Indian Economy - News & Discussion 27 May 2012

[Theo_Fidel]

Can I ask one question.

India's #1 import problem has been oil for 40+ years.

So why the hell are the dinosaur PSU's still in charge of production and marketing.
I don't see any clamor for privatizing this critical sector of the economy.

[Supratik]

Can I ask one question.

India's #1 import problem has been oil for 40+ years.

So why the hell are the dinosaur PSU's still in charge of production and marketing.
I don't see any clamor for privatizing this critical sector of the economy.

We have been saying that Govt should move out of all non-priority sectors on this forum for ages. Regarding privatization.
NDA did that. The INC and left started jumping around about selling "family jewels". If you remember the tamasha of early 2000s when they made Arun Shourie a villain. You must be joking if you expect the current "socialist" UPA to privatize anything.

[Suraj]

I’m not sure what point you are trying to make. My view is India is not at a stage where it can freely import what ever it wants. We should be careful with our money and import carefully. $34 billion in cars? 800 tonnes of gold? really. What would you say to a dead beat relative who does this.

Good to see someone else supporting this same position. I wasn't a fan of our CAD in the past, and certainly am not now. The thesis used to be that a developing nation 'needed to import capital' and thus maintain a current account deficit in the process. But that presumes that a) the nation is primarily importing high end capital goods to use to bolster manufacturing and b) it cannot make those goods on its own. It was also a self-serving argument coming from western economists, i.e. an implied assertion of Ricardo's argument: "keep off high-end/value-added stuff - that's our domain. Just buy it from us and concentrate on the low end".

Neither really applies to us. We primarily import hydrocarbons. There was previously active support encouraging a refined petroleum exporting policy that enabled the income from value added hydrocarbon exports to at least partially cover the net import bill. We're no longer constrained to import even basic machine tools, just high end machinery that we can, and should, progressively replace with domestic goods.

I support actively retaining high duties on imported consumption items, whether it be gold, cars, TVs or whatever. This isn't because they're luxury items, but because they're sinks of domestic capital, and the duty framework should be tied to our CAD situation. However, when an administration applies such duties without concurrent policymaking to invest in domestic infrastructure, they lose the moral mandate to levy taxes/duties. I think most people would readily take the hit of high duties on these things if they could see concomitant benefits arising out of it. But GoI has long since squandered that, leading to the population - incl BRF - thinking about themselves rather than the economy.

I partly agree with Chidambaram that the Rupee fall is being receiving more drama that it is worth - several EM currencies are being hit even worse - BRL and IDR for example. However, I violently disagree with him beyond that point - GoI (UPA-II specifically) has so far managed a solid F grade for economic performance, and no amount of talk from him, or specifically asking people to accept more pain, will receive a sympathetic ear unless they show themselves to be taking enough pain where it hurts them - their electoral chances - to urgently create policy that benefits the country economically.

[nachiket]

We have been saying that Govt should move out of all non-priority sectors on this forum for ages. Regarding privatization.
NDA did that. The INC and left started jumping around about selling "family jewels". If you remember the tamasha of early 2000s when they made Arun Shourie a villain. You must be joking if you expect the current "socialist" UPA to privatize anything.

The "selling the family jewels" nonsense is spouted on BRF too. All the time. Remember the hoopla when FDI was allowed in retail.

This is from a couple of pages ago: viewtopic.php?p=1498605#p1498605

The great hoodwink about opening up and selling off the family silver so that FDI can come in,never tells us that FDI also flows out,in far larger qty. than when it entered,thus beggaring the poor Indian investor who has now lost billions of $$$ in the stock market.

So allowing FDI in is "selling off the family silver". If the highly educated members here can think like this, what to say about the mango abdul?

[svinayak]

I support actively retaining high duties on imported consumption items, whether it be gold, cars, TVs or whatever. This isn't because they're luxury items, but because they're sinks of domestic capital, and the duty framework should be tied to our CAD situation.

Why does the Indian elite import Rs 1Lakh- Rs 5Lakh watches and buy them inside India. They can use their foriegn account to buy the foreign items and not put rest of the Indians in trouble.
All lux items can be made inside India and a large market can be created inside India. We are talking about 50M Indians who can afford it

[SaiK]

it is easy to bandwagon into accepting what MMS and PC are saying.. but one has to measure everything from ground reality.

[svinayak]

God will force India to be a exporting country and will give stiff competition to PRC merchandise.
Many external entities such as global bankers/G8 have the same goal to make sure PRC does not have a monopoly on global trade.

The issue is that it is difficult to do any high-tech electronic in India so it is only only in possible things like Textiles or Agro products we can give some kind of competition. Some of which relates to government and some relates to the turn around time which we have with our manufacturing houses and these are not going to change overnight by a depreciating in Rupee.

I know a Japanese vendor who beleives in India and setup a mfg unit in India.
I know a IT person who has relocated and setup a mfg unit in Pune. There are lot of companies which are opening up and we need to create large clusters so that we can get efficiency.

Will reply in detail later

[Theo_Fidel]

Yes that is a firm point in favor of the NDA, for trying to free up the oil sector.
They failed ultimately not a little bit due to pressure from within their own party where there was little consensus.

Yet last year when the congress tried to restart disinvestment, they did not get anywhere because of zero support. Even parts of the BJP opposed it.
-----------------------------------------

Congress has left its economic rear end exposed and now folks are rightly taking turns kicking it raw.

[vera_k]

For all that counts, letting the currency depreciate is the free market solution for fixing the CAD. Much better than adding random duties and taxes to pick winners and losers.

[gakakkad]

I support actively retaining high duties on imported consumption items, whether it be gold, cars, TVs or whatever. This isn't because they're luxury items, but because they're sinks of domestic capital, and the duty framework should be tied to our CAD situation. However, when an administration applies such duties without concurrent policymaking to invest in domestic infrastructure, they lose the moral mandate to levy taxes/duties. I think most people would readily take the hit of high duties on these things if they could see concomitant benefits arising out of it. But GoI has long since squandered that, leading to the population - incl BRF - thinking about themselves rather than the economy.

Sire, we don't really import a lot of cars ...Import of cars/TVs should definitely have a high import duty. But it ll make a trivial difference to our CAD . IMHO,levying import duty on foreign travellers carrying lcd/led screens is a cursory step which is too little, to late. It is simply too trivial to make any difference. Only intended at headline grabbing.

From the ministry of commerce website.

india import data



as far as import duty of gold is concerned ,I have a completely different take. Our jewellery exports are 50-60% of gold/precious stones import. So levying a tax on import of gold/gems would hit the export business hard too..may even aggravate our troubles. If one wants to reduce domestic consumption of gold one should levy a domestic tax on these items rather than an import duty..levying a domestic tax on these would also make jewellers focus on the export market rather than the domestic market..

In spite of the over all slowing of the economy ,why is it that import of consumer electronics have risen by 14% or so last year ?



http://www.tradingeconomics.com/india/money-supply-m2

why is it that M2 money supply has been increased by 30% in a span of 1.5 year , when our gdp only grew at 7% during that span ? And that too in an inflationary ,slowing down economy ,where both inflation and slow down caused by supply side problems ?

If M2 was increased so much too stimulate the economy ,why were no supply side problems addressed simultaneously?

Our electronics imports increased ,perhaps because people had more disposable money due to increased M2 , but domestic manufacturing of consumer electronics was insufficient to meet the local demand. So it had to be imported.

IMHO , a India's depreciating economy is not just a simply CAD problem which can be sorted with random changes in the import duties. It reflects the gross sickness of the Indian economy having reached a tipping point..there are several other issues which are not reflected in the import export data. for instance indian students seeking education abroad.. can only be addressed by grossly improving capacity and quality to higher education in desh..

[abhishek_sharma]

Seeing it like Sen

[habal]

well this is what you get if you poke holes in your purse for MNCs. They will then convert this hole into 6-lane freeway. Then either we tow their line and sell them this country or else they will find ways and means to rape our skinny behind. While going all socialistic, UPA didn't see this coming or what ? Dollars are endless, so basically depreciation of rupee is also theoritically limitless if this is to be believed, since there is no end to human greed or speculation.

Overseas bets influence exchange rate
RBI says non-deliverable forward markets exert more pressure on Rupee
TNN

Mumbai: Reserve bank of India (RBI) has for the first time attributed volatility in the exchange rate to speculative activities in the non-deliverable forward (NDF) market for currency futures. While currency futures are traded in stock exchanges, non-deliverable forwards are transactions where multinational banks bet on the rupee overseas through forward contracts that are settled in dollars.

For a long time RBI had not even acknowledged the existence of the NDF market. (they were willful abettors acting under instructions) This was because these contracts were earlier seen as esoteric transactions justified on the grounds that clients required options to hedge against currency risks. But of late the NDF market has grown in size and RBI has been suspecting that speculation in overseas markets is actually infuencing domestic rates. According to RBI, the NDF markets for rupee are now exerting an increased influence on domestic currency markets through spillover effects. Studies have shown that during time of appreciation both the spot market in India and the NDF market influenced one another. But when the rupee is weakening, it is largely the local market that is influenced by bets made overseas. This has proved to be a big headache for RBI as it has no control over the NDF market.

"The rupee value is at times influenced by trading in non-deliverable forwards (NDF) - foreign exchange derivative instruments that are based on non-convertible currencies such as the rupee and traded in international financial centres. Importantly being an offshore market, the NDF market remains outside the regulatory purview of local authorities". RBI said in it's annual report for 2012-13 which was released on Wednesday.

[member_20317]

Ravig,

I’m not sure what point you are trying to make. My view is India is not at a stage where it can freely import what ever it wants. We should be careful with our money and import carefully. $34 billion in cars? 800 tonnes of gold? really. What would you say to a dead beat relative who does this.

Theo ji,

I think you would like to withdraw that figure. Should be around 3.5 Billion USD and about 1.5 Billion USD is exported too. That is Fully Assembled Cars only.

I just hope you didn't mention that figure to poor people you saw in Chattisgarh. You would end up kick starting a revolution against the rich people of India.

In any case India is a big country with something like 2 lac individuals said to be in ownership of liquid assets worth 1 lac USD. So I guess importing 10k-13k Cars is not entirely unjustifiable even if worthy of being curtailed for some time. I mean increase the import duty or even ban it for some time. But for gods sake you got to realize this is not the solution. This is at best a mistake and at worst a propaganda.

Re. Gold 800 tons imports, at least 33% would end up in the Cost of Goods Sold and 530 tons while big is not exactly a consumption. It is surely classifiable as liquid investment.

In fact I would say canalize Gold imports too for 1-2 years. Put it under some kind export linked license. But how do you move an economy that has a GDP-PPP of 5000 billion USD by saving probably 30% on 40 billion USD worth of Gold. Surely the kick starting of the economic cycle is more important.

[Suraj]

Gakakkad: excellent post indeed. I'd like to point out that a VAT regime would help us get around the issue you mention, i.e. high duties affecting imports used to generate value add, since the export of the finished value added component will generate a rebate for the jeweler. A high VAT regime as a domestic consumption duty on luxury goods would therefore work without the problem of collateral damage to value-added export industries.

Gems and jewelry exports in 2012-13 were $40 billion. Imports for that component were $91 billion, which means $51 billion in net imports. Our imports net of oil for 2012-13 were $325-330 billion, while exports were $310 billion. In other words, we don't even have a trade surplus net of oil imports, much less an overall surplus. As a further datapoint, refined petroleum exports were $56 billion, and gross crude imports were $168 billion, so that net oil imports were $112 billion.

Net imports of oil and gems/jewelry puts us $163 billion in the deficit. There are a lot of import items that we can dramatically cut:
* net gold imports. This is an emotional topic, but I see little productive value in massive gold consumption. It's become a hedge against GoIs economic mismanagement, paradoxically worsening their dilemma. I support duties on it half-heartedly - without GoI implementing substantial reforms elsewhere to give the population confidence in development, any draconian duty measures will backfire spectacularly, as we're seeing it happen now.
* Nuclear and power generation equipment. More than 3 years ago BHEL was running a $25 billion (yes, billion) backlog in orders. L&T ran something like a $10 billion backlog at the same time. They simply do not have the capacity to produce equipment at the rate needed by the power sector. Clearly there's so much core and infrastructure demand that remains unsatisfied for lack of enough large domestic heavy engineering firms. GoI would have gained much more by permitting them to import anything they needed to expand capacity, at zero duty. It would save us a significant part of the $35-45 billion annual outgo into power equipment.
* Iron/steel at $14 billion, and fertilizers at $10 billion, are another ~$25 billion of imports we don't 'need', and have the ability to replace in almost entirety, but which has no concerted policy for.

M2 growth rate is better compared to nominal growth rate . GoI also has an incentive to devalue the currency, since it will owe less in real terms on its substantial fiscal deficit when it persistently devalues the currency.

[Singha]

more good news:

Why Nokia’s threats to quit India should be taken seriously
by FP Editors Aug 23, 2013

It is a quit India movement of sorts. Fed up companies, both Indian and global, are on their way out of the country, as they see no end for their woes here.

The latest addition to the list is Nokia. According to a report in the Indian Express today, the Finnish mobile handset maker has sent a letter to the government saying India is the “least favourable market” and exporting from China makes better business sense. (Read the entire IE report here.)

It has also warned that “political risk” is likely to impact its future investment decisions.

Nokia’s troubles in India are long known. The income tax department had in March slapped a Rs 2080 crore tax demand on the company alleging that the Indian arm did not deduct the stipulated 10 percent tax on royalty payments made to the parent.

Will Nokia move its manufacturing to China? AFP Will Nokia move its manufacturing to China? AFP
Apart from this, Nokia was also entitled to get a Rs 650 crore as value added tax refund from the Tamil Nadu government. According to the IE report today, the company has not yet received it yet.

The refund was part of its memorandum of understanding the company signed with the Tamil Nadu government in 2005. The pact was for setting up a manufacturing plant in the state, which now gives employment to about 38,000 people directly and indirectly.

According to this report, the company was getting this as an incentive for setting up this unit and was under wraps until 2009, when an RTI plea managed to get the details.

In short, the company has waited for nine years and has found that the wait is in vain. On top of it is the fresh transfer pricing claims made on the company.

Nokia’s case has to be read along with that of Royal Dutch Shell, Vodafone, Cadbury Plc and LG Electronics, all of which are in the midst of similar transfer pricing disputes with the government.

Nokia’s threat could not have come at a worse time for the UPA. With the rupee in a bottomless fall against the dollar, pessimism about the country is on the rise among investors.

Foreign institutional investors are not the only ones that are pulling out of the country. Earlier, global steel giants ArcelorMittal and Posco had decided to not go ahead with one of their steel projects each in the country, citing policy paralysis that rendered their projects non-viable now.

Indian companies such as Aditya Birla group have also threatened to go abroad as policy uncertainties are taking a toll on their businesses here.

Uncertain tax policies have given rise to numerous disputes and legal battles involving multinational companies over the last few years.

In an interview to CNBC- TV18, Asianomics Jim Walker yesterday criticised the UPA government for the slowing economy.

India needs “responsible, sensible fiscal policy” and not UPA’s flagship programmes, said Walker.

“Schemes such as the Food Security Bill, National Rural Employment Guarantee Scheme, or NREGS, should be taken off the table, especially at a time when the economy is slowing down,” he told the TV channel.

Terming these schemes crazy notions, Walker said “They (UPA) failed miserably and are now reaping the benefits of the consequences.”

Time is running out for the UPA, if it has not already.

According to the IE report, Nokia has told the government that it will have to “act quickly to correct the wrong perception of India as a place for business”.

If the company indeed decides to shut the plant in Tamil Nadu, which is its largest in the world, resulting in huge job losses, it would likely serve as the first of many consumer manufacturing losses to come.

What must also be kept in mind is Nokia’s slowing performance in India, from market-leader to a Samsung-follower. This could well be a point where the company is clearly assessing all-round India presence and strategy.

[Singha]

the mayors of 10 chinese cities would be happy to get another plant employing 8000 people. they will in a heartbeat provide all the food,land,water,power,permits needed to get an operation ramped up.

[vina]

Had to make two road trips this week, the first to Madras and second to Madurai (both from Bangalore). All this diversions and rubbish on the Chennai-Madras reminded me of this. In just 4 years , Vajpayee's NDA laid out the Golden Quadrilateral and the NSEW roads out (except for some very small stretches) beautifully with top class road surface and build quality.

In 9 years, the UPA Sarkar has not managed to add ONE lane to the Bangalore-Madras stretch ! On the way to Madurai, the NSEW / NH-7 carriage way was smooth as Hema Malini's cheeks, beautifully built , just like during Vajpayee's time, the same dual carriage way .

The difference , instead of Vajpayee's pictures waving at you, we have Dr M.M Singh and Smt Sonia Gandhi in the NHAI hoardings. So, all Congress managed to do in Nine Years was to replace Vajpayee's Cut outs and pictures with MMS and Desh Ki Bahu's!

Also, another observation on the kind of mobility and opportunity and integration that growth brings. Just before Dharmapuri, (a few Kms after the BP station with Adayar Anand Bhavan), there was and IOC station with some Raj******* 24 hrs restaurant. Very nice, good food, with waiters and servers wearing smocks and hair caps and very well priced and for a second I was taken aback. Nearly everyone of the staff (except the guys who took orders) looked like they were from the North East! And all of them on back slapping terms with the local natives and speaking freely in Tamil (I assume, the Dharmapuri local types wouldn't know any other language). As my table was getting cleared , I spoke with one of them in Hindi and asked them where they were from and he said Assam! Imagine folks from Assam living and working in some boonies some 10 kms from a nowhere place like Dharmapuri! Why some 30 years ago, a place like Dharmapuri would have had close to zero persons from anywhere else except local folks!

Welcome to the new world folks. I just hope we get rid of the ossified dinosaurs from the 60s/70s for good and get in fresh faces with a more modern world view. The I am Gah, and was born 80 years ago rubbish is soooo 20th century and so out of tune and reality of Modern India.

[subhamoy.das]

More good news. CBI today declared Anil Ambani as "Hostile Witness". Indian INC should seriously think of buying a 1/3 India sized country and move there and invite all Indian middle class - with disposable income of 10L - to be come citizens. This will be the land of true freedom where head can be held high. Some thing the freedom loving CHINESE did when they fled mainland and setup TAIWAN. We can call this country Republic Of India ( The Real One ).

[vina]

Also, saw in the TOI /Al-Hundi a startling article. It seems some "research" ( I always suspicious of any regression analysis based economic/social studies "research" and the conclusions drawn based on those), on correlation between State GDP and height of children.

It seems that based on the data, the 3 year old children in TN and Goa are on an average 4.5cms (a good 1.77inches) taller than the 3 year old kids in Bihar and UP . If true ,this is astounding. Who would have taught that the tallest kids are the Dark Rice Eaters and NOT the Fair Wheat Eating Punjabis! .. There was a ramble in the rest of article about genetic factors without any conclusion/point.

If the link between nutrition and height and the recent "report" about Pakistani children being now significantly shorter than Indian kids on an average, maybe BRF should switch terminology to TDRE and SFTA

[Supratik]

There is no doubt that malnourished children have stunted growth. However, a Japanese on average is unlikely to reach the height of a Dane - that is also true.

[JohnTitor]

The storm is coming - brace yourselves people. Either pack up and leave if you can or find a rock and hide under it. I hope UPA wins again, I'd rather have them deal with this mess because if NM comes, he will implement things that will be anti-people like removing some of the freebies. This will cause anti-incumbancy. Why should NM face the wrath for the deeds of UPA?? If NM wins, I fear a repeat of 2004

[Singha]

as I have posted before
(a) there are really no jobs barring a trickle of govt jobs and small shops in entire NE india
(b) the standard of schooling varies on avg from weak to really bad. this stunts people's capability to compete at higher levels with rest of india, despite generally decent primary school education % there
(c) whether anpahr or educated, all who can walk/run/crawl and are young enough have migrated away. joined in the tail of convoy by enthusiastic bangladeshi hordes as well, because there is no more vacant land for the BDs to grab, so what are the poor things to do? you will find BD labour in coorg coffee plantation, a mumbai building site or a punjab wheat farm for sure.

mostly they work where they can and send money home. things are not so desperate food/climate wise that even women and kids are forced to migrate and live in shanties erected by construction cos and work in the day therein...but it will get there if the rot continues like this.

dont be misled by a quick trip to some guwahati, shillong or kohima hotel .... look deeper and you see long running problems of rural lack of growth, education that lags behind in quality to other state boards....things that affect generations and have no quick fix.

WB and Bihar being manufacturing and services basket cases and overpopulated themselves are in no position to support the NE unlike blr-chennai-coimbatore which helps the southern hinterland and magnet cities like mumbai and NCR that lift their hinterlands hugely.

nor is there trade across that border to myanmar or yunnan...these are closed borders used by smugglers onlee.

[Gus]

vina - NE folks have penetrated all the way to interior TN as well..not just the border areas like dharmapuri highways.

[Arjun]

Xposting:

Received the following on email from a forumite who is on sanyas from this dhaga seems like. Hence, posting...

Saar, pliss to look.

http://profit.ndtv.com/news/market/arti ... odi-326196

Even if NaMo is declared as the PM candidate, that may itself arrest some of the rupee and market slide. It will be interesting to see if markets price this piece of information.

Can't help but excerpt the following:

Asia-Pacific focused brokerage CLSA said on Friday that the current crisis in financial markets could trigger an improvement in governance in India.

The Hong Kong-based brokerage linked the fate of the volatile rupee to the political prospects of Narendra Modi, widely expected to be named the BJP's candidate for Prime Minister in next year's general elections.

Analyst Christopher Wood wrote in his weekly column, "Greed & fear's view is that the worse the sense of crisis the better Modi's chance of winning."

He also said, "The Indian stock market's greatest hope is the emergence of Gujarat Chief Minister Narendra Modi as the BJP's prime ministerial candidate."

Wood's 'Greed & fear' reviews global markets and economies and is widely followed by investment professionals and the media.

And this:

India's problems are most self-inflicted in terms of the continuing lack of an investment cycle and a growing currency crisis, CLSA said, adding the Reserve Bank of India's tightening moves in July clearly backfired in large part because of misguided communication and conflicting signals.

The brokerage also said that India remains the Asian market most at risk of a sovereign debt crisis.

India is currently rated BBB-, which is the last rung on the rating ladder above so-called "junk" status that mainstream investors tend to steer clear of.

The brokerage said there could be further downsides in quality stocks, where FIIs have so far not sold their holdings in the relatively 'quality names'.

[vina]

(c) whether anpahr or educated, all who can walk/run/crawl and are young enough have migrated away.

Everyone welcome. I am still dazed at the very NE looking guy with the hotel industry hair cap, standing at the 24*7 Coffee counter (with hoardings of 100% Pure Filter Coffee showing a Stainless steel cup and saucer ..called "Tumbler & Davara" in Tamil) and making filter coffee and handing out to the customers..where the stereotype is the dhoti and towel wearing dude making and pouring the coffee out .

Shades of a Bangladeshi guy handing out Gyros at a Greek deli in Astoria, Queens or Mexican/Paki/Bangladeshi handing out Bagels, Lox Cream Cheese and Knishes at a Jewish deli in the lower east side of Manhattan kind of cultural "shock" I suppose.

[member_20317]

NE bhai log in TN. Hope they get treated like North Indians .

Pls plsss plss do not kick my gadhaa. That is a harmless one.

...........

Now that roads are getting talked about.

Yesterday, received a call from an ex-employee (average Joe) who had joined a company making a National Highway project, around Haridwar. Got his March salary in End July. Says Highways even if made do not get completion certificates for long durations (I think I heard 10 years) and company's do not get paid. So the lala found a new idea. Divert the term loan amounts sanctioned for road building to Residential housing complexes in say Jaipur or Gurgaon. Unfortunately receipts dried up from these places too. Hence the job search.

Another one of my acquaintances, a practicing professional is neck deep advising arbitration in another of the big road project.

So you get the idea. The NDA guys probably made sure the progress payments were made but the subsequent govt. probably didn't. Hence probably the difference.

The guys is a Muslim so that is a double whammy. The political situation for him is going in the wrong direction and so is the career.

[KJo]

For once I agree with KJo. Stunning myself.

Nothing to be shocked saar, we agree on quite a few issues, especially economical. I gave you shabaashis on another post you did below the one you agreed with me on.

We only disagree on your EJ views and your opinion on Marissa Mayer. When she was made CEO, I didn't think she was the right person, but you thought I was being sexist.

[Theo_Fidel]

Theo ji,
I think you would like to withdraw that figure. Should be around 3.5 Billion USD and about 1.5 Billion USD is exported too. That is Fully Assembled Cars only.

Thanx for the correction. Yes it should have been 3.4 Billion.
But the CKD units are not included in that number. That is just manufactured vehicles. So the actual number must be higher still. Again we should not be spending that much importing cars.
In retrospect 34 billion is an absurd number, ~1/10th of imports!

Saar,

Who says restricting imports is a good solution. But it sucks to be poor nah! When we are rich we can play these rich mans games.
Folks should approach life in India like every Indian lives on roughly $2000 per year! This is our level of wealth, every ones level of wealth. If you make more than that then someone somewhere is making less than that by an equivalent amount.

As Suraj says, we lack capital and we are spending $3.5 Billion + on importing cars? Over 10 years ignoring inflation this is a capital expense of $35 Billion.
This amount by itself would be enough to build a world class metro in our top 10 cities in 10 years or so.

If you go back and look at how the East Asians got rich, the first attack was discipline.
Every one of those folks disciplined themselves to live within their means, build the country and bring up every mango abdul first and then think of splurging occasionally.
We are splurging before disciplining ourselves and then wonder why the money doth run out….

Again what would you say to a dead beat relative who did this…..

[Arunkumar]

--Now that roads are getting talked about.--

Thank god , Congress did not get the idea of using funds of NREGA to dig up National highways of Golden Quad as part of 100 days employment gaurentee.

[Supratik]

Indics are still spendthrift at least the majority.

[svinayak]

* Iron/steel at $14 billion, and fertilizers at $10 billion, are another ~$25 billion of imports we don't 'need', and have the ability to replace in almost entirety, but which has no concerted policy for.
.

All the the luxury items have a lobby in India and they have been allowed without much tarriff. Overspending in imported Items is the main cause of the falling rupee. They need to ban some items for 5 years before they allow more free flow. 5 to 10 years of wait is not going to change the lifestyle of the big city folks in India.

We saw a big spending by city folks in early 2000s. This was based on growth in the country. But now with import reaching more than it can be sustained all the luxury has become liability

[Theo_Fidel]

Yes. There are tons of NE folks working in Chennai and also in deep south. Almost every Udipi restaurant in Thirunelveli has one or two.

SI used to be very resistant to NI migrants but with higher levels of education that has changed dramatically. Even Dharmapuri boasts a 70%+ literacy level IIRC. Folks are still expected to speak the local dialect however. You speak the local language, all are welcome. Education is a wonderful thing.

Only old jingo’s like me occasionally fire salvo’s to remind folks what we went through at a personal level. NI folks were quite nasty to SI folks in bygone days even if they lived here.

One feels sad for Assam.
States like Tripura, Meghalaya, Mizoram & Nagaland, even tiny Arunachal population appear to be making rapid moves up the income charts. But not Assam. It languishes dead last, right next to Bihar.
My own view from a long visit 10 years ago is that the infrastructure in Assam was atrocious. There used be a single bridge across the Brahmaputra back then. How can you build any sort of economy on 1 bridge! The Bangladesh border also damaged Assams ability to compete. The NE has excellent Tourist potential. But Assam got all the low lands.

Hopefully the cheap power from the 2000 MW Subansiri dam will help industry get a foot hold. Arunachal alone has the potential for 50,000 MW of power! Ideally Assam should hock itself to the neck to build these dams in exchange for a cut of the cheap power. That along with a more educated population will make a difference.
------------------------------------

KJo,

IIRC your objection to MM was that she was pregnant at the time.
How is that not sexist.

[Karan M]

* Iron/steel at $14 billion, and fertilizers at $10 billion, are another ~$25 billion of imports we don't 'need', and have the ability to replace in almost entirety, but which has no concerted policy for.
.

All the the luxury items have a lobby in India and they have been allowed without much tarriff. Overspending in imported Items is the main cause of the falling rupee. They need to ban some items for 5 years before they allow more free flow. 5 to 10 years of wait is not going to change the lifstyle of the big city folks in India.

Just take a look at the chart posted by gakkad - where does that show overspending in luxury items and what not? Luxury items are still a niche item. And what the heck, why should "big city folks" after paying tons in TDS be subjected to such ridiculous diktats? You are asking for a return to the days of license raj!
Suraj is going purely by the factual data presented, and pointing out the exact areas where we can improve based on current facts - your points though are not backed up by data. And luxury items is such a catch all term. For "big city" middle class folks, the 3L Louis Vuitton handbag is a luxury item. For rural folks, the Samsung grand may be a luxury item, at Rs 15K. For poor people, a 1000 Rs Chinese item is a luxury item. Asking some babu to resolve this ambiguity will result in the kind of stupidity that sets artificial poverty lines or has babus debate on Rs 12 meals

[vishvak]

The economists with long shadows have not bothered to check how some states are moving ahead - as examples. In Gujarat, it is very same government personnel, same technology, and no extra money is still utilized well. World renowned economists are giving excuses-selective secularism- to avoid considering this.

[SaiK]

royalty payments to parent and income tax needs to be studied clearly from FDI and investment-profit flow. A tax structure on income should be delinked from tax structure on the gains. why even bring in FDI, when we have no clear structure established.. what where MMS and PC doing all these years, so called finance experts of the county. they are just foo-bar-ing the country's name for one, and pushing us below paki levels.

industrialization means, there should be well defined economic structuring... goes hand-in-gloves. nokia and others may not wait till pc and mms get their brain cells replenished.

[svinayak]

Just take a look at the chart posted by gakkad - where does that show overspending in luxury items and what not? Luxury items are still a niche item. And what the heck, why should "big city folks" after paying tons in TDS be subjected to such ridiculous diktats? You are asking for a return to the days of license raj!

See this post

we are spending $3.5 Billion + on importing cars? Over 10 years ignoring inflation this is a capital expense of $35 Billion.
This amount by itself would be enough to build a world class metro in our top 10 cities in 10 years or so.

[Bade]

WB and Bihar being manufacturing and services basket cases and overpopulated themselves are in no position to support the NE unlike blr-chennai-coimbatore which helps the southern hinterland and magnet cities like mumbai and NCR that lift their hinterlands hugely.

There was a recent article which mentioned about living conditions of domestic migrant labour in Kerala alone, which needs immediate attention while welcoming free migration within the Indian union.

According to the studies conducted on DML by the Gulati Institute of Finance and Taxation, over 25 lakh workers, mostly from Uttar Pradesh, Assam, West Bengal, Bihar and Odisha, are employed in the state at present. Though they receive reasonable wages, the authorities are yet to assess their health and psychological status owing to their miserable living conditions.

Unhygienic ,migrant colonies turning state into a slum

[SaiK]

plus the cars need road infrastructure to transport effectively and economically. not viable to all, but there is also a growing demand for car, just being the convenience factor alone.. pl. remember, our society and setup is based on convenience living structure from shops and streets. we like to crowd and like to ignore capacity planning and usage metrics. in the sense, we disregard private space, and destroy public infrastructure easily that also need to be compiled when we take to balance sheet.

both are required.. roads and rail network.. we can't pit one against the other, as the market segments are different., and we have a dynamic population that can switch from roads to rails in a jiffy. it is all traffic management at EOD.

[krishnan]

thats a lot for a single state

[SaiK]

are the migrant workers for long term stay in KL?