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they will build the roads where needed rather than digging and filling up useless potholes that NREGA endorses.
Getting Indian economy back on track
- Thread starter sehwag1830
- Start date
trackwhack
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the point is not to drag them to cities but to create a sustainable rural economy.
increase yield and productivity. improve services. improve quality of life. many people will want to continue to stay in their villages.
increase yield and productivity. improve services. improve quality of life. many people will want to continue to stay in their villages.
thakur_ritesh
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Re: Indian Economy: News and Discussion
Yusuf,
You first create an economically viable environment to sustain all such expenditure. What we have done on the contrary is increase our expenditure astronomically, but our revenue generation has just not kept the pace, as a matter of fact, the way we are headed, in two to three decades, at most, we will be in a severe debt trap. At least Europe got rich before they ended up in the mess, on the contrary we are busy digging next generation's grave, without letting them have a fair shot at making all that money.
Today the little growth that one sees is largely inflation driven, imagine. The little real growth that happens has practically no meaning when the inflation rate is double the real growth. Rather than moving ahead, the country is busy taking strides backwards.
The revenue increases from 5.4 lack crs, to 7.7 lack crs, during the same time the government borrowing increases from 1.3 lack crs to 4.4 lack crs, a 3 fold increment. Do you sense the disparity? Soon enough, if this is how the government is going to move ahead, the borrowed figure will be more than the revenue generated. And all those figures don't even account the states' fiscal health, where most of them are in a much worse situation.
You are taking the example of NERGA, the good intention behind was supposed to have enhance the skill set of people employed, today practically no skill sets have been generated, and those people remain as unemployable. What has been the benefit of increasing the debt?
How are we to service all that debt as in another decade or two as a huge pile up will stare us? Do something like Pakistan? Take a loan from IMF?
Did you read what the RBI recently said? They said, the economy faces fundamental problems. Till date India was doing good because the fundamentals were doing good, what happened all of a sudden that we find ourselves in such a fragile situation that the very basics are being felt challenged? The very basics!
And please, let's not suggest that people here don't want to see the upliftment of the poor. I think everyone understands that if the country has to move ahead, there ought to be a trickle down, else social unrest is only going to increase. Yes, social security programs are important, but then so is living within the means, and more importantly rather than making all these people a liability on the state, make them an asset where they see opportunities for self sustenance.
Today we see the quota as a big curse, along with various forms of vote bank politics that go on, wait for another decade, these very social security programs will openly be talked out as a very big vote bank politics, and if anyone would dare say a word against these social programs, the political discourse of the likes of Digvijay's will be that the middle class and the affluent of the country are against the poor, and then the divisive politics will be on how much one earns.
Yusuf,
You first create an economically viable environment to sustain all such expenditure. What we have done on the contrary is increase our expenditure astronomically, but our revenue generation has just not kept the pace, as a matter of fact, the way we are headed, in two to three decades, at most, we will be in a severe debt trap. At least Europe got rich before they ended up in the mess, on the contrary we are busy digging next generation's grave, without letting them have a fair shot at making all that money.
Today the little growth that one sees is largely inflation driven, imagine. The little real growth that happens has practically no meaning when the inflation rate is double the real growth. Rather than moving ahead, the country is busy taking strides backwards.
The revenue increases from 5.4 lack crs, to 7.7 lack crs, during the same time the government borrowing increases from 1.3 lack crs to 4.4 lack crs, a 3 fold increment. Do you sense the disparity? Soon enough, if this is how the government is going to move ahead, the borrowed figure will be more than the revenue generated. And all those figures don't even account the states' fiscal health, where most of them are in a much worse situation.
You are taking the example of NERGA, the good intention behind was supposed to have enhance the skill set of people employed, today practically no skill sets have been generated, and those people remain as unemployable. What has been the benefit of increasing the debt?
How are we to service all that debt as in another decade or two as a huge pile up will stare us? Do something like Pakistan? Take a loan from IMF?
Did you read what the RBI recently said? They said, the economy faces fundamental problems. Till date India was doing good because the fundamentals were doing good, what happened all of a sudden that we find ourselves in such a fragile situation that the very basics are being felt challenged? The very basics!
And please, let's not suggest that people here don't want to see the upliftment of the poor. I think everyone understands that if the country has to move ahead, there ought to be a trickle down, else social unrest is only going to increase. Yes, social security programs are important, but then so is living within the means, and more importantly rather than making all these people a liability on the state, make them an asset where they see opportunities for self sustenance.
Today we see the quota as a big curse, along with various forms of vote bank politics that go on, wait for another decade, these very social security programs will openly be talked out as a very big vote bank politics, and if anyone would dare say a word against these social programs, the political discourse of the likes of Digvijay's will be that the middle class and the affluent of the country are against the poor, and then the divisive politics will be on how much one earns.
Govt pumps in Rs 1,200-crore dose to boost exports
Business Line : Industry & Economy / Economy : Govt pumps in Rs 1,200-crore dose to boost exports
New Delhi, June 5:
The Government has rolled out several sops, estimated at over Rs 1,200 crore, to boost sagging exports. This intervention comes at a time when merchandise exports have been hit by the demand slowdown in developed markets such as the Euro Zone and the US.
The booster dose comes on the heels of a modest 3.2 per cent annual growth in merchandise exports to $24.45 billion in April. .
EPCG scheme
The 2 per cent interest subvention has been extended by a year to March 2013 for handlooms, handicrafts, carpets and small and medium enterprises as part of the annual supplement to the Foreign Trade Policy 2009-14 announced on Tuesday.
Labour-intensive sectors, such as toys, sports-goods, processed agricultural products and ready-made garments will also now be covered under the interest rate subvention scheme.
The policy gives a thrust to employment creation, encourages domestic manufacturing, reduces dependence on imports, helps market diversification and cuts transaction costs for exporters, said the Commerce and Industry Minister, Mr Anand Sharma. However, he did not comment on the revenue implications.
The interest subvention had cost the exchequer Rs 996 crore in 2011-12. Considering that its scope is expanded now, the subvention is likely to cost the Government around Rs 1,200 crore, trade sources said.
Confident that the 20 per cent export growth will be sustained this fiscal too, Mr Sharma said the country was on course to meet the $500-billion export target by 2014. India expects exports to grow to $360 billion this fiscal, up from $303 billion last year.
Besides extending the zero-duty EPCG scheme by a year, the scope of the scheme has been enlarged.
Companies getting the benefit of TUFS (technology upgradation fund scheme) can now take advantage of the EPCG scheme. The Government also announced the introduction of a new post-export EPCG scheme.
Scrips for payment
The Centre has now allowed the use of scrips (licences for import purposes) for payment of excise duty for domestic procurement.
The scrips are issued to exporters by the Government in lieu of duty and taxes paid on exported items.
Earlier, only scrips from Served From India Scheme (SFIS) were so permitted for procurement of goods from the domestic market.
"This new measure will be an important one for import substitution and will help in saving of foreign exchange, in addition to creating additional employment," said Mr Sharma, emphasising that the scrips provision could bring down the current account deficit (CAD), which touched 4 per cent at end December 2011.
"Petroleum prices are coming down. If it comes down below $90, we will get some relief and then there will be some curtailment in gold import," Mr Sharma said.
The Commerce Secretary, Mr S. R. Rao, said the domestic procurement through scrips is a singular step that would help reduce the import bill.
"We need to control our commodity imports, both oil and gold, but what we are also doing is import substitution," Mr Rao said.
Business Line : Industry & Economy / Economy : Govt pumps in Rs 1,200-crore dose to boost exports
New Delhi, June 5:
The Government has rolled out several sops, estimated at over Rs 1,200 crore, to boost sagging exports. This intervention comes at a time when merchandise exports have been hit by the demand slowdown in developed markets such as the Euro Zone and the US.
The booster dose comes on the heels of a modest 3.2 per cent annual growth in merchandise exports to $24.45 billion in April. .
EPCG scheme
The 2 per cent interest subvention has been extended by a year to March 2013 for handlooms, handicrafts, carpets and small and medium enterprises as part of the annual supplement to the Foreign Trade Policy 2009-14 announced on Tuesday.
Labour-intensive sectors, such as toys, sports-goods, processed agricultural products and ready-made garments will also now be covered under the interest rate subvention scheme.
The policy gives a thrust to employment creation, encourages domestic manufacturing, reduces dependence on imports, helps market diversification and cuts transaction costs for exporters, said the Commerce and Industry Minister, Mr Anand Sharma. However, he did not comment on the revenue implications.
The interest subvention had cost the exchequer Rs 996 crore in 2011-12. Considering that its scope is expanded now, the subvention is likely to cost the Government around Rs 1,200 crore, trade sources said.
Confident that the 20 per cent export growth will be sustained this fiscal too, Mr Sharma said the country was on course to meet the $500-billion export target by 2014. India expects exports to grow to $360 billion this fiscal, up from $303 billion last year.
Besides extending the zero-duty EPCG scheme by a year, the scope of the scheme has been enlarged.
Companies getting the benefit of TUFS (technology upgradation fund scheme) can now take advantage of the EPCG scheme. The Government also announced the introduction of a new post-export EPCG scheme.
Scrips for payment
The Centre has now allowed the use of scrips (licences for import purposes) for payment of excise duty for domestic procurement.
The scrips are issued to exporters by the Government in lieu of duty and taxes paid on exported items.
Earlier, only scrips from Served From India Scheme (SFIS) were so permitted for procurement of goods from the domestic market.
"This new measure will be an important one for import substitution and will help in saving of foreign exchange, in addition to creating additional employment," said Mr Sharma, emphasising that the scrips provision could bring down the current account deficit (CAD), which touched 4 per cent at end December 2011.
"Petroleum prices are coming down. If it comes down below $90, we will get some relief and then there will be some curtailment in gold import," Mr Sharma said.
The Commerce Secretary, Mr S. R. Rao, said the domestic procurement through scrips is a singular step that would help reduce the import bill.
"We need to control our commodity imports, both oil and gold, but what we are also doing is import substitution," Mr Rao said.
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It means only urban areas need roads and not villages? They actually need better roads and connectivity which will in turn increase economic activity and therefore prosperity.
Lets look at the numbers in terms of three things
(1) Expenditure side of GoI finances
(2) Revenue side of GoI finances
(3) Invesment as a % of GDP
The WSJ article basically has completely omitted the fact that the GoI has passed on a huge stimulous package on top of the the special tax holidays and tax breaks which has come to around a total of 80-90 Billion USD a year to promote exports and industry as revenue foregone. Call it subsidies to the rich perhaps.
This is where the finances have gone awry particularly post GFC. The tax subsidies were necessary to not only keep the industry profitable but also allow them to grow which is how we ended up with around a 10.4% GDP growth as late as 2010.
NREGA costs around 8-9 Billion USD per year. We spend $40+ Billion on subsidies on Diesel, LPG and Kerosene which is given EVEN to the those who can afford to pay market rate and not just for poor. And while NREGA expenditure is fixed in the budget, the petroleum subsidies are flexible because they depend on the global oil price.
For the FY12 year the revenue foregone was estimated around 90 Billion USD or 5 trillion Rupees
(http://blogs.timesofindia.indiatimes.com/developmentdialogue/entry/revenue-foregone-but-not-forgiven)
Even if half of the special tax concessions and stimulus pacakge is withdrawn and we generate a reven of 2.5 trillion INR we can keep govt. borrowing under 2 trillion Rupees or 40 Billion USD which is quite manageble.
The important thing though is to look at both sides, expenditures and revenue and give priority to GROWTH and NOT REVENUE generation. Focusing too much on Fiscal Deficit defeats the purpose of what is more important which is Economic growth.
Remember, despite the GFC cricises the debt to GDP ratio has actually gone down. Total debt/GDP has dropped from 69% in FY08 to 64% in FY12, and central debt/GDP has fallen from 49% in FY07 to 44% now. This down from the around 80% total debt/GDP ratio and 60% central debt/GDP around 10 years ago. (Irrelevance of fiscal deficit and other stories - Economy and Politics - livemint.com)
And finally during economic crisis, you would expect private investment ratio in GDP to fall and the govt. investment ratio increase to pick up the slack. In the "good times" you should have the opposite happen where the govt. steps back and lets the private sector take up a bigger share of the GDP. But ideally it should be around the 35-40% mark or atleast above 30. The highest we have reached is 33%
As of the most recently released estimates Gross Fixed Capital Formation (aka Investment both public and private) is around the 30% mark which is pretty much stagnant since Q3 of last fiscal. This is worrying. Here, we can't expect the private sector to plough in investment given the global climate so that means govt. projects like power plants, coal projects e.t.c. that are all on hold due to corruption scandals/buercratic inertia/ policy paralysis e.t.c have to move ahead. There a lot of projects which already have money santioned but are held up because of the various clearances it needs from different ministries. Basically as someone said we have gone from license raj to clearance raj
All details here
http://pib.nic.in/archieve/others/2012/may/d2012053101.pdf
I guess the only bright thing in the "numbers" is that exports as a percentage of GDP have actually gone up. So the export policy is working although the jump in imports particulalry oil and gold negates the benefit it has brought.
(1) Expenditure side of GoI finances
(2) Revenue side of GoI finances
(3) Invesment as a % of GDP
The WSJ article basically has completely omitted the fact that the GoI has passed on a huge stimulous package on top of the the special tax holidays and tax breaks which has come to around a total of 80-90 Billion USD a year to promote exports and industry as revenue foregone. Call it subsidies to the rich perhaps.
This is where the finances have gone awry particularly post GFC. The tax subsidies were necessary to not only keep the industry profitable but also allow them to grow which is how we ended up with around a 10.4% GDP growth as late as 2010.
NREGA costs around 8-9 Billion USD per year. We spend $40+ Billion on subsidies on Diesel, LPG and Kerosene which is given EVEN to the those who can afford to pay market rate and not just for poor. And while NREGA expenditure is fixed in the budget, the petroleum subsidies are flexible because they depend on the global oil price.
For the FY12 year the revenue foregone was estimated around 90 Billion USD or 5 trillion Rupees
(http://blogs.timesofindia.indiatimes.com/developmentdialogue/entry/revenue-foregone-but-not-forgiven)
Even if half of the special tax concessions and stimulus pacakge is withdrawn and we generate a reven of 2.5 trillion INR we can keep govt. borrowing under 2 trillion Rupees or 40 Billion USD which is quite manageble.
The important thing though is to look at both sides, expenditures and revenue and give priority to GROWTH and NOT REVENUE generation. Focusing too much on Fiscal Deficit defeats the purpose of what is more important which is Economic growth.
Remember, despite the GFC cricises the debt to GDP ratio has actually gone down. Total debt/GDP has dropped from 69% in FY08 to 64% in FY12, and central debt/GDP has fallen from 49% in FY07 to 44% now. This down from the around 80% total debt/GDP ratio and 60% central debt/GDP around 10 years ago. (Irrelevance of fiscal deficit and other stories - Economy and Politics - livemint.com)
And finally during economic crisis, you would expect private investment ratio in GDP to fall and the govt. investment ratio increase to pick up the slack. In the "good times" you should have the opposite happen where the govt. steps back and lets the private sector take up a bigger share of the GDP. But ideally it should be around the 35-40% mark or atleast above 30. The highest we have reached is 33%
As of the most recently released estimates Gross Fixed Capital Formation (aka Investment both public and private) is around the 30% mark which is pretty much stagnant since Q3 of last fiscal. This is worrying. Here, we can't expect the private sector to plough in investment given the global climate so that means govt. projects like power plants, coal projects e.t.c. that are all on hold due to corruption scandals/buercratic inertia/ policy paralysis e.t.c have to move ahead. There a lot of projects which already have money santioned but are held up because of the various clearances it needs from different ministries. Basically as someone said we have gone from license raj to clearance raj
All details here
http://pib.nic.in/archieve/others/2012/may/d2012053101.pdf
I guess the only bright thing in the "numbers" is that exports as a percentage of GDP have actually gone up. So the export policy is working although the jump in imports particulalry oil and gold negates the benefit it has brought.
Last edited:
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Please do not take the statement literally. All I meant was do not create artificial jobs through NREGA, when people can migrate and get similar jobs.
I do not know how many of you have actually visited villages. The land holdings in India are so small, that in no way you can lift the people,who depend only on agriculture, out of poverty . Give one shock to any such family say monsoon or some disease to a family member and their life-long savings go for a toss and they are trapped in poverty for another generation. So, given such small farm size no increase in farm yield can help them and there is no possibility for development of other path breaking economic activities in a village. Ideas develop only with a bigger congregation and villages are too small for that kind of development. Exceptions might be there, but there is little scope for economic activities in the villages other than agriculture related and agriculture in its present form cannot take people out of poverty.trackwhack said:
This whole concept of keeping the villagers in the villages is the biggest fraud of our times and NREGA is just one part of it.
trackwhack
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PM sets investment target of Rs. 2 lakh crore for 9% growth
PM sets investment target of Rs 2 lakh crore for 9% growth - Hindustan Times
Someone please help me understand.
We have set a goal of 1 trillion in infra spend over 10 years. That translates to 100 billion a year. Two lac crores does not translate into even 40 billion. Whats the deal? That we start with smaller investments and then target bigger numbers towards the fag end of the 10 year period?
PM sets investment target of Rs 2 lakh crore for 9% growth - Hindustan Times
Someone please help me understand.
We have set a goal of 1 trillion in infra spend over 10 years. That translates to 100 billion a year. Two lac crores does not translate into even 40 billion. Whats the deal? That we start with smaller investments and then target bigger numbers towards the fag end of the 10 year period?
Galaxy
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Re: PM sets investment target of Rs. 2 lakh crore for 9% growth
India's infrastructure sector needs $1 trillion investment in 12th Plan
So, actually that would translate into $2 trillion in next 10 years.
Where is the money ? Already fiscal deficit is close to 6% and moving towards 7% rather 4.5%-5%. Debt is rising, GDP growth at 6%, Revenue is not rising in same proportion. Currency valuation at all time high......and wait......Government might announce lots of subsidy and populist scheme like FSB in next 12 months as general election is approaching. So, expect more burden on government expenditure.
http://defenceforumindia.com/forum/politics-society/37306-time-go-sir.html
India's infrastructure sector needs $1 trillion investment in 12th Plan
So, actually that would translate into $2 trillion in next 10 years.
Where is the money ? Already fiscal deficit is close to 6% and moving towards 7% rather 4.5%-5%. Debt is rising, GDP growth at 6%, Revenue is not rising in same proportion. Currency valuation at all time high......and wait......Government might announce lots of subsidy and populist scheme like FSB in next 12 months as general election is approaching. So, expect more burden on government expenditure.
http://defenceforumindia.com/forum/politics-society/37306-time-go-sir.html
Last edited:
LurkerBaba
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Interview with Modi
---
Red carpet, not red tape for investors, is the way out of India's worsening economic crisis, says Gujarat chief minister Narendra Modi.
The Bharatiya Janata Party leader, who recently set off speculations over his prime ministerial ambitions, laughs off suggestions that Congress may turn the 2014 general election into a Modi versus Rahul Gandhi contest.
In a rare interview with PR Ramesh, Modi says Congress president Sonia Gandhi had failed to prevent a landslide victory for BJP even as she spearheaded her party's campaign. Excerpts:
Industry has been raising concerns over fate of its investments in a slowing economy. What is the way out?
It is a crisis. In the new economic scenario, the government can't do all that is needed to pump up growth. We have to encourage private investment, not just in infrastructure but also in the social sector. We have to open up new investment avenues for people who want to invest.
But before any individual or company invests, they look for safety of their money and profit from the investment. We can provide safety for their money through clarity in policies, transparency in decision-making and decent implementation. Is the UPA government able to do these? The answer is: NO.
So, what can be done to revive sentiment?
As I said, there should be clarity and purpose while making policies. We should create an atmosphere where people can make investment from their office or home. Ambiguities and waffling in policy-making should go.
Foreign investors, too, have begun to doubt the India story. How can this impression be changed?
First, the government should stop painting a rosy picture. If the prime minister accepts reality, he can find an answer. But the problem is that he does not believe in what he is doing. He is not able to even take his decisions to their logical end.
The Indo-US nuclear deal is a case in point. The prime minister was ready to sacrifice his government for the nuclear deal. Has he been able to implement it? No! Sound policies and stamina to implement them alone can convince the investor.
Will the BJP help the prime minister in taking the deal forward?
Why should the BJP take the lead? We were told that the nuclear deal was his principal achievement. What is he doing to implement it? You should put the question to the prime minister, who claimed that it was the answer to our energy crisis and the biggest policy trophy of UPA-1.
The prime minister and the Congress have been maintaining that the Opposition-run state governments are not aiding the Centre's efforts to put the economy back on rails...
The charge is baseless. Look at what the Centre is doing to state governments' efforts to attract investment. Iron ore is available in abundance in Odisha. But the Congress and the government led by it at the Centre are opposing entry of steel companies into the state.
They don't want the state government to perform and they place hurdles. This is naturally making investors jittery. They want to work with the state governments but the Centre is playing the obstructionist.
The Centre went to the extent of unleashing enforcement agencies on those who promised investments in Gujarat at the Vibrant Gujarat meet. They should stop preaching and do what they are expected to do - govern.
But the government is trying to put in place a mechanism...
They prepare reports on various issues and then analyse them. Reports take two years to be prepared and then they go an unending analysing trip. There is no real action.
How has Gujarat managed to present an alternative model?
Gujarat is a very successful model. Look at the investment auto companies have made in the state. Every auto major has its plant in my state. It is because of the efficiency of the state government. We have best quality infrastructure, skilled labour and zero man-day loss.
We plan our skill development and infrastructure with the future in mind. In 2012, we plan for 2015. The result is for everyone to see. Gujarat, which accounts for 5% of the country's population, accounts for 16% of the nation's industrial production and 22% exports.
Red carpet, not red tape for investors, is the way out of economic crisis: Narendra Modi - The Economic Times
---
Red carpet, not red tape for investors, is the way out of India's worsening economic crisis, says Gujarat chief minister Narendra Modi.
The Bharatiya Janata Party leader, who recently set off speculations over his prime ministerial ambitions, laughs off suggestions that Congress may turn the 2014 general election into a Modi versus Rahul Gandhi contest.
In a rare interview with PR Ramesh, Modi says Congress president Sonia Gandhi had failed to prevent a landslide victory for BJP even as she spearheaded her party's campaign. Excerpts:
Industry has been raising concerns over fate of its investments in a slowing economy. What is the way out?
It is a crisis. In the new economic scenario, the government can't do all that is needed to pump up growth. We have to encourage private investment, not just in infrastructure but also in the social sector. We have to open up new investment avenues for people who want to invest.
But before any individual or company invests, they look for safety of their money and profit from the investment. We can provide safety for their money through clarity in policies, transparency in decision-making and decent implementation. Is the UPA government able to do these? The answer is: NO.
So, what can be done to revive sentiment?
As I said, there should be clarity and purpose while making policies. We should create an atmosphere where people can make investment from their office or home. Ambiguities and waffling in policy-making should go.
Foreign investors, too, have begun to doubt the India story. How can this impression be changed?
First, the government should stop painting a rosy picture. If the prime minister accepts reality, he can find an answer. But the problem is that he does not believe in what he is doing. He is not able to even take his decisions to their logical end.
The Indo-US nuclear deal is a case in point. The prime minister was ready to sacrifice his government for the nuclear deal. Has he been able to implement it? No! Sound policies and stamina to implement them alone can convince the investor.
Will the BJP help the prime minister in taking the deal forward?
Why should the BJP take the lead? We were told that the nuclear deal was his principal achievement. What is he doing to implement it? You should put the question to the prime minister, who claimed that it was the answer to our energy crisis and the biggest policy trophy of UPA-1.
The prime minister and the Congress have been maintaining that the Opposition-run state governments are not aiding the Centre's efforts to put the economy back on rails...
The charge is baseless. Look at what the Centre is doing to state governments' efforts to attract investment. Iron ore is available in abundance in Odisha. But the Congress and the government led by it at the Centre are opposing entry of steel companies into the state.
They don't want the state government to perform and they place hurdles. This is naturally making investors jittery. They want to work with the state governments but the Centre is playing the obstructionist.
The Centre went to the extent of unleashing enforcement agencies on those who promised investments in Gujarat at the Vibrant Gujarat meet. They should stop preaching and do what they are expected to do - govern.
But the government is trying to put in place a mechanism...
They prepare reports on various issues and then analyse them. Reports take two years to be prepared and then they go an unending analysing trip. There is no real action.
How has Gujarat managed to present an alternative model?
Gujarat is a very successful model. Look at the investment auto companies have made in the state. Every auto major has its plant in my state. It is because of the efficiency of the state government. We have best quality infrastructure, skilled labour and zero man-day loss.
We plan our skill development and infrastructure with the future in mind. In 2012, we plan for 2015. The result is for everyone to see. Gujarat, which accounts for 5% of the country's population, accounts for 16% of the nation's industrial production and 22% exports.
Red carpet, not red tape for investors, is the way out of economic crisis: Narendra Modi - The Economic Times
Re: PM sets investment target of Rs. 2 lakh crore for 9% growth
50% is to come via Private investments and infra bonds. 50% would be govt. input. So 2 lakh crore investment from the govt. is about right as its close to the 40-50 Billion mark. Assuming we do get the other 50% private investment then we would achive a close to 90-100 Billion in this fiscal.
Although given the current environment, it would be a great feat to get even 30-40 Billion USD in infrastrucutre through the private sector.
50% is to come via Private investments and infra bonds. 50% would be govt. input. So 2 lakh crore investment from the govt. is about right as its close to the 40-50 Billion mark. Assuming we do get the other 50% private investment then we would achive a close to 90-100 Billion in this fiscal.
Although given the current environment, it would be a great feat to get even 30-40 Billion USD in infrastrucutre through the private sector.
India's slowdown :Farewell to Incredible India
India's slowdown:Farewell to Incredible India
Bereft of leaders, an Asian giant is destined for a period of lower growth. The human cost will be immense
IN A world economy as troubled as today's, news that India's growth rate has fallen to 5.3% may not seem important. But the rate is the lowest in seven years, and the sputtering of India's economic miracle carries social costs that could surpass the pain in the euro zone. The near double-digit pace of growth that India enjoyed in 2004-08, if sustained, promised to lift hundreds of millions of Indians out of poverty—and quickly. Jobs would be created for all the young people who will reach working age in the coming decades, one of the biggest, and potentially scariest, demographic bulges the world has seen.
But now, after a slump in the currency, a drying up of private investment and those GDP figures, the miracle feels like a mirage. Whether India can return to a path of high growth depends on its politicians—and, in the end, its voters. The omens, frankly, are not good.
In office but not in power
Some of this crunch reflects the rest of the world's woes. The Congress-led coalition government, with Brezhnev-grade complacency, insists things will bounce back. But India's slowdown is due mainly to problems at home and has been looming for a while. The state is borrowing too much, crowding out private firms and keeping inflation high. It has not passed a big reform for years. Graft, confusion and red tape have infuriated domestic businesses and harmed investment. A high-handed view of foreign investors has made a big current-account deficit harder to finance, and the rupee has plunged.
The remedies, agreed on not just by foreign investors and liberal newspapers but also by Manmohan Singh's government, are blindingly obvious. A combined budget deficit of nearly a tenth of GDP must be tamed, particularly by cutting wasteful fuel subsidies. India must reform tax and foreign-investment rules. It must speed up big industrial and infrastructure projects. It must confront corruption. None of these tasks is insurmountable. Most are supposedly government policy.
Why, then, does Mr Singh not act? Vacillation plays a role. But so do two deeper political problems. First, the state machine has still not been modernised. It is neither capable of overcoming red tape and vested interests nor keen to relax its grip over the bits of the economy it still controls. The things that do work in India—a corruption-busting supreme court, the leading IT firms, a scheme to give electronic identities to all—are often independent of, or bypass, the decrepit state.
Second, as the bureaucracy has degenerated, politics has fragmented. The two big parties, the ruling Congress and the opposition Bharatiya Janata Party (BJP), are losing support to regional ones. For all the talk of aspirations, voters do not seem to connect reform with progress. India's liberalisers over the past two decades, including Mr Singh himself, have reformed by stealth. That now looks like a liability. No popular consensus exists in favour of change or tough decisions.
As a result, when the government tries to clear bottlenecks, feuding and overlapping bureaucracies can get in the way. When it suggests raising fuel prices, it faces protests and backs down. When it tries to pass reforms on foreign investment, its populist coalition partners threaten to pull the plug. It does not help that the ageing Mr Singh has little clout of his own: he reports to the ailing Sonia Gandhi, the dynastic chief of Congress. With a packed electoral timetable before general elections in 2014, Congress does not want to take risks.
Is it time for a change at the top? Mr Singh has plainly run out of steam, but there are no appealing candidates to replace him. Mrs Gandhi's son, Rahul, has been a disappointment. What about a change of government? The opposition BJP is split and has been wildly inconsistent about reform. Its best administrator, Narendra Modi, chief minister of Gujarat, is divisive and authoritarian. If it formed a government tomorrow, the BJP would also have to rely on fickle smaller parties.
Some reformers pray for a financial crisis that will shake the politicians from their stupor, as happened in 1991, allowing Mr Singh to sneak through his changes. Though India's banks face bad debts, its cloistered financial system, high foreign-exchange reserves and capable central bank mean it is not about to keel over. A short, sharp shock would indeed be useful, but a full-blown crisis should not be wished for, because of the harm that it would do to the poor.
Instead the dreary conclusion is that India's feeble politics are now ushering in several years of feebler economic growth. Indeed, the politicians' most complacent belief is that voters will just put up with lower growth—because they supposedly care only about state handouts, the next meal, cricket and religion. But as Indians discover that slower growth means fewer jobs and more poverty, they will become angry. Perhaps that might be no bad thing, if it makes them vote for change.
India's slowdown:Farewell to Incredible India
Bereft of leaders, an Asian giant is destined for a period of lower growth. The human cost will be immense
IN A world economy as troubled as today's, news that India's growth rate has fallen to 5.3% may not seem important. But the rate is the lowest in seven years, and the sputtering of India's economic miracle carries social costs that could surpass the pain in the euro zone. The near double-digit pace of growth that India enjoyed in 2004-08, if sustained, promised to lift hundreds of millions of Indians out of poverty—and quickly. Jobs would be created for all the young people who will reach working age in the coming decades, one of the biggest, and potentially scariest, demographic bulges the world has seen.
But now, after a slump in the currency, a drying up of private investment and those GDP figures, the miracle feels like a mirage. Whether India can return to a path of high growth depends on its politicians—and, in the end, its voters. The omens, frankly, are not good.
In office but not in power
Some of this crunch reflects the rest of the world's woes. The Congress-led coalition government, with Brezhnev-grade complacency, insists things will bounce back. But India's slowdown is due mainly to problems at home and has been looming for a while. The state is borrowing too much, crowding out private firms and keeping inflation high. It has not passed a big reform for years. Graft, confusion and red tape have infuriated domestic businesses and harmed investment. A high-handed view of foreign investors has made a big current-account deficit harder to finance, and the rupee has plunged.
The remedies, agreed on not just by foreign investors and liberal newspapers but also by Manmohan Singh's government, are blindingly obvious. A combined budget deficit of nearly a tenth of GDP must be tamed, particularly by cutting wasteful fuel subsidies. India must reform tax and foreign-investment rules. It must speed up big industrial and infrastructure projects. It must confront corruption. None of these tasks is insurmountable. Most are supposedly government policy.
Why, then, does Mr Singh not act? Vacillation plays a role. But so do two deeper political problems. First, the state machine has still not been modernised. It is neither capable of overcoming red tape and vested interests nor keen to relax its grip over the bits of the economy it still controls. The things that do work in India—a corruption-busting supreme court, the leading IT firms, a scheme to give electronic identities to all—are often independent of, or bypass, the decrepit state.
Second, as the bureaucracy has degenerated, politics has fragmented. The two big parties, the ruling Congress and the opposition Bharatiya Janata Party (BJP), are losing support to regional ones. For all the talk of aspirations, voters do not seem to connect reform with progress. India's liberalisers over the past two decades, including Mr Singh himself, have reformed by stealth. That now looks like a liability. No popular consensus exists in favour of change or tough decisions.
As a result, when the government tries to clear bottlenecks, feuding and overlapping bureaucracies can get in the way. When it suggests raising fuel prices, it faces protests and backs down. When it tries to pass reforms on foreign investment, its populist coalition partners threaten to pull the plug. It does not help that the ageing Mr Singh has little clout of his own: he reports to the ailing Sonia Gandhi, the dynastic chief of Congress. With a packed electoral timetable before general elections in 2014, Congress does not want to take risks.
Is it time for a change at the top? Mr Singh has plainly run out of steam, but there are no appealing candidates to replace him. Mrs Gandhi's son, Rahul, has been a disappointment. What about a change of government? The opposition BJP is split and has been wildly inconsistent about reform. Its best administrator, Narendra Modi, chief minister of Gujarat, is divisive and authoritarian. If it formed a government tomorrow, the BJP would also have to rely on fickle smaller parties.
Some reformers pray for a financial crisis that will shake the politicians from their stupor, as happened in 1991, allowing Mr Singh to sneak through his changes. Though India's banks face bad debts, its cloistered financial system, high foreign-exchange reserves and capable central bank mean it is not about to keel over. A short, sharp shock would indeed be useful, but a full-blown crisis should not be wished for, because of the harm that it would do to the poor.
Instead the dreary conclusion is that India's feeble politics are now ushering in several years of feebler economic growth. Indeed, the politicians' most complacent belief is that voters will just put up with lower growth—because they supposedly care only about state handouts, the next meal, cricket and religion. But as Indians discover that slower growth means fewer jobs and more poverty, they will become angry. Perhaps that might be no bad thing, if it makes them vote for change.
arkem8
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Re: India's slowdown :Farewell to Incredible India
The fun part is that India's present economic woes are entirely self inflicted. The UPA's overwhelming victory in '09 did NOT bring in the much needed economic liberalization. The government instead burned the hard earned wealth on blind welfare schemes....
The delusional attitude with which the Indian middle class rallied behind "great economist " Manmohan Singh three years ago has been completely shattered.
On the whole this was a hard slap of reality that the educated classes had coming for a while. To fool the rural illiterate is one thing to pull the blinds over the urban middle classes was an achievement..
The fun part is that India's present economic woes are entirely self inflicted. The UPA's overwhelming victory in '09 did NOT bring in the much needed economic liberalization. The government instead burned the hard earned wealth on blind welfare schemes....
The delusional attitude with which the Indian middle class rallied behind "great economist " Manmohan Singh three years ago has been completely shattered.
On the whole this was a hard slap of reality that the educated classes had coming for a while. To fool the rural illiterate is one thing to pull the blinds over the urban middle classes was an achievement..
arkem8
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Re: India's slowdown :Farewell to Incredible India
It is a Zionist conspiracy to claim that the Paki economy is 1/10th India's....
Oye kya baat karta hai Paki economy is soaring at 14-15%....ajtr , how about some good articles about pakistan's economic catastrophe
It is a Zionist conspiracy to claim that the Paki economy is 1/10th India's....
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Re: India's slowdown :Farewell to Incredible India
This impasse / slowdown is also due to global economic downturn.
India cannot keep up spectacular growth if the global economy is experience a downturn. We are still experiencing 5-7% growth, our unemployment levels are low.
And second major reason is co-alition politics, and lack of political will. The global and local situation warrants urgent reforms. MMS unfortunately cannot take such a decision without the support of his own allies and that of opposition.
This impasse / slowdown is also due to global economic downturn.
India cannot keep up spectacular growth if the global economy is experience a downturn. We are still experiencing 5-7% growth, our unemployment levels are low.
And second major reason is co-alition politics, and lack of political will. The global and local situation warrants urgent reforms. MMS unfortunately cannot take such a decision without the support of his own allies and that of opposition.
arkem8
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Re: India's slowdown :Farewell to Incredible India
The harsh reality is that the country's economic rise/ growth rate could be attributed mostly to healthy global market scenarios, take that away and the ugly underbelly is exposed. The poor policy planning, poor utilisation of monetary resources and poor implementation is the constant and the global economic scenario is the variable.
Mamta though deserves some of the blame is being made a scapegoat to take off heat from the party high command.
It is wrong to blame everything on Coalition politics, apart from the retail issue there were many other areas like interlinking of rivers that have simply been put off for no apparent reason. The INC won a huge victory in '09 and could even have pushed through partial reforms. The truth is that instead of gifting money to poor people(baksheesh) the UPA could have easily built roads, power lines, schools, hospitals, upgrade small cities and large towns infrastructure.
The harsh reality is that the country's economic rise/ growth rate could be attributed mostly to healthy global market scenarios, take that away and the ugly underbelly is exposed. The poor policy planning, poor utilisation of monetary resources and poor implementation is the constant and the global economic scenario is the variable.
Mamta though deserves some of the blame is being made a scapegoat to take off heat from the party high command.
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Re: India's slowdown :Farewell to Incredible India
^^ I agree. Congress has gone into its old mentality of throwing money. From being innovative in the 90s and to some extent in 2004, they have again become a typical socialist 70s party.
What we need to do is be innovative in our approach to the social sector. We spend 35-40% of our budget on social sector. Look at what Nitish Kumar has done. Some person on a TV was suggesting, we can't reach poor because we can't count them, but we can count the rich use that to our advantage.
^^ I agree. Congress has gone into its old mentality of throwing money. From being innovative in the 90s and to some extent in 2004, they have again become a typical socialist 70s party.
What we need to do is be innovative in our approach to the social sector. We spend 35-40% of our budget on social sector. Look at what Nitish Kumar has done. Some person on a TV was suggesting, we can't reach poor because we can't count them, but we can count the rich use that to our advantage.
nrj
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I do not believe that any upcoming government will just shut down all the monumental popular schemes started by UPA. They will be rebranded or reorganized. Otherwise it will be seen as if new Govt us anti-poor.
What we need is to inject new vigor in entire government machinery. I think occupant political party will not be able to do it even with complete majority. It is time for BJP to step up and do the needful. Also new govts perform better. If NDA fails to form govt this time, then they should just retire from politics.
And btw Incredible India story is not over, it can't. No matter how bad governance is or how unfavorable circumstances arise, a strong billion plus population of this country wakes up every day to chase their aspirations to grow. No one can put end to that.
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What we need is to inject new vigor in entire government machinery. I think occupant political party will not be able to do it even with complete majority. It is time for BJP to step up and do the needful. Also new govts perform better. If NDA fails to form govt this time, then they should just retire from politics.
And btw Incredible India story is not over, it can't. No matter how bad governance is or how unfavorable circumstances arise, a strong billion plus population of this country wakes up every day to chase their aspirations to grow. No one can put end to that.
Sent via Tapatalk from a galaxy far far away
