India's GDP growth slows to 5% in April-June 2019

[sandeep]

2 minutes ago, R!TTER said:

I can't comment about specific SEZ because I don't know much about them, besides SEZ is also the responsibility of state govts.

Which party controls the Gujarat State Govt?  Your claim of 'not knowing' is similar to Imran Khan saying he "doesn't know" about China's treatment of Uighurs.

 

3 minutes ago, R!TTER said:

Did you miss the step where China stole network equipment designs, IP from Nortel, Ericsson, Nokia, Siemens et al? Or when they stole bullet train designs from France & Germany? Or how they copied Rover & started selling it as cheap knockoffs domestically? Virtally banned Amazon, Google, FB in & restricted MS' business & Intel to a large degree? How about copying stealth designs, commercial aircraft designs even?

NONE of that has anything to do with the government's failure of doing a simple job like setting up an SEZ - its just basic government 101.  Nobody's claiming that we need to overnight create high tech businesses.  But there are hundreds of low-tech widgets that can be made, leveraging India's existing strengths.  For example, Gujarat has a very heavy concentration of pharma and chemical production.  Those industries already are a pre-existing market for a bunch of products.  That's how industry develops.  You don't need to jump into building trains and planes.  How did the Chennai auto parts sector develop?   You start small.  But in order to enable that growth, the government needs to do their job - laydown the groundwork of infrastructure, and provide legal incentives for new investment - in the form of reliable labor laws, and some basic tax incentives.   But the BJP would rather just add yet another tax to be collected from the public and businesses.  This really isn't rocket science.  And neither does it require stealing or copying anything.  Its basic governance.  And the BJP gets a big fat giant F on that front.

[R!TTER]

3 minutes ago, sandeep said:

Your claim of 'not knowing' is similar to Imran Khan saying he "doesn't know" about China's treatment of Uighurs.

Look if you know more about that SEZ's reality, be my guest & post an editorial in the Hindu or TOI. I don't care either way & I already said I don't know what happened over there, that's it.

 

5 minutes ago, sandeep said:

NONE of that has anything to do with the government's failure of doing a simple job like setting up an SEZ - its just basic government 101. 

You're still stuck up on that word? SEZ - the model copied from China? How do you suppose SEZ's will be viable if they don't produce anything unique or cheaper than the competition? Let me guess - magic? China was able to make SEZ work because they heavily restricted major foreign companies in the ownership structure, not to mention they literally subsidized the SME supplying components or doing all the cheap, low tech labor intensive work. That's not gonna happen here unless you want the govt deficit to balloon, with no guarantee of return ala TARP.

[sandeep]

6 minutes ago, R!TTER said:

How do you suppose SEZ's will be viable if they don't produce anything unique or cheaper than the competition? Let me guess - magic? China was able to make SEZ work because they heavily restricted major foreign companies in the ownership structure, not to mention they literally subsidized the SME supplying components or doing all the cheap, low tech labor intensive work.

Indian government is legally able to replicate the SEZ model.  All countries all over the globe do just that.  Chinese copied it from Japan and Korea.  India already has import restrictions and duties on a whole range of products.  Its very simple to create a market for specific products, and set up an SEZ with proper infrastructure and incentives. 

 

And I'm not blaming the govt for the lack of successful businesses - that outcome can't be guaranteed by any govt.  But they ought to be held accountable for not doing their part.  They were so busy playing politics and spending time and effort on secondary social issues like triple talaq etc - great that they did it, but I don't give AF about that.  The economy is way more important.  Its a clear and indefensible failure by the govt.  There is no defense for it.  You keep saying you don't mean to defend them, but you keep doing just that.  And on top of that, you claim to be ignorant about it - so why are you defending them using bullsh*t tangents like patent stealing etc. 

[R!TTER]

19 minutes ago, sandeep said:

Indian government is legally able to replicate the SEZ model.  All countries all over the globe do just that.  Chinese copied it from Japan and Korea.  India already has import restrictions and duties on a whole range of products.  Its very simple to create a market for specific products, and set up an SEZ with proper infrastructure and incentives. 

China copied it & perfected to the extent that none else could, to the detriment of the rest of the world, I just want to stress that point.

 

Yeah well, it's not as easy as you say otherwise there'd be mini Intel's or MS sprouting up on the outskirts of Bangalore or Hyderabad.

 

19 minutes ago, sandeep said:

And I'm not blaming the govt for the lack of successful businesses - that outcome can't be guaranteed by any govt.  But they ought to be held accountable for not doing their part.  They were so busy playing politics and spending time and effort on secondary social issues like triple talaq etc - great that they did it, but I don't give AF about that.  The economy is way more important.  Its a clear and indefensible failure by the govt.  There is no defense for it.  You keep saying you don't mean to defend them, but you keep doing just that.  And on top of that, you claim to be ignorant about it - so why are you defending them using bullsh*t tangents like patent stealing etc. 

Because 7% growth is not the new normal, not in the age of automation - infact the growth rates will plummet as Western society grows old & we're left competing with South Asia, ASEAN or Africa. China entered the global stage at the perfect time & took advantage of the West's greed like no one else, it just so happens that their philosophy is also slightly different from South Korea & japan, as they do have global ambitions (of hegemony) like no other emerging nation in the recent past.

 

You keep bringing that point about govt ineptness & I have acknowledged that, anything else I don't know about - I won't comment unless you want a random thought or opinion? Just to add to that - even if the SEZ was set up right, are you then pretending to ignore the point about their long term viability given what all I said before this 

Edited August 30, 2019 by R!TTER

[sandeep]

11 minutes ago, R!TTER said:

China copied it & perfected to the extent that none else could, to the detriment of the rest of the world, I just want to stress that point.

That's not a point -  its a false myth that you are regurgitating.   India has the advantage over the likes of Vietnam, Thailand, Malaysia etc in that they have a domestic market.  Those other countries were able to bootstrap manufacturing purely based on export.  India has it even easier.

 

12 minutes ago, R!TTER said:

Yeah well, it's not as easy as you say otherwise there'd be mini Intel's or MS sprouting up on the outskirts of Bangalore or Hyderabad.

Again, You keep shifting goalposts and talk about high-end manufacturing.  I'm talking about lower-end stuff which literally any country can start being competitive in, especially one with a domestic market like India. 

 

13 minutes ago, R!TTER said:

China entered the global stage at the perfect time & took advantage of the West's greed like no one else,

You keep singing that song.  And 20 years down the road, you can sing that same song about how other countries (including China or otherwise) took advantage of the situation in 2019.  Point is that India keeps passing on the opportunity becasue its govt is too distracted - intentionally or otherwise - to facilitate progress.  That's how we kept missing chances in the 50s, 60s, 70s, 80s.    I don't want to see the same pattern keep repeating itself.  You seem to be satisfied with sh**tty job done by the govt and keep making excuses on their behalf. 

 

15 minutes ago, R!TTER said:

Because 7% growth is not the new normal, not in the age of automation - infact the growth rates will plummet as Western society grows old & we're left competing with South Asia, ASEAN or Africa

Again, throwing random factoids that sound good but aren't really accurate or relevant doesn't make any sense.   If you sit on your @ss, instead of rolling up your sleeves and competing, you will never be able to compete.  Excuses are always available.  So are opportunities.  Its up to you, to grab what you want.

[sandeep]

18 minutes ago, R!TTER said:

 even if the SEZ was set up right, are you then pretending to ignore the point about their long term viability given what all I said before this

If SEZ are set up right, given the fact that India has a massive internal market, the odds of success are very good.  And if Modi and co had done their job in setting them up 2-3 years ago, India would be in a great position to market itself as a viable alternative to literally hundreds of companies exploring options to relocate their manufacturing supply chains.  Its a shameless, indefensible dereliction of duty by Modi and co. 

 

But hey, we banned triple talaq, bought a big fat Chinese made statue, and threw some bombs at Pakistan - bajao taali for great leadership! Hey, lets make some more memes on how Pappu is so stupid.  wah wah.  FFS, with this level of ignorant citizenry, no wonder politicians can get away with being lazy and inept, not to mention outright corrupt.

[R!TTER]

You're either ignorant or pretending to be one. The margins at the the lower end of (traditional) manufacturing or tech sector are razor thin, infact so thin that without 100s of billions worth of revenue the likes of Hon hai would be left with little to no profit. Why do you think China stole all those patents & restricted FB, Google, Amazon in the mainland? Also, why do you think China is moving away from low cost manufacturing, permanently? If you don't know the answer to that then there's no point continuing further.

 

As for the part about components, much of ASEAN moved to export oriented economies back in the 70/80/90 on the back of govt incentives. That's why they have a certain base over there, Vietnam has a lower cost base than India atm IIRC, so there's that. China could expand their export sector mainly on the back of subsidies, do you have any idea why Chinese Steel can still be cheaper halfway around the globe (after shipping is included) even if a local steel major has captive mines? If not then figure that out. Entering a nascent or emerging sector is relatively easy, taking on the might of the Chinese empire, backed by state subsidies, isn't your every day game of monopoly.

[Yoda-esque]

No Biggie.Worldwide slowdown.

[sandeep]

51 minutes ago, R!TTER said:

You're either ignorant or pretending to be one. The margins at the the lower end of (traditional) manufacturing or tech sector are razor thin, infact so thin that without 100s of billions worth of revenue the likes of Hon hai would be left with little to no profit. Why do you think China stole all those patents & restricted FB, Google, Amazon in the mainland? Also, why do you think China is moving away from low cost manufacturing, permanently? If you don't know the answer to that then there's no point continuing further.

 

As for the part about components, much of ASEAN moved to export oriented economies back in the 70/80/90 on the back of govt incentives. That's why they have a certain base over there, Vietnam has a lower cost base than India atm IIRC, so there's that. China could expand their export sector mainly on the back of subsidies, do you have any idea why Chinese Steel can still be cheaper halfway around the globe (after shipping is included) even if a local steel major has captive mines? If not then figure that out. Entering a nascent or emerging sector is relatively easy, taking on the might of the Chinese empire, backed by state subsidies, isn't your every day game of monopoly.

Its not a zero sum game.  Its not a question of either intel/huawei or low margin widgets.  There do exist plenty of opportunities and niches where manufacturing in India can prosper.  But its the government's job to provide the space for such businesses to grow.  And they are not doing their job. 

 

Your argument sounds a lot like that idiot who claimed a 100 years ago that everything worth inventing is already invented, so why bother. 

[Moochad]

Someone suggest more reading on SEZ, thanks

[sandeep]

7 minutes ago, Moochad said:

Someone suggest more reading on SEZ, thanks

Just google Dholavira project.  Indian govt is good at making announcements.  In fact Asia's first SEZ was created in India, 15 years ahead of China.  Look at Shenzhen - it was a fishing village, and then the Chinese created an SEZ and kept working at it.   Rest is history. 

 

Dholavira is a project that makes a lot of sense.  Close to the coast, near established shipping lanes - plenty of cheap land available.  Gujarat has decent availability of electricity already. Decent network of road and trains already in the area, can easily be customized and expanded as needed by Industry.  The under-construction national train freight corridor will also pass through close by.  Land acquisition is also not as much of an issue.  Its simply an example of government inaction and laziness.

[dial_100]

Fk economy. If I pay taxes then bloody should you. Whoever takes steps towards that, i will support them.

 

With smaller economy we could afford demo. I dont understand whats with freaking smart people opposing demo. We get it that you lost your dole but stop harping about it and move on. Pay taxes, another demo could happen as well. 

 

There is no magic pill, given the kind of greedy mentality of people evading tax we have in india and in turn robbing society from progessing. I mean this is height yaar. Demo pe 2-4000 article likhe, toh 2-4 articles tax evasion ke khilaf bhi likh do.

[Mariyam]

5 hours ago, Stan AF said:

This is the 5th quarter of economic contraction. This is Textbook recession.

Contraction? The rate of growth of the GDP is at 5%. Our GDP calculation methodology and general number fudging aside, this is just a slow down of growth. Recession is when your growth is negative.

 

A lot of it is to do with the mess our banking sector and NBFCs are in. But then again RBI has released 1.76 lakh crores to the Centre. Gives the GoI a chance to provide the necessary stimulus without increasing the fiscal deficit.

 

Lets wait and watch before penning the post mortem of the economy. The Centre may still come out with some good scheme that would provide much needed help to the MSMEs.

[sandeep]

7 minutes ago, Mariyam said:

Contraction? The rate of growth of the GDP is at 5%. Our GDP calculation methodology and general number fudging aside, this is just a slow down of growth. Recession is when your growth is negative.

 

A lot of it is to do with the mess our banking sector and NBFCs are in. But then again RBI has released 1.76 lakh crores to the Centre. Gives the GoI a chance to provide the necessary stimulus without increasing the fiscal deficit.

 

Lets wait and watch before penning the post mortem of the economy. The Centre may still come out with some good scheme that would provide much needed help to the MSMEs.

+1.  People need to understand basic definition of recession.  But simply avoiding recession isn't good enough.  India has a 10 year window in terms of demographics, to launch itself into being a middle income country.  Maybe 15.  That window will close at some point.  And we have successive governments blowing opportunities and wasting time.

[G_B_]

The response from StanAF is laughable.

[G_B_]

Re The economy

 

Lets got go down the same road as the 2008 financial crisis when we pumped the system with cheap money and our private sector devoured cheap debt leading to the NPA crisis.

 

I do believe the NPA's plaguing our shadow banks will eventually diminish. But it will take another 2 years or so. It is literally like a turd being flushed through the system.

 

By all means a degree of recapitalisation is warranted. Rate cuts are warranted as well. Both will happen. Naturally the rupee will weaken against the USD which should give a positive direction to exports.

 

But if despite that the GDP growth is less than 7% over the next few quarters then so be it. The focus must shift to structural reform which pays long term and long lasting dividends and building tangible and intangible infrastructure.

 

I will wait for the winter session as this government is less than 6 months old. However there need to be comprehensive labour reforms and direct tax reforms. IMO land reforms remain politically toxic as of now. The further liberalisation of FDI norms as also welcome. As if our private sector is bogged down with debt we need foreign capital. 

 

 

 

 

[Stradlater]

52 minutes ago, Mariyam said:

Contraction? The rate of growth of the GDP is at 5%. Our GDP calculation methodology and general number fudging aside, this is just a slow down of growth. Recession is when your growth is negative.

 

A lot of it is to do with the mess our banking sector and NBFCs are in. But then again RBI has released 1.76 lakh crores to the Centre. Gives the GoI a chance to provide the necessary stimulus without increasing the fiscal deficit.

 

Lets wait and watch before penning the post mortem of the economy. The Centre may still come out with some good scheme that would provide much needed help to the MSMEs.

Also Govt has infused 70K crore upfront into the PSBs which should boost lending upto 5 lakh crores. 

Re MSMEs, all the delayed payments and arrears would be cleared in the 30 days. 

This apart from the 100% automatic FDI in coal mining and easing norms on contract manufacturing and single brand retail and not to mention merger and amalgamation of Public sector banks bringing the number from 27 in 2017 to 12 at present. 

 

The coming weeks should see more rationalized policy actions esp aimed at auto sector given it's vulnerability and the fact that it employs largest no of people in the manufacturing sector. 

[Tibarn]

6 hours ago, Moochad said:

Someone suggest more reading on SEZ, thanks

It's better to hear about the idea in context, here: https://mises.org/library/special-economic-zones

 

It's basically a lazy approach: rather than amending and reforming the laws affecting the entire nation, create little "special areas" for economic activity. It's a half-assed idea. China is supposed to be an example of the success from this model, but pretty much any other developed country didn't use this bakwas to get "developed" (and China is by no means a "developed"). The reason that it is an area of praise for China by that particular school of economics is that the Maoists willingly shed part of their ideology, that of a command/control economy, in certain "special areas."  Any sane country would avoid jugaad-style so-called "solutions" and focus on actual structural issues. Brainlets aren't sane however. The government's job is to either reform the entire country or make way for someone who will. That's regardless of it is painful to their electoral prospects or not, rather than engage in "jugaad."

Edited August 31, 2019 by Tibarn

[adi B]

Was expected, market flow slows down during election time/code of conduct ,this quarter should be marginally better 

[sandeep]

2 hours ago, Tibarn said:

It's better to hear about the idea in context, here: https://mises.org/library/special-economic-zones

 

It's basically a lazy approach: rather than amending and reforming the laws affecting the entire nation, create little "special areas" for economic activity. It's a half-assed idea. China is supposed to be an example of the success from this model, but pretty much any other developed country didn't use this bakwas to get "developed" (and China is by no means a "developed"). The reason that it is an area of praise for China by that particular school of economics is that the Maoists willingly shed part of their ideology, that of a command/control economy, in certain "special areas."  Any sane country would avoid jugaad-style so-called "solutions" and focus on actual structural issues. Brainlets aren't sane however. The government's job is to either reform the entire country or make way for someone who will. That's regardless of it is painful to their electoral prospects or not, rather than engage in "jugaad."

No amount of name-calling is going to mask the absence of logic in there.  SEZ's make eminent sense, not just from a 'law amendment' perspective, but from a physical perspective - in terms of building "islands" of competency - places where you provide top-class infrastructure - storage facilities, well paved roads, port connectivity, guaranteed electricity and other required services at cheap rates etc.  Its orders of magnitude more realistic to build out such facilities in SEZ, rather than across the entire country.  Unless "brainlets" claim that India should wait until the entire country is fully connected with roads, electricity, ethernet etc etc, and then and only then we can start to get manufacturing going.   What an utterly ridiculuous claim to make. 

 

Far easier to bash, indulge in ad hominem attacks and pontificate like an empty vessel on how "governments should reform entire country".   Can't even get one decent SEZ going, and wants to "reform" the entire country.