Getting Indian economy back on track

[sehwag1830]

–In 2007-2008, government revenue from tax and elsewhere totaled 5.4 trillion rupees while total expenses were 7.1 trillion rupees, a shortfall of 1.7 trillion rupees. That was covered by 1.3 trillion rupees in government borrowings and other receipts. So the government overspent its income by one third and financed about one fifth of its expenditure through borrowing.

–Fast forward to 2011-2012. Revenue = 7.7. trillion. Expenses = 13.2 trillion. Shortfall = 5.2 trillion. The gap was funded largely by 4.4 trillion in borrowing. So the government borrows almost two thirds of what it earns and one third of what it spends. The fiscal deficit now amounts to about 68% of revenue.

India's Economic Crisis by the Numbers - India Real Time - WSJ

GOI has in a manner of speaking done something similar to China... China too created massive and convoluted internal debt pile to fund its investments ... thats where the similarities end...Indian government spent the internal debt on socialist dole schemes and subsidies ,while china spent it in infra..

so ours is a bigger mess ,because the internal debt has not been used for anything and is being repaid by taking more debt.

Government spending money means that little is left for others...the savings/investment of private sector as a % of GDP have continually come down in the last 3 years.. In 2007 pvt sector savings +investment stood at 25% of GDP..While in 2010 it was only 15% gdp...2011 data when it comes out promises to be even worse..

But people are able to eat three times a day. So it is all good.

 

[Yusuf]

Yeah people are getting to eat three times so it's good. I know what you are hinting at and who.

The idea was to use the NREGA to get labor and use them in infra projects. The plan is to spend over $1 trillion on infra in the next 5 years.

People have problem with the poor getting to eat while they probably go to big institutions and make project reports on how to solve the country's poverty and hunger and then come out and oppose such moves.

 

[trackwhack]

Yeah people are getting to eat three times so it's good. I know what you are hinting at and who.

The idea was to use the NREGA to get labor and use them in infra projects. The plan is to spend over $1 trillion on infra in the next 5 years.

People have problem with the poor getting to eat while they probably go to big institutions and make project reports on how to solve the country's poverty and hunger and then come out and oppose such moves.

Are you defending NREGA?

 

[Yusuf]

Are you defending NREGA?

I defend the thought for providing millions of unemployed jobs ad pay them so that they can buy food.

Implementation and some salient features of it was horrible.

 

[trackwhack]

Through NREGA, what skills is the government imparting to those millions who get employed? After 5 years of working in NREGA schemes, do you think the poor, unemployed person from rural India has gained any skills that will allow him to go out and get employed?

Or is NREGA the new name for slave labor?

Correction : Bonded (and addicted) Slave labor

 

[Yusuf]

Through NREGA, what skills is the government imparting to those millions who get employed? After 5 years of working in NREGA schemes, do you think the poor, unemployed person from rural India has gained any skills that will allow him to go out and get employed?

Or is NREGA the new name for slave labor?

Correction : Bonded (and addicted) Slave labor

That is exactly the biggest drawback of NREGA.

 

[ice berg]

Despite its best intentions, MGNREGA is beset with controversy about corrupt officials, deficit financing as the source of funds, poor quality of infrastructure built under this program, and unintended destructive effect on poverty.

I read good intentions, bad planning and execution.

 

[trackwhack]

Despite its best intentions, MGNREGA is beset with controversy about corrupt officials, deficit financing as the source of funds, poor quality of infrastructure built under this program, and unintended destructive effect on poverty.

I read good intentions, bad planning and execution.

There is no good intention. NREGA is

1) Rural vote bank
2) A way to siphon money from the exchequer
3) A pipeline to route welfare money

The issue is that irrespective of how many years a rural person works in the NREGA scheme, he or she will never achieve any skills that makes him or her hirable by any one else. So in the end the government has created nothing but an intravenous supply to the poor. They will forever be dependent on this fix. It will eventually destroy rural economies and we will witness the same issues as we do in China, with mass migration to urban areas.

 

[trackwhack]

That is exactly the biggest drawback of NREGA.

In that case, as a smart Indian who cares, you have no business justifying the existence of this wretched program.

 

[Yusuf]

There is no good intention. NREGA is

1) Rural vote bank
2) A way to siphon money from the exchequer
3) A pipeline to route welfare money

The issue is that irrespective of how many years a rural person works in the NREGA scheme, he or she will never achieve any skills that makes him or her hirable by any one else. So in the end the government has created nothing but an intravenous supply to the poor. They will forever be dependent on this fix. It will eventually destroy rural economies and we will witness the same issues as we do in China, with mass migration to urban areas.

Agreed.
But you cannot give food for free either to them. Making them earn is the only way out. The scheme could have been formatted in a better manner. Siphoning of funds is the bane of India

 

[Yusuf]

In that case, as a smart Indian who cares, you have no business justifying the existence of this wretched program.

I justify the thought of mass employment. I will do it if the NDA government does it as well. I hope they pick better brains to implement such a program.

 

[trackwhack]

Agreed.
But you cannot give food for free either to them. Making them earn is the only way out. The scheme could have been formatted in a better manner. Siphoning of funds is the bane of India

I am not advocating food for free. The way to develop rural India is to localise economies and make them self sufficient. Not nationalize it through a scheme like NREGA.

Unfortunately GOI is not creating mass employment. It is creating mass dependency. There may come a time when we do not have the funds to run such a vast, unproductive welfare scheme. At that point there could be severe public backlash and riots.

 

[ice berg]

I thought the whole point is nobody wants to hire them cause they are unskilled? How do you localise economies and make them self sufficient if nobody is hiring them? Or I am missing something here..

 

[trackwhack]

I thought the whole point is nobody wants to hire them cause they are unskilled? How do you localise economies and make them self sufficient if nobody is hiring them? Or I am missing something here..

You localise a rural economy by building local agrarian and non agrarian production and supply chains. By ensuring that a vast majority of daily consumables are sourced from local businesses.

All NREGA does is build dirt roads around villages.

 

[Sakal Gharelu Ustad]

I am not advocating food for free. The way to develop rural India is to localise economies and make them self sufficient. Not nationalize it through a scheme like NREGA.

Unfortunately GOI is not creating mass employment. It is creating mass dependency. There may come a time when we do not have the funds to run such a vast, unproductive welfare scheme. At that point there could be severe public backlash and riots.

Time to hammer in the concept of AAPL(Artificially above poverty line) in the minds now. But it is too difficult a concept to explain in a nation where if a worker migrates is seen as a bad thing- both from the state he emigrates as well as the state immigrates(Bihar is a classic example. Politicians hate Biharis everywhere and Nitish finds it great to keep them stuck in an unproductive village economy). So, called left leaning intellectuals see this as a great achievement to help a person get job in his village. But for our political class it is difficult to implement laws to protect the rights of immigrants, so they dole out cheap NREGA schemes. These schemes of micro-credit and rural employment decrease productivity and just create nice looking AAPL numbers without helping the root cause.

 

[Yusuf]

You localise a rural economy by building local agrarian and non agrarian production and supply chains. By ensuring that a vast majority of daily consumables are sourced from local businesses.

All NREGA does is build dirt roads around villages.

It's already done. Daily consumables are available in the villages and in fact goes to the cities from there. India produces enough grain every year. We are self sufficient. Many of those employed with NREGA are those farmers who are not growing some crop because it's off season. But they have to earn something.

The problem with NREGA like I said before is implementation. Yes they built dirt roads. But if they had built better roads, it would mean better connectivity for the villages which means better economic activity.

 

[trackwhack]

It's already done. Daily consumables are available in the villages and in fact goes to the cities from there. India produces enough grain every year. We are self sufficient. Many of those employed with NREGA are those farmers who are not growing some crop because it's off season. But they have to earn something.

The problem with NREGA like I said before is implementation. Yes they built dirt roads. But if they had built better roads, it would mean better connectivity for the villages which means better economic activity.

How many countries in the world function with that mentality? There is no off season concept. An off season exists because you have not created an opportunity to exploit it.

And, no, nothing has been done. We are on the bottom of the list when it comes to per capita yield. Even sub saharan african countries produce more per capita.

 

[Sakal Gharelu Ustad]

It's already done. Daily consumables are available in the villages and in fact goes to the cities from there. India produces enough grain every year. We are self sufficient. Many of those employed with NREGA are those farmers who are not growing some crop because it's off season. But they have to earn something.

The problem with NREGA like I said before is implementation. Yes they built dirt roads. But if they had built better roads, it would mean better connectivity for the villages which means better economic activity.

They would migrate to towns, cities where they can get real employment, where real roads are needed. But state does not like that solution, because protecting rights is always difficult rather than maintain artificial status quo.

 

[sehwag1830]

NREGA was never created to solve poverty. It was created to make a large section of rural poor dependent on govt. doles which will serve as future votebank.

Govt. could have also used NREGA money to build highways which also employs poor people or modernising railways.

NREGA has created nothing for future generation but left them in debt for which they were never responsible.

 

[Yusuf]

They would migrate to towns, cities where they can get real employment, where real roads are needed. But state does not like that solution, because protecting rights is always difficult rather than maintain artificial status quo.

Real employment? Like what? Illiterate people coming to cities end up doing the same labor jobs on construction or other places.