India Economy Thread II

[kannan infratech]

Gold is the staple for Indian micro economy management. Many lower and lower middle class people manage bad economy times by pledging / pawning their gold.

Co Op Banks & Small Fund Local Financial companies lend the cash against Gold mortgage.

Thats why Rural & Poor India is surviving all these years without much help from the Govts / Scheduled banks.

[GJ10]

Originally Posted by MeMumbaikar

I am pretty sure you look at Guj then it will be the same for the A'bad to Valsad belt would stick out like a sore thumb compared to the rest. The reason being a significant chunk of the population live in them.

Its a shame that district level data is not available for Gujarat, and def 15 years ago, what you have said would be absolutely right.

Bot nowadays, with the massive industrialisation of sparsely populated districts like Kutch (Mundra/Kandla), Jamnagar (Reliance/Essar refineries) am pretty sure the situation is different.

As i tend to always go on about, one of the most satisfying things about the growth/development model of Gujarat is that projects/investment are spread across different parts of the state. In a few years time when these things come to fruition, it will probably be a lot more clear to see.

[kalkibhagwan]

for now, economic policy reforms are more important than selling gold and bringing in unknown foreigners to invest in Bharat, the main objective should be manufacturing and indigenious tech. production and ofocurse, substantial infra development, that would itself raise the gdp by a 1-2% , A lot can be done in Infra sector as it is very ill developed, manufacturing is another area I would like to see industries grow, people here are looking for temporary solutions. IMO, manufacturing at large scales can shoot up the gdp and national budget and we can earn at least 2 times faster than we are now. Delivering finished goods usually leads to surplus, that's the need of the hour

[Indiadreams]

Originally Posted by MeMumbaikar

Haryana is a small state. I dont think its fair to compare smaller states to bigger ones.


One think the data does not point out is that money generated in mumbai mmr pune nagpur through taxes is ploughed into the other districts. So even within districts you have to see who generates how much tax from private entities.

Ofcourse, this is a well known fact, whether it is the Centre or State, Mumbai MMR contributes a lion's share of the taxes, but gets peanuts in return. Before someone jumps in saying that Mumbai has just the headquarters, I would like to say that MMR genertaes 28% of non-corporate income tax (source posted many times in SSC) and 33% of corporate tax. Not a big difference between corporate and non-corporate taxes. And, the high tax is not because of the few industrialists in SoBo; they dont even figure in the top 10 taxpayers. The taxes mostly come from the salaried class.

One more important thing is the economy of Mumbai, Thane and Pune districts,which is essentially Mumbai MMR and Pune Metro area, is as big as the next set of big economies (UP, Gujarat, TN etc). And it continues to grow at healthy rate of more than 10% (in real terms)

[TutConr]

What slowdown! FDI inflows hits record $50 billion



NEW DELHI: Undeterred by a slowdown in growth, India's foreign direct investment flow touched a record $50 billion in 2011-12, the highest since investments were opened up in 1996.

British energy major BP's investment of $8.9 billion into India in March 2012 as part of its deal with Reliance Industries earlier this year played a significant role in helping the country reach the record investment figure.

"In 2011-12, we received the highest ever FDI since we opened up in 1996. It is close to $50 billion," Commerce and Industry Minister Anand Sharma told ET. BP's investment in India in March was also the highest ever in a single month, the minister added. FDI in India dipped 25% to $19.43 billion in 2010-11, as against $25.83 billion in the previous fiscal.

The minister said that despite the negativity that it being generated about India's investment climate, the country continued to attract foreign investments. "Contrary to the impression that has been created, we have remained one of the first three attractive FDI destinations of the world," Sharma said.

India is ranked third in the list of countries attracting most FDI, after China and the US.


_______________

Source : http://economictimes.indiatimes.com/...w/13026697.cms


What do you think about this guys?

[MeMumbaikar]

so 185 trade deficit

64 remittances

50 FDI

leaving us -70 to -75 down on a gdp of 1.8 trillion USD.

still too high a CAD


anybody else know of any inflows and outflows?


That just tells me we need to start manufacturing a lot more to reduce the trade deficit. We need reforms in labor and other stuff. Everything else will fall into place.

[MeMumbaikar]

Originally Posted by Indiadreams

Ofcourse, this is a well known fact, whether it is the Centre or State, Mumbai MMR contributes a lion's share of the taxes, but gets peanuts in return. Before someone jumps in saying that Mumbai has just the headquarters, I would like to say that MMR genertaes 28% of non-corporate income tax (source posted many times in SSC) and 33% of corporate tax. Not a big difference between corporate and non-corporate taxes. And, the high tax is not because of the few industrialists in SoBo; they dont even figure in the top 10 taxpayers. The taxes mostly come from the salaried class.

One more important thing is the economy of Mumbai, Thane and Pune districts,which is essentially Mumbai MMR and Pune Metro area, is as big as the next set of big economies (UP, Gujarat, TN etc). And it continues to grow at healthy rate of more than 10% (in real terms)

Maybe they need to merge these districts (along with Nashik) into a single mega district.

Cause i can see Nashik joining these districts pretty soon. The new road just cut time between Nashik and Mumbai (dadar) to less than 3 hours.

Currently Nashik district has a per capita income of 84,000 compared to 87,000 as being the average for Maharashtra.

Everytime i goto shirdi via nashik or to dhule, i can see the NH3 littered with new factories. Pretty soon i think the entire area will be one big industrial for manufacturing. Wont be long before it comes purple.

Nashik Aurangabad and Ahmednagar are the districts in Maharashtra to watch out for. Growing much faster than the rest.



Mumbai Thane Raigad Pune Nashik Aurangabad Ahmednagar. It will be equivalent in area to NCR and a much bigger economic entity.

[HedonistAtBlr]

Originally Posted by TutConr

What slowdown! FDI inflows hits record $50 billion

Brilliant!...wasn't expecting this.

[murlee]

Originally Posted by MeMumbaikar

so 185 trade deficit

64 remittances

50 FDI

leaving us -70 to -75 down on a gdp of 1.8 trillion USD.

still too high a CAD


anybody else know of any inflows and outflows?


That just tells me we need to start manufacturing a lot more to reduce the trade deficit. We need reforms in labor and other stuff. Everything else will fall into place.

Shouldn't we take our service exports too in this calculation?

[hobbes100]

Originally Posted by murlee

Shouldn't we take our service exports too in this calculation?

Also, FII investments (net), reverse FDI (direct investment by Indian companies overseas), repatriation of profits/cash by foreign companies which made direct investments in India, as well as reverse (bringing hope of profits/cash by Indian companies investing overseas).

[SSCaddict]

$50 billion is a one off case since BP had to give $9 billion in a single go. IMO this year we will be very happy to get $40-$45 billion

ichi bhai we got $10-15 billion or even more from FII flows(i am including debt money as well as stock money), are that included in FDI?

[murlee]

I don't think FII inflows would be included in FDI...

[MeMumbaikar]

dont think so

still leaves our cad at 4% of gdp

not sustainable.

[OldKool]

FDI's target is as important as amount..FDI is needed in retail,infra,railways and manufacturing

[srivatsayb]

Originally Posted by SSCaddict

$50 billion is a one off case since BP had to give $9 billion in a single go. IMO this year we will be very happy to get $40-$45 billion

ichi bhai we got $10-15 billion or even more from FII flows(i am including debt money as well as stock money), are that included in FDI?

Brother some times we get huge one time investments like the BP - RIL deal...Small or big, i guess 50 billion is really good..

wonder if we can beat it this year or atleast match it...

@oldKool : FDI "target" as you put it is not important when it comes to CAD..But ya if its going to asset creation like retail, Ports etc then its more beneficial and job creating..

BP i think put cash into the hands of RIL..RIL was already sitting on loads of cash(i think waiting for the 4G mega launch)

[srivatsayb]

The fall of europe where major economies are not able to pull themselves out of recession in the long run is very beneficial for india..

I work for a german company and we have seen us grow humongously from 2008 as a lot of work(high end) has been transferred to India...

India has to capitalize and as some one said amend its labour and land laws with clarity so that european and japanese see us as a base for high end manufacturing...

[MeMumbaikar]

textile is one place where india can really capitalise.

made in china

started through textiles

[hobbes100]

Originally Posted by MeMumbaikar

textile is one place where india can really capitalise.

made in china

started through textiles

As China becomes a "rich" country and labor rates rise there, it's inevitable that over time, China won't be cheapest place to manufacture. Although I think China's advantages in manufacturing go beyond just cheap labor - so there will be along time before manufacturing moves out of China.

Regardless, you'll see more and more low end manufacturing (labor intensive) move out of China. China's govt (which is very smart when it comes to long term planning) knows this and is consciously trying to move up the technology curve in manufacturing. This would be a perfect opportunity for India to attract those industries (mostly geared towards exports).

The sad part is, as companies think and plan for moving out of China, India doesn't get much attention. Again, I'm talking of low end manufacturing (textiles, apparel, toys, etc). I work with companies (mostly in US, some in Europe) on developing business strategy, including outsourcing strategy, and a number of countries come up as next manufacturing destination - Bangladesh, Vietnam, some other south east asian countries, even Africa! But I rarely hear India! When I mention India, they look puzzled. The general impression is (and justifiably so), that India is not a place to do manufacturing. Sure, we have cheap labor, but we are generally considered a difficult place to do manufacturing. Even if you read some decent western publications (WSJ, NYT, Economist) on the topic of next manufacturing hot-spot, you almost never see India mentioned. It boggles my mind, but it's the sad truth!

This has to change. And we only have a window (in next 5 years) to get things right, as companies are making plans about diversifying out of China. If we don't, we'll miss the bus again! Labor and land reforms, along with reforms in myriad of regulations choking manufacturing are a must.

High end manufacturing is great, and India is already getting some of that, but for a country with vast masses to employ, low-end manufacturing is key. That's where you generate employment for millions and have a serious shot at making a dent in poverty for people at the low end of economic ladder.

Unfortunately, I don't expect anything before the next election (or even after it, depending of what kind of dispensation comes into power).

[truckin]

Originally Posted by MeMumbaikar

so 185 trade deficit

64 remittances

50 FDI

leaving us -70 to -75 down on a gdp of 1.8 trillion USD.

still too high a CAD


anybody else know of any inflows and outflows?


That just tells me we need to start manufacturing a lot more to reduce the trade deficit. We need reforms in labor and other stuff. Everything else will fall into place.

Services trade data:

http://articles.economictimes.indiat...ces-exports-bn

Imports from April 2011 to February 2012: $72.08 billion
Exports from April 2011 to February 2012: $124.25 billion

So for the full financial year the +ve flow must be around $ 55 billion, which is quite good IMO.

That leaves CAD to be around -25 billion leaving out FIIs.

A quich search tell me that net FII flow in 2011 was -$358 million. In comparison it was $ 2 billion and $ 5 billion in Jan and Feb 2012 respectively.

http://timesofindia.indiatimes.com/b...w/11985339.cms
http://timesofindia.indiatimes.com/b...w/11654681.cms

So approx. $ 5-7 bilion dollar FII inflow for FY 2012.

That leaves a deficit of only around $18-20 billion. About 1% of our GDP.

[engineer.akash]

No hike in Central drought aid till 2015
May 9, 2012 DC Bengaluru

Drought: Central team to visit state
There is no respite in sight for drought-hit Karnataka with the Centre deciding not to enhance the compensation for affected states till 2015. The state is facing the worst calamity in the past 40 years with both the kharif and rabi crops failing leaving as many as 123 taluks in the grip of drought. With an all-party delegation to Delhi failing to bring any relief, all eyes are now on the Central Study team which is set to tour drought-hit districts in the State for the second time in five months from May 14. The State is hoping to get an immediate relief of Rs 1,500 crore under the National Calamity Contingency Fund (NCCF) but with the Centre not wiling to relax the norms, it remains to be seen if this huge amount will be forthcoming.

Interestingly, the State has revised its memorandum for relief thrice since last November with the latest seeking relief of Rs 5,864 crore. But the Centre has so far, released only Rs 70 crore after adjusting the State’s share of Rs 116 crore under the National Disaster Relief Fund (NDRF). The State submitted the initial memorandum for Rs 723 crore to the Centre, which was revised to Rs 2,605 crore in December 2011, after the Central Study team’s visit to drought hit districts.

The memorandum was finally revised to Rs 5,864.25 crore after both kharif and rabi crops failed causing a total crop loss of Rs 5,953 crore. This time again, a 14-member Central team headed by Pravesh Sharma, managing director of Small Farmers Agri Business Consortium, is slated to visit four drought-hit districts – Kolar, Tumkur, Chikballapur and Chitradurga. The State government is hoping to seek funds under the NCCF, which has provision for allocation of huge funds, made at the discretion of the Prime Minister.

Said Disaster Management secretary (Revenue) K. Amaranarayana, “The State has sought Rs 5,864.25 crore after a thorough assessment of losses incurred by each sector – agriculture, horticulture, animal husbandry and drinking water supply among others. We are hopeful of getting immediate relief as the Central team will be visiting the State to assess the situation.”

Congresses biased attitude towards BJP ruled states