Indian Economy News & Discussion - Nov 27 2017

[neeraj]

In the 5G space does India have anything of its own or is it down the Huawie route.
Hopefully this is being considered
https://www.eenewsanalog.com/news/india ... -5g-modems
https://www.signalchip.com/

[Kaivalya]

Some good news for contract manufacturing : The move will force premium players to reduce costs by 20-40% . Please note that this unit is returning from Vietnam ostensibly because of the favorable tax regime( where it moved to from India )


https://inc42.com/buzz/make-in-india-sa ... ith-dixon/

[CalvinH]

Maharashtra is really the Big Daddy. The difference between it and the other states is huge. Even on a big base, GST collections growth rate is impressive.

The contribution may be because of Mumbai port and large Import/Export trading using that Port.

[Kaivalya]

https://economictimes.indiatimes.com/bl ... -in-india/

The recent report about Huizhou in southeast China having turned into a ghost city after South Korean smartphone giant Samsung closed down its three-decade-old factory there in September 2019, and shifted its base to Noida, Uttar Pradesh.

It not only needs to set out land and customs reforms, but also strengthen its supply chain model. Member companies of USISPF have invested $50 billion in the last four years, creating a number of jobs and promising to generate more in the future as the ecosystem around these factories grows.

[Raghunathgb]

GST Collections

Few points here.

1) In North East arunachal Pradesh has seen fantastic growth with 125% growth. Phenomenal. I always believed north east has potential which is unexplored. A city like Bangalore (business wise ) in North East would wonders.

2) Haryana numbers looks extremely good, probably due to gurgoan contribution. You hardly hear about this state on economic fronts.

3) Karnataka seems to performing quite well. It has overtaken tamilnadu in GST collections and per capita income all due to high growth in last 7-8 years. Contrary to most opinions Karnataka has started industrialising various centers like nanjanagudu , tumour, narsapura all taking advantage of its proximity to Bangalore.

4) Kerala has highest per capita income among southern states yet it's GST contribution looks disappointing. Lack of large scale industries is a big worry there.

Overall it still looks like northern and eastern states need to do lot of catch up to help achieve india reach 5 trillion economy

[CalvinH]

Gujrat is #2 after MH. I thought southern states like TN and KA are ahead of it.

Uttarakhand contribution is same as Punjab and greater than Bihar. What could be the reason.

[Raghunathgb]

Gujrat is #2 after MH. I thought southern states like TN and KA are ahead of it.

Uttarakhand contribution is same as Punjab and greater than Bihar. What could be the reason.

KA is ahead of Gujarat at #2. Tamilnadu as I observe has been slipping last few years and loosing it's famed position once . If KA continues same growth it might overtake GDP of Gujarat and tamilnadu in few years even with lesser population (due to high per capita income )

[tandav]

Need to hive off / create Tier 1 Cities as union territories. The productivity of cities cannot be tied to the fortunes of the state it resides in. Perhaps even consider dissolving States govt and only have district level governance + Central Govt.

GST Collections

Few points here.

1) In North East arunachal Pradesh has seen fantastic growth with 125% growth. Phenomenal. I always believed north east has potential which is unexplored. A city like Bangalore (business wise ) in North East would wonders.

2) Haryana numbers looks extremely good, probably due to gurgoan contribution. You hardly hear about this state on economic fronts.

3) Karnataka seems to performing quite well. It has overtaken tamilnadu in GST collections and per capita income all due to high growth in last 7-8 years. Contrary to most opinions Karnataka has started industrialising various centers like nanjanagudu , tumour, narsapura all taking advantage of its proximity to Bangalore.

4) Kerala has highest per capita income among southern states yet it's GST contribution looks disappointing. Lack of large scale industries is a big worry there.

Overall it still looks like northern and eastern states need to do lot of catch up to help achieve india reach 5 trillion economy

[Raghunathgb]

Need to hive off / create Tier 1 Cities as union territories. The productivity of cities cannot be tied to the fortunes of the state it resides in. Perhaps even consider dissolving States govt and only have district level governance + Central Govt.

Very difficult in southern states where linguistic emotions run pretty high. We have seen how telangana and andhra fought for Hyderabad. So I doubt government would consider such moves.

[jpremnath]

Forget Southern States, try Maharashtra ..they wont let Mumbai go.

Tier 1 cities are the primary revenue source for all the states and it will always be the case. If it comes to a situation that States realise investing and developing a city means it will be taken off beyond a point of growth, they will think it is not worth it. And it is not like Union territories are roaring with growth and development. Every state needs one city that is a magnet of business and industry. Decentralised growth with multiple cities sounds nice on paper, but it hasnt worked for Kerala.

[jpremnath]

Need to hive off / create Tier 1 Cities as union territories. The productivity of cities cannot be tied to the fortunes of the state it resides in. Perhaps even consider dissolving States govt and only have district level governance + Central Govt.

Leaving everything to the Central govt will not work out how we wish it to be..Even with the current govt, barring a handful of ministers, the rest lack any skills or leadership needed in those roles.. Now imagine the fate of the entire country left to the same group..District level admin wouldnt have the financial resources to do any significant development and most of the country will be ignored.

[kvraghav]

Need to hive off / create Tier 1 Cities as union territories. The productivity of cities cannot be tied to the fortunes of the state it resides in. Perhaps even consider dissolving States govt and only have district level governance + Central Govt

The moment you do that, there will large scale problems like water. None of the big cities are in major river cachement area or in the direction of water flow. They all lift water from others share and hence they do not have any right to it. This alone will make cities like Bangalore go dry if you remove it outside Karnataka. People of the state have given their share to keep these cities running and should not be punished for working hard to aid some lazy states. I would actually suggest 50 percent local reservation to decongest the cities and also move some jobs to other states.

[Supratik]

You guys have missed the new kid on the block. WB economy has started moving again. 2018-2019 growth rates was highest in India among major states at 12.6%. This year GST collection up 18% which means another year of high growth.

[tandav]

Need to hive off / create Tier 1 Cities as union territories. The productivity of cities cannot be tied to the fortunes of the state it resides in. Perhaps even consider dissolving States govt and only have district level governance + Central Govt

The moment you do that, there will large scale problems like water. None of the big cities are in major river cachement area or in the direction of water flow. They all lift water from others share and hence they do not have any right to it. This alone will make cities like Bangalore go dry if you remove it outside Karnataka. People of the state have given their share to keep these cities running and should not be punished for working hard to aid some lazy states. I would actually suggest 50 percent local reservation to decongest the cities and also move some jobs to other states.

China solves this by allowing cities to incorporate neighboring districts into their municipal limits... Cities will expand to incorporate water districts and catchment in this fashion.

[Supratik]

December services PMI at 53.3. New business growth at 38 month high.

[Rahulsidhu]

https://www.livemint.com/budget/news/go ... 42775.html

India's government is likely to cut spending for the current fiscal year by as much as 2 trillion Indian rupees as it faces one of the biggest tax shortfalls in recent years, three government sources said.

Asia's third largest economy, which is growing at its slowest pace in over six years because of lack of private investment, could be hurt further if the government cuts spending.

But with a revenue shortfall of about 2.5 trillion rupees, the government has little choice to keep its deficit within "acceptable limits", the first official, who did not want to be named, told Reuters.

Despite all the grand infrastructure investment plans being laid out, this is the sad reality.
How will they finance all those investments if they keep insisting on cutting the deficit? Chalk one more victim up to neoliberal economics.

Even a surprise corporate tax rate cut announced by Finance Minister Nirmala Sitharaman earlier this year failed to spur private investment in the economy.

This would not be a surprise to Keynsians/Post-Keynesians, who maintain that it is demand that is the prime driver of investments. Businesses don't expand capacity just because they have cash lying around (although it does help when they have already perceived demand).

The government is likely to keep the fiscal deficit under 3.8% of gross domestic product, sources said, while letting it slip from its earlier set target of 3.3% for the year.

While it is good that we are now talking of 3.8% instead of 3.3%, (i think slippage of 0.5% is allowed under FRBM rules in a slowdown). But I really wonder if the current govt is not overburdening itself with FRBM and Washington Consensus rules.

[Rahulsidhu]

My 2 paise on the current state of the economy:

Growth and pessimism have already bottomed out in the last quarter. Also idiosyncratic factors like BS VI rollout will be behind us in 2020. Add to that the +ve base effect from 2019, and favorable global environment (unless there is a war and oil prices sustain at high levels). I think we should see things improving steadily this year.

On the other hand, govt. cutting spending will have a huge -ve impact and lean against the recovery. So it will be a gradually expanding private sector vs. shrinking govt. sector for Jan-Mar quarter. Apr onwards, govt. should be back spending in the new fiscal year, further aiding the recovery.

[A Nandy]

https://economictimes.indiatimes.com/ne ... 133424.cms

The reason why we’re excited about Aadhaar at 10, is because simply giving an ID was never the end, only a means. The real benefits accrue now. For example, India has made the single largest jump in financial accounts access by any country ever. A BIS study claims what India did in the last 10 years, would’ve normally taken 47 years. What other developments can Aadhaar fast-track in the next 10 years?

[tandav]

My 2 paise on the current state of the economy:

Growth and pessimism have already bottomed out in the last quarter. Also idiosyncratic factors like BS VI rollout will be behind us in 2020. Add to that the +ve base effect from 2019, and favorable global environment (unless there is a war and oil prices sustain at high levels). I think we should see things improving steadily this year.

On the other hand, govt. cutting spending will have a huge -ve impact and lean against the recovery. So it will be a gradually expanding private sector vs. shrinking govt. sector for Jan-Mar quarter. Apr onwards, govt. should be back spending in the new fiscal year, further aiding the recovery.

Bad news for Infra businesses and a long term growth vehicle sabotaged... cost cutting should be done by giving stiff targets to Indian Babus or enmass give them golden handshakes and begin closing all Loss making state PSU and selling their assets to private sector. Most Babus simply eat salary and then go on to eat pension (a privilege not available to a vast majority of citizens), India cannot afford these sit on their haunches swat flies type babus anymore.

[tandav]

The Sad part is that groups like JayPee Infra which essentially built NOIDA from ground up are now loan defaulters due to political shenanigans... basically these poor buggers trusted the Indian Govt to make payments etc on time however as soon as govt changed their contracts were stonewalled and they could not make the loan repayments. The default of the Indian real estate and Infra business is a sordid saga of the defaults of the Indian State controlled by its Politicians and incompetence of the India Babucracy/Bureaucracy. I have a suggestion make salary of Babus contingent on delivery of projects and things will improve dramatically.

[SRajesh]

https://timesofindia.indiatimes.com/cit ... 129405.cms
And amidst all the gloom this as well!!
Looks like politicians involved in duping the banks or aleast in cahoot with the businessmen!!
We should have stringent laws for the economic offenders and let the civil cases drag on for decades(And Nirbhaya took 7yrs)
The politican/babu/underworld/business nexus extends far and deep.
Breaking this is a monumental task!!

[Supratik]

Shortfall in govt infrastructure spending can be compensated by getting the private sector more involved.

[tandav]

The moment you do that, there will large scale problems like water. None of the big cities are in major river cachement area or in the direction of water flow. They all lift water from others share and hence they do not have any right to it. This alone will make cities like Bangalore go dry if you remove it outside Karnataka. People of the state have given their share to keep these cities running and should not be punished for working hard to aid some lazy states. I would actually suggest 50 percent local reservation to decongest the cities and also move some jobs to other states.

China solves this by allowing cities to incorporate neighboring districts into their municipal limits... Cities will expand to incorporate water districts and catchment in this fashion.

In China all water resources come under sole prerogative of the Central Government (Ministry of Water: for water supply) and Ministry of Construction (for waste water treatment). Both these ministries design schemes based on geography and maximum benefit rather than be held hostage to regional issues. I could not find evidence of any separate chinese state ministries who manage water. Will update this as I find data
https://en.wikipedia.org/wiki/Water_resources_of_China

[kvraghav]

^^^
We have democracy and a federal structure. This works for communist setup. The regional issues are here to stay and the federal agreements are the ones which is keeping the country intact. We do not have genocidal security forces which can crush any dissent like the Chinese and all this just to assuage some lazy states who want to just carry on with their business as usual attitude rather than invest in future. For statistics, population of Kerala had neutral growth in the last census decade and this is again due to the state politics that is not creating any employment and the educated masses are forced to move out.
Another issue of this concentrating on one city is that, this will drive up the real estate prices such that the native and the poor population will relegated to live in capsule apartments, something that we see more in the great Chinese model that you seem to be so much happy about.

[Supratik]

150 private trains. Hope they make the rolling stock mandatory make in India.

https://swarajyamag.com/news-brief/expl ... 2-clusters

[vinod]

India has banned import of palm oil

[kit]

https://economictimes.indiatimes.com/ne ... 156929.cms


India has banned imports of refined palm oil, a government notification said on Wednesday, as New Delhi tries to curb imports from Malaysia following criticism from Kuala Lumpur on India's actions in the Kashmir region and its new citizenship law.

India imports most of its refined palm oil from Malaysia and crude palm oil from Indonesia.

Indonesia and Malaysia are the top two producers of palm oil, while India is the biggest importer of palm oil.

Read more at:
https://economictimes.indiatimes.com/ne ... aign=cppst

[Supratik]

hope they have made provisions for more palm oil imports from Indonesia to prevent a price rise.

[Rishirishi]

Leaving everything to the Central govt will not work out how we wish it to be..Even with the current govt, barring a handful of ministers, the rest lack any skills or leadership needed in those roles.. Now imagine the fate of the entire country left to the same group..District level admin wouldnt have the financial resources to do any significant development and most of the country will be ignored.

Most Indian districts would actually qualify for being small seperate nations. Let us see how the experiment with J&K goes.
States are an extra layer of administration. The states were created in a time when not even telephone existed. I cant see why it is not possible to give more responsibility to the district level.
Perhaps districts are able to handle issues like school, public health and local roads and local infrastructure.

National agencies could handle issues like law and order, courts, internal security, public law and order, water supply, agricultural policy and national infrastructure like (highways, airports, rail, power etc).



Please find below the responsibilities of the state governments.
Executive: State Executive comprises the governor and the chief minister with his council of Ministers. The Governor of each state is appointed by the President for a period of five years. Executive power of the state is vested in the governor. But the actual powers for proper functioning of the state are vested in the CM and his council of ministers.

Judiciary: State high courts have jurisdiction over the whole state. In the states, the judicial setup is headed by the chief justice. He manages and controls the entire judicial system of the state pertaining to criminal, civil and all other forms of litigation. State high courts have to, however, report to the Supreme Court of India, which may override the high court’s findings and judgements.

Legislature: Each state has a legislative assembly. It consists of the governor and one House or two Houses, as the case may be. In seven states, the state government’s legislature is bicameral. These states are Bihar, Andhra Pradesh, Telangana, Jammu and Kashmir, Karnataka, Maharashtra and Uttar Pradesh. These states have two Houses known as legislative council and legislative assembly. The rest of the states are unicameral. There is only one House known as legislative assembly. State Legislature or State Assemblies are headed by the CM.

Legislature has two divisions

Vidhan Parishad or Legislative Council

Not more than one-third of total number of members or 40 members in legislative assembly of the state, except in J&K with 36 members.
Elected members are called Member of Legislative Council (MLC)
Elected by Governor, MLAs, standing graduates etc.
No MLC can be member of Cabinet of Ministers.
Vidhan Sabha or Legislative Assembly

Not more than 500 and not less than 60 members (an exception is the Legislative Assembly of Sikkim. It has 32 members)
Fixed number of seats in every state.
Different number of seats for different states
Elected members are called Members of Legislative Assembly (MLA)
Elected by the people of that state
Roles and Responsibilities of the state governments

State governments have separate departments for proper functioning of the state. States have jurisdiction over education, agriculture, public health, sanitation, hospitals and dispensaries and many other departments.

Internal security: The state governments have to maintain the internal security, law and order in the state. Internal security is managed through state police.
Public order: States have jurisdiction over police and public order
Education: Providing a public education system, maintaining school buildings and colleges, employment of teachers, providing help to under privileged students all come under the education department of the state.
Agriculture: The state governments have to provide support for farmers, funds for best farming practices, disease prevention and aid during disasters such as floods or droughts.
Finances: State legislature handles the financial powers of the state, which include authorisation of all expenditure, taxation and borrowing by the state government. It has the power to originate money bills. It has control over taxes on entertainment and wealth, and sales tax.
Reservation of bills: The state governor may reserve any bill for the consideration of the President.
Transport: State government runs the rains, trams, bus and ferry services and other public transportation in the cities and towns of the States.
Water supply: Water supply to cities and towns for drinking, including irrigation for farmers, is the responsibility of the State governments.
Budget: State governments make budget for state.
Allocation of funds: It has the power to give funds to all its organizations like Zila Parishad, corporation, and other departments[/quote]

[tandav]

Is there Reimagining the Indian Civilization Nation State thread? Where we can propose what would work better in the future. I have some ideas which I am penning down... and this purely is an draft exercise and subject to modification as my thoughts get challenged by inputs from my circle.

1) No private land ownership: We have done nothing to create land, we have no rights to "Own" it, we only have rights to "Use" under a rent or lease agreement. Same concepts apply to common resources such as water. Right to sustainably develop exploit such resources should be there... rent to be paid to the state for exercising such a right. Of course say I use rented land and invest create a massive lake to capture rain water as an entrepreneur, I should be able to sell the water to agriculture and industry around me for profit (there are some other issues but this is the general priniciple). Anything manmade on top of land is "Owned" by the makers... who can sell or take rent from users.

2) Citizens have to work and pay taxes. Their hard work in their productive years will leave them with a retirement fund and the community/govt must sustain "workers" in the old age and youngsters during their learning days. Note I only talk about workers and not citizens... those who waste away their time in youth and contribute nothing will get no state support in their old age and will have to rely on their own resources.

3) Administratively Units (AUs) should be much smaller than current states... the design should be such that if a given AU does not want to participate in a project of national importance they can be bypassed by taking the other AUs. System designed to make the AUs compete with each other in getting onboard with projects of importance. Each AU should be no more than say 10 Lakh people (this may limit things especially when scale is required). Infrastructure built in the AU will be funded by land/resource rentals/lease (ref clause1) + Income Tax received from citizens residing within the AU.

4) Borders of the India Administrative Union (IAU) can be expanded by absorbing by democratic consent and/or military action to acquire other such units around its periphery as mandated by the Parliament of UIAU.

5) All citizens get a NRC linked AADHAAR card that guarantees free movement across IAU. They can vote at the present AU (after proof of ~1 year residency) to elect the AU-CEO (enables economic activity), AU-Judge(resolves disputes as per laws of IAU), AU-Sherrif(Maintains L&O) troika who then run the AU to ideally maximize wealth generation and/or follow the mandate of that particular AU. The AU CEO is remunerated by taxes / leases funds generated by the AU itself (So his/her Loyalty is to the citizens of the AU). The AU-Judge and AU-Sherrif is remunerated by IAU as (to ensure their loyalty is to the IAU system first).

6) Each AU may also have a post called Governor nominated by IAU Parliament whose job is to see the laws/standards of IAU is correctly implemented by the AU-CEO/AU-Judge/AU-Sherrif (3rd party QA/QC).

More later

[JayS]

Is there Reimagining the Indian Civilization Nation State thread? Where we can propose what would work better in the future. I have some ideas which I am penning down... and this purely is an draft exercise and subject to modification as my thoughts get challenged by inputs from my circle.

1) No private land ownership: We have done nothing to create land, we have no rights to "Own" it, we only have rights to "Use" under a rent or lease agreement. Same concepts apply to common resources such as water. Right to sustainably develop exploit such resources should be there... rent to be paid to the state for exercising such a right. Of course say I use rented land and invest create a massive lake to capture rain water as an entrepreneur, I should be able to sell the water to agriculture and industry around me for profit (there are some other issues but this is the general priniciple). Anything manmade on top of land is "Owned" by the makers... who can sell or take rent from users.

2) Citizens have to work and pay taxes. Their hard work in their productive years will leave them with a retirement fund and the community/govt must sustain "workers" in the old age and youngsters during their learning days. Note I only talk about workers and not citizens... those who waste away their time in youth and contribute nothing will get no state support in their old age and will have to rely on their own resources.

3) Administratively Units (AUs) should be much smaller than current states... the design should be such that if a given AU does not want to participate in a project of national importance they can be bypassed by taking the other AUs. System designed to make the AUs compete with each other in getting onboard with projects of importance. Each AU should be no more than say 10 Lakh people (this may limit things especially when scale is required). Infrastructure built in the AU will be funded by land/resource rentals/lease (ref clause1) + Income Tax received from citizens residing within the AU.

4) Borders of the India Administrative Union (IAU) can be expanded by absorbing by democratic consent and/or military action to acquire other such units around its periphery as mandated by the Parliament of UIAU.

5) All citizens get a NRC linked AADHAAR card that guarantees free movement across IAU. They can vote at the present AU (after proof of ~1 year residency) to elect the AU-CEO (enables economic activity), AU-Judge(resolves disputes as per laws of IAU), AU-Sherrif(Maintains L&O) troika who then run the AU to ideally maximize wealth generation and/or follow the mandate of that particular AU. The AU CEO is remunerated by taxes / leases funds generated by the AU itself (So his/her Loyalty is to the citizens of the AU). The AU-Judge and AU-Sherrif is remunerated by IAU as (to ensure their loyalty is to the IAU system first).

6) Each AU may also have a post called Governor nominated by IAU Parliament whose job is to see the laws/standards of IAU is correctly implemented by the AU-CEO/AU-Judge/AU-Sherrif (3rd party QA/QC).

More later

If you dont find a thread (at least I haven't), start one. I like the idea. We should encourage thoughts towards a more indic system. But this is not the correct thread for it definitely.

[Karan M]

Modi is meeting desi business folks back to back. Looks like the economy is back in focus. I fully expect Budget 2020 to be path-breaking and "unleash animal spirits" as our desi-business reporters are fond of quoting (looks like they all subconsciously quote PSmith). Modi just met with a whole bunch of economists as well (hopefully something positive, not airy fairy will result) and also MSME guys are now meeting the Government and FinMin.

[Supratik]

More on the palm oil story. It is complex.

https://swarajyamag.com/business/india- ... ole-reason

[hanumadu]

National Mission on Oilseeds and Oil Palm (NMOOP)
https://nmoop.gov.in/Default.aspx

Status paper but no data after 2016.
https://nmoop.gov.in/Publication/Status ... ilPalm.pdf

India imports about 2/3 of its edible oils. It imports nearly as much other edible oil as palm oil.

India has nearly 20 million hectares of vegetable oil yielding crops (gound nut, sesame, sunflower etc) and only 3 lakh hectares of oil palm production. Palm yields about 5 times as much oil per hectare as other crops. By diverting about 2.5 million hectares of India's crop under other oil seeds to palm oil production we can eliminate our palm oil import. But that still leaves 6-7 million tonnes per year of other edible oil imports. Other crops can be grown in inter row and intra rows of the palm trees, especially during the gestation period of 4-5 years when newly planted trees start yielding oil.

Oil palm trees seem to require a lot more water than other crops. SE Asian countries like Malaysia and Indonesia are suitable because of sufficient amount of rain. In India, they will have to be irrigated. But considering the oil yield is much higher, I don't see why can't reduce our palm oil imports drastically in the next 10-15 years or even sooner if there is a concerted push from the government.

Our edible oil consumption has been increasing way faster than our population growth.

[Aditya_V]

Quite Frankly, Palm oil is good for soaps but not good for foodstuffs, it is better we substitute Palm oil from road side eateries, Biscuits, Chips, Ice cream etc

[Dileep]

There this oil palm plantation near here. A PSU called "Oil Palm India Ltd" runs it, well, typically like a PSU. Not sure if they produce enough oil for cooking in their canteen

[hanumadu]

Quite Frankly, Palm oil is good for soaps but not good for foodstuffs, it is better we substitute Palm oil from road side eateries, Biscuits, Chips, Ice cream etc

There is no proof that palm oil is better or worse than any other oil. Europe imports more palm oil than us per capita. If we wan't to use only other vegetable oils, we have to increase our crop yields three times. Under the NMOOP, India is trying to increase production of oil oil seed crops, but palm oil will have to play a big role.

[chetak]

twitter

First ever banker to be punished in this way in India.

[nam]

A PSU called "Oil Palm India Ltd" runs it

Is there anything GoI doesn't have it's fingers in?

We would have a great gdp growth if GoI is told to mind it's own "business".

[nandakumar]

There this oil palm plantation near here. A PSU called "Oil Palm India Ltd" runs it, well, typically like a PSU. Not sure if they produce enough oil for cooking in their canteen

I am sure they do. But the staff there are sure to want coconut oil for cooking. Fancy frying banana chips in anything but coconut oil!