Indian Economy: News and Discussion (Apr 1 2011)

Theo_Fidel · Post by **Theo_Fidel** » 26 Jul 2011 10:30

Singha,

I don't know about North India but here in South India labor is already too expensive and not productive enough. We have missed that boat completely.

Realized this when painter asked for Rs700/day plus materials to paint house.

No one here will work in a factory for Rs 20 an hour type wage that is common in Panda land. Esp. with any sort of education.

Suraj · Post by **Suraj** » 26 Jul 2011 10:42

I agree with Singha. There's nothing to be gained by voluntarily withdrawing from any industry with the potential to generate volume low/medium skill employment. Focusing at high end sectors without the potential to generate mass employment is a case of trying to run without first finding our feet to walk. However, in industries like textiles, sometimes there's a chicken and egg issue - in the past they lost out quite toften because they lacked scale to win big orders, and without big orders they could not justify investing in scale. The TUFS fund was a response to that. With greater investment and scale, it's now easier to win bigger orders, and turn what was once a vicious cycle into a positive feedback one. While PRC had state investment to give them the headstart, I feel we've just gotten to a point organically where enough labour-intensive industries have sufficient scale grow strongly in the next decade.

vina · Post by **vina** » 26 Jul 2011 11:08

Theo_Fidel wrote:Singha,

I don't know about North India but here in South India labor is already too expensive and not productive enough. We have missed that boat completely.

Realized this when painter asked for Rs700/day plus materials to paint house.

No one here will work in a factory for Rs 20 an hour type wage that is common in Panda land. Esp. with any sort of education.

Absolutely. I want the counter top in the utility area of our kitchen raised by 2 inches (the steel support frames need to be removed, holes drilled 2 inches below the existing hole in the steel and the counter tops fixed again and grout it with silicone ) because we are planning to build a dishwasher (again, maid is driving SHQ nuts and if she doesn't show up, the dishes pile up) . Try as I might I cannot find a mason to do it at all and no one shows up for such "small " work when there is bigger fish to fry in all the construction sites. I think I will have to DIY that myself.

Same story with a painter. Try getting someone to put in some putty and a fresh coat of paint in spots where the plaster got damaged; impossible. The guys who came and looked want to paint the entire apartment or else, they walk!

Theo_Fidel · Post by **Theo_Fidel** » 26 Jul 2011 11:25

I think this is what they mean by consumption being the base of the economy.

There is so much casual consumption generating casual jobs in India, even in small towns, that there is not as much labor to push into the manufacturing sector. Panda is exact opposite. No consumption so labor must go into manufacturing.

Plenty of labor in rural WB or rural MP. But we all know what that labor is good for.

Singha · Post by **Singha** » 26 Jul 2011 11:44

UP and Bihar combined have 200 mil people. throw in economically depressed regions like Assam, WB, chattisgarh, interior Maharashtra, parts of orissa, north andhra and north karnataka and there are plenty of people who will do panda type manufacturing but are not getting the chance. these are the people who are being sucked up the grinder of the construction industry at rock bottom wages. most of them have to leave behind young kids, even toddlers to work in construction sector of big cities. usually grandmothers and relatives take care. our maid is one example of this left behind a 1 yr old son. such people would welcome jobs closer home even if the conditions are equally harsh. sure the itvity munnas would be deprived of easy access to cheap labour, but who cares - munna's better pull pants up and learn to clean their own crap and buy into properties they can clean themselves, not showpiece 6000sq ft villas that need a staff of 3 of upkeep.

due to lack of suitable jobs I have been met BA/BSC passouts from assam working as security guards in bangalore. the agency arranges for shared acco, a LPG connection and sometimes transport if the site is remote.

if chipanda can get 100s of millions of barely functional peasants into assembly plants, train them and use them enough to churn out "shoes, plastics, household goods" (assuming the foxconn types are better educated and do not count here), likewise can develop these depressed regions by occupying the rock bottom rungs of the manufacturing economy. we can crush vietnam in terms of deployable manpower and the contest is really between this "dark territory" in India and the sdre regions in china like yunnan, anhui, shanxi, shaanxi, sinkiang, gansu etc.

Singha · Post by **Singha** » 26 Jul 2011 12:05

http://www.bbc.co.uk/news/business-14287086

south korea signs nuclear energy pact with India..the ninth country to do so.

Theo_Fidel · Post by **Theo_Fidel** » 26 Jul 2011 12:18

Actually it is not 100's of millions in manufacturing.

Panda's manufacturing employment hit a high of about 125 million out of 750 million workers in 2004 or so.
It has since declined to about 110 million out of 800 million workers. About 12%.

Panda's construction workforce is about 45 million out of 800 million.

If you include 'temporary' and contract and seasonal (paid by piece) labor, India has a total of about 25 million in Manufacturing out of about 450 million. About 5%.

I think we will try and be quite successful in mass manufacturing. We will then be surprised as unemployment still does not reduce. Need small biz proliferation for employment. Big companies are job destroyers.

SRoy · Post by **SRoy** » 26 Jul 2011 12:39

Theo_Fidel wrote: Plenty of labor in rural WB or rural MP. But we all know what that labor is good for.

Wrong about WB (not sure about MP though).
After moving to commieland from Delhi I'm facing the same problem as Vina.

vina wrote:Try as I might I cannot find a mason to do it at all and no one shows up for such "small " work when there is bigger fish to fry in all the construction sites. I think I will have to DIY that myself.

Same story with a painter. Try getting someone to put in some putty and a fresh coat of paint in spots where the plaster got damaged; impossible. The guys who came and looked want to paint the entire apartment or else, they walk!

Masons, painters, carpenters...

Singha · Post by **Singha** » 26 Jul 2011 12:57

the freelance model does not guarantee steady employment. they would rather work for a builder or in the maintainence staff of a apartment and do some odd jobs on sunday as a side income.

in due course I am sure "service providers" will emerge who will pay a salary and have a panel of such workers on the staff, to do odd jobs routed via them. timesol in blr is one such, though they have not branched out into painting and plumbing yet ... !! its likely a hard business model to make money on, hence the lack of entrants vs contractors in any field who have a staff but do big jobs only.

chetak · Post by **chetak** » 26 Jul 2011 13:11

Singha wrote:the freelance model does not guarantee steady employment. they would rather work for a builder or in the maintainence staff of a apartment and do some odd jobs on sunday as a side income.

in due course I am sure "service providers" will emerge who will pay a salary and have a panel of such workers on the staff, to do odd jobs routed via them. timesol in blr is one such, though they have not branched out into painting and plumbing yet ... !! its likely a hard business model to make money on, hence the lack of entrants vs contractors in any field who have a staff but do big jobs only.

A scruffy young carpenter turned up at my farm house in rural Tamil Nadu nondescriptly dressed but had on very expensive sports shoes that I would think twice about buying because of the cost and he was riding a late model expensive bike with front and rear disk brakes.

Both his parents are casual laborers. I had a long chat with him while he was working and he seemed a normal, fairly empty headed and over indulged kid of these times. He was the free lance model because he claimed that his contractors did not pay well or on time.

These are changing times onlee.

Singha · Post by **Singha** » 26 Jul 2011 13:16

bosch, black and decker and dremel will enter itvity munna vocab soon enough...

but I hope alongwith amazon, home depot also opens a chain in India...

nandakumar · Post by **nandakumar** » 26 Jul 2011 13:21

Theo_Fidel wrote:Nandakumar,

No one is asking for the dismantling of PDS.

It is the absurd claims and refusal to try cash transfer solutions that are annoying. Speaks of an agenda.

Take a look at this report on welfare systems.
http://southasia.oneworld.net/todayshea ... re-of-poor

Theo Fidel, Trying out cash transfers in parallel to the PDS may be acceptable to the States as purely on a pilot basis. But the moment we talk of wholesale implementation then the case for keeping the PDS going alongside a system of cash transfer becomes fiscally unacceptable besides mangerially indefensible.
I mean look at it this way. If the cash system is implemented and is indeed working without any adverse effects, the question that would be asked is ' why have the civil supplies corporation, procurement staff, general administration staff in the food departement, reimbursing administrative costs of the ration shops in the cooperative sector etc. On the other hand there are fixed costs associated with keeping the programme going which can't be easily liquidated. Once the cash transfer system is implemented the Centre will have to either ask States to lift foodgrains at market or close to market determined prices or continue to issue foodgrains at a subsidised price to the States.
In the case of the former, the States won't be able to find the money for it and in the case of the latter, Centre's outgo on subsidy shoots up even further. I should have mentioned this in my earlier post. But the Leftists actually say by all means keep the cash transfer system but don't dispense with the PDS. That however is an ingenuous argument because keeping both systems going is fiscally unsustainable for both the Centre and the States. And the Left knows it too.
On inflation, i concede that it is already quite high. But the argument about price volatility stemming from a surge in private demand for foodgrains only makes the prospect of inflation even more worrisome. It is a case of 'all-other-things-remaining-as-they-are-you-are-bound-to-see-fresh-bout-of-inflation.
The poverty that you wrote about in South Tamil Nadu or indeed in many parts of the country is certainly valid. but the cash transfer system is not going to change this. As the article that you cited itself makes it clear, the cash transfer will be available to only those who are already in possession of the ration card. So it is back to square one.

chetak · Post by **chetak** » 26 Jul 2011 13:39

Theo_Fidel wrote:Singha,

I don't know about North India but here in South India labor is already too expensive and not productive enough. We have missed that boat completely.

Realized this when painter asked for Rs700/day plus materials to paint house.

No one here will work in a factory for Rs 20 an hour type wage that is common in Panda land. Esp. with any sort of education.

A lot of "South India labor" in southern metros is already North Indian / Bangladeshi. Shops and hotels are stuffed to the gills with cheap labor from the northeast.

We seem to be having a reverse migration problem.

Northeast boys AND girls together stay upto 10-12 to a tiny room, sleeping on the floor. They are willing to work for much lesser wages than the locals.

Social tensions can onlee increase under these circumstances. These types have even fanned out to the rural areas.

JE Menon · Post by **JE Menon** » 26 Jul 2011 14:16

Boss social tensions will increase, but so will social integration... Gradually, over decades, it will become less and less important where in India you are from exactly (sort of like caste now especially in urban areas) while the "Indian" identity will be simultaneously reinforced...People will simply know each other better and will become more accepting. Meanwhile, the various mechanisms of image creation (movies, media - especially advertisements) will reinforce this as well - all are already happening. India 50 yrs from now will be pretty unrecognisable.

Let me give you an anecdotal example: I got into a taxi in a Western metropolis recently, and the driver looked Filipino to me. As usual I can't keep my trap shut with new people, so we started chatting about the city. Then he asked me "where are you from?" - I said India... (he seemed mildly surprised as he probably thought I was Arab) Then he said Ahh... and switched to Hindi... It was my turn to be shocked, as I had to inform him that while I could understand it a bit, I could not speak it. I asked him WTF, where are you from? He said bhai I'm from Orissa!!! I thought to myself "well, fu(k me, I didn't know there were Filipino looking guys in Orissa"... Of course, we quickly established our co-ordinates as we Indians tend to do, and he got chatting. Guess what, he is "from Orissa" only in name... He had lived there most of his life, but in fact was Tibetan. More shocking, he was ex-Indian Army and still more shocking he was ex-SSF, and had extensive experience on our borders with China... trained in Charbatia and Sarsawa (para drop "master" or something like that, I did not push). He then married from Orissa and moved to the Western metro where I was visiting, and was working as a taxi driver. He seemed quite content with his life. I asked him "so you must have some interesting experiences with the SSF"... He just looked away and laughed. Very nice chap. He had such good things to say about India that it was an elevating experience. And this was in a Western metro. There are millions of Indians from various states moving around into other states and living and integrating... Everything will be gradually changed in an evolutionary way, from cuisine to social norms... This is how India has always been. It is to be celebrated and encouraged.

Bade · Post by **Bade** » 26 Jul 2011 20:31

JeM-saar, +100 to that post and your remark at the bottom. We need more internal migration in India to break down all the current barriers to development. As an aside this is already happening at grass root levels. Another anecdote I have to share is our local gurkha who comes to collect his monthly hafta from all the houses in my hometown. He is married locally and settled in Kerala and speaks good malayalam. He has a wife in Nepal too is what I heard. I even ran into a Tibetan two decades back in a University town in Virgina who spoke Malayalam to my total surprise. He had spent his student days in both Kerala and Karnataka. I am pleasantly surprised and happy to see the reverse migration from North to South. It was the other way around always in the past.

vina · Post by **vina** » 26 Jul 2011 20:57

SRoy wrote:Wrong about WB (not sure about MP though).
After moving to commieland from Delhi I'm facing the same problem as Vina.

Interesting. The guy who came to paint the grilles in the balconies of my apt (the entire complex was painted) was Bengali ..He spoke a very "Bengali" Hindi .

But basically all the labor i see here (plumbers, electricians, guys who come to assemble furniture etc ) are either from Orissa, Bihar (including the press walas). The labor that used to be done by the locals here seem to have come down drastically. Earlier that kind of labor used to be Tamil, Telugu and Kannadiga (to a lesser extent). Mallus anyway go off to the "Gelf". I suppose now everyone with any skill either goes of to the "gelf" or work with bigger fellas with better terms and tenure. All for the good I think.

saip · Post by **saip** » 26 Jul 2011 21:06

I disagree. by rights India should be exporting far far more textiles than BD (which no doubts benefits from some EU quotas but still...)

I think they are only talking of export of garments and not of textiles. India still exports more textiles as a whole than either Pakistan or Bangladesh. In the case of garments probably BD gets concessions from Europe and US and benefits from lower labor costs.

BD's total exports are less than $25 bil. Textile are highly price sensitive and the companies in US will drop their supplier if they can find another for say 25 cents less. Some times you don't make any money selling to retailers like Wal-Mart.

Theo_Fidel · Post by **Theo_Fidel** » 26 Jul 2011 21:51

Nandakumar,

I understand your argument but now you are arguing for the PDS to remain because it already exists. Relatively weak don't you think. These guys are arguing for expanding PDS, hire more people, more food, etc. The better alternative is to draw the line and move everything else to cash/coupon type systems. Over time the PDS can be slowly withered away.

I do agree that if the cash program is more effective the food program will find itself in the open market. A good thing would be to find the actual market price of the grain if the Center decides to charge the states properly. It will probably come as a shock to most people WRT the amount of expensive waste going on. If the fear is that things like the FCI will no longer be around to stabilize the market, or reduce administrative costs that is still not an argument for PDS. Few countries have something like a FCI or a PDS and they don't seem to have trouble getting grain to the people. They do this by have a proper and liquid grain market with futures trading and proper transport of food materials between regions. We are large enough that even droughts don't affect the entire country. The PDS was created during a time of war and severe shortages. It was never created as 'food to the poor' program and this weakness shows.

Right now the government effectively destroys about 5% of the grain harvest every year. This is a major factor for the inflation spiral. With the food bill government procurement will rise from 20% of harvest to about 50% of harvest. They are talking about 80 million tonnes plus. You can only imagine the effect of removing that supply from the open market. Which brings me to the other point. 85% of grain actually goes through the open market. FCI does not do much stabilizing, only destroying grain or supplying PDS.

WRT the ration card, the new UIC cards are planned to be the basis of cash transfers. Of course the problem of 'classification' will still remain, but at least it will be tweak-able as an ID system rather than as an entitlement system. For instance, no permanent address means no ration card. Also it is not portable. About 150 million migrants\landless\most destitute in India are cut off because of this. UIC is biometric based and is not supposed to care about these things. For instance no caste, religion, state info is permitted.

One other point. Right now with PDS we are not able to ask for things in return. With a cash transfer we can ask for things, such as keeping girls in school, or having babies in hospitals or request maternal check ups, etc.

Prem · Post by **Prem** » 26 Jul 2011 22:36

Singha wrote:http://www.bbc.co.uk/news/business-14287086
south korea signs nuclear energy pact with India..the ninth country to do so.

Good thing is they will soon be capable of replacing Japan in supplying the equipments required by US and France to operationalize the Nuclear deal with India.

Suraj · Post by **Suraj** » 27 Jul 2011 02:41

RBI has turned decidedly hawkish on inflation management:
RBI raises report rate 50bps to 8%

After stunning everybody by raising the repo rate, the rate at which it lends to banks, by 50 basis points (bps) to 8 per cent, Subbarao hinted at continuation of the rate increase season, catching unawares most economists and market participants, who had expected RBI to signal the end of its tightening spree.

Tuesday’s rate increase was 11th since March 2010, making RBI one of the most aggressive inflation fighters among central banks, and sent bond yields and swap rates higher and stocks lower. The Bombay Stock Exchange Sensitive Index fell 353 points, the most in five weeks.

RBI in effect debunked the government’s rosy projection of inflation cooling to around 6 per cent by March 2012. It instead raised its projection to 7 per cent, up a sharp 1 percentage point from the May figure.

It, however, chose to retain the gross domestic product growth projection at 8 per cent, which surprised many. Jahangir Aziz, chief economist at JP Morgan, wondered how this was possible when RBI had revised the credit growth projection and expressed concerns over the global slowdown. But more than Tuesday’s rate increase, what worried market participants was RBI’s signal that it had no time frame for easing the policy.

vina · Post by **vina** » 27 Jul 2011 06:59

Billionaire's Rise Aids India, and the favor is returned

New Yawk times discovering how the private sector in India works around the govt! This time it is about Adani. But frankly, EVERY success story in India is about this isn't it. Jamshedpur by Tatas where I am told in the early years they had "TISCO Cows" for milk for their folks! The entire IT/Vity story is about this (self contained campuses, insulated from the larger India), but unfortunately there is a moral and a weakness in this.

Unless there is a unique competitive advantage integrating vertically is not optimal. You dont get the economies of scale of a focused horizontal operation (in say coal mining) and the economic value of trading (though the tax code in India used to favor vertical integration because of high taxes on trading..maybe with VAT -rat, that "disadvantage" is gone and there is no regulatory arbitrage in integrating vertically).

That is the reason in part why a huge bulk of the labor and resources in the interior of India (along the gangetic belt mainly,along with MP , central india and North East) are unable to be tapped and those areas industrialized. This serious underperformance of the Govt in building infrastructure and investing in it is the root cause. In fact I really think that the govt should simply privatize /divest all the PSU undertakings and use that capital and value unlocked to build out world class infra to connect the interior of india to global supply chains in an ultra efficient manner.

And oh, corporatizing Indian Railways and taking it off the hands of a politico Mantri would be a great start.

Singha · Post by **Singha** » 27 Jul 2011 09:53

on latest RBI rate hike, the chairman of HDFC says inflation is now driven by food prices, commodity prices and fuel prices. even if prices increase, people will still consume same amt of food. and commodity and fuel prices are decided by international markets. so he is not seeing how more such rate hikes will cool inflation in India.

chetak · Post by **chetak** » 27 Jul 2011 09:59

Singha wrote:on latest RBI rate hike, the chairman of HDFC says inflation is now driven by food prices, commodity prices and fuel prices. even if prices increase, people will still consume same amt of food. and commodity and fuel prices are decided by international markets. so he is not seeing how more such rate hikes will cool inflation in India.

He has thrown everything including the kitchen sink at the inflation mess.

When does the flawed policies of the NAC led govt, like the MGNREGA etc get discussed at these rarefied financial discourses?

RBI is dispensing asprin when drastic neuro surgery is required.

vera_k · Post by **vera_k** » 27 Jul 2011 09:59

Of course, he's being self serving. At some point people will be unable to afford their current food basket and will look for cheaper alternatives, will start to take the bus to work, and will buy fewer cars, homes and such. That will cool inflation.

Though I have a feeling that interest rates must rise another 4-5% before this is brought under control. After the last hike, there were some brave statements in the Economic Times from some builder's association about how home prices will rise further because rates have risen, which tells me there's some ways to go before demand is choked off enough.

Theo_Fidel · Post by **Theo_Fidel** » 27 Jul 2011 10:33

Growth rate will have to be killed to fund NREGA type programs. Congress has done it many times in the past.

Singha · Post by **Singha** » 27 Jul 2011 11:41

food and fuel inflation kills family savings thats all. I would get prepared to be working until 70-75 just as my gora biraders will be forced to do.

nobody in indic middle class will compromise on the food for kids and elderly, etc. certain things like eating out are already curtailed.

nandakumar · Post by **nandakumar** » 27 Jul 2011 12:15

Theo_Fidel wrote:Nandakumar,

I understand your argument but now you are arguing for the PDS to remain because it already exists. Relatively weak don't you think. These guys are arguing for expanding PDS, hire more people, more food, etc. The better alternative is to draw the line and move everything else to cash/coupon type systems. Over time the PDS can be slowly withered away.

Theo Fidel, Honestly if I sounded as on the PDS side of the debate from my earlier post that is not so. I am genuinely ambivalent about the whole thing. That said, intuitively, one would have to say that a direct cash transfer system is the way to go for better food security for the masses. More so, because it can be tagged on with other socially beneficial riders such as children in school etc. Can't help feel that the switch does pose enormous fiscal challenge besides resisting opposition from entrenched vested interests in the current PDS. Lets see how it goes. Right now, there is a strong battle of wits going on between the PM, Montek Ahluwalia, Rangarajan etc. ranged on one side of the food security bill while the NAC and Sonia Gandhi who are inclined to push through some sort of food security legislation, aligned on the other side.
The PM and company feel that there just isn't enough foodgrain available in the country to implement it. The Planning Commission has perhaps done some calculations based on calorific requirement per adult/child and the appropriate quantum of foodgrain needed to fulfill that. It has not however come into the public domain. The NAC I suppose want to go ahead with it preferring perhaps to handle the challenges as we go along. Don't know which way the cat will jump.
All of this of course is just hearsay, or call it, Delhi gossip. But I think in the success of the NAC wallahs lie the prospect of the country switching over to a cash entitlement system.

abhischekcc · Post by **abhischekcc** » 27 Jul 2011 14:57

Cash transfers will do nothing to alleviate the problems they are touted as solutions to. For example, giving money in a drought prone area will not create grops out of thin air, but will push up the prices, creating a localized hyperinflationary scenario. Famine cannot be solved by printing more money, but by producing more crops. Another example, what will money do for healthcare, if an area lacks a local health center (people have to travel 100 kms for a basic checkup). Even here, absence of physical infrastucture is not going to be solved by pouring money into the drain.

Also, cash transfers do not ensure that the people will purchase only those goods for which it is meant. Can you gaurantee that the money will not be used to purchase alcohol?

--------
I get the feeling that all the 'solutions' that NAC has proposed till now are hyperinflationary in character - first NREGA, now this. None of them attempt to solve the problems on a long term basis, but instead try to make the population dependant on the government, which is another definition of slavery. The attempt to link cash transfers with 'social progress' is another sociopathic attempt to manipulate the society.

gakakkad · Post by **gakakkad** » 27 Jul 2011 15:24

chetak wrote: RBI is dispensing asprin when drastic neuro surgery is required.

This is an uncannily accurate analogy. In some kind of patients needing neurosurgery giving aspirin can actually be fatal as it can lead to bleeding . Tragically RBI seems to be doing exactly that.

Now Inflation is due to supply side issues. Increasing interest may actually aggravate the problem . On one hand gov't is injecting liquidity into the system to the consumers by its ill designed "welfare schemes" . On the other hand RBI seems to be sucking money out of the system , but from the producers , not the consumers.

Net result - Constantly increasing consumption due to more money injecting by NREGA etc. And constantly reduced production due to money sucked by RBI FROM THE PRODUCERS. Net result == Hyper Inflation.

Sadly the 200 million "beneficiary" of NREGA may vote back CON-GRASS into power.As they get free money for doing nothing, And its Moslem vote bank remains constant. It only needs 25% vote share to remain in power. Which it will easily get.
SO only a 1991 like monetary crisis can force some change. I wish such crisis comes soon before the damage is irreversible .

My only question -Whom should we hang first , Kasab or Jean Dreze ?

Singha · Post by **Singha** » 27 Jul 2011 17:34

NAC = decades old failed garibi hatao schemes + EJ/dalit/muslim vote bank politics + rajmata personal agendas

chetak · Post by **chetak** » 27 Jul 2011 17:59

Theo_Fidel wrote:Growth rate will have to be killed to fund NREGA type programs. Congress has done it many times in the past.

It's actually the other way around, saar.

NREGA type programs are killing the growth rate.

The parasite, so to speak, will kill off the host.

Seems a funny way to flush the country down the tubes, dig holes and spread the earth around.

Why not specifically build roads, check dams and whatnot. Make the progress of work measurable and quantifyable and associated overseeing personnel criminally accountable and liable

The agenda of the NAC and associated NGOs is insidious.

Theo_Fidel · Post by **Theo_Fidel** » 27 Jul 2011 20:48

chetak wrote:Why not specifically build roads, check dams and whatnot.

Those holes you see are supposed to be check dams and roads. Fool SDRE.

Nihat · Post by **Nihat** » 28 Jul 2011 00:59

I always though RBI looked at "Core inflation" before deciding on a rate hike as food and fuel as far too vulnerable to global fluctuations, now I'm not convinced if the RBI is making the right moves. Constant rate hikes will not bring down crude prices or food shortage.

vera_k · Post by **vera_k** » 28 Jul 2011 07:42

They don't have any other option in the current circumstances. If people keep spending increasing amounts of their earnings, the savings rate will go down, reducing the amount that can be invested, which would slow the growth anyway.

Now, a possible solution to this conundrum is to make the rupee convertible and allow people to borrow from international banks in Euro or USD. Not being done because the financial system is not ready to handle the risk I reckon.

vera_k · Post by **vera_k** » 28 Jul 2011 23:01

India's Two-Front Inflation War

Subscription article, can be viewed through Google. Article says that RBI miscalculated by focusing on core inflation, which resulted in keeping rates low too long. Even now, they are continuing to look at core inflation, which risks perpetuating the same mistake.

chetak · Post by **chetak** » 29 Jul 2011 10:27

The discretionary powers of Union ministers that are set to go

Fri Jul 29 2011, New Delhi:

Union ministers are likely to lose most of their discretionary powers with the GoM on corruption set to recommend that they be repealed. The GoM is expected to meet next week.

The Department of Personnel and Training had established that ministers in 38 departments enjoy a wide range of discretionary powers.

The discretionary powers set to be withdrawn:
..............

The discretionary powers set to be retained:

Prime Minister: Discretionary fund for heart and other life threatening operations.

Defence Minister: Financial assistance from the Raksha Mantri’s discretionary fund for war widows on Independence Day.

Home Minister: Relief for victims of Maoist violence; reward for exemplary service during terrorist operation, encounters etc.

Petroleum Minister: Petrol pump dealership to families of martyrs like the Kargil martyrs.

Singha · Post by **Singha** » 29 Jul 2011 13:00

petrol pumps and LPG dealerships are usually granted to relatives and friends of ministers, not to martyrs!
thats one 'perk' i am glad to see withdrawn.

gakakkad · Post by **gakakkad** » 29 Jul 2011 15:50

Informed to me by my cousin. Today their is a Bandh in Surat to protest lack of flights at the Surat airport. What is interesting is that while rest of the India is busy with Roti , Kapda ,Makaan , Bijli ,Paani ,sadak ; Gujaratis are worried about lack of flights at the Surat airport. Way to go Narendra Modi. Wonder what will us gujjus protest about in 2020. Lack of satellite launch facility maybe

. But it does show the discrimination against Gujarat by successive central govts. Surat has the highest household income in India. (about 5.2 lakh PA). Great infrastructure. Complete with flyovers and everything. Yet only 1 flight/day on airport. Googal chacha found 1 report.

http://www.indianexpress.com/news/surat ... ay/824059/

abhishek_sharma · Post by **abhishek_sharma** » 29 Jul 2011 16:53

Dan Ariely on Behavioural Economics

putnanja · Post by **putnanja** » 30 Jul 2011 00:27

Singha wrote:petrol pumps and LPG dealerships are usually granted to relatives and friends of ministers, not to martyrs!
thats one 'perk' i am glad to see withdrawn.

The article says the power to "give dealerships to families of martyrs" will go. Is there any other power to "give dealerships based on minister's discretion" ? I would like to see what discretions are retained still