Indian Economy: News and Discussion (Jan 1 2010)

vina · Post by **vina** » 15 Aug 2010 11:13

Cross Posting..

Spoke with my parents today. Dad was pretty excited, sort of like a kid who was given a candy for free. Evidently, Dr Artiste's promise of a TV for every family in TN was fulfilled in the ward they live in and a ELCOT 14" TV with 200 channels and a remote was given.

Think of the irony of it all. We have folks dying from hunger in many parts of the country. The TVs go on and on about grains rotting and Messers Karat & Co slam the govt for insuring food security for "rats and not the people of India" and say that the PDS system simply doesn't exist in large swathes of the country, while in a well run state like TN where govt machinery actually works, a TV actually gets delivered to a family for free , even to ones who have no use for the TV (there are 4 TVs in that house, one for each bedroom and living room), while other places are fighting over APL and BPL and this and that.

The bulk of the problems in the BIMARU states can be fixed and basic nutrition and health be delivered ONLY when you have a modicum of decent governance in those states (note, I dont say corruption free, by no stretch a TN or Gujarat are corruption free , far from it, but those govts are EFFECTIVE and that I think is the operative word).

Given the odds of the TV actually being used for public health, literacy and other stuff vs the din-chak being served out on Sun TV and Jaya TV and Vijay TV and others, I think it will be a no contest. Oh well, can only hope that atleast some good comes out if it and not lead to more cretinization via the Bollywood and Kollywood din-chak

Singha · Post by **Singha** » 15 Aug 2010 11:22

shouldnt this have been confined to economically weaker sections?

vina · Post by **vina** » 15 Aug 2010 11:42

shouldnt this have been confined to economically weaker sections?

. Absolutely, if you go by economic logic (even if you stretch it, and dont ask inconvenient questions like choice between better schools and public transport vs a TV).

However, the political logic is different. A vote is a vote, economically "weaker" or otherwise. So you want it to be "Universal". It is sort of like the Commies asking for Universal PDS (you can canvas votes from EVERYONE), but here Dr Artiste has gone one up and Universalized TVs, rather than the PDS!

manish · Post by **manish** » 15 Aug 2010 11:54

vina wrote:
However, the political logic is different. A vote is a vote, economically "weaker" or otherwise. So you want it to be "Universal". It is sort of like the Commies asking for Universal PDS (you can canvas votes from EVERYONE), but here Dr Artiste has gone one up and Universalized TVs, rather than the PDS!

BTW I heard that the distribution of TVs was actually handled by TCI. They seem to have done a decent job. Even otherwise, TN is considered to have one the best PDS implementations in the country isn't it saar?

vina · Post by **vina** » 15 Aug 2010 12:15

Even otherwise, TN is considered to have one the best PDS implementations in the country isn't it saar?

I don't have any experience in the PDS in other states, but yes in TN, it used to work (70s and early 80s) pretty decently and I am sure it works decently now as well, though we don't use it anymore (we dont qualify and even otherwise, now with everything available off the shelf in India, you don't need to unless you have to). I still remember, milk cards and going to the milk booth twice a day (once in the morning, once in the evening, there used to be a morning card and evening card) and getting the cards punched, picking up the allotted 2 bottles of milk and handing in the used bottles etc. At Bangalore and other places we had access to the CSD/Army Canteens.

Also in healthcare, I remember in early 90s visiting a "Model Primary Health Center" during one of my visits from Massa, in someplace deep in Ramanathapuram district (the driest and rain fed part of TN) and there was a huge well equipped PHC with nurses and doctors and an ambulance and road connectivity, some 50 kms away from SivaGangai (which is P Chidambaram's constituency).

As a rule, most (even small) villages will be connected by bus to the nearest town with a pretty decent service (you actually sit inside the govt buses and travel on cushioned seats and pay the actual fare and get a ticket in return, unlike UP/Bihar/Bengal) along with a Primary Health Center and a govt school. That basic social infrastructure is missing/doesn't exist in North India and Bengal.

For eg, when you cross over from Bangalore in to Hosur and head towards Krishnagiri (and then go furthrer south towards Salem or head east towards Chennai), you invariably will see an Ambulance or two of the village /PHC on the road heading somewhere, there are cops in Innovas/Sumos kind of vehicles for highway patrol (though parked under a tree and the Pandus stretching out).

Hari Seldon · Post by **Hari Seldon** » 15 Aug 2010 12:15

The Economist deigns to write about India and the gaps in its labor laws. Good read, surprisingly.
The Himalayas of Hiring

Dileep · Post by **Dileep** » 16 Aug 2010 09:25

The TV distribution by Dr. Artiste have another dimension. It increases the target market for his TV channel and cable TV businesses.

Nihat · Post by **Nihat** » 16 Aug 2010 10:57

Fiscal austerity: A stroke of luck?

nithish · Post by **nithish** » 17 Aug 2010 21:09

CMIE says GDP to grow 9.2 per cent

The economy is projected to return to 9 per cent growth trajectory in fiscal year 2011, Centre for Monitoring Indian Economy (CMIE) said in its monthly review here.

“The boom in economic activities is likely to continue in the remaining three-quarters of fiscal year 2011. As a result, we project a 9.2 per cent growth in real GDP in fiscal 2010-11,” the report said.

Between fiscal year 2006 and fiscal year 2008, the economy clocked an above 9 per cent growth. The global liquidity crisis had derailed the growth to 6.7 per cent in fiscal year 2009 and 7.4 per cent in fiscal year 2010.

Exports grew 13% in July

India’s exports grew by 13.2 per cent in July to US$16.24 billion year-on-year, a rate much lower than witnessed in the first three months of this fiscal because of fading base effect.

The slowdown in growth rate may continue for rest of the fiscal as developed countries may go for fiscal consolidation by partially rolling back economic stimulus packages, Commerce Secretary Rahul Khullar told reporters.

The rollback would contract demand in developed markets, which are the mainstay of India’s exports, he added. In any case, the growth rate has started falling as it is now being calculated on a higher base of 2009-10, after shipments started improving on signs of global economic recovery.

“(Despite) all hoopla about 30-35 per cent (export growth), the reality is 13.2 per cent (in July). Basically what is happening (is) that the base effect is wiped out,” Khullar said.

Due to low base effect, India’s exports showed robust rate in April (36.2 per cent), May (35.1 per cent) and June (30.4 per cent). Khullar further said in the second half of 2010-11, exports would shrink due to aggregate demand contraction overseas and roll back of stimulus in the developed world.

“There is going to be a slowdown in the world in the next six months...that would translate into contraction in aggregate demand of our exports,” he added. However, Khullar said India would be able to meet the export target of US$200 billion this fiscal. Exports in the last fiscal totalled US$182 billion.

“We are on track. Even if we post a 14-15 per cent growth for the remaining period of the year, we will reach US$200 billion,” he added. Due to global demand slump, country’s exports started contracting in October 2008 and entered into positive territory after 13 months in November last year. Overseas shipments in April-July this fiscal aggregated US$68.63 billion, up 30.1 per cent over same period last year.

Trade gap

Meanwhile, imports in July rose by 34.3 per cent to US$29.17 billion, taking the trade gap for the month to US$12.93 billion.

Imports during April-July period this fiscal were at US$112 billion, up 33.3 per cent over the year-ago period. The trade gap during the first four months of this fiscal is US$43.6 billion.

Oil imports during the month stood at US$7.6 billion and during April-July period, grew by 4 per cent to US$33 billion. The official figures for exports and imports would be released on September 1.

Gus · Post by **Gus** » 17 Aug 2010 21:39

vina wrote:The bulk of the problems in the BIMARU states can be fixed and basic nutrition and health be delivered ONLY when you have a modicum of decent governance in those states (note, I dont say corruption free, by no stretch a TN or Gujarat are corruption free , far from it, but those govts are EFFECTIVE and that I think is the operative word).

The parties have active stake in the business now (various business houses of Maran family and so on) and they have figured out that they make much more money by increasing business opportunities and making money out of it (illegally and unethically)...than doing it the old-fashioned way in BIMARU states.

Given the odds of the TV actually being used for public health, literacy and other stuff vs the din-chak being served out on Sun TV and Jaya TV and Vijay TV and others, I think it will be a no contest. Oh well, can only hope that atleast some good comes out if it and not lead to more cretinization via the Bollywood and Kollywood din-chak

I am actually in favor of the free TV thing. Well...I do think the focus should be on primary schools, health care and so on..but if its TV or no TV...I say give the TV. Read some studies that TV watching makes people in poverty aspire for more.

Hari Seldon · Post by **Hari Seldon** » 18 Aug 2010 03:59

^^^Free TV will do zero good if there's no basic infrastructure to support its use - a roof over the household's head, electricity connection to name just two. So, if the tv distribution thingie spurs the TN rationalists to provide such basic infrastruc, more power to them I say. Trying to sell off the tv will fetch little as every fmly has one now.

paramu · Post by **paramu** » 18 Aug 2010 08:18

Gus wrote:The parties have active stake in the business now (various business houses of Maran family and so on) and they have figured out that they make much more money by increasing business opportunities and making money out of it (illegally and unethically)...than doing it the old-fashioned way in BIMARU states.

Wise men said in old days "mixing politics and business can only lead to disaster". Let politicians do politcs and businessmen do business.

That must be a time tested truth as we can see in massaland these days. It is not surprising that people believe what Maran does today is good, just like people did in massaland few years ago. I won't be surprised if TN and BIMARU state change status after few decades for this very reason. Using political power to run business will create its own distortions.

bart · Post by **bart** » 18 Aug 2010 10:31

paramu wrote:
Gus wrote:The parties have active stake in the business now (various business houses of Maran family and so on) and they have figured out that they make much more money by increasing business opportunities and making money out of it (illegally and unethically)...than doing it the old-fashioned way in BIMARU states.
Wise men said in old days "mixing politics and business can only lead to disaster". Let politicians do politcs and businessmen do business.

That must be a time tested truth as we can see in massaland these days. It is not surprising that people believe what Maran does today is good, just like people did in massaland few years ago. I won't be surprised if TN and BIMARU state change status after few decades for this very reason. Using political power to run business will create its own distortions.

Political interference in business will always exist. The point people are trying to make is that it is better to have the politicians inside the tent pissing out (like TN or capitalism) rather than outside the tent and pissing in (like in socialist thinking).

paramu · Post by **paramu** » 18 Aug 2010 22:01

Political interference is one thing, and using politics to expand one's business empire is another. It is a well known case that Daya Nidhi Maran used his power as information minister to favor Sun TV network. Tata Indicom was so pissed of with this.

Probably, India needs to come up with some legal restriction that politicians should not have any direct business associations or interests, especially when they become ministers.

SwamyG · Post by **SwamyG** » 18 Aug 2010 22:20

I tried in vain to get the recent Morgan Stanley report; anybody else try and get it?

SwamyG · Post by **SwamyG** » 19 Aug 2010 02:35

^^
Answering my own question, finally someone uploaded it on the tubes

http://www.scribd.com/doc/36081710/Morg ... I-20100813

Suraj · Post by **Suraj** » 19 Aug 2010 03:07

Appears to be Part 3 of a series dating back to 2004:
Part 1, released 2004
Part 2, released 2006

SwamyG · Post by **SwamyG** » 19 Aug 2010 04:02

^^^
Yup, charts, numbers and tables galore. there are at least 45 exhibits. Lots of info that could provide countless hours of discussion

Suraj · Post by **Suraj** » 19 Aug 2010 09:43

The FM makes good points about funding of infrastructure. It cannot all be done through conventional banking channels; banks cannot lend sums for very long durations and be expected to handle interest rate risk without charging a premium. The presence of a mature bond market that can absorb long gestation issues of the kind needed by infrastructure is crucial, and this requires the participation of agencies like insurance companies, who hold significant amounts of capital chasing a stable rate of return:
FM sees 30% deficit in 12th plan infrastructure funding target

The government has estimated that it may face a shortfall of 30 per cent in funding the infrastructure requirement of Rs 41 lakh crore (~$900 billion) in the Twelfth Five-Year Plan (2012-17), and has called for regulatory changes to channelise funds from insurance and foreign capital to bridge the deficit.

The deficit may be seen due to lack of long-term funds for meeting the needs of infrastructure projects. The fundamental constraint in infrastructure financing relates to the limits on banks’ lending to the infrastructure sector in view of their asset-liability mismatch and concentration risk concerns.

“Increasingly, therefore, we would need to rely upon intermediating greater amounts of insurance and pension funds into infrastructure, subject, of course, to the overriding concern of safeguarding the interests of the policyholders and pensioners,” Mukherjee added. He emphasised the need to strengthen the corporate bond market and develop credit enhancement mechanisms to enable infrastructure projects, typically non-recourse special purpose vehicles, to access these funds.

Some states are punting the task of approving the move to table the GST bill in the current monsoon session of Parliament, while GoI tries to push it through so that it can come into effect by next fiscal year:
Govt faces BJP barrier in GST deadline

States ruled by the Bharatiya Janata Party (BJP) as well as Uttar Pradesh and Tamil Nadu, which are ruled by non-Congress parties, today put fresh hurdles in the Centre’s plan for a nationwide rollout of the Goods and Services Tax (GST) regime from April 1 next year.

Union Finance Minister Pranab Mukherjee, who met state finance ministers today in a bid to generate consensus for the introduction of a Constitutional Amendment Bill in the ongoing monsoon session of Parliament, could not convince all states to agree to the diluted proposals. On their part, the opposing states sought another month to go through the revised draft Bill.

During a meeting that lasted till late in the evening, Mukherjee assured the states that the empowered committee of state finance ministers could revert with its views in a month. Meanwhile, if he tabled the Bill during the current session of Parliament, the suggestions from the states will be forwarded to the Parliamentary standing committee.

abhishek_sharma · Post by **abhishek_sharma** » 19 Aug 2010 09:43

Despite Swirl of Scandals, Indian Mining Bosses Thrive

http://www.nytimes.com/2010/08/19/world ... india.html

manish · Post by **manish** » 19 Aug 2010 11:10

abhishek_sharma wrote:Despite Swirl of Scandals, Indian Mining Bosses Thrive

http://www.nytimes.com/2010/08/19/world ... india.html

The Reddy Brothers sure have come a long way! Now NYT is doing a full-fledged interview plus a detailed slideshow on them?!! I guess the iron ore export ban has finally forced people to sit up and take notice.

enqyoob · Post by **enqyoob** » 19 Aug 2010 16:45

So let's see:

1. Indian imports are twice the level of exports. So much for the Manufacturing Tiger. To the tune of a $150B/yr deficit.

2. The States are generally spending far beyond their revenue intake, of course since no one keeps track of budgets and govt salaries are going up, no one is worried.

3. Rupee value compared to the price of gold is sinking just as fast as the dollar, Oiro etc are sinking.

4. Desis are happily jumping in and buying more flats at 9.5 percent for 5 years (followed by unlimited-hike ARM), with the full anticipation that rates are going to 11.5 percent in 2 months!!! Oh, and of course, with less than 10% down payment.

5. Inflation is already running double-digit. Maybe triple digit, who cares?

These five facts should be ample evidence that the whole national economy is a bubble/ Maya. One MASSIVE unregulated Ponzi Scheme/ Musical Chairs exercise.

What happens to all these loans when rates go to say, 13%? 15%? 19%?

This is like watching in slow motion the ancient poem:

The Optimist fell ten storeys
At each window bar
He called out to his friends
ALL RIGHT SO FAR!!!!

wig · Post by **wig** » 19 Aug 2010 20:07

sir,
deficits in the center and states do fund inflation.
but if we can tinker our legal system and get the sarkari harrasment and corruption down- i do not see why industry and agriculture and the zooming service sector will not grow to offset inflation ( balloning of currency supply). sir, incidentally the growth of the service sector and the revenue generated through Service tax ( Finance Act 1994); is the strongest indicator that there is a burgeoning middle class in India that is earning directly because of a skill set (possessed by the service provider). This skill set has been garnered after considerable personal sacrifice. this generation of a large number of people with a profession is not a minor achievment for a nation in 63 years. if anything it is a tight slap in the face of all the "smart and strategically brilliant" World Bank/ IMF/ honchos who wrote scholarly disserations on how we were a basket case.

if all else fails the Govt can always come out with a scheme like the Voluntary Disclosure Scheme of 1997 or better still the scheme ( i forget the name) in 1991 wherein for a three month period indian citizens could bring back their money stashed abroad into India through legal channels, file a declaration with their bank and get over with it. In 1991 it was the western economies that faced problems as during this 90 day period there were considerable inflows into India.

today such a scheme lauched by India would beggar a few countries in Europe in sixty days. (believe it or not)

incidentally the pakis ( sorry Bakis) also launched a similar scheme to bring in foreign currency in 1992 ( to do an equal equal perhaps) but 1) got nothing much 2) were stopped by angry western drug enforcement types when it turned out that the scheme was little more than a drug money laundromat.

Suraj · Post by **Suraj** » 19 Aug 2010 20:24

Food Prices Cool in India as Monsoon Rains Boost Planting of Lentils, Rice

An index measuring wholesale prices of agricultural products compiled by the commerce ministry rose 10.35 percent from a year earlier in the week ended Aug. 7, according to a statement released in New Delhi today. It gained 11.40 percent the previous week.

India, the world’s second-biggest rice grower, may have a record harvest this year, Vijay Sethia, president of the All India Rice Exporters’ Association, said this week. Farmers planted monsoon crops over 10 percent more land this season from a year ago, the nation’s farm ministry said Aug. 13.

The June-September monsoon rains, the main source of irrigation in India, are forecast to be normal this year, according to the weather office.

enqyoob · Post by **enqyoob** » 19 Aug 2010 20:32

Interesting. Just a couple of days back I saw an announcement that the Monsoon was short by 31%. Makes me wonder about the announcements emanating from GOI/Indian media sources.

Vipul · Post by **Vipul** » 19 Aug 2010 22:54

Launch of new inflation index pushed back to Oct.

The present monthly inflation measurement system, based on the wholesale price index, reflects the price variations of 435 items, with 1993-94 as the base year.

The new index would give a more realistic picture of the price rise and its impact on the people.

In the new wholesale price-based index for measuring inflation -- with 2004-05 as the base year -- the number of commodities will go up to about 680.

Asit P · Post by **Asit P** » 19 Aug 2010 22:59

India to become world's fastest growing economy by 2013-15: Morgan Stanley

Driven by a sterling demographic dividend, continuing structural reform and globalisation, India is poised to accelerate its growth rate to 9-9.5% over 2013-15, even as China will cool down to a more sedate 9% by 2012 and to 8% by 2015.

SwamyG · Post by **SwamyG** » 20 Aug 2010 19:25

http://www.adb.org/Documents/Books/Key_ ... s-2010.pdf

Another report that is making news, the ADB report. It is 300+ pages, and lots of info on India & China.... Now I know what you will be doing this weekend

SwamyG · Post by **SwamyG** » 21 Aug 2010 02:16

Real Reasons For Inflation in India

We may not know the diagnosis but the Reserve Bank of India has administered, and has no choice but to administer, the only cure it knows: Land market distortions, capital inflows, and services may help explain India's inflation

Thus, the diagnosis of and cures for inflation may need some rethinking. Inflation may have a lot more to do with services and land as an input. And curing it may require addressing the macroeconomic aggravators of microeconomic distortions in addition to traditional monetary policies. Exceptionalism characterises India's development pattern, but does it also apply to the nature of its inflation?

paramu · Post by **paramu** » 21 Aug 2010 04:43

George Soros buys 4 p.c. in BSE for $35 million

Theo_Fidel · Post by **Theo_Fidel** » 21 Aug 2010 06:12

enqyoob wrote:Interesting. Just a couple of days back I saw an announcement that the Monsoon was short by 31%. Makes me wonder about the announcements emanating from GOI/Indian media sources.

That was in the second week of July.

Right now it is just -3%. A very good monsoon. Very widely distributed. Even reservoirs are at 50%. Just a shade under normal.

Bihar and WB are a tad dry but it has been raining there heavily this week. Hope they can catch up.

And 6 weeks still to go.

No doubt we are going to have a record crop. Here in South TN the crops look really good even in dry places like Eruvadi.

Theo_Fidel · Post by **Theo_Fidel** » 21 Aug 2010 06:30

SwamyG wrote:http://www.adb.org/Documents/Books/Key_ ... s-2010.pdf

Another report that is making news, the ADB report. It is 300+ pages, and lots of info on India & China.... Now I know what you will be doing this weekend

Thanx Swamy G.

Looks like are Baqui's have been granted their foremost wish.

A permanent move to Central/West Asia no less!

Makes us us look real good and look at the statistical stink they create even in that miserable area.

Suraj · Post by **Suraj** » 21 Aug 2010 11:51

The ADB document just shows the significant problem that exists with the provision of basic socioeconomic services. Comparisons with others are pointless; despite the massive improvements on many fronts, Indian statistics for a significant number of issues, from primary education dropout rate, to infant and maternal mortality rate, remain unacceptably high as late as the mid 2000s. A country growing so fast as we are has no business reporting such a high rate of infant mortality, among other statistics.

Abhijeet · Post by **Abhijeet** » 22 Aug 2010 19:30

Without governance, those who can make it on their own, due to family wealth, connections and so on, will do so. Others will simply stay mired in poverty since a country at the developmental stage as India needs significant government intervention to raise the majority of the population out of poverty.

I am actually quite surprised that india's Gini coefficient is so low. Ineffective governments should logically lead to highly skewed gini values because the poor have no one to give them a helping hand.

I think the gini value may have some inertia from the socialist days when everyone was equally poor. With a liberalized economy accelerating the rate at which skilled people can move ahead of others, I would expect the gini value to get far worse in future if governance does not improve.

Suraj · Post by **Suraj** » 23 Aug 2010 00:20

Marten: roadbuilding, especially near ubiquitous connectivity of all rural areas, cannot be underemphasized. High speed lines are nice, but roads are far more critical at this stage of development. By roads I don't restrict it to 8-lane expressways in Dilli or Bluru. It also means the ones that you can take to get out of some nondescript village and get to the nearest city or metro without a backbreaking journey. One of the primary drivers of poverty is isolation. On the flip side, mobility will result in urban areas getting crowded by those leaving bleak villages, requiring accelerated emphasis on volume industries that will absorb low wage labour quickly.

One more thing that I have never been able to wrap my head around - people talk of India's consumption driven economy being good, because it's more like a developed society, as opposed to China's 'imbalaced' system with capital investment being the primary driver. I'm sorry, but just look at the base of fixed capital, i.e. infrastructure in all forms, in India. It'll take maybe $10 trillion to 'build' India. It has to be done NOW, while costs are low and labour is cheap and plentiful. To be fair we have made tremendous strides towards it - gross fixed asset formation is now 33-36% of GDP. It was approximately half that figure from 1947-2002 . It is the primary reason why the stock of infrastructure is so small, and of poor quality.

I've said this before and I'll say it again - the massive increase in capital formation/GDP is the primary reason India has seen its economic renaissance since ~2002. It's that investment that is feeding consumption, not the other way around. There's no other way to do it than deploy massive amounts of labour to build it. It requires us to further increase investment/GDP from the current 33-36% to the mid 40%s for several years. I support distortionary policy measures that will enable us to make much more steel and cement than we do now, cheaply, because we need them that way. Both the US and China, during their early stages of development, were characterized by massively disproportionate core sector development; e.g. China produces 45-50% of annual global steel output today.

In terms of providing socioeconomic services, just an accelerated infrastructure building program will 'bring more people into the system' as labour, giving them access to facilities and services they'd have lacked if they were in some isolated village.

SwamyG · Post by **SwamyG** » 23 Aug 2010 04:12

Marten wrote:PPS: SwamyG, the weekend hopefully allowed you enough time to read through the report. Awaiting your thoughts.

I did not have the time at home, and friday was very busy at work. So, hopefully the following week at work will give some time

I continue to think India has so still a long way to go; the numbers are not good. All definitions, numbers and theories only help in measuring and understanding the system. Ultimately, what matters is the human conditions and aspirations. We have to look at the glass being half full and empty; the ADB report brings the half empty part. What cheers the heart is that India has opportunity for growth and so does its people.

Airavat · Post by **Airavat** » 23 Aug 2010 05:10

History of Indian Business

Prem · Post by **Prem** » 23 Aug 2010 08:36

India's share in jewellery export to double by 2015
http://timesofindia.indiatimes.com/city ... z0xOcXLRVD

SURAT: India's jewellery export share in the world market is expected to double by 2015 from the current 20 per cent following the high demand in overseas market in China and Hong Kong and mainly from the large Indian immigrant population settled in Middle East, South-East Africa, the US and Canada. The world jewellery market at retail level is pegged at $146 billion and the export market at $100 billion.
According to Mehta, the gold and diamond studded jewellery export have been increasing at 10 per cent year-on-year basis. India has become the biggest exporter of jewellery to the US as about 30 per cent of the jewellery exported to US comes from India. As per the latest KMPG survey, India and China together will realise total sales of $ 80 billion by 2015 in jewellery and both the countries will form a bigger market than US.

Prem · Post by **Prem** » 23 Aug 2010 08:41

Swiss banks list out four conditions for sharing info

NEW DELHI: Facing flak from India and others for acting as a safe haven to foreigners stowing away wealth, Swiss banks have said they will share account details of suspected money launderers if the request is supported by four specific details.
The specific details that someone requesting information should provide are the identity of the suspected offenders, details of the alleged offence, along with facts to undermine the suspicion, name of the bank and branch concerned in Switzerland and a written request from the foreign country's tax authority.
India is believed to have completed talks with Switzerland to amend their bilateral tax treaty, which would pave the way for authorities here to seek details of illicit wealth stashed away by Indians in Swiss banks. Having made it clear earlier that it won't encourage "fishing expeditions" by any country, Swiss banks have also said that account details would not be exchanged automatically and would be shared with foreign countries only under their taxation agreements.

http://economictimes.indiatimes.com/Swi ... 391317.cms

Vasu · Post by **Vasu** » 23 Aug 2010 15:11

Suraj wrote:Marten: roadbuilding, especially near ubiquitous connectivity of all rural areas, cannot be underemphasized. High speed lines are nice, but roads are far more critical at this stage of development. By roads I don't restrict it to 8-lane expressways in Dilli or Bluru. It also means the ones that you can take to get out of some nondescript village and get to the nearest city or metro without a backbreaking journey. One of the primary drivers of poverty is isolation. On the flip side, mobility will result in urban areas getting crowded by those leaving bleak villages, requiring accelerated emphasis on volume industries that will absorb low wage labour quickly.

One more thing that I have never been able to wrap my head around - people talk of India's consumption driven economy being good, because it's more like a developed society, as opposed to China's 'imbalaced' system with capital investment being the primary driver. I'm sorry, but just look at the base of fixed capital, i.e. infrastructure in all forms, in India. It'll take maybe $10 trillion to 'build' India. It has to be done NOW, while costs are low and labour is cheap and plentiful. To be fair we have made tremendous strides towards it - gross fixed asset formation is now 33-36% of GDP. It was approximately half that figure from 1947-2002 . It is the primary reason why the stock of infrastructure is so small, and of poor quality.

I've said this before and I'll say it again - the massive increase in capital formation/GDP is the primary reason India has seen its economic renaissance since ~2002. It's that investment that is feeding consumption, not the other way around. There's no other way to do it than deploy massive amounts of labour to build it. It requires us to further increase investment/GDP from the current 33-36% to the mid 40%s for several years. I support distortionary policy measures that will enable us to make much more steel and cement than we do now, cheaply, because we need them that way. Both the US and China, during their early stages of development, were characterized by massively disproportionate core sector development; e.g. China produces 45-50% of annual global steel output today.

In terms of providing socioeconomic services, just an accelerated infrastructure building program will 'bring more people into the system' as labour, giving them access to facilities and services they'd have lacked if they were in some isolated village.

Well said Suraj. Studies on the PMGSY (the Prime Minister Gram Sadak Yojana) have actually corroborated that better connectivity has raised the standard of living of the village connected with a metaled road.

The small and medium towns of India are the biggest gathering points for this immigrant population, and unfortunately, they are the least developed. My personal opinion is that in all our years of urban development and planning and what not, we could never decide whether to classify our small towns as cities or villages, because you will know there are vast differences in our urban and rural laws. This has resulted in most small towns looking like cities and behaving like villages.

With regards capital formation, India has tremendous scope in creating new and better infrastructure, and a huge chunk of it is coming from the private sector. I feel our weakest link is our policies, most of which send out very confusing signals to both Indian and foreign players. I know i'm beating a dead horse here, but I just can't help but mourn the fact that the current Congress government could be doing so much more in strengthening our economic and social policies with their strength in the Parliament, instead of letting all the important bills gather dust.