supratik · Post by **Supratik** » 04 Dec 2017 23:44

Not sure what you are trying to say by bringing in Korea. FDI in india was as severely restricted as domestic private enterprise. It is like choking a man with both hands. It is incredible that India didn't become another NK.

Suraj · Post by **Suraj** » 05 Dec 2017 00:45

Supratik wrote:Not sure what you are trying to say by bringing in Korea. FDI in india was as severely restricted as domestic private enterprise. It is like choking a man with both hands. It is incredible that India didn't become another NK.

Well you are making my point. India choked both investment through accumulated savings, and prevented investment from outside . Further, a large part of govt revenues went to the cost of running government, paying subsidies, and the interest burden. All of which are non-productive and don't qualify as investment .

Here's the subsidies vs capex graph I was talking about in my earlier post:

Lisa · Post by **Lisa** » 05 Dec 2017 01:32

VinodTK wrote:
Lisa wrote:Hari Seldonji,

Such things are only possible in China not India because they are the only ones who are special!

https://www.google.co.uk/publicdata/exp ... &ind=false

See Chinese growth between 2005 - 2009- 2014.

Now say again, only possible in China because Hindus are incapable.
It took India nearly 60 years to break out of Hindu rate of growth which was 3.5 GDP per year (a term coined by Prof Raj Krishna in the 70's). Hopefully this time around India will break out of 6 to 8 percent growth rate quickly, and achive double digit growth rate for a couple of decades....!!!

From your lips to God's ears.

Avtar Singh · Post by **Avtar Singh** » 05 Dec 2017 02:42

in the late 90s an english work colleague told me how chinas large population was an asset.
BUT the large population in India was a burden!! "oh yes sure" were my thoughts/reply***

to be fair many in India fell for this propaganda hook line and sinker and parroted the same line
I suppose at some point the western media changed its tune and that convinced many in India..
it must be true that Indian population is an asset after all!! some western jokers have told us!!

***I have always wondered what this person was thinking as he told me this fact about superiority
of chinese over Injuns. Did it even occur to him what he was saying and to who.

If it was a joke, then I can only say he who laughs last laughs longest.

Katare · Post by **Katare** » 05 Dec 2017 03:03

Billion people standing together is asset and powerful. Yet I don't think any one said that population was a burden. What was said was having too many kids, more than you can afford, is a great burden on family and social infrastructure of the country. All those extra kids would either die of sickness, grow up stunted, remain illiterate and/or live a miserable life.

Which is correct now as it was earlier.

disha · Post by **disha** » 05 Dec 2017 03:40

Population and its growth is not a burden., what is burden is when the population growth is not used to an advantage. What we have done is choke the population when it comes to economic advancement by sticking unduly long to policies and practices which were discarded decades ago elsewhere and proven to be worth less. Leave alone coming up with newer ideas. And the worst thing is that those socialist stasist policies are still being held as shining examples of "progress".

A_Gupta · Post by **A_Gupta** » 05 Dec 2017 03:43

Biggest failure was not emphasizing literacy and primary education right at the start. That made population more of a liability, less of an asset.
China, communist, not Fabian socialist, did emphasize literacy.

A_Gupta · Post by **A_Gupta** » 05 Dec 2017 05:44

Sand artist Sudarsan Pattnaik

Dipanker · Post by **Dipanker** » 05 Dec 2017 10:41

Katare wrote:Billion people standing together is asset and powerful. Yet I don't think any one said that population was a burden. What was said was having too many kids, more than you can afford, is a great burden on family and social infrastructure of the country. All those extra kids would either die of sickness, grow up stunted, remain illiterate and/or live a miserable life.

Which is correct now as it was earlier.

There is a difference though, the per capita income of Indians on inflation adjusted basis was higher during 50's, 60's, and I think pretty much through 70's too, though the last 3 years of 70's ruling Janata Party screwed up big time. Education and healthcare , and food was cheaper, fewer people on the roads and trains, less polluted air and water. Now with just $2.3T economy cities are reaching pollution level of 500 AQI (EPA recommended level is 15.0 μg/m^3 of PM2.5), and most of our water is polluted (~75%) and rest downright toxic.

I shudder to think what is going to happen when we reach $10T/$15T/$20T! If we are to survive this onslaught of the impending ecological disaster as a nation, the growth model needs to change into a eco-friendly and sustainable developmental model. That is why I think Gandhi probably had better ideas, it is amazing, for a person born in 1869, how much far sighted he really was!

Jits · Post by **Jits** » 05 Dec 2017 13:54

INSTC to be operationalised mid-Jan 2018; game changer for India's Eurasia policy

The International North South Transportation Corridor (INSTC) connecting Mumbai with St Petersburg and beyond – which has been 17 years in the making – is set to be operationalised from the middle of next month with the first consignment from India to Russia.

Although the formal operationalisation of INSTC is planned for mid-January, the corridor will start functioning fully in a few months thereafter, according to people aware of the matter. Hectic preparations are underway to firm up all elements of the corridor in all key stakeholder states, informed officials. A Russian railway operator is expected to play key role in INSTC.

India, Iran and Russia had in September 2000 signed the INSTC agreement to build a corridor to provide the shortest multi-model transportation route linking the Indian Ocean and the Persian Gulf to the Caspian Sea via Iran and St Petersburg. From St Petersburg, North Europe is within easy reach via the Russian Federation. The estimated capacity of the corridor is 20-30 million tonnes of goods per year.

Conceived well before China’s Belt and Road Initiative (BRI), INSTC will not only help cut down on costs and time taken for transfer of goods from India to Russia and Europe via Iran but also provide an alternative connectivity initiative to countries in the Eurasian region. It will be India’s second corridor after the Chabahar Port to access resource rich Central Asia and its market.

External affairs minister Sushma Swaraj, in an indirect criticism of the BRI project while addressing a meeting of the heads of Shanghai Cooperation Organisation (SCO) member states on Friday last week, emphasised on the need to make connectivity corridors inclusive.

The operationalisation of Chabahar Port (whose Phase 1 was inaugurated on Sunday) coupled with INSTC will be a game changer for India’s strategic and economic goals in the Eurasian region, where China has benefited from its geographical contiguity, experts told ET. These connectivity routes promise to open up a sea of opportunity for India, they said, and the country may even consider working jointly with Russia on economic projects in the Eurasian region.

INSTC could get linked to the Chabahar Port besides Iran’s Bandar Abbas port, said an official, who did not wish to be identified. India also hopes that INSTC will be connected with various other connectivity projects that the five Central Asian and other Eurasian countries have undertaken among themselves, the official said.

“INSTC is now becoming a reality. Chabahar project launched in 2016 will complement INSTC. India is also exploring how Chabahar connectivity corridor can be extended to connect with Central Asia through INSTC, or the Iran-Turkmenistan-Kazakhstan rail line, Iran-Uzbekistan-Kazakhstan alignment and Trans-Afghan rail line (which possibly could be developed by Iran, India, Afghanistan and Uzbekistan),” said P Stobdan, India’s former envoy to Kyrgyzstan and noted expert on Central Asia.

India’s ratification of international customs convention TIR in June will help boost trade through INSTC and other corridors.

The absence of viable surface transport connectivity is a serious impediment to trade with the Eurasian region. Currently, transport of goods between India and Russia mostly takes place through the sea route via Rotterdam to St Petersburg. In the case of the Central Asian region, goods are routed through China, Europe or Iran. The routes through China and Europe are long, expensive and time-consuming. Therefore, a need was felt to have a logistics route that would be shorter, cheaper and faster, officials said. A few dry runs on INSTC have been carried out in the past few years.

The corridor could held Indian exports get a competitive advantage due to lower cost and less delivery time. Studies show that this route can reduce time and cost of container delivery by 30-40%. According to Iranian officials, tariffs for transportation of freight through INSTC may drop further after the completion of a railroad segment connecting two Iranian and Azerbaijani border cities. Finland, Estonia and Latvia may also join INSTC in the near future, according to Iranian officials.

INSTC has been expanded to include 11 new members – Azerbaijan, Armenia, Kazakhstan, Kyrgyz Republic, Tajikistan, Turkey, Ukraine, Belarus, Oman, Syria and Bulgaria (as observer).

disha · Post by **disha** » 05 Dec 2017 14:50

I too shudder to think at this very deep & flawed political motivated gas bag analysis passing of as economic wisdom!

the per capita income of Indians on inflation adjusted basis was higher during 50's, 60's, and I think pretty much through 70's too, though the last 3 years of 70's ruling Janata Party screwed up big time. Education and healthcare , and food was cheaper, fewer people on the roads and trains, less polluted air and water. Now with just $2.3T ...

I shudder to think what is going to happen when we reach $10T/$15T/$20T! If we are to survive this onslaught of the impending ecological disaster as a nation, the growth model needs to change into a eco-friendly and sustainable developmental model. That is why I think Gandhi probably had better ideas, it is amazing, for a person born in 1869, how much far sighted he really was!

Bart S · Post by **Bart S** » 05 Dec 2017 17:20

Avtar Singh wrote:in the late 90s an english work colleague told me how chinas large population was an asset.
BUT the large population in India was a burden!! "oh yes sure" were my thoughts/reply***

to be fair many in India fell for this propaganda hook line and sinker and parroted the same line
I suppose at some point the western media changed its tune and that convinced many in India..
it must be true that Indian population is an asset after all!! some western jokers have told us!!

***I have always wondered what this person was thinking as he told me this fact about superiority
of chinese over Injuns. Did it even occur to him what he was saying and to who.

If it was a joke, then I can only say he who laughs last laughs longest.

The difference is that China was way ahead in literacy and basic infrastructure, which makes all the difference. They are also ahead in being able to control immigration, contrast with India who had pretty much an open border with Bangladesh, and the ability to throttle population growth as opposed to India where the least literate people tend to have more children because mullahs frown upon contraception etc (which is a self perpetuating cycle).

Kashi · Post by **Kashi** » 05 Dec 2017 18:35

disha wrote:I too shudder to think at this very deep & flawed political motivated gas bag analysis passing of as economic wisdom!

This actually provides very deep insights into the thinking of this group of people. Recall the times when only elites could drive cars, travel in aiplanes and AC first class? Those were the Nehruvian times and successor imitations that followed. Like many Brits yearning for the Raj of the yore, this lot hankers for a return to their own "Raj" of the yore.

A_Gupta · Post by **A_Gupta** » 05 Dec 2017 19:24

^^^ The ecofriendly, sustainable part is right though. On the energy front, if India continues to go big on solar and renewables, higher efficiency coal plants where necessary, some nuclear, and if India gets into electric powered vehicles + better public transport, that should work out.

Katare · Post by **Katare** » 06 Dec 2017 01:01

Dipankar,
Do you have any data to show that percapita of India was higher in 1950 than what it is today? Never heard this before.
Disha,
You have your political views and Dipanker has his own. I don't understand where is the need for you to be condescending.

Katare · Post by **Katare** » 06 Dec 2017 01:13

disha wrote:Population and its growth is not a burden., what is burden is when the population growth is not used to an advantage. What we have done is choke the population when it comes to economic advancement by sticking unduly long to policies and practices which were discarded decades ago elsewhere and proven to be worth less. Leave alone coming up with newer ideas. And the worst thing is that those socialist stasist policies are still being held as shining examples of "progress".

The bolded part - How can you say that? Not a burden on who? Parents/Family? infrastructure? Environment? Natural resources like water/capita, Government?

Where is the socialist coming into picture?
If you look at the last census of India, it was the first time in our history we saw the primary enrollment staying pretty much same as last census. This means India does not need to build more primary school each year, instead it can focus on quality of primary education. This is possible only when people started to have fewer kids and population growth of young Indians stabilized at replacement levels. Kids for first 20 years are very expensive liability on the family and society and once they are of working age, unless you have modern large economy they are not an asset but another liability.

Case in point. Bangladesh has reduced it's population to replacement levels. Look at it's HDIs they are better than both India and Pakistan.
Pakistan's doing what you are suggesting and look at their HDI- They have fallen behind Bangladesh even with a very large lead over BD in 1974.

Show me one country that has population growth rate of 2% and it is doing great?

HDI, economic growth and turning your adult and young'uns into an asset is only possible when population growth slows or reaches replacement levels.

Suraj · Post by **Suraj** » 06 Dec 2017 01:28

UAE operationalizes $75 billion sovereign fund targeting India

In a major move to further boost bilateral economic ties, the United Arab Emirates (UAE) has operationalised a $75 billion sovereign fund for India of which USD one billion has already been transfered, the Gulf nation’s envoy said today. Diplomatic sources said Prime Minister Narendra Modi is likely to visit Abu Dhabi, the capital of UAE, in February to attend a global leadership summit. On the sovereign fund, UAE Ambassador to India Ahmed Albanna said operationalisation of the $75 billion sovereign fund for India reflects UAE’s commitment to significantly improve trade and investment ties. He said USD one billion has already been transferred to India’s National Infrastructure and Investment Fund. It was not clear when the entire amount will be transferred or the conditions related to the investment. Abu Dhabi has a sovereign wealth fund of about $800 billion. India has been eyeing the fund, parked with the Abu Dhabi Investment Authority, for its infrastructure sector.

The ties between India and the UAE are on an upswing. India is UAE’s number one trading partner and the annual trade currently stands at around USD 53 billion. UAE, a major player in the Gulf region, is a strategically important country for India. The country is home to around 2.6 million Indians who constitute nearly 30 per cent of its population. The country contributes significantly to India’s energy security and was the fifth-largest supplier of crude oil to India in 2016-17.

The new Foreign Trade Policy has been released by Suresh Prabhu, who took over this portfolio recently:
Foreign Trade Policy Review offers more incentives to push exports

Commerce and Industry Minister Suresh Prabhu today let out more incentives while unveiling the mid-term review of the Foreign Trade Policy 2015-20 with a view to boosting exports. The minister said the Merchandise Exports from India Scheme (MEIS) incentive rate will be raised by 2 per cent across the board for labour intensive/MSME sectors. The increase in annual incentive by 34 per cent to Rs 8,450 crore will benefit leather, handicraft, carpets, sports goods, agriculture, marine, electronic components and project exports, the minister said in a tweet.

Referring to implementation of the Goods and Services Tax (GST), Prabhu said introduction of the new tax regime “would be the catalyst for spurring growth in the export sector. The lower duty on most of items and reduction of cascading effect of various duties would lower the cost and make exports competitive”. He added that green shoots in export growth are distinctly visible now with positive export growth in 13 of the past 14 months. The five-year FTP was announced on April 1, 2015, and set an ambitious target of India’s goods and services exports at $900 billion by 2020. It also has a goal of increasing India’s share of world exports to 3.5 per cent, from 2 per cent.

Katare · Post by **Katare** » 06 Dec 2017 01:33

Dipanker wrote:
Katare wrote:Billion people standing together is asset and powerful. Yet I don't think any one said that population was a burden. What was said was having too many kids, more than you can afford, is a great burden on family and social infrastructure of the country. All those extra kids would either die of sickness, grow up stunted, remain illiterate and/or live a miserable life.

Which is correct now as it was earlier.
There is a difference though, the per capita income of Indians on inflation adjusted basis was higher during 50's, 60's, and I think pretty much through 70's too, though the last 3 years of 70's ruling Janata Party screwed up big time. Education and healthcare , and food was cheaper, fewer people on the roads and trains, less polluted air and water. Now with just $2.3T economy cities are reaching pollution level of 500 AQI (EPA recommended level is 15.0 μg/m^3 of PM2.5), and most of our water is polluted (~75%) and rest downright toxic.

I shudder to think what is going to happen when we reach $10T/$15T/$20T! If we are to survive this onslaught of the impending ecological disaster as a nation, the growth model needs to change into a eco-friendly and sustainable developmental model. That is why I think Gandhi probably had better ideas, it is amazing, for a person born in 1869, how much far sighted he really was!

I don't think size of economy necessarily means worst pollution for the country. Actually increased size of economy provides required resources and technologies to control pollution. On the other hand uncontrolled population growth is the real culprit as for as pollution goes. Once percapita income starts to rise (with population stabilizing) pollution would be controlled. West went through the same route, they cleaned up their rivers and cities once they had the money so would we.

Gandhi's ideas on economic development were as asinine as they get, they were even worst than Nehru' socialism or Bose's communist dictatorship. Although his thought was pure, had foresight and right direction. We should have created a village focused and locally empowered economic and government model instead of centrally controlled and planned industrialization which excluded most of what mattered to villages. Gandhi like rest of the congress, excluding Nehru and Bose, was a staunch right wing free marketer by soul but his economic development ideas weren't practical and duly rejected by Patel and Nehru. If we have chosen to live in Gandhi's India, by now most of India would have been either captured by it's neighbor's or fragmented into pieces. No thank you!

Suraj · Post by **Suraj** » 06 Dec 2017 02:08

Growth slowdown has bottomed out: Chief statistician

A day after the GDP data showed a rebound in growth to 6.3% in Q2 from 5.7% in Q1, chief statistician TCA Anant says he believes the slowdown is behind us and the rebound in manufacturing is going to sustain. He says the GST data taken into account to compute GDP in Q2 could be revised upwards and also explains why there is a difference between the GDP and the GVA deflators.

Is manufacturing revival to 7% in Q2 from 1.2% in Q1 going to sustain?

It should, for two reasons. First, traditionally our manufacturing production picks up from Q2 onwards. Second, we saw a drawdown of stocks in Q1. So, in addition to the production to cater for the improved demand in the second half of the year (thanks to festivities), we will also see production taking place to re-build stocks.

Can we conclusively say now the growth slowdown has bottomed out?

I think so. The data available to us (point at an uptick); major structural adjustments have been put in place, and the negative consequences of those are behind us. So, what we expect to see is the positive benefits of those structural changes, such as GST, real estate regulator etc.

The GDP deflator in Q2 dropped to 3.2% from 3.5% in Q1, while the GVA deflator went up to 2.5% in Q2 from 2.3% in the previous quarter. Why is this discrepancy?
The GVA deflator is an average of sectoral deflators. For each sector, we derive a deflator based on what that sector covers. For instance, in agriculture, we derive the sectoral deflator from crops, horticulture production, forestry and fisheries. Moving from the GVA deflator to the GDP deflator requires an additional deflator for taxes and subsidies.

Do you think the limited fiscal space available to government to boost spending will hurt GDP growth in coming quarters, especially when private investments are hard to come by?
As such, growth in government final consumption expenditure (GFCE), a major driver of GDP in recent years, slowed to just 4.1% in Q2 from 17.2% in Q1.
Government consumption and expenditure data are partly a statistical artefact. Last year, we saw rapid growth in government consumption because, apart from other things, it had implemented the pay commission awards. So, If you ignore that natural unfavourable base, the growth in government account in Q2 is good

Gross fixed capital formation (GFCF) has grown for a second straight quarter, although it’s still tepid. Is it an early sign of revival?

To a certain extent, the growth in the GFCF is a sign of revival, particularly the fact that capital goods production has gone up. However, there is much further to go. Ideally, we would like to see the GFCF recording higher growth than the GDP, so that its share in the GDP keeps rising. Largely, the current GFCF growth has been guided more by the government account (robust spending); private sector investments still need to revive considerably before we can see robust growth in the GFCF.

putnanja · Post by **putnanja** » 06 Dec 2017 08:52

Reaping the benefits of inclusion

...
But since 2014, Ramesh has been getting ₹1,000 a month as pension from the Government. The money is transferred to an account he got from Andhra Bank, under the Pradhan Mantri Jan Dhan Yojana (PMJDY). Linked with Aadhaar, the account is basic and he doesn’t need to keep a minimum balance.

“I neither had a bank account nor an ATM card till three years ago. I’m somewhat comfortable now,’’ says Ramesh while getting onto his tricycle at his home. He uses a RuPay debit card to withdraw money.

Maganti Subbamma, 68, also lives in Chinnapuram. And she too has benefited from the PMJDY scheme. “I am able to save ₹100 out of my monthly pension of ₹1,000. And I operate my account from home, thanks to banking correspondents (BCs),’’ she says. In the pre-Jan Dhan days, Subbamma used to wait for hours to receive her pension in treasury offices.

Same is the case in the remote hamlet of K P T Palem, about an hour’s drive from Chinnapuram. Located by the Krishna river, this is a hamlet inhabited mostly by fishermen. According to the hamlet’s Sarpanch, Tirumalsetti Jayaraj, many of the 1,000 voters in the village got bank accounts for the first time after the introduction of the PMJDY scheme. They are beginning to see the benefits of formal banking. “The fishermen use their bank accounts for receiving payments from buyers,’’ he says.
...
There are 1.26 lakh BMs delivering branch-less banking services to crores of rural customers across the country. They are fully equipped with gadgets needed for rendering banking services at the door steps of the customers, besides also giving insurance and pension related services, says Venkateshwarlu, the Andhra Bank branch manager. He adds that these services are being delivered through biometric authentication and by swiping Rupay ATM/ Debit cards.

“One of the reasons for popular use of these accounts by the poor and elderly is the door-step delivery of banking services,’’ says Raju, a BC working for Andhra Bank. Each BC covers about 700 to 1,000 customers across a few villages every month. Each earn ₹6,000 - 10,000 monthly. More needs to be done though. Making an observation on the impact of PMJDY, Reserve Bank of India (RBI) Governor Urjit Patel in a recent speech said that there is a further need to ease access to bank accounts through BCs, payment banks, and point-of-sales machines so that these are used frequently.
...
“Some customers are moving on their own to normal bank accounts. This is actually leading to a drop in the number of Jan Dhan accounts in some States. But we need to ensure automatic upgradation and a better clarity on this,’’ said a senior SBI official.
...

disha · Post by **disha** » 06 Dec 2017 11:53

Katare wrote:The bolded part - How can you say that? Not a burden on who? Parents/Family? infrastructure? Environment? Natural resources like water/capita, Government?

The bolded part is taken out of context. There is a follow up statement. I think that was not taken into account. Anyway.,

A growing population - of course does not mean that out-of-control-growth population.

A growing population again is not necessarily a burden on economy. Of course statisticians talk about replacement ratio and ideal replacement ratio is like 2.1. So a population just *slightly* over replacement ratio is not necessarily bad for economy.

My point is simple., one cannot rhetorically state that "a growing population is bad for economy"., since the other way round will be equally true that is "a growing population is good for economy".

The rest is nuances. The argument from the socialist stasist Nehruvian rate-of-growth "economists" was made that India's growing population was a bane and hence the country is poor. That is a pathetic excuse. Others have already proven it so.

A_Gupta · Post by **A_Gupta** » 06 Dec 2017 17:13

https://www.bloomberg.com/news/articles ... th-drivers

It’s quiet as Ruchak Khanter walks across his factory in the southern Indian city of Chennai. Stacked piles of unsold stainless steel plates, trays and bowls cover the floor, industrial stamping machines lay idle and most of his workers have been sent home.

"There’s literally no work," Khanter said, citing the new nationwide goods and services tax and the decline in his state’s competitiveness as others regions lure investment. He’s considering moving to Ahmedabad in Gujarat, some 1,850 kilometers to the north. "A lot of industries have already shifted."

Katare · Post by **Katare** » 06 Dec 2017 23:14

disha wrote:
Katare wrote:The bolded part - How can you say that? Not a burden on who? Parents/Family? infrastructure? Environment? Natural resources like water/capita, Government?
The bolded part is taken out of context. There is a follow up statement. I think that was not taken into account. Anyway.,

A growing population - of course does not mean that out-of-control-growth population.

A growing population again is not necessarily a burden on economy. Of course statisticians talk about replacement ratio and ideal replacement ratio is like 2.1. So a population just *slightly* over replacement ratio is not necessarily bad for economy.

My point is simple., one cannot rhetorically state that "a growing population is bad for economy"., since the other way round will be equally true that is "a growing population is good for economy".

The rest is nuances. The argument from the socialist stasist Nehruvian rate-of-growth "economists" was made that India's growing population was a bane and hence the country is poor. That is a pathetic excuse. Others have already proven it so.

Disha,
Apologizes if i took you out of context. I fully agree with your thoughts in your second post. Actually economies do best when population is growing mildly, they sputter or shrink during slowing, shrinking or no growth periods. The relationship appears to be similar to what inflation has with economic growth.

Anyhow the land has an upper sealing of how many it can sustain so sooner or later we’ll have to find a different economic model that does not depend on continuous population expansion for economic growth. But that would come once we have become a developed nation. JMHO