India most disappointing among BRIC nations:

Discussion in 'Economy & Infrastructure' started by Yusuf, Dec 6, 2011.

  1. Yusuf

    Yusuf GUARDIAN Administrator

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    LONDON: Growth in all four BRIC economies has surpassed expectations in the decade since the term came into existence but India's record on productivity, FDI and reform has been the most disappointing, the chairman of Goldman Sachs Asset Management Jim O'Neill said on Tuesday.

    O'Neill, who coined the term, BRIC, in December 2001 to jointly describe the four biggest developing economies -- Brazil, Russia, India and China -- was speaking at the London leg of the Reuters 2012 Investment Outlook Summit.

    "All four countries have become bigger (economies) than I said they were going to be, even Russia. However there are important structural issues about all four and as we go into the 10-year anniversary, in some ways India is the most disappointing," said O'Neill who oversees almost a trillion dollars in assets at Goldman.

    Just this week, India's government caved in to opposition pressure and put on hold a landmark reform of the retail sector that was seen opening the doors to billions of dollars in foreign direct investment in the supermarket sector.

    The long-awaited measure, passed earlier this month, had been hailed as ending the government's economic reform paralysis that is widely seen as the root cause of high inflation, shrinking capital inflows and a wider current account deficit.

    "India has the risk of ... if they're not careful, a balance of payments crisis. They shouldn't raise people's hopes of FDI and then in a week say, 'we're only joking'," O'Neill said.

    "India's inability to raise its share of global FDI is very disappointing," he said.

    United Nations data shows that India received less than $20 billion in FDI in the first six months of 2011, compared to more than $60 billion in China while Brazil and Russia took in $23 billion and $33 billion respectively.

    The glacial reform pace has hit India's hopes for double-digit economic growth, O'Neill said, adding: "India is as bad as Russia is on governance and corruption and, in terms of use of technology, Russia is in fact much higher than India."

    On the other BRICs, O'Neill said Brazil's main problem was an overvalued currency which puts the country in danger of "Dutch disease" -- a term first used to describe how North Sea oil discoveries in the 1960s triggered a surge in Dutch energy exports but also in the Dutch currency, pummelling much of the country's manufacturing.

    China's challenge was to effectively manage a transition to a higher-consumption economy with slower growth, he said.

    O'Neill remains positive on Russia but said much depends on what Prime Minister Vladimir Putin can deliver in terms of reform following an election at the weekend that left his ruling party with a much reduced parliamentary majority.
    The Times of India on Mobile
     
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  3. p2prada

    p2prada Stars and Ambassadors Stars and Ambassadors

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    With such high interest rates, I am happy we are at least getting $20Billion in a six months period.
     
  4. NSG_Blackcats

    NSG_Blackcats Member of The Month OCTOBER 2009 Senior Member

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    I am not qualified enough to comment on economic reforms but would like to make few points.

    • Every country in BRIC has different economic structure. For example China is more of an export driven economy and Indian economy mostly depends on its internal demand.
    • Only FDI is not going to solve all our problems. We are not investing enough on sectors like Highways, rural and urban roads, ports, airports, power etc.
    • The ambitious freight corridor project is still on paper, I am not sure if it can be completed by 2016/17.
     
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  5. Ray

    Ray The Chairman Defence Professionals Moderator

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    I am watching a BBC programme on BRIC.

    I think the next one is on India!
     
  6. trackwhack

    trackwhack Tihar Jail Banned

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    Brazil just posted a ZERO percent growth in the latest quarter. Thats right - ZERO

    What drives the Brazillian economy? - Imports, It is resource rich.
    Where do these imports go - China, Brazils largest trading partner.
    How long before China growth rate comes to a screeching halt? Anyones guess, but not too long.
    Is there anything that can reverse whats happenning? Yes, Europe has to be bailed out.
    Why does Europe have to be bailed out - EU is China largest destination market for its exports
    Who can bail out Europe - China can.
    How much will it cost China to bail out Europe - About one third of its current reserves
    Will China bail out Europe - No. Cause they aint gonna see that money coming back.

    So whats really gonna happen - Supply demand correction, Lots of Loan defaults, Gold hitting 2700 - 3000 USD per troy ounce, Brent Crude hitting 55 - 60 USD per barrel.

    What should India do? - Use internal savings to drive infrastructure growth, however slow. Sign long term oil contracts during at every dip in Brent Crude. Cash rich companies try and buy overseas assets like Tata did with JLR. Government try to raise money through exiting sick PSU's preferably offloading stake to local buyers and most importantly retail investors - let the PSU be owned by the Indian public who wont panic and exit their investment at every global financial jitter.
     
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  7. pmaitra

    pmaitra Moderator Moderator

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    Now look who's talking. The chairman of Goldman Sachs Asset Management Jim O'Neill would obviously speak about things that are in his interests. Now, I am not fully against the reforms in the retail sector, but I definitely don't want a chain of WalMart like stores selling Chinese products and destroying domestic industries. We also need to think of the middlemen who are right now employed in the supply chain. Any reform should be slow and gradual to allow for the economy and society to adjust. Shock therapy works well and we have seen it perform excellently in the USSR, thanks to the superior intelligence of the IMF.

    Don't trust these Goldmen who are looking to make some quick gold, Chasers who chase you around to implement reforms the way they want and the Sachmen who will fill their sachs with the loot and run away!
     
    Last edited: Dec 7, 2011
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  8. Falcon

    Falcon Regular Member

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    This is Bull shit. Just because they are not getting an opportunity to en-cash the huge middle class, they think that policy of India is disappointing. We must remember that just to attain double digit growth rate, we cannot allow them to take a big share from our assets. That will be foolishness. There is something called organic growth and we must follow that path. Artificial growth would only hamper future generations.

    We need to increase of efficiency and self dependence along with research and development. That is the only think which will help us. World knows how friendly are the advises of these big evils.
     
  9. pmaitra

    pmaitra Moderator Moderator

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    Double post. MODs, kindly remove. Thanks.
     
    Last edited: Dec 7, 2011
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  10. trackwhack

    trackwhack Tihar Jail Banned

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    The FDI in retail must come with a caveat - 95% sourcing of products must be local. We are ok with 5 % Chinese toys.
     
  11. pmaitra

    pmaitra Moderator Moderator

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    If there are some essential items that we need badly and we cannot procure them domestically in enough number and in time, of course we should be open to import from PRC or any other country for a justified price. However, toys and other non-essential goods, must be heavily taxed, especially if they are from PRC and the money used in projects that will generate jobs in India.
     
  12. Soorya Dhanush

    Soorya Dhanush Regular Member

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    More than any thing we need now strong political leader..:namaste:
     
  13. Ray

    Ray The Chairman Defence Professionals Moderator

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    Wishful thinking!
     

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