India Economy Thread II

[desiyogi]

http://www.chicagotribune.com/news/s...,3625113.story

NEW DELHI/SINGAPORE (Reuters) - India's largest shipping company was forced to cancel an Iranian crude oil shipment last month because its European insurers refused to provide coverage for the vessel on the grounds of tightening sanctions on the OPEC member, industry sources said.

The European Union announced new sanctions in January prohibiting European insurers from indemnifying ships that carry Iranian crude and oil products anywhere in the world.

Iran is India's second-biggest supplier of oil after Saudi Arabia, with some $11 billion a year in shipments meeting about 12 percent of India's crude import needs.

[MeMumbaikar]

Originally Posted by think-tank

oh sure, asking for an educated man is biased. Where as media hyped personalities get all the praise. Yes, I think I'm very biased in a class of my own.

Thats not the issue, looking down at somebody like Nitish and Modi cause they have been educated in India and not abroad in Oxford Cambride certainly is a huge bias.


i have always noticed this with you. You are way pro congress in your accessment of everything. The bjp certainly have a lot of stable heads such as Gadkari the current part president in their ranks.

Its just odd you chose to call them a party of nutcases. Which party in India congress included does not have nut jobs? Digvijay singh himself comes out with some real rubbish.

I for one am not going to deny that BJP has its own share of odd politicians. Rajnath singh comes to mind. That guy is a freak. but there are plenty of other factions of the party such as the units in Bihar working with Nitish Kumar who are more than stable.


@Bangalore

I dont think he is part of NDA or UPA and it will stay that way me thinks. But I think Nitish Kumar would make an excellent candidate.



and as i said before Economy as now = state of politics. Everything is now hinged on the budget which is hinged on the results in uttar pradesh especially.


So all we can do is wait for the budget. The indian economy cannot escape policies as of now.

[desiyogi]

@think tank ..I read the list and from it only Chidambaram and Mr. Singh had impressive or may i add extraordinary qualifications.The irony here is that they both are politically the weakest members of the party and incapable of forcing their own policy.Chidambaram won his constituency with 1% vote margin and Manmohan ji doesn't even have a voting base..lol
Pawar who can play a major role in coalition politics has a b.com. You cannot look at places visited or "honorary PAID FOR degrees" as achievements.
If you want to talk about qualifications the defence minister and agriculture minister have degrees that are completely unrelated to their portfolio. You know as well as i do that when they want to make a decision they have to depend on the knowledge of bureaucrats.The economic decisions always have a political viewpoint attached to it.Do you think oil subsidies,temporary employment benefits and reservation despite lack of marks are economically feasible policies for the long term?

[hobbes100]

Originally Posted by desiyogi

@MeMumbaikar - I agree completely. If Rajiv Gandhi was alive we could actually dare to compare Shanghai and Indian cities.He was a visionary leader with his reform plans.

I wouldn't be too quick to credit Rajiv Gandhi so much. He was marginally better than Indira Gandhi for sure.

But remember, he had super majority in the parliament (90% of seats!) and Congress ruled in most states as well. He came into office with lot of goodwill and popular support. He had absolute power - he could have done ANYTHING. He could have transformed the whole country! No one in Indian political system would ever have such power (at least in the foreseeable future). And he squandered that opportunity.

I can't think of any major policy or legislative achievement during his time. He did some things at the margins, like more focus on computers, panchaayati raj (which didn't change much), some small relaxation in the strangulating industrial licensing and import policies. But it pales in comparison with what Narsimha Rao and Vajpayee achieved with much less power. I think because he died so young in a tragic fashion, people have fond memories of him and credit him more than he deserves.

[desiyogi]

@Hobbes.True...i guess he could have done more..but he was definitely forward looking and modern for that period in India.He probably didn't have the dictator like power of his mother in making sure things happened if he wanted them to.

[think-tank]

Originally Posted by desiyogi

@think tank ..I read the list and from it only Chidambaram and Mr. Singh had impressive or may i add extraordinary qualifications.The irony here is that they both are politically the weakest members of the party and incapable of forcing their own policy.Chidambaram won his constituency with 1% vote margin and Manmohan ji doesn't even have a voting base..lol
Pawar who can play a major role in coalition politics has a b.com. You cannot look at places visited or "honorary PAID FOR degrees" as achievements.
If you want to talk about qualifications the defence minister and agriculture minister have degrees that are completely unrelated to their portfolio. You know as well as i do that when they want to make a decision they have to depend on the knowledge of bureaucrats.The economic decisions always have a political viewpoint attached to it.Do you think oil subsidies,temporary employment benefits and reservation despite lack of marks are economically feasible policies for the long term?

My point was clear from the start, I'm not defending a political party. But the rules have changed. You see when UKs economy took an upswing it was in the 1980s during the Thatcher's regime, in India it started loosely with Rajiv Gandhi aggressively removing mad policies of License Raj. With Vajpayee - we started seeing rise in the jobs, mobile telephony, economic growth, IT and more people started paying taxes. But since 2006 the global economic condition demanded more skills and more industries, the situation demanded a qualified person here in India. Less involved in politics and more of an intellectual, we see that with MM Singh- he doesn't like getting involved in the nitty gritty of cheap poltics nor i am sure he cares about what people think. But now, further reforms demand education, science and technology, health and industrialization. Where do you find a suitable candidate to carry forward that torch? It's not as easy as you imagine- it's not simple desk job. Integrity of the ruler reflects well upon the country and the soundness of his decisions ought to be read in the history books. If you can find such a person, no matter from which party I would gladly accept him as the next PM.

[desiyogi]

@ Think Tank - I agree with your viewpoint of an intellectual person leading.But unfortunately in India policies are not decided by Intellectuals.Your examples of Thatcher,Rajiv Gandhi and Vajpayee are good examples of prime ministers who actually had power and could force their own policies. The prime minister is not a one man army and surely has capable departments and advisors to carry out reforms.But all of this is useless when you realise that he has no actual political power.He is remote controlled by a party that has grown used to being corrupt for 50-60 years. The party cares about policies that gets it quick votes like reservation and giving out free food.Manmohan Singh has to bow before Mamta Banerjee's socialist demands.
The prime minister in India is not as powerful as you consider him to be.It is the party which decides which policy to take.In this coalition politics scenario i would prefer BJP because at least when it comes to power it's partners are supportive of it's actions and don't interfere as much.At least then reforms can be carried out quickly. Whether these reforms are successful is to be seen.But given the decent performance of NDA in their first term it is time Indian's gave a chance to people based on their merits and not having a famous last name.

[think-tank]

Originally Posted by desiyogi

@ Think Tank - I agree with your viewpoint of an intellectual person leading.But unfortunately in India policies are not decided by Intellectuals.Your examples of Thatcher,Rajiv Gandhi and Vajpayee are good examples of prime ministers who actually had power and could force their own policies. The prime minister is not a one man army and surely has capable departments and advisors to carry out reforms.But all of this is useless when you realise that he has no actual political power.He is remote controlled by a party that has grown used to being corrupt for 50-60 years. The party cares about policies that gets it quick votes like reservation and giving out free food.Manmohan Singh has to bow before Mamta Banerjee's socialist demands.
The prime minister in India is not as powerful as you consider him to be.It is the party which decides which policy to take.In this coalition politics scenario i would prefer BJP because at least when it comes to power it's partners are supportive of it's actions and don't interfere as much.At least then reforms can be carried out quickly. Whether these reforms are successful is to be seen.But given the decent performance of NDA in their first term it is time Indian's gave a chance to people based on their merits and not having a famous last name.

The idea of coalition is flawed anyway because different ideologies collide- I wouldn't expect anything extraordinary to come out of that. But I wouldn't go as far as to say MMSingh is weak- some of his decisions are the best- whether its party based or his own, the final executive is the PM. The nuclear deal which bjp opposed, right to education, right to information, efforts to strengthen our military, rural employment, highway projects, bid for UNSC etc. But there are plenty that are due and I only wish the best for him. We can only learn from a man of his stature and not criticize.

[bangalore]

Originally Posted by desiyogi

@bangalore Being from Bangalore you would have to admit that the state govt. despite all their faults helped bring IT to the city.I know the anti-valentine protests,CM resigning is sad but the fact that the CM resigned proves that BJP itself is democratic.Can anyone force Sonia or Rahul to resign?
.

The current Karnataka govt has nothing to do with IT in Bangalore. And we are seeing one of the worst performing & most corrupt governments in this state currently. Just like we talk about UPA not having a credible opposition, the problem at the state level in Karnataka is exactly that - all parties lack leaders of integrity & vision. Bad politics and bad governance can potentially kill the potential of this place & of its people. Its simply saddening.

[sixsigma1978]

Originally Posted by think-tank

The idea of coalition is flawed anyway because different ideologies collide- I wouldn't expect anything extraordinary to come out of that. But I wouldn't go as far as to say MMSingh is weak- some of his decisions are the best- whether its party based or his own, the final executive is the PM. The nuclear deal which bjp opposed, right to education, right to information, efforts to strengthen our military, rural employment, highway projects, bid for UNSC etc. But there are plenty that are due and I only wish the best for him. We can only learn from a man of his stature and not criticize.

I would agree with this. If MMS didn't have the CPI vetoing most reforms in UPA-1 or Mamata Banerjee in UPA-II - he might be able to unleash his full potential.
Rajiv Gandhi too was visionary - I would go as far to say that 1991's reforms, though forced on us because we were about to Default - had its roots in his slowly rooting out the License Regime that had throttled India.

I think even IK Gujaral was a competent PM in a completely inept Coalition - and you're spot on about Coalition politics - its holding back the nation - and as is evident in UPA-1 and 2 - how less-than-visionary parties (oddly both from West Bengal) - have artificially put brakes on the Indian economy!!

On a rating I would put:
AB Vajpayee>MMS>Rajiv Gandhi/IK Gujaral (tie)>Indira Gandhi.

Other PM's are not worth mentioning!!

[SSCaddict]

ichi gadkari?

i don't even want to comment about him, he is not even capable of being the president of BJP.

[MeMumbaikar]

Originally Posted by SSCaddict

ichi gadkari?

i don't even want to comment about him, he is not even capable of being the president of BJP.

well he is going to get a second term as BJP president and most people are more than happy with him. Making his continuous term the longest in the BJP regardless of the results as everybody realises that he has worked very hard in the state.

I dont know why you have such a negative opinion of him. He has a strong record on infra and was the main force behind a lot of infra projects in Maharashtra. Mumbai pune express-way being one. The recent Nagpur civic polls to indicate that people seem to be happy with governance he provides.




I think most will agree that the communists made life hell for MMS in term 1 of the UPA. Even i dont blame Congress for that. Their hands were tied and stability seems to be the key as even the global economy was doing well.


However i did expect a hell of a lot more i UPA 2. Thats 2009-2012 should have seen a wave of reforms launched. Congress had the potential to pick and choose their allies. If Mamata did not play ball it was time for them to pick somebody else such as the SP who are supporting from the outside and get things moving.


I have a big fear that if the SP-Cong does not form government and the BJP does well in Uttar pradesh with 80-90 seats the congress will go back in its shell further fearing reforms.

[sixsigma1978]

Direct Taxes Code Bill closer to House doors

A Parliamentary panel on Friday adopted its recommendations on the Direct Taxes Code (DTC) Bill, which suggests sweeping changes in the personal income tax regime.

Parliamentary Standing Committee on Finance would give its report in a week to the finance ministry, which would then submit it to Parliament in the Budget session, those in the know told Business Standard.

The committee has suggested increasing the income tax exemption limit to Rs 3 lakh a year, against Rs 2 lakh proposed in the Bill. The threshold now is Rs 1.80 lakh a year.
The committee, chaired by Bharatiya Janata Party senior functionary and former finance minister Yashwant Sinha, wanted a 10 per cent rate to kick in for annual income of Rs 3-10 lakh, according to sources. The Bill proposes this rate to be imposed on a slab of Rs 2-5 lakh. The panel also recommended that 20 per cent income tax rate be paid by those earning Rs 10-20 lakh a year. This slab was proposed to be Rs 5-8 lakh in the Bill. The committee wanted the government to impose a peak rate of 30 per cent on annual income above Rs 20 lakh, as against above Rs 10 lakh sought in the Bill.

The panel has authorised Sinha to make minor changes in the recommendations.

The committee also suggested substantial changes in tax exemptions given to long-term savings, medical insurance and social security contributions. It wanted the government to increase long-term savings limit for the purpose of exemption from income-tax to Rs 1.5 lakh from Rs one lakh. Besides, it recommended that contribution to social security such as pension be exempted up to Rs 1.5 lakh a year; medical insurance up to Rs one lakh; up to Rs 50,000 medical insurance for dependent parents; Rs 50,000 for professional studies and education be exempted from income tax, the panel has said.

The panel did not suggest any changes in the corporate tax rates.

The panel wanted the government to cautiously implement the General Anti-Avoidance Rules. These provisions, contained in the Bill, are aimed at authorising the tax department to demand tax in situations where the main motive of a transaction is to get a tax advantage.

These provisions have assumed importance after the government lost the Vodafone case in the Supreme Court. Many believe the Budget may incorporate the proposal, even before the introduction of DTC

While the Bill puts the onus on those involved in a deal to prove that they have not intended to avoid tax, the committee recommends that it should be the other way round.

Officials said after the submission of report in Parliament, the finance ministry may table the revised bill in the Monsoon session.

The Bill is expected to be introduced from April 1, 2013.

Currently, income of Rs 1.80-5 lakh attracts 10 per cent income-tax, Rs 5-8 lakh attracts 20 per cent and above Rs 8 lakh 30 per cent.

Parliamentarians were of the view that personal income-tax be widened significantly as the bulk of 89 per cent of taxpayers fall under the annual income of up to Rs 5 lakh, but pay just 0.10 per cent of overall tax. On the other hand, just 1.3 per cent of taxpayers have over Rs 20 lakh income in a year, but they pay over 62 per cent of taxes.

Around 35 million people pay personal income-tax in India.

Source : Link

[desiyogi]

NEW DELHI: State-owned Life Insurance Corporation (LIC) pumped in over Rs 12,000 crore and purchased 95% of the equity put on the block in the first-ever stake sale of ONGC through auction process.

LIC, according to official sources, picked up 40 crore shares, or 95% of the ONGC shares, sold through the auction route yesterday fetching the government a total of Rs 12,766.75 crore.

There was no participation from foreign institutional investors and very little from retail investors, sources said.

http://timesofindia.indiatimes.com/b...w/12113653.cms

One PSU bought the shares of another PSU. It's like the government moving cash from the left side of the table to the right side and applauding itself for a job well done.

[hobbes100]

Couldn't agree more with Sadanand Dhume's opinion piece in today's WSJ:

http://online.wsj.com/article/SB1000...978490040.html

Alarm Bells in India
Growth is slowing, but the politicians at fault haven't heeded calls for serious reform.
By SADANAND DHUME

India's once red-hot economy is feeling increasingly lukewarm. Government figures released Wednesday showed that the economy grew 6.1% in the quarter ended Dec. 31, the slowest in nearly three years, and the seventh successive quarterly slowdown. The government has already downgraded expectations of growth in the fiscal year ending March 31 to 6.9%, well below the nearly 9% in the latter part of the last decade that helped cement India's reputation as an emerging economic power.

To be sure, from the vantage point of North America or Western Europe nearly 7% growth looks almost indecently robust. But it's anemic for a country at India's level of economic development—per capita income is only $1,500. When they were at a comparable level of development, East Asian economies such as South Korea and China had little trouble sustaining high growth for long periods.

This slowing growth challenges two views cherished by leaders in New Delhi: that the country will effectively eradicate poverty within the space of a generation, and that it will assume its rightful place in the front rank of global powers. Both goals depend on an economy that generates enough resources to fix glaring deficiencies in health and education and to build a muscular military. India must also generate jobs to ensure that a youthful population is employed productively rather than drawn to the myriad violent movements—from Maoism to ethnic separatism to religious radicalism—that dot large parts of the country.

Though the global economic slowdown hasn't helped matters, India mostly has its own politicians to blame. Instead of using the bounty of the boom years to double down on reforms, the ruling left-of-center coalition led by the Congress Party appears to suffer from a strange hankering for the socialist past. This has led it to sacrifice a historic opportunity to swiftly transform India into a middle-income country on the altar of shortsighted populism.

Nobody embodies this sorry state of affairs more than Prime Minister Manmohan Singh. He was once touted as a great reformer, thanks to having been the finance minister who unleashed the "Big Bang" reforms amid a balance-of-payments crisis in 1991. But his tenure as prime minister has been very different. Most recently, the first sign of political opposition was enough for him to abandon a plan to lift restrictions on foreign investment in retail. These days he's more likely to be seen muttering darkly about a foreign hand behind anti-nuclear protests in the southern state of Tamil Nadu than making a principled case for deeper liberalization.

Nor do Mr. Singh's cabinet colleagues inspire confidence. Human Resource Development Minister Kapil Sibal will be remembered either for a ham-handed attempt to muzzle the Internet in the name of social harmony, or for a quixotic quest to build a cheap Indian tablet computer that nobody wants to buy. Jairam Ramesh, a leading intellectual voice for liberalization in the 1990s, is now better known for using his stint heading the environment ministry (2009-11) to gum up development projects. As rural development minister, he's now piloting a populist land acquisition bill that would inflate the prices at which private companies can buy property. Presiding over this gusher of largess is the National Advisory Council, a group of advisors to Congress President Sonia Gandhi, that has apparently never encountered a handout it didn't like.

The government's biggest "achievement" is its flagship National Rural Employment Guarantee Act, which promises each rural poor person a 100 days of work per year. This distorts labor markets, encourages widespread corruption and has helped—along with fuel and fertilizer subsidies—to balloon the federal fiscal deficit to an estimated 5.6% of GDP this year instead of the budgeted 4.6%. A proposed food security bill would pour billions of dollars more into a public distribution system already notorious for graft and wastage, and create a new entitlement that future generations will find difficult to kill.

Slowing growth should be taken as a warning that there won't be sufficient spoils to divide if Delhi continues on its current course instead of shifting to a strongly pro-growth tack. The decline doesn't have to be permanent. India's savings rate, at about 32%, is nearly at East Asian levels, and about 10 percentage points higher than a decade ago. Its burgeoning middle class values education. Its entrepreneurs have learned to thrive under tough conditions, and have begun to spread their wings in overseas markets. An increasingly federal structure lessens the damage a meddlesome central government can do. And India's democracy, messy as it is, also gives the country a deep structural stability. Nobody need live in fear of leadership purges or military coups.

The question now is, how quickly will Indian politicians heed the alarm bell being sounded by slowing growth and undertake reforms to unleash the country's potential?

[kalkibhagwan]

I would like to see reservations going down, it has been 65 years, now it`s time to let dalits and other lower castes to actively compete for their survival and give everyone else a fair chance, although the chances of that happening are quite slim we would have the human rights wallas (runned by the catholic church with the direction from their italian masters) crying about casteism.. elements like these must be first removed to have a more mature society...

[desiyogi]

"I would like to see reservations going down, it has been 65 years".

True, reservations are fine to a certain extent but when you allow someone who has below 35% marks to access higher education on the same level with people who got above 90% there is going to be a major problem.People from reservation quota also have guaranteed jobs creating a 'babu' culture.You are creating a society in which you can't trust a doctor/engineer from government organizations to make a proper judgement. If there was reservation on merit rather than on caste it would make more sense.There should be financial aid in preparing for exams.After that it's up to the individual to succeed.There are lot's of poor people who have cracked entrance exams and become successful without relying on reservations.

[tryindiffdrugsngirls]

Originally Posted by kalkibhagwan

I would like to see reservations going down, it has been 65 years, now it`s time to let dalits and other lower castes to actively compete for their survival and give everyone else a fair chance, although the chances of that happening are quite slim we would have the human rights wallas (runned by the catholic church with the direction from their italian masters) crying about casteism.. elements like these must be first removed to have a more mature society...

Every one wants reservations to go down but they wont cuz u know how India works. Only thing you can wish for is that economy booms and we have enough jobs and opportunities for every one who wants to study and work thus eliminating the need for reservation itself. But I don't think that will happen any time soon though with the way things are going.

[hobbes100]

Originally Posted by MeMumbaikar

I have a big fear that if the SP-Cong does not form government and the BJP does well in Uttar pradesh with 80-90 seats the congress will go back in its shell further fearing reforms.

Congress never came out of its shell, so no fear of them going back to it They'll just stay there as they have for most of last 60 years (only exception being when a non-Nehru Gandhi family person - Rao - was at helm).

Well, I'm sure UP results would have some impact on the budget, but I'm not sure it'll completely dictate it. There are only 10 days between UP election results and the budget. I'm sure 90% of the budget would already be prepared by the time UP results come out. They can only change on the margins after that.

Although, who knows, maybe they'll prepare two versions of the budget - one for if Cong does well and one if they fail I wouldn't put it past them!

[bangalore]

Originally Posted by MeMumbaikar

@Bangalore
and as i said before Economy as now = state of politics. Everything is now hinged on the budget which is hinged on the results in uttar pradesh especially.

What happens if Cong, in spite of a poor show in UP, manages to win Punjab, Goa, Chattisgargh & Manipur. (Goa could be doubtful, based on exit polls) Will it give enough momentum for the reforms ? I hope it would.