Indian Economy: News and Discussion (Apr 1 2011)

gakakkad · Post by **gakakkad** » 24 Apr 2012 08:34

we would have an interesting problem of ghost towns in the future..as better opportunities become available people will move put of their villages..ghost towns have also occurred in the US in various points in its history..but the scale of population in India would be massive in India..Imagine a village housing 10k people ,almost completely empty ....the land planning efforts would be massive..not to mention ownership issues and other legalities ...

Singha · Post by **Singha** » 24 Apr 2012 11:04

to some extent its said to be true in areas of punjab and haryana - mostly kids and older people while young ones work and live in urban areas or abroad to send back money.
it must be true on a massive scale in China where young both male and female moved to manufacturing hubs and come home couple times a year, kids raised by grandparents.
another segment is construction labour from different areas who can rarely afford to bring their kids along either because its the man alone, or if its the women she works in construction or maid sector, grandparents or siblings must be raising them.
the flight of single young people from west bengal, orissa, NE states and bihar-UP belt is also very huge.

Roperia · Post by **Roperia** » 24 Apr 2012 11:46

Very informative discussion and is a severe indictment of UPA-II's economic policies.

India: A Breakout Nation?

Montek Singh Ahluwalia, Sunil Bharti Mittal, Y Venugopal Reddy discuss Ruchir Sharma's new book - Breakout Nations.

harbans · Post by **harbans** » 24 Apr 2012 16:12

As we become rich there will be billions and perhaps trillions of dollars available to do the same. It all boils down to economics, planning and intent.

Yes indeed. Yet as rural Indian villages become clusters of 100k and more without decongestion, towns and cities that develop around such clusters will unnecessarily resemble the worst of urbanization for decades to come. That overcrowding is completely unnecessary if we do manage to internalize the need for decongestion at this stage at the minimum. Today 70% of manufacturing and industrial investment is in rural areas. Village clusters have grown tremendously. Many villages we cannot even provide for basic electricity and sewage because of congestion. Half of our population live there. It's only a lucky few thousand villages in and around suburbun development that have had their stock of land price boom up due to urban spread. Decongesting village ghetto's away from main cities and towns also will have a major bearing on health and education. With growth a lot of problems are solved indeed. But to achieve growth and make it's outreach more spread, change from ghetto cluster to hamlet must be imbibed.

Not planning a decongested highway by completely miscalculating congestion as was done while making the Gurgaon Del highway has led to complete misery for those who have to transit. It will continue till they don't plan decongestion. Mahipalpur, Badarpur areas have remained miserable transits for more than 2 decades simply because there has been no effort at decongestion despite billions being poured into the city.

Congestion is causing frayed nerves, road rage, psychatric problems, high insurance costs, fuel inefficiencies and billions of dollars in losses. This is apart from the fact that to overcome unnecessary congestion issues we will have to pan out billions more. Also congestion is a major cause of pilferage of power. Pilferage of power in Delhi's localities occurs maximum in the village clusters. Go 100 meters inside one and you'll see some kind of manufacturing unit running on wires tapped from some pole.

A good sign is that 70% manufacturing facilities are shifting to the rural countryside, but we certainly do need to focus on decongestion planning and means.

Yogi_G · Post by **Yogi_G** » 24 Apr 2012 19:37

It is said that TN will be power surplus in a few months, what impact will that have on the diesel prices? Most companies run diesel gensets during power outage and this in turn has led to the increase in the diesel prices. Gujarat is also power surplus in power, with TN and Gujarat being industrial power-houses and power surplus the price of diesel should have a definite impact.

anishns · Post by **anishns** » 24 Apr 2012 20:17

Welcome developments if true!

Rural India no longer an agrarian economy: Study

In rural India, manufacturing is booming as almost 75 percent of the new factories during the last decade came up there, contributing to 70 percent of all new manufacturing jobs created.

As a result, manufacturing GDP in rural India witnessed an 18 percent CAGR during 1999-09, and is now 55 percent of India's manufacturing GDP. Growth in services employment is equally robust, the study said.

Indian villages are growing larger, merging together and are moving away from agriculture, and thus being classified as towns. This trend is clearly visible in the sharp increase in the number of 'census towns' in the 2011 census. The number of census towns has increased three times in a decade.

Census towns are habitats that are not statutory towns; they have no municipal body, but given population density and employment characteristics, they are classified as towns.

India's urbanisation is therefore likely to take a different path as compared to other emerging economies.

Last line is on the money IMO

Supratik · Post by **Supratik** » 24 Apr 2012 20:56

@harbans

IMO decongestion will come to rural areas later as you need to attain certain levels of income to live in well planned areas.
What I see from SSC is that the middle class is gradually shifting to organized areas. It is just that the pace is not as scorching
as China nor is it as widespread. I would like to see organized living even in small towns and continue to pump billions of dollars in
infra.

svinayak · Post by **svinayak** » 24 Apr 2012 21:36

Roperia wrote:Very informative discussion and is a severe indictment of UPA-II's economic policies.

India: A Breakout Nation?

Montek Singh Ahluwalia, Sunil Bharti Mittal, Y Venugopal Reddy discuss Ruchir Sharma's new book - Breakout Nations.

Several new information but also problem in the debate.

There is no mention of the 1T money kept by NRIs which should have been invested inside India.
Indian political system was isolated for 60s and 70s unable to build trading relations in the world. Same during 80s and 90s. It changed in 90s but too late in the game.

Indian business should be seen as one unit inside India and should have home advantage inside India. This making of Indian business as threat to India is vestige of the British system from colonial times. The British looked at every business held by Indians as a threat East India Company and kept the system like that to depress them from growing. The one which grew during the colonial era was ones which collaborated with the British and within British trading system. India has to clean this and make India favorable for India Inc and Indian business.

The debate avoids all the regulations from colonial system inside India and also vestges which are still left over.

gakakkad · Post by **gakakkad** » 25 Apr 2012 01:29

Yogi_G wrote:It is said that TN will be power surplus in a few months, what impact will that have on the diesel prices? Most companies run diesel gensets during power outage and this in turn has led to the increase in the diesel prices. Gujarat is also power surplus in power, with TN and Gujarat being industrial power-houses and power surplus the price of diesel should have a definite impact.

word on the street is that someone will attempt to deregulate diesel in a few months time...Can only happen if they have replacement MPs whenmamtawithdraws support as she surely would once diesel is deregulated...

Suraj · Post by **Suraj** » 25 Apr 2012 06:23

FY2011-12 exports figure: $303.7 billion

Merchandise exports reached $303.7 billion in 2011-12, a rise of 21 per cent over $251.1 billion in 2010-11, while imports stood at $488.6 billion, rising 32.1 per cent compared with $369.8 billion in the previous financial year. Thus, though exports surpassed the government’s target of $300 for 2011-12, the surge in imports led to the highest-ever trade deficit of $184.9 billion, and this is expected to raise the current account deficit (CAD) to four per cent of the gross domestic product, against the forecast of 3.6 per cent by the Prime Minister’s Economic Advisory Council.

Swelling of the trade deficit to record levels was primarily attributed to a huge surge in the import of petroleum products and gold. “What has primarily driven trade deficit is petroleum and gold. In these, imports were higher by about $69 billion, compared to 2010-11, and that almost entirely accounts for the rise in the trade deficit from $118 billion in 2010-11 to $185 billion in 2011-12,” Commerce Secretary Rahul Khullar said, while releasing the initial numbers.

Exports in March topped $28.7 billion, the highest monthly figure in the entire previous financial year. Ironically, this was a 0.71 per cent fall compared to March 2010, when exports stood at $30.9 billion. Imports in March stood at $42.6 billion, propelling the trade deficit to $13.9 billion.

“The year-on-year growth is irrelevant. Last year was a boom period for exports. Comparison should be done on a month-on-month basis. The export market had effectively collapsed from September in the previous financial year.…The first six months were almost schizophrenic, while the remaining six months saw a marked deceleration,” Khullar said.

Reducing trade deficit: Cut imports through policy action, says Rahul Khullar

A key government official has said India's record high trade deficit that has fuelled a worrying current account deficit can be corrected only through policy action to limit import of fertilisers, edible oil, gold and coal.

Petroleum products and gold together raised import bill by $ 69 billion in 2011-12, more than half the increase in total imports.

"If the import of these commodities continue to grow at this rate, exports will have to grow by 28%-30% just to neutralise the additional increase," commerce secretary Rahul Khullar told reporters at a press briefing.

"This is a difficult situation as trade, if anything, is only going to slow down because of unpredictable global situation."

The secretary said the prognosis for exports was that 2012-13 will be a difficult year. "While the US is recovering, equally significant is the fact that the EU is not. Japan is better, but not significantly. All other parts of the world are also grappling with serious difficulties," he said.

Exports for 2011-12 were at $303.7 billion posting a growth of 21% over the previous year.

"Exports have behaved almost in a schizophrenic way. It showed one personality in the first half when it grew strongly and a completely different personality in the second half when it collapsed," Khullar said.

There was, however, a marked increase in exports in March 2012 compared to the previous month, which could augur well for the next quarter, he said.

The government has to take policy action to restrict imports of coal, edible oil and fertilizer that together accounted for another $15-$16 billion in import bill. "These are items where we do have solutions. We have to take domestic policy measures to increase supplies and lower dependence on imports," Khullar said. The export-import strategy, the paper talks at length about the policies required to curb imports, he added.

On the positive side, Khullar said increase in petroleum imports was not expected to be in the range of 40%-50% in 2012-13, as it was in the previous year, because price increase in petroleum has already been factored in. "Now you can look at normal growth in demand and the petroleum bill will certainly not be as high," he said.

Trade data official press release

During April 2011-March 2012, the following sectors have done well with regard to exports- engineering, (US $ 58.2 billion) which registered the growth of 16.9%; petroleum & oil products, 38.5% (US $ 57.5 billion); Gems & Jewellery registered the growth of 13.3% (US $ 45.9 billion); Drugs and pharmaceuticals 21.9% (US $ 13.1 billion ); leather 22.5% (US $ 4.2 billion); electronics, 9.2% (US $ 9 billion); Cotton yarn and fabric made-up 17.4% (US $ 7.2 billion) Readymade garments yarns and fabrics, 18% ( US $ 13.7 billion), Manmade yarns and fabrics 18.5% (US $ 5.1 billion); Marine products 31.4% (US $ 3.4 billion) .

As regards to imports during April 2011-March 2012, the growth estimates on the following sectors are: POL, 46.9% (US $ 155.6 billion); Gold and silver 44.4% (US $ 61.5 billion); coal, 80.3% (US $ 17.6 billion); machinery, 27.7% (US $ 35.4 billion), electronics goods, 23% (US $ 32.7 billion), and coal 80.3% (US $ 17.6 billion US $), Iron & Steel 15%, (US $ 11.9 billion); Vegetable oil, 47.5% (US $ 9.7 billion); Fertilizer 59% (US $ 11 billion); Gems & Jewellery (-)10.6% (US $ 31 billion) .

Big import components:
Oil: $98 billion (net)
Gold: $62 billion
Machinery: $35 billion
Electronics: $33 billion
Coal: $18 billion
Iron/Steel: $12 billion
Vegetable oil: $10 billion

Of these, oil and coal can be partially alleviated by domestic supplies. $35 billion odd each for machinery and electronics, and a $12 billion iron/steel import bill is poor policy at work; multiple large plants (POSCO, Jindal etc) are stuck, and this is costing us more per year than the investments in the plants themselves. Ditto for $10 billion in vegetable oil imports - is it not possible to incentivize cash crops to produce this ourselves instead of depending on Malaysia etc ? There's enough low hanging fruit here to cut $50-75 billion in imports through concerted policy action, while accelerating exports.

It is obvious that several import components are a sign of an energy starved economy. We pay a lot for oil (crude and edible) and coal. We lack electricity to produce all the iron and steel and machinery we need. Lack of energy independence on many fronts places a huge annual cost.

Singha · Post by **Singha** » 25 Apr 2012 06:48

the villages growing large and gradually merging together is evident in the Bangalore Mysore road. 7 years ago, there were some clearly defined towns - ramanagaram, maddur, chennapatna, mandya, ramanagaram and srirangapatna with miles and miles of agricultural fields in between.

take a trip now and almost the whole of the 150km stretch is urbanized on the highway frontage...the towns above have grown big, extending many more miles on each side. only between mandya and srirangapatna there is a stretch of sugarcane field that makes you aware you are passing through a rural area.

Likewise bangalore extends 50km south right upto Hosur these days - with electronic city, bommasandra, attibele all considered as 'outlying suburbs' , in the north the city has expended 50km already upto BIAL and the march continues. in the east, whitefield is creeping out along the old madras road, a process that will accelerate once the 4 laning is completed and the chennai expway project gets momentum. in the west kengeri and bidadi nearly 50km away already had the feel of suburbs. so the city is more like 100 x 100km now = 10,000 sq km with maybe 15 mil people.

Gus · Post by **Gus** » 25 Apr 2012 11:21

gakakkad wrote:word on the street is that someone will attempt to deregulate diesel in a few months time...Can only happen if they have replacement MPs whenmamtawithdraws support as she surely would once diesel is deregulated...

diesel subsidies won't be lifted anytime soon. It will cause all agri products to increase in price and that is something no govt can survive. They can probably take some baby steps and even that will get staunch resistance.

shyam · Post by **shyam** » 25 Apr 2012 11:34

They can introduce something like ration card and limit subsidy to farmers only. But trucking industry also will be hit badly.

Singha · Post by **Singha** » 25 Apr 2012 11:44

why not just subsidize diesel for trucks?

a petrol pump could just dedicate a couple pumps for trucks and program the meter with the lower rate, while passenger cars would pay the petrol rate as diesel costs as much to produce and transport as petrol.

the HOWLS on tbhp forums would alone be worth the move

shyam · Post by **shyam** » 25 Apr 2012 11:50

There would be a black market for truck licenses. They would buy cheap diesel and sell in black market for profit. In the nut shell, it may be worth tolerating that black market than subsidizing every diesel consumer.

ajit.d · Post by **ajit.d** » 25 Apr 2012 11:56

Singha wrote:why not just subsidize diesel for trucks?

a petrol pump could just dedicate a couple pumps for trucks and program the meter with the lower rate, while passenger cars would pay the petrol rate as diesel costs as much to produce and transport as petrol.

the HOWLS on tbhp forums would alone be worth the move

That move is a non-starter - it will only serve to increase corruption & harassment at all levels. Who is to ensure that pumps dont sell diesel meant for trucks to Cars - or lorries themselves transferring their diesel to cars? It will be a neat little racket and another money spinner for local strong men.

The best way fwd will be a to impose a one time tax on the diesel cars. Using empirical methods, calculate the number of km a car would run over its life time and hw much diesel it would consume over the period. Obviously, this number will be different for private use vehicles and public use vehicles (cabs). Levy a one time fees at the time of registration. For cars already on the road, this could be done at the time of insurance renewal.

But seriously, does any one have the figures of diesel consumption by cars as a percentage of the total? I suspect it will not be more than 5%. Trucks must be at the very top, followed by Buses/Trains, Agri sector & Industrial consumption

Yogi_G · Post by **Yogi_G** » 25 Apr 2012 13:54

S&P lowers India's outlook to negative, threatens downgrade

Sriman · Post by **Sriman** » 25 Apr 2012 14:23

ajit.d wrote: But seriously, does any one have the figures of diesel consumption by cars as a percentage of the total? I suspect it will not be more than 5%. Trucks must be at the very top, followed by Buses/Trains, Agri sector & Industrial consumption

According to Kirit Parikh report the breakdown is:

Trucks : 37 %
Buses : 12 %
Passenger Cars : 15 %
Power Generators : 8 %
Agriculture : 12 %
Railways : 6 %
Industry : 10 %

Its 3 year old data though. I'd imagine diesel usage by cars would have increased in this period.

Yogi_G · Post by **Yogi_G** » 25 Apr 2012 16:06

Harbans ji, you raise very valid points. While I am not attempting to provide a anti-thesis which can completely negate your point I do have some examples in mind which can in part prove that development can happen amidst congestion. For example, check out the streets of Triplicane in Chennai in this image -->

. This was an out and out village/small town which integrated into the city alone with Mylapore/Adyar etc into today's greater Chennai. You can how neatly paved the streets are in spite of them being narrow and of course all homes have electricity connections and what not. I visited a place called Sultanpalya in RT Nagar Bangalore, the place was a village integrated into present day Bangalore and the streets there are exactly as wide as the ones in Triplicane. How do we explain this? The congestion in these places is inbelievable and you will find Ground + 2 floor buildings in front of 15 feet wide roads.

Yogi_G · Post by **Yogi_G** » 25 Apr 2012 17:10

Most of the rural areas have not more than 10 hours of power supply in Tamil Nadu. Now just imagine industries moving into such places. How will they generate power? Diesel gensets. Result? Increase in diesel consumption and prices. This will become a spiral. Poverty in rural areas is a scandal in India. Industries wont move in large volumes due to lack of infrastructure and service industries wont move in due to talent.

saip · Post by **saip** » 25 Apr 2012 19:57

What is the implication of this?

S.&P. Gives Negative Outlook for India

Although S.&P. did not downgrade India’s debt rating, the revision in the outlook, from stable to negative, signaled that there was now at least a one-in-three chance of a downgrade sometime in the next 24 months, S.&P. said.

The agency rates India’s debt at BBB–, the lowest investment-grade rating. A downgrade would carry heavy significance for investors, who are already intensely nervous about slowing growth and persistent infrastructure shortfalls in India, as well as about the debt troubles of Europe and the lethargic performance of the U.S. economy.

NYTimes

Theo_Fidel · Post by **Theo_Fidel** » 25 Apr 2012 20:45

Little bit OT but what is the status of Ethanol use in India. Maybe trucks could all use Ethanol and GOI could subsidize that instead. That way money stays in desh and farmers benefit. Waste molasses now thrown a way could be converted to ethanol and Sugarcane farmers would have a local market as well. Brazil's Sugar cane Ethanol system produces 8 liters of Ethanol for each liter consumed in production. No reason we can't reach that sort of efficiency.

harbans · Post by **harbans** » 25 Apr 2012 21:15

I visited a place called Sultanpalya in RT Nagar Bangalore, the place was a village integrated into present day Bangalore and the streets there are exactly as wide as the ones in Triplicane. How do we explain this? The congestion in these places is inbelievable and you will find Ground + 2 floor buildings in front of 15 feet wide roads.

Yogi Ji just check it out on Google:

http://maps.google.co.in/maps?oe=utf-8& ... CCYQ8gEwAA

This area must be having atleast 400k people and the congestion spilling into every main round surrounding it. Why wait for 400 k population villages to be trapped into developing big cities and lead to inevitable congestion? Why not proactively deal with congestion at 10k population stage itself. From what i see in the south, it still is better than many places in North India where the level of ghetto'ization is much higher. De-congestion at a later stage also will require massive capital costs and time during which people will be subject to much misery.

Supratik · Post by **Supratik** » 25 Apr 2012 22:00

We need NOIDA, Gurgaon, YEIDA type of developments in the hundreds may be thousands in India to prevent future congestion. And redevelop congested urban areas. Unfortunately it also means fights over acquiring land. South has done a better job in controlling population than North specially the gangetic valley (UP, Bihar and Bengal).

gakakkad · Post by **gakakkad** » 25 Apr 2012 22:36

I hope the govt has some sense... They have got the kick in musharraf they needed with s&p ...reforms ASAP...

gakakkad · Post by **gakakkad** » 25 Apr 2012 23:56

Theo_Fidel wrote:Little bit OT but what is the status of Ethanol use in India. Maybe trucks could all use Ethanol and GOI could subsidize that instead. That way money stays in desh and farmers benefit. Waste molasses now thrown a way could be converted to ethanol and Sugarcane farmers would have a local market as well. Brazil's Sugar cane Ethanol system produces 8 liters of Ethanol for each liter consumed in production. No reason we can't reach that sort of efficiency.

my take about biofuel of any sort is that it will be difficult to implement in India ..you need large farms and high yield /hectare ..so difficult to achieve in India ..even in US you might have noticed that after using biofuel ,cost of vegetable oil went up..

http://www.futurepundit.com/archives/004936.html

waste molasses is a good idea..but whether significant quantity can be produced or not is worth thinking..

there are some solutions , like using algae for fuel synthesis ...it is said to be more efficient than plant based product..

nachiket · Post by **nachiket** » 26 Apr 2012 00:19

Suraj wrote: Big import components:
Oil: $98 billion (net)
Gold: $62 billion
Machinery: $35 billion
Electronics: $33 billion
Coal: $18 billion
Iron/Steel: $12 billion
Vegetable oil: $10 billion

Can't we do something about the 62 billion in Gold imports? Gold is not an essential commodity by any means unlike Oil, coal or machinery but it seems to be costing us too much foreign exchange. Perhaps a steep increase in import duty will reduce local demand and the import bill. Increase in the price of gold is unlikely to impact other products as opposed to say a fuel price increase. Side by side we may need to think about somehow offsetting the higher import duty burden on Jewellery exporters to ensure that exports are not hit too bad.

chandrabhan · Post by **chandrabhan** » 26 Apr 2012 00:58

Only ways for government to save foreign exchange spent on Gold import or make use are two

1. Show some fiscal discipline and lower inflation , help stablise stock markets doth at it gives good returns thus discouraging people to put money in gold. It is GOI's fiscal profligation fuelling gold rush as people see it as safe investment.

2. Another way is to link currency to Gold standard - back 50% of M1+ M2 or M3 with gold supply thus tieing down the printing press to a number.

Theo_Fidel · Post by **Theo_Fidel** » 26 Apr 2012 03:41

Gold is a social issue. People like to show off wealth and gold is convenient only. Going to take a long time to change society sufficiently.
---------------------------------------------

I'm of the view we will have better results attacking that oil import bill. We are a tropical country and have options USA does not.

Right now our sugar area is roughly 7-8 million acres producing around 25-30 million tones of Sugar. Since this is only 4% of our irrigated area now approaching 180 million acres, We could double the Sugarcane area to say about 15 million acres. Along with increasing yield to TN's level (roughly 55 tonnes per acre, UP is at about 25 and Assam is at a shocking 20) this would give us 55x15 = 825 Tonnes of Sugar. Best in class extraction yields about 12%-15% but lets say India chugs along at 8%-10% extraction. Then 0.08x825 = 66 million Tons of Sugar + About 4 million Tons of Molasses. So if we convert say 36 million tons of sugar + 4 million tons of molasses. At a yield of 560 liters per ton that will yield 560x40 = 22,400 million liters of Ethanol. This is equal to roughly 60 Million liters per day.

Since this is refined fuel, it roughly the equivalent of importing 1.2-1.3 million barrels of oil per day. At the lower calorific value say about 1.1 million barrels of oil per day. Or, our entire transport fleet. A forex savings of about $100 Billion. Not bad at all IMHO.

Yogi_G · Post by **Yogi_G** » 26 Apr 2012 07:52

harbans wrote:
I visited a place called Sultanpalya in RT Nagar Bangalore, the place was a village integrated into present day Bangalore and the streets there are exactly as wide as the ones in Triplicane. How do we explain this? The congestion in these places is inbelievable and you will find Ground + 2 floor buildings in front of 15 feet wide roads.
Yogi Ji just check it out on Google:

http://maps.google.co.in/maps?oe=utf-8& ... CCYQ8gEwAA

This area must be having atleast 400k people and the congestion spilling into every main round surrounding it. Why wait for 400 k population villages to be trapped into developing big cities and lead to inevitable congestion? Why not proactively deal with congestion at 10k population stage itself. From what i see in the south, it still is better than many places in North India where the level of ghetto'ization is much higher. De-congestion at a later stage also will require massive capital costs and time during which people will be subject to much misery.

Definitely, we should de-congest right away, I have always been for it. But it is interesting to note that these places somehow did develop in spite of being extremely congested. Maybe we can replicate the same in the rural areas and ensure further planning takes into account de-congestion.

vera_k · Post by **vera_k** » 26 Apr 2012 07:59

Trucks could also be asked to move to CNG, yes? Maybe Supreme Court can mandate it, since it would address both the import bill and pollution, while side stepping the political gridlock.

Yogi_G · Post by **Yogi_G** » 26 Apr 2012 08:09

In terms of eco-friendly fuel policy, India has come up with one more disaster. In US you get special parking rights, lesser taxes etc on your eco-friendly vehicle, in India its exactly the opposite. I have been to several buildings where they wouldn't allow me to park my LPG car in their basement parking. My insurance is higher because of the LPG. The LPG fuel keeps going up higher and higher and to top it all there aren't enough stations for LPG fuels so you will see all the autos lined up in the 4-5 stations you will see in South Chennai. Screw them damn policy makers. Given all this, why would anyone want to contribute to society by means of buying eco-friendly vehicles?

vera_k · Post by **vera_k** » 26 Apr 2012 09:07

CNG, not LPG.

Pratyush · Post by **Pratyush** » 26 Apr 2012 10:56

nachiket wrote: Can't we do something about the 62 billion in Gold imports? Gold is not an essential commodity by any means unlike Oil, coal or machinery but it seems to be costing us too much foreign exchange. Perhaps a steep increase in import duty will reduce local demand and the import bill. Increase in the price of gold is unlikely to impact other products as opposed to say a fuel price increase. Side by side we may need to think about somehow offsetting the higher import duty burden on Jewellery exporters to ensure that exports are not hit too bad.

Saar Ji,

The one thing which nearly destroyed DI network in early nineties was the decontrol on gold imports. By reintroducing that control, you risk creating multiple DI type networks.

nawabs · Post by **nawabs** » 26 Apr 2012 11:00

Bad debts return to haunt banks

http://www.business-standard.com/india/ ... /163726/on

“Bank failures are caused by depositors who don’t deposit enough money to cover losses due to mismanagement.” -- Dan Quayle, vice president of the US, 1989-93

Indian banks definitely will need depositors by the truckload to pull them out of the mess they are in. Financial Express reported that the quantum of loans referred for recast by the corporate debt restructuring (CDR) cell has increased to Rs 2,05,692 crore, a jump of 48 per cent over the previous year. This amount is three times the cumulative net profit of all listed banks in FY11. The total profit of the 41 listed banks was only Rs 66,907 crore.

Of the above mentioned amount coming to the CDR cell, Rs 1,50,225 crore has been approved. Of this, the actual amount of loans restructured is only Rs 39,311 crore, or roughly 20 per cent (6 per cent in the 2010-11) of the loans that have come to the CDR cell. Even this amount is 500 per cent higher than the previous year’s.

A sharp rise in the number of approvals indicates the ground scenario, which is definitely not heartening. The report says that an additional Rs 35,878 crore is under process to be sent to the CDR cell.

A loan is sent for restructuring if the bank feels that the borrower is not in a state of repaying even the interest amount. Had the account not been restructured, it would have resulted in being declared a non-performing loan. The lending bank in turn would have to strike the amount off its loan book and at the same time take a hit on its profit.

An unprecedented global and domestic slowdown has affected almost all sectors of the economy. Banks have to bear the brunt as they are lenders to most of them.

Recognizing the strain, State Bank of India has drastically reduced interest rate for small and medium enterprises (SME). In its December quarter results presentation, the bank has highlighted that NPLs from SMEs are as high as 7.90 per cent of total loans given to the sector. SME loans were second only to agriculture, which had an even higher NPL of 9.45 per cent.

Sending an account to the CDR cell is the absolute last step that a bank takes after failing to recover money by all means. Even after an account is approved by the CDR cell, banking records have shown that nearly one-fourth of them again default on their payments.
Till the economy picks up, banks are likely to be saddled with toxic assets. This time around however, the toxicity has spread deep, threatening to pull down banks along with the companies if growth does not pick up fast.

anishns · Post by **anishns** » 26 Apr 2012 11:51

Regarding subsidies on diesel only for trucks, a massan friend of mine told me that in the US they used a special dye in the subsidized diesel, which imparted a unique color to the liquid. So, regular diesel (non-subsidy) would have a different color.

But, then again they have the laws and the means to enforce them, so that there is no hanky panky. Not sure how effective this would work out in India ☺

vina · Post by **vina** » 26 Apr 2012 12:47

Regarding subsidies on diesel only for trucks, a massan friend of mine told me that in the US they used a special dye in the subsidized diesel, which imparted a unique color to the liquid. So, regular diesel (non-subsidy) would have a different color.

Kerosene sold in India via PDS is dyed blue ! That still doesn't stop it from being diverted and misused wholesale , including for adulterating petrol and diesel.

ArmenT · Post by **ArmenT** » 26 Apr 2012 13:04

anishns wrote:Regarding subsidies on diesel only for trucks, a massan friend of mine told me that in the US they used a special dye in the subsidized diesel, which imparted a unique color to the liquid. So, regular diesel (non-subsidy) would have a different color.

But, then again they have the laws and the means to enforce them, so that there is no hanky panky. Not sure how effective this would work out in India ☺

They used to do that back in WW-I and WW-II. Many enterprising people found that you could simply pass the diesel through a charcoal gas mask filter and voila, the diesel is back to normal color. Lots of black marketers made money this way.

Manu · Post by **Manu** » 26 Apr 2012 15:31

gakakkad wrote:I hope the govt has some sense... They have got the kick in musharraf they needed with s&p ...reforms ASAP...

Hope springs eternal....no kick has been received or acknowledged......they will keep warming up to vote banks and social welfare NREGA (Mahatma Gandhi National Rural Employment Guarantee Act) type schemes...they know what it takes to get re-elected....as long as they are getting rich, how does it matter if India overall gets poorer?

I believe that life is going to get a lot tougher for the salaried middle class..

gakakkad · Post by **gakakkad** » 26 Apr 2012 16:57

Moody's slam Gandhi family for Indias economic mess...
http://www.financialexpress.com/news/mo ... ia/941435/

Pioneer- UPA Government a drag on economy, says Moody's
http://www.dailypioneer.com/home/online ... oodys.html

Finally whole world is slamming NAC and G phamilee ...

opposition should take this as an opportunity to isolate g-phamilee and attempt revolt within inc..