Indian Economy News & Discussion - Nov 27 2017

[yensoy]

It's time for my second theory in 24 hours, this time about agriculture.

1. Modi government is very aware of where its money comes from and where it goes. They realize that money has to be spent wisely on productive outcomes beside social welfare/populist measures needed to win elections. They realize that money can't be created at will - printing money is bad. They realize that taxation has to be reasonable so companies can run profitably and produce stuff competitively for domestic consumption and export.

2. One big drain on money has been subsidy of agriculture. This is in 2 parts - (i) agricultural inputs - fertilizers, pesticides, seeds, irrigation & energy for irrigation - are subsidized, and (ii) agricultural output is procured at above-market prices and sold back to consumers at or below market prices.

3. In addition the market for agricultural produce is skewed in a manner which makes produce cheap in India by world price levels, mainly because of the subsidies mentioned above. Savvy business people have figured out that they can export Indian produce, especially foodgrains, worldwide and make a packet of money.

4. It's one thing exporting food products to Indian diaspora, and something altogether to export bulk volumes of foodgrains to countries for their domestic consumption. The former may be necessary, also it has a large value added component because exports include processed foods. The latter is purely arbitrage and someone is profiting from it at GoI's subsidy expense.

5. Farm bill was defeated, so the first part of the subsidy couldn't be removed. But to get back at the profiteering exporters (many from Punjab area), GoI has decided to ban rice exports as the first step. G2G is still allowed which allows GoI to grow its influence with the surplus production.

6. I feel some of the K'stani interests may have been harmed first by the farm bill, and now by the export embargo. They were able to get the farm bill repealed but this one is causing some heartburn.

I have said earlier that it is possible to hurt Pakistan financially by selectively importing from them something which costs them a lot more to produce. The mere fact that a country is exporting something doesn't make it a good deal for that country. I think even China's exports are hurting it more than helping. You need to export something that is not commoditized, something that commands a premium, something that is critical and something that is irreplaceable. US is king at that. Yes they also export crude but it's only a part of their export basket.

Rice exports, especially when rice production is highly subsidized by GoI, is hardly a good venture for the national exchequer though it may be profitable for the few exporters in this business. The export ban is reasonable but the best way forward would be to gradually do away with both sides of the subsidy equation while raising national income and continuing the social safety net for downtrodden sections who need it.

[VishnuS]

I am curious. Please explain. Thanks.

I was thinking something similar to what CargoBeamer people seem to have already done. It would require extensive modifications tothe ports themselves. Reduced loading/unloading costs/time may not offset the upfront capital spend.

Here is the link https://www.cargobeamer.com/

Modifications of BargoBeamer itself is possible. Scheduling the placement of the containers on trucks/trains/ships/trains/trucks is ofc a very hard optimization problem. If it has to be solved for true optimality, it would be a mixed integer non-linear programming (MINLP) problem. Even MILinearP problems are NP-hard. Relaxation method is a reasonable approach which solves a related linear programming problem. Since LP has polynomial time algorithms, the relaxation method is quite popular in the industry. That said, solving the place/route/schdule is just a part of the entire solution. Physical infra needs big bucks.

Bhai, this will not work

We are looking the transition of Ship to Rail. Road is not sustainable.

One thing that we forget about the road transport is damage of roads due to heavy truck traffic.

We should look at 50K Semi trailer traffic for everyday.

[Cyrano]

Excellent post yensoy ji.

There is also agricultural insurance like certain Kisan Bhima yojanas which is a cost for the govt but a reasonable one if implemented properly. Plus there are unsustainable state level subsidies and freebies thats we have to find a way to control.

What about farm labour? Isn't that also subsidised by the govt indirectly by giving them benefits through various schemes like health care, medicines, subsistence food, gas, water, houses etc while their employers can get away paying them a pittance?

Farm input subsidies reduced to minimum and taxing agricultural income are some of the big structural changes that can be envisaged when percapita income doubles from present levels IMHO onlee.

[yensoy]

Excellent post yensoy ji.

Thank you for reading through it sir, I thought it would go unnoticed

Some of the subsidies like health, insurance, make-work programs etc are necessary because of the huge labour force and percentage of population living off the land. This is our reality and I have nothing against that. One way to look at it is as a fixed cost - whether we produce 1 million tons or 100 million tons, we have 800 million people whose livelihood is at risk and need a safety net.

Where I have a problem is with the variable cost which is borne by the government but profits large exporters. The more the government subsidizes, the more the exporters gain, it is more than a linear relationship.

There is another problem here which you alluded to, which is resources. I have said that the cultivation of sugarcane in Mandya region in Karnataka has exacerbated the Cauvery water issue with TN. Mandya farmers are growing a low value crop and depriving downstream of water for living (not just agriculture). I am not taking sides here - it is a natural outcome when we have the wrong incentives in place. Likewise the utter depletion of the water table in Punjab which has been eloquently stated by a senior expert in the interview below, all this because of wrong incentives.


The Punjab agriculture situation as we see has global ramifications. The economy has become a one trick pony, youth doesn't want to do the hard work tilling the land (and expose themselves to carcinogens), state government has no idea how to bring back the erstwhile thriving small-scale industry, disaffected youth take to drugs and/or migration. With little education or awareness they become pliable in the hands of inimical interests and eventually you have a G7 member bullshitting to his parliament. You just can't make this up.

Today we are going after these wrong incentives due to internal politics & geopolitics, but I wish we based it on science, economics and objective fairness.

[Lisa]

One must realise that the export of certain commodities is in effect an export of water. Until a complete understanding of this matter both at a financial level and its social costs in not properly understood we are in effect exporting these commodities at our expense rather than at a profit.

[hanumadu]

One must realise that the export of certain commodities is in effect an export of water. Until a complete understanding of this matter both at a financial level and its social costs in not properly understood we are in effect exporting these commodities at our expense rather than at a profit.

I heard this several times before, but water is not the only thing that makes up the food grains or any crop. There's land itself, fertilizer(organic or otherwise), labour, fuel, weather (like not snow or desert) and water. Water is renewable to certain extent, if not to a great extent. What are we going to do with the water in our dams if not to grow crops? And there is ground water which if used carefully replenishes too. I don't see any problem exporting food or crops as long we are making judicious use of the resources like land, water, labour etc.

[Cyrano]

Agree.

However what remains in our soil, air and biome are pesticides and herbicides that hang around for years if not decades and cause harm to plants, animals and humans.

EU is still debating whether to ban Glyphosate herbicides... they are used extensively and despite all the green intentions, the farmers are so dependant on them that banning them means lower yields, more expensive manual de-weeding, all leading to increased food costs and inflation.

[ritesh]

One must realise that the export of certain commodities is in effect an export of water.

And what about promoting ethanol? Isn't sugarcane water hungry crop. Why isn't GoI promoting hybrids or EVs instead?

[sanjaykumar]

EtoH may be too precious to export. If and when a hydrogen economy comes on stream.

[Cyrano]

Ethanol as biofuel makes sense only when it is a byproduct of some other process. Growing water hungry sugarcane plus fertilizers and pesticides and then process it to make ethanol is not viable.

Let them try and they will come to the same conclusion.

[Lisa]

https://ourworldindata.org/grapher/wate ... +%26+Leeks

Freshwater withdrawals are measured in liters per kilogram of food product.

[sanjaykumar]

Not ethanol directly as biofuel but as feedstock for H2 gas.

[yensoy]

One must realise that the export of certain commodities is in effect an export of water. Until a complete understanding of this matter both at a financial level and its social costs in not properly understood we are in effect exporting these commodities at our expense rather than at a profit.

I don't see any problem exporting food or crops as long we are making judicious use of the resources like land, water, labour etc.

Great points made by posters about the use of water and other resources, which is what I have also been saying - that what the total input cost of foodgrains we export is higher than the price we get for it.

No, we are not making judicious use of water. Ground water in Punjab is depleting to the point of no return (please view the youtube video I attached in an earlier post). Why on earth would one need tubewells in the land of 5 (perineal) rivers? Why should a new generation of farmers grow water intensive sugarcane in water starved southern India, at a time when diabetes is the fastest growing ailment in the country?

[williams]

It's time for my second theory in 24 hours, this time about agriculture.

1. Modi government is very aware of where its money comes from and where it goes. They realize that money has to be spent wisely on productive outcomes beside social welfare/populist measures needed to win elections. They realize that money can't be created at will - printing money is bad. They realize that taxation has to be reasonable so companies can run profitably and produce stuff competitively for domestic consumption and export.

2. One big drain on money has been subsidy of agriculture. This is in 2 parts - (i) agricultural inputs - fertilizers, pesticides, seeds, irrigation & energy for irrigation - are subsidized, and (ii) agricultural output is procured at above-market prices and sold back to consumers at or below market prices.

3. In addition the market for agricultural produce is skewed in a manner which makes produce cheap in India by world price levels, mainly because of the subsidies mentioned above. Savvy business people have figured out that they can export Indian produce, especially foodgrains, worldwide and make a packet of money.

4. It's one thing exporting food products to Indian diaspora, and something altogether to export bulk volumes of foodgrains to countries for their domestic consumption. The former may be necessary, also it has a large value added component because exports include processed foods. The latter is purely arbitrage and someone is profiting from it at GoI's subsidy expense.

5. Farm bill was defeated, so the first part of the subsidy couldn't be removed. But to get back at the profiteering exporters (many from Punjab area), GoI has decided to ban rice exports as the first step. G2G is still allowed which allows GoI to grow its influence with the surplus production.

6. I feel some of the K'stani interests may have been harmed first by the farm bill, and now by the export embargo. They were able to get the farm bill repealed but this one is causing some heartburn.

I have said earlier that it is possible to hurt Pakistan financially by selectively importing from them something which costs them a lot more to produce. The mere fact that a country is exporting something doesn't make it a good deal for that country. I think even China's exports are hurting it more than helping. You need to export something that is not commoditized, something that commands a premium, something that is critical and something that is irreplaceable. US is king at that. Yes they also export crude but it's only a part of their export basket.

Rice exports, especially when rice production is highly subsidized by GoI, is hardly a good venture for the national exchequer though it may be profitable for the few exporters in this business. The export ban is reasonable but the best way forward would be to gradually do away with both sides of the subsidy equation while raising national income and continuing the social safety net for downtrodden sections who need it.

I thought Punjab primarily produces Basmati rice and that was not banned. So I am not sure about this theory. Also, the problem is always the middlemen are always making a lot out of any produce in India. Modi tried to bring both land reform and farm bills and nothing is working. Not sure how you will solve the problem when the farmers themselves don't have any incentive to change. My thought will be to provide subsidies to only small-scale farmers and let the big people buy stuff at market rate. But it needs to be done slowly over time to avoid disruption.

[yensoy]

Sir, basmati rice is not purchased at any MSP by the government. It is open market only.
Punjab does grow substantial non-basmati varieties of rice. Your observation only strengthens the argument that Govt is clamping down on profiteering at the government's expense.

https://indianexpress.com/article/expla ... %20abroad.

[nandakumar]

The farm law was challenged because it allowed farmers to sell their produce outside the APMC yards. This hurt the Arthiyas' financial interest as the produce was the collateral for their earlier loans to farmers (at usurious rates of interest). If this was not bad enough, the real kicker was that lakhs of tonnes of paddy/rice produced in Bihar and Eastern UP was being transported to Punjab and sold to FCI at a profit (the FCI has pathetic procurement infrastructure in these two States. Now those farmers had an alternative. The easy money for Arthiyas was under threat. This was the genesis of farm agitation.

[Cyrano]

No, we are not making judicious use of water. Ground water in Punjab is depleting to the point of no return (please view the youtube video I attached in an earlier post). Why on earth would one need tubewells in the land of 5 (perineal) rivers? Why should a new generation of farmers grow water intensive sugarcane in water starved southern India, at a time when diabetes is the fastest growing ailment in the country?

This is a predictable consequence of providing free electricity to farmers by state govts, Punjab in this case. Instead of using that money for creating water harvesting structures like check dams, canals, local ponds etc which can replenish water tables, the govts spends money to give free electricity which is used to run submersible pumps in bore wells that suck all water from very deep underground, and they are run day and night since power is free, to irrigate water intensive crops like sugarcane, rice etc.

Over time, the soil loses bio mass, therefore holds less and less water, and no tree cover to provide shade so evaporation losses increase and we have the current disastrous situation. The loss of biomass means impoverished soils needing more fertilisers, which make weeds also grow faster, needing more herbicides.

This also leads to more surface run off in rainy season, causing more flooding and destruction while water tables still remain low. The recent cyclonic flood in Libya illustrates this perfectly, their dry desert sand cant hold water at all and with a few hours of heavy rain, entire villages got washed away killing 10s of thousands and destroying thousands of homes.

[Vayutuvan]

Not ethanol directly as biofuel but as feedstock for H2 gas.

Why go through Ethanol for that? Use CH4 (from anearobic digestion of waste biomass) and get H by steam forming. That is the cheapest H we can get. H from H2O is expensive by a multiplicative factor, as per my reading and talking to people in the industry.

[Vayutuvan]

And what about promoting ethanol? Isn't sugarcane water hungry crop. Why isn't GoI promoting hybrids or EVs instead?

How are you getting the electricity to charge EVs?

[Vayutuvan]

I was thinking something similar to what CargoBeamer people seem to have already done. It would require extensive modifications tothe ports themselves. Reduced loading/unloading costs/time may not offset the upfront capital spend.

Here is the link https://www.cargobeamer.com/

Modifications of BargoBeamer itself is possible. Scheduling the placement of the containers on trucks/trains/ships/trains/trucks is ofc a very hard optimization problem. If it has to be solved for true optimality, it would be a mixed integer non-linear programming (MINLP) problem. Even MILinearP problems are NP-hard. Relaxation method is a reasonable approach which solves a related linear programming problem. Since LP has polynomial time algorithms, the relaxation method is quite popular in the industry. That said, solving the place/route/schdule is just a part of the entire solution. Physical infra needs big bucks.

We are looking the transition of Ship to Rail. Road is not sustainable.
One thing that we forget about the road transport is damage of roads due to heavy truck traffic.

@VishnuS bhau,

Modifications of CargoBeamer I am talking about are for loading and unloading from/to ships to/from rail. You need port infrastructure. Gantry crane design needs to be changed. The whole logistics chain needs to be redesigned and optimized from the get go.

We have to start somewhere to upgrade the port infra. Why not in West Asia first? They have the money, the need, and USA-EU-Israel-India have the tech and execution experience. New ports at Dubai, Haifa which are ship-rail integrated. Then we do it in Mumbai. Let EU do what they want.

[sanjaykumar]

Not ethanol directly as biofuel but as feedstock for H2 gas.

Why go through Ethanol for that? Use CH4 (from anearobic digestion of waste biomass) and get H by steam forming. That is the cheapest H we can get. H from H2O is expensive by a multiplicative factor, as per my reading and talking to people in the industry.

It depends on the economics. Methanogenic bacteria need a massive and novel infrastructure.

Ethanol from agricultural waste or crops is established and is upscaled. There is progress in steam forming and electrochemical processes. The stoichiometry favours CH4 but I don’t see too much else.

[ritesh]

And what about promoting ethanol? Isn't sugarcane water hungry crop. Why isn't GoI promoting hybrids or EVs instead?

How are you getting the electricity to charge EVs?

Isn't it more straightforward and clearer in today's times? But ethanol is another story. Hope better sense prevail. Hydrogen seems a better bet than ethonal.

[sanjaykumar]

Err….please read the posts before making recommendations.

[Vayutuvan]

It depends on the economics. Methanogenic bacteria need a massive and novel infrastructure.

I posted some information about a company in Pune. Well, I am an investor (full diclosure). We have am indigenous process which is ecnomically feasible and the projects are bankable.
I am hoping that we will get some news in oh about six months, definitely one year, where we are going. Stay tuned.

[Vayutuvan]

How are you getting the electricity to charge EVs?

Isn't it more straightforward and clearer in today's times? But ethanol is another story. Hope better sense prevail. Hydrogen seems a better bet than ethonal.

How are you getting electricity? Let me give you current choices (not mutually exclusive)

1. Nuclear
2. Solar
3. Wind
4. Coal fired
5. Oil
6. NG
6. Ethanol
7. Biomass/Wood fired
8. Biogas
9. Hydrogen (from where?)
10. Fusion
11. Waves
12. Geothermal
13. Lightning
14. Electric eels (large number of huge electric eel farms)?

Can't think any more at the moment, but you get the idea.

[sanjaykumar]

Fireflies with photovoltaic cells

[yensoy]

Solar is actually nuclear...if you think about it. Biomass is also solar which is nuclear, so is coal, oil, wind etc etc. Geothermal is probably the only one in the list which is not nuclear.

[Vayutuvan]

Fireflies with photovoltaic cells

It seems to be workable. CRISPR I might come in handy.

Joking aside, photosynthesis was modified to produce H in place of O, iirc.

[vijayk]

https://www.livemint.com/economy/indias ... 32189.html
India's core sector output in August rises to 14-month high of 12.1%

The growth of eight key infrastructure sectors rose to a 14-month high of 12.1 per cent in August 2023 compared to 4.2 per cent a year ago, on expansion in production of coal, crude oil, and natural gas, government data showed on Friday. The core sector or infrastructure output, which comprises eight sectors including coal and electricity, accounts for nearly 40 per cent of industrial output.

[VishnuS]

Fireflies with photovoltaic cells

It seems to be workable. CRISPR I might come in handy.

Joking aside, photosynthesis was modified to produce H in place of O, iirc.

How?

H2 gets combined with CO2 to form glucose, in that process all of O2 isn't consumed, thus releasing O2 as waste product!

Tell where this additional H2 comes from? and what compound is produced!

[Vayutuvan]

It seems to be workable. CRISPR I might come in handy.

Joking aside, photosynthesis was modified to produce H in place of O, iirc.

How?

H2 gets combined with CO2 to form glucose, in that process all of O2 isn't consumed, thus releasing O2 as waste product!

Tell where this additional H2 comes from? and what compound is produced!

Check this wikipedia page out. I have seen a pop article in SciAm in 1990s as well.

https://en.wikipedia.org/wiki/Biohydrogen

Obligatory Economics.

Economics
With current reports for algae-based biohydrgen, it would take about 25,000 square kilometre algal farming to produce biohydrogen equivalent to the energy provided by gasoline in the US alone. This area represents approximately 10% of the area devoted to growing soya in the US.

Specifically this section
https://en.wikipedia.org/wiki/Biohydrog ... n_by_algae

(let us take it another thread. I forget the name)

[Vayutuvan]

Fireflies with photovoltaic cells

Forgot Hydropower.

[A_Gupta]

Index of Eight Core Industries, up to August 2023:
https://india-indicators.blogspot.com/2 ... up-to.html

Index of Industrial Production, up to July 2023:
https://india-indicators.blogspot.com/2 ... up-to.html

[vijayk]

Indian Economy in September, 2023.

GST collection - 1,62,712 crore
Services PMI - 61
Manufacturing PMI - 57.5
Automobile sales - 3,63,733 cars
UPI transactions - 10.56 billion
Coal Production - 67.21 MT
Railway Freight - 123.53 MT

Good September performance with CPI inflation yet to be released. Experts predict lower CPI inflation compared to last month.

[drnayar]

move out middle east hubs

This would be the busiest and largest airport hub in the world easily.. and likely Air India's main hub

[drnayar]

[bala]

Sanjeev Sanyal Member, Economic Advisory Council to the Prime Minister of India explores the need for accelerating the Indian economy.

UPI Digital financial system for payments, ONDC, etc. GST for India. Insolvency and bankruptcy court. Inflation target 2%-6%. Handling the covid19 epidemic - safety nets like free food, JanDhan account transfer of small amounts to needy, guarantees on payment system, billion odd people were given vaccines. India became the world leader in dispensing vaccines for all, especially global south. There is a huge build out of the medical and pharma sectors (API too) happening in India that includes ayurveda systems. India's Ayushman system covers low income for medical insurance. AIIMS are increasing in the country.

Faster Infrastructure rollout happened after stabilizing the epidemic. This pace will continue for the decade and more reforms are coming over the next 25 years. Delhi is the 3rd largest metro in the world. In Mumbai there are 13 metro lines built out simultaneously. Two large airports are coming in UP and Navi Mumbai. Intercity connections are being built. Within the city there needs to be another wave of development. Delhi has already begun with the new Parliament. A complete facelift of the country is being attempted. Many projects: Roads, trains, airports, bridges, power, water, metros, new buildings, city, town, village facelift. The frenzy of development will yield huge growths, jobs, confidence/belief in the nation. In other areas, there is new revival in science and technology - yielding space, defence, export, semiconductor and other high tech goods/services. India's people caliber is already being tapped by multinationals. A huge amount of R&D is being done in India.

Process reform (e.g. patent system from 9000 to 35,000 this will increase further to 100,000 in a short while). Judicial reform is in the works. Admin & Bureaucracy reforms is also being attempted. Multiple rounds of reform, some done in parallel, several in discussion/plans for the next stage.

India is also tackling the external situation. EAM is firing on all cylinders and charting a new course. More to come in this area. Sovereign rating and credit rating are controlled by North atlantic 3 private agencies. India is trying to do it for itself (CareEdge) and spread it for other nations. ESG scam is taking over the global corporate structure (a tiny group in north atlantic create the rules). India is going to push back and India will create its own rules/norms. Cost of capital, trade and other factors like how good a democracy a nation (VDEM index) is being controlled elsewhere. Happiness index another bogus nonsense is based on suicide rate and anti-depressants. India is taking on all this shit thrust on the world by Goras. ESG high rank drum-roll please is phillips-morris (grower of tobacco and cigarette products). India is going to document and create the rules and share them with other nations. All of this will be fair and equitable. Boot out the special interest junk. India will be leader and show a new path for the global south. I am sure those in US will also adopt the sane rules instead of being bulldozed by the left-wokes-etc.



In a few short years India is truly going to be 3rd in the world and continue on a growth path for a long time. Going to #2 or even #1 is a distinct possibility and ergo the nation must be prepared for the mantle.

[Jits]

India's GHI ranking should be 32 and not 111:

https://www.msn.com/en-in/news/opinion/ ... rent&ei=28

[Atmavik]

https://www.youtube.com/watch?v=SaFp-Es7td4

संवाद # 133: Modi's secret BIG reform & reality of India's GDP growth | Prof. Prasanna Tantri

[Atmavik]

https://www.narendramodi.in/phenomenal- ... sbi-575303

Phenomenal Impact of PM SVANidhi Scheme on Street Vendors: An Analysis by SBI