Indian Economy: News and Discussion

[nongaddarliberal]

Just for information -----
GDP in Local currency: 1 lakh crore = 1 trillion

For 2017:

India : 121 trillion INR
Pakistan : 32 trillion PKR
China : 82.7 trillion RMB
Bangladesh : 19.5 trillion BDT

That 121 trillion figure is at constant 2011 prices, not current prices. Right next to that is the actual 2017 figure of 152 trillion INR, which is 2.3 trillion USD

 

[nongaddarliberal]

So from the above figures, revenue for 2018 is 24 trillion INR, fiscal deficit is 6 trillion INR, which means total spending comes at 30 trillion INR which equals 460 billion USD. Not very good. For our economy's size our govt spending should be close to 700 billion USD. Our tax to gdp ratio is the problem.

 

[KumarG]

So from the above figures, revenue for 2018 is 24 trillion INR, fiscal deficit is 6 trillion INR, which means total spending comes at 30 trillion INR which equals 460 billion USD. Not very good. For our economy's size our govt spending should be close to 700 billion USD. Our tax to gdp ratio is the problem.

Low collections / government spending is not inherently a problem. If the capital / labour utilisation outside of government is more efficient than the government allocation of capital / labour, the economy would grow much faster - not just based on what we produce (increase in factors) but also how we produce it (increase in factor productivity).

Unfortunately, in India, efficiency of capital utilisation both outside and inside government is pretty dismal. Perhaps that is why "good governance" is the need of the hour.

 

[nongaddarliberal]

Low collections / government spending is not inherently a problem. If the capital / labour utilisation outside of government is more efficient than the government allocation of capital / labour, the economy would grow much faster - not just based on what we produce (increase in factors) but also how we produce it (increase in factor productivity).

Unfortunately, in India, efficiency of capital utilisation both outside and inside government is pretty dismal. Perhaps that is why "good governance" is the need of the hour.

Its not only about efficiency, its about appropriate spensing on human capital such as high quality education and healthcare, which requires much more govt spending. And yes, our government spends very inefficiently, not only because of corruption but also all those unnecessary subsidies, which in the long run hurt the economy by keeping it inefficient. And the interest payments are also eating into too much of the budget.

 

[KumarG]

Its not only about efficiency, its about appropriate spensing on human capital such as high quality education and healthcare, which requires much more govt spending. And yes, our government spends very inefficiently, not only because of corruption but also all those unnecessary subsidies, which in the long run hurt the economy by keeping it inefficient. And the interest payments are also eating into too much of the budget.

I do agree with the need for spending in increasing human capital (i.e labour base as well as productivity, which is one of the "factors"). What I am not sure of is if the involvement of the government is required in terms of direct spending (as opposed to incentivising extra-government entities). Like I said, do not know which one is better at allocation of the spending.

 

[nongaddarliberal]

I do agree with the need for spending in increasing human capital (i.e labour base as well as productivity, which is one of the "factors"). What I am not sure of is if the involvement of the government is required in terms of direct spending (as opposed to incentivising extra-government entities). Like I said, do not know which one is better at allocation of the spending.

As far as education is concerned, high quality and free govt run primary, and secondary education is a must, along with lots of govt funding in R&D for higher education. Direct spending has always worked better in education than incentives or subsidies. But healthcare is where the confusion is. There is no one good answer on what the best healthcare policy should be. Govt run healthcare systems can be very inefficient and be too much of a burden on taxpayers. Private healthcare industry can and does overcharge patients for even basic treatments and many times more for serious treatment of life threatening diseases. The farce that is the US healthcare system is case in point.

 

[KumarG]

As far as education is concerned, high quality and free govt run primary, and secondary education is a must, along with lots of govt funding in R&D for higher education. Direct spending has always worked better in education than incentives or subsidies. But healthcare is where the confusion is. There is no one good answer on what the best healthcare policy should be. Govt run healthcare systems can be very inefficient and be too much of a burden on taxpayers. Private healthcare industry can and does overcharge patients for even basic treatments and many times more for serious treatment of life threatening diseases. The farce that is the US healthcare system is case in point.

Agreed. There isn't a straightforward solution to this, is there?

At this juncture, when the extra-government entities largely seem to be cronies lining their own pockets, direct spending is probably the way to go. Which is why "good governance" is important - firstly, to reduce government inefficiencies, and secondly - perhaps, also equally importantly - to introduce governance standards in the non-governmental entities.

 

[ezsasa]

That 121 trillion figure is at constant 2011 prices, not current prices. Right next to that is the actual 2017 figure of 152 trillion INR, which is 2.3 trillion USD

Yup, as and when current prices are adopted for GDP we can start using them. For now it is 2011 prices.

I think this fiscal the current prices would be adopted.

 

[ezsasa]

So from the above figures, revenue for 2018 is 24 trillion INR, fiscal deficit is 6 trillion INR, which means total spending comes at 30 trillion INR which equals 460 billion USD. Not very good. For our economy's size our govt spending should be close to 700 billion USD. Our tax to gdp ratio is the problem.

Explain this to people on this street, who are against modi because he is trying to collect taxes and increase tax base.

 

[nongaddarliberal]

One reason might be...



https://www.moneycontrol.com/news/b...t-are-likely-to-benefit-the-most-2558165.html

Hmm. And with oil prices are rising again, its gonna put a big strain on the rupee this year. I guess we got lucky in 2017. Hope forex doesn't feel the strain because of this. We should have taken advantage of the strong rupee and imported critical technology for both civilian and military use. Bloom energy would have been a really good investment. Along with hiring more Israeli firms for agriculture modernization.

 

[ezsasa]

Hmm. And with oil prices are rising again, its gonna put a big strain on the rupee this year. I guess we got lucky in 2017. Hope forex doesn't feel the strain because of this. We should have taken advantage of the strong rupee and imported critical technology for both civilian and military use. Bloom energy would have been a really good investment. Along with hiring more Israeli firms for agriculture modernization.

Saudi Arabia GDP growth.

2010: 4.8%
2011: 10.3%
2012: 5.4%
2013: 2.7%
2014: 3.7%
2015: 4.1%
2016: 1.7%
2017: -0.7%

 

[nongaddarliberal]

Saudi Arabia GDP growth.

2010: 4.8%
2011: 10.3%
2012: 5.4%
2013: 2.7%
2014: 3.7%
2015: 4.1%
2016: 1.7%
2017: -0.7%

I'm not talking about the long or medium term. Im just talking about this year compared to last. Oil prices are predicted to remain high this year, by the past 2 years standard.

 

[ezsasa]

I'm not talking about the long or medium term. Im just talking about this year compared to last. Oil prices are predicted to remain high this year, by the past 2 years standard.

Yup, hence i posted the reason for oil prices hike. saudis are in recession.

 

[YagamiLight]

So from the above figures, revenue for 2018 is 24 trillion INR, fiscal deficit is 6 trillion INR, which means total spending comes at 30 trillion INR which equals 460 billion USD. Not very good. For our economy's size our govt spending should be close to 700 billion USD. Our tax to gdp ratio is the problem.

High tax to GDP ratio means people are paying more taxes to go to. How is that good for anybody. If you have too much money to give, give it to a hindu charity

 

[YagamiLight]

Im sorry but you are the one who is mistaken man, no country has become great on services alone.. If you look at services as a % of GDP and make that call then you are misguided for a number of reasons

Strawman argument. Where did I say "only" services sector is good for economy? Services sector produces the most wealth for the economy, anywhere. Show me one country which is rich now where manufacturing is the dominant economic activity. Talk with statistics instead of made up BS you read on a blog

Countries account for services in differing ways, so a lot of industries which are actually manufacturing get counted as service sector because they are somewhere upstream on their particular value chain. Like they do with small manufacturers and OEM service providers in the Mittelstand, Germany or China counting its Railways.

LOL. Such "manufacturing" is counted as services too in India. And, what % of overall GDP of Germany do such small manufacturers contribute?

Korea and Japan are services dominant? Really? They are two of the most industrialized countries on earth!

https://en.m.wikipedia.org/wiki/Economy_of_Japan

https://en.m.wikipedia.org/wiki/Economy_of_South_Korea

70% of Japanese GDP is services. 60%of SoKo GDP is services. As I said, Rich countries invariably have excellent services sectors. This is why every good economist worth his salt thinks trump's plan to save coal/steel jobs with tariffs to be retarded as it will create manufacturing jobs at the expense of services jobs(traders/exporters).

And I never claimed that Japan/SoKo isn't industrialized(stop with the strawman) . By that measure, even India is industrialised

Name one global power today with an economy over 1.5-2 Tn. which has never had any golden era in manufacturing?

How about India? seriously, why do you want to waste time with two steps instead of jumping directly to top?

 

[nongaddarliberal]

High tax to GDP ratio means people are paying more taxes to go to. How is that good for anybody. If you have too much money to give, give it to a hindu charity

Already explained why a decent tax to GDP is crucial. And it can only be achieved by having more people pay the same amount of taxes, not the same number of people paying more taxes. Actually you can significantly lower the tax rates since far more people will share the burden. Only 3% of India's population pays income tax. And half of those are government employees, which is meaningless since their salary itself is from tax money.

 

[tharun]

Here is the Tax to Gdp ratio.....Compared to other countries....

Sent from my AO5510 using Tapatalk

 

[ninad]

India has potential to grow even faster, if we can just take urbanisation route. No country has developed or become a developed country with 60-70% of its population living in rural areas. Cities and urban areas are where development is taking place and if 70% of the people stay away from development, then that isn't going to uplift their financial status, that's given.

 

[ezsasa]

India has potential to grow even faster, if we can just take urbanisation route. No country has developed or become a developed country with 60-70% of its population living in rural areas. Cities and urban areas are where development is taking place and if 70% of the people stay away from development, then that isn't going to uplift their financial status, that's given.

Just ensure people pay their taxes, development and growth will happen automatically.

 

[ninad]

Just ensure people pay their taxes, development and growth will happen automatically.

Yes, you have to ensure that but it is a process which takes time.

If you look at it in urbanisation terms, you would see that if the 70% of the people were living in urban areas and 30% were living in rural areas, you would have had good tax to GDP ratio. The relation of tax-to-GDP or any other or any other developmental factor is linear to that of the urbanisation of the country.