Indian Economy: News and Discussion

26/11

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The government works for the people. The people are the bosses. The bosses have every right to examine and critique the work of their employees--the government.

Modi and his administration need to enact some major economic reforms in order to improve the living standards of Indians. He has an overwhelming parliamentary majority so there is no good excuse to avoid them. Modi got elected on his promise to open up and reform India's economy but his reforms have nearly come to an end. What is the next major economic reform he plans to enact?
Reforms kind of slowed down after IBC, may be because of election pressure. But it is currently progressing at great speed. Reforms in progress or recently implemented:
1. Agriculture: APMC reforms, Contract farming
2. Electricity: New electricity act to rationalize commercial electricity prices, Market based coupling
3. Coal: Commercial coal mining
4. Railways: Reform in railway bureaucracy, station redevelopment, allowing private investment
5. Education: New education policy though its implementation will largely depend on state governments
6. Healthcare: India has more than tripled no of people covered y health insurance. + National Digital Health Mission. No of MBBS seats have touched to 80,000 against around 50,000 in 2014.
7 Civil service reforms: Cutting of deadwood and compulsory retirement of under-performing officers.

There might be many reforms I might be missing. But they need much more work in sectors like logistics, railways, defense production, education, police and judiciary.
 

26/11

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The government works for the people. The people are the bosses. The bosses have every right to examine and critique the work of their employees--the government.

Modi and his administration need to enact some major economic reforms in order to improve the living standards of Indians. He has an overwhelming parliamentary majority so there is no good excuse to avoid them. Modi got elected on his promise to open up and reform India's economy but his reforms have nearly come to an end. What is the next major economic reform he plans to enact?
Completely agree with you on critique part. It is right of every citizen. But it is not duty of every citizen to criticize government on every issue.
No one claims that any government is perfect. But I chose to support this government, because it is much better than options I have got. Manmohan singh's 10 year tenure was complete disaster in terms of reforms as well as economic performance. (Before you jump with GDP data, look at the facts. His claim of fame relies on data for 2004-07. Where India achieved good GDP but as did every economy in the world. Even Pakistan was achieveing 7% rate amindst full blown taliban insuargency. China was in 12-14% range. This all was led by global credit bubble.
Once the bubble was burst, his performance has been subpar. UPA 2 achieved average growth rate of 6.7%. This was achieved by credit fuelled growth (meaning creating our own credit bubble like USA). This mis-step is haunting us even today in form of NPA crisis.

On reforms front, I would love it if someone can correct me with reforms undertaken by UPA 1 and 2.
 

26/11

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Dr Manmohan Singh has been part of India's economic management from 1972.
1972-76: Chief economic advisor
1976-80: Secretory ministry of finance
1980-82: Member-planning commission
1982- 85: Governor RBI
1985-87: Dy Chairman of Planning commission
1990-91: Economic Advisor to PM
So, while he might be credited for economic turnaround in 1991, we also need to look for the people responsible for putting India in that mess.
 

Historian

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Modi's administration started off with many bold reforms and high economic growth. But what has happened in the last few years? GDP growth was slowing before the pandemic and now India has the worst of both worlds--a terrible economy and out-of-control pandemic. It's fine to appreciate Modi's previous economic reforms, but what about now?
 

26/11

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Modi's administration started off with many bold reforms and high economic growth. But what has happened in the last few years? GDP growth was slowing before the pandemic and now India has the worst of both worlds--a terrible economy and out-of-control pandemic. It's fine to appreciate Modi's previous economic reforms, but what about now?
Pandemic growth is a simple case. More strict the lockdown, more will be the decline.

What you are referring to is growth in Jan 2019 to Dec 2019. It had lot to do with IBC, in which defaulting promoters started losing ownership of the companies. So, every company which had utilized past credit bubble started deleveraging and started prioritizing loan repayment over growth. Even today, most of the companies even today are focused on reducing debt level (e.g. reliance zero debt, Tata Motors reducing debt by half, JSW targetting cutting debt by half in next 2 years etc). As corporates became risk averse, investment levels dropped resulting in cycle of GDP decline. Same way it started series of defaults in real estate as now homebuyer can drag builder in insolvency for non-delivery of home. IBCs negative impact will be there for atleast 2-3 more years. But it was something which was absolutely neccessary as government can no longer keep utilizing public money for corporate failures.

Government is well aware of the reason that is why the reform cycle stopped for 1 year and it took Corona to restart the reform cycle. And I am not talking about previous reforms, past 3 months reforms have been going on full speed in almost every sector.

I just hope that they can continue that for few more months. Also, They will have to drop this facade of state autonomy. If it is for the benefit of the people they will have to start ramming reforms by hook or crook even in state sectors. State autonomy can not supersede people's welfare.
 

Chandragupt Maurya

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India is now on number 63 in ease of doing business and is improving before 2014 we were one of the worst these are the things which really matter in long run these temporary issues like lockdown or demonetization doesn’t make any difference at all
 

ezsasa

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Modi's administration started off with many bold reforms and high economic growth. But what has happened in the last few years? GDP growth was slowing before the pandemic and now India has the worst of both worlds--a terrible economy and out-of-control pandemic. It's fine to appreciate Modi's previous economic reforms, but what about now?
One of the biggest myths is that nation only needs "Bold Reforms" to achieve economic growth.
Where as most of the Modi Govt spending is being done of basic structural deficits which has been ignored by all govts prior especially the ones that came after 1991, i.e basic amenities like a house, cooking gas connection, household electricity, cheap health insurance, village roads, drinking water etc..

Fancy economists made us believe that economy can be managed just by tweaking inflation & repo rates, it turns out it takes a lot of less glamorous efforts to sustain the economy and create/sustain the next set of middle class.

Need of the hour is to create & expand more industry streams, which Modi govt has been focussed on right from the start. ethanol & Mobile phone manufacturing are a few good example.
 

Chandragupt Maurya

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Indian economy and foreign policy was a failure because of Weird Gandhian idiocy imposed on us By westerners and their proxies in India
We are abolishing those Gandhian policies and adopting a more practical one which is a welcome step indeed
 

Indx TechStyle

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Why India’s present economic crisis is different from the recession of 1979 | India Today Insight
The country has a stable government, forex reserves of over $500 billion, overflowing granaries and surplus capacities in factories.

Women protest against inflation in 1979.
In the summer of 1979, the Indian cricket team returned after a dismal performance at the cricket World Cup in England. The team lost all its three matches and returned home to a country in political turmoil and battling a collapsing economy and trade unions strikes. An acute fuel shortage, caused by the oil crisis as global oil production dropped in the wake of the Iranian Revolution, was compounded by a serious balance of payments crisis as India struggled to pay for the sudden increase in its fuel import bill. A crop failure caused by two successive droughts only added to the agony of a country, 31.7 per cent of which depended on agriculture.
By 1980, the writing was on the wall. India faced a negative growth of 5.2 per cent in its Gross Domestic Product (GDP), with inflation hitting the roof at 29 per cent. The economy was in recession—defined as two successive quarters of negative growth.
Cut to the present. GDP data for the first quarter of financial year 2021, released on August 31, shows a grim economic outlook—an unprecedented dip of -23.9 per cent in economic growth, the worst on record. The degrowth has been caused by the nationwide Covid lockdown, among the harshest in the world.
So what went wrong during the economic crisis of 1979? Just two years before, in 1977, the Janata Party government had stormed to power. It featured a conglomerate of leaders united by their opposition to Indira Gandhi and divided by their individual ambitions. The economy was already fragile and between 1965 and 1977 had grown by only 2.9 per cent, on CAGR (Compound Annual Growth Rate) basis. During this period, the country went into war twice with Pakistan, resulting in three years (1965, 1966 and 1972) of negative growth. The Morarji Desai-led government of the time had put the bureaucrat turned pro-free market politician Hirubhai Mulljibhai Patel in charge of the finance ministry.
Patel changed various ‘socialist’ economic policies, ending barriers to foreign investments by reducing tariffs. Separately, the Janata Party government pushed the draft of the sixth Five Year Plan to aim at boosting agriculture output and rural industries, along with pushing policies to support indigenous industries. But the Janata Party government had varied constituents: Patel-like pro-free market legislators from the Swatantra Party, mixed economy proponent Atal Bihari Vajpayee-led Bharatiya Jana Sangh, socialists like George Fernandes, Madhu Dandavate, farmer activist-turned-politicians like Charan Singh along with the not-so-socialist group of Congressmen led by Desai.
Despite the best of their intentions, India continued to be pushed into its worst recessionary fiscal. In a bid to project a pro-farmer face, the Desai government increased procurement of foodgrains (without increasing the support price). Along with this, the input price at farms was heavily subsidised. This included fertiliser subsidies, which increased from Rs 60 crore to Rs 600 crore, along with other food subsidies. Patel accepted the recommendation of the seventh Finance Commission to increase devolution of funds for states, without reduction in the work profile of the Centre. Socialists in the government forced Patel to increase jobs in the public sector, increase wages and bail out several loss-making public sector enterprises. Disinvestment in PSUs was not considered. All this slowed down growth in government revenues, which increased the fiscal deficit. From an average of 5 per cent in the first half of the ’70s, it had reached 6.5 per cent in 1979.
Simultaneously, Patel’s import liberalisation resulted in growth of imports of intermediate and capital goods. By then, the differences in political viewpoints of Patel and industry minister George Fernandes had already led to foreign players being pushed to cut down their equities to 40 per cent and look for partners in India. This led to the exit of IBM and Coca-Cola from the Indian markets. The current account deficit crossed double digits.
For most part of 1979, India and the world battled rising crude oil prices, precipitated by the Islamic Revolution in Iran. Uncertainty and deteriorating US-Iran relations saw crude oil jumping from $13.6 a barrel at the start of 1979 to $39 a barrel by the mid-80s. This destabilised economies across the world. Back home, India was struck by another disaster—the worst drought since Independence as production of foodgrains fell by a sixth.
To top it all, Desai was faced with political turmoil. He had already replaced Patel with Charan Singh to seek temporary truce with him. Patel was now the country’s home minister while Charan Singh was working out a deal with the Congress to oust Desai. In July 1979, Charan Singh became prime minister with outside support of Indira Gandhi’s Congress. Post this economic recession, India entered into negotiations with the International Monetary Fund (IMF), which eventually led to the economic liberalisation of the ’90s.
As India now stares at a deep economic recession, a few things do serve as a silver lining. The Narendra Modi government is politically stable. The country’s forex reserves are at $500 billion, its highest ever. At 833 million MT, foodgrain stocks are ample and capacities in domestic factories are in surplus (30-40 per cent inventory). The Indian economy is now better integrated with the global economies. The contraction of 23.9 per cent is in keeping with what is happening with most integrated economies across the world.
Today, India is talking about making more space for private players, including disinvestment in PSUs, opting for monetary policy methods instead of fiscal to tackle the slowdown. Most economists are pushing for inflationary financing. As PM Modi pushes for self-reliance amidst a recessionary phase, it would be prudent to keep the economic events from four decades ago as a reference point.
 

captscooby81

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Certainly sir , i will do that too . But just go back and read my post i had mentioned Critique in 2 places and Critic in one place .

Who are you to analyse govt policy , Lets take example of the new Tax law , If you ask someone to Critique that policy you will have 10 different views does that mean the govt policy is wrong because ten people came with ten different analysis of their own . Govt can't make policy and let citizens to sit and analyse it and give feedback for every single different outcomes of the analysis .

If you ask a salaried person like me i will say demonetisation was good ,A colleague of mine would say its disaster reason we don't have to guess .so if you ask my colleague to be critique about demo he will say its pathetic and will be critic about the govt . Should govt listen to every one like that ?

The elected representative had chosen to bring CAA but then people who didn't elect them are now critically against it . What should the govt do keep holding every policy based on 120 crore views then every single policy will look like poor one .

Need to work on your English skills

critique = analysis/ assessment of a thing.It's not necessarily a negative thing.

A government is not your mummy or daddy that you will believe or support in whatever they do.They are a body consisting of your elected representatives whose primary job is to serve you.
 

captscooby81

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One more important Myth Bubble needs to be busted .

There is no 1991 type economic reform to be done now . We had moved from socialist economy to capitalist in 1991-92 . Unless people want india to reverse that by Modi going back to socialist there is no great economic reform . Please keep using a myth Modi needs great economic reform no boys there is no more magic wand everything is set in place . Digital Payments, GST and Digital documentation .

The reform needed is not from PMO its from Judiciary . We are still pathetic when it comes to clearing corporate legal cases and that is where our great bottle neck is not in any some rocket science type economic reform

Watch this interview from 58:10 Minutes where Judicial reform and Especially about so called 1991 type reform by Modi .


 

Haldilal

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Power Grid Corporation of India Limited NSE:p Power Grid is about to go ex-dividend in the . You can purchase shares from the start of the September in order to receive the dividend, which the company will pay on the 9th of October.

Power Grid Corporation of India’s next dividend payment will be ₹4.04 per share. Last year, in total, the company distributed ₹10.00 to shareholders. Looking at the last 12 months of distributions, Power Grid Corporation of India has a trailing yield of approximately 5.5% on its current stock price of ₹182.3. We love seeing companies pay a dividend, but it’s also important to be sure that laying the golden eggs isn’t going to kill our golden goose! We need to see whether the dividend is covered by earnings and if it’s growing.

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. That’s why it’s good to see Power Grid Corporation of India paying out a modest 49% of its earnings. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. The good news is it paid out just 22% of its free cash flow in the last year.

1598667683480.png


It’s encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don’t drop precipitously.
Power Grid Corporation of India has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it’s cut the dividend at least once in the past 10 years, but the conservative payout ratio makes the current dividend look sustainable. Overall we think this is an attractive combination and worthy of further research.

On that note, you’ll want to research what risks Power Grid Corporation of India is facing. For example, Power Grid Corporation of India has 2 warnings think you should know about.

Bhagwan Ucha.
 

ezsasa

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One more important Myth Bubble needs to be busted .

There is no 1991 type economic reform to be done now . We had moved from socialist economy to capitalist in 1991-92 . Unless people want india to reverse that by Modi going back to socialist there is no great economic reform . Please keep using a myth Modi needs great economic reform no boys there is no more magic wand everything is set in place . Digital Payments, GST and Digital documentation .

The reform needed is not from PMO its from Judiciary . We are still pathetic when it comes to clearing corporate legal cases and that is where our great bottle neck is not in any some rocket science type economic reform

Watch this interview from 58:10 Minutes where Judicial reform and Especially about so called 1991 type reform by Modi .


and judicial reform cannot be done from outside of judiciary, it has to come from within.

people like Panagariya & SG know this, hence the red herring in public discourse just like “Big Bang reform” narrative.
 

Haldilal

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Haldilal

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Ya'll Nibbiars Differences in the approach of measuring GDP in India, US and Europe -
 

sorcerer

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sorcerer

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Electricity demand improves to 98% of pre-Covid-19 level in August: ICRA

Electricity demand in India has recovered on account of the recovery in rural areas and the increase of demand for electricity in the country. ICRA rating agency has stated that the growth has improved to about 98 per cent of pre-COVID-19 level in August. The electricity demand recovery on an all-India level has largely been led by northern and eastern states with a year-on-year (y-o-y) increase of 6-13 per cent in demand in July 2020, it said. "The rise in demand was mainly driven by rural consumption though it continues to be lower as compared to the pre-COVID-19 levels," it said.

Source: PIB
 

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