Indian Economy: News and Discussion (Apr 1 2011)

The Technology & Economic Forum is a venue to discuss issues pertaining to Technological and Economic developments in India. We request members to kindly stay within the mandate of this forum and keep their exchanges of views, on a civilised level, however vehemently any disagreement may be felt. All feedback regarding forum usage may be sent to the moderators using the Feedback Form or by clicking the Report Post Icon in any objectionable post for proper action. Please note that the views expressed by the Members and Moderators on these discussion boards are that of the individuals only and do not reflect the official policy or view of the Bharat-Rakshak.com Website. Copyright Violation is strictly prohibited and may result in revocation of your posting rights - please read the FAQ for full details. Users must also abide by the Forum Guidelines at all times.
RamaY
BRF Oldie
Posts: 17249
Joined: 10 Aug 2006 21:11
Location: http://bharata-bhuti.blogspot.com/

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by RamaY »

Theo_Fidel wrote: Meanwhile our national wealth is $12 Trillion and we need to get to $150 Trillion for prosperity. No one mentions that do they.
In 2009 the entire world trade was $15T. What can/will India buy with $150T wealth? How is it earned? How much resources are need to achieve this wealth;assuming there is only so much of meaningful intangible value one can add. What is the projection for world wealth (including PRC and other nations)
at that time and how much natural resources are required?

Thanks in advance.
Supratik
BRF Oldie
Posts: 6530
Joined: 09 Nov 2005 10:21
Location: USA

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by Supratik »

Dreze's arguements above about the difficulties of implementing a CT scheme anytime soon look good except that he goes overboard with what one might do with the cash. The latter can be addressed easily IMO provided we put in place the infrastructure. I would also like to see house rent allowance and transport allowance (apart from food and fuel) under the CT scheme and public housing projects under JNNURM. However, all these should be linked to tangible efforts made by the individual concerned to get out of his/her situation. The experience of advanced countries in reforming social security should come in handy.
But all these will take Trillions of dollars and so faster and prolonged growth is essential.
sugriva
BRFite
Posts: 318
Joined: 15 Jun 2005 20:16
Location: Exposing the uber communist luddites masquerading as capitalists

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by sugriva »

Who is going to pay for the phone, you or Sri Abhikit Sen? Who will change all kirana shops and village market infra to accept sim card based cash balances?
And what sir is laughable about a phone and sim card. If we are willing to do a cash transfer per month of Rs 4000-5000 a month why not provide every person a phone at Rs 800-1000? Compared to the cost of the DCT this will only be a small fraction of the total cost?
Last edited by sugriva on 12 May 2011 21:31, edited 1 time in total.
sugriva
BRFite
Posts: 318
Joined: 15 Jun 2005 20:16
Location: Exposing the uber communist luddites masquerading as capitalists

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by sugriva »

Odd. In some cases we demand that government provide more than cash compensation for acquired land, things like job trainings, annuities etc. Yet for the poorest of poor we demand that they be given cash and not food. Why the discrimination. Why not simply give cash to farmers from whom we acquire land and let them do whatever they want to do with the cash. Its their wish if they wish to blow it away on weddings, cars or save it in a bank. Why should governments be burdened with doing anything more than providing cash for the land bought?
sugriva
BRFite
Posts: 318
Joined: 15 Jun 2005 20:16
Location: Exposing the uber communist luddites masquerading as capitalists

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by sugriva »

http://acorn.nationalinterest.in/2011/0 ... tao-hatao/

^^^
:lol: Another ayatollah from Mylapore School of Economics
Let’s consider Mr Dreze’s policy arguments. He first argues that conditional cash transfers won’t work in India (as they did in Latin America) because public services are “missing to a large extent”. This is bizarre, for giving Indians the money to procure services like healthcare and education from private operators allows them to escape having to depend on the government.
Of course the above is beyond the comprehension of the mullah. Cash transfers only provide the ability and not the access. So if someone in some remote village of a district without any nearby medical facilities needs to visit a doctor we will have to travel by foot, bus and train for 2-3 days to get to the doctor in the city or district town even when he would have cash to spend on his medical treatment. Nevermind the fact that there are no operators, private or public to provide the service
It is conceit to believe that a government that lacks the competence to deliver drinking water to its citizens can somehow change human behaviour.
:rotfl: :rotfl:
Ha.. notice how the expectation is still there for the government to provide drinking water facility. Notice that here he wont say, why not just give the money to the poor and let them figure out a way to get water for themselves.

In some ways giving out cash is a cop out. It is the response of a government that has washed its hands of providing basic amenities and services to its people and says "here take these many rupees and go figure out how to solve all your problems with it". Those who say that the market will take care of it miss a very important piece of the argument. There has to be a market in the first place to take care of somethings. In many places there isn't one :lol:
RamaY
BRF Oldie
Posts: 17249
Joined: 10 Aug 2006 21:11
Location: http://bharata-bhuti.blogspot.com/

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by RamaY »

Sugrivaji,

That is what happens when people see the world thru cash counters and financial indicators and e-CON-o-mists run gobernment.
Hari Seldon
BRF Oldie
Posts: 9374
Joined: 27 Jul 2009 12:47
Location: University of Trantor

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by Hari Seldon »

n some ways giving out cash is a cop out. It is the response of a government that has washed its hands of providing basic amenities and services to its people and says "here take these many rupees and go figure out how to solve all your problems with it". Those who say that the market will take care of it miss a very important piece of the argument. There has to be a market in the first place to take care of somethings. In many places there isn't one
Good points.However the chicken-and-egg argument arises here too. The point about non-existent markets is maybe redundant, IMHO.

"If there is demand, supply will find a way." Of course, the catch is demand here is defined as both the willingness and the ability to pay [cash?] for a product. The CCT takes care of the ability part (the real stumbling block) and the willingness part, well, inshalla, folks will spend the money on nutritious food for the family, clean water, sanitation etc rather than daru or gambling.

Time will tell which model succeeds in which areas. Many are being tried with the UID, mobile payment gateways etc looking to break into reality soon. I was approached for some pro bono consulting by a desi run phoren NGO that wants to setup village level water UV purification centers and then sell clean drinking water at break even cost +nominal surcharge to families on a daily basis. Lawd knows demand exists for such a product/service only.

Anyway, fascinating discussion. jai ho and all that.
somnath
BRF Oldie
Posts: 3416
Joined: 29 Jan 2003 12:31
Location: Singapore

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by somnath »

RamaY wrote:Who is going to pay for the phone, you or Sri Abhikit Sen? Who will change all kirana shops and village market infra to accept sim card based cash balances?
RamaY-ji, Sugriva has already replied to this. I would only say this - if GOI orders 10 crore mobiles phones from Nokia (one for every BPL family -the extreme case), it shoyuld be able to get a quote @ 500 rupees, ie 5000 crores one time - a smll fraction of the total annual outlays on various subsidies/NREGA/tax breaks et al..

More importantly, your question on "targeting"..Things like BPL cards etc have been tried, with disastrous results...Which is where UID comes in..Once every individual has an ID, it becomes easier to create a matrix of outcome characteristics for the person - property ownership, income, education, health, caste etc..And then create entitlements specifically for the most vulnerable groups that are directly credited to the individual's account..

The latter is where mobile banking tech and enabling regs come in...Today it is well within technical capabilities for the govt to directly at the begining of the month, "charge" an individual's mobile SIM with a pre-allotted amount of money...This pre-loaded SIM (new RBI regs allow for upto 50k per txn now) can be used anywhere - at the kirana store, at the agri services outlet - the individual can purchase goods and services by transferring money from his SIM to the seller's SIM through a simple sms...He can also transfer money from his SIM to a third party bank account (ideally, his SIM itself will be tagged to a bank account)...And banks can dispense cash at branches by encashing such loaded up SIMs...None of this is "fantasy" anymore - these are operational tech and functional in limited ways in places like Africa (which is ahead ironically of India in mobile banking)..The challenge is to scale it up...Once monies are directly credited to individual's accounts, he has the flexibility to do what he wants with it...conversely, it can also be done in a "conditional" format, ie, a specific type of transfer can be encahsed only at specific places - say schools or fuel shops..

Vina-ji, this is all in the realm of here-and-now, with live examples avaialblke, no ROTFLs required..Its certainly more realistic than voodoo economics of "wealth required" for growth that we see from Theo....

One point on the issue of execution...And how neither NAC nor the central govt seems to "care" as much about the execution as it does about outlays and schemes...The reason is very simple...The Central govt (NAC is part of it in some ways) have actually close to zero tools to execute any programme...ALL exectution, whether of educaiton, NREGA, roads programme or anything else, has to be done by the state govts...Which is why we have this uniquely Indian animal called "centrally sponsored schemes" (NREGA, Bharat Nirman etc are all such)...The model followed is simple..The Central govt lays down the basic objeectives earmarks the budget, asks the state govt to submit their plans, disburses the money, and does audit of the outcomes...How the money is spent, and how effieciently is a question of the state govt...Whenever guidelines are sought to be made very stringent, state govts cry foul..Besides monitoring and audit, there is really no "central" tool for execution...Which is why policymakers try tinkering around with basic models at a conceptual level to arrive at most efficient constructs..The concept of universalisation (compared to targeting), manual work for NREGA are all a result of this...

Which is why UID and banking inclusion is considered so disruptive - from Amartya Sen to Jagdish Bhagwati..It has the potential to completley change the execution models in many ways, especially in terms of creating "affordibility"...

It still, however doesnt take care of access, which in many cases (education and healthcare for sure) will need to be provided for by the state..People like Nitin Pai (who is he, btw?) forget the fundamental axiom that in many villages, even with cash in hand, the poor chap has no access to a half decent healthcare centre (unless someone like Binayak Sen sets one up :wink: )...
Supratik wrote:But all these will take Trillions of dollars and so faster and prolonged growth is essential
Supratik-ji, it is a huge ask...And growth is a sine qua non for that....But as growth generates the surpluses, conscious choices need to be made to make that socially and economically sustainable - which is what Amartya Sen and Jean Dreze are saying..BTW, none of the pending reforms measures that people get worked up on militate at all against increasing allocations to these programmes...So to criticise the latter of preventing the former is a bit of a red herring that is being invoked..
somnath
BRF Oldie
Posts: 3416
Joined: 29 Jan 2003 12:31
Location: Singapore

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by somnath »

Hari Seldon wrote:"If there is demand, supply will find a way."
ACtually not always...Not unless affordibility is stretched...An example from my home state, WB...There is a huge demand for tertiary medical services there...Has supply found a way in? In recent times, yes, but very limited and priced way above the means of most...As a result, Coromodal Express that runs every day from Calcutta to Chennai is called "Hospital Express"!

On the other hand, "supply creates its own demand"! But thats a different discussion...
SwamyG
BRF Oldie
Posts: 16271
Joined: 11 Apr 2007 09:22

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by SwamyG »

UBanerjee wrote:Actually "we ought to look at X%" is what is entirely wrong in the first place- especially based on some top-down theorizing. What we should look to do is increase incomes and opportunities- and the X% involved in agriculture will retain a natural equilibrium.

I will say this though- the romance of agriculture is much easier when you're not the one toiling in the fields day-in, day-out. It is one of the most miserable professions for the average farmhand in terms of work put in and output received - which is why in every country on earth, people leapt at every opportunity to get the hell out and do anything, even work in soot-covered factories paying a small steady wage. Also keep in mind humans have only been engaged in real agriculture for 10,000 years, give or take a few thousand. There is nothing in human biology tied to agriculture, it is as artificial as working in any other profession.
You are waking assumptions one after the other. Romance? Me? Well, I have done that enough with SHQ. No where I have said or implied agriculture is anything rosy or better than any other profession. Your charge of talking easy sitting here instead of toiling in the fields can be easily applied to ahem ahem to this very nature of forum. It is so easy for us to talk about war and strategy, as it is us who is not fighting the Pakis in the taller snowy mountains or deserts; it is us not manning the borders with China. Yet we all sit here and wax eloquent on what MMS should do, how we should handle terrorist events ityadi no? Why? It is not that we romanticize about war, it is because we feel x,y,z are important for desh to do or not to do. We talk about building infrastructure, are we the guys toiling carrying bricks on heads, pouring hot tar under humid and hot skies, risking limbs and life building stuff for the country? Again it is not romanticizing, it is about what we think are important. So is the case of agriculture.

There is nothing in human biology tied to agriculture? I am not sure what you mean by that. Am I supposed to read between the lines and discover something profound?
Supratik
BRF Oldie
Posts: 6530
Joined: 09 Nov 2005 10:21
Location: USA

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by Supratik »

I forgot to add Medical allowance as a part of a CT scheme.

I am not sure if a mobile with SIM card is all you need for a CT scheme. You
will eventually need to setup social security offices everywhere.

Lastly, a CT scheme must not be seen as a permanent dole-out by the Government. It should be linked with efforts made by the individual to get out
of his/her economic situation e.g. in Brazil your CT amount is linked to the
number of years your child spends in school. I am afraid I do not see such ideas from Dreze or Sen.
abhischekcc
BRF Oldie
Posts: 4277
Joined: 12 Jul 1999 11:31
Location: If I can’t move the gods, I’ll stir up hell
Contact:

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by abhischekcc »

The latter is where mobile banking tech and enabling regs come in...Today it is well within technical capabilities for the govt to directly at the begining of the month, "charge" an individual's mobile SIM with a pre-allotted amount of money...This pre-loaded SIM (new RBI regs allow for upto 50k per txn now) can be used anywhere - at the kirana store, at the agri services outlet - the individual can purchase goods and services by transferring money from his SIM to the seller's SIM through a simple sms...He can also transfer money from his SIM to a third party bank account (ideally, his SIM itself will be tagged to a bank account)...And banks can dispense cash at branches by encashing such loaded up SIMs...None of this is "fantasy" anymore - these are operational tech and functional in limited ways in places like Africa (which is ahead ironically of India in mobile banking)..The challenge is to scale it up
Somnath, I have done some studies of this mobile banking / corrospondent banking thingy so I know that it is not as simple as it looks on paper. One of the main issues is conversion of money from digital to physical form, usually at the point of transaction. Suppose a person goes with his mobile to a kirana store to buy grocery. Kirana store does not have new fangled mobile banking enabled , he asks for money. So person goes to the nearest mobile banking corrospondent (BC) - someone who converts digital and physical money to each other, and maintains an account with a physical bank. He will be equipped with a terminal that will allow him to transact with his own account in the bank. Person gets the money and buys the grocery. IOW, a single point transaction has been converted to a double point transaction. But this is not the main problem.

The main problem is the credit limit of the BC. Experience in Brazil has shown that allowing a BC too much credit is a recipe for losing money in theft, etc. So they have put limits on how much money a BC can keep with him at a time. If his cash in hand exceeds this amount, the terminal will lock down and the BC will have to visit the bank to deposit the money. Similarly, if BC runs out of money, he will have to go to the bank to get money. IOW, the delivery of banking services even through correspondent banking is dependant on the physical presence of a bank.

IOW, digital banking is no substitute for actual banking and financial inclusion.

I know what you will say next - convert all people in a given region to mobile banking in one shot :)
The amount of infrastructure support needed for millions of low amount transactions is not something that banks would relish. This system would have to be subsidized. IOW, even all comprehensive mobile banking is not likely to end inefficiencies in delivery of financial/government services.

--------
This is not to say that the idea cannot produce pratical results, but jumping in with both feet without testing the waters is likely to be more wrong than right.

--------
The reason why parts of Africa are more 'advanced' than India in mobile banking is because they have no other way of financial inclusion. India has the largest, most inclusive financial system in the world. This itself is the more powerful competitor of mobile banking. :)
somnath
BRF Oldie
Posts: 3416
Joined: 29 Jan 2003 12:31
Location: Singapore

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by somnath »

Supratik wrote:
Lastly, a CT scheme must not be seen as a permanent dole-out by the Government. It should be linked with efforts made by the individual to get out
of his/her economic situation e.g. in Brazil your CT amount is linked to the
number of years your child spends in school. I am afraid I do not see such ideas from Dreze or Sen.
Again the contextual reason is simple. Compare brazil's hdi with India. Brazil is near OECD levels, so their objectives are more evolved.

India on the other hand has two priorities now on welfare - coverage and leakage, max the former and minimise the latter. Once we are at brazil's levels, our obj will change
somnath
BRF Oldie
Posts: 3416
Joined: 29 Jan 2003 12:31
Location: Singapore

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by somnath »

abhischekcc wrote:
Somnath, I have done some studies of this mobile banking / corrospondent banking thingy so I know that it is not as simple as it looks on paper.

--------
This is not to say that the idea cannot produce pratical results, but jumping in with both feet without testing the waters is likely to be more wrong than right.

:)
sure the task isn't easy. Scaling up is going to be the challenge. But there are mitigating factors as well.

One, infra. People tend to think that all villages are relics of some Vedic age. In reality, good or bad, there are state organs touching many rural areas. Banks, RRB, post offices - the touch points of physical cash are many.

Two, there would not be one, but multiple BCs, as all sellers of services and goods would vie to become one - a bit like all merchants in cities try to have credit card pos machines.

Three, India has actually fairly low levels of banking inclusion, measured by that simple measure, bank account. Mobile banking ensures the cheapest last mile connectivity to a bank account. With all PSBs fully on core banking systems, or largely so, the ability to hook up with a mobile system is easier. So there is both consumer incentive as well as technical capacity for this.


But of course, it won't be a walk in the park. But it is far more realistic than voodoo economic objectives of 100000000000 trillion wealth requires for India to achieve nirvana!
Raghavendra
BRFite
Posts: 1252
Joined: 11 Mar 2008 19:07
Location: Fishing in Sadhanakere

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by Raghavendra »

somnath wrote:
Hari Seldon wrote:"If there is demand, supply will find a way."
ACtually not always...Not unless affordibility is stretched...An example from my home state, WB...There is a huge demand for tertiary medical services there...Has supply found a way in? In recent times, yes, but very limited and priced way above the means of most...As a result, Coromodal Express that runs every day from Calcutta to Chennai is called "Hospital Express"!

On the other hand, "supply creates its own demand"! But thats a different discussion...
Big hospitals are capitalist fronts exploiting the poor, WB being communist heaven doesnt need them, so say the commies.

If commie birathers are serious about increasing access to tertiary medical services they should lobby with WB based business houses to open medical colleges and hospitals and give assurance that they wont be killed like the managers of factories that have been killed by commies in the past. In a few years both human resources and medical facilities would be ready to take care of patients but commies being commies they are busy byhearting commie bible and making plans to liquidate their opponents
RamaY
BRF Oldie
Posts: 17249
Joined: 10 Aug 2006 21:11
Location: http://bharata-bhuti.blogspot.com/

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by RamaY »

Somnathji,

Let me say this before answering your points. "All of us want progress to reach four corners of Bharat."

The difference of opinions are on
- Definition of progress; for some it is "modern" education, "modern" amenities, and so on. For others it is "quality" education, "eco-friendly" amenities etc., It is up to the poster to present what "education" and "amenities" the s/he considers part of her/his definition of progress.

- Methods to implement this vision.

- Role of Government.

***

Earlier most of the discussion used to be around availability of funds. Apparently it stopped becoming a problem now as everyone talks about throwing few billion Rs here and trillion Rs there. If the economy and inflation grow at proportional pace, where did Bharat cross that critical mass? in 1947 or 1970 or 1980 or 1998? The average inflation date since 1969 is 7.99%. What does that mean?

It is interesting to note that while the onus of developing India is put on the Government, the execution responsibility is being taken away from the Govt; the popular reason being private sector's efficiency. While it is convincing to use the efficient aspect of the society in the short term, the long term success of any vision cannot be achieved without instilling similar efficiency processes and structures in Govt sector.

Coming to Cash transfers. On one hand people argue that this as the best solution (short-term focus); while complaining about the absence of supporting infra - UUID and Banking. So what is the efficiency loss in current NREGA program that is in place for past 5 years and distributed > Rs 100,000 crores? Is it 30% or 50% or 70%?

Who is responsible for this stupidity? Even an entry level project manager knows that dependent tasks must be completed before taking up high-value and high-risk activities. Who is fooling whom in PMO? Who is responsible for this oversight? Why coudn't they spend few thousand Rs to ensure that
- All BPL families got a cell phone
- All BPL families were given a UUID linked with their ration cards
- All BPL families are educated to use nearest post office or govt office or PDS center to convert their SIM card balance into Cash/Food grains?

and so on?

Where are these NGOs all these days? If they have been serving :roll: the BPL families day and night, why aren't they tagged along to remove duplicate entries in the list?

And finally, who is tracking the key metrics to get feedback on all these schemes and processes? The key metrices being
- Amount spent on Food security; Daily calorific intakes; associated HDI indicator
- Amount spent on education, access to quality education; associated HDI indicator
- Amount spent on economic security that is employment; access to vocational training and employment opportunities.

Kindly do not tell me that UUID will address this issue. UUID project scope doesn't include this. It just allows such eco-system to develop. It is up to the corresponding public/private/service/NGO sector to determine how to integrate UUID into their service models and what gets contributed (this is where vested interests come into picture) into the feedback mechanism.

***

This doesn't mean I am pessimistic about all this action. I appreciate this action (as chaos is Dharmic :P ); but I don't think that all these pieces come together, especially in the time of need, to enhance Indian Interests. By the way, Indian Interests is not some fashion statement nor an idea for uber-nationalists. Indian Interests is the word that encompasses the long-term well-being of all Indians; including the religious minorities.
Last edited by RamaY on 14 May 2011 02:21, edited 1 time in total.
RamaY
BRF Oldie
Posts: 17249
Joined: 10 Aug 2006 21:11
Location: http://bharata-bhuti.blogspot.com/

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by RamaY »

Somnathji

I outlined how UUID gets integrated in to various systems in related thread a long time ago. we can take related discussion there.
Theo_Fidel

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by Theo_Fidel »

What TN did was to improve the supply of doctors by allowing private 'donation' medical colleges to start up. They then set aside 1/3 of that for govt. quota. This doubled even tripled the number of doctors coming out. With the private sector paying for about 2/3s of the seats. So now every small town, village and street has at least one MBBS hoarding. Admittedly the quality has suffered a bit but pricing has come down too. Even a poor person feeling really sick can see a GP for Rs100 in 10 minutes flat FWIW. In really small towns doctors accept payment in kind, such a bag of rice or peanuts :-) or I even saw my Aunt accept 2 ducks once.

Now private clinics and hospitals are another matter entirely. Very expensive and not for the poor. But a new private innovation is nursing homes/hospitals. Apparently the regulations are lesser and cheaper. They are largely staffed by nurses and hence cheaper. But still not cheap enough for the abject poor. But these hospitals have taken pressure off the government run ones. So most TN hospitals are much less crowded and available for the really really poor. With the result that several TN govt. hospitals are over run by people from other states. Tamabaram TB hospital is now filled with HIV patients from all over India apparently, don't ask how that happened. For some reason the last time I went to MMC in Chennai it was over run with Rajasthani women in their colorful sarees. There was a good 200 of them.
vera_k
BRF Oldie
Posts: 4456
Joined: 20 Nov 2006 13:45

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by vera_k »

It struck me that these latest assembly election results are a setback for encouraging the politicos to put greater focus on HDI. Both DMK and CPI(M) had made good progress on the HDI front, but they are receiving a pasting.
Theo_Fidel

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by Theo_Fidel »

vera_k wrote:It struck me that these latest assembly election results are a setback for encouraging the politicos to put greater focus on HDI. Both DMK and CPI(M) had made good progress on the HDI front, but they are receiving a pasting.
In TN the situation on the ground rarely varies much party to party. The politics is mostly personality driven, hence name changing, pet project shelving, arresting defeated candidates and similar shenanigans are the name of the game. The one project I fear for is the Chennai metro as AMMA for some reason is sold hard on mono-rail. Otherwise AMMA actually has a much better recent HDI record, esp. in hospitals for women, police for women, protecting girl children, etc.

I thought the consensus here was the WB commies destroyed their social institutions. WB has one of the lowest HDI indicators in India. Or did I miss something.

Looks like AMMA and DIDI make a nice pair. AMMA's problem is the third year, something happens to her at that point and she goes crazy.
vera_k
BRF Oldie
Posts: 4456
Joined: 20 Nov 2006 13:45

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by vera_k »

West Bengal has one of the best Infant Mortality Rate in the country largely because it dropped massively over the last decade. On that count it rivals a highly urbanized state like Delhi where this indicator has not budged much for about 10 years.

2011 SRS survey

1999 SRS survey
Theo_Fidel

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by Theo_Fidel »

Thanx Vera,

Was not aware of that. Any idea how they did it w/ the hospitals in ruins and all? Keep in mind Kerala & Goa are less than 1/3 of WB's level.
vera_k
BRF Oldie
Posts: 4456
Joined: 20 Nov 2006 13:45

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by vera_k »

I have put it down to increased spending in that area by the state government, but this article also says greater autonomy to the panchayats played a role.

Why West Bengal needs a Left government
abhischekcc
BRF Oldie
Posts: 4277
Joined: 12 Jul 1999 11:31
Location: If I can’t move the gods, I’ll stir up hell
Contact:

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by abhischekcc »

vera_k wrote:It struck me that these latest assembly election results are a setback for encouraging the politicos to put greater focus on HDI. Both DMK and CPI(M) had made good progress on the HDI front, but they are receiving a pasting.
Commies around the world (except NK) are very good in delivering basic services (hence the jump in HDI), but very bad in letting the development go its logical conclusion. which is letting the people rise economically by using the better health/education etc to better their lives without needing government subsidies.

CPM/DMK have been thrown out for a variety of reason not connected with HDI.
somnath
BRF Oldie
Posts: 3416
Joined: 29 Jan 2003 12:31
Location: Singapore

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by somnath »

Interview with Raman Singh

Interesting interview in light of the discussion on Jean dreze's oped piece on DCT versus PDS.

Now raman Singh is neither commie nor DU/JNU nor nehruvian congressman. But his opinion on pds mirrors that of Jean dreze's, in almost as many words.

The reason's simple. Access and social realities of te country are important to take into account. C'garh is a wel off state, fiscally speaking, as it didn't have to carry too much of MPs debt. It also has impressive growth rates. But the elected leader, not from the "snake" category, lays so much importance on direct state intervetion for improving hdi.

Which is the other point. Execution is the respnaobility of the state govt, and while models can be worked upon, the last mile is always there.

It is an indicator of what is required - the intellectual rationale is well articulated, but so is the political one. Something to chew over!
Aditya_V
BRF Oldie
Posts: 14772
Joined: 05 Apr 2006 16:25

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by Aditya_V »

somnath wrote:Interview with Raman Singh

Interesting interview in light of the discussion on Jean dreze's oped piece on DCT versus PDS.

Now raman Singh is neither commie nor DU/JNU nor nehruvian congressman. But his opinion on pds mirrors that of Jean dreze's, in almost as many words.

The reason's simple. Access and social realities of te country are important to take into account. C'garh is a wel off state, fiscally speaking, as it didn't have to carry too much of MPs debt. It also has impressive growth rates. But the elected leader, not from the "snake" category, lays so much importance on direct state intervetion for improving hdi.

Which is the other point. Execution is the respnaobility of the state govt, and while models can be worked upon, the last mile is always there.

It is an indicator of what is required - the intellectual rationale is well articulated, but so is the political one. Something to chew over!
Yes that is why given the state of roads etc in C'garh and state of Bastar district upto 2003 December when leaders like Dijvijay Singh/Ajit Jogi made a mess of Goverence, it will take him time to get this State HDI up, but he is doing a good job.

The Maoists by coming in blowing Hospitals and schools and have caught this backward state unwares and vcaluable money is being wasted on Policing the state instead of developing HDI. Anyone interested in developing the state ( not keeping villagers backward so that they will never realise the value of thier natural resources) should help in education and building hospitals not blowing up.

Only the Illegal mining lobby(exporters of raw ore mainly to China), where settlements are made directly in foreign tax havens which benefit European Bankers are interested in keeping Maoism alive. They have deep pockets to buy journalists and foreign Governments to lobby thier cause.

Tell me do Indian observors go and sit in European Courts and sit ion Judgements reagrding Migrants or criminals in thier courts, then why do the French, Western European Governments are so bent on thier interference?
Why do these Western Companies who are haapy selling Guns to African wars and Pakistan Government suddenly don't want to sell arms to indian Police Forces?

Isnt the worst Form of Untouchabilty Visa norms where an Indian couple which was travelling to Finland was stopped, brutally treated amd sent back to India merely because the French Visa officer thought they were too poor to visit thier son? What visa did the European Ancestors in N America, South America, Australia and NZ take from the orignal inhabitants?

To me rich countries should preach Human rights only when they unlimited Visa numbers where poor people with no criminal background should allowed in easily to earn a livelyhood, just like European ancestors had the choice to go to Asia, Africa, Aus-NZ , N and South America.
vera_k
BRF Oldie
Posts: 4456
Joined: 20 Nov 2006 13:45

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by vera_k »

somnath wrote:Which is the other point. Execution is the respnaobility of the state govt, and while models can be worked upon, the last mile is always there.
This then means that the problem is more political than one of spending. At the state level, failure to improve HDI should be treated as a failure of the constitutional machinery and fit ground to impose A356. Similarly at the national level, it should be grounds for dissolving the Lok Sabha and calling for new elections.

Both measures will hasten the process of democratic change by letting people vote in alternative governments sooner than every 5 years. Another possibility, to impose some urgency is to reduce the terms of governments to 4 years from 5 years.
somnath
BRF Oldie
Posts: 3416
Joined: 29 Jan 2003 12:31
Location: Singapore

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by somnath »

vera_k wrote:This then means that the problem is more political than one of spending
Both...Even the most conscientious execution will falter is the outlay is x/3 or x/4...PDs actually is a good example of a place where outlay isnt (generally) the issue...Its the delivery system that is in shambles..But in many other areas (health, education etc) outlay has usually been as much of an issue as execution...

Whether Art 356 can be used for failures of governance is a differnet point, I am not sure that its a great idea..Participatory democracy is a far more effective tool to achieve outcomes than discretionary, and often arbitrary tools like Art 356..
Aditya_V wrote:Yes that is why given the state of roads etc in C'garh and state of Bastar district upto 2003 December when leaders like Dijvijay Singh/Ajit Jogi made a mess of Goverence, it will take him time to get this State HDI up, but he is doing a good job.

The Maoists by coming in blowing Hospitals and schools and have caught this backward state unwares and vcaluable money is being wasted on Policing the state instead of developing HDI. Anyone interested in developing the state ( not keeping villagers backward so that they will never realise the value of thier natural resources) should help in education and building hospitals not blowing up
I would keep the anti-insurgency record of the C'garh govt spearate from its record on PDS...On the latter, they have clearly done a good job, and more power to them...

There are big issues with their anti insurgency efforts though...And money isnt a constraining variable, either for that or for HDI spends...C'garh is positioned uniquely...It has fiscal space of its own, and being a "naxal affected" state, it also gets preferential grants-in-aid or matching grants from Centre on a host of areas...
vera_k
BRF Oldie
Posts: 4456
Joined: 20 Nov 2006 13:45

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by vera_k »

somnath wrote:Whether Art 356 can be used for failures of governance is a differnet point, I am not sure that its a great idea..Participatory democracy is a far more effective tool to achieve outcomes than discretionary, and often arbitrary tools like Art 356..
The underlying point I was making is that the democratic process needs to be hurried along. If the only way to get better outcomes is through a change in the government via democracy, then we are looking at 10-15 year (2-3 elections) timescales for voting out one party and voting in an alternative. IMO just having HDI be a factor in whether a government stays or goes will focus efforts regardless of the dispensation in power. And the decision should be taken by the PM in consultation with some number of CMs of other states both to avoid the appearance of arbitrariness and since other better performing states invariably have to deal with inmigration from failing states.
somnath
BRF Oldie
Posts: 3416
Joined: 29 Jan 2003 12:31
Location: Singapore

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by somnath »

Back to more mundane stuff...

Most of the street has bruched off the tactical uptick in IIP..
http://www.business-standard.com/india/ ... nt/435397/

More than the headline numbers, the hawkish RBI stance is an issue...A cost-push inflation, primarily on commodities and bottlenecks is being sought to be fought with monetary tools...The similarties with 1997 are uncanny...
nandakumar
BRFite
Posts: 1673
Joined: 10 May 2010 13:37

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by nandakumar »

Agricultural labour wages are up 50 per cent in two years as this news report says.
http://www.thehindubusinessline.com/tod ... 021962.ece
The policy dilemma for the Government would be how much of this increase should be factored into the MSP price for wheat, rice etc. Such input cost driven increase in prices would set off another bout of inflation. Not factoring the increase too would be politically damaging. Gulati's suggestion quoted in that news report is interesting. He argues for a wage subsidy funded out of NREGA outlays for farm work. This he argues, could be done by diverting the wages payable under the scheme to farm work done in private agricultural fields. This way MSP need not be revised and at the same time farming continues to be viable at the current support prices.
somnath
BRF Oldie
Posts: 3416
Joined: 29 Jan 2003 12:31
Location: Singapore

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by somnath »

^^^Prof Gulati makes an exellent suggestion...A variant of the universal basic income concept in vogue for some time now (Jean Dreze referred to that too in the article on DCT)...Execution will be a challenge, especially on "targeting"..Who should the "incremental payment" go to? All farm labourers? should they go to migrant labour as well, who get paid much more?

UID and an individual deprivation mapping index would enable some of this....
nandakumar
BRFite
Posts: 1673
Joined: 10 May 2010 13:37

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by nandakumar »

somnath wrote:^^^Prof Gulati makes an exellent suggestion...A variant of the universal basic income concept in vogue for some time now (Jean Dreze referred to that too in the article on DCT)...Execution will be a challenge, especially on "targeting"..Who should the "incremental payment" go to? All farm labourers? should they go to migrant labour as well, who get paid much more?

UID and an individual deprivation mapping index would enable some of this....
The other advantage that i can see from the suggestion is that it doesn't force the rural administration to look for trench digging and trench filling kind of jobs which alone are eligible for NREGA funding
Supratik
BRF Oldie
Posts: 6530
Joined: 09 Nov 2005 10:21
Location: USA

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by Supratik »

Somnath,

Actually in case of Brazil they found out that the CT scheme was not delivering on reducing poverty levels.
So they introduced the innovation of linking the amount of CT with the recipient families ability to keep its children in school.
An example in India would be the mid-day meal scheme. Now the government could have just fed children from BPL families but by correlating it with school education they aim to achieve more. Personally I would like to see the mid-day meal scheme to be extended upto high school instead of going back to universal PDS and other such failed schemes of the socialist years that Drez and colleagues are suggesting. Similarly it has been seen that in many cases the parents would rather have their children do menial work than keep them in school. We should use any CT scheme to make more people enter the mainstream economy instead of it becoming a permanent dole-out by the Govt. The ultimate aim of any CT scheme should be a temporary intervention to give the affected party a chance to come out of his/her economic situation. Anything else will become state spending as in the failed socialist countries which will result in disastrous consequences. Lastly, except China most of these countries had relatively lesser population as compared to India. Even if we consider CT intervention at 10% of the population in poverty then we are talking about 150 million people. A permanent dole-out without any tangible outcomes is simply not sustainable IMO. So the question remains whether Drez and colleagues in the NAC are thinking along those lines or is it just a rehash of "garibi hatao" and other such nonsense of the past.
Theo_Fidel

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by Theo_Fidel »

http://www.financialexpress.com/news/po ... e/791647/0
Soon after the Trinamool Congress and the Congress combine got a thumping majority in the Bengal polls, Union finance minister Pranab Mukherjee cleared the R1,440-crore revival package of Hindustan Steel Works Construction (HSCL). HSCL, the ailing PSU, under the administrative control of the Union steel ministry, became the third central PSU in the state after Burn Standard and Braithwaite, to get central assistance for a fresh lease of life.
Yes, that is right. Last net profit 32 years ago!
HSCL, referred to the Board for Reconstruction of Public Sector Enterprises (BRPSE) in 2007, earned its last net profit in 1978-79. However, after a gap of 24 years in 2002-03 it could earn a meager operating profit of R3.94 crore and thereafter continuing to post operating profits over the last nine years.
Meanwhile...

http://www.hindu.com/2011/05/17/stories ... 590100.htm
Hours after she assumed office, Ms. Jayalalithaa went to Fort St. George, which has again become the seat of power, and gave her formal approval to seven proposals that included provision of 20 kg rice free of cost for those entitled to rice under the Public Distribution System. Beneficiaries of the Antodaya Anna Yojana Scheme (for the poorest of the poor) will get 35 kg rice free of cost.

Other approvals given by her included distribution of four-gram thali( mangalsutra) free along with marriage assistance of Rs. 50,000 (which was earlier Rs. 25,000) to women with graduate degrees or diplomas; increase in the monthly assistance from Rs. 500 to Rs. 1,000 for senior citizens, persons with disabilities and destitute women; hike in the assistance from Rs. 1,000 to Rs. 2,000 for fisherfolk during the 45-day ban on fishing; and a six-month-long maternity leave for government women employees. Under another marriage assistance scheme, four-gram thali ( mangalsutra) would be given free coupled with Rs. 25,000 to educated poor women.
The UPA will probably be crushed in the next polls, which will allow the princeling to take over...
somnath
BRF Oldie
Posts: 3416
Joined: 29 Jan 2003 12:31
Location: Singapore

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by somnath »

Supratik wrote:Actually in case of Brazil they found out that the CT scheme was not delivering on reducing poverty levels.
So they introduced the innovation of linking the amount of CT with the recipient families ability to keep its children in school.
An example in India would be the mid-day meal scheme
The Brazilian bolsa scheme is actually an example of "conditional cash transfer", or CCT...In India, there are a few instances of that, most notably Nitish Kumar's cash transfer to girl students to buy cycles, which became quite a hit...The mid-day meal scheme too is somewhat similar - the kid has to attend school in order to get the meal..

Finally, all welfre schemes need to be "outcome-led"...And entitlements need to be tailored to needs...The biggest challenge is always in "targeting" and "measurement"...

Which is why NREGS is conceptually so elegant...The need for the "works programme" means that only those who have no other choice will participate - automatic targeting, and those who move up in life subsequently (say by getting a job at a construction site in Delhi) will not participate...Therefore it is a "self selecting" welfare programme...

PDS, efficiently administered, too is similar...Remember that the goods being sold via PDS are primarily (in econ terms) inferior goods and/or giffen goods...If coverage is universal and efficient, it means that only those who really need it come to buy, while those who have moved up in life to afford "superior" goods dont...The issue arises due to a) BPL card based targeting and b) inefficient administration...Both of these give rise to leakages, reduce coverage and engender corruption...Refer to Abhijit Sen and Himanshu's paper (linked above) for the data...Instances of C'garh and TN show that an efficient administration can ensure both universal coverage and reduced leakage...
Supratik wrote:Lastly, except China most of these countries had relatively lesser population as compared to India. Even if we consider CT intervention at 10% of the population in poverty then we are talking about 150 million people. A permanent dole-out without any tangible outcomes is simply not sustainable IMO
The numbers are daunting no doubt...But today, resources are not as big a constraint as before...The issue really is of execution...As growth and higer skills pull people up the ladder, a lot of the programmes will see reduced participation...We see that already in parts in PDS-particiaption in urban areas...

In terms of money, just have a look at the taxes foregone every year on exemptions (mind you, exemptions, not tax rate reductions), and subsidies - I have linked up the source many times in the past.....Almost all the former, and bulk of the latter go to upper middle class/rich individuals and businesses (a lot of it straight to plain crooks like KP Singh and Jaiprakash Gaur)....Tapping into even 30-40% of these would fund most programmes comfortably...

EXecution is the real challenge..The reason why the erstshile "garibi hatao" measures didnt work was poor execution (and inefficient outlays) - which meant that there was no real difference made..
somnath
BRF Oldie
Posts: 3416
Joined: 29 Jan 2003 12:31
Location: Singapore

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by somnath »

Sometime back there was a discussion on the 1990 crisis, with some people describing it as a "fiscal" crisis...While a lot of erroneous assumptions went behind that particular hypothesis (on India's fisc, so-called govt largesse etc), the key conceptual point that one made then is that a "crisis" is almost necessarily of external dimension...Economies do not implode on internal grounds, generally...

An interesting article on the same topic..

http://www.business-standard.com/india/ ... ne/435744/
The current crisis in the eurozone is known around the world as the “euro sovereign-debt crisis.” But the crisis is really about foreign debt, not sovereign debt.
The importance of foreign debt is well illustrated by the case of Portugal: although the country’s public-debt and deficit ratios are broadly similar to those of France, the risk premium on its public debt increased continuously, until it was forced to turn to the European rescue fund. The key problem confronting Portugal is thus not fiscal policy, but the high (foreign) debt of its private sector — its banks and enterprises.
Read in full..

Now India of course didnt really have a very high "foreign debt" even then, but the Gulf War spiked the external account too much to service even the mdoest levels that we did...
Arjun
BRF Oldie
Posts: 4283
Joined: 21 Oct 2008 01:52

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by Arjun »

somnath wrote:An interesting article on the same topic..

http://www.business-standard.com/india/ ... ne/435744/
The author's primary point is that fiscal adjustment is necessary but insufficient to resolve the Eurozone crisis - it needs to be combined with a reduction in dependance on foreign debt. So he is not discounting the importance of fiscal adjustment.

Also, as the author himself notes Argentina was a case of a country with little foreign debt that was close to bankruptcy...Ireland and India (1990) are other similar cases. The inference is that having low levels of foreign debt is not a sufficient condition to escape an economic crisis. That would therefore imply the importance of a prudent fiscal deficit when the economy is robust - so that if and when the economy takes a hit there would be leeway to provide a fiscal stimulus to get the economy back on track.
somnath
BRF Oldie
Posts: 3416
Joined: 29 Jan 2003 12:31
Location: Singapore

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by somnath »

Arjun wrote:Also, as the author himself notes Argentina was a case of a country with little foreign debt that was close to bankruptcy...Ireland and India (1990) are other similar cases. The inference is that having low levels of foreign debt is not a sufficient condition to escape an economic crisis.
Certainly not, he is referring to "net foreign debt", and the uselessness of that as a "saviour"..Certainly not that Argentina had low levels of foreign-held public debt..That would be too glaring an error for any half-decent policymaker to make...
Argentina, which did not have a large net foreign debt. The private sector had large foreign assets, while the government had about the same amount of foreign liabilities
So the govt's large external liabilities were offset by pvt sector foreign assets...But it meant nothing as the govt is liable for all gross liabilities...Which was very very large for Argentina, as anyone with a semblance of familiarity with the crisis would know (its a classic case study)....And the govt is also liable for organising "hard ccy" for pvt sector foreign obligations...Both Econ 101 public policy...

In India's case, public debt held by foreigners was small, but there were large current account obligations that needed to be financed..And there was no foreign exchange, basically as remittances dried up...

Net net, fiscal deficit by itself will almost never trigger a crisis unless foreigners hold a large part of the debt and there is an "external account" issue...Which is the point that the author is making...

Which is precisely why there had never ever been, in history a default on domestic debt by any govt (barring one case by Russia)...Its tautological..
Arjun
BRF Oldie
Posts: 4283
Joined: 21 Oct 2008 01:52

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by Arjun »

somnath wrote:Net net, fiscal deficit by itself will almost never trigger a crisis unless foreigners hold a large part of the debt and there is an "external account" issue...Which is the point that the author is making...
Lets look at this issue on two fronts-

1. Can a fiscal deficit alone be the cause of a crisis ?
2. What fiscal scenario is ideal when faced with an eventual recession - which is a normal part of the economic cycle, & cannot be avoided ?

In answer to (1), you are correct in that fiscal deficit alone can never trigger a crisis. But that is just as true for any of the other factors. Inflation, CAD, low growth, unemployment, fiscal deficit, public debt - none of them on a standalone basis can trigger a crisis, but its in combination with one or more of the others that lead to issues. Also all are highly interlinked in that an imbalance on one front can result in an imbalance in one or more of the other factors.

The only inference to make from this scenario is that fiscal deficit is one of the major factors responsible for crises - and that implies that the deficit needs to 'controlled'. There are norms in place that all economies aim for as regards inflation, growth, unemployment - and similar prudential norms are very obviously required for CAD, fiscal deficit and public debt. That is my sole point.

In answer to (2), lets look at the situation when a recession does hit India. If the country is already at a fiscal deficit of 8% in normal times, in a recession the same deficit would shoot up to say 13 - 14%, and when you add a fiscal stimulus on top of that to get out the recession - you are looking at deficits of close to 20%. That is definitely pushing the country close to the brink!

On the other hand, if you have a cap at say 4% for normal times, you then have the leeway to spend your way out of the recession.

The issue of a prudent cap on fiscal deficit is commonsensical. You would note that I am not even talking in terms of a surplus, and morover am supportive of a fiscal stimulus during recession.
Post Reply