Indian Economy - News & Discussion 27 May 2012

Singha · Post by **Singha** » 01 Jun 2012 22:41

the goonda Raj of riders, sponsored agitations and objections unleashed by the NAC, allied NGOs and env ministry on all major proposed projects is a good example of how the poorest areas of the nation will be perpetually kept in poverty to feed the vote mills.

Arjun · Post by **Arjun** » 02 Jun 2012 00:06

Suraj wrote: Growth is a mathematical return on investment, and that investment is made in continuous pipeline of activity. Growth today comes from money that was invested over a period of time in the past, between 1-5 years. I pointed out that investment/GDP in the recent past has remained stable and high. While some projects are paused or deferred due to current circumstances - which shows up in a quarter with low growth - they'll eventually come onstream.

I guess the linear relationship between GDP growth and investment rests on ICOR being a fixed coefficient (Harrod-Domar model). This may well be one of the myths demolished by economic data over the next few quarters...

Here's more on ICOR from a recent article: Happy Estimates

If the government indulges in overestimation as a matter of course, then Budgets will not respond properly to the country’s output squeeze, or to the state’s expenditure explosion. Last Budget season’s predictions for this year are a case in point. The methodology relied on savings rate calculations, and the proportion of investment devoted to building up infrastructure. A simplistic, Soviet-style calculation of the incremental capital-output ratio or ICOR to estimate growth can then be used. This process is capable of generating innumerable errors and distortions. Long-gestation projects, for example, automatically raise the ICOR, complicating the process of growth estimation. Growth theory has taken many strides since the ICOR was developed, and for good reason; the government’s statisticians and economists need to update their back-of-the-envelope methods of calculation

Suraj · Post by **Suraj** » 02 Jun 2012 00:44

ICOR is certainly not a fixed metric, nor is investment/GDP. Both are affected by a number of factors, and continued misgovernance will both lower investment/GDP and raise ICOR, resulting in lower trend growth rate in the long term. All governments put out self-serving economic data, whether it be the US, EU, PRC or us.

I don't see how it contradicts my previous post(s). CSO data for 2011-12 shows GFCF at 32% of GDP, as opposed to 32.5% in the 2010-11 data. That underlines what I said - YoY change (as well as multiyear trend) in investment/GDP doesn't reflect the delta in GDP growth rates; it suggests investments have been deferred rather than any chronic reduction in growth rate in the long term. Could that happen due to continued misgovernance ? Sure.

Meanwhile:
Indian government savaged over shock GDP figures

India's central bank warned Friday economic growth could fall further after the country's worst quarterly figures in nine years, as business leaders and newspapers blasted the government over the slump.

Data for the January-March quarter released on Thursday showed growth in gross domestic product of just 5.3 percent, high by the standards of developed countries but a severe disappointment in once-booming India.

"Unless we work hard, it (the growth rate) will go down further," Reserve Bank of India Deputy Governor K.C. Chakrabarty warned in comments to reporters on the sidelines of a conference.

Many commentators described the figures as a wake-up call for the left-leaning coalition government, elected in 2009 but since riven with infighting and sapped by a string of corruption scandals.

Ideological differences in the coalition and distractions over corruption scandals mean the government has been unable or unwilling to push through reforms to open up the economy and cut red tape, analysts say.

An attempt to open the retail sector to foreign investment last year -- a long-standing proposal recommended by business leaders -- ended with a revolt in the coalition and an embarrassing U-turn.

In minor measures announced since the publication of the GDP data, the government announced a ban on officials meeting in five-star hotels to save money and a new body to monitor blocked investment projects.

The new so-called Investment Tracking System is "to ensure speedy implementation" of projects held up by red-tape such as the need for security or environmental clearances, Prime Minister Manmohan Singh's office said.

Singha · Post by **Singha** » 02 Jun 2012 08:57

Ambani of the Gulf bets big on Indian market
Last updated on: June 1, 2012 12:59 IST

Ruchika Chitravanshi in New Delhi

With a house on the top floor of Dubai's Burj Khalifa, the world's tallest building, Bahrain-based India-born billionaire Ravi Pillai is planning big-buck investments across the construction, hospitality, real estate and healthcare sectors in India.

Often referred to as the 'Ambani of the Gulf', his investment partners and he are looking at putting serious money in sectors that interest him. In what could be a coincidence, the group is in talks with Reliance Industries for taking up construction work at a petrochemical plant in Jamnagar, Pillai said.

"If all the resources are utilised properly, India can be the number one country in the world. To develop any country, there is a need for good leadership and good team work," Pillai, chairman and CEO of the RP Group, said. He is part of a visiting business delegation from Bahrain.

gakakkad · Post by **gakakkad** » 02 Jun 2012 09:14

from the planning commission website :

capital/gdp = 35.4 % for 11/12 ..35.8% in 10/11
savings/gdp = 33.0% in 11/12 .. 32.3 in 10/11

deposit has grown from 15.8 to 17 in the same period..and bank credit is down to 18% from 21.4%..

all this does indicate deferred investment..

but yes investment translating into growth cannot be taken for granted...not in an inflationary , badly governed economy...

savings will amount to nothing if money keeps depreciating due to inflation...

Altair · Post by **Altair** » 02 Jun 2012 09:15

Suraj wrote:ICOR is certainly not a fixed metric, nor is investment/GDP. Both are affected by a number of factors, and continued misgovernance will both lower investment/GDP and raise ICOR, resulting in lower trend growth rate in the long term. All governments put out self-serving economic data, whether it be the US, EU, PRC or us.

Suraj garu
Will a highly de-valued rupee help our growth in the long run? I can understand the effects of it in short term but i am a nanha mujahid onlee. pliss to explain
Altair

gakakkad · Post by **gakakkad** » 02 Jun 2012 09:28

is not Ravi pillai , related to late k. rajan pillai ? (the guy who acquired a controlling stake in britannia in mid 90s , died in Tihar jail because the judge refused to grant him bail to see a doctor even though the guy was genuinely ill )

Suraj · Post by **Suraj** » 02 Jun 2012 09:42

gakakkad: thanks! That is really useful data.

Altair: it is not the value of the currency that's important, but a stable policy framework and a stable or managed exchange rate vs key export destinations. This minimizes hedging costs on the part of exporters, and a proper policy framework ensures the BoP situation is well managed. For example, Japan has a numerically 'weak' currency and Germany has a 'strong' one, but they're both historically major exporters.

We enable easy import of a lot of things we really shouldnt be enabling the easy import of - luxury goods and consumables for example. I'm not being a socialist here - it's just a clinical policy imperative. These things should be taxed as much as possible to discourage their import, since their forex outflows have no benefits as such. In comparison, imports of industrial machinery, for example, enable us to increase manufacturing output for export, which pays the cost of importing them.

We've made some good steps in fostering exporters via the SEZ policy, but the import side of the equation remains badly mismanaged. We enable the cheap import of Chinese heavy engineering goods that break down 1-2 years later. We should instead have enabled BHEL, L&T etc to further expand capacity through soft loans, and helped them produce these domestically. Incentivizing raw imports and value-added exports is the best way to benefit us economically.

Altair · Post by **Altair** » 02 Jun 2012 10:31

In Auto sector, companies like Honda and Bajaj import certain auto parts. Honda imports more and Bajaj imports less. Because of depreciation of rupee, Honda is trying to acquire most parts locally. Same is with Volkswagon compared to MUL. Companies are turning to local manufacturers to survive the cut throat competition in auto sector.
I am positive similar thing will happen to many sectors. Economics is pure logic. If it is not logical to import stuff, people simply wont!
We might be importing cheap Chinese stuff because we make them work longer than it is supposed to work. The Make or Buy analysis stuff is pretty basic for many Indians.
Rupee might actually settle at 60 for USD in a month. People will adjust to the new reality and go on.

Arjun · Post by **Arjun** » 02 Jun 2012 10:59

Over the next couple of quarters we will know for sure whether Jan-Mar quarter was a blip due to deferred investments as suggested by some here, or reflects deeper malaise in economic fundamentals. In the latter case - that would imply a dramatic change in ICOR from around 4 to more than 6....

My personal opinion is that it may be time to junk some shibboleths in use by Indian government economists, and come up with refinements that explicitly build in business confidence / governance perception into these models. In other words - something on the lines of a <deleted> ICOR as opposed to generalized fixed coeffecients.

Arjun · Post by **Arjun** » 02 Jun 2012 12:00

Wakey, wakey: India slips to No 4 in growth sweepstakes

Even about a week ago, Kaushik Basu, in an exit interview after resigning as Chief Economic Advisor in the finance ministry, could shoo away the economic cassandras with this argument: but we are till the second-fastest growing economy in the world. What can we do if the whole world is slowing down?

In an interview to Karan Thapar broadcast on CNN-IBN, Basu was asked about the Indian economy’s continuous economic decline, and he replied: “I agree, but now put it in a scale. It has come down according to our own past. But do a little bit of cross-country comparison; I must compel you to do that. Use The Economist magazine’s back page forecast for 42 countries for the year 2012, India ranks No 2. So, the whole world’s growth has come down but we are roughly maintaining the same position in the global chart.”

Correction, Dr Basu. India was No 2. It isn’t anymore.

Hear Rajeev Malik, Senior Economist at CLSA in Singapore, on this: “Tabulation of 1Q12 (January-March 2012) GDP growth rates for EM (emerging markets) Asia shows an interesting comparison: For the second consecutive quarter, India was not the second-fastest growing economy after China.”

The fourth quarter (Q4) GDP numbers released on Thursday by the Central Statistical Office showed growth slipping to 5.3 percent. For most economists, barring the sarkari ones, it was merely a confirmation that the economy is into a free fall from the peak hit in January-March 2011, when GDP grew 9.2 percent.

Says Malik: “India’s growth has slowed largely because of macro imbalances and policy inconsistencies fathered by the government (it has done little else), but some other Asian countries have actually done better despite facing the same global challenges. I doubt the Indian government has woken up to this shifting regional ranking, even if it lands up being temporary.”

In Q4 of 2011-12, India was No 4 in the growth sweepstakes behind Philippines (6.4 percent) and Indonesia (6.3 percent). China, as usual, was tops at 8.1 percent.

Ironing out quarterly blips, in the six months to March 2012, India’s GDP grew 5.7 percent, behind China (8.5 percent) and Indonesia (6.4 percent), thus coming in at No 3 even here.

CLSA’s full-year (calendar) forecast for 2012 still shows India hanging in there – barely — and the No 2 position could be a toss-up between India, Philippines and Indonesia (all projected at 6 percent).

But a lot depends on whether the UPA gets its reform and growth act together by then. Else, it may lose out to the other No 2 candidates, and Thailand at No 5 with 5.5 percent growth projection will be snapping at India’s heels.

Malik concludes: “India’s challenges are largely self-inflicted but not insurmountable. However, they will require a government that is awake and willing to use some political capital, and avoids making more policy boo-boos. The problems are known, the solutions are also known. But the political will to implement the solutions is still missing, which is partly why it is an abnormal cycle and the much-needed adjustment will be more protracted. We’ll have a combination of weak growth and still-high inflation for longer.”

vina · Post by **vina** » 02 Jun 2012 13:15

I hate to post from the TOI(let), but if somebody can post the link to the original publiciation in the Ministry of Statistics website, would be grateful.

TOI says Bihar is the fastest growing state at 13.1%

Bihar, Dilli, Pondicherry, Chattisgarh and Goa round off the top five. Small states ,like Pondicherry, Goa and Dilli, no great shakes, but Bihar and Chattisgarh is very impressive indeed.

See, what a difference a good leadership does. Compare Bihar under Laloo Goonda raj and now. What a world of difference. UP cries for positive reforms. I do hope Akilesh pulls his boots up.

Tamil Nadu whops a** at 9.4% and is now the second largest economy after Maharasthra, ahead of UP , with what, like a fourth of UP's population! Gujarat grew at 9.1% , pretty good. Andhra and Karnataka did badly (due to a variety of factors.. Telanagana and the mining scam effect on KTK surely).

Big elephants missing in the room are Kerala and Bengal. At this rate, Bengal will have just a HALF of the state per capita income of TN , Maharahstra, Gujarat etc very soon. And despite having a giant Metro like Kolkata as a big big part of the state's economy. it just goes on to show the stagnation that Bengal has experienced in all these years and will show up very starkly going forward.

Just watch for the day when Orissa and Bengal, the erstwhile "backwaters" of Bengal, race ahead in HDI and wealth indicators.

vijayk · Post by **vijayk** » 02 Jun 2012 15:16

http://www.firstpost.com/politics/2012- ... 29822.html
2012 is not 1991: Why UPA’s snake oil remedies won’t work this time

This guy Jagannath is going hammer and tongs against UPA in FirstPost.

But 2012 is anyway not 1991, and Manmohan Singh is PM, not FM. In 1991, we had Narasimha Rao handling the political fallout; 2012 has Sonia and Rahul missing in action. What is common to both years is the “sense” of crisis, but that’s about it. The political and economic situations are dramatically different, and 2012’s challenges are completely new. The remedies also cannot be the same as in 1991. Moreover, PM Singh cannot regress to his old job as FM Singh. If he wants to, he should tell Sonia and he can go back to his old job. But even that will not solve the problem. This brings me to the bigger regression under UPA.

The real backward march under UPA-1 and 2 relates to feudalism. Today’s leaders of the Congress and its allies are simply feudal. They believe that they will be elected by throwing taxpayers’ money at voters. (NREGA, food subsidies, farm loan waivers, et al). The voter is assumed to be an unthinking moron, who will not respond to good ideas, but your crumbs and carrots.

The Congress is bankrupt of ideas, and so are its allies like the DMK. Their idea of leadership is the old mai-baap approach, where the Lord and Master flings an occasional purse of gold at the poor, and the latter are just supposed to swoon with gratitude and re-elect them.

First, in 1991, only India was facing bankruptcy; today, the whole world is.

Second, the old economic remedies are simply not working. The primary economic debates of the 20th century are not over. Both Keynesian economics, and its polar opposites in the free-market philosophies of the Austrian school and supply side economics, appear unconvincing in the current climate of crisis.

Third, most economic models the world over are sputtering. In the post-World War scenario, the one model which seemed to work was the Asian export-led growth economy accompanied by high levels of investment and low domestic consumption. It was first tried out by Japan, then the Asian Tigers, and then Asean, and then, finally, that Godzilla called China.

Over the last 20 years, the model has come under strain. It seemed to work for a while because the US was able to absorb the output of an exporter of the size of China, now the world’s second largest economy. But it needed steroids. It worked only because poorer China lent the richer US money to buy. A similar pattern was repeated in the eurozone, but here the relatively poor borrowed from the relatively rich

Fourth, and this is specific to India, the political scenario in 2012 is radically different from 1991.Twenty-one years ago, Narasimha Rao still headed a national government, even though he was short of a majority. His political astuteness and the country’s sense of crisis helped Manmohan Singh, a bureaucrat, to work with other economists and technocrats to find a solution to the country’s problems.

Today, there is no national party left, except in name. The states are more powerful and the Congress’ allies are no pushovers. Getting any kind of policy implemented needs political clout – something Manmohan Singh does not have. Forget clout, he does not even have the goodwill anymore. So the idea of recreating the 1991 team makes sense only if Sonia and Rahul are going to play the role Narasimha Rao did in 1991 – then the PM can play bureaucrat-in-chief and his kitchen cabinet of Rangarajan and Montek can deliver.

gakakkad · Post by **gakakkad** » 02 Jun 2012 17:37

Some comments about the state Data..
The following table give the per capita net state domestic product (current prices) and yoy growth rates of the same.
http://planningcommission.nic.in/data/d ... ab_108.pdf
Note- 1)..the current year data of Guj and Maha are not available yet so I have extrapolated using the average growth rate of previous 5 years…
2) There is a printing error in the per capita NSDP data in the planning commission website. Please ignore Rs. In crore. It is the per capita income table and the chart has gross value .they are not in crore..

I am not sure why toilet paper has a new found fascination with “state gsdp growth rate” and intends to write misleading articles about the same…. (Like Bihar is the topper state etc).
Bihar had consistently negative growth rates in the 1990s. Laloo Yadav drained the Bihari’s as bad as the Bri-tards drained India in 1900s…
Nitish Kumar has been able to provide a stable gov’t that managed to maintain some form of law and order..
Bihar is still the poorest state in India and will remain so for a foreseeable future .
It has a population 11 crore . Its population density of 1100 /sq km is 2.5 times the national average and 3 times most states.
Its per capita income is 24K inr at current prices. That is 2.6 times less than the national average . The richest major states (Guj , maha , TN) have a per capita income of 85K-95K INR…Which is 3.5-4 times that of Bihar …
While growth rates of 13% may sound impressive , there are several ways of looking the same data.
Its industrial growth rate has still remained very poor and has averaged 5% in the previous 5 years.

UP/Bihar and westbengal have a collective population of 41 crore. That is 35% of India . Yet there share in economy is only 12-14 % . There collective per capita income is about half that of India.
The data from the BIMARU/Eags states can be found in the planning commission websites . I think we should form a separate thread to discuss the same .
These states are going the be the biggest challenge for the country in coming years as they have a massive population that has an average age of under 25 , but less than optimal opportunities to achieve there full potential.
Media poop-ganda and piss ops certainly don’t help.. The complex caste based demographics of these states make developmental activities even more of a challenge.
The biggest challenge in these states is lack of urbanization and poor human development indicators..
The capitalist inside me thinks that they can provide affordable labor to power our manufacturing sectors. But that too would be a real challenge .

Singha · Post by **Singha** » 02 Jun 2012 17:39

so Magadha rises again as the ancient prophesies had foretold...dwaraka has already risen...so have the pallava, chola, kempegowda and hoysala heartlands...

the center of gravity is shifting away from the rulers of the delhi sultanate and sickulerate

unless someone is ill or eats paper, a diet of NAC maoist pamphlets/sultanate propaganda handouts and faux-sickularism never creates opportunity for those deprived...or fills a hungry stomach.

gakakkad · Post by **gakakkad** » 02 Jun 2012 17:46

magadha is showing some signs of rising.. it is still the poorest region in the country... indraprastha is still the most heavily invested region in the country,, tax from rest of the country goes to indraprastha to make it wealthy...

Gus · Post by **Gus** » 02 Jun 2012 22:48

why is money so damn costly in India?

I say this from observation of high interest rates. Despite what people think as increase of cheap credit (credit cards and personal loans pushed by banks), in the rural level things are still done very informally - mortgaging truck RC books for loans informally, raising money from 'seettu' (chit? an interesting way of raising money from friends and relatives that is not a straight loan) etc.

Industries have learned to run efficiently on less resources. But I feel that there is a huge opportunity cost that is not looked at. Because of this prohibitive environment, people are more risk averse and this is causing slower economic activity. This is my observation from my relatives in the industries. These people are small scale entrepreneurs (truckers, stone crushers, shop owners, real estate agents, small farmers etc)

Asit P · Post by **Asit P** » 03 Jun 2012 00:57

Good to read about the growth rate of Bihar. Way to go Nitish Kumar.

Theo_Fidel · Post by **Theo_Fidel** » 03 Jun 2012 04:49

Gus wrote:Industries have learned to run efficiently on less resources. But I feel that there is a huge opportunity cost that is not looked at. Because of this prohibitive environment, people are more risk averse and this is causing slower economic activity. This is my observation from my relatives in the industries. These people are small scale entrepreneurs (truckers, stone crushers, shop owners, real estate agents, small farmers etc)

Main problem is the GOI funds its deficit through appropriating most savings for itself. No money for anyone else.. IIRC something like 40% of savings is parked in Indian banks. Rest GOI takes.
------------------------------------------
Nitish seems to be a guy who does what works. No reference to any dogma or arbitrary ideology. May his kind multiply.

http://www.deccanherald.com/content/254 ... ntive.html

The scheme stipulated that each Muslim student securing Ist division in the matriculation examination would get a reward of Rs 10,000 from the State Government.
Within two years of its launch, the scheme yielded such splendid results that it was an eye-opener for other States. There was nearly 1300 per cent increase among the Muslim students passing their Class X examination with first division in the last five years. If a total of 2,627 Muslim students secured first division in 2007, the number swelled to 5,800 in 2008, and eventually to 11,500 in 2009. The success rate increased manifold in 2011 when 34,965 students from minority community were rewarded with an incentive of Rs 10,000 each for securing first division.

-----------------------------------------------------------

Why is Maha doing so badly? With super dynamic Mumbai with 1/4 of claimed GDP it should be right at the top. Mumbai is doing well so what gives. And not the usual whines about politics please. TN's is as toxic as they come (Sasikala anyone) and it seems to be doing fine. So why is Maha suffering. Less than UP type growth now.

vera_k · Post by **vera_k** » 03 Jun 2012 07:53

Maharashtra had a bout of political instability due to corruption. The new CM is non-corrupt, but the clean-up intiated meant that everything was at a standstill. Should get better as some happy medium is found.

Pranav · Post by **Pranav** » 03 Jun 2012 07:56

Theo_Fidel wrote: ------------------------------------------
Nitish seems to be a guy who does what works. No reference to any dogma or arbitrary ideology. May his kind multiply.

http://www.deccanherald.com/content/254 ... ntive.html

The scheme stipulated that each Muslim student securing Ist division in the matriculation examination would get a reward of Rs 10,000 from the State Government.
Within two years of its launch, the scheme yielded such splendid results that it was an eye-opener for other States. There was nearly 1300 per cent increase among the Muslim students passing their Class X examination with first division in the last five years. If a total of 2,627 Muslim students secured first division in 2007, the number swelled to 5,800 in 2008, and eventually to 11,500 in 2009. The success rate increased manifold in 2011 when 34,965 students from minority community were rewarded with an incentive of Rs 10,000 each for securing first division.

Such identity politics will lead to a bitter harvest. What about other poor people?

gakakkad · Post by **gakakkad** » 03 Jun 2012 08:10

yup...GOI internal debt is 70% of the GDP and is used to fund dole schemes/subsidies ...leaves little for other people...Panda has even a higher internal debt/gdp ration. This is one of the reason why they can't get too liberal with consumer credit... In India it is liberal but very expensive...

So bottom line ,key to India's growth is removal of subsidies and dole schemes , funding infra through bonds and fdi and reducing internal debt to leave more money for aam junta...

Why is Maha doing so badly?

It is not doing badly .not If you count Mumbai .... TOILET data onlee. I posted the links to real growth rate a few weeks ago , when the piss ops article against Guj was published ..Maha is growing as well as Guj and TN ...UP grew at an average 6% real growth rate in the last 5 years , while maha was close to 10...its industry and agro are not doing as well as Guj ,but overall it catches up...

But yes excluding mumbai/poona belt rest of the Maha is dong very badly ..One of the reasons why vidarbha and marathwada are proposed as separate states..these regions are doing poorly... I don't have any solid statistical data , but anecdotally some villages in these regions are "UP poor" . Districts like gadchiroli have mooist problem...

Mumbai consists of 40% of Maha NSDP... Maha has a per capita income of 90k..that is skewed upwards by mumbai which has a per capita income of close to 4 lakh INR..being a port city and financial hub of the country makes it very rich and perpetually growing ..But it tends to skew data of rest of the state upwards...And the state gov't can't claim any credit... since Mumbai is the home to big guys it is bound to grow rapidly..it also has the highest budget amongst any other municipal corps...

UP however is the main concern...In spite of a small base per capita income of 26k (2/5th of the national average) ,it is growing badly . And if we exclude the wealthy regions of western UP , the rest of UP is not growing at all..

So there will be masses of population in UP which have a per capita income of less than 10k INR...Half the UP villages are not even electrified...

gakakkad · Post by **gakakkad** » 03 Jun 2012 08:52

I dug into Data ..And there is bad new ....looks like we ll not accelerate to 9%+ for the next few years...CON party has ruined it...

investment and savings ration are important determinants of growth as per the existing economic models.. While the total data for both does not reveal a problem ,the data for private/corporate sector is indeed worrying...

Both savings and investment have gone down in the last 3 years..

Code: Select all


private corporate sector 

year                  savings/gdp ratio                investment/gdp ration


2004                         6.55                                    9.12      
2005                         7.51                                   11.82
2006                         7.89                                   12.48
2007                         9.41                                   14.26
2008                         7.48                                   10.41
2009                         8.24                                   10.80
2010                         7.85                                    9.92

As you can see , both corporate savings and investment peaked in 2007 , but have been going down since..The data correlated well with decent growth rates we had in the period ...Investment has noticeably gone down in the last 3 years...Savings has gone down but is still holding on..

the overall savings and investment does not seem to have gone down for 2 reasons

1)household savings and investments are still holding on ..

2)What has risen is the government expenditure ...Public sector capital formation too has increased ..while that does include PSUs , NREGA roads are also a part of gov't capital formation .

..but those roads have zero return of investment ....

the affect of mis governance can statistically be seen from the above data...

This is not a doomsday scenario ..but things are not going to accelerate in a while..

Singha · Post by **Singha** » 03 Jun 2012 19:39

UPA govt has done nothing but halt, rollback and eliminate every large project it can in the last few yrs under the guise of tribal rights, dalits, muslim sentiments impacted, environment clearances....so its no surprise the investment/GDP ratio from pvt sector is falling and will continue to fall.

even a medium sized apartment project anywhere in india needs a clearance from ministry of env and forests did you know?

Singha · Post by **Singha** » 03 Jun 2012 20:06

interesting observations by mani shankar aiyar. seems to run 180' from the NAC POV. being in exile he might be speaking freely.

http://economictimes.indiatimes.com/opi ... 765821.cms

Rajya Sabha MP and former Union minister Mani Shankar Aiyar tells Anahita Mukherji what India needs to do improve its human development indicators. Excerpts:

Where have we gone wrong?

Mani Shankar Aiyar: The reason there seems to be no connection between outlays and outcomes has much to do with what Rajiv Gandhi estimated over 30 years ago, about how 85 paise of every rupee spent on development goes into administrative expenses.

This is largely because programmes intended for the same set of beneficiaries are sub divided among approximately 140 schemes, each of which is delivered by a separate silo, mutually insulated from all other silos, into the same bin but without there being any possibility of convergence.

So, what's the solution?

Mani Shankar Aiyar: The bulk of the money should be sent directly from the state governments to the local bodies and tracked electronically .

We have to get back to the Gandhian concept of using the local bodies and neighbouring communities as the most important instrument for the delivery of public goods and services.

Just throwing money at the poor, which is the system favoured by the finance ministry and planning commission, is not the option.

India ranks 129 out of 147 countries in the UNDP Gender Inequality Index. Why?

Mani Shankar Aiyar: The index takes into account only political empowerment in parliament and the legislatures, but not in the local bodies, where it matters most. A poor woman can only be empowered by the Panchayati Raj. Out of 3.2 million elected representatives in local bodies in India, 1.2 million are women, of whom 86,000 are office- bearers.

member_20317 · Post by **member_20317** » 03 Jun 2012 20:28

Even Mani has some brains when would Congis get it.

But what is this about UNDP Gender Inequality Index. Don't these UN people know of Rabri Devi and sundry Neta ke aulads that we have in Parliament and Legislatures.

With Local bodies even if just 50% of the lady panchs get to be free in their workings and which is entirely possible, that is a quantum jump in ensuring Gender Equality.

gakakkad · Post by **gakakkad** » 03 Jun 2012 20:44

Singha wrote:UPA govt has done nothing but halt, rollback and eliminate every large project it can in the last few yrs under the guise of tribal rights, dalits, muslim sentiments impacted, environment clearances....so its no surprise the investment/GDP ratio from pvt sector is falling and will continue to fall.

even a medium sized apartment project anywhere in india needs a clearance from ministry of env and forests did you know?

both savings and investments are down.. so it is not confined to just the large projects ...the socialist dole schemes are directly responsible for the mess...money is too expensive ...

By our standards this is recession...

if commodity prices go down , and the currency appreciates a bit , GOI may have some leg room.. It may inject some liquidity to the system.. GDP growth data would superficially look good , and than all is well syndrome ..that is what the CON party is hoping for...
i am hoping for the reverse...

let there be a quarter of negative real growth ...(can happen if inflation reaches 13-14 % ,which is realistic..) ...people will be out on streets ...that ll cure the disease ...

People should know that spending 150 billion + on subsidy+ NREGA + other dole schemes can have dire consequence...if the dole schemes of various states are taken into account ,than we are spending 15% of GDP on them..so we are literally burning wealth..

MS Aiyar wrote: Where have we gone wrong?

Is there any place where you guys haven't gone wrong ?

darshhan · Post by **darshhan** » 03 Jun 2012 20:51

gakakkad wrote:magadha is showing some signs of rising.. it is still the poorest region in the country... indraprastha is still the most heavily invested region in the country,, tax from rest of the country goes to indraprastha to make it wealthy...

Gakakkad ji , Right now Delhi's gdp has already reached 167 billion USD.And I doubt if this figure includes contribution from NCR towns such as Gurgaon,Noida,Faridabad. To give you a context Mumbai's GDP is approximately 200 billion USD. So you can see Delhi has almost closed the gap.

The point is that Delhi's economy is growing like anything.It is the hub of economic activity for whole Northern India.So it would be wrong to say that Delhi is dependent on rest of the Country's taxes for its betterment.Statistics say otherwise.

gakakkad · Post by **gakakkad** » 03 Jun 2012 20:59

that is what I said darshan... In fact Delhi is wealthiest of the 4 metros ....

But delhi has received more investment (especially infra) than any other city in the country.., large portion of it is centrally funded..all the medical colleges of delhi are Central gov't funded..so are the engineering colleges...

member_20317 · Post by **member_20317** » 03 Jun 2012 21:01

Western UP was growing due to the necessities of Mayawati ji and the huge NCR appetite for housing. Gurgaon in fact has much better chances now. Even Faridabad has some real chances with some link roads and metro coming up.

Now that the Mulayam and Akhilesh are in, you can safely count out UP from any list of 'growth potentials'.

If you are cued into the Real Estate business here which is actually very big in proportionate terms (as a percentage of State GDP) you will realise what is happening. 1-2 years of residual effect like you had in UPA-1 and then straight downhill. Construction was the only high EVA sector here. That too is mostly gone or mostly approaching maturity.

No magic here any more. Only silver is that there is no real boundary between various components of NCR. So people already here may not feel much difference except in longer lightouts.

gakakkad · Post by **gakakkad** » 03 Jun 2012 21:11

^ that is the major challenge saar,,we got 40 crore people in extreme poverty in politically difficult regions(up+bihar
+wb)...this will have implications for the rest of the country...

darshhan · Post by **darshhan** » 03 Jun 2012 21:56

^^ If these provinces are so bad and they are not contributing anything positive to India then I request the rest of India to separate them from the union.

Suraj · Post by **Suraj** » 03 Jun 2012 22:00

Let's not get dramatic

Clearly there's a LOT of low hanging fruit in UP, MP, Bihar and Rajasthan. I wonder if there's savings/investment data breakdown by state. It would be interesting to see which states maintain a high or growing figure and which ones are laggard. The trends should follow GSDP data. Would anyone be willing to search for this ? If these laggards grow at closer to 7%, we'll be pushing double digit growth rates.

Another state that deserves concern is WB. It's not just a tragedy that what was India's most industrialized state at one time is now a basketcase. What is even more a concern is that a prosperous WB implies a prosperous northeast, and for strategic reasons it is critical that WB rebuild economically.

gakakkad · Post by **gakakkad** » 03 Jun 2012 22:31

@ darshan , I never implied any thing of that sort... i merely said that it would be the biggest challenge for the country to ensure proper econ development of these 3 states.. And that is very much true ..its not going to be a walk in the park...

@ suraj , stats are available at the websites of state gov't .i will try to compile a data table...will be a useful exercise...

Singha · Post by **Singha** » 03 Jun 2012 22:35

WB was not just one if not the most industrialized state in british era but in addition kolkata-dhaka-chittagong had a century of head start over the rest of NE and E states in social reform movements, global diaspora, higher educational institutions, quality of state education board syllabus, access to the sea and trade routes....the bengali diaspora in high level positions worldwide would dwarf the rest of E+NE states worldwide for example, a clear sign of educational credentials.

but nobody wants to invest in WB and neither is it a magnet for neighbouring states the way Delhi , chennai or Blr acts like a magnet ... secondly there is no other network of smaller industrialized cities that can distribute development over the state , CCU is a one shot deal , states like TN, MH, Guj have multiple cities nearly at the same level of the economic value chain...so no wonder their state GDP resembles good sized european countries...

vera_k · Post by **vera_k** » 03 Jun 2012 23:52

darshhan wrote:Right now Delhi's gdp has already reached 167 billion USD.

Delhi's less than $60 billion, about the same size as Haryana.

Looking at the data in that link, WB has turned around in the last few years.

Theo_Fidel · Post by **Theo_Fidel** » 04 Jun 2012 00:06

I have been particularly disappointed in DIDI. It must be remembered that AMMA laid the foundation for Chennai's car industry in her first stint. IIRC within 3 months of coming to power she seduced Ford into coming in. Chennai has never looked back. This was the time she was issuing blood curdling rhetoric and trying to hound several powerful business for being on the wrong side of the elections.

It is one thing to issue rhetoric but you should also keep the pot stirring with the other hand. DIDI does not seem to be a natural at this dual nature of life. AFAIK she has not got a single major industrial investment to break ground in WB. One of the little remarked but devastating actions of DIDI was arresting the Marwari's after the hospital fire and exonerating the Bengali's. Even AMMA would not dare this sort of open chauvinism. It has had chilling effect all possible investment by other states.

The NE is going to have grow without WB. Maybe the growth of Bihar will help a Northern corridor power up the NE without a distracted Kolkata noticing.

darshhan · Post by **darshhan** » 04 Jun 2012 00:25

vera_k wrote:
darshhan wrote:Right now Delhi's gdp has already reached 167 billion USD.
Delhi's less than $60 billion, about the same size as Haryana.

Looking at the data in that link, WB has turned around in the last few years.

This is the link I used.( GDP PPP)

http://en.wikipedia.org/wiki/List_of_In ... ies_by_GDP

Whichever statistics you use it is hard to deny that Delhi/NCR has seen stellar growth. It is closing in on Mumbai very fast. And private players are very much part of this growth story.

darshhan · Post by **darshhan** » 04 Jun 2012 00:42

gakakkad wrote: But delhi has received more investment (especially infra) than any other city in the country.., large portion of it is centrally funded..all the medical colleges of delhi are Central gov't funded..so are the engineering colleges...

Gakakkad ji, If other cities are not receiving their share of investment then it is their state govts which need to be asked why it is so ? As far as Delhi is concerned it has its own govt. and that surely helps.As far as Engineering and medical colleges are concerned they are one time investment and hardly count for much when looking at NCR's economy. Infact any decent Real estate developer(DLF/UNITECH etc) here develops more property in a single year than the combined area of all of these institutes put together.

And by the way in all these central institutes like AIIMS,IIT,DU etc , seats are open for all Indian citizens and not just the Delhi Citizens.Economically it is actually a tremendous loss for Delhi. These institutions are covering extremely prime land in the heart of Delhi. If ever auctioned to developers( just saying) , Delhi would be richer by tens of thousands of crores.

On the other hand JNU should definitely be terminated and the land should be auctioned to developers.This brothel should be closed down as early as possible.

AbhiJ · Post by **AbhiJ** » 04 Jun 2012 01:33

darshhan wrote:
gakakkad wrote:magadha is showing some signs of rising.. it is still the poorest region in the country... indraprastha is still the most heavily invested region in the country,, tax from rest of the country goes to indraprastha to make it wealthy...
Gakakkad ji , Right now Delhi's gdp has already reached 167 billion USD.And I doubt if this figure includes contribution from NCR towns such as Gurgaon,Noida,Faridabad. To give you a context Mumbai's GDP is approximately 200 billion USD. So you can see Delhi has almost closed the gap.

delhi's GDP always Includes Noida, Faridabad, Gurgaon because delhi lacks Industrialization to stand on its own Strength. BTW Mumbai's GDP by PPP(On 31st March, 2012) would be $366 Billion(Half of Maharashtra's GDP) considering Maharashtra is 16% of India's GDP. Then Mumbai's Growth Should be >16%. Per Capita of Mumbai = $13,000 (Nominal). With 16% Y-O-Y for 8 Years can reach the Developed World with $40,000 Per Capita Income.