tandav wrote:The more important question is how do we become competitive. 10 years is a massive amount of time and the world will not wait around. We have to step up our game by orders of magnitude.
Narendra Modi has done well to keep India out of RCEP, but WTO-style bargaining for future entry is a good idea
Madhavan Narayanan,
Nov 05, 2019
India's economy and polity both have a strong agricultural grounding, and its demographics are such that more than a billion people depend on their livelihoods in a stable farming environment
Imports may threaten farm sector competitiveness while rising farm prices threaten consumer price stability for the industry and service sectors
RCEP is essentially a move to counter the US, which has a special relationship with India on everything from technology-based industries to security aspects
There is a Hindi proverb to describe those who invite trouble: "Aa bail, mujhe maar" (Come bull, gore me). We might as well invent a new-age idiom if we were to invite trouble in a manner that China would trouble India's economy: "Come dragon, gore me". As it happens, China is an ostensible trading partner for India, but from security issues to manufacturing competitiveness, things are on such a fragile ground between the two Asian giants that it makes sense to hasten slowly on everything in which the elephant might want to embrace the dragon.
To this, we might add the idea that Australia and New Zealand, ever the friendly economies for India, can be seen in a different light when they are viewed as agricultural superpowers.
In such a context, Prime Minister Narendra Modi has done the wise thing in keeping India out of the ambitious Regional Comprehensive Economic Partnership (RCEP), the planned ASEAN-plus free trade area with ten members of the Association of South East Nations (ASEAN) joining Japan, Oceania, South Korea and China. His own self-image as a decisive leader has been asserted in the process, but more importantly, it shows that joining the RCEP as a founding member would be a risk India can ill-afford in a new world economic order.
Narendra Modi has done well to keep India out of RCEP, but WTO-style bargaining for future entry is a good idea
While RCEP, now reduced to 15 members after India's decision, may be painted as a single economic grouping that offers low tariff barriers and market access to member economies, the simple fact is that the dice are loaded against India in what would be a certain gamble in uncertain times for India's struggling economy. India has enough wounds to heal in its economy before it can afford to play footsie with Asia-Pacific wannabes offering a charming embrace.
India's economy and polity both have a strong agricultural grounding, and its demographics are such that more than a billion people depend on their livelihoods in a stable farming environment. Farmers, on the other hand, are not a happy lot. From unremunerative agricultural prices to restrictions on crop residue burning, they walk the wedge as much as India's manufacturers have to look over their shoulders to see if Chinese counterparts are selling or dumping goods in a manner that threatens their future.
Consider the fact that both the white and green revolutions that India can be proud of are at potential risk. Australia and New Zealand, who we have just started outshining in our favourite sport, may well turn the economic game into something that is simply not cricket. Farm wages are rising in India, while the demographics are such that food security is a double-headed problem. Imports may threaten farm sector competitiveness while rising farm prices threaten consumer price stability for the industry and service sectors.
Modi has, therefore, rightly invoked a Gandhian allusion to considering the plight of the poor and the farmers in rejecting the RCEP.
At one level, the staying out does question India's credentials in the march to globalisation, but this is not 1991, when the domestic economy was in a balance of payments crisis and opportunities and threats were both conducive to a step towards globalisation. A few years later, when the Bharatiya Janata Party (BJP) came to power, it invented a term called "calibrated globalisation" in its bid to defend the domestic industry from being quickly cast to the uncertain whirlwinds of global capital. The situation has not changed much since then as far as India's manufacturing and agricultural sectors are concerned.
India's core strength is human capital, and anti-immigration and protectionist narratives in the West are gently but firmly laying down limits to leveraging India's inherent potential. On the other hand, 63 years of active industrialisation since the start of the second Five Year Plan in 1956 has given India a strong manufacturing base. It is not good enough to uniformly or easily compete against the Chinese or the West, but strong enough to serve a local economy.
It is noteworthy that India has trade deficits with as many as 11 of the RCEP's 15 partner economies.
The ink has barely dried on Modi's slogan linked to the nationwide Goods and Services Tax (GST): "One nation, one market." From the judiciousness of the rates involved to actual GST collections and sharing the revenues from it between states, India has to manage its own house first. Add to this the persisting crisis in the banking and financial service industry amid an industrial slowdown, and an income support scheme for farmers that has barely got off the ground amid a fiscal crunch. You get the picture: RCEP is a recipe for a risk that adds more uncertainties to an already uncertain ground.
Though one does not know what goes on inside the prime minister's mind, it can be said safely in the backdrop of the challenging measure to introduce a GST and a thoroughly controversial demonetisation of high-value currency notes, he must have felt it wise to be in agreement with the Congress party's opposition to the RCEP.
Economists like Arvind Panagariya argue that India can be base for exports to other RCEP economies if multinationals (read: Western giants) invest here to tap the new regional market in the Asia-Pacific. But we need to ask: What are the opportunity costs of this risk? We might add that there are unresolved issues linked to infrastructure. Investing in large manufacturing bases are not as easy as it might seem.
Does that mean India stays a lonesome wanderer in the global economy? Obviously not. India's subcontinental dimensions offer internal opportunities for growth. There is plenty of plumbing to do in everything from banking to macroeconomic stability, but the doors are already open for foreign investors across the board. Engaging meaningfully with Europe and the US can still do wonders for India.
As for RCEP, India must keep its doors open for possible future engagements. For this, RCEP should be viewed as a "mini-WTO" where India can negotiate the details of its entry (think visas, regional security and farm sector safeguards and exceptional import duty protection). The bargaining should be such that it gives India a fair chance of stable growth and managing a transition to better opportunities.
It is true that the RCEP is part of a desirable "Look East" approach in India's diplomacy. But looking before you leap is a key part of the game. It also pays to remember that the RCEP is essentially a move to counter the US, which has a special relationship with India on everything from technology-based industries to security aspects. There is no need to be a groupie in a hurry.
Japan, an RCEP member, can be for India a special partner, given its rich resources that complement that of India rather than compete with it. South Korean manufacturing chaebols already have a huge presence in India. Nothing stops them from helping India boost its competitiveness as an exporter if India has to find a place as an equal partner in the RCEP.
We can continue to play cricket with the Aussies and buy Ganesha idols from the Chinese. Sparring with a kangaroo and dating a dragon is fine. Deeper engagements can wait.
(The writer is a senior journalist and commentator. He tweets as @madversity)
It is the daily sale of milk that gives the average Indian farmer his daily spending cash and helps him sometimes supplement the meagre daily meals.Supratik wrote:It is time to renegotiate the FTAs. We now have a $100 billion dollar deficit with these countries.
As for traditional Indian companies not being able to compete. Very few are entrepreneurs. Most are traders. As long as they make margin selling an imported product they are all fine. The only hope are the new generation entrepreneurs who want to be the next Zuckerberg.
Australia has 5000 #dairy farmers, & 5700 farms, avg of 261 cows
New Zealand has 12000 dairy farmers & 11590 herds, avg=431 cows
India has 7.5 crore farms, avg=1-2 cows
Q-Who suffers if we open our markets to cheap imports thru #RCEP?
Ans-Our farmers
Picklu wrote:We should actually get out of the FTA deal with Indonesia also. Aus and NZ are not that much of a threat due to the transport distance. East Asian countries are much bigger threat.
We need to give them a signal that they can not open their market only 50% and expect a 74% market access from us.
Why should we open our market for imports by signing #RCEP, when a @NITIAayog recent report of Feb 2018 has shown that India’s #milk production in 2016-17, at 162.5 million tonnes (mt), exceeded the demand of 147.5 mt, with this gap projected to widen by 2032-33.
Good question.tandav wrote:The more important question is how do we become competitive. 10 years is a massive amount of time and the world will not wait around. We have to step up our game by orders of magnitude.
At last count, India had 26 unicorns, with eight new entrants joining the club in 2018 alone.
A report published in 2018 notes that 111 of the most popular family-owned businesses had a total market capitalization of some $839 billion.
The Global Entrepreneurship Monitor estimates some 20% of Indians (aged between 18 and 64 years) intend to start a business in the next three years, while more than 11% are nascent entrepreneurs (against the global average of 12.6%). About 63.7% of people in India consider entrepreneurship to be a desirable career choice, against the global average of 62.4%.
Bangalore, particularly, has emerged to be the capital of GCC or Global Capability Centers, with about half of the global 1200 multinationals having set up their R&D centers in India.
.Beyond the current unicorns, the next wave of 100 startups in India are much more diverse, going beyond consumer to B2B marketplaces, healthtech, enterprise-tech, robotics, fintech and many more. Some of these startups include Grey Orange Robotics, Medgenome, Blackbuck, Bankbazaar, Uniphore, etc
Only now we have vaccinations, livestock management started...Luckily these things are happening faster than before. Along with insurance cover we don't have to lose productivity. We will suddenly have some folks consolidating in the 50-100 range...I still remember reading dharampalji's work and hyperventilating...ramana wrote:Good question.tandav wrote:The more important question is how do we become competitive. 10 years is a massive amount of time and the world will not wait around. We have to step up our game by orders of magnitude.
So when and which sectors need economic reforms to become competitive.
I think the dairy sector will never become competitive as farm holdings are average 1-2 cows.
Need to increase the holding to up to 25-50.
And its impact on cattle feed, veterinary services etc.
The SJM stance of just say no is not going to be helpful.
And they have powerful backers.
And what are the services industry issues with RCEP?
I know about dumping etc.
The key point to note is the gdp contribution of services in their countries..so what is yours is mine; what is mine is mineMode 1 is cross-border supply between countries.
Mode 2 refers to consumption abroad.
Mode 3 means commercial presence, which includes joint ventures between foreign service providers and domestic businesses.
Mode 4 is for movement of people.
Mode 4 services is of key interest to India.
https://m.economictimes.com/news/econom ... 668360.cmsServices contribute more than 50% to the national GDP in all RCEP countries.
Add to this the environmental concerns of running massive dairy farms that require insane resource inputs including water and feed (corn/soy etc.) Ethically and environmentally this is a no go. India should sponsor/champion vegan/vegetarian movements globally as a means to alleviate climate change. This is CRUCIAL. The debilitating effect it would have on Anzac dairy production/exports is a side effect.Vayutuvan wrote:Do Ozzies practice factory farming? Kiwis? I don't our farmers can stomach the cruelty involved in factory farming and hence we would not be competitive. That said, there is a worldwide movement to stop factory farming. The protests are going to be louder and louder since the environmental and health problems meat production/consumption are coming out now.
And every so often an unsuspecting child falls down an abandoned tubewell borechetak wrote:When we "export" basmati rice, we actually export our scarce resources of freshwater.
It takes about 800 kgs of water to produce a kg of rice.
So, annually we are, in reality, exporting hundreds of millions of tonnes of our already scarce freshwater.
This is the cost that is hidden because farmers in punjab and haryana get free power to run tube wells 24X7 to extract free groundwater to grow rice in quantities far in excess of our own needs, purchased by the govt at MSP and a lot of it left to rot in FCI warehouses.
The Value of Sugarcane is the Liquor business and Politicans associated with it thrive on it, White Sugar taken out early through Centrifuges is actually the by product and the Molasses is where the big and somewhat illegal money rests. There is a whole mafia around the liquor business which benefits from at the cost of Indian health.yensoy wrote:And every so often an unsuspecting child falls down an abandoned tubewell borechetak wrote:When we "export" basmati rice, we actually export our scarce resources of freshwater.
It takes about 800 kgs of water to produce a kg of rice.
So, annually we are, in reality, exporting hundreds of millions of tonnes of our already scarce freshwater.
This is the cost that is hidden because farmers in punjab and haryana get free power to run tube wells 24X7 to extract free groundwater to grow rice in quantities far in excess of our own needs, purchased by the govt at MSP and a lot of it left to rot in FCI warehouses.
I can even tolerate basmati export since it is somewhat of premium product; but sugarcane production just doesn't cut it - sugarcane/sugar is a low value commodity which is better produced by countries which have much more land and water resources to throw at it.
This Liquor related Sugarcane cultivation is the main reason for the Cauvery crises as Both Karnataka and TN both grow lots more sugarcane which 100 years ago was mainly grown for Jaggery in cooking. Similarly in Maharashtra this has been main reason for farmer distress. And by you know the Sugar MIlls and related Coop Banks are run by Mafia Politicians. It is a viscous cycle.This is counter to the way the oddly named Indian Made Foreign Liquor (IMFL) category was conceived in the past. These were made by flavouring and colouring extra neutral alcohol that was derived from molasses, cheaply available as a by-product of sugar manufacture. Nearly all Indian versions of whisky, brandy, gin, vodka were originally made from molasses.
Very astute observation regarding molasses. I did notice your "deliberate" typo? "viscous cycle"Aditya_V wrote:...
This Liquor related Sugarcane cultivation is the main reason for the Cauvery crises as Both Karnataka and TN both grow lots more sugarcane which 100 years ago was mainly grown for Jaggery in cooking. Similarly in Maharashtra this has been main reason for farmer distress. And by you know the Sugar MIlls and related Coop Banks are run by Mafia Politicians. It is a viscous cycle.
I have also stated before in this forum about the tensions between Ka and TN due to the new crop of sugarcane farmers in Mandya area. For the record Cauvery delta region around Tanjore has been a breadbasket for 1000s of years, so it is the upstream usage which is the new factor here - not saying that Ka farmers don't have a claim but it has to be worked out amicably and sensibly, especially when water is diverted for a commodity crop like sugarcane.Just one of the mindless policies we are running from govt level. Another is flower farming. Roses need excessive water for example. Like 15 times more than what some grain crops would need. But it gives good money as export to Europe during winter time especially Chrisms. Many hybrid varieties are being cultivated mindlessly without thinking their suitability to local conditions. I read once that the type of rice cultivated in KA these days need more water than the varieties used in Punjab Haryana..!! Some "smart" farmers started taking crops like roses, strawberries in one of the rather dry areas of north MH. Some can build green houses and pump out a lot of ground water and earn good mullah like this, rest all suffer.Aditya_V wrote: This Liquor related Sugarcane cultivation is the main reason for the Cauvery crises as Both Karnataka and TN both grow lots more sugarcane which 100 years ago was mainly grown for Jaggery in cooking. Similarly in Maharashtra this has been main reason for farmer distress. And by you know the Sugar MIlls and related Coop Banks are run by Mafia Politicians. It is a viscous cycle.
S Gurumurthy
@sgurumurthy
Nov 8
If any single event turned the Indian Economy it was the historic DM decision on 8.10.2019. It was as courageous a decision as the 1998 pokharan atom blast. The DM decision was financial pokharan blast. Unbiased history will record how this single measure made turned the economy
S Gurumurthy
@sgurumurthy
·
Nov 8
The implementation of GST would have been a non starter without DM. With High Denomination Notes dominating trade, the GST in Cashland would have destroyed the economy. Most commentators failed to understand how DM cleaned the ground for GST
S Gurumurthy
@sgurumurthy
·
Nov 8
The informal economy which accounted for 50% of total economy could never have been brought into formalisation largely without DM. It had had 3 major and positive impacts unthinkable otherwise.
S Gurumurthy
@sgurumurthy
·
Nov 8
The first is the rise in the no of tax payers. The direct tax returns rose from 40m in 14/15 to 67m in 17/18, by 25% And tax collections from 7lac cr to 10lac cr net. New returns filed rose to more than 1cr. By 25%. Corporate returns by 17%. In 2018-19 it it rose by 11m again
S Gurumurthy
@sgurumurthy
·
Nov 8
Had notes in Circulation grown how they were growing before DM the notes in Circulation now would have been 25 lac cr. It is now only 22.4lac cr. There has been huge increase in digital Economy. DM changed the psychology of the nation
S Gurumurthy
@sgurumurthy
·
Nov 8
It was not without pain. But nothing big happens without pain. There were two errors in scheduling DM. The Mudra should have been implemented before DM, and the tax immunity schedule which preceded DM should have coincided with it. This would have reduced the pain.
S Gurumurthy
@sgurumurthy
DM prevented the collapse of the Economy which was sitting on asset inflation of stocks, gold and Real estate by over 30% per annum in six years to 2010, unable to shed it even now, particularly in real estate & housing. Stocks are over valued even now, artificially by FII inflow
S Gurumurthy
@sgurumurthy
·
Nov 8
The pain of the pleasure of asset inflation led growth of 2000-2011 found in the NPAs that was the outcome of the needless & unabsorbable inflow of over 170 billion dollars to 2008, which YV Reddy wanted stopped, but PC and Dr Singh wanted him not to stop
S Gurumurthy
@sgurumurthy
·
Nov 8
The unwanted money flowed into the banking system and became unlendable, forcing the govt to zero rate tariffs to allow cap goods imports that turned into CAD on the one hand and into NPA on the other. See my article on A decade of Economic destruction.
This article would have been true three years ago. India is already Mini Pakistan. Look at some numbers for Year 2018-19 (from Commerce Deptt):Kaivalya wrote:Endorsement of Indian government action by Forbes - thought it was a funny but scary title : Modi will not let China turn India into another Pakistan
https://www.forbes.com/sites/panosmourd ... ae64b6ebfc
A few of the countries in the south east Asian region also have been turned into pakistan in a short time.
Sugarcane is a preferred crop for Farmers with access to water. There are multiple reasons why farmers prefer it. Their is a MSP for Sugarcane and though the payments may be delayed farmers eventually get it. Crop is safe from many pests and once grown it can withstand weather related issues. A hailstorm in late harvest season can destroy a standing wheat or rice crop but it has no impact on Sugarcane. Produces good amount of fodder for the livestock too.yensoy wrote:chetak wrote:When we "export" basmati rice, we actually export our scarce resources of freshwater.
I can even tolerate basmati export since it is somewhat of premium product; but sugarcane production just doesn't cut it - sugarcane/sugar is a low value commodity which is better produced by countries which have much more land and water resources to throw at it.
Was talking about punjab.CalvinH wrote:Sugarcane is a preferred crop for Farmers with access to water. There are multiple reasons why farmers prefer it. Their is a MSP for Sugarcane and though the payments may be delayed farmers eventually get it. Crop is safe from many pests and once grown it can withstand weather related issues. A hailstorm in late harvest season can destroy a standing wheat or rice crop but it has no impact on Sugarcane. Produces good amount of fodder for the livestock too.yensoy wrote:
+1. The bad news is piling on:Rishi_Tri wrote:This article would have been true three years ago. India is already Mini Pakistan. Look at some numbers for Year 2018-19 (from Commerce Deptt):Kaivalya wrote:Endorsement of Indian government action by Forbes - thought it was a funny but scary title : Modi will not let China turn India into another Pakistan
https://www.forbes.com/sites/panosmourd ... ae64b6ebfc
A few of the countries in the south east Asian region also have been turned into pakistan in a short time.
India Export to China - $ 16.8 BN. India Import from China - $ 70.3 BN > Deficit $53.5 BN
India Export to ASEAN - $ 37.5 BN. India Import from ASEAN - $ 59.3 BN > Deficit $21.8 BN
Given that the deficit above totals to $75.3 BN is it any surprise that there is job crisis in India. India is employing Chinese and ASEANians at cost of Indian labor.
Industry after Industry has been destroyed - Household Goods, White Goods, Solar Power, Mobile Phones, Electronics. Industries that employ millions. Does anyone remember the likes of Micromax, Lava? Literally every white good sold is White Labeled Chinese Product. Every mall, furniture shop, is over-run with Chinese and ASEAN products.
Now, as the election results show (despite 370)- turkey is coming home to roost. Not signing RCEP is least that should have been done. What is needed is 200% duty on all non electronics items and 100% duty on all electronics items - tomorrow - if there is to be hope of growth and job creation. Else worse election results are in store. 303 bump was because of Balakot.
Anyway, I have been whining about this for last three years, so pardon me. Just that the solutions are in plain sight and pains me a lot. PM Modi (am a huge supporter) risks going down in history as being worst for Indian Economy in his enthusiasm for Global Trade and what not. Once again pardon me.
Nikhil T wrote:+1. The bad news is piling on:Rishi_Tri wrote:
This article would have been true three years ago. India is already Mini Pakistan. Look at some numbers for Year 2018-19 (from Commerce Deptt):
India Export to China - $ 16.8 BN. India Import from China - $ 70.3 BN > Deficit $53.5 BN
India Export to ASEAN - $ 37.5 BN. India Import from ASEAN - $ 59.3 BN > Deficit $21.8 BN
Given that the deficit above totals to $75.3 BN is it any surprise that there is job crisis in India. India is employing Chinese and ASEANians at cost of Indian labor.
Industry after Industry has been destroyed - Household Goods, White Goods, Solar Power, Mobile Phones, Electronics. Industries that employ millions. Does anyone remember the likes of Micromax, Lava? Literally every white good sold is White Labeled Chinese Product. Every mall, furniture shop, is over-run with Chinese and ASEAN products.
Now, as the election results show (despite 370)- turkey is coming home to roost. Not signing RCEP is least that should have been done. What is needed is 200% duty on all non electronics items and 100% duty on all electronics items - tomorrow - if there is to be hope of growth and job creation. Else worse election results are in store. 303 bump was because of Balakot.
Anyway, I have been whining about this for last three years, so pardon me. Just that the solutions are in plain sight and pains me a lot. PM Modi (am a huge supporter) risks going down in history as being worst for Indian Economy in his enthusiasm for Global Trade and what not. Once again pardon me.
Industrial output contracts for the second month in row
September IIP contracted by 4.3%, at a much sharper pace, as against -1.1% in August
A slowdown was witnessed in manufacturing sector, which contracted by 3.9% in September as compared to 4.8% growth a year ago
This is the height of stupidity. If you want to talk politics, use the politics thread. Don't post here and ask for pardon.Rishi_Tri wrote:303 bump was because of Balakot.
Anyway, I have been whining about this for last three years, so pardon me. Just that the solutions are in plain sight and pains me a lot. PM Modi (am a huge supporter) risks going down in history as being worst for Indian Economy in his enthusiasm for Global Trade and what not. Once again pardon me.
While surplus figures may be correct, not the growth rate figures. China figures are always to be taken with a big bag of salt.kit wrote: Why is china still having growth rate despite global downturns ..they still have massive surplus against most other countries.
Compare this performance with India’s broader real estate industry, where as many as 500 firms face bankruptcy and Citigroup Inc. estimates as much as 800 billion rupees ($11 billion) of debt is locked within incomplete projects. A credit crunch is feeding into -- and worsened by -- an economic slowdown that’s hitting Indians’ demand for goods and services.
Number of developers have reduced by 46% from 2012 to 2018.
While the government plans to set up a 250 billion-rupee fund to salvage stalled residential projects, it is estimated to only be sufficient to salvage some 6% of constructions that are running behind schedule.
