Indian Economy: News and Discussion (Jan 1 2010)

Suraj · Post by **Suraj** » 14 Feb 2011 12:16

Ravi_ku: What's the problem here ? Yes, it is average per capita income - national income divided by population. Why the complaint about the nature of the statistic ? The skew in income distribution applies to any country. At the current GDP level, our per capita income for the year ended March 31 2011 will be in the vicinity of Rs.54k, just as it was around 46k last year. RBI releases a quick estimate in February, actual GDP data in end-May, and a final revision in the subsequent November, to account for data not available by May. They've consistently projected figures pretty accurately in February, and often scale up their final figure in November once all data is available.

Virupaksha · Post by **Virupaksha** » 14 Feb 2011 12:46

Suraj wrote:Ravi_ku: What's the problem here ? Yes, it is average per capita income - national income divided by population. Why the complaint about the nature of the statistic ? The skew in income distribution applies to any country. At the current GDP level, our per capita income for the year ended March 31 2011 will be in the vicinity of Rs.54k, just as it was around 46k last year. RBI releases a quick estimate in February, actual GDP data in end-May, and a final revision in the subsequent November, to account for data not available by May. They've consistently projected figures pretty accurately in February, and often scale up their final figure in November once all data is available.

Suraj ji,

It comes from the argument it developed from.
If you read Somnath's earlier posts, he used the argument

1) But it is a fact that a large part of the price rise is a function of supply side bottlenecks, in other words, a lot more people asking for stuff they didnt earlier...A lot more people asking for milk, and in more quantities..Ditto for meat, sugar and all superior goods...And even the "poorest of the poor" are better off and consuming more at the margin, hence the increase in prices of giffen goods!

2) While it is a fact that prices in India have shot up, it is also a fact that salaries in general have skyrocketed...So much so that across industries, there isnt a huge amount of dollar differential in Indian and (say) A-Pac salaries..

From 1 source:
basically he compared Say two countries from APac, (PCI-Singapore $37,220) (Malaysia $7,350) with India's salaries '1,180' saying that there is no huge amount of dollar differential and the so increased prices which are "comparable" is quite ok for Indians.

http://data.worldbank.org/country/india
http://data.worldbank.org/country/singapore
http://data.worldbank.org/country/malaysia

Basically we are facing a 12% inflation. (wholesale , not retail - which is actually as of today much higher).

He then by a statistical trick converted PCI to PFI to compare the salaries only for India and for that he used the higher number provided by these projections so as to show his numbers better.

I actually have a rough idea of what you said, but should we be actually using that projected data even before the year is completed, for any purposes (exceptions of course include budgeting and so on) - especially for comparision with other countries PCI and inflation? It is above skulduggery which provoked me.

Abhijeet · Post by **Abhijeet** » 14 Feb 2011 12:51

somnath wrote:That too is a reason, and not a small one at that...If you talk to anyone in "industry", you would find what kind of shortage of skilled labour (not IIT/IIM types ) they face - plumbes, electricians, welders..

In 2004, you could get a driver in Mumbai for 4000 bucks a month..Today the going rate is 8-10k!

$200 a month means that salaries have reached general APAC levels? That salary corresponds to a yearly income of Rs. 96,000 to Rs. 1.2 lakh (being generous with the conversion, about $3000 per year) -- hardly at a level which justifies dollar prices for so many items!

As I've written repeatedly, salaries for many occupations have gone up. But -- outside of a small set of niche fields -- they are nowhere close to the levels needed to afford even the basic necessities (petrol, electricity, milk) I listed in my earlier post.

somnath · Post by **somnath** » 14 Feb 2011 13:26

Raviji,

1. Relax, no one is getting killed.

2. Look at the statement in the context it is made - and look at the whole message..

No one is saying M'sia and Singapore are "comparable" to India..The basic contention is that parts of the Indian economy have heated up to an extent where people costs are now comparable to world standards, and that has its own slippage effect on inflation..

There is no "statistical trick" in estimating HH income and expenditure either..People who estimate demand patterns for a living (NCAER for example) do exactly that...People (most of them) dont live in isolation - they live in households..Most asset ownership is at a HH level, not individual..Therefore, when estimating demand patterns, it is useful to look at HH incomes..

the PCI data for 2011 is not "projected", it is an estimate - for any income stream data, you do not expect the trend to be seriously bucked if you only have 1-2 months left of the year...And if you are aware of the basics, you would also know that these Quick Estimates are typically understated -the final actual numbers are always better...

Now to inflation...Talk to anyone working in the manufacturing sector, or IT, or financial services, or Real Estate - ask him what the biggest issue is..It is staff shortage, and soaring expense on staff costs..Average employee costs of private sector goes up by 15-20% per annum..Govt employee costs go up by a similar number (it is inflation linked, and there was a pay commission a year back)...There is no economic way how such wage inflation cannot but seep into prices..Thats all..

There are other reasons as well, supply side bottlenecks, reforms etc (whih I have mentioned)..

dont be in a hurry to score a point, defeats the purpose, no?

somnath · Post by **somnath** » 14 Feb 2011 13:31

Abhijeet wrote:$200 a month means that salaries have reached general APAC levels?

It hasnt (yet) - but such strong wage inflation HAS TO seep into inflation, thats all...

Virupaksha · Post by **Virupaksha** » 14 Feb 2011 13:46

Somnath,

i) Please compare HH to HH and PCI to PCI.
ii) It will be "estimated" in april. As of today, it is "projected" only.
iii) Unfortunately you are comparing semi-advanced skilled labour. India has a literacy of 65% rate, which means they can sign their name. You unfortunately are projecting your isolated observations to the general populace.
Unfortunately sir, I have *school friends who lost their jobs, failed businesses last year and are still trying to catch their feet back.

For these people, unfortunately inflation hit them first and are still searching for the elusive "soaring expense on staff". So unfortunately my perspective is the complete opposite of what you propound.

Ofcourse all this excludes people like these
http://www.thehindu.com/opinion/columns ... epage=true

*I went to a street corner type of school, not the chi chi schools.

Sri · Post by **Sri** » 14 Feb 2011 13:58

India is a county of multiple parallel economies at work.

Here in TN fols still get a kilo of rice at Rs 2 upto 35 Kgs a month. Similarly PDS system delivers many essential items at a hugely subsidised rates. On the other hand, if you but rice at say Nilgiri and the likes it will cost approx Rs 35 a KG.

Actually it's the middle class which is facing the brunt of te economic distortions.

somnath · Post by **somnath** » 14 Feb 2011 14:29

Raviji,

The discussion was on macro inflation, not on inequality that is (undoubtedly) present in India..

Take 2 thought experiments..

1. Agriculture - thanks to 3 years of NREGA, rural farm labour costs have risen, across the board by 20-25%, in some places even more...Now foodgrain production goes up every year by 2-3%...Costs go up by 15-20%, demand (thanks to economic growth) goes up by 15-20%, partly driven by the same farm labour getting enhanced wages! What do you think will be the impact on prices? What are the driving factors? One, lack of reforms to boost agri..And two, rising labour costs that drive up cost of production..

2. Real Estate - 10 years back, a 4000 rupee/sq feet project in Mumbai would have X number of applicants..Today, a 30k/sq feet project has 3X the number of applicants..(Both projects are from the same developer, I am not naming it)...30k/sq feet is higher than the avearge/median price in most Asian cities barring SG, HK and Shanghai....Where does this higher price flow into? A lot of things downstream....

There are "50% of world level" compensations being paid in many industries now..And employees there are producing stuff that will need to be priced "somewhere close to world levels"...

that said, the primary challenges (in food prices at least) are at the supply bottleneck level...

SwamyG · Post by **SwamyG** » 14 Feb 2011 23:06

I read LPO (Legal Process Outsourcing) is changing UK, USA and India to a great deal. Even Australians are sitting up and noticing "fundamental changes" that LPO to India is bringing to the practice of law in Australia. It is a big big billion dollar industry onlee. Iceberg tip is being scratched onlee.

Mort Walker · Post by **Mort Walker** » 15 Feb 2011 09:53

somnath wrote:
Mort Walker wrote:This is speculation at best. Per capita consumption of basic food items, outside of wheat, hasn't increased much. What is more disturbing is that per capita protein, fresh vegetables & fruit consumption has not increased either and in fact has declined.
You are maybe referring to NSSO numbers...These are hugely problematic, and recognised by scholars on both sides of the divide...In a nutshell, while per capita calorie intake is static to declingin, per capita fat has been increasing..Here is a study from the "other" side of the divide..

http://www.jsk.gov.in/epw_article.pdf

But check out actual industry-wide numbers - meat, milk, fish, egg, sugar - you will see a distinct improvement in per cpaita numbers across the board...And with our huge (population) base, even a small increase in per capita demand causes a surge in production volumes required...

There is more production of meat, fish, shell fish, eggs and milk, but you have to subtract export amounts, for example take a look at India being the largest exporter of milk powder, and the growth of restaurants which has increased on a per capita basis. Real consumption of healthy foods on a per capita basis has declined, and your report doesn't have any clear conclusions about why, but the reason is cost due to inflation. People have to fill their stomachs so cheap foods full of fats are consumed and for the poorer segments of society, even though they have other opportunities afforded to them, healthy food has become more expensive in real terms. This is true in other places in the world where people may have other affordable luxuries, but healthy food costs more.

PrasadZ · Post by **PrasadZ** » 15 Feb 2011 11:09

Mort Walker wrote:There is more production of meat, fish, shell fish, eggs and milk, but you have to subtract export amounts, for example take a look at India being the largest exporter of milk powder, and the growth of restaurants which has increased on a per capita basis.

Not sure what you are getting at.. By that logic, we should also add imports and exclude wastage, which would, ultimately, end up with consumption figures .. If so, why not just look at consumption statistics?

Mort Walker wrote:Real consumption of healthy foods on a per capita basis has declined, and your report doesn't have any clear conclusions about why, but the reason is cost due to inflation. People have to fill their stomachs so cheap foods full of fats are consumed and for the poorer segments of society, even though they have other opportunities afforded to them, healthy food has become more expensive in real terms. This is true in other places in the world where people may have other affordable luxuries, but healthy food costs more.

I think that may be an argument more relavant in the US where cheap, unhealthy food has become pervasive and is causing changes in diet. I cant find any statistic that there is higher inflation for healthy food in India. You can see that undernourishment percentages have remained constant since 1990. There is no evidence that food inflation is the primary cause of malnutrition.
However, from here,

According to the Global Hunger Index, South Asia has the highest child malnutrition rate of world's regions. India contributes to about 5.6 million child deaths every year, more than half the world's total.[71] The 2006 report mentioned that "the low status of women in South Asian countries and their lack of nutritional knowledge are important determinants of high prevalence of underweight children in the region" and was concerned that South Asia has "inadequate feeding and caring practices for young children".

I would submit that education and access are the more important determinants for malnutrition in the Indian context

somnath · Post by **somnath** » 15 Feb 2011 12:31

Mort Walker wrote:People have to fill their stomachs so cheap foods full of fats are consumed and for the poorer segments of society, even though they have other opportunities afforded to them, healthy food has become more expensive in real terms

Mortji, that is not an "Indian" issue, not yet in any case...At a macro level, an increase in fat consumption means that people are consuming more oil, meat, eggs etc - all more expensive than the "inferior" goods (basic cereals)..

Take a look at the consumption demand growth numbers:

Edible oil
http://mofpi.nic.in/ContentPage.aspx?CategoryId=687

Poultry and meat
http://www.pjbs.org/ijps/fin74.pdf

Milk/products
http://mofpi.nic.in/ContentPage.aspx?CategoryId=145

You can go on and on - NSSO data just does not account for the huge increase in consumption that can be seen in industry numbers..In fact Surjit Bhalla has estimated that the current NSSO sampling model leaves out 50% of the GDP in its various estimations!

Unfortunately the structure of the agri sector in India is such that it cannot follow an industrial pattern of "capacity enhancement, meet demand, rising prices, more capacity enhancement, price recession, capacity consolidation" patern...Prt of it is due to the fact that agri is tied to a way of living, and part of it is due to inadequate reform...

As a result, demand-supply is finely matched, and even a slight mismatch cause prices to catapult..

somnath · Post by **somnath** » 15 Feb 2011 12:50

There was a discusison here sometime back about PE investments and its slowdown reflecting macro weaknesses..

Here is a news flash on PE investments in 2010 - seems that they doubled, in a year when FDI slowed!
http://www.indianexpress.com/news/pe-in ... bn/750140/

also note the #1 destination for PE money - energy...Basically investments in privatisation of energy resources..Now while it might be good or bad, investments in energy assets in a country is usually divorced from the macro prospects of the place...

Arjun · Post by **Arjun** » 15 Feb 2011 15:40

somnath wrote:There was a discusison here sometime back about PE investments and its slowdown reflecting macro weaknesses..

Here is a news flash on PE investments in 2010 - seems that they doubled, in a year when FDI slowed!
http://www.indianexpress.com/news/pe-in ... bn/750140/

also note the #1 destination for PE money - energy...Basically investments in privatisation of energy resources..Now while it might be good or bad, investments in energy assets in a country is usually divorced from the macro prospects of the place...

The data has been known since Dec-Jan, so it's not exactly breaking news. The number is actually a reduction from the expectation in August - Sep, when it was assumed $10 billion would be the year-end PE figure. Also, the usage of the term 'energy sector' differs from the rest of the world, in that it largely refers to investments in the Power generation sector (not in energy resources).

Also, please note that I am not in the least bit bearish about PE investments in India or that PE would slow down - reflecting macro-weakness. My case was that in the 2006 - 07 period, India was by far in a league of its own among emerging markets (much above China as well) - which no longer remains true. China has overtaken India during the slowdown. PE was a category where India could have remained the unchallenged leader (rather like China is in FDI), with the right set of policies - rather than being just one along with China, SE Asia, Latin America. The signaling effect when one is the #1 by far, is very different from a situation when one is just among the top few contenders.

Prem · Post by **Prem** » 16 Feb 2011 03:31

http://online.wsj.com/article/SB1000142 ... 15406.html
Japan, India to Sign Free Trade Pact

TOKYO—Japan's government said it will sign a free-trade agreement with India on Wednesday, bolstering ties with the fast-growing South Asian economy with which it shares a mutual concern about larger economic rival China. The agreement will make Japan and India each other's biggest free-trade partners, and will do away with tariffs on 94% of trade between the two countries within 10 years, according to local media reports.The deal comes days after official data showed Japan ceded its place as the world's second-largest economy to China in 2010. China's growing market for Japanese goods has galvanized corporate Japan

( Industrial corridor from DEL to BOM Via Khajuraho looks realistic now)

somnath · Post by **somnath** » 16 Feb 2011 06:16

Good narrative by Prof Deepak Pental on a critical aspect of lagging agri in India - R&D...

http://www.indianexpress.com/news/doing ... g/750384/0

Critically

This drift and complacency can only be plugged by the political establishment. The last time this was done was in the ’60s when C. Subramanian took the decisive step to import dwarf wheat to India, a technology that brought about the green revolution and saved millions from starvation — in spite of the scientific establishment in agriculture dragging its feet

Time to again bring in the "brightest and best" into agriculture...Maybe get Jairam Ramesh in there!

abhischekcc · Post by **abhischekcc** » 16 Feb 2011 10:01

^Getting Jairam Ramesh into the Agri Ministry is the surest way to ensure that India' food production dependancy on Monsanto.

Neshant · Post by **Neshant** » 16 Feb 2011 11:21

i've often wondered if jairam ramesh was a CIA agent.

Arya Sumantra · Post by **Arya Sumantra** » 16 Feb 2011 13:43

^^^ Jairam Ramesh is definitely serving western interests. One has to be really dumb or someone on same payrolls as him to not see what he is upto.

Suraj · Post by **Suraj** » 16 Feb 2011 13:48

Hi folks... that'll be enough of character assassination on this thread. Please take it elsewhere.

joshvajohn · Post by **joshvajohn** » 16 Feb 2011 16:14

Switzerland relaxes rules for info exchange on foreign black money
http://timesofindia.indiatimes.com/worl ... 502364.cms

Suraj · Post by **Suraj** » 17 Feb 2011 03:29

Interestingly, merchandise exports reached $185 billion in April-Jan of this fiscal, after successive months of >$20 billion exports in December and January. The original export target of $200 billion for the year has now been revised upward to $220 billion, and estimates are that the full year figure will be approximately $225 billion, which would get us into the top 15 in the list of exporters, overtaking Spain. Getting into the top 10 will require exports of >$400 billion per year; between $200-300 billion we'd overtake mid-tier countries like Belgium, Mexico, Singapore and Russia.

somnath · Post by **somnath** » 17 Feb 2011 06:02

If true its shocking...I hope it isnt...

Why BJP objects to GST..

http://www.indianexpress.com/news/bjp-b ... h/751188/0

putnanja · Post by **putnanja** » 17 Feb 2011 06:49

somnath wrote:If true its shocking...I hope it isnt...

Why BJP objects to GST..

http://www.indianexpress.com/news/bjp-b ... h/751188/0

That was the claim by the PM. Read the entire article. It says that there is loss for the states which the central govt won't make up. Not only BJP ruled states, even some congress ruled states oppose it. Did you read the last paragraph?

And the decision to move a constitutional amendment to decide on the GST issues that are contentious is being objected to on the grounds of taking away state powers for taxation.

somnath · Post by **somnath** » 17 Feb 2011 07:32

putnanja wrote:That was the claim by the PM.

Thats is precisely what I was referring to...

putnanja · Post by **putnanja** » 17 Feb 2011 08:39

somnath wrote:
putnanja wrote:That was the claim by the PM.
Thats is precisely what I was referring to...

Well, the PM neatly found scapegoats for every issue affecting the country. reforms stalled because of parliament deadlock(never mind that in UPA-1, BJP offered support to the pension reform bill, but UPA held back), coalition partners for corruption and international economic conditions for inflation. I would take his claims with a big bag of salt

Vasu · Post by **Vasu** » 17 Feb 2011 11:02

While a big deal was made about about his press conference before it happened, it will be forgotten before you wake up tomorrow morning. It was all accusations and denials. Spoken like a true politician, Mr. Prime Minister.

The CONgress is now making a big deal of the BJP holding the Parliament back from passing important economic legislations, but like you said, they've been sitting on many important reform bills for years. They have absolutely squandered away their strength in the Parliament to do any good to this country. Certain sections of the media are still trying to analyze the positives from his press meet yesterday.

Okay, the JPC is supposed to be initiated in April. Lets see how this government starts the next financial year. I don't have any expectations.

abhishek_sharma · Post by **abhishek_sharma** » 17 Feb 2011 11:46

World Bank: Power in Rural India Should Go Local

http://blogs.wsj.com/indiarealtime/2011 ... -go-local/

Aditya_V · Post by **Aditya_V** » 17 Feb 2011 16:28

somnath wrote:If true its shocking...I hope it isnt...

Why BJP objects to GST..

http://www.indianexpress.com/news/bjp-b ... h/751188/0

Sorry it is Shocking if it is true but it would even more shocking if it is not true since a Prime minister of this country sinking to such Lies and Fictional statements on black mail for failure to deliver means effectively we are running a Bannana republic.

PM's charge on Gujarat biggest joke in 2011: Narendra Modi

“"Gujarat and the BJP has cleared its stand on reforms like GST since the beginning. A year ago, when I met finance Minister Pranab Mukherjee, I told him we cannot implement it before creating the nationwide information technology network for GST. Mukherjee also agreed to my suggestion and immediately called his personal secretary and ordered him to form a taskforce for this. However, till date, there is no progress. I challenge the PM to make the minutes of the GST empowerment committee public and let the people know what suggestions Gujarat and other states have made in last two years."

Given what the PM has said in a Public conference and seriousness of the charge, GOI should disclose the Minutes of Meetings within 24 hours.

The Prime Minister should also answer, since has stated that effectively only Amit Shah's arrest is the ONLY THING THAT HAS STOPPED GST FROM BEING IMPLEMENTED WITH IMMEDIATE EFFECT.

a) Is the IT infrastructure for GST ready, so if law is passed it can be implemented with immediate effect?

b) have all States except those ruled by BJP have given written consent for immediate implementation?

if the answer to any of these 2 is wrong, then the Fact becomes that Prime Minister of India has restorted to Tactics which can only indicate that things in the Central Government are really in a Terrible State.

somnath · Post by **somnath** » 17 Feb 2011 19:20

^^^Well, that is true...As Pratap bhanu Mehta put it in his column in IE, the PM looked more like a cynical politician than a leader taking charge...God knows which story is true - maybe there is a grain of truth in both stories...The IT infrastructure bit does not sound right as a ceteris paribus condition for GST...Even Income Tax, the other big "national tax" got an IT-infrastructure only a few years back....And there has been loads of discussions and analyses on GST over the last 5 years - I havent found any mention of an IT infrastructure in them at all...

Aditya_V · Post by **Aditya_V** » 17 Feb 2011 19:30

somnath wrote:^^^Well, that is true...As Pratap bhanu Mehta put it in his column in IE, the PM looked more like a cynical politician than a leader taking charge...God knows which story is true - maybe there is a grain of truth in both stories...The IT infrastructure bit does not sound right as a ceteris paribus condition for GST...Even Income Tax, the other big "national tax" got an IT-infrastructure only a few years back....And there has been loads of discussions and analyses on GST over the last 5 years - I havent found any mention of an IT infrastructure in them at all...

Sorry IT is totally different from GST, being from the accounting feild let me tell you the crux of the GST regime is smooth operation of VAT credits on inter state sales and inter state sales at conncessional rates. C-forms are a Huge headache even today and many Sales tax assessements for Sales Tax are not closed because of this issue.

You need the IT infrastructure in place for GST because Like CENVAT( which is covered by the Central Goverments CEntral Excise Departments and not the various state Sales tax departments) credit in order to verify that VAT credits in Inter states are accounted to the correctly and not falsly claimed and the revenue is shared properly inbetween the states.

FOr Income Tax, IT infrastructure is mainly needed once TDS came to force in the 90's and covered almost most services in the last decade. And besides there is no case of Revenue sharing IT revenue between States and Central Government, Excise also same issue does not rise.

For GST however, inter state and Central Government sharing of revenue is very critical since Sales tax (apart from Excise on Alcohol) is thier main form of Revenue.

somnath · Post by **somnath** » 17 Feb 2011 21:32

^^^I am sure IT will be a big help..Though in terms of revenue sharing, Centre shares ALL direct tax revenues with states - that is the job of the Finance Commission, to lay down the rules...

you might be right, but an IT backbone was never the publicly articulated concern of the states - they are all more worried about the loss of their "independence".....

Whatever be the case, the PM should simply bring the bill to the Parliament - let the govt call BJP's bluff, if what the PM is saying is correct...

vera_k · Post by **vera_k** » 17 Feb 2011 22:02

So the Amit Shah case was about creating a pressure point on BJP!! That explains why the Central agencies went after Shah even though it hurt Gujarat Congress.

IT concerns seem legit in light of the whole internet sales tax avoidance routine that has sprung up in the USA. Collection of sales tax across state borders is similarly hanging fire because of the challenge of unifying 7000+ taxing jurisdictions.

In any case, the PM can get past this by having the bill specify IT implementation benchmarks that have to be met prior to GST taking effect.

putnanja · Post by **putnanja** » 17 Feb 2011 22:37

somnath wrote:
Whatever be the case, the PM should simply bring the bill to the Parliament - let the govt call BJP's bluff, if what the PM is saying is correct...

I don't know what you are trying to say here. Some of the BJP and UPA ruled states are opposing it for various reasons like loss of revenue, taking away state power to tax etc. When the BJP has clearly said it is not opposing for sake of Amit Shah(who is not even in the news anyway), do you really think they will use Amit Shah as an excuse to oppose it in parliament? They will raise their concerns there, and the government has to address it if it wants the 2/3rd majority to pass the constitutional amendment. And like I said, it is not just BJP ruled states, but states ruled by other parties too have reservations on it

Suraj · Post by **Suraj** » 17 Feb 2011 23:39

The primary sticking point has been revenue sharing, and states' concerns about how to make up for shortfalls once the host of transaction taxes and duties are abolished. One of the consequences of having dynamic and laggard states is that the former are concerned that they will just be squeezed to prop up the latter. There have been three rounds of discussions between finance ministers of states and the union finance ministry.

Ideologically, the BJP has been more of a states right-ist / fiscal discipline oriented party than the Congress, which has always had a top-down union's rights posture on finances, as well as greater tolerance towards deficits. The 1999-00 Finance Commission yielded significant improvements in the state of our public debt after the public finance disaster of the 5th pay commission - within 3 years our savings/GDP had accelerated to over 25%, and is now in the mid 30%s.

The PMs words are rather self-serving, though he probably never expected a soundbite like that to evolve into such a massive controversy. He's been in that position over half a decade and ought to have thought more carefully before speaking, however.

Prem · Post by **Prem** » 18 Feb 2011 02:49

Scindia says around 4.5 - 5% growth in agriculture vital for economy
http://www.fnbnews.com/article/detnews. ... ectionid=1

Calling for a second green revolution, union minister of state for commerce and industry Jyotiraditya M Scindia said that with proper investment in agriculture, technical innovation and infrastructure for food processing, India could well become the food basket of the world. Scindia was addressing the APEDA Export Awards function which coincided with the celebrations of 25 years ( Agriculture and Processed Foods Development Authority of India) of the Authority).Scindia said that agriculture sector was critical for India's economy as 60-70% of the population depended on it for livelihood. “We require 4.5%-5 % growth in agriculture to uplift our economy in rural areas,” he added.
Referring to the recent initiatives to reduce transaction costs, he said that the ministry was committed to build on the first installment of transaction cost reducing initiatives which had resulted in saving of Rs 2,100 crore in perpetuity. He hoped to come out with fresh initiatives on annual or bi-annual basis.
Commerce secretary Dr Rahul Khullar noted that Indian agriculture was intrinsically competitive and robust export of agri products was an indication of that strength.Complimenting the exporters for their performance, Dr Khullar emphasised that Indian agri products would have to move up the value chain in order to achieve a target of $15 billion in the next three years. He pointed out that the main challenge for the sector would be to deal with emerging range of non-tariff barriers such as sanitary and phytosanitary measures. “We have to address quality and technical issues more seriously,” he added. He praised traceability measures deployed in various agri-products to meet international requirements. “Traceability may become another mode of banning,” he warned.

somnath · Post by **somnath** » 18 Feb 2011 06:18

Suraj wrote:Ideologically, the BJP has been more of a states right-ist / fiscal discipline oriented party than the Congress, which has always had a top-down union's rights posture on finances, as well as greater tolerance towards deficits.

Is it? Not on available evidence, either of BJP state govts or of the two NDA govts...they can be as profilgate as the next Indian party...

The issue with GST is not about dynamic and laggard states, but of the complex state tax structures that have evolved over time..As a result, the uniform national tax that would be aplicable would impact various states differently. In this regard, a "dynamic" Gujarat might find itself in the same boat as a "laggard" Bihar..Kavita Rao and Pinaki Chakravarty have done perhaps the most extensive research on GST over the lat few years..

http://businessstandard.co.in/india/new ... nk/402303/

the point however is that the issues are well known - a committee of state Finance Ministers led by Ashim Dasgupta has been at it for years...the pros and cons, the potential gainers and losers are all studied and recognised...The two national parties(add in CPM as the third) should now just take a call and take the plunge..No point keeping at it by making fallacious political points, whether Amit Shah or anything else...

Suraj · Post by **Suraj** » 18 Feb 2011 07:44

somnath wrote:
Suraj wrote:Ideologically, the BJP has been more of a states right-ist / fiscal discipline oriented party than the Congress, which has always had a top-down union's rights posture on finances, as well as greater tolerance towards deficits.
Is it? Not on available evidence, either of BJP state govts or of the two NDA govts...they can be as profilgate as the next Indian party...

My own observation is based on what I quoted in the rest of that previous post - the quantitative improvement in the savings/GDP situation between 2000-03 even though the NDA govt (there was realistically only one - the first one lasted 2 weeks) had to bear the consequences of both the 5th pay commission as well as the 2000-01 downturn and bad monsoon. The 1999-00 finance commission increased the states share of gross revenue receipts higher than the original proposal (29% vs 26% if I recall right).

On the matter of fiscal discipline, it was the NDA after all, that introduced the FRBM Act, which UPA-1 attempted to pause upon, due to the requirements resulting from their subsidy and social sector spending programs like NREGS. Just from the nature of how that act came into being - not during a cyclical upturn but during a period of low growth (2000-02) suggests a difference in priorities between the two parties; the UPA, and in particular its left 'allies' and Planning Commission folks like Jean Dreze actively attempted to make the case for watering down the provisions of the act.

Qualitatively, I rate the NDA's public spending policies - the NHDP projects and the Bharat Nirman rural infrastructure and roads program, to be much more effective than the NREGS programs of the two UPA administrations. This is primarily because of my view that lack of connectivity is one of the primary impediments to economic growth and access to cities, together with rural water/electricity supplies, are far more meaningful than a right-to-work program like NREGS.

What would be the 'available evidence' on your part ?

somnath · Post by **somnath** » 18 Feb 2011 08:29

1. Savings rates and Fiscal rectitude are not necessarily correlated, not in India, not for many other countries..Savings rates have been showing a secular uptrend, a flat curve, but secular...The "real spikes" are all during years of high growth (1993-96 for example) and then again in 2003-04 (the start of the current 8%+ growth)...Multiple policies have been responsible for that, including the NDA's, but fail to see the connection with fiscal rectitude..
http://indiabudget.nic.in/es2009-10/chapt2010/tab16.pdf

2. The FRBM Act was in the works for a long time...And the final Act is filled with so many holes that beyond the optics, there isnt much teeth in it...In fact Yashwant Sinha started downplaying it almost from the day the bill was passed!

But on actual deficit management, the record of the BJP state governments do not show any special attention to deficits, not any more (or any less) to other state governments...

http://www.rbi.org.in/scripts/Publicati ... x?id=12090

On the central govt too, the track record of both NDA and UPA are mixed, and random...

http://indiabudget.nic.in/es2003-04/cha ... chap22.pdf
http://indiabudget.nic.in/es2009-10/cha ... pter03.pdf

Typically, high growth years have seen a decline - and the sharp decline in GFD in NDA's term was the one really high growth year it had....the UPA too had the same "fortune" till the financial crisis took the fiscal sails away..

BJP had similar antediluvian views on subsidies as the UPA - its a political consensus - oil subsidies parked with oil companies, disregarding the abolition of APM (which has now been done finally, partially)...

3. The point on NREGA v/s NHDP is valid, though the growth track record of UPA is much better than the NDA, so I guess there is some merit in a cash transfer scheme!

So net net, I dont see how NDA and UPA are qualitatively any different on matters relating to the fisc - the data (or for that matter, the respective political narratives) dont show that up in any consistent manner..

Singha · Post by **Singha** » 18 Feb 2011 08:47

http://www.bsmotoring.com/news/daimler- ... enz/3143/1

Diamler starts truck manufacturing and test facility in Chennai. 4400cr investment.