Indian Economy: News and Discussion (June 8 2008)

[AnimeshP]

It's not clear to me why online fraud seems to be a big issue in India, given the small number of people who have a credit card that they use online.

Instead of trying to promote e-commerce usage for efficiency reasons, the RBI seems to be firmly in the camp of making it as difficult as possible. It has recently passed a regulation that in order to transact online, users must enter a separate, bank-specified PIN in addition to the credit card and CVV numbers. In practice, this means that when buying something online, you have to enter the credit card number at the merchant's site, and you will then be redirected to the bank site to enter your PIN. If the site is down or slow (which is very likely in India) - tough luck.

HDFC has yet another insane policy called "NetSafe". With them, you cannot use your physical credit card number to transact online. Instead, you are required to generate a temporary card number for each specific transaction, and then enter that virtual number on the merchant's site. So to buy something:

- You select an item at the merchant's site
- Before paying, you have to log in to your HDFC account
- Generate the virtual PIN
- Enter the virtual PIN on the merchant's site

If you are an ecommerce site, this will probably result in lots of customer dropoff at the second step.

In addition, some banks like ICICI also have this thing called "Verified by Visa" or "Mastercard SecureCode" (which I had never heard of before coming to India), where you can shop with your card only on sites that are VBV/MSC enabled. I think there are about 15 sites in India, and even fewer internationally, that actually allow this, so those are the only sites you can use.

I don't get this whole attitude -- it reeks to me of fear of the unknown and putting a cumbersome bureaucracy in place before a problem has even been identified.

I agree that online fraud might be an issue, but the solution should not be to make the whole thing so cumbersome that most people will be discouraged from even attempting to buy things online - especially when ecommerce is in its infancy in India. Countries with far higher volumes of online transactions haven't felt the need to have such procedures in place -- perhaps we could learn from their experiences rather than making stuff up without due diligence?

A slightly old blog post that talks about the same issue:

http://www.watblog.com/2009/07/07/credi ... gulations/

All the issues listed above by you are not unique to India. I have to enter an extra PIN whenever I use my credit card issued to me by Royal Bank of Canada.
As a consumer, I feel much better about it as it adds an extra layer of security for my online transaction ...

[Tanaji]

^^^

Agree completely, I dont understand what the fuss is about. RBI for a change is sticking to good old fashioned security basics: two factor authentication. You are authenticated on something that you hold physically (the card number and CVV) and something you know (the PIN). It results in more security overall... why is it bad?

If the bank site that does the second part is slow or down, then it is for them to fix it. Or more specifically, the vendors should scream loudly that the bank is denying them business and take their custom to someone that can serve them well. Why blame RBI?

[Abhijeet]

The bank is the customer's bank, not the merchant's bank - so the merchant can't simply refuse to accept (say) ICICI because that will turn away customers who have cards issued by ICICI.

The PIN is not input on the merchant's site, but through a redirection to the bank site. ICICI, at least, has been unreliable for me at best. I would hesitate to start a transaction where midway I could be redirected to an unresponsive ICICI server.

Perhaps the RBI could try to ensure that the online functions of Indian banks are more reliable before mandating this? I understand that it's not their job, but it would certainly make life easier.

The other issues I mentioned - requiring websites to be "Verified by Visa", and requiring a virtual card number for each online transaction - seem like massive overkill to me.

[Singha]

icicidirect.com forces you to change password every 2 weeks as per govt directive.

[milindj]

The bank is the customer's bank, not the merchant's bank - so the merchant can't simply refuse to accept (say) ICICI because that will turn away customers who have cards issued by ICICI.

The PIN is not input on the merchant's site, but through a redirection to the bank site. ICICI, at least, has been unreliable for me at best. I would hesitate to start a transaction where midway I could be redirected to an unresponsive ICICI server.

Perhaps the RBI could try to ensure that the online functions of Indian banks are more reliable before mandating this? I understand that it's not their job, but it would certainly make life easier.

The other issues I mentioned - requiring websites to be "Verified by Visa", and requiring a virtual card number for each online transaction - seem like massive overkill to me.

Verified By Visa and Maestro SecureCode authentication programs are common security features in UK/Europe. It's in use in several Asian countries as well (Korea, Malaysia, etc). India is just a new entrant to the club.

My day job at a company that is an online retailer showed me just how widespread online fraud is(especially in the US, where credit card security can be incredibly poor - a lot of transactions don't even ask for the 3 digit CCV code!). There has to be a trade off between customer convenience and customer security, and for transactions, the more the security, the better it is for everyone.

But yeah, the issuing banks do need to have infrastructure in place to handle the additional layer of authentication.

[Singha]

for booking railway tickets, the citibank payment gateway seems to be ok, the others are bit moody.

[manish]

for booking railway tickets, the citibank payment gateway seems to be ok, the others are bit moody.

On the contrary, I have had better results with the AXIS PG. But by far the worst experience has been with ICICI PaySeal. Haven't used others.

[Suraj]

Last year's GDP growth rate is likely to be revised up to almost 7%:
2008-09 GDP growth rate likely to be revised upwards to 6.9%

“The economy growth in the financial year will be revised upwards at 6.9 per cent from earlier estimates of 6.7 per cent,” Planning Commission Member Saumitra Chaudhuri said while addressing the conference ‘Indian Forecasting Forum’. The growth projection is likely to be revised upwards, mainly on account of better-than-estimated performance of the manufacturing sector.

RBI's response regarding inflation management:
Large fiscal deficits make price control tough: RBI

In an indirect warning to Delhi, the Reserve Bank of India (RBI) today said central banks could find it tough to maintain price stability if governments continued to incur large deficits.

Maintaining that price stability was necessary for financial stability, RBI’s Trend and Progress report, released this evening, said higher inflation could push up the yield curve, which could result in significant mark-to-market losses for fixed income instruments. This, in turn, had adverse implications on bank profitability, as banks had to benchmark their bond portfolio to the prevailing prices. Bond yields had an inverse relationship with prices.

As mentioned previously, credit growth, particularly non-farm credit, remains below RBI's target:
Credit growth at a 12-year low of 10.75%

Low demand for loans pushed credit growth to a 12-year low of 10.75 per cent during the year up to October 9.

The previous low of 9.78 per cent was during the fortnight ended November 11, 1997.

According to the latest fortnightly data released by the Reserve Bank of India (RBI) this evening, during the fortnight ended October 9, 2009, bank credit grew Rs 17,160 crore. Bankers said a part of the increase was during the last four days of September, when banks tried to meet their second-quarter targets for sanctioning and disbursing loans.

The present level of credit growth is nearly half the RBI’s projection of 20 per cent for the year ending March 2010. The central bank, which is due to present the second quarter review of the monetary policy on Tuesday, is expected to revisit the projections in the wake of the low demand for funds from the corporate sector. During the pre-policy meeting, bankers had told RBI that it would be difficult to clock a 20 per cent credit growth.

Expenditure limits to be imposed on GoI departments:
PMEAC for including expense targets in fiscal discipline

The Prime Minister’s Economic Advisory Council (PMEAC) has suggested that various government departments should be given expenditure targets as part of fiscal responsibility.

In its economic outlook for 2009-10, the council said fiscal responsibility legislation should be followed by a medium-term fiscal framework, specifying the targets on both revenue and expenditure sides.

“The experience with the Fiscal Responsibility and Budget Management Act (FRBMA) provides some useful lessons and the next stage of fiscal adjustment should be designed to incorporate them. Perhaps it may be possible to induct a counter-cyclical mechanism to the fiscal consolidation process,” it said.

It noted that fiscal discipline was not the function of the finance ministry alone and all spending departments should be involved in its implementation.

“Based on the medium-term fiscal framework, indicative expenditure targets should be given to each of the spending departments, based on which they should prepare a medium-term expenditure plan. Both the medium-term fiscal framework and expenditure plan should be initiated as a part of the FRBMA exercise to be updated every year,” it added.

After a steady improvement, particularly since legislating FRBMA in 2003-04, the fiscal situation deteriorated sharply in 2008-09 due to economic slowdown. The government is continuing its expansionary fiscal policy stance in the current year as well. It has provided additional cuts in excise duties and services taxes, besides increasing the borrowing room for states to 3.4 per cent of GDP.

The fiscal deficit at the Central level is estimated at 6.8 per cent and the consolidated deficit for the year is projected at 10.1 per cent. Finance Minister Pranab Mukherjee had indicated in his Budget speech for 2009-10 that the government planned to reduce the fiscal deficit by 1.5 per cent every year to 4 per cent by 2010-2011.

[vina]

Hmm. I was wondering whether to post this under the Indian Economy thread or the NBJPrie thread. But since there is a lot of money and public morality involved, I think I will post it here.

It is this. While there is obvious changes for the better in TN, much of the other stuff remains the same. I am talking about the political economy. It is just that the scale has grow gargantuanly bigger. All over TN, instead of the giant cut outs of Amma, you see giant hoardings of the Trinity of Messers Dr Artiste, Mr Steel and Mr Beautiful Mountain. Obviously setting the stage for post Dr Artiste days where Mr Steel and Mr BeautifulMountain inheirit the "legacy" with TN "Kingdom" being split between North TN for Mr Steel and South TN for Mr BeautifulMountain. Long term, Ms Fruit Speech is no longer a "Playa" for the long term. Either she will be kicked out to Dilli or will be purged when the long knives are out in the post Dr Artiste days.

The sad part is that public morality has sunk into the morass. Evidently Dr Artiste and family have promised a TV for EVERY FAMILY in TN. Whatever for, I dont understand.

While Rahul Mehta would be on cloud nine, because "the commons" get a TV for free (color with remote.. the works), I really dont think watching Kalaignar Channel or Sun TV is the most elevating thing around. Sure a nice way to beam party propaganda to the living rooms of all and no need to truck them to massive rallies of the Netas and everything.I just hope that the channels are not locked into a specific few like in North Korea and people can use the remote to flick to any channel. Another "pleasing the commons" idea that will absolutely please Raul Mehta. It seems that during the recent election in Madurai consitutiency where BeautifulMountain became the MP, every voter was give Rs 500. And after that votes by constituency was checked against payments makde to tally payouts vs votes. People there told me that the communist MP was easily the best MP that Madurai had had in a long long time. Totally un corrupt, very approachable, committed, basically all that you would want out of an MP (travels by public bus, talk austerity). I didnt know I could say this. But that communist MP absolutely deserved to win. (this is vina rooting for a commie, mind you )
The only saving grace is unlike the rank idiocy in UP where huge amounts of public money is spet on building absolutely usellss statues, here attleast , public money is put back in people's hands by something as tangible as a TV and unaccounted money is put back in the commons hands.

All in all, if this is the future of politics and the politcal ecoonmy is goint to work this way as the coutnry gets richer (what LCD TV for all and Rs 1000 for every person's vote), it will be a huge travesty. It will no loger be the "Gantantra" ,but become "Dhantantra" as Vajpayee always used to say.

While Rahul Mehta and his commons will be pleased with all this, the ony fly int he ointment was this. I asked my relative , if they were going to take the TV . To my surprise they said yes. I repled that you dont even have space for the TV.You have 4 TVs in the home already with one for each bedroom!. The anwer was, if we dont take it, it will be stolen in our name by someone else. So we might as wel take it and see what to do with it!.

All in al, what a terrible terrible waste. That funds for the TV business (howmany ever hunderds of crores for TVs for all households in TN?) can be put to far far better and productive use. But hey, who am I to say it. If the brain dead "commons" want TV and the daily drug /anondyne of Sun TV and Kalignar TV and Kollywood DinChak, who am I to say no?. I dont pay taxes in TN anyway.

[KarthikSan]

It seems that during the recent election in Madurai consitutiency where BeautifulMountain became the MP, every voter was give Rs 500.

Corrections Vina Saar. It was more like Rs. 10K per family for Mr.BM's MP bid. The Rs. 500 per vote was for the legislative assembly by-elections

The only saving grace is unlike the rank idiocy in UP where huge amounts of public money is spet on building absolutely usellss statues, here attleast , public money is put back in people's hands by something as tangible as a TV and unaccounted money is put back in the commons hands.

The money was raised by Mr.BM's faithful followers by threatening shopkeepers and business owners to pay up between Rs. 10K - Rs. 100K depending on the size of their business. Source of all this information is my corner petti kadai owner onlee

Funny thing is, a leading Tamil investigative magazine reported that Mr.BM came crying back to daddy that nobody respects him in Delhi because he can't speak English or does not know what the eff is happening around him. Seems he wants to give up his minister spot to dear sister Ms.FL and come back to TN to continue his katta panchayats.

[Singha]

I have claimed for some time TN is our closest equivalent to PRC in terms of industrialization and high urbanization, mass mobilization for any cause good or bad, periodic purges of courtiers and relatives based on regime change events, authoritarian rulers with 'heavens madate to rule middle earth' , lack of good water, diasporic power, maritime linkages, fanatical armies of 'manchu bannermen' to fight for their leader, mostly difficult climate, incorruptible strict old gentlemen who debate on morality and ethics over a cup of coffee akin to the Daoist and Confuscian thinkers ...

karnataka is more akin to a outlying agrarian tribute paying peripheral province. sichuan
comes to mind.

kerala is the steppe frontier of the kingdom, with unpredictable coalitions of clans sometimes engaging in cross border raids into more settled areas in the river valleys of
the east. the time is nigh when darth dileepus will end the succession battle and as
the QaKhan lead his army of 600,000 hard riding cavalry out of the steppe and fall upon the settled lands in a winter expedition like chinggis khan did.

[negi]

[vina]

I have claimed for some time TN is our closest equivalent to PRC in terms of industrialization, mass mobilization for any cause good or bad, authoritarian rulers with 'heavens madate to rule middle earth' , lack of good water, diasporic power, maritime linkages

I think you are very right with the PRC comparison. The resemblances in many ways are uncanny . I was just reading a report forwarded by a top honcho in my company from some research firm about business environment and expectations of future growth in India, the top 4 are TN, AP, Karnataka and Maharashtra which are expected to show the greatest investment friendliness and promise and PRC like "lack of friction to business" (as long as the path is lubricated with money and due obeisance paid to BrotherMountain, Steel,and Dr Artiste of course).

Another uncanny resemblance is the mass propaganda/people control and personality cult that is straight out of a Stalinist/Mao/ No Korea play book. Just as Mao Tse Dong would never be referred to by his name in China but would rather be called as the "Great Leader" or "Great Helmsman" or whatever and Kim Jong IL would be "Dear Leader" / "Son of Heaven" in No Korea, in TN too we have Dr Artiste, Dear Revolutionary Leader. Why even BeautifulMountain too is now not referred to by name , but rather as "Elder Brother" - Fearless Heart (maybe Braveheart would be the better word in English, or Sher Dil in Hindi, but in Tamil it is Fearless Heart).

As for "Mandate from Heaven" even an ostensibly "anti religion" /atheistic like DMK now has huge posters in place with the classic scene from Gita with Krishna as Charioteer and Arjuna in the chariot ,drawn by 4 white horses.. The difference is instead of Krishna, we have Dr Artiste as the charioteer and Mr Steel instead of Arjuna. Great marketing I suppose. Tap into the mental images and symbols burned over millenia into the hearts and minds of millions and hijack it for propaganda or rather (propah , gandha)

[Singha]

the eunuch admiral Zheng He under ming dynasty did call in on TN and Sri Lanka (also calicut & kochi) in some of his expeditions. maybe he left some of his reading materials behind.

[vina]

Talking of actual reality on ground and the scene with the "commons" , one unmistakable reality is that wage levels have gone up across the board, across all skill levels. It is impossible to get any sort of labor, even unskilled at less than Rs 200 a day.

I used to think it was a peculiarly Bangalore problem. The common whine with all the outsiders settled in Bangalore is that it is close to "impossible" to get maids. All the folks I know went and "imported" maids from Bengal/Orissa via Dilli. I cant figure out why they go to Dilli and then hire Bengal/Orissa folks, but that is reality.

In fact, recently at a party at Shiru (a very uber chi chi Japanese restaurant at UB City,the prices are a real shocker, but the place was close to full), I met an expat who had recently moved to Bangalore (her husband runs a fund) and she was complaining about how impossible it is with maids here and maybe how India should allow "import" of Filipino maids who she said were "ultra efficient" (she had moved here from Hong Kong.. I think entire east asia, the Std Op procedure is to outsource the entire household including kids to the filipina maid). With us, we have a great person who just cooks and takes care of the baby when SHQ is off to work. We pay her close to Rs 9000 a month, . She comes in at 7:30 and leaves promptly at 5:30 Pm. SHQ gets back at 5:30.

I tried telling the expat woman that south India , wages are high and you pay the kind of money we are paying she could get a maid. Her problem was that she had 3 kids and she needed a full time live in maid!

I think it is a really really good sign that it is getting difficult to get maids and people cheaply anymore. It can only mean that there are more compelling alternatives available and that too at better wages and conditions. That is very encouraging.

In Madurai, I was talking to someone who has been running a printing press for close to 40 years. His major complaint was that it is impossible to get any workers any more. He paid full benefits like health care and bonus and all benefits historically and his wages usually were above markets. But now even with wages bumped up to levels where he just about breaks even in a situation of head on competition (which didnt exist in that intensity earlier), he wasn't getting any workers!. He has a press in Chennai as well, which he runs with just ONE worker , who he sends for 2 to 3 days from Madurai if he cant execute the order out of Madurai!.

His theory was that with the NREGA and other benefits given away for "free" by the govt, people dont want to work anymore and prefer staying at home. I really dont buy that theory. I think the NREGA has effectively set the floor on labor prices for ANY sort of labor, especially unskilled (far better than any minimum wage legislation could). Now with that in place, the general wage rates have rise, which I think is great (and inflation has not exploded even with that, means productivity has increased tremendously as well) . For skilled labor, I think the minium floor would be atleast Rs 300 to 350 per day in these parts of the country. I am not sure even the "Gelf" pays much better than that by a big margin for semi skilled work. My dad says that a young dalit boy whom he taught driving and helped get a driver's license (he still comes to clean the car once a week) now works in a auto repair shop and gets something like 300 Rs a day.. Not bad for someone with limited education and skills . He would make around Rs 7000 or so if he worked 23 /24 days. Not a princely sum, but enough to live on I guess, especially if there are two people in the family working.

So all in all, I think I like the NREGA as long as the money being spent is not wasted on dig a hole and fill a hole kind of thing and there are no /few leakages. I know I have been scathing on this entire thing and bashed the JNU ding dongs and Jean Dreaze and others who pushed this. Sincere apologies to them. I see that they were right. I just hope that they do enough to make sure real assets are created via NREGA and that there are no leakages.

[Umrao Das]

South Africa is still a good place to get maid at very good rates, they do dishes wash clothes press them fold them and clean up the house everyday.

Cape Town Durban are ok Joe burg too much crime.

I was thinking If and when I retire in India about Rs 7000 to 8000 per month is ok income after having a own house . looks like its not going to work with Rs 8000 pm income.

[krishnan]

Not just cost. There was this case where the couple were leaving for north after being here in chennai for sometime, and the maid had the guts to ask them for the fridge and microwave oven , free of cost

[Rony]

Singha Ji,


The Satavahanas and later the Cholas transplanted their genes and culture in South East Asia long before Zheng He even learned how to navigate.If you want to make comparision, its more like the Zheng He reading the materials left over by the Satavahanas and Cholas.


But reading your comments on Tamil-Chinese comparisions, I remember a real life comment. I have a chinese friend, a phd in international relations from a canadian Uni and well versed in India-China relations.During a friendly chat after 2-3 pegs , we were talking about usual India-China comparisions.He told me that there are lot of stereotypes between Northern Chinese and Southern Chinese.Northen chinese - more fair, more beautiful.Southern chinese - more intelligent, more educated, more developed. Reminded me of our own North/South stereotypes.He also said that once the northen china was over run by mongols and later by manchus, the chinese civilizational core slowely shifted to southern china.Again quite similar to what happened to India in the past-the Indian civilizational core shifting to the south during the muslim rule.


I then asked him what are his general impressions on Indians.He was already in his 5th peg but looked steady and this what he said exactly .


"North Indians are easy to handle.They are emotional but no brain like Northern Chinese.Look at Nehru.He was no match for Mao (born in Hunan, southern china).But South Indians are tough nuts to crack.They look calm and innocent but they are very calculative and intelligent and can be ruthless at times.You know.. that guy who bought reforms... Raaao .." ( Me to him : Narshimha Rao ? ) ." Yes.. Yes.. He is from South India right ? which state ? ( Me to him : Andhra ) .
Isnt he the one who crushed the rebellions in Kashmeerr and Puuuunjab ?. People like him are the real danger. Jiang (Zemin) (born in Jingsu, Northen china) was no match for Raoo ".


I was about to change the topic and he again burst open .


"You know , the only time the chinese lost to Indians in battle happened in 1967 nathu la clash ? Then your army was lead by a South Indian general ? ( Me to him : General Kumaramangalam ? ) . "May be . I dont remember his exact name ". "Is it again a coincidence that the only time the Indians went on a offensive againt the chinese, then also it was led by a south Indian general.General Sunderji is a south Indian right ? "


By this time i had enough and i chnaged the topic back to Northen Chinese Vs Southern Chinese.



I wanted to take this just as another drink talk , but what really worried me more than his attempt to pit everything in North Vs South was his observations and knowledge about India. How many of us can name the chinese generals during the 1962 , 1967 and 1986 clashes with India ?


The chinese may shout from the rooftops that they dont care about India and resent about India-China comparisions, but its all only for show and propoganda purposes. They are keenly studying India and its impact on them. It is time for us to study about the chinese people and their impact on us and see if there are any divisions we can exploit.

[Hari Seldon]

Wow. Tks for that post, Rony. Should have asked your friend about that other great south indian stalwart involved in the Indi-chini dance - Sri Krishna Menon......

Anyway, this is the Indian Econ thread, and Sri PVNR's contribution to the Indian Econ is IMHO well recognised here.

[harbans]

IIRC the first Naval engagement between an European power and a South Indian King ended in disaster for the Dutch fleet. The vanquished admiral of the Dutch fleet ended up in the Kings fleet.

Fact is that Indian fleets were foraying into China and Japan millenia ago. Fa Hsein returned to China on an Indian ship that sailed out from Bengal-Andamans-Singapore-Indonesia-China. Chinese ships never could make such long voyages that era.

[vera_k]

India should allow "import" of Filipino maids who she said were "ultra efficient" (she had moved here from Hong Kong.. I think entire east asia, the Std Op procedure is to outsource the entire household including kids to the filipina maid). With us, we have a great person who just cooks and takes care of the baby when SHQ is off to work. We pay her close to Rs 9000 a month, .

Well, her complaint may be about the quality of work <and other unmentionable things>, rather than cost. $200 or so for daycare and perhaps $500 for a live-in maid are prices that would be hard to beat anywhere in the world. As a comparison, we used to pay $2500 for a nanny with another $200 paid to the government for FICA. It's hard to imagine prices are much different for Filipina labor elsewhere to the point where it would make sense to import into India.

[SwamyG]

>>>as long as the path is lubricated with money and due obeisance paid to BrotherMountain, Steel,and Dr Artiste of course
Hey, remember what Nayagan said "Naalu paerukku naladhuna eduvame paavam kidayadhu" {nothing is a sin, if it helps the people} Sources tell me that MuKa routinely gives lakhs to the temple near his house. He even prays to that deity in the temple.

Vina saar: You again hit the ball out for a six with your insight on the lack of maids. I am so enamored with the taxi cab drivers in India still. We had such a horrible time to get drivers on an adhoc basis. We used to call this agency that supplied just drivers or both drivers and a car. We had to call atleast one day in advance to block a driver for 4 or 8 hours. They were booked all the time. The drivers had mobiles (of course who does not in India) and had their grapevines helping their other friends if they could not take an order. It was encouraging to see so many people gainfully employed - they earn about Rs6000 to Rs10000 pm - depending on their terms of employment/contract. And my mom, has tough time getting maid - but they are old fashioned don't pay much.

[Singha]

looks like its not going to work with Rs 8000 pm income.

assuming you want to eat something more than bread and water! food, electricity, phone, gas, cable tv, petrol, car servicing, medicines, books, .... esp food is quite costly here both in raw form and midrange+ restaurants.

[Bade]

They were booked all the time. The drivers had mobiles (of course who does not in India) and had their grapevines helping their other friends if they could not take an order. It was encouraging to see so many people gainfully employed - they earn about Rs6000 to Rs10000 pm - depending on their terms of employment/contract. And my mom, has tough time getting maid - but they are old fashioned don't pay much.

That is quite low when compared with what a driver makes in Kerala. I ended up paying Rs9000 for a 10-day period with housing and food extra for an out of town trip. The work was limited to 12 hours per day with long gaps of inactivity. In between he kept asking me if he could head back for a day or two for his regular hauls, hinting at his loss of income because of the longish commitment. Most busy drivers (mostly veterans with 10 yrs experience) do not like such deals. They instead prefer a point A to point B drop off for long distance calls. He actually has his own car (Amby) and says he makes a good Rs15,000 per month regularly as take home income after all expenses paid. Pretty darn good. He has not even bothered to go to the Gelf in all these years.

[SwamyG]

Bade: I am talking about guys who don't own a car or run such an agency. Sometimes they work outside the agency on a part-time basis too. I think the average income for paid car drivers at home was around Rs7,500. And it was tough to get them as the drivers earned more if they worked with companies who had contract with ITvity companies. If a person was willing to work for more than 10-12 hours a day, he could easily pocket some more money. With more call-taxis coming up, the options for these guys are even more than what was say one decade ago - when only the rich had a car and a driver.

[Bade]

SwamyG, you are right the full-time(8 hr day) driver is paid roughly around the figure of Rs7,500 even in my town, 40km north of Cochin. But, the guys who do this are usually newbie drivers, with a host of associated problems. Most are not punctual and with worse attitudes combined with poor driving skills. I was wondering what the comparative costs would be in Cochin city itself, since I was quoting figures for small towns, with a population less than a lakh.

[SwamyG]

One another thing I noticed in Madras (err...Chennai for some of you folks) is the number of Airconditioners. Coming from a middle-class family I had not seen ACs in that many house-holds. Again only the privileged had it in Madras. In 2009 visit, almost all my friends have ACs - one in the living room and one in bedroom. They say it is a necessity. And the flats I was scouting in Hyderabad all had 2 ACs compulsory (that is hyderabadi style of talk).

It is mind boggling to think of items that were considered to be worthy of the rich getting "commoditized" and non-rich folks having the ability to afford them. Nobody is breaking their banks to buy these items.

[ramana]

ACM Mehra saab told us AC was not luxury for the humidity and the consequent lack of sleep does a lot of damage to the pilots fitness.

When the new Irrigation Secy took over in 2003 he sanctioned all the CEs a/c cars for he wanted them to travel comfortablly and be fresh when they go on duty. Most of them are over 55 years.

[paramu]

I wonder whether excessive addiction to air conditioner can make future generations physically weak?

[Gus]

Evidently Dr Artiste and family have promised a TV for EVERY FAMILY in TN. Whatever for, I dont understand.

It is a small color TV...i think 21" not sure..it is quite adequate for a small home..remote included etc. I have seen programs and again..it is not something I would have in my house, but I can watch it if need be.

I used to think that this is just bribery. I read some article that TV watching actually increases aspirations...people do want more in their life from watching TVs. Now...that may be contradictory to those who are already middle / upper middle and think of TV watching as 'lowering their aspirations'...but apparently it works the other way in low income households.

I can observe changes in my extended family living in remote village areas in TN. Whether it is by the TV or not, but on the whole, the current generation of 20 somethings from rural areas do aspire more than their parents were.

take it FWIW.

[vina]

Well, her complaint may be about the quality of work <and other unmentionable things>, rather than cost.

Yes here complaint was more about "quality" or rather "efficiency" as she called it. Point is those kind of live in maids are not available anymore anywhere in the south. With job avenues opening out, most local women work in formal jobs and this maid business is simply not on anymore.

Why in places like Banaglore, in the malls, most of the sales girls behind perfume, jewelry, make up /cosmetics counters have a big contingent from the North East. Walk into a Daniel Swarovski showroom ( I bought a gift for SHQ from one of those), the sales girl is proabably from the North East. Local women also prefer piece-meal 2 hr jobs , like babysitting the kid in the evening for 1 or 2 hrs for Rs 1000 or so.

$200 or so for daycare and perhaps $500 for a live-in maid are prices that would be hard to beat anywhere in the world.

The sad part is the support systems for nuclear families with kids (parents just visiting and not staying with you l) is barely in place in India. Day care /creches where they exist are way way below even acceptable stds unlike in Massa. I know a couple of people who are Massa returned, but the wives preferred to stop working because the day care as it exists freaked them out and they couldnt get the kind of maids they could be comfortable with and trust the kid with. And like us, they too couldnt have the thought of a live in maid. The problem with the normal maid is, in case she falls ill or doesn't come in on a week day, either I or SHQ have to take the day off! . More than the money, it is the trust the confidence of leaving the kid all alone with the maid during the day!. Some companies (notably Honeywell, I think Intel, Tesco etc) have great day care and they are not located too far from the city or are within the city. So I know people who drive to work with the kid, leave them in day care, check on the kid for like 3 times a day and tkae the kid back home in the eveneng. But what ifyou work in Electronics city and tyou take the office bus to work?. You cant take the kid with you ,even if the company has a day care center and if you leave the baby in a day care close to home, you have the challenge of rushing back from electronic city in the mind numbing traffic to take the kid home before day care closes and in the middle of all that, you ahve to put in say 9.5 hrs or so anyways!

I think day care, creches are going to be the big growth opportunity in India going forward. good quality ones are going to atrract parents with small kids like felas!
Dilli model is slightly differnt. I dont know how they manage to get maids and help . There is a huge supply there and DIlli Bills have this naukar -cahhar business. Maybe it is the poverty of the surrounding areas and the willingness of folks from the poore eastern parts like Bengal, Orissa and Bihar to move to Dilli.

[vina]

And my mom, has tough time getting maid - but they are old fashioned don't pay much.

At best she will get someone who will come in for a hour for say 4 or 5 days a week and do the dishes and sweep and mop the floor. It is amazing to see how the wimmin of all types bust their spleen when the maid doesn't turn up for one day (same problem with my MIL). I suggest dish washers and it runs into the stubborn , "it wont work here, our cooking is different etc" kind of nonsense and I even if I tell them it works perfectly well, they dont believe it (all it needs is some investment in glassware /china and some sensible thing like glass cookware/anodised cookware if you are going to cook and serve from the same dishes)!.

But anyways, that is the easy part .. If you parents want someone to come and cook daily, well, close to impossible. There are no more such people. All the cooks get called for all sorts of functions for like 15 to 20 days a month and they easily make around 15K . No one wants to tied into a 1hr at 9:00 am kind of locked in schedule where there is much higher money making opportunities elsewhere... Well, I guess time for your parents to switch to cereals /cold breakfast like the rest of the world , or step out for breakfast at a nearby restaurant!. One of the luxuries of India I guess, is you still do get a hot , cooked breakfast in the morning (atleast I do coz the maid comes in at 7:00 or so).

Yeah folks, dishwashers, cold break fasts and cooking once a day is the future!. Welcome to "development" or rather piss,plogress and plospelity (for whatever it is worth) , along with day cares and creches. The washing machines are well and truly entrenched.. Time for dishwashers I think.

[Sriman]

Narayana Murthy's VC fund: http://www.thehindubusinessline.com/200 ... 710500.htm

[csharma]

Stephen Roach on India surprising everyone in the next few years.

Asia set for dramatic changes; India 'real sleeper': Roach

http://www.business-standard.com/india/ ... h/76421/on

Asia is likely to witness dramatic changes over the next few years and India may be the 'real sleeper' — the one who becomes suddenly successful after being undistinguished — even as China is grabbing the centre-stage in the region, says the Morgan Stanley Asia Head.

"I think that India actually could be the real sleeper in Asia over the next few years. Just at a time when everybody is all lathered up and excited over a China-centric region," Stephen Roach said.

A large presence of world-class competitive companies, English-speaking, IT-competent workforce, relatively stable financial institutions, are some of the factors that may drive growth in the country.

In the last three to four years, India's savings rates have moved, though at a lesser pace than China but still an improvement in itself.

"Foreign direct investments accelerated dramatically again, not up to Chinese standards, but a huge acceleration vis-a-vis where India has been historically," Roach said in an interview with the Mckinsey publishing group.

Story on savings rate approaching 38%.

Savings: The Real India Story

http://www.vccircle.com/columns/savings ... ndia-story

Two, India’s savings rate has risen relentlessly over the past 30 years and is now approaching 38%. Based on our analysis of other developing and developed countries’ savings rates, we expect India’s savings rate to peak at 45% in 2030.

Three, equity investments currently account for only 5% of retail financial savings in India. As India moves towards the rich-country norm of 20%, the amount of retail money entering the stock market annually would grow a staggering nine-fold.

Finally, pensions/life insurance currently account for 30% of retail financial savings in the Western countries. Surprisingly, India has already hit this 30% ratio. However, as the overall quantum of savings rises, retail flows into life insurance/pensions will grow seven-fold.

Just in case you believe that these four trends represent mindless extrapolation, over the past 17 years, India’s savings rate has risen from 23% to 38% and the annual flow of retail money into the stock market has risen six-fold. So all we are predicting is a mild acceleration, based on data from the rich world, of what is already a well- established mega trend in India.

[SwamyG]

Vina saar: No no, they don't need the maid for cooking. It is just for the non-cooking chores. My mom does claim that she pays them a lot; but I think the issue is some of the elderly ladies are yet to adjust to the contemporary conditions. They are not really used to vacations, going to village 'kula daivam' visits ithiyadi. So she had different maids one who washes clothes and the other who sweeps and washes vessels. This summer, the maid who washes clothes teased my mom that if the maid falls sick then my family has to bear the expenses. Her rational was that my family had visitors from USA (carriers of swine flu) . No doubt my mom was angry and petrified. I was praying that she did not fall sick.

[csubash]

That was a wonderful summary Vina. It is true in most parts of TN, NREGS has created a minimum pay scale for any unskilled/semi-skilled labour. I am not sure of other states but TN would easily rank high in one of the most corrupt states in India, but it still manages to grow respectably.
GD, once again as others have said before write a book.
csubash

[Suraj]

RBI leaves interest rates unchanged; hikes SLR

The Reserve Bank of India today in its quarterly review of the Credit Policy left key rates unchanged.

RBI left the cash reserve ratio (CRR) unchanged at 5 per cent, the repo and reverse repo rates have also been left unchanged at 4.75 per cent and 3.25 per cent, respectively.

The Reserve Bank, however, raised statutory liquidity ratio (SLR), the portion of deposits that banks are required to keep in government securities, by 100 basis points to 25 per cent.

The decision to raise SLR, in the second quarterly review of the credit policy, is aimed at reducing liquidity and fighting the inflationary expectations, which has started building up, especially in the case of food items.

RBI raises inflation projection to 6.5 per cent with an upside bias by this fiscal end from 5 per cent projected earlier.

RBI retains GDP growth projection for FY10 at 6 per cent with an upward bias.

Both GoI and RBI are estimating GDP growth in the upper 6% range:
GDP likely to grow 6.5-6.75%: FinMin

"RBI always makes very hard and conservative assessment... The GDP growth I am inclined to accept (is) the figure of Prime Minister's Economic Advisory Council, headed by C Ranagarajan, that means from 6.5 to 6.75 per cent," he told reporters.

In its monetary policy review, the central bank retained its earlier forecast of six per cent growth for FY'10.

Asked whether stimulus measures will continue, he said, "As I mentioned that until the economy is on a firm recovery path, it will continue."

The Finance Minister said figures for second quarter economic growth are yet to come, but industry has started picking up. The Indian economy grew by 6.1 per cent in the first quarter.

RBI moves to contain inflation without hurting growth

Aiming to tackle inflationary pressures, the Reserve Bank today increased a key statutory deposit ratio for banks by one percentage point to 25 per cent but the move is not expected to push interest rates up.

Barring the hike in Statutory Liquidity Ratio, the deposits that commercial banks are to park in government securities, the central bank left other key policy rates and ratios unchanged.

Although the one percentage point hike in SLR could suck up over Rs 30,000 crore from the system, the average SLR of banks is already at 27.6 per cent.

"As such the increase in SLR will not impact the liquidity position of the banking system and credit to the private sector," RBI Governor D Subbarao said, releasing the second quarterly review of the Monetary Policy.

Maintaining the easy credit flow to the private sector would help increase economic activity.

[Masaru]

On Mumbai's Streets, Cabbies Fight To Keep Passengers Uncomfortable

The taxi tensions are strongest at the city's domestic airport. The airport has a brand-new covered area for cabs where, initially, old and new cabs mingled. But passengers were waiting in line for the next modern cabs rather than choosing the old ones. After watching the choicest customers being whisked away, the Padmini drivers got mad.

After some of the old-taxi drivers started beating up Meru cab drivers and stoning windshields, the police asked the new cabs to wait for customers to call to phone at a spot three blocks from the airport exit. Meru drivers at the airport say their business has plunged, and now they can't even go to the nearby tea stall for a snack.

May be OT for this thread, but another instance of mobocracy masquerading as democracy. Instead of the rule of law it is more the rule of the loud, obnoxious and powerful vested interests. Reminds one of the instance in 1920-30 when a group of Mumbai textile mill workers similarly protested against modernizing and automating the manufacturing, leading to most of the business shifting to Japan and eventually bankrupting the whole industry. International financial center and next 'shanghai' dream on, when the govt. can't/won't do anything against a taxi driver mob. Compare the rickety taxis to the maglev; gives a true measure of the distance to be traveled.

[Malayappan]

Cross Posting...

India's Financial Sector in Current Times, S Guhan Memorial Lecture by YV Reddy, Business Standard, Oct 26, 2009

It is worth reading in full. He asks and answers questions on macro economic management, banking etc etc.

Just one excerpt! -

First Question: Is macro economic management reasonably balanced?

The answer is obviously yes – by and large. We have no excessive current account surplus or deficit; no excessive dependence on exports or external demand; no excessive reliance on investment or consumption expenditure; and, no excessive leverage in most households or corporates or financial intermediaries.

We are, however, vulnerable to shocks on four fronts: Fuel; Food; Fiscal; and Finance – external. In regard to fiscal, the quality of management and subordination of monetary policy continue to be issues. On external sector, the quality of capital flows will continue to be an area of concern. In particular, quality of FDI (Foreign Direct Investment) also deserves a close look, in terms of extent to which FDIs are financing green field projects.

There are nine such questions he poses and answers

[csharma]

India has become the third largest steel producer for the first 9 months of 2009. Used to be fifth until last year.
It is still pretty low though as far as per capita consumption is concerned.

http://www.hindustantimes.com/India-mov ... 70283.aspx

India moves up, turns world’s third-largest steel producer

The country has consolidated its position as the third-largest steelmaker in the world behind Asian rivals China and Japan, jumping three spots in the pecking order for steel producers in the first nine months of this year.

With the global downturn still impacting the steel industry worldwide, United States and Germany are the two biggest victims of the downturn, with the former slipping two positions.