Indian Economy: News and Discussion (June 8 2008)

[Shivani]

Economic growth stifled by poor infrastructure

Apart from adding significantly to the cost of doing business, infrastructure bottlenecks deter foreign and private investors, and constrain the process of growth. Unless these are addressed quickly, it will be difficult for India to break into the big league, says KAMLENDRA KANWAR.



The ongoing global credit squeeze is bad news for India’s infrastructure plans which are critical to the country’s future goals. In the ramshackle state in which infrastructure is in today, it is robbing the country of substantial investment that would otherwise have come its way.

While India has climbed to the number two position in attracting foreign direct investment, many potential investors are shying away, deterred by the abysmal condition of Indian roads, traffic congestion, flight delays, and chronic shortages of power and water.

Economist Jagdish N. Bhagwati, who currently teaches at Columbia University, said recently that India’s GDP growth would run two percentage points higher if the country had decent roads, railways, and power.

Long way to go

There is indeed much to do in the infrastructure sector to come up to international standards. Highways, modern bridges, world-class airports, reliable power, and clean water are in desperately short supply. Power shortage is estimated at 12 per cent at peak levels and 8 per cent at non-peak levels. Indian ports have a vessel turnaround time of three to five days, as against only four to six hours in Singapore and Hong Kong.

Most large Indian cities are overstretched in terms of infrastructure due to fast growth. The national highways account for two per cent of total road length, but 40 per cent of total traffic. By adding significantly to the cost of doing business, infrastructure bottlenecks deter foreign and private investors, and constrain the process of growth.

Unless these issues are addressed quickly, India faces the prospect of missing the bus after all the hype that has accompanied the impressive rate of growth in the last few years.

Funding is understandably a challenge for the country’s infrastructure projects exacerbated as it is by the global funds crunch in the wake of recession, but the problem is not just that. There is rampant corruption and bureaucratic red tape which delay projects and escalate costs for those that are looking to move ahead.

A Malaysian Indian told this writer recently how he had collected all his life’s savings and decided on setting up a small-scale unit in Karnataka so as to spend his ripe years in the country of his ancestors. Much against the advice of many, he migrated to India with his family.

A few months were, however, enough to chasten him. He was confronted at every stage by corrupt and extortionist Indian officials for every little sanction that he needed. Ultimately, he chose to pack his bags and return to Kuala Lumpur, resolving never to venture into India again.

Such instances of NRIs throwing up their hands in disgust abound and are a deterrent against greater investment flowing into the country.

For a country that is looking at an investment of nearly $500 billion in infrastructure alone over the Eleventh Plan, such a state of affairs is hardly reassuring. In China, the non-resident Chinese account for the bulk of the total foreign investment into the country.

Says a blog on the Internet from one who knows the ground realities: “China can build an airport from scratch in one year; that is the same amount of time the Indian government takes just to propose building an airport. Going through the bureaucracy is the biggest hurdle. There is no dearth of skill, labour, or technical know-how. The biggest problem is the hurdles one must cross with the government.”

Bangalore’s plight

Look at Bangalore, the software pride of India, as an example. Its poor roads and chaotic traffic conditions are a nightmare for commuters with the number of vehicles on the roads having increased 10-fold since 1985. Traffic moves at a shocking 10 km an hour during peak hours and that has forced many companies to relocate to Mysore or to other southern States.

Bangalore’s Metro Rail has been in the making for 26 years. It was conceived in 1982 when the first of four plans for a rail system was unveiled. But each of those plans was stymied by bureaucratic red tape and corruption. These plans were eventually abandoned by successive State governments due to differences over funding or regime changes.

With a staggering three million cars, buses, trucks, motorbikes and auto-rickshaws vying for space on the city’s pot-holed roads (and a thousand more being added every day, thanks to better affordability), Bangalore’s Metro Rail managing director is on record saying that the project when completed by 2011 would cater to only 15-20 per cent of the transportation needs of the city.

The present blueprint for Bangalore Metro was produced in 2003. It was April 2006 by the time the Central Government approved it and sure enough, the costs had escalated by 16 per cent by then.

In March this year, work on the first 7 km stretch began, but the tendering for the remaining 26 km has not even taken place.

A new airport was commissioned this year after much bickering over its distance from the city. And how much time did it take? As many as 17 years from the time the tendering process started. One can only keep one’s fingers crossed that the rail project would be completed by 2011.

Yet, as the outspoken founder and chief mentor of Infosys, N. R. Narayana Murthy, said in a recent interview: “If our infrastructure gets delayed, our economic development, job creation and foreign investment get delayed. Our economic agenda gets delayed — if not derailed.”

Indeed, Bangalore’s problems are no different from the rest of the country’s woes.

Corruption, bureaucracy

It is all very well for the Indian government to resolve to step up spending on infrastructure from the current five per cent of GDP to nine per cent in the next five years, but if corruption is not controlled and the bureaucracy continues to delay projects, one can hardly expect the huge inflow of investment into infrastructure that is required.

The recent Government order enhancing the limit for borrowing abroad for infrastructure projects from $100 million to $500 million can help only marginally, considering that the cost of borrowing abroad has gone up sharply.

Last year, foreign funds were available at LIBOR plus 40 basis points. Now, the rate is LIBOR plus 350 basis points. This is unlikely to ease until the global crisis abates and that is steeped in uncertainty.

If industrial production slowed down to a mere 1.3 per cent in August, the lowest for a month in a decade, it was in no small measure due to the slowdown in the infrastructure sector.

Slower growth

Latest Commerce Ministry figures show that growth of the six core infrastructure industries — crude oil, petroleum refinery products, coal, electricity, cement and finished steel — which account for 26.7 per cent of industrial output, accelerated by 4.3 per cent in July, down from 7.2 per cent in the same month a year earlier.

All said and done, if India is to break into the big league, it is vital that the infrastructure dream be at least substantially fulfilled sooner than later. With the kind of bottlenecks there are, that is indeed no mean task.

(The author is former Editor (Tamil Nadu), The New Indian Express, Chennai.

[Katare]

India to have near 0% inflation in H2 of '09

[Katare]

FDI increase 259 per cent in September

[Suraj]

The continued strong FDI growth is very good news indeed. IHT has more details:
India's FDI up 259 percent in September

For the April to September period, FDI grew 137 percent, to $17.21 billion. Services, construction, real estate, and computer hardware and software attracted the most investment, the ministry said.

Foreign investors fleeing risk and seeking liquidity to meet redemptions back home have helped drive the nation's benchmark stock index down more than 50 percent this year.

Though the tide started to turn this month, with net foreign institutional investment in India's stock markets of $459 million, the flight of dollars has caused the rupee to depreciate sharply, wreaking havoc with corporate earnings.

In contrast, export data, released by the Ministry of Commerce Monday, still looks "healthy" Gokarn said.

From April to September, exports were 4.05 trillion rupees ($95 billion), a growth of 30.9 percent in dollar terms and 36.7 percent in rupee terms from last year, the ministry said.

Exports during the month of September were valued at 626.41 billion rupees ($13.7 billion), which was 10.4 percent higher in dollar terms and 24.7 percent higher in rupee terms than last year.

In dollar terms, that's the weakest export growth since November 2005, according to Citigroup.

Gokarn said rupee depreciation helped local manufacturers offset slowing sales overseas in rupee terms.

He cautioned, however, that September's retreat in dollar terms suggests that the slowdown in global demand has started to affect India.

October data would be interesting to see. The Chinese are already reporting significant shortfalls in export growth.
Direct tax collection growth slows to 28% in Apr-Oct

Direct tax collections in the first seven months of the current fiscal grew 28 per cent, significantly slower than 43 per cent in the corresponding period last year, because of poor advance tax collections.

However, this is still above the 26 per cent growth needed to achieve the revenue department’s internal target for the current financial year.

Advance tax receipts grew a paltry 13.57 per cent in April-October 2008. As advance tax collections account for nearly two-fifths of the central government’s direct tax kitty, any slowdown under this head will bring down the overall growth.

A slowdown in advance tax collections is also considered a leading indicator of slowing economic growth as companies and individuals pay advance tax on the basis of their earning estimates for the full year.

“The growth in advance tax collections is likely to come down further in the quarter ending December 31,” said a senior Central Board of Direct Taxes official. However, the department was trying to make up for the lower advance tax collections by strictly enforcing tax deducted at source (TDS) rules and raising additional tax from companies evading taxes, the official added.

[vina]

As I look around and see the economic scene in India a decade or so from now, what is clear is that on the whole the economy will be dynamic and growth will be explosive. The chief benefecieraies will be the states in the peninusla (TN,KA, Andhra..kerala will muddle along with gelf fuelled money and commie ding dongs doing their hardest to pull it down), the west (MH, Goa, Gujarat) , along with North India (Punjab, Haryana and Dilli and places like western UP).

What about the traditional horror stories of india, the BIMARU states ?. Rajasthan is transforming, and I think Orissa is as well. Earlier, the "divide" in India was the line joining Vizag and Kanpur. West of that was an India with promise, to the east of that was a hell hole, both industrially and also HDI wise. What would have changed is that the line instead of Vizag, would probably be from Bubaneshwar to Kanpur.

How will the vast regions in UP, Bihar, MP, Chattisgarh, Jharkhand , West Bengal, North Eastern states fare ?. Not very well I think. UP and Bihar have per capita incomes which are a fourth to a sixth of Maharashtra. That gap will widen.. Those states with huge population will be an area of abject misery and poverty, with migration and crimes being the only real outlet for any economic and social advancement. With the disastrous 15 years of Laloo rule in Bihar and the equally disastrous last 20 years of "non govt" in UP and the fashionably JNU chic rule of two terms of that Digvijay Singh and I am sure the equally disastrous Arjun Singh year, where the focus was on "empowerment" (other term for politics of indentity and conflict), is there any space for a forward looking , creative politics which promises development and prosperity.

Unless the politics of those places shifts fundamentally to focus on development and growth, there is no hope for the folks there. "Bihari" and "Bhaiyya" would increasingly become terms of ridicule and abuse and the MNS like idiocy would find fertile catchment in other areas.

I think something fundamentally has to be done for the regions east of the line from Bubaneshwar to Kanpur. There needs to be massive investment in physical and human infrastructure, politics need to be transformed to be more forward looking and we will need peace and stability. It has to start with getting the politics in. Are the people ready for that ?. Has any Bihari / Eastern UP type done any soul searching what the politics of the past 20-25 years has led them to and are they ready to break with it and chart a new path ?.

Bengal is a lost cause and a basket case. I dont think anything much can be done there . Maybe Orissa can be the new engine for growth in the eastern part of the country. What will it take for Bihar to go from being a basket case to a turnaround.

Long term, I am very pessimistic about the India growth story if this is not addressed. The only hope for the Indian heartland is if massive investments happen in physical infrastructure and value added manufacturing starts moving inland in search of arbitrage due to wage and productivity differences and people in those areas actually have the earnings power to start consuming. The Indian market consumptions are skewed terribly. The most populated regions (the Ganges belt), consumes the least (on a per capita basis) and is the poorest. Turning around UP and Bihar alone is the only scenario where India can shine (the hope is WB can be shamed finally to doing something, rather than intellectual masturbation ) and the vast numbers of people in the eastern and north eastern parts can be pulled out of terrible poverty.

[Manu]

Similar Theme expressed Here. It is a ticking Time Bomb really. Not to mention that the most vicious followers of ROP are also from the Heartland area. Where I disagree with Vina is that I am not that optimistic about Kerala, though. In Fact, I will say that it is going to become a National Security threat in the coming decades.

The next City to crumble under the weight of Massive Influx and Inter-State Migration will de Delhi. Mark my words.

[Shivani]

How so? Delhi already has one of the highest number of 'migrants' and outsiders working in all types of jobs. And they have grown over the years: NCR.

With the exception of some private islands that have been constructed in the past decade, the larger parts of NCR -where common people live- are already "crumbled" in that the conditions are not any different than other cities in India. And the parts where the political elites reside will not be allowed to crumble.

[vina]

The next City to crumble under the weight of Massive Influx and Inter-State Migration will de Delhi. Mark my words.

Oh.. That will give Dilli the excuse to steal even more from other states. Anyways, since Dilli is stealing their money, the folks from other parts might as well follow their money to Dilli and make themselves a royal nuisance and give a big headache to the Billis.

[Manu]

You are right of course, Shivani. But Delhi's Urban Sprawl has Gurgaon, Faridabad, Gaziabad and of course Noida to spread to. Mumbai has simple no room. That is why the situation is not as bad as Mumbai. And Yes, South Delhi is Still not as bad as the rest of the place, trees, parks and open spaces are simply disappearing. I don't know how the 2010 Commonwealth Games will be hosted.

And to Dear Vina (Agent Provocateur, as always), If your goal was to inspire a feeling of despair in my weak Billi heart the likes of which hasn’t been felt since Whoopi Goldberg hosted the Oscars, then Bravo! You have succeeded.

[Kakkaji]

Nitish Kumar in Bihar, Navin Patnaik in Orissa, and Raman Singh in Chhattisgarh are providing reasonably good governance. If they can continue for ten more years, then there will be visible positive impact.

Jharkhand is resource rich. With good governance, it can become the Ruhr of India. Naxal menace will have to be curbed. Maybe it should be put under President's rule for 10 years.

UP needs to be divided in 3 or 4 states. Hopefully 1 or 2 may get good governance and start leading the others by example. Currently UP is just too large to be manageable.

Unless UP and Bihar improve, migrants will continue to pour into Mumbai and Delhi.

[Surya]

Vina

on the flip side the bulk of Indias defence manpower now comes from UP and Bihar.


The main thing is to break these into smaller manageable chunks to get them going.

UP especially gets away because of its ridiculous influence at the center.

[sugriva]

As regards the currently well developed states of TN, KA, KR and AP, the population there is mostly stable and will get older in the years to come. Then the people of Bihar and Jharkhand will migrate there too for the menial jobs that nobody in these states will want to do. This should have a trickle down effect on these states as these people will send back money to their home states, similar to what has happened in KR already with gelf money.

[satya]

Problem states of UP & Bihar will not change course simply by breaking them into 4-5 smaller states , it may help but its not the sanjivni buti for their socio-economic backwardness unless the stakeholders/educated working people of these two states stay back and make a difference ie immigration from these two states need to slow down drastically . Reason , only now we are seeing the immigration of people from UP/Bihar to as far as B'glore /Mumbai but they have been migrating since independence for they already had a lead in university education pre-independence universities & colleges in UP & Bihar but for GoI development model& low level political gains where scarce resources were put in states other than UP & Bihar , these educated /trained people had to migrate to other states to earn a living .Things got worse with the present day developed states having lead in both education & employment opportunities and continuous migration for all these decades from Bihar & UP has left them with just 'manpower' not trained not educated just manpower as a commodity nothing else . Another issue is their sense of not belonging neither here nor there for example In Agriculture University in my native state, we still have substantial number of teaching staff & researchers from Eastern UP but here's the problem they have not assimilated in Haryana , still maintaining their aloofness and keeping connections back home in East UP, not that its bad its just that they see their home state back in UP as a failure and in Haryana they feel themselves as outsiders so na idher ke na udher ke . You can see this sort of attitude in Delhi & other cities from people of these two states . They are just trained manpower with not much significant social contribution/sense of belonging to the place they leave and they currently reside ( pls discount JNU types ) unless these people are made to stay back for they are the cream of their native states you see no hope unless there's reverse massive immigration from more prosperous states to start businesses or farming in UP & Bihar that may help .We need to make this migrating worker mass as stakeholders till then we are a land of future hope & promises but all in future nothing in present .

[fanne]

Bihar, Chattisgarh and Orrisa are changing. MP leads the nation in % chnage of may indices that measure economic and social changes (though it does that from a lower base). The story that Vina says is old one and of course in current scenario quite superficial. Bihar has turned a corner. There are news in this BR, which says, less and less Biharis are migrating. Patna is a non-negotiable city right now – not because if you go, Biharis will kill you, but because, they have initiated so many infrastructure projects that daily commute has become a challenge – just like, heavy rain floods a deseart more easily than it does a tropical forest. In fact, it was argued, that Jharkhand would do much better with its ore and more cosmopolitan population, it has gone far backward in comparison to Bihar.
If you were to go to Chattisgarh, you would not recognize Bilaspur. That city has changed, development and all that. Orrisa has many new mega project coming up. People there are happy with corruption not being an issue. I don’t see why anyone would have a stomach ache, Oriyas do not migrate anywhere and they are happy to live in their village and have a simple lifestyle. I don’t think anyone who posts here drives a Porsche and owns a gulfstream (or is TFTA).
So thank you very much, India’s hell hole is doing fine. Get some other hobby or beat someone else.

[Manu]

It would help if things are not taken personally. This should not become a sensitive/Taboo topic as is the case with any discussion on WB. In a family, if one bother is not doing well, the Parents and Siblings have a duty to help him in any way that they can. We are only trying to find ways to help our Brothers reach their full potential. The discussion here is purely from an Economic point of view, BTW.

The Heartland is from where India will rise once again, or not at all.

Though it is not a very good analogy, try to read John Steinbeck's Grapes of Wrath. People, even in the same country, have often had to endure hardship and move elsewhere. This applies to many, many communities in our Country.

[Singha]

many of todays pop in rajasthan, dilli, punj, haryana, J&K came from a region
bounded in west by black sea and east by kazakhstan - Indo-Scythia.
referred to in Mahabharata as the 'warlike tribes of the NW'. whenever central power
as in the Gupta, Maurya or Satavahana dynasties weakened, they would advance
further south and settle. even the north kerala Nair's are supposed to be a branch.

http://en.wikipedia.org/wiki/Indo-Scythian

the definition of hell-hole changes from time to time. todays cosmopolis was yesterdays flea bitten tatooine. a few decades are nothing. I would be cautious about beating up
certain states because of their current circumstances much of which is due to political
machinations.

a grevious blow to bihar-UP which has been missed is that GOI has decided to only
focus on the high speed rail and industrial corridor between delhi and mumbai with
japanese funding. the eastern one from delhi to kolkata lies abandoned pending
funds.
toyota is going to make small cars in BLR and is pressing GOI and state govts to
make a similar high speed industrial corridor from BLR->MAA. an expway was already
planned, and the rail link is actually quite good though can always be better.

Up-Bihar already have a dense rail network, and quite some stretches are electrified.
they have willing hordes of people, no lack of rainfall and some old universities and
colleges. I dont see a reason why agriculture and industry cannot thrive there.
its the transit hub of the country for commodities...yet mughalsarai is the coal
pilferage hub of the indian railways.

holdouts like the musalmans who breed 10 and refuse polio drops must ofcourse
be caught by scruff of neck and told to get in line or else emigrate to pakistan.

[vina]

Bihar, Chattisgarh and Orrisa are changing. MP leads the nation in % chnage of may indices that measure economic and social changes (though it does that from a lower base).

The last time I visited the eastern part of the country was in the early 90s, just as Shri Laloo Yadav was getting started on his "revolutioniary empowerment" . I noticed first hand on the effects of his rule in the law and order and other situation in a part of the country that was then in Bihar , but now in Jharkhand. From all accounts from people I knew from that part, things got worse, a lot lot worse in fact and the pinnacle was probably Mrs Yadav's rule. Frankly from even the low base, whatever was there has been driven to the ground and made into dust. I guess it finally reached a breaking point that people decided that they were screwed so badly that they should get over their "caste" phobias and fetishes and vote that guy out. But the Lalloo clan (and also Digivijay and Arjun and Mulayam etc) while the wet dream of JNU type "subaltern" and "empowerment" and all that wugga wugga basically extracted tremendous human misery and costs on an unfortunate people. The sad part of it is if one were to ask Laloo, what do you have to show for your 15 years of rule in Bihar , I doubt you can get a coherent answer.

If there is one, I'd like to hear it. Any JNU type "empowerment" lurkers, pls try your hand here. Show something concrete and tangible , that made a material difference other than "one of our own became CM and we feel elevated".I frankly am hard pressed to find any.

The day Laloo kind of politics becomes the going currency in the rest of India, it will be a travesty. In fact, I would think the MNS and Shiv Sena kind thing is really not targeted at the avg Bihari at the street in Mumbai. Come on, lets face it. What the MNS and Shiv Sena are fighting is actually the attempts by the UP and Bihar politiciand to use the huge migrant population in Mumbai as a vote bank to build bases there. That is exactly the attempt of Mulayam with UP and Muslim vote catching attempt and the same with laloo and the bihar population. In fact the sharpest exchanges were between Lalloo and Sanjay Nirupam,before Sanjay switched to Congress. The local Marathi politicos feel that with the demographic changes in Mumbai and with the new migrants voting on atavistic lines , it is not issue based politics, but identity politics which they would lose in the new situation.. hence the calls for assimilating.

Bihar has turned a corner. ....If you were to go to Chattisgarh, you would not recognize Bilaspur. That city has changed, development and all that.

I am glad if that is really happening and things are changing. To recover from the devastation of the Laloo years will take a while, to even get back to the perious (aleit low) level. Long term, I am not very certain of consistent positive change in Bihar, unless the corrosive politics of the Laloo kind and the general thuggery ,goonda gardi and rangdaari, so prevelant as a means of social and economic business model is broken. The other states like Orissa, Chattisgarh etc are poor, but they are great hopes of a bright future, where their resources and skills can be tapped with investment to create prosperity,because they dont have the layer upon layer of violence and coercion.

[Dileep]

KL is already a Gelf to east of centre, to pick up the lower tier jobs, as Tams move out. A good indication is the number of Chaat stands, trademarked "Yadav Bhel Puri".

[Sachin]

KL is already a Gelf to east of centre, to pick up the lower tier jobs, as Tams move out.

True. Heard that construction labourers are now predominantly from Orissa, Bihar etc. Tams have now moved to slightly different trades. In some places they pioneer the "iron/pressing" kind of jobs. They make money by pressing/ironing out clothes. With many of the people now having washing machines, the next irritating job is passed off to these folks. In some places Tams are also active as "money lenders", but don't know how they can get the muscle power to deal with the defaulters (who are local Mallus).

[Dileep]

Ironing is a monopoy of Tams.

Lots of Tams went back as opportunities are a-plenty in TN itself, and Bihar/Orissa filled the gap.

The money lender thing is a totally different scene. Not the normal, humble SBRE Tam who come to clean your yard calling you "chaare" or "shETTaa". These are the aruvaaL wielding virumaandi types. They bring in money from the rich lords of TN and lend at cutthroat rates. Take one look at the guy, and you wouldn't even think of not repaying!!

The jobs of cleaning up, hauling dirt and waste are still monopolized by Tams. The BH/OR crowd are into construction jobs onlee.

[Rahul M]

carrying on from where kakkaji and fanne left, at least in bihar and orissa governance has been pretty good the last few years. In fact I think currently bhubaneshwar is the best city to live in in entire eastern India, over kolkata in fact.
my patnaiyaa friends tell me that bihar has improved considerably in 2 areas -- law and order and attendance of govt employees, including in education department.
one ndtv programme a few months back on 'changing face of bihar' had an interesting stat.
I'll try to give the ballpark figures.
lalu/rabri spent 100-200 crores on infrastructure per year on avg. nitish spent 22,000 crores in a single year !
and the crew actually went in to check many projects in far flung areas and unlike lalu ka jamana, there was work going on in full force and the local population was extremely happy.
another notable issue was efforts to create an university in nalanda by officials at the highest level.
problem with orissa is that there are large parts that are unfertile and has no water resources worth the name to create industry.really very difficult to develop those parts.

It would help if things are not taken personally. This should not become a sensitive/Taboo topic as is the case with any discussion on WB.

manu, why do you repeatedly push this canard as a fact ? care to enlighten me where it has become taboo ?

[Manu]

Rahul,
I have mentioned this all of two times in the past 5 years. So a canard it may be, but I am certainly not 'repeatedly' pushing it. On BR itself, there have been several attempts over the years to discuss the complex issue of the Bhadralok/WB, but it always, and I mean always, ends badly.

If you remember, when you last reprimanded me on this (the only other time, I mentioned it was a taboo topic), you answered in a separate thread and the topic died shortly thereafter.

It ruffles too many feathers and personal sensitivity or indignation at perceived slights to the fair name of one's community (insert your "community" here) always come in the way of a frank and meaningful discussion.

The last time when a serious discussion took place was when Ramana posted a link to an excellent Article by Gautam Sen ("Selling Indian sovereignty") in summer 2005 (I'm pretty sure) in the Pioneer. A short but informed discussion followed. Then N^3 remarked that whenever he reads an article by a Bengali sounding name in the Western Press, his mind automatically assumes it is a Psy-Ops piece - some people agreed, some did not. Predictably, this was not taken well. After that, for one reason or another, WB discussions never go past a couple of pages in any thread. I don't know why, but by accusing me of spreading canards, you are perhaps only shooting the messenger.

KGoan, Rudradev, Nitin, Ramana and Anand have tried in the past. Rudradev started a thread, "the Red Menace"...that went no where either.

But nothing for the past 2 years by way of serious discussion. Doesn't seem like happenstance.

[Rahul M]

yes, some people have expressed unhappiness when their communities have been discussed but that has been consistently overruled in favour of meanigful discussions.
even now you will find some very detailed discussions on this topic started by fanne in the old FHL thread .

If you remember, when you last reprimanded me on this (the only other time, I mentioned it was a taboo topic), you answered in a separate thread and the topic died shortly thereafter.

that's because you didn't pursue the discussion !
why blame taboo and other such stuff for that ?! if people are not interested in discussing a topic how is it a taboo ? as far as I'm concerned it is a canard.

why not try and restart any discussion and see if it is closed down by taboo/whatever and then cry about it ?
regards.

[vina]

Ok. Lets get it back to economics. What is the "capital" in Bihar and Eastern UP . What is the main source of income, how many in primary occupations and what are the major industries there, if any.

I think the division of Bihar into today's Bihar and Jharkhand too separated the industrial areas from the agrarian north. What sort of industries can come up in today's Bihar and Eastern up.. Agri processing kind of value add stuff leaps immediately up. Massive potential in raising agricultural productivity in term of yield is probably the fastest way to put money into the hands of most number of people . Is the agricultural potential tapped out ?. How does agricultural productivity given the favorable factors like soil fertility, ample water etc translate into actual. How is it compared to Punjab and Haryana.

Maybe an agri revolution targeted at high value crops niche crops such and s fruits, vegetables and along with the usual grain , dairy and animal husbandry, along with massive investments in storage and processing infrastructure such as cold chains could be the way to go.. seems like the low hanging fruit there.

BTW who is the agriculture minister in India today ? . Why is someone of such vital importance to close to 50% to 60% of our people such a terrible also ran when compared to industry. The last guy I remember was Balram Jhakar . What we need urgently is a dynamic, visionary and go getter in the agriculture ministry. Somebody who can drive change, rather than a washed up old kulak power broker who was given agriculture because of his supposed ability to deliver the votes of "kisans" .

[Vivek Sreenivasan]

Vina you miss the point, the problem with Bihar and Orissa is the quality of human resources, the pollies are generally ignorant mofos.

[vina]

Vina you miss the point, the problem with Bihar and Orissa is the quality of human resources, the pollies are generally ignorant mofos.

Nope.. The people are great. I have lived/worked in those parts and have many good friends and fond memories from those places. They are as good/bad as any other place.

There is something basically wrong with the political economy of the place. Where they are like the Arabs /Pakis and other Middle Eastern despots is that they are extremely "political" for want of a better word. If your caste/clan wins the political rat race, the feeling is via doling out the fishes and loaves you come out on top , or else you end up in the gutter. That way there is a "democracy deficit" or in better words lack of the community /civil society kind of thing.

The politicos are mofos anywhere in the world, more so in India. For eg, Lalloo etc cant hold a candle to Dr Artiste or Manninmaga or Revolutionary Leader and their machinizations. Somehow the point is the latter set somehow manage to do things that create wealth and prosperity and growth (and a share of the spoils of course), while the Eastern India model is to distribute poverty /drive things to the ground for everyone , while politco mofos, try to gain power by delivering amelilorative "welfare"/dole and hope to ride to power by being the power that delivers dole. That is where I think the fundamental disconnect is between the east and the rest.

In KA or TN or AP (Kerala is self destructive "eastern" here) politico would say..ok, you wanna invest x and make y, okay, I will clear the paperwork, but steer certain contracts my way /use my land/make some associate of mine your partner so that we share the spoils.

[SRoy]

Manu,
Please read my post in the "Red Menace" thread about the the so-called "Bhadralok".

Then N^3 remarked that whenever he reads an article by a Bengali sounding name in the Western Press, his mind automatically assumes it is a Psy-Ops piece

This being the case, coming from a forum admin, how can one expect a fair discussion?

Since this ECOTECH thread, why not post the socio-economic indicators from Bengal as per last census? That will be a good starting point.

[SRoy]

-------------------------------------------
Population Density (Population per Sq.km)

Bihar 881
Madhya Pradesh 196
Rajasthan 165
Uttar Pradesh 690
West Bengal 903
ALL INDIA 325
Arunachal Pradesh 13

----------------------------------------------
Increase in Urban population (%) 1991-01

Bihar 23.6
Madhya Pradesh 5.2
Rajasthan 30.7
Uttar Pradesh 25.0
West Bengal 20.3
ALL INDIA 31.2
Arunachal Pradesh 100.0

-----------------------------------------------
Ratio of Urban population (%) 2001 census

Bihar 10.46
Madhya Pradesh 26.46
Rajasthan 23.39
Uttar Pradesh 20.78
West Bengal 27.97
ALL INDIA 27.81
Tamil Nadu 44.04

-----------------------------------------------
Literacy Rate 2001

Bihar 47.0
Madhya Pradesh 63.7
Rajasthan 60.4
Uttar Pradesh 56.3
West Bengal 68.6
ALL INDIA 64.8
Kerala 90.9
-------------------------------------------------
Percapita Consumption of Electricity (KWH) 2004-05
Bihar 44.6
Madhya Pradesh 308.4
Rajasthan 328.1
Uttar Pradesh 393.5
West Bengal 247.5
ALL INDIA 411.1
Punjab 907.3

-------------------------------------------------
Villages Electrified (Percentage) 2004-05
Bihar 39015
Madhya Pradesh 52117
Rajasthan 39753
Uttar Pradesh 15761
West Bengal 37945
ALL INDIA 593732

-------------------------------------------------
No. of Students in Primary & Secondary Schools (per ‘000’ population) 30.9.2000)
Bihar 175
Madhya Pradesh 265
Rajasthan 216
Uttar Pradesh 131
West Bengal 180
ALL INDIA 172
Assam 232

-------------------------------------------------
Percapita Income 2000-01(in Rs.)
Bihar 5466
Madhya Pradesh 10803
Rajasthan 13116
Uttar Pradesh 9721
West Bengal 16072
ALL INDIA N.A.
Karnataka 180413

WB seems to be average performing state and Rajasthan seems to be breaking out of the BIMARU bloc.

[Surya]

agree with Vina - people are good\bad as other places.

The Biharis have the street smarts to sell your pants off.

last trip to KKD, my friend had 7 bags.

The usual bargaining with the coolies started with 400 and 500 quoted

eventually my friend declined and the guys left in a huff.


except one - a bihari.

Once the other guys left he said he will carry all 7 bags for 200 bucks

We thought he was crazy
and he was - but he still carried 5 , all along that long platform and up the stairs!!!

while we carried the other 2.

My friend ended up paying 300 out of sheer respect for the guy.

[Manu]

SRoy, N^3 has been given Hellfire missiles only recently. I am talking of June 2005. He usually had flashes of brilliance one month in a year (I don't think he took himself very seriously then). The other times where he made some really hard-hitting posts were about the Godhra Riots.

I have saved a Bunch of good posts from BR members in the past 5 years or so. To repeat, he was not Forum Admin at the time, and he said a lot of other things too - it's just that one statement (which you have highlighted) pissed a lot of people off. Neither you, nor Rahul were at BR at the time, so its difficult to give you a precise background.

Listen, I don't want to upset anyone. I am just going to take a break for a while. Sorry for the digression, over and out.

[Suraj]

My take on the disparities between the stabler and more dynamic regions and the more backward ones is that while these disparities constitute centrifugal forces, they are also sources of centripetal momentum, so to speak . Rajasthan, Orissa or Bihar getting new reformist administrations did not happen in isolation. It happened because there is a growing mandate backing development driven governments as opposed to dole driven ones. There will certainly be divisions of various kinds - differential growth rates between states, or between communities within a state.

For example, I see Gujarat's development as a very interesting case. The Gujaratis had long been a significant economic component in MH's economy, particularly in the belt between Gujarat and Bombay. With an enabling administration, they have become the source of dynamic development within their own state as well. I'm not surprised that their dynamism has driven development in Rajasthan and Madhya Pradesh - two of its neighbours.

Part of the lack of development impetus of UP (except the northwest abutting Delhi/Haryana/Uttaranchal can be attributed to the lack of neighbouring drivers. Even a once-again thriving Delhi-Kolkata trade route would be a significant driver towards the development of the UP-Bihar corridor in the path. The same applies for the north east. The basic strategy towards development of that region must start with reliable transportation connecting it to the rest of the country, though.

[Singha]

auto and auto parts industry are now starting periodic shutdowns and layoffs of contract
labour to manage low sales. Ashok Leyland is closing their plant for 12 days soon.
parts makers are complaining the car makers are delaying payments upto 100 days from
the usual 30-60 days after delivery.

meantime Tirupur is in a major flap due to american clothing retailers being in doldrums.
I have had TN colleagues go down there from various native places and get themselves
gap/eddie bauer style gear on the cheap. dont know if its surplus maal or seconds.
potentially tens of thousands of women could lose their jobs.

[Singha]

BW claims India-MEA is the new Silk Road

http://images.businessweek.com/ss/08/11 ... dex_01.htm

The New Silk Road
Historic bonds between the Middle East and Asia are being revitalized in a torrent of trade and investment in energy, infrastructure, and manufacturing

[shyamd]

Singha, they are getting seconds, small mistakes in the tags or in printing/stitching. I bought myself some fubu gear last time I visited. Things are really bad in the textile belt. Many huge mills have shut down, the main problem is the electricity. Our mill was using 85000 units of electricity, now it has been capped to 30,000 units. So you can imagine the reduction in production.

Due to major current cuts to the residential areas, to win popular vote, they are diverting the industries current to the people.

[krishnan]

Some areas of coimbatore are experiencing almost 10 hours of power cut.

[Katare]

China announces $600bn relief for financial crisis

[Vipul]

13,000 tons of Gold rest in India.

India is the world's largest consumer of gold. Do you know how many tons of gold rest in India? Or how the gold economy helps India? Or how gold is having to compete with the stock market, investment in internet industries, and a wide range of consumer goods?

Read here about India's booming gold economy:

It is believed that at least 13,000 tons of gold rest in India – or approximately nine per cent of the world’s cumulative mine production. This should be viewed against our share in land area at 2.4 per cent, in population at 16.4 per cent and in GDP at 1.2 per cent. Mining and production of gold in India is negligible, now placed around 2 tons as against a total world production of about 2,272 tons in 1995.

During 1990-95, India’s share in global gold demand is placed at about 402 tons (16.4 per cent) a year, including imports into India. This should be viewed against its share of 0.6 per cent in world trade. On the other hand, India exported about 23 tons in 1995 accounting for a negligible part of world trade.

The world gold trading is concentrated in the U.K., Switzerland, Dubai, Hong Kong, etc. and India does not figure among them.

Facilities for refining, assaying, making them into standard bars in India, as compared to the rest of the world, are insignificant, both qualitatively and quantitatively.

Of the total gold reserves estimated to be on the books of the Central Banks (subject to some Banks not declaring them) of 28,225.4 tons, the holdings of Reserve Bank of India are only a modest 397.5 tons. Government of India has in its possession some amount of gold mainly out of confiscation of smuggled gold remaining after transferring it to the Reserve Bank of India from time to time.

RBI is neither a speaking purchaser nor a seller of gold reserves, unlike many other countries including some developing economies, especially in Asia. A part of gold was used by RBI (in parallel with gold with Government) for raising foreign currency resources during the balance of payments crisis in the early 'nineties. These overseas gold holdings are being used as part of reserve management to yield a return.

Use of gold as a financial product is virtually non-existent in India except to a limited extent of issuing ‘Gold Bonds’ by Government of India from time to time coupled with occasional tax amnesty. Commercial banks, however, accept gold as security, but no advances are permitted for purchase of gold by their customers for non-productive use.

Gold is valued in India as a savings and investment vehicle and is the second preferred investment behind bank deposits. India is the world’s largest consumer of gold in jewellery (much of which is purchased as investment).

The hoarding tendency is well ingrained in Indian society, not least because inheritance laws in the middle of the twentieth century lent a great desirability to anonymity. Indian people are renowned for saving for the future and the financial savings ratio is strong, with a ratio of financial assets-to-GDP of 93%.

Gold’s circulates within the system and roughly 30% of gold jewellery fabrication is from recycled pieces. India is typically also the largest purchaser of coins and bars for investment, although last year it had to concede first place to Japan in the wake of the heavy buying in the first quarter due to fears for the stability of the Japanese banking system.

In 1998-2001 inclusive, annual Indian demand for gold in jewellery exceeded 600 tons; in 2002, however, due to rising and volatile prices and a poor monsoon season, this dropped back to 490 tons, and coin and bar demand dropped to 67 tons. Indian jewellery offtake is sensitive to price increases and even more so to volatility, although this decline in tonnage since 1998 is also due in part to increasing competition from white and brown goods and alternative investment vehicles, but is also a reflection of the increase in price.

The Indian bride’s “Streedhan”, the wealth she takes with her when she marries and which remains hers, is still gold, however (thus giving gold an important role in the “empowerment” of women in India).

Local expenditure, in terms of the value of the gold content purchased, peaked at Rs 302 billion (Rs 311 per capita) in 1998, when total Indian demand was almost 775 tons, and since then has dropped to Rs 279 Bn in 2002 (Rs 284 per capita), a decline of almost 9%. This peak in 1998 came in the wake of the main liberalisation step, which was the freeing of imports in November 1997.

Typically, India accounts for 20% of global gold offtake in any one year. Its GDP (as measured by the World Bank) in 2001 was 1.5% of the world’s total, ranking twelfth – although if this is measured on Purchasing Power Parity, then India ranks fourth with 6.4% of the world total. While changes in total demand per capita, in terms both of tonnage and expenditure show how Indian jewellery demand in 2002 compared with the rest of the world in terms of offtake per capita and against GDP.

Offtake per capita is still very low, reflecting the widespread distribution of the rural population and the social infrastructure of the country (the rural population accounts for approximately 70% of national gold demand), but offtake in terms of GDP is high. At just over one gramme of demand per thousand dollars of GDP, India stands third in the world, behind only the UAE (just over two grammes) and Bahrain (almost 1.5g) – although these two are both enhanced by tourist purchases.

It was not always thus. As recently as 1991, Indian gold demand was a little over 230 tons, or only 8% of world offtake. The deregulation of the market during the 1990s brought about a dramatic change. Jewellery demand increased from 208 tons in 1991 to peak at 658 tons in 1998, while demand for investment bars grew from ten tons in 1991 to 116 tons in 1998, and registered 85 tons in 2002. These figures reflect average growth rates of 16% and 30% per annum respectively between 1991 and 1998. While both have eased since 1998, there is still a fascination in India for gold and there is significant scope for the development of further demand in the country.

In the cities, however, gold is having to compete with the stock market, investment in internet industries, and a wide range of consumer goods. In the rural areas 22 carat jewellery remains the basic investment.

The World Gold Council, which was involved in the deregulation of the market in the 1990s, continues to work closely with Indian gold market stakeholders to foster increased demand, partly through the development of new gold instruments that can be bought through banks, as an additional set of distribution channels, although the rural community does still tend to prefer to use jewelers

[Dileep]

Most of that gold (like what I have) is as good as dirt in your yard. The womenfolk who own them will never allow you to sell it!!

[ramana]

My mom gave half a kg for defence relief fund in 1962. makes my blood boil at the waste that goes on in MOD.

[Suraj]

DGFT advance data indicates a drastic fall in exports in October, to the tune of a real decrease (not lower growth, but absolute decrease) of 15% . However, thanks to the export growth being above expectations between April-Sept, the growth for April-Oct would still exceed 20%. Fall in demand from US/Europe is one cause, but the breakdown in global credit and liquidity mechanisms were probably more to blame for the drastic shortfall. These portends probably explain China's haste to annouce their bailout, since they are significantly more export dependent.
Export shrink in Oct: DGFT

Preliminary data suggest that India’s exports have shrunk 15 per cent in October. The overseas sales have contracted for the first time since 2003, a senior foreign trade official said today.

Non-oil exports dipped 20 per cent in October against a small 3 per cent rise in September, he added.

Gujral attributed the decline to waning demand from the United States and the European Union. In dollar terms, the two markets account for over 35 per cent of India’s total exports.

The final export figures for October will be released in the first week of December, after revised data from ports are compiled by the commerce ministry.

The non-oil exports account for over 80 per cent of India’s export basket and industries like gems and jewellery and handicrafts have been the hardest hit.

October’s performance is expected to drag the country’s overall export performance. Exports expanded 31 per cent in the six months from April to September. In the seven months between April and October, however, growth is 21.5 per cent against 23.3 per cent in the same period last year.