BRICS, E7 Economies, and IBSA

santosh10

Senior Member
Joined
Oct 5, 2014
Messages
1,666
Likes
177
Reckless imports put rupee on ventilator
19th August 2013

After watching the relentless fall of the Indian rupee for 18 months with saintly restraint, Finance Minister P Chidambaram declared on August 12 that he would cut the Current Account Deficit (CAD) — the excess outgo over receipts of foreign exchange — and stabilise the rupee. In January 2011, Indians could buy one US dollar by paying Rs 45. But, by August 12 2013, they needed to pay more, Rs 61 for a dollar, the dollar rising by over 35 percent since January 2012, mirroring an equal fall in the rupee value.

This is the direct outcome of the burgeoning CAD since 2004-2005. On August 12, Chidambaram announced "measures" to reduce the CAD and arrest the rupee slide. But, within 36 hours, on August 14, the rupee fell further, to Rs 61.50 per dollar.

This forced the Reserve Bank to restrict investments and remittances abroad to reduce the dollar's flow out of India. Even that did not work. It is Rs 62 to a dollar now. Even as the rupee was crashing, in January, The Economist magazine [2.1.2013] reported that the real value of the rupee, namely its purchasing power, equated a dollar to just Rs 19.75 - a third of the market value of the dollar today.

The Economist said the rupee is the most undervalued currency in the world market. Why does the already-undervalued, high real-value rupee keep losing value? Who is responsible for it? Chidambaram himself had acknowledged that the NDA had left behind a healthy economy.

In his budget speech (July 2004) Chidambaram said: "The economic fundamentals appear strong" and "the balance of payments robust". From "robust" balance of payments, the nation is today in a balance of payments crisis reminding the country of the dark days of 1991.

How did the UPA manage to mess up the prosperous economy it had inherited in 2004?

Galloping CAD

A quick look at some simple facts will bring out the drastic change for the worse after the UPA came to power in 2004, which turned disastrous for the country after the UPA was voted back in 2009. Take the recent history of the CAD. The country incurred a CAD of $35 billion in 10 years from 1991 to 2001. But, under the NDA regime, it posted a substantial current account surplus - yes, surplus - of $22 billion for the first time since 1978. After the current account surplus of the NDA days, nine of years of the UPA regime saw unprecedented CADs of $339 billion, when Chidambaram [5 1/2 years] and Pranab Mukherjee [3 1/2 years] stewarded the national economy. See the transition from surplus into deficits under their economic leadership. While the NDA handed to the UPA a current account surplus of $13.5 billion in 2003-2004, the UPA quickly turned it into a CAD of $2.7 billion (2004-5) and trebled it to $10 billion each in the second and third years and thereafter multiplied it to $16 billion (4th year) $28 billion [5th] $38 billion (6th) $48 billion (7th), $78 billion (8th) and $89 billion (9th). The government repeatedly said oil prices and high gold imports are the culprits for the relentless CAD. Is the story of oil and gold as culprits true? Or the complete truth? :ranger:

Reckless imports destroy production

A closer look at the import data reveals a shockingly different picture. Unnoticed (or suppressed?) in popular discourse, capital goods import skyrocketed under the UPA rule. The capital goods import during the NDA period averaged about $10 billion a year. But in 2004-2005, the very first year of the UPA, it leaped to $25.5 billion and then relentlessly rose year after thus: to $38 billion in the second year, $47 billion (3rd), $70 billion (4 th), $72 billion (5th), $66 billion (6th), $79 billion (7th), $99 billion (8th) and $91.5 billion (9th), aggregating to $587 billion in nine years.

Import of capital goods is a sign of vibrant economy. And in theory it generates higher national production. But, see what happens. The Index of Industrial Production (IIP) annually averaged 11.5 percent during the first four years of UPA rule. But in the next five years the annual average IIP came down to less than 5 percent — finally to a peanut of 2.9 percent for 2012-2013. Far from rising with the import of capital goods, the IIP growth has fallen from 11.5 percent in the first four years to 5 percent in the latter five years, a fall of over 56 percent. In contrast, it was in the latter five-year period the capital goods import was $407 billion (79 percent) out of the $587 billion for the UPA's entire nine years, the average in the first four years being $45 billion and the later five years was $80 billion. :ranger:

A rise of 78 per cent

Is it not shocking that when the capital goods import rises by 79 percent, the national production falls by 56 percent. The 2008 meltdown cannot be cited as an alibi for the decline in the IIP. Because the GDP has risen from 6.7 percent in 2008-2009 to 8.6 percent in 2009-2010 and to 9.3 percent in 2010-2011. Also, an economic slowdown affects investment first and production later.

Production falls after investment contracts. But here investment (read capital goods import) has risen by two thirds but production has fallen by half. Why this conundrum? The reason for the fall in national production in the latter five years itself is the rise in imports. The domestic capital goods industry slowed down and later declined because of the import of capital goods. Even as the GDP rose to 8.6 percent in 2009-2010, the IIP rise of 5.3 percent did not keep pace with it. Later the index of domestic capital goods production fell — yes actually fell — by 4 percent in 2011-2012 and 5.7 percent in 2012-2013. More, in the last three years to 2012-2013, the production of intermediate goods hardly grew. If capital goods import under the UPA hit the capital goods industry like a tsunami, foreign-manufactured goods flooded the Indian market. :facepalm:

The average annual import of manufactured goods during 2001-2004 (the NDA period) was just $600 million. But from 2004-2005 to 2012-2013, the average soared to $5.5 billion, by 8 times. The nominal national GDP grew by 3.2 times in this period, by just a third of the growth of manufactured goods imports. The 9-year UPA regime saw manufactured goods imports of $50 billion against just $2.3 billion during the NDA regime. Obviously, the capital goods import did not add to, but actually destroyed, national production, ably aided by import of manufactured goods.

CAD kills GDP growth

It is basic economics that trade surplus adds to national wealth (GDP) and trade deficit cuts into it. So, the CAD, which is the trade deficit, brings down the nominal GDP by a like amount. Calculations show that the CADs have brought down the real GDP by 0.8 percent in 2007-2008, by 1.5 percent (2008-2009) by 2.1 percent (2009-2010) by 1.4 percent(2010-2011) by 2.6 percent (2011-12) and by 3.9 percent (2012-13). If the CADs were removed, theoretically, the real GDP of India would have been 10.8 percent (not 9.3 percent) in 2007-2008, 8.2 percent (not 6.7 percent) in 2008-2009, 10.7 percent (not 8.6 percent) in 2001-2011, 8.8 percent (not 6.2 percent) in 2011-2012, and 8.9 percent (not 5 percent) in 2012-2013. True, oil and gold too have eaten into the forex holdings. But there is a fundamental difference between them and capital goods. Indians buy a quarter to a third of the global supply of gold, which is not produced in India. Domestic oil production is just a quarter of national needs, necessitating the import of the balance three-fourths. But most imported capital goods, which are actually produced in India, has displaced domestic production of capital goods and brought down the GDP. :ranger:

Oil and Gold as alibis

And see how the oil and gold story is not true or is true only partly. The gross value of gold, silver and precious stones import of $402 billion during the UPA's nine years looks huge. But if the export of jewellery and precious stones of $251 billion is set off, the net deficit is $161 billion in nine years. Likewise, the petroleum imports of $804 billion in nine years look gargantuan. But, if the export of petroleum products ($279 billion) is set off, the net import is down to $515 billion. It is less than the capital goods import of $587 billion. In the last five years, the net petroleum import is worth $360 billion, but the capital goods import is worth $407 billion. Does it need a seer to say that the real culprit is the reckless capital goods import and that it has killed the rupee through the CAD and hit domestic production and GDP? Just see one fallout of rupee depreciation. A calculation shows that for every additional rupee paid to buy dollars for oil imports, the additional oil bill for India is Rs 9,500 crore. In today's rupee value, the extra annual petrol bill will be Rs 1,60,000 crore. But the CAD is only part one of the story of destruction. Await further testimony on the decade-long destruction. :coffee:

S Gurumurthy is a well-known commentator on political and economic issues. Email:

[email protected]

Reckless imports put rupee on ventilator - The New Indian Express
 
Last edited:

santosh10

Senior Member
Joined
Oct 5, 2014
Messages
1,666
Likes
177
Capital goods sector to get the competitive edge
March 29, 2013



With trade and current account deficits becoming worrisome, the Government has started on an exercise to reduce dependence on imports for capital goods. Work is apace on a policy to make the capital goods industry globally competitive. :thumb:

The value of capital goods imports, including project goods, is set to cross $50 billion this fiscal, accounting for more than 10 per cent of the total imports. In sharp contrast, the domestic output of capital goods contracted by 10.1 per cent in the April-December period.

The Department of Heavy Industries and Public Enterprises will soon appoint consultants to profile and analyse the sector and offer policy recommendations for the sector valued at roughly Rs 5,00,000 crore.

IMPORT DEPENDENCE

"The consultants will be asked to examine various policy parameters that govern the sector's growth and identify the shortcomings. This would include the industrial, fiscal and the foreign trade policies in the light of various regional trade agreements being signed by India," an Industry Department official told Business Line.

Despite a diversified domestic industry that employs about 14 lakh people, India is heavily dependent on capital goods imports from a handful of countries such as China and South Korea, especially in textile and power sectors. :ranger:

"It is a shame how the Chinese have been allowed to take over our power generation industry. Our textile industry, too, is heavily dependent on imports. Definitely the time has come for the Government to scale up the domestic sector," a Delhi-based trade expert said.

Since there is not much the country can do to control petroleum and gold imports, the Government wants to explore all possibilities to reduce dependence on non-oil imports and increase their exports so as to check the widening trade and current account deficit gaps.

"If we give our domestic industry the right mixture of fiscal incentives, infrastructure and skilled personnel, there is no reason why it can't compete with global players, be it in the country or outside," the official said :ranger:

CONSULTANTS' TASK

According to industry body Ficci, it is important to have domestic capabilities across the value chain in capital goods. "We hope that the roadmap is finalised soon, preferably in the next four-five months," Ficci Director Chetan Bijesure said.

The Department of Heavy Industries has set April 16 for opening of bids.

In its Request for Proposal (RfP) for consultants, the Department has specified that the consultants will be required to identify key measures relating to research and development, technology enhancement, skill augmentation, export promotion, local purchasing encouragement, besides trade and taxation needed to power up the capital goods sector.

Capital goods sector to get the competitive edge | Business Line
 

santosh10

Senior Member
Joined
Oct 5, 2014
Messages
1,666
Likes
177
True Value of Indian Rupees, INR, stands at around 1.0 INR = 1.5 Pakistani Rupees, to 1.0 Yuan = 10.0+ INR

Indian Government has to make Gold Import easier than before, until Indian Rupees remains 'Over Valued', until it is depreciated to 1.0 US$ = 65 INR (1.0 Yuan = 10.0 INR). as we do expect Gold import to put more pressure on the INR to bring it to the level, where we may have enough resistance to imported products, which will bring down the Trade Deficit, CAD, with the same rate. as discussed in the post#39 too....

(and it will be the time when gold import too will become expansive to be imported this way :thumb:)

its clear that if Indian 35% import accounts for only Oil, and those manufactured products which may be produced in India itself, including Capital Goods, as discussed in the above articles. and as these items are very cheap to be imported due to Over Valued Rupees, so it has to be made expansive enough to be less imported by depreciating rupees to its true value :thumb:

we hope to see Indian Rupees to be at least at around its true value by end 2014, at around 1.0 INR = 1.5 Pakistani Rupees to 1.0 Yuan = 10.0 INR, hence to around 1.0 US$ = 63.0 INR+ :thumb:

here we also have a news as below too, which states that Rupees is around 17.6% Over Valued at 1.0US$=INR 60.

Rupee still 17.6 per cent overvalued: Nomura - Economic Times

and this above news doesn't surprise me. India has to keep Indian Rupees value at somewhere close 1.0 INR = 1.5 Pakistan Rupees, and 1 Yuan = 10.0 INR+, somewhere close to, of these currencies of its neighbors, which would be further depreciated by the coming years as India suffer higher inflation as compare to China, which makes product manufacturing in India more expansive by coming years...... and until India makes it import expansive enough to be less imported this way, we will have higher CAD in future. and yes it will then need to depreciate to $1.0 = INR 63.0+ this way by 2014, which will then make the import of oil expansive enough too, which will obviously effect its consumption because of its higher price this way, means lesser import of oil. and until the imported products are made expansive enough to be less imported, the growing CAD will not be controlled :disagree:

the exchange rate value by end 2002/early 2003 was standing at around 1.0 US$ = Rs 50, while its hardly around 1.0 USD = INR 60.0 rupees right now. while India suffered around 6%+ annual inflation on average since 2002? which has increased manufacturing cost by around twice since then this way, while China on comparison had only around 3% annual inflation on average since then. China, with which India has highest trade deficit for those manufactured products which may be produced in India itself....... similarly India suffer very high trade deficit with EU as below for those products which has to be made expansive enough to be less imported this way......:thumb:

at 1.0US$ = INR 60, Rupee still 17.6 per cent overvalued

Nomura Singapore Limited states that its FX valuation model shows that the rupee is still about 17.6 per cent overvalued, giving more room for weakness.

Now that the rupee is trading below 60 to the dollar, Nomura said the chances of government or authorities to implement measures soon have risen.

Rupee still 17.6 per cent overvalued: Nomura - Economic Times
 

santosh10

Senior Member
Joined
Oct 5, 2014
Messages
1,666
Likes
177
India needs free floating gold trade

We want Market Determined Value of Gold

Stemming rupee fall: With import duty at 10%, gold may turn rare metal in India - The Economic Times

the above news is disappointing..... I always support Gold Import as its all about a foreign currency in the form of gold, which floats as per market demand. and having high gold import, in fact help the Trade Balance in tough times. for example, like how we saw even "EXPORT" of Gold in first quarter of 2009, when Indian Rupees depreciated to Rs50/US$, from its Rs40/$ level of mid 2008, which then made the Gold price lesser in the Indian market as compare the its Dollar value in the international market, which then resulted in even 'export' of Gold coins from India in the first quarter of 2009, during the peak of recession, as below

Singapore: Investors in India, the world's largest gold consumer, sold 17 tonnes of bullion in the first quarter of 2009, marking its first disinvestment ever, while investment demand plunged more than 70% in Vietnam on import restrictions, industry data showed on Thursday.

India gold investment turns negative for first time - Livemint

Gold import has a unique role in the Indian trade and it can't be equated to oil import, as its in fact the "most valued foreign currency". in fact, gold has been the investment with the highest return since 2001. also, now days we find that at $1.0 = INR 60, gold price in India is maintained at around INR 27,000 per 10 gram. and if the currency depreciates by 10% from here, say, then obviously gold price will then fall by 10%, nearly INR 30,000 per 10 gram this way? :thumb:

there must not be any tax on the Gold import to keep it always floating. we want "market determined value of gold", which may help India maintain respect during very tough time, similar to the recession time of early 2009 when it was even exported to help India maintain respect on the trade deficit side that year, during the peak of recession.....

there is a difference between oil import which has a share of around 35% in India's import, as compare to gold import which is a form of foreign currency. if oil/gas is more imported then it means for its more consumption, the waste, while gold is the "most valued" form of foreign currency, which first provides a high return, as how we saw Gold price rising with the similar pace as Oil/gas prices since 2001. and at the same time gold is even exported in tough time, as we saw in early 2009, during peak of that recession...... also, why does the government worry so much if rupees is still around 15% "over valued" at this level itself, as below?

Rupee still 17.6 per cent overvalued: Nomura - Economic Times
 

santosh10

Senior Member
Joined
Oct 5, 2014
Messages
1,666
Likes
177
Right Value of CAD can be maintained only when INR is depreciated to its true Value

further to the articles of post#41/42 stating struggling Indians industries due to those Chinese products which may be manufactured in India itself, many economist generally compare true value of Indian Rupees equal to Japanese Yen. while we find its now at par with Pakistani Rupees as below :ranger:

Currency Calculator (Japanese Yen, Pakistani Rupee) - X-Rates

while Indian rupees, INR, is still more valued than Japanese Yen as below, which is following the above news that INR is around 17.6% over valued at 1.0US$ = INR 60 itself

Currency Calculator (Indian Rupee, Japanese Yen) - X-Rates


when we produce products domestically, it first generate employment, then direct and indirect taxes which government may use for Infrastructure projects. Investment of 1.0$ result in return of 66 cents (66%) through direct and indirect taxes, and things are always good if the money is kept inside the country. losing home business to cheap imported products only means for short term benefits, which will be eroded out in future.......

its true that you pay higher on the side of oil/gas/metal etc import due to depreciation of over valued currency, but long term benefits of defending home industries can't be ignored for any reason :nono:

its in a simple term that, "India needs to depreciated its Over Valued Rupees to the level when the imported products are expansive enough to be less imported."
:india:
 

santosh10

Senior Member
Joined
Oct 5, 2014
Messages
1,666
Likes
177
India must prepare ground for a post-taper world
August 4, 2014

RBI governors have no option but to master the art of tightrope-walking. Regardless of what diehard inflation-targeters may say, the reality is central bankers have to strike a careful balance between price stability and growth while framing monetary policy. :ranger:

In that sense, Raghuram Rajan's position as he contemplates his third bimonthly policy statement tomorrow is no different from US Federal Reserve chairman Janet Yellen's. But there the similarity ends. Unlike the US Fed that frames monetary policy with its eye on US fundamentals, RBI governors have no such luxury.

Over the last few years, and especially after the 2008 financial crisis, they have had to walk the tightrope with one eye on inflation, another on growth and a third, somewhat wary eye, on the Fed.

A Stitch in Time

So much as Rajan might weigh his options, look at inflation, growth and the government's fiscal numbers, and gaze skywards to try and figure out if the rain gods will make amends for their late appearance, and then take a call, there is one big imponderable.

By October 2014, when the RBI's next monetary policy statement is due, the Fed would be buying only $5-billion bonds, down from $85 billion before the taper started in December 2013. So, if the RBI has to safeguard the economy in a post-taper world, it has to prepare the ground now. And that is not going to be easy. More because no one knows what the post-taper world will be like. Interest rates will rise for sure, but no one quite knows when. :ranger:

Rajan is aware of the pitfalls. In a speech earlier this year, he called for greater central bank coordination, "When monetary policy in large countries is extremely and unconventionally accommodative, capital flows into recipient countries tend to increase local leverage."

Falling on Yellen Ears

So, "recipient countries are not being irrational when they protest both the initiation of unconventional policy as well as an exit whose pace is driven solely by conditions in the source country".

However, his plea for greater sensitivity regarding the consequences for emerging market economies like India fell on deaf ears. The US position has been that the Fed is only concerned with domestic interests. Other countries need to put their own house in order before looking to the US to consider the "spillover" effects of its monetary policy. Fair enough.

Except that the US can afford to take this position only because of the dollar's privilege as the international reserve currency. No one is worried about spillovers from the actions of the central bank of Burkina Faso, which, incidentally, is also the central bank to seven other West African states. Hence Janet Yellen's cavalier dismissal of the Bank for International Settlements' warning of asset bubbles building up and leverage reaching danger levels.

Her argument that macroprudential, rather than monetary, policy is the right instrument for financial stability overlooks the reality that macroprudential measures are a poor substitute, especially when taken in isolation. Spain, for instance, had a housing boom despite countercyclical provisioning.

Free market fundamentalists might suggest freely floating exchange rates and liberalisation of financial markets as an answer. But research has shown that countries that undertook textbook policies of financial sector liberalisation often suffer more as deeper markets tend to draw in more flows. It also makes it easier to sell and exit when global conditions turn adverse.

Foundation is the Decider

The IMF's 2014 Spillover Report warns of turbulent times ahead. Yes, countries with strong fundamentals are likely to weather spillover issues better. Yes, countries that press ahead with structural reforms will be better placed than others. :thumb: But there, the ball is in the government's court. The RBI's mandate and its sphere of influence are much more limited. Indeed, the RBI often has to overcorrect for government excesses. What should the governor do?

RBI executive director Deepak Mohanty's recent message provides some hints, "Foreign exchange reserves are the first line of defence to contain volatility" in case of capital outflow. Expect the RBI to beef up reserves.

Also, "to the extent capital outflows reflect an imbalance between demand for foreign currency vis-à-vis domestic currency, the price of domestic currency has to go up as a defence against capital outflows". Expect monetary tightening if flows reverse abruptly, although the bank is likely to keep its powder dry now to deal with any eventuality later. We are in uncharted waters. Rules of macroeconomics have broken down. It is each country for itself. Former RBI governor Bimal Jalan, who steered the country through the East Asian crisis with some rather unconventional monetary policy, put it best.

"The only test of whether correct actions (are) taken or not, is whether policy (is) successful in handling the problem and not whether it conforms to prescribed dictums of international institutions," he said. That home-grown wisdom has never been more true. Time for Rajan's third eye to take over.

Economic Times | Blogs
.
 
Last edited:

santosh10

Senior Member
Joined
Oct 5, 2014
Messages
1,666
Likes
177
Preparing for the Post-Taper World

its not an old joke, just till 2013, we have been generally talking, "total Trade Deficit of US is almost equal to the total Debt it borrows." during 2008 to 2013 of 5 years, US has been borrowing around $1.0trillion+ debt a year and its trade deficit was well around $800billion till 2012, check.....
and this trend of borrowing debt and buy foreign products is less likely to continue, a worries for the whole world in fact. and here we discuss issue of the above article of post#46, how much India is prepared for "Post Taper World". and who who will be the mostly affected? as in this article, it clearly states that the total borrowing has been reduced from $85.0billion a month to hardly $5.0billion, and lower demands from US would obviously affect the countries dependent on trade with US........

but we have some good news about US as below too, pumping more than twice oil than the pre-crisis level, with the news of LNG gas export too. hence we expect the demands from US to be maintained to an extent even at the post taper scenario :thumb:

America Will Likely Close Out 2014 as the World's Reigning Oil Champion

America is Producing More Oil than ever and using it more Intelligently :thumb:

Bloomberg reported the latest triumph of America's energy boom. Earlier this year America's daily production surpassed Saudi Arabia's and Russia's. Since the boom has continued, the U.S. is likely to close 2014 as the world's oil champion.

On a macro level, it turns out the U.S. has actually managed the oil boom with some modicum of intelligence. It's little-appreciated, but the boom in oil production has coincided with a quiet revolution in the way Americans use oil. At the same time we are pumping more, we are using less, and using it more intelligently. Consumption amounted to 18.9 million barrels per day in 2013, which was up from 2012. But that rise followed seven years of net decline, from 20.8 million barrels per day in 2005 to 18.49 million barrels of oil per day in 2012. Between 2005 and 2013, oil consumption fell 9 percent in absolute terms.

America world’s leading oil producer: As we’re pumping more, we’re using less.
 
Last edited:

santosh10

Senior Member
Joined
Oct 5, 2014
Messages
1,666
Likes
177
Any New 2008 type Recession would make a Difference in World

it was always good when we find one category of developed nations and one of 3rd world countries. things were easy to discuss, US/UK/Aus etc are always best places, and its your good luck if you may have even transit visa in Australia type developed countries. but now things changing and getting complex. for example, these so called Industrialized nations have already lost Industries to emerging markets to an extent and losing the remaining ones too with a constant pace. all the techs are getting common for emerging economies and they have at least 6.0%+ a year average growth even since 2008 recession.

while even if its rude to say, but this is how its going to be working. at 90%+ Debt to GDP level, UK and other EU's economies have to make many spending cuts., which would have undermined any further growth prospects. even at 200% Debt to GDP level, an emerging economy would have reduced debt on long run, as it does grow by at least 6%+, with high inflation too. while EU at hardly 1.0%+ growth a year, would hardly match its population growth, while its Per Capita Income adjusting inflation is still around 5% lower than early 2008.....

its really not about saying wrong about any country, but there is a point on what i say. and the worse we will see if we get any other recession like 2008, dont get surprise but the issues of 2008 recession is still present. China type emerging economies have hollowed out the industries of OECD economies, in fact, and there is no sign that China is stoppable...... and if we get any 2008 type recession again, then i dont think they may again borrow debt in the same way like how they did since 2008. for example of UK, its national debt raised from 45% by early 2008 to 95%+ to date, its per capita income adjusting inflation is still around 5% lower than early 2008 level, and one more recession like the same will simply make then unanswerable. and its the same story for the Eurozone economy as whole too......
even National Debt of US and many of EU's economies is just doubled since early 2008 itself..

only Australia, Canada type mineral rich low population countries would have strong economic future, along with Japan, France, Germany type highly advanced countries would also withstand any new recession, i think. as, even if US with 320million+ people has been doing so much oil/gas pumping since 2009 itself, its National Debt level is well over 105%+ to date.....

=> and the main fun will be to see the circumstances when Industries back to many of today's OECD economies. very high debt they have put to date, and if the industries back, just one more recession is needed in this regard, then they will have very high inflation in beginning, which does mean for high interests payment on the debt they have borrowed to date........ we may see many funny things in coming years
things are so complex that, the interest payment would occur on the Total Debt, which includes government debt+household debt+business bedt etc, which may result in social unrest too in many of those countries
:ranger:

and this is how BRIC is compared with the OECD economies, as in post#14
 
Last edited:

santosh10

Senior Member
Joined
Oct 5, 2014
Messages
1,666
Likes
177
I don't know if I understand your question correctly, but if you are asking my opinion on the rise of Russia, well I'm not sure if Russia is on the rise. To me it's more like we are seeing the last gasps for air of a dying empire.

First Cut Comparison of Russia with US/EU (military strength comparison to follow.....)

and thats why i said, you would come to the thread of this forum, post#78..... just living in wrong fantasies? shameful :toilet:

for example of 3 points of economic comparison as below :

1st; Total Debt: here we find Russia in world, as compare to OECD and BRIC economies

//cdn.static-economist.com/sites/default/files/imagecache/original-size/t1-overall_0.png

2nd; Per Capita Income: i just discussed, Russia was rising along with BRIC speed till the 2008 recession, and Per Capita Income of Russia and US since 2008 is compared as below, even if US is pumping twice oil/gas since 2008 too.
//blogs-images.forbes.com/markadomanis/files/2013/03/GDPPerCapitaRussiaUS.png
while i just discussed, even if UK has recovered its pre-crisis level economic size, its Per Capita Income adjusting inflation is still 5% less than pre-crisis level, along with more than twice debt since then too. and UK is one among most of the Eurozone economies....
//upload.wikimedia.org/wikipedia/commons/0/06/Russian_economy_since_fall_of_Soviet_Union.PNG

3rd; along with hefty investment domestically, this is how they helping other nations too
Over the last 11 years, Russia has written off foreign debts in the total amount of $80 billion and paid $124 billion to its creditors. Here is the list of the largest debts that were written off by Russia: :namaste:

Afghanistan - $12 billion, Iraq - $11.9 billion, Mongolia - $11 billion, North Korea - $11 billion, Syria - $9.8 billion, Ethiopia - $4.8 billion, Libya - $4.5 billion, Algeria - $4.3 billion, Nicaragua - $4.3 billion, Angola - $3.5 billion

//english.pravda.ru/russia/economics/19-10-2012/122511-russia_africa-0/

=> From here, do you want to start Military Expenditure comparison of Russia? its military strength with rest of world, first have a look on US as below. while we do know about hefty cuts in Europe's military expenditures too :ranger:

//i.cfr.org/content/publications/July2013/002_military_spending_percent_of_world.png

Trends in U.S. Military Spending - Council on Foreign Relations

=> we discussing economic state of US+EU as below too :thumb:

//defenceforumindia.com/forum/europe-russia/64033-eurozone-crisis-online-2.html#post956561
 
Last edited:

santosh10

Senior Member
Joined
Oct 5, 2014
Messages
1,666
Likes
177
Living standards needs to improve in a sustainable manner. Rapid growth typically backfires. Russia has to take the approach of improving productivity of its workforce in a gradual and step by step manner.
hmmm, how do you see Russia helping other countries improve their living standard by writing off their debt? last post#80
:tsk:
 

santosh10

Senior Member
Joined
Oct 5, 2014
Messages
1,666
Likes
177
It is better to write off debts which you cannot collect.
This is the reason why Russia prefers to deal with India as Russia knows India always pays its debts.

Soon all creditors of Pakistan will realize the same as this country is about to implode as well.
Living standards needs to improve in a sustainable manner. Rapid growth typically backfires. Russia has to take the approach of improving productivity of its workforce in a gradual and step by step manner.
@asianobserve

hmmm it also confirm that these countries need debt relax, more needy, isn't it? just have a look on the amount of debt Russia has written off during last 7-8 years, more than $100bn+ :scared1:

from here, in response to your post# regarding "living standard" of Russians, we have a comparison as below :thumb:

(The Living Standard Comparison, w.r.t. to the Debt on the society as whole, the Total Debt, which includes government+business+household debt etc too.)

//data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD
Per Capita Income PPP in 2013- World Bank

United Kingdom: $36,197

Italy: $34,303

Spain: $32,103

Russia: $24,120

Greece: $25,651

Poland: $23,275

(as the second most industrialized East European country after Russia, we find Poland is a good comparison :thumb: .)

//data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD

=> Total Debt: and dont forget, in today's world, something that matters the most is as below. how much debt you have to pay back, before you become a rich nation..... and if i dare to say, considering the hefty resources Russia has, Russians have the most bright future in world at present, not surprised why they have thrown out over $100bn+ foreign aids for its poor friends recently :truestory:

//cdn.static-economist.com/sites/default/files/imagecache/original-size/t1-overall_0.png
and its worth mentioning, as the interest rate payment occurs on the total debt, once inflation rise, and we need only one more 2008 type recession in this regard..... as we do understand that the way these OECD economies have doubled their debt since 2008 recession, they won't be able to borrow this time again :nono:
we may see a type of social unrest in OECD economies, on the back of one more recession like 2008-09....


=> and the Per Capita Income Growth Rate: a comparison: Russia was rising along with BRIC speed till the 2008 recession, and Per Capita Income of Russia and US since 2008 is compared as below, even if US is pumping twice oil/gas since 2008 too. and referring the above comparison, Russia isn't a developing country like Indonesia, India, China, Philippines, its well compared with developed country like US as below Lranger:

//blogs-images.forbes.com/markadomanis/files/2013/03/GDPPerCapitaRussiaUS.png
 
Last edited by a moderator:

santosh10

Senior Member
Joined
Oct 5, 2014
Messages
1,666
Likes
177
Getting personal eh? Rest assured I have no intention of bringing "Malaysians" versus "Indians." I just feel I have to respond after you brought the "Malaysia" part first. I am all for academic discussion no matter how heated t becomes.

I may help you here.

considering 350million+ Middle Class of India, which is more than total population at the time of freedom in 1947, this number is around 35 times to total Middle Class Number of Malaysia. :ranger:
(Population of Malaysia at 25million and Middle Class Number at 10million, around. as, half of the Malays just eat and work here there, money is owned by Chinese, and by Indians also to an extent, isn't it?" my Chinese girl friends used to say the stories of shiits Malays of Malaysia.... come out of the bluffs that a Muslim country is industrialized by Muslims, the Malaysia :wave: .)

and when you read my 2 posts as below, always remember, how China has 100times+ Middle Class than Malaysia, even if its Per Capita Income is less than half to Malaysia :thumb:

for example, you might be proud to live in "Kuala Lumpur" but in my eyes, most of Malaysian may find it tooooooo hard to get a similar size property in Mumbai :wave:
globalpropertyguide.com/most-expensive-cities

=> read the posts#25 and #26 and come with some arguments :ranger:

//defenceforumindia.com/forum/economy-infrastructure/64395-brics-e7-economies-ibsa-2.html#post961126
 

santosh10

Senior Member
Joined
Oct 5, 2014
Messages
1,666
Likes
177
India has a very strong and long lasting relationship with Russia. So it is natural for me (as an Indian) to be interested in Russian affairs.

On the other hand, I have not known any adversarial relationship between Malaysia and Russia. So you are the odd man out.

MH17 is not a reason to denounce Russia. You must ask yourself - why this plane ONLY. Why other civil airlines not shot down out of so many that flew over than region every day??

Only a fool can believe that Russia shot down MH17.

how would look on the post #26, as below, along with#25 too? :ranger:

//defenceforumindia.com/forum/economy-infrastructure/64395-brics-e7-economies-ibsa-2.html#post961127
 

jouni

Senior Member
Joined
Jul 29, 2014
Messages
3,900
Likes
1,138
Russia has just annonced 5% savings in public spending for the next year. Of course military spending is not involved in the cuts. Education, healthcare etc. are. That is a deliberate decision to prevent the living standards to raise to the level of rest of the Europe. That is really worrying for the whole world.
 

santosh10

Senior Member
Joined
Oct 5, 2014
Messages
1,666
Likes
177
Now growing at 3.9 percent. and almost no inflation. Do you want to compare that to India.

Comparing OECD Economies with Emerging Economies

India is a developing economy, so it would grow at least at 6%+ on the long run, while average growth rate of OECD economies since 1990 is well below 2% per year, check.

and, a comparison we have between US, Russia, and India is as below. per capita income of US might have reached its early 2008, as even if its around 5% above to pre-crisis level on the back of hefty oil-gas pumping since then, it registered population growth rate at around 0.9% a year too, as below.

while on the other hand, as India is an emerging economy, its GDP is around 50%+ to its early 2008 level, because of around 6.5% average growth rate since then. we find India's growth rate below 5% for the last 2 years, but its now picking up :tup:

and considering hefty cuts in Budget Expenditure, because of heft debt borrowing since 2008 recession hence over twice debt since then on them, i personally can't see anything driving growth in OECD economies in future. we only discuss exception of Australia, the strongest economies among the OECD since 2008, along with Canada too, rest of OECD are still struggling at Per Capita Income below 2008 level, most of them. for example of UK, i just discussed, it just reached its pre-crisis level, by doubling Public Debt since then too, but its Per Capita income adjusting inflation is around 5% lower than its pre-crisis level due to population growth since then.

we simply can't compare an emerging economy like India, Indonesia, Philippines, Vietnam etc with the OECD Economies :coffee:

//blogs-images.forbes.com/markadomanis/files/2013/03/GDPPerCapitaRussiaUS.png

How Russia And The United States Have Fared Since The Great Recession - Forbes

=> GDP of India since 2007

thehindu.com/multimedia/dynamic/01747/gdp_1747901f.jpg

GDP growth will not be less than 5%, says Chidambaram
 

santosh10

Senior Member
Joined
Oct 5, 2014
Messages
1,666
Likes
177
six percent of almost nothing is still almost nothing. 4 percent of 53,000 a years is more then 2000 a year. Six percent of 2000 a year is only 120 a year. Make that 1625 times 6 percent for 2014.

and thats why i first mentioned exchange rates difference between US and India, which make a huge difference. in purchasing power terms, i would say 1.0 US$ = Indian Rupes 10.0, no more than that. so, you would consider per capita income on "PPP term of India "at around" $15,000, considering how prices really affect a common civilian

and the main issue here is the total Debt of US, well over $60.0trillion+, while that of India would be hardly around $2.5trillion, as below:

//cdn.static-economist.com/sites/default/files/imagecache/original-size/t1-overall_0.png
=>

"on Ground" Purchasing Power Comparison between India and US

please check my post again, and read "Per Capita Income at Ground", on ground :thumb:

On Ground: on ground, i pay $3.2 for a Medium size Flat White Coffee in Sydney while walking on the road, while its hardly Indian Rupees 25 (40 cents), for the same size and same standard of milk/coffee/machine of my near by. 8 time difference
(while i generally by coffee from the side at hardly IRN 15-20)

the "cheapest" food, 'production line food' of KFC/Mc Donalds/Hungry Jack etc cost around $10, no less than that. while a simple plate of food in Delhi cost around Indian Rupees 100 ($1.5), in a pretty good Middle Class restaurant. 7 times difference
(while a vegetable thali/plate in the restaurant of my colony of Delhi is priced at INR 70, its good.)

Im a resident of Perth, and you simply can't get a 2 room flat for less than $400 a week, means around $1,700 a month (INR 100,000). while in the city like Lucknow, the capital of largest state of India, UP, in my colony, around INR 20,000 per month is enough) 5 time difference
(while people do get flat for even INR 10,000 a month in Lucknow, on the long term contract. quite seen...)

even the cheapest food in Sydney, a Chinese cheap and best food, is available for $12, take away food, and then you pay $2.5 for water also, the minimum. while 1.0 liter mineral water in Delhi is priced at INR20 (30 cents), the best brands..... around 9 times

and yes, prices of rice, chicken, edible oil, cooking gas, etc is hardly twice in Australia, as compare to India, but again you do pay very high for other services in US......

and thats why i said, $15,000 per capita income in US, means for around $2,000 in India, around. regardless the PPP calculation, what does we buy from our earning "on ground", matters the most. :tup:

=>

Travelling Comparison: along with food prices in the Middle Class restaurants, price of 2 rooms flats/rent, price of mineral waters etc, i just realized one major comparison, the Travelling Expanses in city. here we find, its around INR 20 (30 cents) by the metro From Nehru Enclave to New Delhi railway station. and I would consider Distance of Nehru Enclave to New Delhi similar to Paramatta to Sydney. while from Straigthfield to Sydney, a closest suburb, i used to pay $3.2 for one way. 10 times difference
(while from O-Connor to Perth city, the price comes at around $4.4 for one way.)

hence On Ground Purchasing Power has now included traveling expanses too. again i discussed once, price of Petrol in Sydney and Delhi has hardly 20% difference because of its international price. but i again thought, once you send your vehicle to work shop for any type of repair, it simply cross $600 to $1,000+ in Australia. similar how i said before, even if prices of rice/cooking oil/chicken is hardly around twice in Australia as compare to India, but you first need to go to shops for the items, and service is again expansive in Australia. while we find prices of vegetables in Australia well closed to $10 per kg+, vegetables there are much more expansive than Chicken/Lamb.

i would use the factor of 7.5 to translate the Exchange Rate Per Capita Income of India to see its value in US/UK/Australia. and right now it would stands at around $2,000 :ranger:
 

santosh10

Senior Member
Joined
Oct 5, 2014
Messages
1,666
Likes
177
Even if you used your figures and your the only person in the world that does, the average income in Delhi is 5000 dollars while in Perth its closer to 75,000. Think I prefer Perth
no, if you ask about me then i would say, "25 lacs package in Delhi means for around $110,000 Package in Perth." the minimum people of my profession would get in India, its equivalent value i and engineering-management professionals of my category find.....

even if you have a look on what i said in my last post, it use the factor of 7.5, to calculate the purchasing power, equaling $15,000 in US means for $2,000 in India, the average Per Capita Income of India.

and my "On Ground" calculation has many aspects, which mainly discuss, what you buy in US/Australia on ground, and what i pay here for the same. while the main attribute of living in US/Australia means for many things, other than the coffee we buy, flat rent we pay, and the cheapest food we buy.....
 

santosh10

Senior Member
Joined
Oct 5, 2014
Messages
1,666
Likes
177
there's no doubt abt Russian will to integrate with Europe (EU)- just answer a few simple Q's - who're those extravagant tycoons living in London?

the heart is where the coffer is! ;)

this way half of the wealth of Super Riches of UK belongs to Russians and Indians only :ranger:

and, Eurozone looks in full mess, badly indebted and economy still below to its pre-crisis level. we have to see how EU as whole turns by the next few years. as, Mr Putin won't be as helpless as Mrs Merkel in future, as below :ranger:


Merkel said Tuesday that full debt sharing would not occur "as long as I live."
June 27, 2012

On the eve of a European summit, German Chancellor Angela Merkel touts tighter budgetary controls and says debt sharing will not occur 'as long as I live.'

BERLIN — As European leaders gather in Brussels on Thursday for a two-day summit aimed at resolving the Eurozone's debt crisis, German Chancellor Angela Merkel's response to the most aggressive proposal pushed by her neighbors is, in essence: Over my dead body.

With borrowing costs for Spain and Italy approaching unsustainable levels, European Union leaders have stepped up their pressure on Germany to accept solutions it has long resisted. But Merkel, whose country has Europe's largest economy and probably will foot the highest share of the bill for rescuing its struggling neighbors, has dug in her heels.

In response to the widespread call for euro bonds, which would allow European countries to issue debt jointly and could ease the cost of borrowing for highly indebted southern European countries, Merkel said Tuesday that full debt sharing would not occur "as long as I live."

[//articles.latimes.com/2012/jun/27/world/la-fg-euro-summit-germany-20120628]Germany leader opposes full debt sharing in Eurozone crisis - Los Angeles Times[/url]
=>

Indians account for 20% of Britain's ultra-rich club
June 19, 2012

Super-rich Indians account for more than 20% of the wealth of ultra-high net worth (UHNW) individuals in Britain, a new list showed on Tuesday. As a national group, they are second only to expat Russians. :ranger:

[hindustantimes.com/news-feed/chunk-ht-ui-businesssectionpage-corporate/indians-account-for-22-of-britain-s-ultra-rich-club/article1-875096.aspx#sthash.sFkQCOHH.dpuf]Indians account for 22% of Britain's ultra-rich club - Hindustan Times]
 

santosh10

Senior Member
Joined
Oct 5, 2014
Messages
1,666
Likes
177
dailyo.in/opinion/we-mustnt-allow-modi-to-scrap-the-planning-commission/story/1/1047.html
My Comment:-

how this idea came, to scrap the planning commission?

even if this man wants to start something regarding infrastructure only, its a welcome approach, but how can he even scrap the planning commission?

he simply can't transfer every department to the ministry, he simply can't try to take over all the government departments of India, specially the Planning Commission :nono:

dailyo.in/opinion/we-mustnt-allow-modi-to-scrap-the-planning-commission/story/1/1047.html
 

Global Defence

New threads

Articles

Top