Indian Economy: News and Discussion (June 8 2008)

Rahul M · Post by **Rahul M** » 28 Jun 2009 16:47

Is there a concept of negative work outside of engineering in govt/babu dom?

of course ! work done by the babu is negative, work done for the babu is positive !

Singha · Post by **Singha** » 29 Jun 2009 06:20

good idea Vina. unfortunately another characteristic of the Dilli vaasi is fear
of Govt 'machinery' coming down hard on their head when vital interests are threatened (like their power supply). cant blame them, various lutyens dilli 'warlords' roaming around majestically in convoys escorted by armed batallions is designed to bend the psyche of the people, to let them know 'we are special, we are above the law, beyond the law, we make the law ... and we can crush you like a bug if you cross us'

so the poor utility guy or just any random guy gets bashed up.

btw another good example of things starting 5 yrs late are the new
flyovers in places like agara lake, sarjapur junction and soon in bellandur
jn on ORR. would have been easy when ORR was built or immediately thereafter...you should see the place after dark as hordes of people come
back to koramangala side. its like a wild west. dont go there after dark
unless you are intimately familiar with the current 'system'

Sumeet · Post by **Sumeet** » 29 Jun 2009 10:58

Nice interview of Montel Singh Aluwahlia on UPA's unfinished economic agenda approx 20 mins.

http://www.ndtv.com/news/videos/video_p ... id=1130601

manish · Post by **manish** » 30 Jun 2009 00:15

ToI Dilli edition had a graphic showing that Dilli produces just about 17% of its power req. Rest has to come from the Central Grid. Coupla days ago, Delhi's consumption hit an all time high of 4200+ MW. On that day, it apparently overdrew some 140 MW from the Central Grid-but UP was an even bigger culprit with an overdraw of 1200+ MW

. I don't know what the way forward is here. Dilli hasn't added any generation capacity since 2002 as per ToI.

Dixit has reportedly complained to Sushil Kumar Shinde regarding the 'indiscipline' of neighboring states. Lets see what happens now. The rains at least have brought some temporary relief, so the demand might come down a bit now.

Edit: Here's the ET/ToI link I spoke of:
Dry spell bites, power supply down 12%

The hot and humid weather has affected the power situation in the northern region the most as demand has shot up. Against an expected demand of 13,720 mw on Friday, the northern grid was wheeling nearly 15,000 mw as states sucked 1,540 mw more than their share from the pool. This sparked low voltage and fluctuations in many areas. UP was the most indisciplined with an overdrawal of 1,270 mw, followed by Delhi (140 mw) and Punjab (130 mw).

All the four other arterial supply regions also reported shortage, but only the eastern region reported an overdrawal of 132 mw by Bihar. The western region reported a shortfall of 873 mw, northeastern region 112 mw and southern region 61 mw.

The national grid wheeled 84,670 mw of power on Friday, which was 14-15% short of the demand. On Thursday, TOI had first reported that the Tehri hydel plant, which supplies substantial power to Delhi, is doddering on the verge of closure as the water level in its reservoir has sunk to 740 metres.

putnanja · Post by **putnanja** » 30 Jun 2009 00:26

Is it not possible to have build power stations near Delhi for NCR, say something like gas/coal-fired plants? I don't see any UMPP near Delhi planned. Is it a shortage of water or are there any other issues?

manish · Post by **manish** » 30 Jun 2009 00:47

RaviBg wrote:Is it not possible to have build power stations near Delhi for NCR, say something like gas/coal-fired plants? I don't see any UMPP near Delhi planned. Is it a shortage of water or are there any other issues?

The Tata owned NDPL apparently has a 108 MW plant scheduled to go on steam within the next year. The Reliance ADAG's BSES Rajdhani Power is said to be looking around for a suitable location to base a 1400 MW plant. Even if these two surfaced magically tomorrow itself, they may just about manage to cover the present demand.

As far as basing a UMPP is concerned, I think that is unlikely. I doubt any of the UMPPs is located close to a major city (I might be wrong here) and in any case, I doubt Delhi (or dilli billis) would like to have any large, polluting industrial setup anywhere close to it

(vina saar!!)

R Vaidya · Post by **R Vaidya** » 30 Jun 2009 17:24

http://www.dnaindia.com/money/comment_i ... on_1269625

India's illegal wealth abroad is not just an issue of tax evasion
R Vaidyanathan
Tuesday, June 30, 2009 2:39 IST
Though not a part of the UPA government's agenda for the first 100 days, the issue of illegal money in tax havens like Switzerland has fortunately not been brushed under the carpet post-elections.The finance ministry has indicated it is taking steps to recover the amounts and also said the government of Germany has given a list of names of those whose money is lying in the LGT Bank of Liechtenstein. The response also shows steps have been taken in the case of Pune stud farm owner Hasan Ali Khan's illegal transactions through the UBS Bank of Switzerland.
Interestingly, the response of the Union government in the SC indicates that tax demands of Rs 71,848 crore have been raised against the said person, his wife and other associates. If this were the tax demand, the income on which it is raised may be more than Rs 1.5 lakh crore, taking into account compounding, penalty etc. This is a mind-boggling figure, given that our national income for this year is about Rs 50 lakh crore. But something more interesting has been reported.
"Swiss authorities told an Indian news magazine that Indian authorities submitted in the case of Hassan Ali Khan, who has a Swiss bank account, a request in January 2007 for legal assistance to the Federal Office of Justice. Swiss authorities, upon domestic inquiry, found that the banking information provided with the request for legal assistance contained 'forged documents'. Swiss authorities want to provide further assistance in that case if the Indian authorities could satisfy the Swiss government's demand to establish dual criminality -- what is crime in India is a crime in Switzerland. The Swiss also wanted to know whether the offence was an object of Indian money-laundering. Since April 2007, the Indian government has not responded," it was reported.
The Indian government says it cannot disclose the names provided by Germany as they have been obtained under the Double Taxation Treaty but it has initiated proceedings against the accountholders under tax laws. This begs the question -- why did the government of India ask information under the Double Taxation Treaty when the LGT Bank issue doesn't have any link to that? Besides, where is the question of confidentiality when dealing with criminals? Germany has released its own list; how then is it asking India not to release it?
A report in a financial daily said out of 50 names in the LGT Bank list, 25 were from Mumbai, none being big industrialists or well-known individuals. Not surprising -- big industrialists and politicians will hardly hold these accounts under their names. They will be under benami names. Tax authorities have reopened the assessment of all the 25 tax evaders under section 148 of the Income Tax Act. This implies that the government is treating the case only as tax evasion and not as capital flight and corruption. These are international crooks that have deprived India of huge resources by capital flight. This can be equated with financial terrorism.
Tax havens are against transparency. There are concerns that a lot of money is being generated through bribery, receipt of kickbacks, drug-backs, drug-trafficking, insider trading, embezzlement, computer fraud, under invoicing, and other scams, all of which have a major impact on common people. Ill-gotten money can be laundered through companies floated in tax havens. If a terror outfits decides to transfer resources to India from Monaco or Luxemburg, or some of the islands in the Caribbean Sea, or some dot-like country in Micronesia or Polynesia, it can adopt a simple strategy. Its investment manager can structure some device or product for transferring resources into the target country, maybe through a subsidiary or a conduit company in a tax haven.
Some check was being done when income tax authorities investigated the cases of the non-residents to see the profile of the real operators and beneficiaries to prevent persons of the third states from taking advantage of bilateral treaties. The effect of Circular No. 789, issued by the Central Board of Direct Taxes in 2000, is to subvert this check. The circular made the Certificate of Residence granted by a tax haven government conclusive for two things
(i) the authenticity of the fact of residency
(ii) the beneficial ownership of income
Due to the mandatory directive, income tax authorities won't be able to know the real operators and income earners. Terrorism can flourish under such circumstances. Those who issued this circular didn't seem to have thought they were unwittingly facilitating terrorism and anti-India activities. It was recently reported that Citibank was told to suspend retail sales over money-laundering in Japan. It was suspected that the bank has allowed 'anti-social' bodies to open several hundred accounts. Recently, the US media reported on Saudi money being used to finance terror outfits in Bosnia and Pakistan possibly using tax havens as conduits. These should make us much more alert as we are the worst-affected by terrorism.
India should move the UN Security Council and other multilateral bodies to close these tax jurisdictions. The sooner, the better.
The writer is a professor of finance and control at Indian Institute of Management-
Bangalore and can be contacted at [email protected]. Views expressed here are personal and don't reflect those of the organisation

Jamal K. Malik · Post by **Jamal K. Malik** » 30 Jun 2009 20:37

Services may be included in WPI
http://www.business-standard.com/india/ ... pi/362506/
A good proposal.

Jamal K. Malik · Post by **Jamal K. Malik** » 30 Jun 2009 22:04

Govt likely to garner USD 15 bn each year from GST
http://www.ddinews.gov.in/Business/Busi ... onterk.htm

The govt may mop up about 15 billion dollars (over Rs 72,000 crore) annually with the implementation of Goods and Services Tax (GST)-- the new tax regime doing away with the most indirect taxes.

shravan · Post by **shravan** » 01 Jul 2009 00:56

India's external debt rises 2.4 per cent at USD 230 billion
http://www.hindu.com/thehindu/holnus/00 ... 301975.htm

Mumbai (PTI) India's external debt rose by 2.4 per cent at USD 230 billion during 2008-09 due to an increase in commercial borrowings and short-term debts.

With a rise of USD 5.3 billion over the previous fiscal, the external debt rose to 22 per cent of the GDP from 19 per cent in the previous year, RBI said in a release on India's external debt position.

On the positive side, India's debt service ratio was the third lowest, above China and Malaysia.

Of the total external debt, the share of commercial borrowings was the highest at 27.3 per cent followed by the short-term debt at 21.5 per cent.

At the same time, Non-Resident Indian deposits accounted for 18.1 per cent, while multilateral debt was 17.2 per cent of the total debt.

The debt service ratio declined to 4.6 per cent at the end of March 2009.

In terms of international comparison, it added, India was the fifth most indebted country after China, Russia, Turkey and Brazil.

The release further said but for the valuation effect due to appreciation of the US dollar against the Indian Rupee, the stock of external debt would have increased by USD 18.7 billion compared with the stock at the end of March 2009.

Suraj · Post by **Suraj** » 01 Jul 2009 03:05

About external debt, many components of foreign exchange reserves also count as external debt. For example, NRE accounts comprise both forex reserves and debt, and therefore capital exit results in the reduction of both. This is an accounting artifact more than actual debt. As it stands, forex reserves (currently at ~$265 billion) are well north of external debt, and a large component of this debt is non-serviced debt, i.e. something like NRE accounts.

Core sector growth slips to 2.8% in May

Growth in the index of six core infrastructure industries slipped to a three-month low of 2.8 per cent in May 2009 on account of a dip in crude oil and refinery production as well as less power generation by hydel plants.

The Index of Industrial Production (IIP) is most likely to be in the positive territory in May, even as the core sector performance was less than expected because of positive indications from some components of the manufacturing sector. The core sector has 27 per cent weight in IIP.

The core sector performance in May was lower than that of April, when it expanded by 5 per cent, as well as the increase of 3.1 per cent a year ago.

“IIP will be in the positive territory, but the growth will be muted. Indications from textile, auto and cement sectors are positive, which will keep IIP floating in the positive,” said Shubhada Rao, chief economist, World Bank.

Govt to modify NREGA to plug loopholes

Among other issues, the amendments will increase the scope of work under the NREGA. There is a proposal to include “agricultural work” in the 100-day flagship employment programme.

“We also intend to include activities like poultry, fisheries under the NREGA,” a top ministry official told Business Standard. The labour component in construction of washrooms in the private houses of BPL (below poverty line) population under the Indira Awaas Yojana may also be included in the list of works prescribed under the Act. Currently, only eight types of manual works are allowed in the schemes under NREGA.

A section of the ministry also feels that use of machines can be selectively allowed in the NREGA for better results and more employment opportunity. “For creating embankments or ponds, heavy machines can do the basic digging and then people can be employed for the rest of the work. In states like Punjab and Bihar, machines are already used in this manner,” said an official.

To make the bureaucrats more accountable, the amendments will specify that the role of the “district coordinators” (the top official in charge of overseeing the implementation of the NREGA in a particular district) should only be given to the respective district magistrates. “Currently, the states have the power to employ other officers at the rank of DMs in this post. But if a district magistrate is held directly accountable for the project, then the loopholes can be plugged and better implementation can be assured,” said another official.

Effect of falling oil prices:
Current account turns surplus after 2 years

On account of lower trade deficit and surplus invisibles account India’s current account recorded a surplus of $ 4.7 billion during the fourth quarter of 2008-09 as against $ 1.5 billion deficit in the corresponding quarter in 2007-08.

The current account balance saw this turnaround after two years. During the January-March 2007 current account increased by $ 4.2 billion.

Although invisibles declined by seven per cent in the fourth quarter it led to a surplus in the current account. Services increased by over 45 per cent to $ 10.99 billion as compared to $7.56 billion in the corresponding quarter in 2007-08. At the same time transportation increased to $ 424 million as against a dip of $215 million in January-March 2007-08.

vina · Post by **vina** » 01 Jul 2009 11:54

Yawnn.. Goldman Sachs Economics Research has come out with a paper (Global Economics Paper No: 169) about what India's potential in 2050 is and the "Ten Things it needs to do to achieve it"

Summary -- India can be 40 times it's current size. So GDP ranking wise in 2050 the world will look like this in order of size. China , India, US, Brazil,Russia, Japan, UK, Germany, France , Italy Canada . Uk, Germany, France roughly equal in size and Japan, UK, Germany, France, Italy and Canada added together wont probably equal India's size . So 6 out of the current G7 added together wont be the size of India's economy . China will be roughly double India's size ie (US and India added together will be roughly China's size).

In per capita income it will be UK, US, Korea, France,RUSSIA, Germany, Canada, Italy, JAPAN, Mexico,Turkey, Brazil, China, Iran, Vientam, Indonesia, Philippines, India, Egypt (Indon, Phillipines, India, Egypt roughly equal) and then Nigeria, Pakistan and Bangladesh .

BD and Pakiland roughly a 1/3rd or so of India's per capita income.

So a nice thought. Time the govermund and babu monkeys got their pants up and their acts together.

Nihat · Post by **Nihat** » 01 Jul 2009 12:36

Could you post any link to such report

Chinmayanand · Post by **Chinmayanand** » 01 Jul 2009 15:05

Goldman Sachs document

Abhijeet · Post by **Abhijeet** » 02 Jul 2009 00:24

Vietnam will have a higher per capita income than India? That would be strange considering India is ahead of Vietnam (slightly) in PCI right now.

Also if UK PCI > US PCI in 2050, it seems to suggest that all the doom and gloomers on the global economic crisis thread will likely not see their fantasies of UK economic ruin come true.

Not that these predictions will be 100% accurate, of course.

vsudhir · Post by **vsudhir** » 02 Jul 2009 00:41

Abhijeet wrote:Vietnam will have a higher per capita income than India? That would be strange considering India is ahead of Vietnam (slightly) in PCI right now.

Must be true Goldman is saying so.

Also if UK PCI > US PCI in 2050, it seems to suggest that all the doom and gloomers on the global economic crisis thread will likely not see their fantasies of UK economic ruin come true.

The D&G ayatollahs are a lost cause. Kindly ignore them.

Not that these predictions will be 100% accurate, of course.

Hmmm. Like Sri Yogi Berra once said:

Predictions are dangerous, especially about the future.

That apart, it should not escape notice that the Goldman report, apart from regurgitating such profound banalities as "Improve governance to improve your chances", comes directly to the point where its interests are cincerned - those related to India's banking sector ('GOI should let go, let pvt players dominate' etc whereas even in the emerged markets, the banking sector are now public owned/supported. Just like ss-Roy had predicted), and to credit creation within our economy (just the disaster that brought the G7 down - debt binges that went unsustainable and future outlook is gloomy only).

Abhijeet · Post by **Abhijeet** » 02 Jul 2009 00:59

Nothing personal, vsudhir.

On a separate note: I wish the South Korean success story was taught in all Indian classrooms. Children should internalize the kind of profound changes that are possible in a country within a generation, given the right government, economic policies, and work ethic. To grow from being a nation as poor as India in 1960 to where they are today is beyond remarkable.

Singha · Post by **Singha** » 02 Jul 2009 06:49

WSJ - the authors name sounds korean to me. but could be korean-american too.

* OPINION ASIA
* JULY 2, 2009

India's Rising Tide
The rural poor fare better than in China.

By JOHN LEE From today's Wall Streeet Journal Asia.

China and India will likely defy the economic malaise in Western economies and grow at more than 7% this year. But that is where the comparison should end. Contrary to popular hype, India is actually outpacing China where it counts most -- the economic growth of the rural poor.

Half of China's population and two-thirds of India's still live in rural areas -- roughly 700 million people in each country, most of whom remain poor. In China, the urban-rural income ratio has become increasingly disparate; it was 1.8 times more in the mid-1980s, 2.4 in the mid-1990s, 2.9 in 2001 and now around 3.5.

This trend starkly contrasts with the early years of Chinese economic reform. Over 80% of the poverty reduction in China occurred during Deng Xiaoping's reforms, between 1978 and 1988. Although per-capita incomes have risen since then, the net incomes of about 400 million people have declined over the past decade.

India started from a lower economic base but has made greater gains: Its urban-rural income gap has slowly but steadily declined since the early 1990s. Over the past decade, economic growth in rural India has outpaced growth in urban areas by almost 40%. Rural India now accounts for half of the country's GDP, up from 46% in 1993. Unlike the Chinese, rural Indians do not have to migrate to already crowded urban areas to earn a better living.

These trends mirror the path of economic reform in both nations. China had a huge head start in alleviating poverty. It began free-market reforms in 1978, while India only started on its current journey away from socialism toward a market-based system in the early 1990s. Since the turn of the century, India has been rapidly improving, but China has been getting worse. And since 2000, poverty and illiteracy in India have halved, while the same figures doubled in China.

The role of domestic consumption in the economy also demonstrates the divergent paths of these two developing giants. In China, domestic consumption as a proportion of GDP has fallen to 35% from around 60% in the 1980s. The Chinese "economic miracle" depends mostly on exports and state-led fixed investment. Even Beijing consistently admits this is an unbalanced, unsustainable strategy. Moreover, depressed consumption levels and correspondingly high levels of savings by the citizens of a still-poor country mean growth is uneven and benefits relatively few. In contrast, domestic consumption composes more than two-thirds of the Indian economy. India has a lot of catching up to do, but its poor are rising with the tide, unlike in China.

China's emphasis on state-led fixed-investment growth in urban areas may have fostered this trend, exacerbating inequality and heavily favoring a relatively small number of well-placed insiders. After the 1989 Tiananmen Square massacre, Beijing decided the state should reassert its control of economic growth, which had rested on private-sector entrepreneurship. Before Tiananmen, private-sector investment growth in rural China was growing at 20% annually. After Tiananmen, it dropped to 7%. Hundreds of millions of Chinese have since missed out on the fruits of the country's spectacular growth.

The Chinese and Indian development models are not actually in competition, despite what newspaper headlines and books may suggest. But as magnificent as Shanghai now is, its shiny buildings have been built on the backs of peasants forced to deposit their savings into state-owned banks and receiving little in return. In contrast, India started its reforms 15 years later than China but is quietly and gradually building its base. Now that Prime Minister Manmohan Singh is starting his second term, he will do well to reject the dangerous appeal of the Chinese approach.

Mr. Lee is a foreign-policy fellow at the Centre for Independent Studies in Sydney, a visiting scholar at the Hudson Institute in Washington and the author of "Will China Fail?" (CIS, 2008).

Suraj · Post by **Suraj** » 02 Jul 2009 08:25

Exports down 29%, Imports down 39% in May

Data released by the commerce ministry today revealed that merchandise exports dipped 29.2 per cent in May 2009 and stood at $11 billion, as against $15.5 billion in the year-ago period.

Imports also dipped for the sixth month in the running, pointing towards weak appetite for goods in the domestic economy. It contracted by 39.2 per cent to $ 16.21 billion in May.

The trade deficit — difference between exports and imports value — shrunk by 53.3 per cent in the month under consideration and stood at $5.2 billion. With oil imports contracting due to weak international prices, the trade deficit has been dipping in the last five months. Weakening trade deficit and stronger foreign direct investment (FDI) inflows led to the India’s current account become surplus for the first time in two years in the three months ended March 2008.

The fall in imports has been attributed to the decline in the crude oil Bill of the country. In the month under consideration, India’s oil imports stood at $4.13 billion, a dip of 60 per cent over $10.5 billion in May 2008.

Non-oil imports which comprise capital goods as well as raw material used by India Inc. also contracted by almost a fourth and stood at $12 billion, as against $16.18 billion in the year-ago month. This shows the weak domestic demand in the Indian economy, in the backdrop of the global economic recession.

vina · Post by **vina** » 02 Jul 2009 11:20

Yawwnn.. Bored at work and I seem to be continuously bombarded by the e-CON- 'o Mix teams from lots of places. Today got a research report mailed to me and just glanced through it.

Very slick nice one. This one is called "InCh" ie India-China. I guess after "BRIC" , "INCH" could be a new jargon gets thrown about by all the "beautiful people" and the policy gadflies . Karat and Yechury and other commie ding dongs would love it of course , . Chinese would hate it coz it compares lowly SDRE Yindoos to SYRE (Short Yellow Rice Eating) , middle kingdom 'people' with 'kei (black) barbarians' (Chinese would prefer to be compared with Ang Mo Gao , ie White Barbarian dog).

Basically a comparison report on a historical basis of multiple facets of the economies of both countries and what is the gap measured in terms of years between the two countries. This is an IIFL report.

A quick gist.

Sector Gap in Years wrt China (China ahead)
Services Export 1
Ext Debt 2
Mobile Phone 3.5
Service Import 3.5
Private Consumption 5
Auto -Passenger 5
Domestic Aviation 5
Foreign Trade dependency 5
Goods Imports 5.5
Foreign Reserves 5.5
Dependency on Exports 6
Auto Production 7.5
GDP 9
Goods Exports 11
Railway Length 12
Deposits 13
Foreign Tourist Arrival 15
FDI 15
Industrial Output 15
Loans 15
Electricity Output 16
Installed Elec Capacity 17
Population 17
Yarn Production 22
Steel Production 23

The way to read it is like this. The gap in Years X means that the Chinese were exactly where we are today X years ago.

Going through the report, one thing struck me most. It seems that Gross Capital Formation /Fixed Investment contribution to growth in the period 2002 to 2007 was 59% in India vs 46% in China.

The good news is that going by the above numbers, we can see that the lags with china is greatest in areas which call for heavy fixed investment. If in India, capital formation /fixed investment is exceeding china proportionately, that gap would decrease going forward.In fact , in manufacturing, India is proportionately out investing china! A greater proportion of Chinese investments are going into real estate

!

In many of these areas, the gap between India and china, (phones for eg) the gap has shrunk from say 30 years to less than 3 years. In fact, in the last couple of years, India has been outperforming china. For eg, in FDI, the gap is 14 years, the gap has shrunk dramatically. In 1993, China's FDI was 47X India's while it is 2.7X now.India is already attracting a higher FDI as a % of GDP since 2006 than China!

The huge news is GDP wise, the gap is JUST 9 YEARS . We are today where the Chinese were 9 years ago !. Despite all the huge growth differential in the past, this gap is not that wide . We really need to make sure that this gap does not widen !. We need to make sure that we get our act together.

Another big difference is the agricultural productivity between India and China. Chinese productivity in grains and oil seeds is 2.1X and 1.5X India. In rice, it is something like 3X .I think this is a crucial area and the govt needs to focus absolutely on a priority basis on farm productivity here in India. This will tie in with all our nice social goals, get growth out to a majority of our people and spread the benefits and tie in well with the Kangress Govt's social and political objectives.

Tourism is another potentially huge untapped growth area. We really really really need to get our acts together in terms of hotel infrastructure. The transport stuff has got hugely better with private airlines. Hotels still remain extremely expensive because of ridiculous taxation, the land shortage due to the local politico mafia and the massive short supply of decent hotel stock. For eg, what you get at places like Bangkok and Singapore (recent visitors to Shanghai and Bejiing said the same thing) at 1/3 to 1/4 the cost of a hotel room in India is very impressive indeed. You get very decent things in the $50 to $60 per day range out there. You get next to nothing here in India, other than some very sorry dump

Of course there is marxist stupidities and overhangs in China like the steel production and coal production.. I think electricity will see the gap closing. I think CHinese demand growth rate has probably peaked, while when the govt finally gets its pants up and stops squatting here, we can see the UMPPs rolled out and demand gap for power bridged. All in all, I am quite happy. India is a far more efficient user of economic factors like water , power etc, wrt to China.

Onwards countrymen. Into the breaches! .

vera_k · Post by **vera_k** » 02 Jul 2009 11:48

Does the report contain data about -

1. Literacy

2. Life expectancy

3. % of population or absolute numbers graduating from high school and college

IndraD · Post by **IndraD** » 02 Jul 2009 17:01

The upcoming budget seems to be a bomb. Already prices have gone up along with petrol/diesel. They are saying on news cost of new houses are likely to go up @ 20% in 2 years which means a flat for 40 laks now would be 50 laks in 2 years, where do salaried and middle class people go from here? There is urgent need of a regulatory authority on makan prices gosh...! apni peeda koi nahi sunta.

http://www.indianexpress.com/news/uproa ... vt/484117/

The Budget Session of Lok Sabha started on a stormy note on Thursday with non-Congress parties, including UPA allies DMK and Trinamool Congress, slamming the hike in petrol and diesel prices and demanding a roll back, which was rejected by the government

ashish raval · Post by **ashish raval** » 02 Jul 2009 19:18

^^ Vina, from what you have written, I can infer that we need to massively improve X times in mostly everything just to catch up the dragon. I am sure if China keeps up growing at this pace of next 10 years the gap will be widened X 1.5 times than the years listed now. I dont see any reason for being too optimistic. 9 years in terms of GDP is big time.

vera_k · Post by **vera_k** » 02 Jul 2009 21:19

vina wrote:The huge news is GDP wise, the gap is JUST 9 YEARS

It depends on how one skins the cat. A straight calculation assuming no exchange rate fluctuations and 8% growth for India every year shows it will take 16 years to grow to the size of China's economy today.

It is true that China's GDP was $1.08 trillion in 2000. But that number has grown non-linearly due to changes in the way China calculates GDP and a slightly appreciating currency.

vina · Post by **vina** » 02 Jul 2009 23:13

It depends on how one skins the cat. A straight calculation assuming no exchange rate fluctuations and 8% growth for India every year shows it will take 16 years to grow to the size of China's economy today.

I would bet on the Indian currency appreciating from here. It will depend on the current account deficit and trade surpluses, but even in the BRICs model, atleast a large part of the gap is closed to the converging of GDP in PPP and nominal values.

China started liberalizing in 78/79. It started entering the turbo growth period in late 80s/early 90s, while we were just barely opened up in 91 and still stumbling along. The Chinese lead is due to the 20 year gap of strong growth in the 80s and 90s, and the very strong growth on top a higher base in 2000s .

I personally feel that the Chinese growth rate has peaked. They will not see the 10% growth on a sustained basis from now. The base effect is kicking in, it is running into limits of sustainabilty (ecololgical, social, financial etc) and the growth model has run it's course.

The gap between India and China will close becuase, India is accelerating it's growth, while Chinas has plateaued and is growth rates are goign to drop.

vera_k · Post by **vera_k** » 03 Jul 2009 07:00

vina wrote:I would bet on the Indian currency appreciating from here.

Yes, but even the yuan is supposed to be undervalued by 30% or so.

vina wrote:It will depend on the current account deficit and trade surpluses, but even in the BRICs model, atleast a large part of the gap is closed to the converging of GDP in PPP and nominal values.

Undoubtedly.

vina wrote:The gap between India and China will close becuase, India is accelerating it's growth, while Chinas has plateaued and is growth rates are goign to drop.

Hope this happens, but there are long odds. To close the current gap in 9 years will need updating the way India calculates GDP along with double digit growth rates.

vina · Post by **vina** » 03 Jul 2009 09:47

vera_k wrote:Hope this happens, but there are long odds. To close the current gap in 9 years will need updating the way India calculates GDP along with double digit growth rates.

You cant "close" the gap. That is a long term thing, say 50 years or so. What you can do is make sure that 9 years remains 9 years and doesnt widen to 20 years. That widening would definitely have happened if the hare brained Karats and Yechurys had a say in the govt and their wholly lunatic idea of "turd front" had got even a minute bit of traction.

Jamal K. Malik · Post by **Jamal K. Malik** » 03 Jul 2009 23:18

Recovery may decide growth trajectory

AnimeshP · Post by **AnimeshP** » 03 Jul 2009 23:37

Jamal K. Malik wrote:Recovery may decide growth trajectory

As per the article ...

The Economic Survey 2008-09 today forecast a growth rate of 6.25-7.75 per cent for the Indian economy during the current financial year (2009-10), provided the US economy “bottoms out” by September 2009.

from whatever I am reading on the economy (the BS about green-shoots not withstanding) ...the assumption that US economy will bottom out by Sep 2009 is just plain wrong ... So I guess our growth rate for 2009-10 will be much lower than 7.75%

Jamal K. Malik · Post by **Jamal K. Malik** » 03 Jul 2009 23:44

g.kacha wrote:
Jamal K. Malik wrote:Recovery may decide growth trajectory
As per the article ...
The Economic Survey 2008-09 today forecast a growth rate of 6.25-7.75 per cent for the Indian economy during the current financial year (2009-10), provided the US economy “bottoms out” by September 2009.
from whatever I am reading on the economy (the BS about green-shoots not withstanding) ...the assumption that US economy will bottom out by Sep 2009 is just plain wrong ... So I guess our growth rate for 2009-10 will be much lower than 7.75%

Just a guess and data work

Jamal K. Malik · Post by **Jamal K. Malik** » 03 Jul 2009 23:46

RBI for improvement in quality of WPI, IIP data
It is a long due improvement.

Suraj · Post by **Suraj** » 06 Jul 2009 11:24

The Union Budget is being presented right now. The Economic Survey has been released, in the meantime:
Economic Survey 2008-09, accompanying the 2009-10 Union Budget

mohan · Post by **mohan** » 06 Jul 2009 11:28

IBNLIVE/Moneycontrol is streaming a DD feed of the FM's budget speech. If you want to watch, here is the link:

http://www.in.com/videos/watchvideomc-c ... 26370.html

cheers
Mohan

IndraD · Post by **IndraD** » 06 Jul 2009 13:05

can some one please explain the new tax structure, also why money only for IIT, NIIT, don;t we need AIIMS like hospitals all over India, we should have many of them.

dipak · Post by **dipak** » 06 Jul 2009 13:15

Defence Budget Raised by 34%

In Budget 2009, the defence services have been allocated Rs 1,41,703 crore (Rs 1,417.03 billion) for 2009-10, a 34 per cent hike from 2008-09 budgetary allocation of Rs 1,05,600 crore (Rs 1,056 billion).

Impressive hike - good times ahead for Indian defense.

dipak · Post by **dipak** » 06 Jul 2009 13:20

IndraD wrote:can some one please explain the new tax structure, also why money only for IIT, NIIT, don;t we need AIIMS like hospitals all over India, we should have many of them.

Very true. IIRC, there was some announcement last year regarding establishing AIIMS like hospitals all over India - however, its not clear or mentioned any thing till now in this budget. Let's wait for the full-text.

SwamyG · Post by **SwamyG** » 06 Jul 2009 17:57

A simple question. Did India need stimulus money? Or did India go down the path because the West had gone down that particular path?

Rahul M · Post by **Rahul M** » 06 Jul 2009 18:22

suraj, could we have your take on the budget ?
with a little detail if possible, I like reading your stuff !

mohan · Post by **mohan** » 06 Jul 2009 18:42

A simple question. Did India need stimulus money? Or did India go down the path because the West had gone down that particular path?

What specific stimulus money are you talking about? NREG? JNNURM?

While I recognise that a significant (but perhaps not substantial(?) ) fraction of vocal BR forum members feel that the GOI (independent of the political party in power) is spineless and displays a complete lack of vision and execution ability - and is incapable of acting independently without our presumed Western masters - surely, the fact that growth rate has decreased to 6.7% from a previous 9%, along with corresponding swings in oil and commodity prices is a sign that even our economy has been affected by the 'global slowdown' - just like (the oft compared) China.

Given this fact, I am perplexed that one would castigate the government for reacting and attempting to boost growth/domestic consumption and chalk it off as yet another trivial attempt to ape the West . The phrase, 'damned if you do, Damned if you don't' comes to mind.

Perhaps one needs to recall that for most of the last 60 odd years, we have been accused of 'aping' USSR - and not the 'West'. Man, aren't we schizophrenic!
We ape the soviets for a few decades, and then we ape the west! Perhaps, after a decade or two, the schedule says we ape Africa...why leave out that continent?

This was not a perfect budget - Pranab Mukherjee left many things unsaid (which might give the Govt room to manoeuvre later - absence of evidence is not evidence of absence) - but there are enough signs within the budget that suggest that more things are being planned. But what has been described seems smart:
Cut taxes, boost spending, widen tax base - all three ideas have found implementation.

Again, I ask if this knee-jerk psychosis response is warranted, or if it is just a matter of convenience and fashion to remain cynical without making an effort at deeper analysis.

Asking a loaded question, that fails to atleast demonstrating a willingness to consider the possibility that one's cynicism is unwarranted, precludes a simple answer.

Cynicism, after all, is the most common form of naivety.

regards,
Mohan

SwamyG · Post by **SwamyG** » 06 Jul 2009 19:51

^^^
Suraj, Vina, Katare et al...regarding my question can you throw some insight or point to some sources? TIA