Indian Economy: News and Discussion (June 8 2008)

Neshant · Post by **Neshant** » 15 Oct 2009 19:04

do you think they would really be revealing anything.

i doubt it.

switzerland's entire economy is based on attracting tax evasion/fraud, bribery and corruption money from around the world.

Singha · Post by **Singha** » 15 Oct 2009 19:07

zurich and geneva are said to have most expensive shops and cars in the worlds. salespeople sniff at you if you ask the price before buying anything.

hitler could have moved in and grabbed all of that money. I wonder why he respected swiss neutrality?

Umrao Das · Post by **Umrao Das** » 15 Oct 2009 19:10

Because his money was in Swiss banks.

SwamyG · Post by **SwamyG** » 15 Oct 2009 20:27

Suraj as usual you are in good company :RBI may hold interest rate levels: Rangarajan

And, thanks for the list of reasons.

Rahul Mehta · Post by **Rahul Mehta** » 15 Oct 2009 20:29

Singha,

Pls see "Right to bear guns" thread for the answer to you Q

MohanSI · Post by **MohanSI** » 15 Oct 2009 21:33

Ameet wrote:Babus must have forgotten their Swiss bank account numbers or everyone has moved it to another location already.

Victory for India; Swiss Banks to reveal Indian black money

Published on Wed 14th Oct 2009 17:10:59

New Delhi, October 14 :
..........

"The BJP is claiming that about $500 billion to $1,400 billion belonging to Indians has been deposited in Swiss banks. Media reports, however, quoting one annual report of Swiss banking association have put the figure at $1500 to $1900 billion. Now, which one is correct? We have checked the official website of Swiss banking association and there is no mention of that annual report there," the Govt said.

Total GDP of Switzerland ~350 Billions
Total Assets & Liabilities of UBS bank = ~1900 Billions with ~600 billion as deposits
Total Assets & Liabilities of Credit Suisse ~1100 Billions with ~400 billion as deposits

However deposits from tax-dodging Indians amount from $500 billion to $1900 billion. Is this for real? This all looks like pure BS to me IMO, using just simplest of deductions. Maybe 500-1900 billion Rupees (which would be $10-40 billion dollars) is a more like amount.

archan · Post by **archan** » 15 Oct 2009 21:59

Yes, that figure looked way too high even to an economics-illiterate like me.

vera_k · Post by **vera_k** » 15 Oct 2009 22:59

I found the professor's interview where he calculates the amount of money that has been stashed away. Note that calculations based on official Swiss figures are dicey because the money is stashed away all over the world and not just in Swiss banks.

Suraj · Post by **Suraj** » 16 Oct 2009 02:51

As mentioned earlier, there's a concerted push to streamline inflation data collection, and hopefully GDP data collection as well:
Montek pushes for monthly inflation data

Planning Commission Deputy Chairman Montek Singh Ahluwalia today pitched for monthly release of inflation data, as it was more sensible than the current practice of coming out with weekly figures.

Nowhere in the world was there weekly release of inflation data, he added. Earlier, Finance Minister Pranab Mukherjee had said information on weekly prices of manufactured products was highly meagre.

“In the absence of legal backing for a dedicated data collection system, the data is received on a voluntary basis from ministries and attached offices, commodity boards, oil companies, individual industrial units, leading manufacturers, business houses, chambers of commerce and trade associations,” Mukherjee had said.

Disinvestment process gathers traction:
Govt for listing more PSEs

Keen on unlocking value of public sector enterprises (PSEs), Prime Minister Manmohan Singh today said the government was encouraging them to raise resources by listing on the stock exchanges.

Singh said several PSEs have got their shares listed on the markets in the last two years and many more want to do so.

“This shows they are not shying away from market scrutiny and are ready to face new challenges,” he said at a function organised by the Standing Conference of Public Sector Enterprises (SCOPE).

Since the UPA came to office for the second term this May, two public sector companies — NHPC and Oil India — have listed on the bourses. More are in the pipeline. Forty-three PSEs account for 24 per cent of the Bombay Stock Exchange’s market cap of Rs 58 lakh crore.

Of the top 10 listed companies on the BSE, five belong to the public sector. “More and more PSEs are entering capital market and are striving to become global players,” he said.

20-30% increase in Diwali spending expected. Please do your part to shop, whether in India or online from outside

Retailers expect brighter Diwali, see jump in sales

Retailers are smiling again this Diwali, but not as widely as they did in the boom time of 2007. Some of the biggest retailers such as Future Group, Spencer's Retail and Bharti Retail, among others, say they expect 20-30 per cent increase in Diwali sales. Last year’s Diwali, when the global economy had skidded, it was just about 5-10 per cent.

Retailers had posted a record 120-250 per cent increase in sales during the 2007 Diwali (compared to Diwali in 2006), mainly due to extravagant spending by shoppers on the back of rising salaries and booming markets.

Satya_anveshi · Post by **Satya_anveshi** » 16 Oct 2009 09:04

MohanSI wrote:Total GDP of Switzerland ~350 Billions
Total Assets & Liabilities of UBS bank = ~1900 Billions with ~600 billion as deposits
Total Assets & Liabilities of Credit Suisse ~1100 Billions with ~400 billion as deposits

However deposits from tax-dodging Indians amount from $500 billion to $1900 billion. Is this for real? This all looks like pure BS to me IMO, using just simplest of deductions. Maybe 500-1900 billion Rupees (which would be $10-40 billion dollars) is a more like amount.

Hain? What logic is this?
How is Swiss GDP related to balance sheets (BS) of two banks? Then how are deposits of two banks related to overall deposits by Indians in all banks of Switzerland ? Why would you quote "Total Assets & Liabilities" of any entity in isolation?

If you compare unrelated things, everything can look pure BS.

Vipul · Post by **Vipul** » 16 Oct 2009 20:33

Edelweiss & ET NOW to unveil lead index to track economy.

EDELWEISS Securities and ET NOW are on Friday jointly launching a lead indicator index for the Indian economy. The Edelweiss-ET NOW Lead Indicator Index, to be released on a monthly basis, will be available with a lead period of around three months before the availability of the actual data on GDP for any particular period.

This is a composite weighted average index of a number of macro-variables that typically exhibit a strong predictive ability of the core trends in the Indian economy.

Instead of tracking different macro-variables, which typically influence the economy with different intensity and varying lead times and often — especially at turning points for the economy — move in opposite directions, this single indicator should be able to summarise movements in all such different variables into one value. Hence, this can be an easy, yet effective, tool to track and predict the inherent trends in the economy.

The construction of the index was based on a multiple regression framework using quarterly data for the
past 10 years. As a starting point, around 60 different macro-variables — including capital availability, credit demand, cost of funds, purchase managers’ index (PMI), freight rates, property prices/rentals, consumption demand, intermediate goods production, electricity production, tourist arrivals and commodity prices — were considered.

This initial set of indicators was trimmed down on the basis of three criteria: degree of influence on non-agricultural GDP (high correlation), availability of high frequency and reliable data (longer/sufficient history) and lead property (lead period of at least one quarter).

Redundancies were also removed for sets of indicators demonstrating auto-correlation (for example, money supply and non-food credit off-take). On the basis of such criteria, the final set of variables that was chosen for inclusion in the index are as follows: (1) credit off-take, (2) policy interest rates, (3) slope of the yield curve, (4) non-oil imports, (5) commercial vehicle production, (6) cement dispatch, (7) domestic steel prices, (8) government expenditure, and (9) resource mobilisation in the primary capital market.

The weights of different variables were assigned after removing the time trends and seasonality, and after normalising all the variables to one common scale. Weights were determined on the basis of the regression model.

Thus, higher weights were assigned to indicators that have been historically shown to have a greater influence on the overall activity level and have captured turns in the economy better with a lead.

While the basic approach for constructing the indicator has by and large been in line with several other lead indicators followed internationally, certain customisations have also been made in order to suit Indian conditions.

Lack of availability of data for certain potential lead variables including housing starts, property prices/rentals, PMI, business confidence indices, and job losses imposes constraints on their inclusion in the index.

The index was back-tested for 10 years. It exhibited a robust fit for the inherent trends in the economy (with co-efficient of determination being 0.85) along with being effective in capturing the turning points.

The most recent value of Edelweiss ET NOW Lead Indicator Index — and what that value says about economic conditions going forward — will be unveiled at 12 noon today on ET NOW.

wig · Post by **wig** » 16 Oct 2009 21:01

Satya_anveshi wrote:
MohanSI wrote:Total GDP of Switzerland ~350 Billions
Total Assets & Liabilities of UBS bank = ~1900 Billions with ~600 billion as deposits
Total Assets & Liabilities of Credit Suisse ~1100 Billions with ~400 billion as deposits

However deposits from tax-dodging Indians amount from $500 billion to $1900 billion. Is this for real? This all looks like pure BS to me IMO, using just simplest of deductions. Maybe 500-1900 billion Rupees (which would be $10-40 billion dollars) is a more like amount.

sir, these figures do not represent a clear picture by themselves. the indian (or any other) deposits could be anything from 500 to 5000 billion. the total assets and liablities of UBS or Credit Suisse do not necessarily represent all the deposits. keep in mind that they are numerous other ways to recieve bulk deposits and then invest them for the depositors. off balance sheet vehicles with taps on the revenue streams to keep the depositor happy and earn your own hefty fees could be one option. they are numerous options open to canny bankers. even the notes to final statements of account might be used to obfuscate the picture.
cheerio!

Vipul · Post by **Vipul** » 17 Oct 2009 00:44

Govt to come out with new IIP series soon.

In order to give an accurate picture of industrial production in the country, the government will soon come out with a new series of data on factory output that will do away with obsolete items and add those products which have entered the markets in recent years.

The new series of Index of Industrial Production (IIP) will also have a recent base of 2004-05 for calculating factory production that will reflect industrial scenario better than base of 1993-94 used currently.

The factory output at present comprises of 543 items. With the revision of the base the items for the calculation of IIP would increase.

"We have not yet frozen the items to be included in the revised IIP but data collection work has been more or less finalised," a Department of Industrial Promotion and Policy (DIPP) official said, adding that the exercise is likely to be completed soon.

the DIPP and the Central Statistical Organisation (CSO) are working towards moving the base year for IIP to 2004-05 from the present 1993-94.Citing reasons for revision in the base year, the official said it is being done because there is a change in the production in the past one decade.

According to Crisil Principal Economist D K Joshi the shifting of the base year will make the index more representative and accurate.Often the present IIP series is criticised for having items whose significance has declined over a period of time, Joshi said.

The new index would be a better indicator of the industrial production and help policy makers and market participants.The industrial output data comes out on a monthly basis and has 17 sub-heads under the industry group.However, there is also a broad category comprising of mining, manufacturing, electricity and a general category.

For the month of August, industrial growth catapulted to a 22-month high of 10.4 per cent.Manufacturing output grew by 10.2 per cent in August, mining by 12.9 per cent and electricity production by 10.6 per cent. Of the 17 industry groups, 14 showed positive growth.

On the basis of use-based industrial break-up, consumer durables production grew by 22.3 per cent, basic goods by 10 per cent and intermediate goods by 14.3 per cent.

Suraj · Post by **Suraj** » 17 Oct 2009 01:07

They really need to extrapolate the entire inflation and GDP reporting framework in parallel. Right now CSO claims to report GDP using a 1999-00 base year but they still use IIP and inflation data (for GDP deflator) with a 1993-94 base year, so the 1999-00 base year claim for GDP is pointless. Agriculture and services have no formal reporting baselines. While 2004-05 is still rather dated, moving all the statistics to something within 5 years is better than the current jumbled economic data collection framework that uses a positively antiquated base year of 1993-94; our economy was a world apart then.

VinodTK · Post by **VinodTK** » 18 Oct 2009 00:53

India's forex reserves rise by $1.521bn

kmkraoind · Post by **kmkraoind** » 20 Oct 2009 09:31

Cabinet okays inflation base yr to be changed to 2004

The cabinet has approved a proposal to release the wholesale prices-based inflation data on a monthly basis as against the week on week basis it flowed earlier. The base year would now be changed to 2004 from 1993.

vina · Post by **vina** » 20 Oct 2009 11:52

Hmm. Can some guru here tell me if we will be in current account surplus or deficit (please include invisibles ). The rupee's strength sort of doesn't sound very convincing to me.

If the current account is in deficit, and commodity prices are back on the upward trend (oil is above $80 as of now) and dollar generally is weakening, I cant see how India's currency is appreciating (oh yeah, even if you account strong capital inflows).

India has a lot in common with the US, a current account deficit, big oil importer and capital flows from outside these two countries making up for the trade and current deficit. If that is so, how can the USD and INR move in opposite directions ?. It is going to be like the sucker punch when the rupee was at around $38/39 and people were hoping it would go to $35 and the trend reversed very quickly because the USD weakened and commodity prices went up (oil @150 ?) and all those who rushed to hedge at $40 or so took huge hits in their currency futures (many IT/Vity boys and other exporters).

I think we are setting up for a similar sucker punch. This strength of the rupee is not sustainable. The fundamentals say that INR will move in SYNC with the USD. At best this strength can be temporary, if there are strong capital flows (that drive up short term demand for INR).. I suppose that is really a strength of the stock market, more institutional money seems to coming in for emerging markets.

All in all, interesting times. I think I will take a contrarian bet on the rupee and think that it will follow the doctor. Let us check this again in 4 week interval for the next 3 months or so.

csharma · Post by **csharma** » 20 Oct 2009 13:41

One question I have is whether India's GDP size is accurately calculated given the base year is from 1990s. IIRC, China changed the base year for GDP calculation a few years ago and got a 30% jump. Can we expect a jump in Indian GDP if the base year is revised.

vina · Post by **vina** » 20 Oct 2009 14:53

csharma wrote:One question I have is whether India's GDP size is accurately calculated given the base year is from 1990s. IIRC, China changed the base year for GDP calculation a few years ago and got a 30% jump. Can we expect a jump in Indian GDP if the base year is revised.

While the question you ask is relevant, interesting and maybe even important, but I think in the end the reason behind this , ie the pissing contest vis-a-vs the Big Liz is totally unimportant.If I can paraphrase what Richard Feynman wrote to one of his student's/colleague's mom who was worried about her son and what he was doing in Physics and if it was good for him,Feynman wrote.

Physics is not important, love is

. Similarly,

Economic Statistics are not important, reality on the ground is

I recently drove all the way to Madurai visiting relatives and got back yesterday. The entire place is unimaginably different. Earlier, Bangalore to Madurai used to be a back breaking 10 to 12 hour drive on a terribly unsafe, overcrowded two lane road that takes you right into all the major and minor towns and cities along the way. Hosur, Krishnagiri, Dharmapuri,Salem, Karur,Namakkal,Dindigal and Madurai.

No longer. Now that same terrible road is a nice smooth (as Hema Malini's cheeks as Lalu Yadav might put it) 4 laned toll road, all the way to Madurai. You dont get into the towns and cities on the way. You simply whizz past at 120 to 130 km/hr and you reach it in 7 hours flat!.

Ah, and the towns and cities.. My word. What a change !. People are better dressed, better fed, ride on two wheelers, buses looked good, no over crowding. Why , I got out of the highway to go into Namakkal town to go to the Hanuman temple (my dad always makes it a point to visit while driving past and now thanks to the Sade Saathi Shani that I have, I couldnt even protest against Shani--> Hanuman connection business

). Well, it aint your grandfather's Namakkal anymore. Even that grubby town in the middle of a dry zone looked well spruced up and polished. The old fort on top of the Namakkal hill, the ramparts and the walls, which always looked black and weed and fungus infested, was glowing in the sunlight with a fresh granite grey (it had recently been sand blasted and was glowing..think of it, people spend money to clean the walls and ramparts of some old fort!).

And Madurai.. I could hardly recognize that place. I just got lost inside that city which I used to visit very often!. Went to the Meenakshi temple after 10 long years. My word. The temple is in absolutely pristine condition. The walls and statues were glowing (granite had been sand blasted and then a layer of clear preservative coat applied, temple spick and span, no smelly bats and musty smell of old and decay around) . I haven't seen it so well maintained ever before. The surrounding streets have been made pedestrian only , with nice tiles laid over . Why earlier, even to leave your footwear, you had to pay some change in some grubby mosquito infested stall. No longer. Now it is free and you hand your footwear off at a spanking new, very nice looking large IT/Vity guard entrance type building !.

All along the way, town after town , Salem,Karur, Dindigal etc looked nice and much better and prosperous.

Like I said

Economic statistics are not important, reality on the ground is

The last 15 years or so have been good. Very very good for lots of places in India and from what I can see, Tamil Nadu is definitely one of those states. I just hope that the prosperity deepens and spreads to areas like MP, UP, Bihar and Bengal (where I think it will happen last). The next on ramp states and regions I think should be Rajasthan, Orissa and smaller states in the North East and definitely Vidharba , Telengana and north interior Karnataka. . If that happens, mass poverty and deprivations will be confined to pockets of Bihar, UP, MP, Jharkhand, Chattisgarh etc and where hopefully , in a generation with better governance and development, there too it will disappear.

If that happens, for the first time in history and forever, poverty and destitution will not be a mass phenomenon in India. That is the important goal. The rest will be just statistics for the e-con-o-mix wonks to wank off over and for JNU ding dongs and ISI Shanghai Stats to lie and FUD over.

I think, India's per capita income is around $1000 or so. The mass poverty and destitution free state will come at around $4000 to $ 5000 or so when we reach lower middle income countries (roughly 4 times from where we are now). The good thing is here the laws of numbers start working in your favor. At 10% growth, starting at $1000, for you to grow 4 times is going to take roughly 14.5 years. Or if you grow at 8%, it will be 18 years. Maybe 20 or so if at 6%.

Point is in one generation, you can get rid of mass poverty and destitution in India. E-Con statistix are not important. The end goal as measured by reality on the ground is

harbans · Post by **harbans** » 20 Oct 2009 15:50

^^ Great post Vinaji, extremely nice to see that things are becoming better and certainly agree with your premise that statistics come secondary to the on the ground reality that you described so well. However they do depict in some objective way the reality. Like you mention poverty depravation will come in around the 4000 USD per cap mark and at a 10% growth rate in 14 years from the 1000$ mark. Question is if there is a revision of base year will Indian GDP also jump 30% or some amount that would mean it might not take 14 years to reach the $4000 mark but earlier?

vina · Post by **vina** » 20 Oct 2009 21:35

Question is if there is a revision of base year will Indian GDP also jump 30% or some amount that would mean it might not take 14 years to reach the $4000 mark but earlier?

Dollar, Pounds, Roubles (rubble actually), Euro (trash), Yen, Renminbi, Rupee .. all are just Wampum . What matters is reality. Not Maya. What you are saying that 1 Wampum today is actually 1.33 Wampums and so we are richer and hence easier ?. What is real is the reality on the ground. Call it 1 Wampum or 1.33 Wampum doesnt matter. That needs to become 4*1 or 4*1.33 (basically 4 x) of whatever Wampum base you want to use today in real terms (accounting for inflation).

Suraj · Post by **Suraj** » 20 Oct 2009 22:11

Vina has put it far better than I could in dry economic terms

As for current account, we run a deficit on that front, but have run an overall BoP surplus because the capital account surplus is larger than the current account deficit. However, there have been several recent current account dynamics:
* New oil/gas finds in India coming onstream
* imports have fallen faster than exports over the last several months
* strong invisibles - software exports stable, private transfers strengthened
Some data: RBI Q1 2009-10 BoP data

Also, the Fed's currency moves have different imperatives than the RBI today. In the past, GoI arguably put greater pressure on RBI to monetise debt than the Fed had, but the current mounting liabilities of the GOTUS means the situation is in reverse. I don't underestimate GoI's ability to spend, but the US liabilities (regular, planned, legacy) are staggering. While I would not use short term (under 1 fiscal quarter) movements of the Rupee to make any conclusions, in the medium/long term I think the Rupee will still strength vs dollar.

vera_k · Post by **vera_k** » 20 Oct 2009 22:53

If the all-India per capita GDP figure is projected to reach $4000 in 15 years, then the BIMARU states should be able to get to a per capita income between $400-700 by that time assuming the group is able to maintain the same relative differentials as today. IOW, economic growth alone is unlikely to resolve poverty in these states even 15 years from now.

ramana · Post by **ramana** » 21 Oct 2009 03:20

Vina I made that trip in Jan 1996. It was blast. I really love deep south India. Yes those towns were crowded and quite run down in those days. Glad to hear the Pandyans are rising again. I started from Hyd ->B'lore (SHQ demands) -> KRS dam -> Coonoor-> Madurai-> Kanya Kumari -> Kovalam -> B'lore -> Hyd. An awesome journey over two weeks. Got to see a lot of nature parks along the way.

Suraj · Post by **Suraj** » 21 Oct 2009 03:25

On the RBI half year monetary policy review:
FinMin expects RBI to maintain soft monetary policy

Ahead of its monetary policy review, Reserve Bank of India (RBI) Governor D Subbarao is expected to meet Prime Minister Manmohan Singh and Finance Minister Pranab Mukherjee on Friday. “We hope that it (soft monetary policy) will continue,” said Finance Secretary Ashok Chawla on the sidelines of a CII event.

In line with the finance ministry expectations, economists also do not expect any major changes in the RBI’s stance in its upcoming review. However, some expect there may be an increase in the cash reserve ratio (CRR) by January.

At present, CRR stands at 5 per cent, while the repo rate (the rate at which banks borrow from RBI) is at 4.75 per cent and reverse repo (the rate at which RBI borrows money from banks) stands at 3 per cent.

I expect the effect of the monsoons on rural demand to be light because of the proactive moves by GoI:
Farm loans rise 57%

Farm loans disbursal surged by 57 per cent till August this financial year to Rs 1.13 lakh crore as the government strove to mitigate the impact of drought on farmers through timely supply of credit.

‘Farm credit worth Rs 1,13,569 crore has been extended in the first five months of this financial year against Rs 72,236 crore in the corresponding period last year,” a senior government official said.

The government will “definitely meet” the target of extending Rs 3.25 lakh crore in farm credit this year, he added.

While presenting the Budget 2009-10, Finance Minister Pranab Mukherjee had announced farm loans at a subsidised interest rate of 6 per cent for those who pay their dues in time and raised the agriculture sector credit target by 16 per cent to Rs 3,25,000 crore this year.

At present, farm loans are extended at an interest rate of 7 per cent per annum.

Mukherjee had said the Rs 71,000-crore debt waiver scheme, announced during the Budget 2008-09, would be extended by six months till December 31 this year in view of the delay in monsoon.

More good tidings:
Strong festival demand clears auto inventories

The Diwali period has been very good in sales for car and bike dealers. Many authorised dealerships, including those of Maruti Suzuki, Hero Honda, Bajaj Auto and Hyundai Motors, reported speedy exhaustion of stock, despite all companies keeping inventory as high as possible.

Although most companies had geared for increased production at their plants, most say the surge in demand was unexpected, partly driven by yesteryear purchases which had been postponed earlier due to lack of funds.

Analysts say the increased push by public sector banks to provide finance at the directives of the Reserve Bank of India, return of positive buying sentiment at the most opportune time (stock market being on an upswing, merging with the festive season) and aggressive marketing push by auto companies resulted in the surge.

Anticipating the surge, Maruti Suzuki had raised its production by 25 per cent and asked all its vendors to jack up component supplies for key models like the A-Star, Alto, Ritz, Swift and DZire a few months earlier.

Hyundai, similarly, added a third shift at its Chennai facility last month, just in time to meet the festive demand.

S P Shah, president, Federation of Automobile Dealers Association, said: “The average increase in sales has been more than 30 per cent across our member-units. On Dhanteras (October 15), sales in a lot of dealerships doubled when compared to the same day last year.”

Holiday season jewelry exports rise 20%

The signs of global economic recovery have given new life to the Indian diamond processing industry, with export orders rising sharply by 20 per cent for execution on the occasion of Christmas and New Year.

According to a senior official with one of the largest jewellery exporters, “We have regained last year’s lost ground. We cannot say whether the entire industry has gained the same rate of growth. But, there is a general consensus that the Indian diamond processing industry has achieved the level of export orders in 2007.”

Gems and jewellery exports constitute about 13 per cent of India’s merchandise export basket. They recorded an export turnover of $2.566 billion (Rs 12,429 crore) in September 2009, as compared to $2.509 billion (Rs 11,433 crore) in the same month last year.

SwamyG · Post by **SwamyG** » 21 Oct 2009 04:54

Vina saar: Very good insightful post. I actually was pleasantly surprised to see temples in Bangalore, however small, had painted and gleaming gopurams. Hyderabad is having a phenomenal growth when it comes to construction. There seem to be plenty of jobs. I think the sheer number of car/taxi drivers has increased in the last few years.

csharma · Post by **csharma** » 21 Oct 2009 07:24

vina, what you are saying is correct. There are very visible signs of progress everywhere in India.

I was thinking that if the base year change does result in larger GDP and if that is the right thing to do, maybe India should do that.

Hari Seldon · Post by **Hari Seldon** » 21 Oct 2009 07:28

^ Visible signs of progress in areas where highways pass by and so on. No wonder the maoists are so suddenly filled with driven urgency.

Changing the base year is the right thing to do if it helps data collection, collation and interpretation. Affects poplicy responses, investment climate for external observers and also, in some way, the average middle class urbanites sense of optimism/confidence and risk appetite. Why should these be unimportant anyway? Nobody can deny that ground reality is the ultimate test. But data affect perceptions affect investments affect ground reality too, no?

Suraj · Post by **Suraj** » 21 Oct 2009 09:37

Road connectivity is a fundamental driver of economic development. A village that has decent connectivity to the nearest small town, which in turn is connected to cities, is no longer an isolated economy. I would have no problem if India ran a significant deficit to build roads and infrastructure, because of their multiplier effect on economic development. In that sense, the Bharat Nirman project started by the NDA is the most important and far-reaching government initiative at present.

Rahul Mehta · Post by **Rahul Mehta** » 21 Oct 2009 16:59

vina wrote:While the question you ask is relevant, interesting and maybe even important, but I think in the end the reason behind this , ie the pissing contest vis-a-vs the Big Liz is totally unimportant..... Economic Statistics are not important, reality on the ground is

I recently drove all the way to Madurai visiting relatives and got back yesterday. The entire place is unimaginably different. Earlier, Bangalore to Madurai used to be a back breaking 10 to 12 hour drive on a terribly unsafe, overcrowded two lane road that takes you right into all the major and minor towns and cities along the way. Hosur, Krishnagiri, Dharmapuri,Salem, Karur,Namakkal,Dindigal and Madurai.

No longer. Now that same terrible road is a nice smooth (as Hema Malini's cheeks as Lalu Yadav might put it) 4 laned toll road, all the way to Madurai. You dont get into the towns and cities on the way. You simply whizz past at 120 to 130 km/hr and you reach it in 7 hours flat!.

Ah, and the towns and cities.. My word. What a change !. People are better dressed, better fed, ride on two wheelers, buses looked good, no over crowding. Why , I got out of the highway to go into Namakkal town to go to the Hanuman temple (my dad always makes it a point to visit while driving past and now thanks to the Sade Saathi Shani that I have, I couldnt even protest against Shani--> Hanuman connection business ). Well, it aint your grandfather's Namakkal anymore. Even that grubby town in the middle of a dry zone looked well spruced up and polished. The old fort on top of the Namakkal hill, the ramparts and the walls, which always looked black and weed and fungus infested, was glowing in the sunlight with a fresh granite grey (it had recently been sand blasted and was glowing..think of it, people spend money to clean the walls and ramparts of some old fort!).

Vina,

Replied in neta-babu thread. But here is something to chew on.

http://en.wikipedia.org/wiki/Electricit ... r_in_India

In March 2009, the installed power generation capacity of India stood at 147,000 MW[2] while the per capita power consumption stood at 612 kWH.[3] ...

How much is 612 kWH?

Dileep · Post by **Dileep** » 21 Oct 2009 17:24

The per capita electricity consumption at my home is around 870 kWH.

The meter is read bi-monthly. We always see the value between 550-580 kWH in each bill. Taking 580 KWH as average, it will be 3480 kWH in a year. We are 4 people in the family. So, per capita is 870.

amit · Post by **amit** » 21 Oct 2009 17:32

The point is whether we take it to be 612 kWH or 870 kWH this number is meaningless without a comparison to what it was 10-15 years ago. The point in Vina's excellent post is that things are improving but we are not there yet. I fully agree on that. So Mehta ji if you want to make a point with the per capita power consumption figure to show a lack of progress (over the past decade or so) you'll have to do a comparison with what the number was back then. Otherwise it's pointless to point to this figure as we all know India still has a long, long way to go to catch up even with states like Malaysia, forget US or China.

Rahul M · Post by **Rahul M** » 21 Oct 2009 17:43

How much is 612 kWH?

which unit do you want it in ?
joule,calorie, MeV or equivalent of TNT ?

durvasa · Post by **durvasa** » 21 Oct 2009 18:03

A large percentage of per capita electricity consumption is indirect, outside your home - for producing fertilizers, electronic goods, food items, clothes, cars and for lighting schools, roads, stadiums, offices, hospitals, brothels, etc. So if you are direclty consuming 870KWH at home, your actual consumption is much higher.

For example, per employee electricity consumption in our office is 3-4,000 KWH per year. This number should be similar in almost any modern tech-dominated commercial building.

Per capita consumption in Bihar is <100 KWH, and probably less than 50 KWH (as the direct usage would be nil) in the bottom 25% of Indian villagers.

Suraj · Post by **Suraj** » 22 Oct 2009 00:46

GDP growth estimated to be 6.75% this fiscal: PM's economic panel

The Prime Minister’s Economic Advisory Council (PMEAC) today projected that the country’s economy might grow by 6.5 per cent in 2009-10, and even touch 6.75 per cent, despite bad monsoon affecting farm sector output.

The PM’s panel, however, said the growth was not likely to be lower than 6.25 per cent. On Tuesday, Prime Minister Manmohan Singh said the country would clock 6 per cent-6.5 per cent growth during the current year, despite drought.

India’s economic growth slowed to 6.7 per cent during 2008-09, from over 9 per cent recorded in the previous three years, on account of the global financial meltdown.

Though PMEAC has projected the agriculture sector to decline by 2 per cent, against 1.6 per cent growth in the previous year, the 6.7 per cent growth in gross domestic product (GDP) would primarily be led by 8.2 per cent growth in the industry (including construction) that rose only 3.9 per cent in 2008-09.

The services sector would grow by 8.2 per cent, which is lower than 9.7 per cent growth registered last year, PMEAC said in its economic outlook for 2009-10.

$518 billion infrastruction spending target for 2009-2012

India is envisaging an investment of $150 billion from the private sector over the next few years to develop the much-needed infrastructure projects, a top Government official said today.

The Government has also set a target to spend about $518 billion to build highways, roads, ports and sanitation facilities by 2012, said Gajendra Haldea, Adviser to Deputy Chairman of the Planning Commission.

"Our projections of how this money would be raised suggest that 30 per cent is expected to come from the private sector, that is $150-billion will come over the next 5-6 years," Haldea said at a conference here.

While 30 per cent of this envisaged spend would come from budgetary resources, the remaining 40 per cent will come from commercialised budgets of state-run firms like NTPC and PowerGrid, he added.

Haldea said India needs to scale up its GDP spend on infrastructure to nine per cent from the present five per cent.

Foodgrain output decline estimated at 11 million tonnes: PM economic panel

Deficient monsoon and widespread drought will pull down the food grains output by 11 million tonnes during the current financial year, Prime Minister's Economic Advisory Council (PMEAC) said today.

With drought hitting about half of the country, the Council said total output of the agriculture and allied sector will decline by 2 per cent against growth of 1.6 per cent in the last fiscal.

"The final change in annual farm output works out to -2 per cent...It is expected that the total food grain production in 2009-10 will drop to 223 million tonnes from 234 million tonnes in 2008-09," the PMEAC said today in Economic Outlook for 2009-10.

Oilseed output, too, may decline by six million tonnes to 276 million tonnes this season, the report added.

"The outcome of a negative 2 per cent (growth) should be contrasted with a possible 4 per cent or higher growth that would have resulted had the monsoon of 2009 been normal," the report said.

The two percent shortfall in agriculture output translates to roughly -0.4% contributor to GDP growth, i.e. a flat agricultural output would have resulted in a little over 7% GDP growth estimate, instead of 6.75%. A normal monsoon and 4% agricultural growth would have meant ~7.5% GDP growth estimate.

Umrao Das · Post by **Umrao Das** » 22 Oct 2009 05:02

How much in terms of
Cost of Living,
in Local currency
in bribes not to pay bill
in making the meter not run by sticking a magnet'

etc etc

If you glow a bulb of one (number)100 watts continuesly it would take 255 `256 days to consume that much energy.

Most rural consumption of electricity is for pumpsets, cinemas (entertainment) and Dhabas next to highways.

It is common to throw heating coil or even two plates connected to wires (live and Neutral) to heat water too.

Rahul Mehta · Post by **Rahul Mehta** » 22 Oct 2009 09:39

Dileep wrote:The per capita electricity consumption at my home is around 870 kWH.

The meter is read bi-monthly. We always see the value between 550-580 kWH in each bill. Taking 580 KWH as average, it will be 3480 kWH in a year. We are 4 people in the family. So, per capita is 870.

err ... the 612 kWH per Indian citizen per year includes household, commercial, agricultural and industrial, and also street lights. While what you stated is just household consumption. I will get number of per capita house hold consumption and we will talk later.

amit wrote:The point is whether we take it to be 612 kWH or 870 kWH this number is meaningless without a comparison to what it was 10-15 years ago. The point in Vina's excellent post is that things are improving but we are not there yet. I fully agree on that. So Mehta ji if you want to make a point with the per capita power consumption figure to show a lack of progress (over the past decade or so) you'll have to do a comparison with what the number was back then. Otherwise it's pointless to point to this figure as we all know India still has a long, long way to go to catch up even with states like Malaysia, forget US or China.

If I have to make a point, I have to make that point in some other thread, not a pious and prestine thread this consisting of "excellent posts". So I will write later in neta-babu thread.

Dileep · Post by **Dileep** » 22 Oct 2009 11:10

Rahul Mehta is doing everything possible to draw attention to the NJPRIE thread, as the readership there ain't worth writing home about. Nice Try!!

I gave the numbers because RM tried to calculate the numbers for a small family. Just wanted to show the fallacy of that argument.

amit · Post by **amit** » 22 Oct 2009 13:00

Rahul Mehta wrote:If I have to make a point, I have to make that point in some other thread, not a pious and prestine thread this consisting of "excellent posts". So I will write later in neta-babu thread.

Mehta ji,

Selective quoting of posts is a very disingenuous thing to do. You can make all the points/assertions you want to. However, in this specific context you need to look at the part of my sentence which you didn't highlight:

...if you want to make a point with the per capita power consumption figure to show a lack of progress (over the past decade or so) you'll have to do a comparison with what the number was back then

This all started with Vina's interesting post. He did not say every problem(s) have been solved. Neither did he claim that we now live in a land of sugar and honey. What he said was that compared to 10-15 years ago there is visible improvement in general standard of living. And he even gave a (very realistic) projection of another 15 years or so before absolute poverty is abolished in India.

Now, visible improvement in living standards would naturally include increased per capita electricity consumption - in fact that's why you brought up the issue in the first place.

The point is if you want to disagree with Vina's viewpoint (and the viewpoint, apparently to me, of a large number of other posters, including myself) that the standard of living has gone up then you have to present some empirical evidence. And so in this case you have to show that the per capita consumption of electricity has either not grown or is stagnant.

Simple isn't it? And this would be a hard economic stats/discussion so I don't see why you have to run off to the NJPRIE thread to respond - unless you want to post rhetoric instead of economic data.

Abhijeet · Post by **Abhijeet** » 22 Oct 2009 14:28

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

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

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

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

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

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

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

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

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

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