Indian Economy: News and Discussion

[Khagesh]

@Khagesh
The rupee will gain. You cannot drive it down artificially without having other problems, as the Chinese are finding out. Wages for all types of jobs increase relative to world standard for the same output. The cost of most products produced in the country (including food items) goes up due to rupee's gain. Higher education standards means higher living standards. This means higher regulation standards (e.g. food regulations, packaging standards, everything). Most sectors will be more structured. Also, the wage gap decreases between high skilled and skilled jobs. The size of the domestic consumer market will also stabilize, which is increasing now. Indians companies will have to outsource jobs outside India to remain profitable because of higher wages. This will increase social spending. A developed nation has a stable population as parents spend more on fewer kids than trying to have multiple kids. This also leads to wage growths, but this is generally offset by immigration.

I think India can become a developed country only when the population stabilizes.

Thanks for the 101.

However before I move further, let me tell you the premise of my arguments:
All said and done India has grown despite the overt and covert competition from the rest of the world. And so has China. All implies all good and all bad, notwithstanding.

And in the worldwide economic value creation China was third last population, India is second last and only the Africa now remains. You have highlighted how higher wages lead to migration of Industry. But with the whole world resetting to a different economic reality in next 30 years compared to the situation of last 70 years where First world constituted 60%-70% of the world output, don't you think that the place for the industry to scoot to rapidly declining, even while technology has enabled a complete workaround to the problem of cheap labour arbitrage. For example India is producing high end military and space tech yet another part of India (Tirupur) is persisting with intermediate level tech of garment manufacturing and yet another part of India (Rural India) is persisting with bullock cart technology of vintage ~10000 ybp. Thus my view is that even if there is labour cost increase there is enough space within India to absorb the fleeing industry. Only risk being a left-lib bunch getting into governance. Manpower cost increases, have not chased out the IT industry and in the ITES space we actually already have ITES that serves the domestic sector. Thus the whole argument of "higher wages will lead to economic slowdown / stagnation" has no legs to stand on. IOW the points you raise are not relevant to India at this stage at all. I admit you had said that 'higher wages will lead to economic slowdown in future'. My counter point to that being it will not be relevant even in the future, unless of course the left-libs impose their NACxalite policies. I have many more issues with you line of thought but its difficult to address all.

Merely because the west has had these issues does not mean we too will experience the same. Anyways I had asked for a logic to your argument and not an unlinked listing of factors you thought were pertinent. You are welcome to plead uncertainty into your logic. I feel that uncertainty being an evidenced reality is a valid argument only precaution necessary being people have to be able to commit where and how much the uncertainty affects their arguments.

My difficulty gets compounded because of more reasons eg. in the case of your argument that "The size of the domestic consumer market will also stabilize, which is increasing now", I am unable to understand how that implies a 'stagnation' or even 'slow down'. BTW are using the two words interchangeably. While I don't use these in that manner, I think I have read some people on the net do that. And this difference in definitions could be a reason for our respective argumentation.

One great thing about western economic thought is that you can begin to call upon theories for both an upside and a downside at any given point. I love these westerners. They are almost like Dabang shooting his police pistol.


For reference:

I had reservations to the following quotes as being presumptions:

@ 23-02-15, 04:34 AM #77 Kay http://defenceforumindia.com/forum/politics-society/66770-one-more-down-time-amartya-sen-6.html,:

"Europe is developed, that's why its growth is slow. Once we reach their levels of development, our growth will slow down as well."

@ 26-02-15, 04:20 AM #1438 Kay http://defenceforumindia.com/forum/economy-infrastructure/64-indian-economy-news-discussion-96.html:

"The reason growth rates become stagnant once countries reach a certain level of development is because wages increase and cheap labor becomes available elsewhere"

I will repeat my initial question that is still unanswered
What decides how wealthy I/we can be?

And let me add other queries where I think we could be using different tools –
What is value?
What is the perception of value?
Don't people pay a price to get whatever they think is valuable?

 

[Kay]

@Khagesh
I understand where you are coming from. Of course, I have made some broad assumptions. Some of them would be, the world becoming a much more connected place in the future and it would be much easier to provide service and products across the world. There would be much more political, infrastructural, social and legal uniformity across the world. Expectations would be similar across the world, irrespective of cultures. Similar education standards also mean the ability to innovate would be similar across the world. Competition would be high. There would be much more stability in the world.
Now this may be overtly simplistic now but this is what the long-term trend is as an effect of globalization. If we are looking so far ahead as India becoming a developed country and her population stabilizing, I think the above is a valid assumption.

This means the real values of products and services will not differ much, neither will be the perceived values. In this conditions, India's output percentage compared to world output would almost standardize to 18-20 %, which was what was before the British.

 

[Khagesh]

I do understand that things can be dealt with in a general sense too and that is what you wanted. Logic of the proposal need not be discussed always esp. considering the ever-present and unquantifiable uncertainty.

Having said that even general observations need to be in line with what is observed. Notice how smart people have been born in all ages. Notice how these smart people have lead others. There is no reason to believe that Perceived Value will be same as Actual Value.

In something as empirical as education we have had cases where an Bhaskaracharya could do his work without even a proper Pen and Paper while 99.9999% of the educated world of today still cannot match it despite all the facilities. At least I view this as a case of a great chasm between perceived value and actual value. This chasm in my view will keep the so called economic advancement on for a very long period of time. Now what country performs in what manner in this game of perception would be decided by how it plays this game.

So perhaps, we need to agree to disagree.

 

[ezsasa]

DEFENCE (` 2,46,727 crore)
This includes revenue and capital expenditure on Defence Services, net of recoveries and revenue receipts. The components are Army (` 1,04,158.95 crore), Navy (` 15,525.64 crore), Air Force (`23,000.09 crore), Ordnance Factories (`2,884.23 crore), Research and Development (`6,570.09 crore) and Capital outlay
on all the above services (` 94,588 crore) for modernisation of Defence forces

Police (`51,790.83 crore)
The provision includes `13,647.89 crore for Central Reserve Police, `12,227.82 crore for Border Security Force, ` 3,723.28 crore for Assam Rifles, `5,169.02 crore for Central Industrial Security Force, `3,646.67 crore for Indo-Tibetan Border Police, ` 4851.77 crore for Delhi Police, `3,366.16 crore for Sashastra Seema Bal, ` 70 crore for Modernisation of Police Force, `598.76 crore for National Security Guard, `1,250.40 crore for Intelligence Bureau, `1,050.40 crore for Jammu & Kashmir Light Infantry and `477.82 crore for Central Bureau of Investigation.

External Affairs (`5,187.32 crore) :–
This expenditure is mainly for the Embassies and Missions abroad and for Special Diplomatic Expenditure

INTEREST PAYMENTS AND DEBT SERVICING (` 4,56,145.05 crore)

An amount of `4,55,145.05 crore is provided for payment of interest on Public Debt, both internal and external and other interest bearing liabilities of the Government. The internal debt
mainly comprises market loans through dated securities; treasury bills and special securities issued to National Small Savings Fund. Other interest bearing liabilities include Insurance and
Pension funds, deposits of non-Government provident funds, Reserve funds, Special securities issued to Oil marketing companies, Fertilizer companies, FCI and others. From 2004-05, the provision for interest payment on borrowings under the Market Stabilization Scheme (MSS), have been separately reflected in terms of the MoU on MSS. An amount of `1,000 crore
is provided towards pre-payment premium for reduction of debt.

 

[ezsasa]

Was going thru UNION budget 2015, some things were a realisation for me :-

1) central govt revenue is around 1777477 crores (about 280 billion)
2) we pay about 4.5 lakh crores every year on repayment of loans
3) I was surprised to know that Union budget does not estimate any profit, target is always to spend everything they earn, in 2015-16 budget they is a shortfall of around 12000 crores.

New things I learnt :-
1) state govt revenues are not added in Union budget
2) the GDP growth actually happens at the states not at the centre(budget wise)

 

[Simple_Guy]

RBI does it again with a surprise .25% rate cut.

RBI rate cut: 6 ways in which it will impact you - The Times of India

 

[NSG_Blackcats]

FDI doubles to $4.48 bn in January, highest in 29 months

During the April-January period of the current fiscal, the foreign inflows have grown by 36 per cent, year-on-year, to $25.52 billion, according to data from Department of Industrial Policy and Promotion (DIPP).

The inflows were at $18.74 billion during the same period a year ago.

 

[Mad Indian]

@Khagesh I would like to know what you think about India's population and whether you agree with my OP in this thread

http://defenceforumindia.com/forum/economy-infrastructure/61167-india-really-over-populated.html

 

[Mad Indian]

@Khagesh Jobs or wages are not indicative of growth or prosperity and what matters is the productivity of the economy. I wrote a logical argument on that premise. what do you think?

And people think that Jobs are the factor which determines the economy. Thats wrong. Jobs are just an indicator in economics. The end result from the jobs - the services and goods we get is the one which is more important when determining the economic progress.

For ex. Lets say there are two countries A and B each with a population of 1000 working members in 2015. For argument's sake lets take that they all manufacture only clothes.

Now both countries take different routes to development(in this case manufaccturing clothes), A mechanises the industries because A found mechanisation to be cheaper and so more efficient and dint really care about the loss of jobs and B increases the no. of jobs by Human labor, because they thought that, mechanisation while efficient, decrease the no. of jobs and so concluded to save the jobs at the expense of efficiency and so in the same sectors
|
Now lets say that it takes 200 people to make 100 clothes and lets say that it costs 2 crores for that.

Now the country B employed the 200 people to produce 100 clothes instead of mechanisation because they thought that mechanisation destroys jobs though they are cheaper . So after 10 years, country B produces 500 clothes with 1000 people at the cost of 10 crores, and so now has full employment

Now the reason A mechanised was because the mechanisation with employment of just 100 people was 50% cheaper than the employing 200 people for the same job of producing 100 clothes and so for them it cost 1 crore for employing 100 people with machines to produce 100 clothes. So the country A after ten years, employed 800 people with mechanisation and produced 800 clothes at the price of just 8 crores. Now the country A has 200 unemployed people, but has saved 2 crores


Now compare A and B. A has more unemployment but has more resources to consume, .ie (800 clothes as against the 500 clothes of B) and has saved 2 crore rupees for other future projects. B has full employment and has less resources to consume compared to A.

Note that the average productivity of B is 0.5 clothes to a person. So to achieve the same level of consumption of an average person in B, the govt of A can fund a welfare for the unemployed 200 in its country at a rate of 0.5 clothes per person(.ie the wage he will earn had his country had not mechanised and had remained job oriented like B) . So now, after funding the welfare, govt A now produces 300 clothes in excess of govt B. and hence the country of A has on average a GDP of 0.8 clothes per capita while the country B has an economy of 0.5 clothes percapita, with A also having 2 crores in their foreign exchange or future expenditure account while B has none.


So now tell me, which among the two countries A and B is better off economically

 

[Khagesh]

Your Population related thread is too long for me to read. Perhaps in future I will take part in it too. But I try to take a nuanced view on that population scene. It is obvious we cannot have a 7-9 kids a woman situation that we had in 47. But yes simply saying that India is overpopulated is to try to avoid the real difficulties. Countries with much more dense packing have managed their affairs. Having said that we have besides the problem of density a more straightforward problem of magnitude of absolute numbers too. Because this massive population has to be fed too. We can afford to have even a larger population then we have currently but before that we have to increase the agro-productivity and that too with less water. For example our usable water resources are almost the same as our total national consumption today. Either we begin to consume better or we manage our population better. It is only when we refuse to bear any sort of respect for our water and instead chose to foolishly waste it, that we begin to see our population as a problem. But such an assessment of a population problem is merely escapist and must-lose analysis.

Anyhow regarding your write up on Jobs vs. Growth. I think you are analysing it correctly but because you are not taking things to their logical conclusion you end up too academic.

For example in your mechanization scenario how would you market what gets made by that mechanization. Do we really need more factories making Coke and TVs? See the concomitant problem of finding a market for these products is also important. The simplistic answer of selling it to our own poorer populations is not valid because of simple reason that we cannot simply begin to finance consumption of a class that must be instead pushed towards current sacrifices+quality education+future consumption. Almost all of India has already followed this exact model where parents have given up a lot of current consumption so their wards could get better schooling (~education) so the family as whole become secure in future.

Similarly in the Labour oriented side of your argument you have failed to point out that none of the economies that have remained or relied on labour intensity have actually achieved fuller (leave alone 'full') employment. So the Country B has no hope in reality, to begin with.

What we need to achieve is to have copious agro productivity per head per dime, so we can fee all and that too without having too much inflation. Have manufacturing of the kind that we need keeping in view the constraints of Balance of Trade, Strategic industrialization. Services sector where the price, of the value delivered by real people, is higher and better appreciated. For example how can an economic system survive if the value of the output given by teachers / police / agriculturists, is not appreciated well enough. For example everyone loves to eat exotic food and pay handsomely for it. But here in India our people love to pay stingy for a cuisine that is probably the richest in the world. Unless we are able to better appreciate Bisibella Bhat over a Sannakji or a Escargot, how the hell is the value going to flow back to the agriculturist.

It is at this place where the cultural invasion hits us. People just end up devaluing:
1) Bisibella Bhat for a Pizza
2) Field Hockey for Cricket and Baseball,
3) Kaar-seva based culture for a Tithe based culture,
4) Mathematics for English/Sociology,
5) Sarees and Veshtis for western wear.
6) kaamwali for a washing machine or vacuum cleaner.
7) Indian corporate jobs for MNC jobs.

British have left but their wealth transfer mechanisms are still very much in place.

 

[Khagesh]

I don't know how seriously it has been thought about but jobs creation is probably the best metric to decide how a country is doing. A lasting job creation scenario where in people earning and using leaverage to imporve their lives is possible only when thoughtful policy making is done. Cannot happen easily.

For example NDA-1 did the best policy making in implementation and that also created a lot of jobs. Indians thought yeh to chalta hai and gave the reins over to UPA-1 in 2004. By 2007 all the good work had been exhausted in a high growth but low on jobs economic management and 2008 saw the tight slap on the face of every Indian voter who either voted for UPA-1 or forgot to vote for NDA-2.

By 2009 BJP could not put its own leadership problems in order and the voters again went sheeple like to UPA-2 and again they got beaten up bad. Only this time in their ass.

Today things are better.

Hope I am not talking too early. There is a Kejri with the most lucrative promise of muftkhori waiting just down the lane. And from the looks of it, there are enough people who believe muft is best. What kind of jobs muftkhori will generate we will see gradually.

 

[NSG_Blackcats]

Sebi clears norms for international finance centres

India on Sunday moved a step closer to having a Singapore- or Dubai-like financial hub, with the Securities and Exchange Board of India (Sebi) approving a framework for international financial centres (IFCs).

Sebi said IFCs, to be set up under the Special Economic Zone (SEZ) Act of 2005, would allow subsidiaries of both domestic and foreign stock exchanges to set up shop here. Issue of depository receipts and other securities by foreign issuers under the Foreign Currency Depository Receipts Scheme, 2014, will also be allowed.

Leading domestic bourses — the National Stock Exchange (NSE) and BSE — have already agreed, in principle, to set up international exchanges at the Gujarat International Finance Tec-city (GIFT), an equal joint venture between the Gujarat government and IL&FS that is likely to be the country's first IFC.

 

[ezsasa]

US-India Forum looks to sell American Dream to Indian SMEs

The US-India Investors Forum (USIIF), a platform to introduce US and Indian companies and facilitate new business opportunities, is set to expand its services to south India. It has been formed with the support of the US Consulate and US Commercial Service.

USIIF, which has 50 members till now, is launching its South India chapter on May 20 in Bengaluru. It will then take its chapters to Hyderabad and Chennai.

In the city, its focus is on biotechnology, pharmaceuticals, agricultural technologies, IT and health care, among other manufacturing companies, including SMEs in aerospace industry. There’s also interest from many players in the education sectors who are keen on going abroad to invest or sell their products and USIIF hopes to handhold many of them too.

USIIF being a liaison between the Indian and US companies, aims to serve as a link between business and government leaders, thus resulting in increased trade and investment.

As trade benefits all, as proved by Daniel Ricardo in his theory in 1817, USIIF wants to take the message to the SMEs here. But one problem that worries the SMEs is that of building relationship with banks. This is where USIIF is in talks with several Indian banks to help SMEs build relationship with banks. The banks will underwrite loans, and then the US banks will extend loans to the SMEs, said Shital Kapoor, director, USIIF.

“Indian SMEs are now focussed mostly on the Indian market. We can open up a whole new market for them. We can help open up half the world for them,” said Kapoor. The NAFTA market, made of the whole of North America, she added will be automatically be open for them.

However, according to USIIF, the main problem of the Indian businessmen is their inability to sell themselves. While, self-marketing comes naturally to an American, we Indians are not good at that, added Kapoor. Hence, the forum has a course for the small businesses on selling themselves in the US, and for this it charges its members a fee.

"When you sit across a table trying to sell yourself to the US government officials, or US businessmen, you need to know how to sell yourself," Kapoor added.

“We will handhold the SMEs in South India wanting to go to the US," said Pavan Kumar, vice-president, South India chapter, USIIF.

Currently, USIIF is studying the industries that it needs to focus on in Hyderabad and Chennai, though its industry agnostic.

Link: http://www.business-standard.com/ar...ican-dream-to-indian-smes-115051801201_1.html

 

[ezsasa]

Any idea in which month Annual GDP growth rate is declared?

 

[anupamsurey]

the official numbers are usually given during the budget session, independent sources and govt sources estimate also release quarterly reports.

 

[sorcerer]

India GDP to surpass China's in 2015-16: UN report



India's economic growth is projected to surpass that of China's, with the GDP expected to zoom by 7.7 percent in 2016, according to a UN report which said India will help accelerate economic growth in South Asia.

The mid-year update of the UN World Economic Situation and Prospects (WESP), released Tuesday, said India's economy is projected to grow by 7.6 percent this year and 7.7 percent in 2016, overtaking China.

China is projected to grow by 7 percent in 2015 and 6.8 percent next year.

The report termed South Asia's economic outlook as "largely favourable" since most economies are expected to experience a strengthening of growth in 2015-16 on the back of stronger domestic consumption and investment, and a pick-up in exports.

The region's GDP is projected to grow by 6.7 percent in 2015 and 6.9 percent in 2016, up from an estimated 6.3 percent in 2014--a significant revision of the previous forecast. "This revision mostly reflects a higher growth trajectory in India," it said.

It said the growth prospects for Iran and Pakistan have also improved moderately, although for both countries significant uncertainties remain.

Across South Asia, the expansion is expected to be driven by buoyant household consumption and a gradual recovery in investment. Private sector demand will be underpinned by a more benign macroeconomic environment, including considerably lower inflation.

In 2015, global consumer price inflation is expected to average 2.5 percent, the lowest level since 2009. With oil prices expected to recover slowly and global activity projected to pick up, average inflation is forecast to accelerate to 3 percent in 2016.

Average inflation in the region is also projected to fall to its lowest level in almost a decade, following the recent decline in oil and food prices.

As a result, monetary policy has become more expansionary in several countries, notably in India and Pakistan, it said.

However, despite the improved outlook, South Asia's economies face, to varying degrees, long-standing development challenges including energy shortages, infrastructure deficits and political and social unrest. The global economy will continue to grow at a modest pace.


http://www.moneycontrol.com/news/economy/india-gdp-to-surpass-chinas2015-16-un-report_1387960.html

 

[ezsasa]

Indian software market logs highest 8.3% growth among BRICS

NEW DELHI: India's software market registered the highest growth rate of 8.3 per cent in terms of total revenues among BRICS nations in 2014, market research firm Gartner said today.

The revenue of Indian software market was at $4 billion in 2014 against that of $3.7 billion in 2013.

The software market in Brazil grew by 5.4 per cent, in South Africa by 4.8 per cent and in China by 3.8 per cent.

In Russia, the market, however, shrunk by 6.4 per cent. The growth in Indian market was led by Microsoft with 25 per cent market share and revenue of $1,017.9 million. Oracle and IBM followed Microsoft with 13 per cent and 12 per cent market share.

Oracle's revenue was at $516.7 million, while IBM's at $475.3 million in 2014.

SAP's market share stood at 8 per cent with revenue of $317.4 million and VMware at 3 per cent at $105.3 million.

CA Technologies, Adobe, SAS, HP accounted for 1 per cent market share each, Gartner said.

While the top five vendors registered increase in their revenue, CA Technology's business declined by 7 per cent at revenue of $50.9 million in 2014 compared to $54.7 million in 2013. Adobe's revenue in India dipped by 35 per cent to $27.5 million from $38.4 million during period under revenue.

Revenue of HP also declined by 14 per cent to $33 million in 2014 from $38.4 million in 2013.

"Improvement in global economic conditions has somewhat relaxed the strain on the Indian economy, thereby boosting corporate sentiments. Along with a new stable government at the centre, this has helped in alleviating concerns about economic growth," Gartner Research Director Bhavish Sood said in a statement.

Gartner observed adoption and development of Software as a service, open-source software adoption and Changing buying behaviours and purchasing styles associated with the digital business as common trend between India and global market.

Read more at:
http://economictimes.indiatimes.com...ofinterest&utm_medium=text&utm_campaign=cppst

 

[Sakal Gharelu Ustad]

It is at this place where the cultural invasion hits us. People just end up devaluing:
1) Bisibella Bhat for a Pizza
2) Field Hockey for Cricket and Baseball,
3) Kaar-seva based culture for a Tithe based culture,
4) Mathematics for English/Sociology,
5) Sarees and Veshtis for western wear.
6) kaamwali for a washing machine or vacuum cleaner.
7) Indian corporate jobs for MNC jobs.

British have left but their wealth transfer mechanisms are still very much in place.

Too many wrong assumptions.

1) May be/may be not. More options are not always bad. Bisibella Bhat can stay with pizza, chat papdi etc.
2) Field hockey is not Indian either. Kabaddi would have made sense
3) Sunday service is common in many places
4) No one devalued Maths. But a society which doesn't understand itself devalues itself
5) May be right here
6) What is more devaluing? Engaging a person in useless task or a machine?
7) Jobs are jobs. You should do one that interest you.

For example how can an economic system survive if the value of the output given by teachers / police / agriculturists, is not appreciated well enough.

1) May be the output is not good enough
2) It is not because of economic system but political system. We fund shitty colleges and schools where teachers don't turn up and there is no incentive for performance.
3) The value will not flow to the agriculturist because they are just too many.

I can go on to dissect the whole post. But hope you got the idea.

 

[NSG_Blackcats]

$34.9 bn FDI inflows to India in FY 2015: Nomura

Foreign direct investment is likely to have hit high of $34.9 billion in financial year 2015, a massive 61.6 per cent jump from $21.6 billion in the previous fiscal, according to a report by Japanese brokerage Nomura.

According to the report, the FY 2015 inflows are 1.7 per cent of GDP, up from 1.1 per cent in the previous year.

The report by its India economists attributed the higher FDI to the growing investor confidence in the country and lower outbound FDI following weak balance-sheet of domestic companies coupled with a weak global growth outlook.

According to the latest government data, as of April-February period of 2014-15, FDI grew by 39 per cent year-on-year to $28.81 billion.

 

[cobra commando]

India's GDP Grows by 7.3 Percent in 2014-15

NEW DELHI: The Indian economy grew by 7.3 percent during 2014-15 from the 4.7 percent increase in the previous fiscal, government data showed on Friday. The gross domestic product (GDP) -- which is a measure of the total value of goods and services produced in the country -- broke the sub-five percent growth barrier after the last two consecutive years. According to the ministry of statistics and programme implementation, the GDP at constant (2011-12) prices in the financial year 2014-15 is now estimated at Rs.106.44 lakh crore -- showing a growth rate of 7.3 percent over the 2013-14 figure of Rs.99.21 lakh crore. In 2012-13, the GDP climbed by 4.5 percent. The data also showed that the economy expanded by 7.5 percent in the fourth quarter of 2014-14, from 6.6 percent rise in the September-December quarter. The GDP had increased by 8.4 percent and 6.7 percent in the second and first quarters of 2014-15, respectively.

India's GDP Grows by 7.3 Percent in 2014-15