India's road to fiscal ruin

[Sabir]

Government will keep on wasting money on ambitious project...not becoz it is congress or Bjp.....bcoz there is Raja and Kalmadi in every house...(variable in size...equal in greed)

 

[maomao]

India needs an austerity drive with various echelons of power be it - Bureaucracy, Legislative, Law/Judiciary etc. Start by cutting perks such as free "Petrol" and "Electricity" for politicians and babus; less useless (foreign) exchange programs for babudome, free foreign education (obviously through scholarships meant for poor meritorious Indian students) for the children of babus posted abroad (these posting are taken deliberately).....the list can go on and on! But who is listening.....

 

[Sabir]

What if we dont have

1) the Rajyasabha

2) the governors

3) legislative councils in states (six states have legislative councils along with legislative assembly)

4) so much intencives for the politicians (being a MP or MLA a profitable occupation)

5) so much spending on security of the VIPs...(many of them consider it as status symbol)

 

[Galaxy]

What if we dont have

1) the Rajyasabha

2) the governors

3) legislative councils in states (six states have legislative councils along with legislative assembly)

4) so much intencives for the politicians (being a MP or MLA a profitable occupation)

5) so much spending on security of the VIPs...(many of them consider it as status symbol)

That will save some 1 billion $ per year and we talking of around 500 Billion $.

 

[thakur_ritesh]

I think Jairam Ramesh meant the same when he said this is model of unsustainability.

Keep borrowing, keep increasing debt, report growth & then use currency norms as toggling instrument to appreciate/devalue rupee to balance undertakings.

NRJ,

i am not very sure about what is it that jairam ramesh is talking about. the reference is in context with environmental, social and governance issues which they are trying to globally standardise. please give a detailed description on what is he hitting and hinting out, i am not able to make much from the article posted.

now he says india and china are heading the US way, but if the correlation is about debt trap then i suspect that is not what he is hinting at.

china is trying to live within its means pretty much, we are not. china has a socialist model as well, but those chaps know where to draw the line, not our politicians.

check these figures:

china: public debt - 17.5% of GDP, revenue - $1.149 trillion, expenses - $1.27 trillion, gdp - $6trillion

india: public debt - 71.84% of GDP, revenue - $185.4 billion, expenses - $269.8 billion, gdp - $1.7trillion

our political class is slowly poisoning the country and busy digging the grave.

72% public debt is a staggering and a scary figure for an economy like india, when we have just started, its really been a case of one good decade so far and is a ripe recipe of putting us in a trap where if we want to get out we will require more loans and heavy taxes because no way are they going to give up on their extremely expensive unsustainable "socilist" plans because that earns them votes, or king size lives our political class/bureaucracy sustain. its a trap in which pakistan is right now, though slightly different case.

this country needs a course correction from the follies being committed.

• we need to live within our means.
• limit the unproductive expenses.
• create an environment where people find enough opportunities to fend for themselves, and not what is happening now, where the populace is being made to become a liability on the state exchequer, with non-existent skill sets.

we are not at all attempting the first two points and the third is stuck for good over 7 years now. we need to get out of that mindset of socialism, if not, we are headed for a very rude wake up call and my fear is would it then have been a case of completely missing it out.

 

[thakur_ritesh]

and its not just a congress or a UPA thing.

takes me to yashwant sinha's speech in lok sabha when they were deliberating the anna hazare fast and LP bill in the recent monsoon session. he talked in reference to fiscal deficit, and he pointed out he met this old lady in bihar who said babu ab to cylinder bahut mehanga ho gaya hai or was it in reference to kerosene oil, not sure, the point he was enforcing was how important is subsidy and how the talk of fiscal deficit is BS.

imagine this is a former finance minister of india talking!

one can just hope bjp is not taking dictations from people like sinha or sinha was at best just trying to score some brownie points and no more.

if its none of the above, we are indeed doomed left, right and centre.

 

[nrj]

I could not locate details of what Jairam said. But now do think that maybe its not relating to public debt.

Honestly, I do not believe figures corresponding to china be it gdp or debt. However Indian situation is alarming without doubt.

this country needs a course correction from the follies being committed.

• we need to live within our means.
• limit the unproductive expenses.
• create an environment where people find enough opportunities to fend for themselves, and not what is happening now, where the populace is being made to become a liability on the state exchequer, with non-existent skill sets.

These measures will help in increasing savings but how do we stop spendings?

We are far from investing in even 50% of infrastructure demands. Last year report said 550+ USD billions are needed right away to fix demands. There are several other sectors in similar situation. As time passes these spendings are going to increase. Its difficult to stop growth engine of developing state like India. The entire machinery necessitates constant money from govt.

What I couldn't figure out is, how do we cut expenses but allow exponential spendings at the same time without increasing debt?

Opening up market seems to be only resort, I think. With little or no reforms for 09-11, we saw FDI almost doubled in Q1 2011. That itself explains how eager firangis are to invest in India. Revenue generation from overseas corporations should help imo but again eastern great wall offers more attractive tax benefits & cheap facilities than us. I think that is where competition intensifies.

 

[thakur_ritesh]

If by spending the point is about the non-productive spending then that doesn't need to be stopped but prioritized, be limited, plan it more efficiently and have a delivery system where leakages are well sorted out. if the scope is of 150b usd then don't try 250b usd, plan the same 150 much better, and execute it much better.

If spending is productive which will have a RoI, why stop? The only real requirement is to have model from where there is sufficient revenue generation.

Government doesn't have to be in areas where the private sector can be more than handy, government is required in areas where the private sector doesn't want to go. Important is to create an environment which makes it conducive for the private sector to step in and once done, the government needs to completely step out and not linger on, which is when the wastage and unproductiveness creeps in.

Spending is at the core of sustaining the economic activity, but have it well planned out, limit the government role in it, and make the private sector the bigger player. in the most simplest words, government's role has to be that of a facilitator.

FDI will come to India because a dollar invested in India gives one of the best returns and much more than what a dollar invested in china earns.

 

[Armand2REP]

china is trying to live within its means pretty much, we are not. china has a socialist model as well, but those chaps know where to draw the line, not our politicians.

check these figures:

china: public debt - 17.5% of GDP, revenue - $1.149 trillion, expenses - $1.27 trillion, gdp - $6trillion

india: public debt - 71.84% of GDP, revenue - $185.4 billion, expenses - $269.8 billion, gdp - $1.7trillion

China's public debt is 150% of GDP once you include local debt and SOE liabilities. Just because they move it off their balance sheets doesn't make it go away.

 

[Koovie]

72 percent? check this out : List of sovereign states by public debt - Wikipedia, the free encyclopedia India is at the 45th place while China is holding the 111th place with 17.6 percent

 

[LurkerBaba]

Pranab approves changes in Food Bill

The changes to be made in the proposed Food Bill were discussed with Congress President and UPA Chairperson Sonia Gandhi, he added.

The proposed Bill would cost the government exchequer more than Rs 1,00,000 crore annually in subsidies. Presently, the subsidy bill on food is less than Rs 70,000 crore.

 

[Naren1987]

The changes to be made in the proposed Food Bill were discussed with Congress President and UPA Chairperson Sonia Gandhi, he added.

The proposed Bill would cost the government exchequer more than Rs 1,00,000 crore annually in subsidies. Presently, the subsidy bill on food is less than Rs 70,000 crore.

You've gotta be kidding me.

 

[cir]

virtually zero growth in industrial production, hyper inflation, a fast depreciating currency, huge trade and fiscal deficits, total outstanding national debt exceeding 70% of GDP....

these are potent mixes that currently drive the Indian economy.

 

[LurkerBaba]

Sonia-led NAC proposes more welfare schemes for minorities

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The draft prepared by the National Advisory Council (NAC) headed by Congress president Sonia Gandhi has recommended measures for the inclusive development and welfare of the minority communities.

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It also called for enhancement in the budgetary allocations for schemes designed for the minorities.

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Early elections ?

 

[Ray]

India is in a bind.

What could be the reason?

Running after GDP statistics at the expense of real reforms and governance or is it something else?