India headed for economic doom, prominent US thinktank

[Yusuf]

NEW DELHI: India is heading straight for economic failure post-Chidambaram's budget as a direct result of the lack of meaningful economic reform, says Heritage Foundation, an important conservative thinktank in the US. Assessing finance minister, P Chidambaram's budget, Derek Scissors of the Washington-based organization said that it "leaves India on the same, failing course it's been on of undisciplined spending and unrealistic expectations".

The Indian economy is in dire health, he said, not only because Indians' incomes have stagnated, income growth slowed and consumer inflation is high, but because manufacturing that should lead the Indian economy that would create jobs for the swelling ranks of young Indians is refusing to take off.

"Services lead in large part because the labour market is more flexible in services industries than in manufacturing. Rather than labour market reform, the Indian government offers a state-led infrastructure program. But the infrastructure program has no chance to succeed while property rights to land remain so ill-defined," he explained.

According to him, India is making the same mistake as the US like substituting spending since reform is politically difficult. "The proposal for this year is a triumph of hope over courage: Spending is to increase by 17%, yet the deficit is to fall to 4.8% of GDP. This won't happen. Spending will have to be curbed or the deficit will balloon again," he said.

The high growth between 2004 and 2007 was largely due to the reforms of the years before. "Without a sustained reform process, which will take considerable time, India will not return to the days of fast growth. Government revenue and GDP will continue to disappoint, deficits will continue to be high, and consumers will continue to suffer. This is the path India remains on," he added.

India headed for economic doom, prominent US thinktank says - TOI Mobile | The Times of India Mobile Site

 

[Ray]

Heritage Foundation, an important conservative thinktank in the US. Assessing finance minister, P Chidambaram's budget, Derek Scissors of the Washington-based organization said that it "leaves India on the same, failing course it's been on of undisciplined spending and unrealistic expectations".

I do not go by US think tanks since they have an agenda to grind.

However this is true that there is undisciplined spending and unrealistic expectations.

Too much of populism and to much of kowtowing to the corporate without sound financial logic to balance both!

High living does not go with low spending power!

 

[p2prada]

I wonder how we plan on doing that. Increase spending and reduce deficit at the same time.

 

[Daredevil]

The most that took affect in the last two UPA regimes is - overall productivity of people. And that is very bad for economy in long term.

 

[t_co]

I don't agree with this analysis. China was able to make infrastructure and heavy capital investment succeed in building up a manufacturing base without land privatization.

What India really needs is labor market reform--which the author seems to hint at but doesn't go full-force in recommending. India's greatest resource is its people--and without labor market reform to really tap into that resource, the young men and women who could be powering India's manufacturing boom will be rioting over unemployment in the streets instead.

 

[badguy2000]

what INdia needs is not land privatization..but a revolution....

 

[arnabmit]

At times I would tend to agree to you...

what INdia needs is not land privatization..but a revolution....

 

[anoop_mig25]

Forget nothing is going to happen on reforms front for following reason
1) If congress win Man Mohan singh would be not avaliable, chinduram would be alone raising flag of reforms , then they would think people elected for all their welfare funds so why go for reforms and most of congress are pro-welfare idea waalas

2) if bjp gets number then, bjp itself has become more left then cpi-cpi(m) itself look their most of their state gov are running welfare scheams and if they get mamta as one of their partners then only god can save this country

3)if third front forms with help from congress then only congress would push for reforms from behind the doors

 

[Godless-Kafir]

NEW DELHI: India is heading straight for economic failure post-Chidambaram's budget as a direct result of the lack of meaningful economic reform, says Heritage Foundation, an important conservative thinktank in the US. Assessing finance minister, P Chidambaram's budget, Derek Scissors of the Washington-based organization said that it "leaves India on the same, failing course it's been on of undisciplined spending and unrealistic expectations".

According to him, India is making the same mistake as the US like substituting spending since reform is politically difficult. "The proposal for this year is a triumph of hope over courage: Spending is to increase by 17%, yet the deficit is to fall to 4.8% of GDP. This won't happen. Spending will have to be curbed or the deficit will balloon again," he said.

The high growth between 2004 and 2007 was largely due to the reforms of the years before. "Without a sustained reform process, which will take considerable time, India will not return to the days of fast growth. Government revenue and GDP will continue to disappoint, deficits will continue to be high, and consumers will continue to suffer. This is the path India remains on," he added.

India headed for economic doom, prominent US thinktank says - TOI Mobile | The Times of India Mobile Site

I agree with the above two paras. he put it perfectly, the idiot PC is ruining industries by over taxing and losing the money in a broken system.

 

[pmaitra]

I agree with the above two paras. he put it perfectly, the idiot PC is ruining industries by over taxing and losing the money in a broken system.

On the other hand, his proposal to raise taxes on imports might bring more car production to India.

Comments: Exclusive: Jaguar Land Rover studying full production in India - sources | Reuters

There are always two sides to a coin.

 

[pmaitra]

I don't agree with this analysis. China was able to make infrastructure and heavy capital investment succeed in building up a manufacturing base without land privatization.

What India really needs is labor market reform--which the author seems to hint at but doesn't go full-force in recommending. India's greatest resource is its people--and without labor market reform to really tap into that resource, the young men and women who could be powering India's manufacturing boom will be rioting over unemployment in the streets instead.

I agree. I do not see why land privatization is necessary for economic growth. Also, labour laws need big time reform in India, but our babus want to brush every labour problem under the carpet as "Maoist instigated violence."

 

[Godless-Kafir]

On the other hand, his proposal to raise taxes on imports might bring more car production to India.

Comments: Exclusive: Jaguar Land Rover studying full production in India - sources | Reuters

There are always two sides to a coin.

May....Mehhhhh....

Few car companies will employ and solve everything when thousands of indian business go more into debt and shut down, right.

 

[roma]

the only area i feel able to comment about is manufacturing -....... it just doesn't seem to be getting the priority i feel it should have been getting since way back

 

[Yusuf]

what INdia needs is not land privatization..but a revolution....

What kind of revolution ?

 

[no smoking]

what INdia needs is not land privatization..but a revolution....

Too late!
In mordern age, any revolution will highly likely turn to a civil war.
Neither indian people, nor world has the stomach to such a thing happen to india.

 

[no smoking]

I agree. I do not see why land privatization is necessary for economic growth. Also, labour laws need big time reform in India, but our babus want to brush every labour problem under the carpet as "Maoist instigated violence."

It is not your "babus" problem if you really have such kind of person in your elite!

It is all about the political influence. Currently india's unions just have too much influence on your leaders. No one can afford the loss of 20 to 40 millions votes.

 

[Sakal Gharelu Ustad]

I agree. I do not see why land privatization is necessary for economic growth. Also, labour laws need big time reform in India, but our babus want to brush every labour problem under the carpet as "Maoist instigated violence."

Land is needed to develop big manufacturing plants(Singur is still fresh in minds)..There is so much confusion about real estate deals that it kills most initiatives for manufacturing..Strong economy needs strong manufacturing base to absorb the masses.

 

[pmaitra]

It is not your "babus" problem if you really have such kind of person in your elite!

It is all about the political influence. Currently india's unions just have too much influence on your leaders. No one can afford the loss of 20 to 40 millions votes.

On one side you have unions, who would go to the extent of preventing workers who are willing to work, and on the other hand you have the management that is utterly corrupt, and would patronize certain unions for their personal needs. All or most of this can be fixed with proper labour laws.

Land is needed to develop big manufacturing plants(Singur is still fresh in minds)..There is so much confusion about real estate deals that it kills most initiatives for manufacturing..Strong economy needs strong manufacturing base to absorb the masses.

I think the confusion is with land privatization. Land acquisition in Singur was difficult because small pieces of land were in private hands. Large tracts of land in private hand would be difficult to find because of the various legislations, like the Land Ceiling Act. The problem is, industries need land close to a good water supply and power supply. It is not always necessary for industries to be close to raw materials due to a certain socialist policy. It just happens that such places are usually densely populated. India is saturated.

 

[badguy2000]

What kind of revolution ?

1.nationalize rural land ,decrease the land cost for industrialzation,

2.crush the awareness of social classes. widely spread that "all social classses are equal".
in CHina, it is a routine for bosses to have dinners with his driver or his housekeepers.
In india, it is a insult for bosses to have a dinner with his driver.or housekeepers

 

[p2prada]

1.nationalize rural land ,decrease the land cost for industrialzation,

That will give too much power to the govt. Too little power to the people. Middlemen will exploit the people then.

Of course, nobody will be willing to part with their land and the govt cannot buy all the land by itself.

2.crush the awareness of social classes. widely spread that "all social classses are equal".

I don't think this is as big a problem as you think it is.

There is tribalism everywhere, a guy from one community will help another from the same community at the expense of someone else, mainly in the govt.

But this isn't a problem as far as the health of the economy is concerned, it is more of a social problem.