Indian Economy News & Discussion - Nov 27 2017

[vijayk]

Got a question

Looking at the budget of AP
https://www.prsindia.org/parliamenttrac ... 82%20crore.




Grants-in-aid from Center in 2020


Budgeted 61,072
Real 21,876

Why is there so much discrepancy?

[Ambar]

Thanks for the long interesting explanation Adrija! Do you mind also adding supporting data that can make the description more solid - e.g. historical time series on capital/labour input and total factor productivity data ?

Can ICOR be used to augment the point Adrijaji is making ? I am in agreement with Adjrijaji's Indira and post-Indira regimes benefited industries largely through cheap material input and favorable lending, i'd like to add that it did not help the industries at a macro level but only helped certain crony capitalists who were friendly with the Congress party and its leaders. This may explain why we have historically struggled with high incremental capital to output ratio and also an inefficient use of the capital.

The average ICOR for industrial sector was 8.88 for a average rate of growth of 5.66 per cent for the period of 1952 to 1990. And for the post liberalization period the ICOR rose to 10.43 for a growth rate 6.46 per cent during 1991-2010.This translates into a very inefficient utilization of capital in industrial sector , its no wonder that the services sector has had the burden of driving the growth in the last 3 decades. I think we have done significantly better in the Modi era, the ICOR pre-covid (2019) has improved to around 6.9.

[Suraj]

Please post references to whatever data is being quoted . The references serve to strengthen the argument being made.

[Ambar]

References :

https://www.econstor.eu/bitstream/10419 ... wp-122.pdf

https://www.thetruepicture.org/indian-e ... icor-modi/

https://www.researchgate.net/publicatio ... ces_Sector

[Adrija]

Suraj-san, Ambar ji, thanks a lot for those comments. You're absolutely right, Indira amma's regime (and Rajiv's as well) benefited only the crony capitalists....... Congress was the epitome of crony capitalism and large scale value destruction (ah, the irony of the Hum Do hamare Do charges )

I have struggled quite a bit to evidence my hypothesis at a macro level and also trace it back to the precise causation factors. Thanks a lot to Ambar ji for the ICOR trends, will have a look........ the challenge has been evidencing the causation and crony capitalism precisely... nevertheless, let me take a stab, some free time is coming up this summer and I will take this as a research project....

[Suraj]

Please avoid political conversation here . It’s great if you can include charts and show the conclusions you’re making , but this isn’t the place for politics - fundamentally the characters aren’t important, just the reference material.

[kit]

A worthwhile discussion would be why the oil prices are going north and ways to deal with it

[rajkumar]

A worthwhile discussion would be why the oil prices are going north and ways to deal with it

Oil prices are headed up because (a) the world will be coming out of Covid induced recession this year, especially with the successful role out of vaccinations and (b) in the short term the Houthi attack on a Saudi oil refinery at the weekend is causing the oil price to spike.

Medium/Long term is to move away from oil as an energy source as much as possible but also remembering that crude oil is also an input into the production of fertilizer etc. which we can't move away from.

In terms of petrol prices in India. GoI should mandate that all petrol stations should display the breakdown in per litre price to show how much the state governments are earning in revenue from the price per litre. Medium to long term is to move Petrol & Alcohol into the GST regime.

[kit]

One is inclined to think if it is indeed the Houthis helping the Saudis jack up oil prices ., quite covenient

[bharathp]

One is inclined to think if it is indeed the Houthis helping the Saudis jack up oil prices ., quite covenient

and it doesnt kill anyone or hurt the oil supply itself.

[Vips]

Centre, states to remove 6,000 compliance norms by Aug 15, 2022: DPIIT Secy.

The union and state governments will reduce compliance burden by 6,000 processes by the time India celebrates its 75th independence day next year to further promote ease of doing business, secretary in the Department for Promotion of Industry and Internal Trade (DPIIT) Guruprasad Mohapatra said on Tuesday.

He told reporters that a systematic exercise across Centre and states is being undertaken to eliminate or reduce compliances, which have an adverse impact on time and cost of businesses.

The exercise is divided into two phases - March 31 this year and August 15, 2022, he said while releasing booklets on FDI reforms and ease of doing business in India.

These compliances are related to areas which do not require amendments in Acts and complex legal examination of rules, he said.

In phase 1, work is underway for reducing regulatory burden across six areas including renewal of licenses; inspections to be assigned randomly; returns/filings to be standardised and digitisation and simplification of all manual records or procedures, he said.

Mohapatra said maximum compliance burdens are in five union ministries - commerce and industry; finance; health; corporate affairs; and mines.
Out of the 6,000 burdens, 1,500 -2,000 are at Central level and remaining at state. Besides compliance burden, the government has also undertaken removal of archaic laws and decriminalisation of rules, he pointed out.

The official further said that to promote investments, the government is working on creation of a single window system for approvals and clearances.

By April 15, the system will be in place and initially 14 states will be involved in the process, said Mohapatra.

[Suraj]

Oct-Dec FDI data is FINALLY out, and they are great numbers:
DIPP FDI Oct-Dec 2020
Oct-Dec Total: $25.164 billion
Oct-Dec Equity Inflows: $21.467 billion

Monthly Equity FDI Inflows
Oct: $5.331 billion
Nov: $8.515 billion
Dec: $7.621 billion

Financial YTD Inflows:
Total FDI Inflwos: $66.076 billion
Equity FDI Inflows: $51.470 billion

Full year should be around $92-95 billion FDI.
During the previous fiscal year 2019-20, the full year FDI was $69.63 billion, meaning we have almost hit that figure within the first three quarters. Full year equity only FDI for 2019-20 was $49 billion, which has already been exceeded in the first three quarters of current fiscal.

[Vips]

Clean water in all homes is Modi’s next big election play.

Prime Minister Narendra Modi’s popularity has endured over the years in part due to his focus on giving poorer Indians things like cooking gas, toilets and electricity. Now he wants every rural home to have water by the next national election in 2024.

The Rs 3.6 lakh crore program will put piped water in all of India’s 19.2 crore rural homes — more than all the houses in the US — over the next four years. That won’t be easy: Currently only 7 crore Indian households have piped water, or about 36% of the target.

“The mission is an acknowledgment that if we in India don’t x our water availability this might become a limiting factor in our quest for faster socio-economic development,” Bharat Lal, who heads the Jal Jeevan Mission, a special division for piped and potable water in India’s Water Ministry, said in an interview in New Delhi. “Water is critical, the most The 2018 report said India was “suffering from the worst water crisis in its history and millions of lives and livelihoods are under threat.”

Modi’s government has faced months of protests from farmers over a law they say will boost corporate inuence over agriculture, a movement that has helped rally opposition forces who also accuse him of stoking sectarian tensions. Still, programs like the piped water plan help explain why the ruling Bharatiya Janata Party has steadily consolidated power across the country since 2014.

Access to water is becoming a more urgent political issue: The government’s planning body projects demand will be twice the available supply by 2030, leading to shortages for hundreds of millions of people that will hurt economic growth. The 2018 report said India was “suffering from the worst water crisis in its history and millions of lives and livelihoods are under threat.”

Depleting Resource
Modi’s program aims to supply at least 55 liters of potable water to each person per day by building new pipelines and refurbishing existing networks, Lal said. It plans to use groundwater in areas of large river basins and set up desalination plants in coastal areas, he added.

Currently, India is the world’s biggest extractor of groundwater — more than China and the US combined — accounting for almost a quarter of the total extracted globally, according to Water Aid. Groundwater levels in the country declined by 61% between 2007 and 2017, the government told parliament in Nov. 2019 citing data from an irrigation census.

“The plan will work if India manages to simultaneously strengthen water sources,” said Romit Sen, associate director at the Montpelier, Vermont-based Institute for Sustainable Communities. “We will need to x the backend to ensure it doesn’t encourage exploitation.”

Past efforts at supplying drinking water to Indian villages have largely failed. In 2018, the CAG blamed poor execution and contract management for shortcomings in its rural drinking water program, a former avatar of the country’s piped water push.

Modi’s plan calls for working with village bodies, states and private companies. It’s already seeing some initial gains: The number of rural homes with tap water has more than doubled since 2019 to about 7 crore.

Election Connection
Adding 1,00,000-plus water connections every day has also meant creating more jobs and revenue at companies that make pipes, cement and plastic, Lal said. The government plans to contract work worth $27 billion in 2021.

Since coming to power, Modi has used welfare schemes to target voters, especially women. In 2016, the government subsidized cooking fuel for poor families. Two years later ahead of national elections it introduced minimum wages as well as social security for domestic workers, the bulk of whom are women. It also increased maternity and childcare benefits.

“On a socio-political front, a program like this really matters. In most parts of India, it is the women who fetch water for their households,” said Aditya Bhol, a researcher at New Delhi’s Center for Policy Research. “Having said that, this is an ambitious plan and going by the earlier projects in this eld, the government will have to ensure it is thinking long term.

Look at the Takleef of Toilet publishers - Good work that Modi is doing is being projected as being done just to win an election.

[Suraj]

Let’s ignore the politics and look at numbers:
JJM Dashboard
Start date : Aug 15 2019
Start coverage: 3.2 crore households

Current coverage: 7.06 crore households

That’s 3.2 crore built in 1.5 years. A lot of building is non linear, i.e first you need the major piping and water treatment in place for each location. Then you connect many taps to it.

There are 12 crore homes left and 3 years to target. That is just 4 crore per year. It’s doable. At the dry least, failure to get to 100 percent isn’t going to be any sort of concern given than at the beginning of the project the coverage was a pitiable 16 percent.

[VinodTK]

India forex reserves surpass Russia’s to become world’s 4th biggest

ndia’s foreign-exchange reserves surpassed Russia’s to become the world’s fourth largest, as the South Asian nation’s central bank continues to hoard dollars to cushion the economy against any sudden outflows.
Reserves for both countries have mostly flattened out this year after months of rapid increase. India pulled ahead as Russian holdings declined at a faster rate in recent weeks.

India’s foreign currency holdings fell by $4.3 billion to $580.3 billion as of March 5, the Reserve Bank of India said on Friday, edging out Russia’s $580.1 billion pile. China has the largest reserves, followed by Japan and Switzerland on the International Monetary Fund table.

India’s reserves, enough to cover roughly 18 months of imports, have been bolstered by a rare current-account surplus, rising inflows into the local stock market and foreign direct investment.
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[Vips]

India's exports during March 1-14 up 17% at USD 14 billion.

This is near real time tracking of the data. Welcome change from the earlier times when such data used to take more then 3 months to be published.

[vijayk]

https://swarajyamag.com/economy/pro-poo ... s-to-adopt
Pro-Poor Micro, Pro-Markets Macro: Defying Dogmas, Modinomics Is Emerging As A Clever Strategy For Governments To Adopt

One of the most satisfying chapters to read in 2020-21 Economic Survey is about the progress made by the Indian state in expanding access to ‘the bare necessities’ like housing, water, sanitation, electricity and clean cooking fuel to its citizens over the last few years.

Between 2012 and 2018, not only has India made great strides on this front, but the disparities in access to these basic needs between the states have also declined. Moreover, the fact that improved access to the bare necessities has had a positive impact on health indicators is a cherry on the top.

The survey prepared ‘Bare Necessities Index’ (BNI) for different states by sourcing data chiefly from two NSO Rounds (69th in 2012 and 76th in 2018).

The BNI is constructed using 26 indicators on five dimensions — water, sanitation, housing, micro-environment (household drainage system, presence/absence of flies/mosquitos in house), and other facilities (kitchen, bathroom, ventilation, LPG, etc). [Read the survey for more details]

Modi’s clever blending of soft Hindutva, hardcore nationalism and pro-poor image delivered 303 seats for his party. What shouldn’t be forgotten in all this is Amit Shah’s role who didn’t join the government but worked to expand the base of the party as its president.

It seemed that Modi had studied the reasons for the BJP loss in 2004 more intelligently than anyone else and reached a conclusion that it was due to poor perception of Vajpayee-Advani duo on national security, Hindutva, perception among poor people and total disregard for strengthening the party to win elections.

It’s not that Modi was only focusing on welfare for the poor. He was also trying to push reforms albeit with caution. Nonetheless, his government managed to implement the goods and services tax (which drained most of its energies and political capital) and also pass the crucial Insolvency and Bankruptcy Code.

But all this was not enough to satisfy the Himalayan expectations from him by his cheerleaders who had seen reflections of Ronald Reagan and Margaret Thatcher in him.

And after the first budget of his second term, they had all given up on him. They had to reconcile with the fact that at least Modi was now delivering on Hindutva agenda. Abolition of Article 370 in Jammu and Kashmir, passing Citizenship Amendment Act and the Supreme Court awarding Ram Janmabhoomi case in favour of the Hindu side more than made up for lack of action on economic reforms.

But they were wrong to give up on Modi who was about to unleash the reform blitz. First, the corporate tax rates were slashed to globally competitive level. The privatisation of major public sector units like Bharat Petroleum, Air India, Shipping Corporation, Concor, etc, is already underway.

Now, two banks and one general insurance company has been added to the ever growing list. The labour laws on hiring and firing were relaxed. The three farms laws, demanded by agricultural experts and farm unions for decades, were passed.

[Vips]

633,000 'New Middle Class' households In India: Hurun India report.

Hurun India Wealth Report 2020 released Tuesday has identified a novel household category in India – the ‘New Middle Class’ – with an average savings of Rs 20-lakh per annum. These households, the report says, have major allocation towards physical assets such as primary residential property and automobiles. Hurun India pegs the total number of such cumulative households in India at 633,000.

According to Hurun, there are 412,000 dollar-millionaire households / affluent households in India with a networth of at least Rs 7 crore. Hurun Rich Listers have a wealth of Rs 1,000 crore, the report says, and pegs the number of such cumulative households in India at 3,000. At the other end of the spectrum is the ‘Indian middle class’ that has earnings of over Rs 2.5-lakh per annum and a net worth of less than Rs 7 crore. “It is estimated that around 56400,000 families in India fall under this category,” findings of the Hurun India Wealth Report 2020 suggest.



The report classifies two broad segments of wealthy households in India – the lower part comprises households having work compensation income, along with fixed deposits, real estate and equity investments as their primary source of income; and the upper segment that has inherited wealth, real estate possessions, primary business earnings and a diverse equity investment portfolio as sources of income.



And investing patterns among all these household segments differ.

A business-owner – be it a billionaire, international ultra-high networth individual (UHNI), UHNI or an affluent individual – for instance, allocate a higher portion of their wealth towards their primary business activities. “The other major consumers of their investable wealth include cash reserves, equity stocks, and primary residence,” the report says.

Chart: Business Owner



Similarly, the ‘Stock Market Kings’ invest actively in the stock markets since it is their primary source of revenue. “Nearly two-thirds of their wealth is devoted to stock market investments. Given the scale of these investments, the upper level households in this category, i.e. the international multi-millionaire households and above, hire wealth management firms to look after their investment portfolios,” the report said.

Chart: Stock Market King


Meanwhile, the golden collar / salary-driven households – those households that have been earning an eight-digit salary per annum for at least five years – mostly prefer to invest in a house, followed by cash / stocks.
Chart: Golden Collar


Region-wise, the top 10 states are home to 70.3 per cent of millionaire households in the country. Maharashtra, the report said, has the highest number of millionaires (56,000), followed by Uttar Pradesh (36,000), Tamil Nadu (35,000), Karnataka (33,000) and Gujarat (29,000). City-wise, Mumbai is home to most millionaires (16,933), followed by Delhi (16,000), Kolkata (10,000), Bengaluru (7,582) and Chennai (4,685).

Chart: Real Estate Owner

[Suraj]

Very interesting article. Thanks for posting it! Interesting that Kolkata still retains #3 spot in number of millionaires.

[venkat_kv]

633,000 'New Middle Class' households In India: Hurun India report.
snip

This article has info that is surprising, I didn't expect UP to have such high number of millionaires - do they say if they are from areas bordering Delhi?
But Bengal is the most surprising. 30 odd years of communist rule and they have such a high number of millionaires.

[Vips]

My interest was piqued by the number of $ Billionaires (200- going up by leaps) vs $ Millionaires (412,000). This number is grossly underreported as anybody who lives in Apartments in big cities or has a shop in the city or suburbs or has just 5-10 acres of agricultural land would be worth that much.

[AkshaySG]

633,000 'New Middle Class' households In India: Hurun India report.
snip

This article has info that is surprising, I didn't expect UP to have such high number of millionaires - do they say if they are from areas bordering Delhi?
But Bengal is the most surprising. 30 odd years of communist rule and they have such a high number of millionaires.

Number of millionaires isn't always a sign of progress and good governance but sometimes the opposite , Areas with high authoritarianism and corruption can produce many millionaires while widening the income inequality . UP ,Bihar and Bengal have been hotspots of corruption and building a net worth of 7 crore + isn't that big a deal for many shady govt officials and businesses when you're taking lakhs of crores from the centre and misusing them . Plus don't forget UP, Bihar and Bengal are 3 of the the top 4 most populous states

That's why places like Brazil ,Mexico have a very high number of millionaires as well but overall inequality is extreme

A better (thought not perfect) way is to see is per capita income and per capita GDP generation ,by which metric UP and Bihar are slam dunk last (32nd,33rd) while WB is quite low too ,with their figures being several times lower than comparable big states like Maha,TN,KR,GJ etc

[venkat_kv]

This article has info that is surprising, I didn't expect UP to have such high number of millionaires - do they say if they are from areas bordering Delhi?
But Bengal is the most surprising. 30 odd years of communist rule and they have such a high number of millionaires.

Number of millionaires isn't always a sign of progress and good governance but sometimes the opposite , Areas with high authoritarianism and corruption can produce many millionaires while widening the income inequality . UP ,Bihar and Bengal have been hotspots of corruption and building a net worth of 7 crore + isn't that big a deal for many shady govt officials and businesses when you're taking lakhs of crores from the centre and misusing them . Plus don't forget UP, Bihar and Bengal are 3 of the the top 4 most populous states

That's why places like Brazil ,Mexico have a very high number of millionaires as well but overall inequality is extreme

A better (thought not perfect) way is to see is per capita income and per capita GDP generation ,by which metric UP and Bihar are slam dunk last (32nd,33rd) while WB is quite low too ,with their figures being several times lower than comparable big states like Maha,TN,KR,GJ etc

AkshaySG,
While there can be corruption, I wasn't expecting the high number for UP, that is quoted. there will be many crony captalists that will make some money but the number itself is mind boggling when you consider that the number of industries are far and few (or atleast that what the media projects).

Coming to Bengal a few communist cadres could have made hay, but bengal was in its grip till 2010/2011 and communism still holds sway. somebody once said that if a communist wanted to make a tall man and a short man equal, he would cut off the tall mans legs and bring them to the same height. So the absolute number of millionaires is what is surprising for me here.

[AkshaySG]

AkshaySG,
While there can be corruption, I wasn't expecting the high number for UP, that is quoted. there will be many crony captalists that will make some money but the number itself is mind boggling when you consider that the number of industries are far and few (or atleast that what the media projects).

Coming to Bengal a few communist cadres could have made hay, but bengal was in its grip till 2010/2011 and communism still holds sway. somebody once said that if a communist wanted to make a tall man and a short man equal, he would cut off the tall mans legs and bring them to the same height. So the absolute number of millionaires is what is surprising for me here.

You seem to be thinking of millionaires in the corporate sense.. Like the ones who come with industries, tech and live in big cities but that's not the only way

Going by their definition its just people who have household asset/income of above 7-8 Crore and that's pretty paltry tbh,

any big farmers, zamindars, shop owners, small businesses, MLA's city officials, land owners, politicians, actors, singers etc etc and many more will clear that easily.., If anything that number is understated since there are probably lakhs more with undeclared incomes and who weren't surveyed ... Hell just BSP and SP would probably have thousands of people who clear that barrier


And as I said before it's an absolutely massive massive populace.. Has more people than Brazil, Pakistan etc . it would be the 5th most populous in the world if it was a country. So having high absolute numbers is not surprising.

36,000 in a population of 200 million is nothing its not even 0.02% of the population

Same with Bengal, If you own a house in any good part of Calcutta you probably easily clear that barrier.

[Cyrano]

Interesting report. What is their data source? Definitely not income tax receipts data !

Overall, I don't know what to make of it in the larger context of India.

In a fast growing economy with high single digit inflation, all valuations keep going up so millionaire ranks will swell. But so does cost of living. While there are more and more millionaires on one end, at the other end, especially for people at the boundary layer between poor and lower middle class if wages/earnings increases cannot outpace inflation, it hits their savings and makes it harder for such households to jump one level up and may actually push more people below poverty line.

Recent years of low oil prices and low inflation have helped a lot of people, but Covid induced slowdown has made many in the lower strata to barely survive. I would suspect income inequalities have only increased in the past year. Oil prices will go up as economies rebound in 2021 and it will hit the poor and lower middle class harder than anyone else, further increasing income inequality.

Seen this way, the welfare structure put in place by Modi Govt is the right thing to do. The problem will be collections. Lower corporate tax means GST, personal income tax cant go down. Farm income going tax free and subsidies galore on bijli, water, fertilisers, MSP further screw up the picture. May be farm reforms will make food prices more realistic but still keep them low, I'm not sure. If that happens, it will again benefit the poorer sections.

[vijayk]

https://swarajyamag.com/insta/direct-ta ... owth-chart

In a positive development, the direct tax collection in FY 2020-21 has exceeded the revised estimates as announced in the recent Budget, signalling a recovery in the economy of the nation.

The direct tax collections stood at Rs 9.18 lakh crore on 16th March 2020, which is about Rs 18,000 crore higher than Union Finance Minister Nirmala Sitharaman’s announcement.

Notably, the finance ministry has approximated corporate tax collections of around Rs 4.46 lakh crore. However, the figures shot up by 7 per cent to reach Rs 4.7 lakh crore on 16th March. The overall rise is mainly led by the rise in advance tax collections from companies.

The all-inclusive direct tax collection of 9.18 lakh crore, though higher than the revised estimates, still falls 4 per cent short as compared to the year-ago figure. Yet, it marks a significant improvement from the 20 per cent nosedive witnessed during the early parts of the year amidst the Covid-19 pandemic.

On the other hand, the income tax collection of Rs 4.21 lakh crore has failed to meet the revised evaluation of Rs 4.59 lakh crore. But, the tax authorities are anticipating their collections to increase remarkably with two weeks still remaining in this fiscal year.

The Mumbai, Delhi, and Bengaluru circles have bagged direct taxes of Rs 3.03 lakh crore, Rs 1.18 lakh crore, and Rs 1.15 lakh crore as of March 16th. Mumbai and Bengaluru recorded growth in collections of 3.5 per cent and 10.4 per cent on a year-on-year basis.

https://swarajyamag.com/insta/rs-8-lakh ... anda-gowda

Union Minister of Chemicals and Fertilizers D V Sadananda Gowda on Wednesday (17 March) informed that investments worth Rs 8 lakh crore worth are in the pipeline in Indian chemical industry by 2025, the ministry Ministry of Chemicals and Fertilizers said on Wednesday (17 March).

Inaugurating the 11th Edition of India Chem 2021 in New Delhi with the theme “India: Global Manufacturing hub for chemicals and petrochemicals”, Gowda said that the Indian chemicals and petrochemicals industry is growing to new heights, and informed that an investment of Rs 8 lakh crore is anticipated in the sector by 2025.

[Suraj]

RS passes bill to raise FDI in insurance to 74 pc

A bill to increase foreign direct investment limit in the insurance sector to 74 per cent from the current 49 per cent was approved by the Rajya Sabha on Thursday.

Replying to the debate on Insurance (Amendment) Bill, 2021, Finance Minister Nirmala Sitharaman said foreign investment will supplement domestic long-term resources with a view to further insurance penetration in the country.

Sitharaman said the decision to increase the FDI limit to 74 per cent was taken after sector regulator IRDAI held detailed consultations with stakeholders.

As per the bill, the majority of directors on the board and key management persons would be resident Indians, with at least 50 per cent of directors being independent directors, and specified percentage of profits being retained as a general reserve.

It was in 2015 when the government had last hiked the FDI cap in the insurance sector from 26 per cent to 49 per cent.

Increase in FDI is aimed at improving life insurance penetration in the country. Life insurance premium as a percentage of GDP is 3.6 per cent in the country, way below the global average of 7.13 per cent, and in case of general insurance, it is even worse at 0.94 per cent of GDP, as against the world average of 2.88 per cent.

[disha]

https://swarajyamag.com/insta/rs-8-lakh ... anda-gowda

Gowda further informed that government has launched 12 PLI scheme for different sectors which will directly or indirectly benefit the chemicals sector.

He also stated that the government is prioritising the sector and in the Budget, the import duty on Naphtha has been reduced from 4.0 per cent to 2.5 per cent.

Napthalene is a feedstock to several chemicals including textile dyes. Chemical industry is a very important but overlooked industry while monitoring state of economy.

[vijayk]

Piyush Goyal @PiyushGoyal
Leadership matters: If India had continued electrification at the rate of 2004-14 it would have reached full electrification by 2040, instead it accomplished this momentous feat under the leadership of PM @NarendraModi ji in 2019.

Suraj
@surajbrf

This thread describes the progress of Indian electrification coverage. Two charts are presented, both sourcing data from EIA.
First chart:

1/

Piyushji RTed Suraj tweets. Now Suraj nay be shadow banned by scums at Twitter . Too much of substance

[Suraj]

Hehe yes I just saw that now

This was the original tweet: https://twitter.com/surajbrf/status/137 ... 90019?s=20

[V_Raman]

https://swarajyamag.com/insta/rs-8-lakh ... anda-gowda

Gowda further informed that government has launched 12 PLI scheme for different sectors which will directly or indirectly benefit the chemicals sector.

He also stated that the government is prioritising the sector and in the Budget, the import duty on Naphtha has been reduced from 4.0 per cent to 2.5 per cent.

Napthalene is a feedstock to several chemicals including textile dyes. Chemical industry is a very important but overlooked industry while monitoring state of economy.

Chemical industry is one of the largest in USA as well. bedrock of their economy. We letting go of the drug inputs industry is criminal IMO.

[V_Raman]

https://swarajyamag.com/insta/rs-8-lakh ... anda-gowda



Napthalene is a feedstock to several chemicals including textile dyes. Chemical industry is a very important but overlooked industry while monitoring state of economy.

Chemical industry is one of the largest in USA as well. bedrock of their economy. We letting go of the drug inputs manufacturing is criminal IMO.

[nachiket]

Hehe yes I just saw that now

This was the original tweet: https://twitter.com/surajbrf/status/137 ... 90019?s=20

Awesome Suraj. You should have joined Twitter a lot earlier.

[Suraj]

Continuing my efforts to keep with the Jal Jeevan Mission every month:
18 Mar 2021


Crossed 37% coverage now, up 2% from a month ago. Over doubled from the 16.9% coverage in August 2019 when the program began.

UP has made it into the next colour tier, leaving only WB among populous states still in lowest tier, along with Assam.

Here is the live dashboard. Click on the toggle button to see change since inception of the program. You can see state level performance by hovering over or clicking on state.

Prior statuses:
Feb 21 2021
15 Jan 2021
18 Dec 2020
15 Nov 2020
October 15 2020
September 20 2020
August 15 2020

[vera_k]

First Negative Yield Quote in India's Bond Market

[vsunder]

Punjab GDP per capita as compared to the national average

https://twitter.com/811GK/status/1370409088589295617

Punjab spending per capita is 1/4 of the national average(the state is slowly becoming a gone case)

https://twitter.com/811GK/status/1370413554843590656

[Suraj]

Surjit Bhalla, Karan Bhasin and co have done a great research study into the RBI's inflation targeting (IT) policy that began in 2016 under Rajan. The report effectively debunks the argument in favor of IT, stating that there is no causal relationship between the two. Specifically, Indian inflation is MSP inflation driven:

No country for inflation targeting
Research report

I also posted about it on twitter: https://twitter.com/surajbrf/status/137 ... 28328?s=20

[prahaar]

First Negative Yield Quote in India's Bond Market

There is another clarification from Bloomberg Quint:
No, Negative Yields Have Not Come To India

An apparent trade in short-term Indian government bonds at a negative yield on Friday, which left debt markets baffled, was a fat finger error and the trade was not concluded, a person familiar with the matter said on the condition of anonymity.

The Indian central bank and the bond markets have been locked in a tussle for the past two months. While the central bank has assured markets of comfortable liquidity conditions and a smooth passage of the government borrowing programme, yields have moved higher. The 10-year benchmark bond yield closed at 6.19% on Friday.

[Ambar]

Surjit Bhalla, Karan Bhasin and co have done a great research study into the RBI's inflation targeting (IT) policy that began in 2016 under Rajan. The report effectively debunks the argument in favor of IT, stating that there is no causal relationship between the two. Specifically, Indian inflation is MSP inflation driven:

No country for inflation targeting
Research report

I also posted about it on twitter: https://twitter.com/surajbrf/status/137 ... 28328?s=20

Interesting article. I quote the conclusion the author makes -

As the accompanying graphic makes abundantly clear, countries that have not adopted inflation targeting, across the world, reveal lower inflation than those that did. There are also costs to inflation targeting in India. It led to higher real policy rates, in the mistaken belief that high policy rates affect the price of food, oil, or anything else. But, high real rates do affect economic growth, by affecting the cost of domestic capital in this ultra-competitive world.

Isn't a relative lower inflation in advanced economies due to a variety of other reasons and not just non-adaptation of inflation targeting ? Advanced economies have far superior infrastructure, logistics chain, less bureaucratic hurdles and higher productivity . Also, they benefit from stable currencies and predictable policy outlook near and long term . Whereas emerging economies like India have suffered from chronic inflation, currency devaluation, history of poor fiscal and monetary policies resulting in uncertainties, infrastructure and logistics bottleneck, corruption and bureaucratic hurdles etc. So i doubt if inflation targeting alone or the absence of it reduces inflation . That aside, while i agree that the governments take core inflation to calculate median inflation rate, in a country such as ours where hundreds of millions still struggle for basic subsistence, ignoring retail food, energy and housing hides the true picture of the economy and quality of life.

The author also argues that increase in oil prices has no bearing on the overall inflation. Unfortunately he choses to make this point by using advanced economies as an example and i quote -

But, oil has ceased to be a factor in global inflation, at least post the mid-1980s. In this regard, it is instructive to look at the price of Brent oil. In December 1998, the average price of oil was $9.8 a barrel. In July 2008, the monthly average price of oil peaked at $ 133/barrel.

Trough to peak, the rise was 13 times over nine years. But what happened to AE inflation? Nothing. More interesting is what happened to inflation among the non-targeters—median headline inflation declined, and average AE inflation 2005-2009 was 1.9 %, compared to the 2.7 % average in the 1990s.

Again, this ignores the fact that many advanced economies are fundamentally more efficient compared to emerging economies, and there by do a better job in absorbing some of the pass through increase in cost. Secondly, the author seems to completely discount the bilateral currency valuation. Using the same example from the article, in 1998 when the oil was trading at $9.8/barrel, 1 USD was ~Rs37, today when the oil price is 65 USD/barrel, 1 USD is Rs 73. So while an US importer is paying 6x for a barrel of oil over 1998 prices, an Indian importer is paying over 13x for the same barrel of oil over 1998 prices.

The author also seems to purposely take a point in time to prove inflation targeting negatively affects GDP growth. He choses to compare only 2015-16 Vs 2016-17 to prove IT and increase in repo rate had a negative effect on growth. I quote -

Equally important, was IT adoption associated with the policy of the highest real repo rates in India—ever—for almost three years 2017-2019? The answer is yes to the latter, but it also needs acknowledgment that high real repo rates were the primary cause of GDP growth decline in India from 8% (pre-IT) to 5% (post IT).

Truth is India's GDP growth rate has been declining since 2011 much before the IT adaptation. It began increasing from 2013 onwards only to decline once again from 2016. This also coincides with the drop in investment as a % of GDP and consumer spending negatively impacted by inflation, so if anything repo rate increase is not the cause for drop in GDP but the net effect.

Lastly , the author claims fiscal deficits does not matter -

In 2003, India passed the FRBM Act to control fiscal deficits and inflation. As I have mentioned several times in my columns over the last 20 years, there is precious little evidence, either domestically or internationally, about fiscal deficits affecting inflation.

Sounds like music to money printing central banks ! If fiscal deficits do not matter then why not cancel or reduce taxes (Paging Mrs Sitharaman) ? UPA 1 and UPA 2 ran the country's economy into the ground because they too decided fiscal deficit and current account deficits do not matter and the net result was borderline hyperinflation and collapse of the rupee .

[Suraj]

The goal of the article is to ask how well inflation targeting as a policy suits India as a monetary policy. Responses should be focused upon that.