Indian Economy - News & Discussion 27 May 2012

RoyG · Post by **RoyG** » 29 Mar 2013 22:15

If you read my posts around the time the FM spoke what you refer to, you'd realize I both agree and disagreed with him:

I agree that the component of gold imports as a fraction of total imports has reached unsustainable levels, because we can't pay for it in either Rupees or our own wares and are building up a significant current account deficit while people attempt to defend their wealth from erosion through inflation at a time when the goal ought to be to apply those savings towards investment.

Our current account deficit is unsustainable because the government is spending too much money. A rise in interest rates and public consumption of gold at the levels we are seeing today are the symptoms. As far as what the people "ought" to do should be up to them.

Meanwhile...

South Korea Dollar Reserves Fall to Smallest Share Since ’07

By Eunkyung Seo - Mar 29, 2013 5:53 AM ET

The share of U.S. dollars in South Korea’s $327 billion worth of foreign-exchange reserves fell last year to the lowest level since the country started disclosing the contents of the portfolio in 2007.
Dollar holdings dropped to 57.3 percent of reserves from 60.5 percent in 2011, the Bank of Korea said in its annual report for 2012 released today. The ratio has fallen four out of five years since 2007, when it was 64.6 percent.
The decline in dollar investments by Asia’s fourth-largest economy underscores a shift among reserve managers to diversify assets, with China’s yuan and gold among the beneficiaries. The reserves, the nation’s major safeguard against a foreign currency crisis, rose from $306 billion at the end of 2011, a gain of 6.9 percent.
“The dollar share fell last year as we bought gold and Chinese assets while the euro and pound appreciated,” the central bank said in a statement.
The central bank boosted the proportion of equity investments to 5.7 percent last year from 5.4 percent in 2011, it said. Holdings of foreign government bonds rose to 38 percent from 36.8 percent, the BOK said.
South Korea now holds government bonds issued by countries including the U.S., Japan, Canada, and Germany, Kang Sung Kyung, a director at the bank’s Reserve Management Group, told reporters today in Seoul.
“Our dollar holding share is not much different from the levels at other central banks,” Kang said.
Chinese Bonds
The Korean central bank began to buy Chinese bonds and stocks in 2012 as part of plans to diversify its reserves.
The BOK received approval from the People’s Bank of China to buy bonds and obtained a license to invest in Chinese stocks as a Qualified Foreign Institutional Investor, or QFII, last year.
The BOK has used a “considerable amount” of its 20 billion yuan ($3.2 billion) limit for purchases of Chinese government and central bank debt, Choo Heung Sik, head of the South Korean central bank’s reserve management group, said in an interview last November. In addition, a $300 million allocation for Chinese stocks has been fully utilized, he said.
South Korea has also boosted its gold holdings. In February, the country added 20 metric tons, a rise of 24 percent, for a total of 104.4 tons.

http://www.bloomberg.com/news/2013-03-2 ... -2007.html

Prem · Post by **Prem** » 29 Mar 2013 22:48

India on track to become 5th economic power by 2020-25, says Chidambaram

http://www.khaleejtimes.com/kt-article- ... onbusiness

India, which is among the three large economies that are able to record above five per cent growth amid a gloomy global scenario, is all set to emerge as the fifth world economic power by 2020-25, the country’s finance minister said here on Thursday.While the global economy, which is “still not out of the crisis” that began with the collapse of Lehman Brothers on September 15, 2008, will likely to have a flat growth at 3.2 per cent in 2013 in the backdrop of aggravating euro zone problems, India is steadily and confidently regaining its growth momentum to achieve a seven per cent growth target in two years, Finance Minister P. Chidambaram said.He said the Indian economy, already on track to achieve 5.5 per cent gross domestic product (GDP), growth by March 31, 2013, would pick up pace in the coming years as it is firmly on track to cut deficit to around three per cent of the GDP by 2016. India is also on target to register a growth of six per cent in 2013-14 and in the next year it will go up to seven per cent, he said.
Only China and Indonesia are growing at a faster rate than India even as other global economic powerhouses like the US, Japan and Canada witness depressing growth rates of below two per cent. Germany and the UK witnessed contraction in the last quarter of 2012 and most likely experience the same in the 2013 first quarter, he said.“In 2012-13 fiscal ending March 31, we will be cutting our deficit to 5.3 per cent, and going forward, we will further reduce it to 4.8 per cent, 4.2 per cent, 3.6 per cent in the successive three years and by 2016-17, it will be slashed to 3.0 per cent,” Chidambaram said.India is currently ranked as the  10th largest global economy, and by 2015-16, it is expected to be positioned as the seventh largest 

Austin · Post by **Austin** » 30 Mar 2013 10:03

Record current account deficit: 10 things you should know

Suraj · Post by **Suraj** » 30 Mar 2013 10:13

RoyG wrote:Our current account deficit is unsustainable because the government is spending too much money.

That would be the fiscal deficit, not the current account deficit (trade imbalance).

RoyG wrote:A rise in interest rates and public consumption of gold at the levels we are seeing today are the symptoms. As far as what the people "ought" to do should be up to them.

Absolutely - India has been characterized by a chronic high interest rate regime because GoI maintains a persistently high fiscal deficit. The only time there was a concerted action to reduce it was during the NDA's time when the FRBM Act was formulated. UPA 1/2 have just given it lip service, while the communists were in favor of repealing it outright.

Supratik · Post by **Supratik** » 30 Mar 2013 20:29

We should have been fifth largest economy much before 2020-25. It is because of UPA that we have high inflation, low growth, rupee depreciation, etc. When they reach 2020-25 with these kind of policies they will say "we will become fifth largest economy by 2030-35. It is like their five year plans which never reaches the target.

krisna · Post by **krisna** » 30 Mar 2013 20:53

External debt rises to 20% of GDP

India’s external debt rose 8.9 per cent to $376.3 billion as of December 31, 2012, against $345.5 billion as of March 31, 2012, accounting for about 20 per cent of gross domestic product (GDP), official data released on Thursday showed.

The higher the proportion of short-term debt to total debt, the more difficult it is to manage the debt. It was a rise in short-term debt that had led to the East Asian crisis of the 90s. As of now, India’s short-term debt isn’t at an alarming level.

While the rise in long-term debt was primarily due to non-resident Indian deposits and commercial borrowings, short-term debt rose due to trade-related credits.

There is concern on the low forex cover for external debt. Till 2009-10, forex reserves covered the entire external debt. Even in the crisis period of 2008-09, when capital flows from the advanced world dried, India’s forex cover to external debt stood at 112 per cent.

krisna · Post by **krisna** » 30 Mar 2013 20:55

Current account deficit zooms

The country’s current account deficit (CAD) rose to a record high of 6.7 per cent of gross domestic product (GDP) in the December quarter on account of heavy oil and gold imports, besides muted exports. Though the deficit was worse than expected and way above the Reserve Bank of India’s (RBI’s) comfort zone of 2.5 per cent, the government put up a brave face, saying it would do all that was needed to tackle the problem.

vera_k · Post by **vera_k** » 30 Mar 2013 20:58

Indian foreign exchange reserves not enough to fund 7 months’ import

disha · Post by **disha** » 31 Mar 2013 04:35

vera_k wrote:Indian foreign exchange reserves not enough to fund 7 months’ import

It will be great if this government is to sell gold again under SoniaNomics by Maun Maun Sigh. What a farce this government is.

History repeats itself, first time as a tragedy and second time as a farce.

disha · Post by **disha** » 31 Mar 2013 05:44

Theo_Fidel wrote:
RamaY wrote:Who knows we might be brothers in past/future lives with four wives each
YamaR, Don't even kid about that, ever...

theo, even in jest and definitely not with concern or all seriousness - do not ever offer to try to save somebody's soul or reap the soul for the flock.

Ever.

Kakkaji · Post by **Kakkaji** » 31 Mar 2013 06:00

disha wrote: theo, even in jest and definitely not with concern or all seriousness - do not ever offer to try to save somebody's soul or reap the soul for the flock.

Ever.

+1001

RoyG · Post by **RoyG** » 01 Apr 2013 00:18

disha wrote:
vera_k wrote:Indian foreign exchange reserves not enough to fund 7 months’ import
It will be great if this government is to sell gold again under SoniaNomics by Maun Maun Sigh. What a farce this government is.

History repeats itself, first time as a tragedy and second time as a farce.

Shh...Keep it down...the anti-gold lefty loonies will hear you. Print, spend, consume onlee.

RamaY · Post by **RamaY** » 01 Apr 2013 00:25

^
Gold is good ONLY in the hands of secular govts, especially the termite verity, and more benevolent West and NOT in the hands of ignorant, Casteist, communal Yindus! The moment Yindus get their hands on Gold it becomes a cultural dead weight.

krisna · Post by **krisna** » 01 Apr 2013 03:12

Indian Jewelry Designer Is New Billionaire

The showpiece of Christie’s auction of jewels in Hong Kong in November 2010 was a Golconda Lotus necklace embedded with a rare 12.29 carat Golconda diamond that was suspended on a lattice-work diamond chain studded with pink Argyle diamonds. The stunning one-of-a-kind piece featured on the cover of the auction catalog and ended up fetching $3 million.

This sale marked the international debut of Nirav Modi, an unknown jewelry designer from India, a country with a reputation for producing cut-price diamonds rather than high-end jewelry. “It’s not usual for us to put a first-time designer’s work on the cover of our auction catalogue,” acknowledges Rahul Kadakia, head of Christie’s jewelry department in New York. “But we were struck by Nirav’s fluid design.”

Modi operates what is now a far-flung empire spanning diamond sourcing, and manufacturing to retailing diamond jewelry. His privately-held Firestar Diamond is projected to close the current fiscal year ending March 31, with sales exceeding $1.2 billion. Apart from India, it has manufacturing units in Russia, Armenia and South Africa. It also owns American bridal jewelry retailer A.Jaffe and supplies fine jewelry to the US defense bases.

The Indian obsession for jewelry has led to surging gold imports, causing the government to lately take measures to cool demand. Modi believes that such curbs are misplaced. “Fine jewelry is not about consumption but investment. It’s a hard asset, like real estate that can be passed on through generations,” he maintains.

Austin · Post by **Austin** » 01 Apr 2013 11:59

krisna wrote:Current account deficit zooms

Wonder why the GOI tries to spend beyond its means , with such high CAD , Public Debt at 70 % GDP , Inflation with every commodity you name rising , we are in for bad times. Our only saving grace is our 5-6 % economic growth else we would be another Europe in the making.

Wonder by dont with impose a curb on importing fuel since it constitutes for major CAD , imposing 10 % ban on Crude and encouraging transport via rails would be a good small start

habal · Post by **habal** » 01 Apr 2013 12:26

from where are they importing fuel 20% from India, 25% from Iran. Don't go by official stats. Rest a lot is bought from Reliance, which imports very low quality and thus low-priced crude. It's a profitable business for GoI.

Austin · Post by **Austin** » 01 Apr 2013 12:47

I was under the impression that Reliance crude export was 100 % EOU and it made revenues to GOI , Didnt knew they exported to India

Reliance is virtually at the corridors of power no matter what party is in power , so it can virtually sell shit to GOI and make money and no one will complain.

RamaY · Post by **RamaY** » 01 Apr 2013 19:05

Some e-CON-mists were arguing the govt can grab people's GOLD. Here is some related info...

We already have http://en.wikipedia.org/wiki/Eminent_domain to grab other forms of private property.

And Neshant ji extends it to Mooony...

Jim Grant was back on CNBC saying “Your money isn’t really yours if it’s needed by the State.”

Suraj · Post by **Suraj** » 01 Apr 2013 19:51

Gold confiscation occured in the US in the past - FDR made private gold possession illegal during the 1930s, and everyone was required to turn theirs in, in exchange for a fixed $s per ounce. Naturally after all was said and done, prices in $s went up. Private gold holding in the US was not legalized again until the mid 1970s. reference. Sounds like a horrifying idea to Indians, but to US, it's been there, done that

Prem · Post by **Prem** » 01 Apr 2013 22:44

1991 reloaded
( No Icon for Big Tamacha )
http://www.thehindu.com/business/Econom ... 567419.ece

inance Minister P Chidambaram has said he can see some green shoots in the Indian economy. Of late it has been as barren as Caesar’s wife Calpurnia.GDP growth has come down from around 9 per cent to well below 6 per cent in a scant three years.Investment is hugely down, from 38 to 26 per cent of GDP, and no amount of pulling on the corporate udder is getting it to yield milk.Inflation remains high, around 13 per cent for consumers who are sullenly waiting to get rid of Sonia’ Sorry Army.The current account deficit has just gone well above 6 per cent which could lead to foreign money withdrawing from India.And political uncertainty engulfs the country like the January fog in Delhi.Is it any wonder that the economy is not taking off?
The imminent crisis
It is the job of finance ministers to hold out hope. After all, they can hardly say that the end is nigh.
But governors of central banks have to be more circumspect. That is probably why Governor Subbarao spoke very guardedly about the green shoots during his I G Patel Memorial Lecture at London School of Economics.This is what he said: “…There is nothing inevitable about the India growth story. We can accelerate growth and improve welfare only if we effectively implement wide ranging economic and governance reforms. Slipping up on this will amount to a costly and potentially irreversible squandering away of opportunities.”He then went on to discuss inflation, governance and the current account of deficit. Having some inkling of how much the current account deficit is – and has been – worrying policymakers for the last one year, I paid particular attention to the last bit.The labour did not go unrewarded. Dr Subbarao shot down a straw man which he had himself set up. “…the marginal propensity to import by borrowing money is small”, he told the audience.If I may respectfully ask, Sir: who ever said there was a link between the two? As far as I know, this is how it works. People borrow more when interest rates come down. They then spend more.Some of that extra spending gets translated into imports. Without those imports, the extra demand would get translated into higher prices. It is as simple as that.But India being India, we seem to have got both now – higher inflation and higher imports. Add lower exports and what you have is something very worrying, a looming balance of payments crisis which could happen at the drop of a foreign hat.The only remaining hope is strong – very strong – government action to bring down the fiscal deficit which, as Dr Subbarao said, is a governance problem.“The complexity,” he said, “arises from the political economy… political executives…much more tempted by short-term political pay offs rather than long-term sustainability.”He then concluded his speech thus: “The India growth story is not inevitable. It will not materialize in the absence of vigorous and purposeful structural and governance reforms. It is those reforms that must continue to engage our attention.”The question is if we can have those reforms without a crisis. History says we can’t.

RamaY · Post by **RamaY** » 01 Apr 2013 22:47

Suraj:
That I know.

But interestingly numerous "We Buy Gold and precious metals" shops have been popping up in every single mall across US. If there was no private gold (I know it is not legally permitted) then what is the business case for these? Especially when Massa is known for shrewd business planning.

Another point to ponder is then why do they allow gold/jewelry shops in Massa; especially the gold hoarding Desi type stores.

What are we missing here?

Theo_Fidel · Post by **Theo_Fidel** » 01 Apr 2013 22:56

Desi's/Chinese in USA buy tons of gold too. Many Esp. if RTI types, though this is usually as stamped gold bars. Many of the gold shops in USA cater to Asian types.
-------------------------------

The real problem is a relatively very poor population diverts its resources to buy non productive assets.

BTW the vast majority of gold purchase in India is for weddings, read dowry. IIRC something like 60% of all gold is for this marriage purpose alone.

It is technically not savings. It is dowry being supplied by the brides family that causes this over importance to gold. More important than putting a roof over the head or even education.

RamaY · Post by **RamaY** » 01 Apr 2013 23:10

^
Theoji

Beyond the cultural amount, I think using Gold as part of Dowry is to cover the black-money aspect of it. To be fair GOI/SC ruled that women should have equal share in parent's wealth, so it is a matter of timing when/how the wealth is transformed from parents to daughters. I wonder if dowry payment is over and beyond the girl's share of family wealth.

Imagine a family with a Rs 1crore net wealth that has a boy and girl. If the parents spend Rs 50L in marriage/dowry for the girl it should be acceptable. And if the Girl/in-laws prefer this is done in the form of Gold then it is a valid form of savings, same as transferring residential or commercial RE or farm lands or cow/goat/sheep.

In fact Gold is the best way to give a girl her dowry (her share of family wealth). Unlike RE/Farm-lands it can be carried to in-laws house and also doesn't incur registration charges (~6% of value). Unlike Cow/Goat/Sheep it wouldn't require necessary supporting infra - grazing areas etc. Unlike Cash it doesn't occupy lot of space. Unlike shares/bonds it wouldn't have to go thru the hassle of changing DMAT accounts or untimely sell/buy (if needed) and future complications (imagine the share value falls 50% after marriage day). More than anything it has the glitter that no investment/saving option can provide in a marriage function; imagine giving your daughter a garland made up of stocks/bonds or worse currency notes in her marriage.

Thus Gold is the most suitable to pay dowry, which is a legal, most timely and most celebrated way of giving the girl her equal share in family wealth.

nachiket · Post by **nachiket** » 01 Apr 2013 23:32

^^Who are you kidding? Dowry doesn't end up with the girl. It ends up with the in laws. Otherwise, they wouldn't be the ones crying for it. And you can't compare that to inheritance. That happens only after the parents die. And it is obtained by the children regardless of whether there was any dowry paid during their wedding.

In any case gold buying during weddings is not just for dowry. Number of people asking for dowry must have gone down considerably by now. It has more to do with showing off and keeping up appearances. Amount of gold bought and gifted during weddings has somehow come to define social standing in many places. Sad thing is even those who can't afford such luxuries are being dragged into this show.

Theo_Fidel · Post by **Theo_Fidel** » 01 Apr 2013 23:32

^^
Yes, I don't disagree. If you are going to give dowry then gold is a very good way to do it, esp. publicly. As I have said before gold is aggressively marketed to Indians as a status symbol. The black money aspect helps as well....

RamaY · Post by **RamaY** » 01 Apr 2013 23:42

Aha... That is the problem!

Backward Injuns have Dowry. Forward west have inheritance. Backward Injuns give it at the time of marriage. Forward west gives it when they die (can they gift kids when they are alive?).

So Dowry is bad and inheritance is good.

The next point is taxation. Dowry is not taxed at the time of xfer, but inheritance is taxed. Is That the main motivation for the govts to pounce on dowry and accept inheritance?

Nachiket garu - Yes in west the wealth is solely enjoyed by the daughter, because she would be divorced and single mother by then.

nachiket · Post by **nachiket** » 01 Apr 2013 23:51

^^ Taking this to off topic thread: viewtopic.php?p=1432988#p1432988

Prem · Post by **Prem** » 01 Apr 2013 23:56

When CAD is bad, govt should let the rupee drop to 60
http://www.moneycontrol.com/news/econom ... 44673.html

he right response to governemet's shocker on the current account deficit (CAD)—which came in at an unexpectedly high 6.7 percent of GDP for the December 2012 quarter—should not be soothing words.
This is the time for action, and one action that was previously unthinkable should now be on the table: a sharp devaluation of the rupee in order to give exports a leg up and imports a press down.With the rupee at Rs 54.30 to the dollar right now, a drop to Rs 60 should give the system enough of a shock to start responding to the crisis. A further cut can be contemplated depending on how the economy responds. Remember, in 1991, it took two devaluations of the rupee to wake the system up and respond to the challenge of the external crisis.Unfortunately, the finance ministry seems to be adopting a policy of talking down the deficit. The Chief Economic Advisor, Raghuram Rajan, has said that “there is no need for knee-jerk measures,” and he expects the fourth quarter CAD to be better as exports are reviving. C Rangarajan, Chairman of the PM’s Economic Advisory Council, said something similar. “CAD will be better in Q4 as the trade deficit is likely to come down.”Now, nobody needs to argue with the statement that we should not panic or adopt kneejerk responses, but it is not as if the latest CAD figure is the first scary number in a long while. CAD has been deteriorating for more than two years now, and every time it has crossed another unacceptable number, we got words, no action. In fact, our actions have always reeked of panic and kneejerk reactions.A comfortable CAD number is not more than 2.5 percent of GDP for the Indian economy, but that number was crossed long, long ago. The only policy response has been to allow more hot money flows and clampdowns on alleged import villains (more short-term debt, easier FII inflows, liberalisation of non-resident deposits, increased import duties on gold, et al). The biggest import villain oil imports has never been tackled.he net result has always been the same: a further deterioration in the CAD, and a worsening of the country’s external vulnerabilities.The Reserve Bank of India, which released balance-of-payments data as at the end of December 2012, has said that the country's external debt is now USD 376.3 billion, and our foreign exchange reserves are enough to cover only 78.6 percent of this exposure.Debt rose faster than reserves, but short-term debt is rising even faster. According to Business Standard , while 'long-term debt stood at USD284.4 billion at the end of December 2012 (a rise of 6.4 percent over March-end 2012), short-term debt rose 17.5 percent to USD 91.9 billion…". Since short-term debt accounted for 24.4 per cent of India's external debt, it means a quarter of our debt will fall due for repayment fairly soon and needs constant watching and replenishing with more short-term inflows.Our tendency to court more short-term debts as an answer to a fast-deteriorating CAD is a sign of panic and kneejerk response, not mature long-term policy action.If CAD which is the difference between the country’s external export earnings plus inward remittances minus imports and outward remittances has been consistently headed south, the time for incremental reform is over.The unstable general weakness of the rupee is not helping exports, nor is it dampening imports. The system has got adjusted to this weakness, and is no longer responsive to the exchange rate as it now stands. The government wants a stable rupee in order to deal with inflation, but if CAD is to be tackled, we can't do it by holding the rupee artificially high .As we noted before in Firstpost , the rupee should be closer to 60-70 against the US dollar in terms of its real value. SS Tarapore, former Deputy Governor of the Reserve Bank of India, wrote in Business Line newspaper, "With the inflation rate persistently above that in the major industrial countries, the rupee is clearly overvalued. Adjusting for inflation rate differentials, the present nominal dollar-rupee rate of around USD1 = Rs 54 should be closer to USD 1 = Rs 70. But our macho spirits want an appreciation of the rupee which goes against fundamentals."Rajeev Malik of CLSA, writing earlier in Firstpost , had this to say: "The worsening CAD is partly signalling that the rupee is overvalued. But the RBI and everyone else are missing that clue. That is because policymakers further open up the tap to attract more volatile, risk-driven foreign capital to finance a worsening CAD. Indian policymakers are making a simple mistake to think that as long as capital inflows finance a worsening CAD, the rupee is appropriately valued. This is incorrect. India’s high inflation differential will contribute towards making the rupee overvalued even if capital inflows are adequate to finance a bigger CAD."The time for half-measures on CAD is over. It is time for the big bang. We have to let the rupee drop significantly to allow the CAD to recover, which will, after a lag, help the economy itself rebound. The sooner we do this, the faster the economy will bounce back

Yayavar · Post by **Yayavar** » 01 Apr 2013 23:58

RamaY: no point in defending dowry when we know how it is abused.

OT: There was a tradition of parents providing for the daughter since inheritance laws were different - but when where these laws instituted? Wasnt it under the Firang? Ref: Veena Talwar Olderburg's research

RamaY · Post by **RamaY** » 02 Apr 2013 00:03

What is India doing wrong? OR India is in the phase where China was between 1970-1991?

Since India opened up its economy in 1991 INR value is falling. But at the same time Chinese currency is strengthening.

vishvak · Post by **vishvak** » 02 Apr 2013 00:47

Don't know about dowry but any Jewellery of married lady is called Stree-Dhan & it stays with the lady. It cannot be considered 'dowry' - that's common sense. It certainly cannot be looted by invaders after demeaning wealth under ignorant disinformation or in any way. It certainly is strange why these misplaced notions come up to justify anything, the fact remains that gold for the married lady is very well structured and conducted practice. In fact Jewellery can come to the lady from either side, so let's avoid colonial style rona-dhona under misconstructed mediaeval notions about Indians. Indians are very loving and caring people. Even my grandmother knew this, who lived even before Independence as also during and after Independence from barbarians so its very normal and has always been so.

At the same time, Indians have not given anyone any rights to pass value judgements in general too.

It is not simple as it is made to look or talk about it. It's like saying that rupee note is but a piece of paper only?? What is easy here is being ignorant, then talk of it all as gold in dowry only and then talk of using some people's wealth and even go about planning/spending of people's wealth??

It is also simple to view this confiscation business as taking gold only just the same, or creating strawman of opposition to leftists talking of gold only.

vishvak · Post by **vishvak** » 02 Apr 2013 01:25

What looks tough here is to find out how to stop excess spending by govt under what has become purely vote bank politics at the cost of national budget that has caused the problem- to solve the problem. Other steps to avoid wastage by not investing in junk bonds etc. can aid too to a certain extent but can't solve the problem. More exports again is great but can't solve the problem at its root.

Theo_Fidel · Post by **Theo_Fidel** » 02 Apr 2013 02:08

vishvak wrote:What looks tough here is to find out how to stop excess spending by govt under what has become purely vote bank politics at the cost of national budget that has caused the problem

Does anyone know what the total quantum of such programs is now and the time series change as a percentage of GDP. I'm trying to see the multiplier effect of wasted money to inflation.

RoyG · Post by **RoyG** » 02 Apr 2013 04:01

It is technically not savings. It is dowry being supplied by the brides family that causes this over importance to gold. More important than putting a roof over the head or even education.

Whether it is obtained through dowry or other means, it is savings. As for the second part, is this some sort of assumption pulled out of your arse or is there concrete evidence to back up it up? India has been the gold capital of the world for thousands of years and we did quite well in the roofing and education arena.

krisna · Post by **krisna** » 02 Apr 2013 04:13

I am no top dawg in eonomy dhaaga.
At least I believe in reality - at least in my personal life/phamili matters.
If it is useful for the phamili buy it, if not jettiosn it for later buying.
If have spare money buy for personal use.

If govt does the same-- if xyz is useful for the nation, do it.
If it is for some segment and not for whole then dont do it as it will not benefit the whole nation.
-----------------------------------
ex- Instead of reservations , having elite educational instituions which cost a lot of money. establish primary/secomdary schools in all villages or group of villages which is cheaper. It is estimated that at least or more than 1000 primary/secondary schools can be stablished for each IIT/IIM or secondary elite institutions. open up education for private ones to increase the supply abd reduce demand.
Give tax concessions for people willing to opne schools/hospitals etc.

Open primary/secondary health centres in all villages. establish tertiry ones in district HQs and bigger ones in cities. offer the same tax concessions to private players to help the poorer segments.

let the rich people and other middle class people take part in uplifting the poorer sections. let them have the fruits of poorer people becoming rich with time-- consume their products naturally.

Build good roads and establish connectivity to all villages. Villagers reap the better connectivity with increased revenue to themselves.
Every Indian is an entreprenuer in a limited sense of term as he/she wants to earn money to feed and clother his/her family. encourage this aspect. India will do wonders.
----------------------------------------------
Govt should bother about streamlining lot of laws, govern the land. Not to involve in business.
Being in business leads to losses due to political trade offs to partners by using tax payers money.
-------------------------------------------------------

talking about gold and its control is like misuisng your credit to the hilt and blaming the last few cents available with the common man as the cause of the economic misery. total BS in IMHO

JMTs.

Suraj · Post by **Suraj** » 03 Apr 2013 00:04

Good to see the Ambanis patch up their differences:
Ambanis sign first deal since split

Mukesh Ambani’s Reliance Jio, which will offer 4G services, today signed an agreement with Reliance Communications (RCom), controlled by his younger brother Anil Ambani, to use the latter’s fibre-optic network for a one-time payment of Rs 1,200 crore.

The deal is non-exclusive. This implies, RCom is free to offer fibre optics to other firms, too, while Reliance Jio can avail of other firms’ infra. Though the size of the agreement is small, it carries a symbolic significance because, RCom says, the deal is the first in a series of agreements between the two groups, raising expectations of further action in the near future. Though Reliance Industries Ltd (RIL) did not comment, it forwarded RCom’s announcement to stock exchanges.

The brotherly spirit of cooperation makes business sense, too. According to the agreement, Reliance Jio Infocomm will utilise multiple fibre pairs across RCom’s 120,000 km of inter-city fibre-optic network. This means Reliance Jio will pay around Rs 1 lakh for every km of the network, which is close to a tenth of the cost it would have had to bear to put up its own fibre.

And the FM's budget calculations go awry thanks to lower revenue collections. Serves them right for the years of economic mismanagement:
FY13 direct tax mop-up short of RE by Rs 17k cr

The low collections may pose a challenge to the finance ministry’s efforts to restrict fiscal deficit for 2012-13 to 5.2 per cent of gross domestic product (GDP). The Centre’s revenue deficit is set to miss the RE of 3.9 per cent of GDP, as the deficit till February had already exceeded the target, analysts said.

Despite the government writing to tax evaders and tax offices and banks keeping their doors open to taxpayers during the March 29-31 period to facilitate tax payment, direct tax collections net of refunds at the end of 2012-13 stood at only Rs 5,48,845 crore, against the RE of Rs 5,65,835 crore and the Budget estimate of Rs 5,70,257 crore.

Data released by the Central Board of Direct Taxes today showed corporation tax collections in 2012-13 stood at Rs 3,51,724 crore, compared with the RE of Rs 3,58,874 crore and the BE of Rs 3,73,227 crore.

Income tax collections fell short of the RE by about Rs 15,000 crore — collections stood at Rs 1,91,323 crore, against the RE of Rs 2,06,095 crore and the BE of Rs 1,95,786 crore. Other taxes contributed Rs 5,798 crore to the direct tax collection kitty.

In 2012-13, refunds stood at Rs 82,704 crore, against Rs 95,000 crore issued in 2011-12. In 2009-10 and 2010-11, refunds stood at Rs 57,000 crore and Rs 73,000 crore, respectively.

In the Budget, the government had projected the Centre’s fiscal deficit at 5.2 per cent of GDP, keeping in mind the revised revenue and expenditure projections. While the fact that expenditure cannot surpass the RE provides comfort, there is little the ministry can do to meet the RE for revenue collections.

paramu · Post by **paramu** » 03 Apr 2013 11:14

Theo_Fidel wrote:It is technically not savings. It is dowry being supplied by the brides family that causes this over importance to gold. More important than putting a roof over the head or even education.

May be OT, but there are some interesting tidbits about this dowry story. While giving gift as part of every marriage tradition, the oldest recorded "dowry" in India is that of City of Bombay for the marriage between a Portuguese princess and British Prince. While many Indian communities did not have any dowry practice, started adopting that as they modernized. For example, my friend told me that Kerala that followed matriarchal tradition that didn't have concept dowry, started adopting dowry when they modernized and moved away from matriarchal system.

While Hindus, Sikhs and general Indian culture get flak for current dowry system, my Syrian Christian friend told me that dowry among Christians is institutionalized and the church gets 10% of that.

vera_k · Post by **vera_k** » 04 Apr 2013 10:36

Given that oil is the other contributor to the current account deficit, there should be steps taken to reduce oil consumption.

For instance, all luxury car purchases that consume diesel, petrol or gas can be discouraged with 400% sales tax. This should encourage moving the auto fleet to electric propulsion.

Similarly, if building codes are updated to require good insulation, and energy efficient appliances in expensive homes, that should reduce electricity consumption, and therefore the amount of diesel used for standby generators.

Aditya_V · Post by **Aditya_V** » 04 Apr 2013 11:55

vera_k wrote:Given that oil is the other contributor to the current account deficit, there should be steps taken to reduce oil consumption.

For instance, all luxury car purchases that consume diesel, petrol or gas can be discouraged with 400% sales tax. This should encourage moving the auto fleet to electric propulsion.

Similarly, if building codes are updated to require good insulation, and energy efficient appliances in expensive homes, that should reduce electricity consumption, and therefore the amount of diesel used for standby generators.

I think we tax Petrol and Diesel heavily, as it is car ownership is very low in India. OIL imports are also required for many Industrial uses from PVC to TAR to plastic to paraffin wax to the beauty creams, paints people use. So just targettign vehicles without addressign Public transport etc is no use.

I much prefer oil imports to Jewellery imports which is not so useful to the overall economy. We should also focus more on exporting finished goods rather than mining ores and not try to shut down sterlite, Vedanta type companies. We should also focus on more self sufficiency in steel. Most of cars, ships built in India run on imported steel.

We need a proper Manufacturing policy which focus on Electricity, Transportation bottlenecks to reduce our current account deficit.

Pranoy Roy recommended fancy retail products will not cut it.

Abhijeet · Post by **Abhijeet** » 04 Apr 2013 13:14

The "tax things more heavily" argument has been done to death in India. We need to work on the supply side and figuring out ways to deliver essentials like energy cheaply to the population, rather than always working on killing demand through high taxes. As it is, per-capita Indian consumption of just about everything is among the lowest in the world and even below the global mean, leave alone comparisons to developed countries.

Whenever people in India talk about "conservation", how we need to reduce consumption etc, it seems to me like a starving man going on a diet. Of course inefficiency needs to be removed wherever possible, but there is a big difference between efficiency and simply cutting consumption. India needs a lot more consumption, not less.