R!TTER Posted August 31, 2019 Posted August 31, 2019 (edited) You still don't get it do you? The CCP has always had its hands in the cookie jar, for one they are about as corrupt if not more than any other politician or political party in India! The thing is with CCP controlling, or at least having major-minor stakes in their home grown behemoths, especially the likes of Huawei, what they've done is to create a space for these companies to operate domestically. With direct or indirect benefits these companies have always had the unfair advantage over foreign companies in China, then after these guys stole IP from the West they were able to undercut their direct competitors virtually everywhere outside China. Do you know that Chinese steel mills negotiate collectively with the likes of Rio Tinto & BHP Billion for raw materials? The same goes for most of their other sectors of economy, including Aluminium. They not only get cheaper prices but can also hoard minerals for times when their prices shoot up, the Chinese govt does help them out directly/indirect when that happens. This is what is called - unfair advantage This is beside the point I made about stealing IP & giving direct/indirect benefits to their export sector. What China has today is a well oiled machinery wherein they can pour insane amounts of money into the relatively weak, under-performing (but high employment) sectors from the much more profitable booming sectors of the economy like - you guessed it, high tech! In a much more natural, albeit not 100% free market economy like India that's impossible because the loss making companies would eventually be bankrupt. Then you totally ignore the repeated fallacy of your argument about Modi - if GoI were to support our home grown major, like Reliance through sometimes unfair means - would you support that endeavor? My guess is a big fat NO - so keep on whining about how SEZ do not work, how Modi is stupid & his policies worse - keep on whining because you clearly do not understand how economics at the global stage work! Because if you did you wouldn't cry - Zomg RIL had an unfair advantage paid bribes, because every other nation ever has supported their domestic industries over others & in case of China they continue to do it - through criminally unfair means. Without which we cannot hope to become an export hub with or without SEZ - with that I'm out because I see exactly where you're going here And no you cannot sustain an economy by just being a component maker or low cost assembly hub, you need (domestic) companies that actually sell the high margin products, or services! You talk about ASEAN, how about you check their growth rate over the last decade or two & ours? Edited August 31, 2019 by R!TTER
sandeep Posted August 31, 2019 Posted August 31, 2019 6 minutes ago, R!TTER said: You still don't get it do you? The CCP has always had its hands in the cookie jar, for one they are about as corrupt if not more than any other politician or political party in India! The thing is with CCP controlling, or at least having major-minor stakes in their home grown behemoths, especially the likes of Huawei, what they've done is to create a space for these companies to operate domestically. With direct or indirect benefits these companies have always had the unfair advantage over foreign companies in China, then after these guys stole IP from the West they were able to undercut their direct competitors virtually everywhere outside China. Do you know that Chinese steel mills negotiate collectively with the likes of Rio Tinto & BHP Billion for raw materials? The same goes for most of their other sectors of economy, including Aluminium. They not only get cheaper prices but can also hoard minerals for times when their prices shoot up, the Chinese govt does help them out directly/indirect when that happens. This is what is called - unfair advantage This is beside the point I made about stealing IP & giving direct/indirect benefits to their export sector. What China has today is a well oiled machinery wherein they can pour insane amounts of money into the relatively weak, under-performing (but high employment) sectors from the much more profitable booming sectors of the economy like - you guessed it, high tech! In a much more natural, albeit not 100% free market economy like India that's impossible because the loss making companies would eventually be bankrupt. Then you totally ignore the repeated fallacy of your argument about Modi - if GoI were to support our home grown major, like Reliance through sometimes unfair means - would you support that endeavor? My guess is a big fat NO - so keep on whining about how SEZ do not work, how Modi is stupid & his policies worse - keep on whining because you clearly do not understand how economics at the global stage work! Because if you did you wouldn't cry - Zomg RIL had an unfair advantage paid bribes, because every other nation ever has supported their domestic industries over others & in case of China they continue to do it - through criminally unfair means. Without which we cannot hope to become an export hub with or without SEZ - with that I'm out because I see exactly where you're going here Hope you enjoyed destroying the various strawmen you fabricated?
R!TTER Posted August 31, 2019 Posted August 31, 2019 Yeah keep laughing & keep whining, & keep telling us how setting up a SEZ is all there's to it towards making India Great again - without understanding an iota of how profitable they'd be, unless GoI pours in huge subsides!
rkt.india Posted August 31, 2019 Posted August 31, 2019 12 hours ago, cowboysfan said: right wing government specialize in tanking the economy,this is is even worse considering their doles and freebies all around too. Do you remember how our gdp grew during NDA 99-2004 and then tanked during UPA? Fiscal deficit risen as well.
rkt.india Posted August 31, 2019 Posted August 31, 2019 28 minutes ago, R!TTER said: Yeah keep laughing & keep whining, & keep telling us how setting up a SEZ is all there's to it towards making India Great again - without understanding an iota of how profitable they'd be, unless GoI pours in huge subsides! I will give you an example. Chinese phone manufacturers have already destroyed home grown manufacturers like Micromax and others. Until we beat Chinese in their cost-effective manufacturing game, our manufacturing won't survive. Until our products can compete with them globally, these SEZs won't survive. Our products can't compete with even in our home market.
R!TTER Posted August 31, 2019 Posted August 31, 2019 (edited) Just now, rkt.india said: I will give you an example. Chinese phone manufacturers have already destroyed home grown manufacturers like Micromax and others. Until we beat Chinese in their cost-effective manufacturing game, our manufacturing won't survive. Until our products can compete with them globally, these SEZs won't survive. Our products can't compete with even in our home market. Yes & that won't happen because we can't match China's resources. There's also the fact that China is actually mineral rich, they are the biggest source of rare earths with 80-90% of the production under their control. Anyone who understands electronics (manufacturing) & manufacturing in general knows the value of rare earths. So even if we pour billions of $ to support phone making, China can always undercut us on this front. There's also the fact that phone making is not such a profitable business - there's only 2 major profitable phone making companies that aren't based in China. As for the Chinese phone makers, I don't need to repeat why they're profitable albeit not at same the level as Apple or Samsung. Anyone who's setup any business will know that they're all about profitability, if you can't ensure that then even the best of intentions (employment opportunities?) are useless! As someone who's been down that black hole, I know for a fact that businesses can eat money like anything, making them profitable isn't just about hard work, dedication or even luck - it is as much about gaming the system & destroying your competition (many a times through unfair means) Edited August 31, 2019 by R!TTER
sandeep Posted August 31, 2019 Posted August 31, 2019 1 hour ago, R!TTER said: Yeah keep laughing & keep whining, & keep telling us how setting up a SEZ is all there's to it towards making India Great again - without understanding an iota of how profitable they'd be, unless GoI pours in huge subsides! Where did I claim that SEZs are all that's needed? I'm saying its such a basic deliverable, that its pathetic how this govt has failed to even do that much. Let alone actually deliver tangible results in the manufacturing sector. All they have done is collect billions in Swacch Bharat tax. Say, is there any audit available of just how much money the govt has amassed under that tax? And where its gone?
sandeep Posted August 31, 2019 Posted August 31, 2019 35 minutes ago, rkt.india said: I will give you an example. Chinese phone manufacturers have already destroyed home grown manufacturers like Micromax and others. Until we beat Chinese in their cost-effective manufacturing game, our manufacturing won't survive. Until our products can compete with them globally, these SEZs won't survive. Our products can't compete with even in our home market. what bullshit - when did micromax or anybody else ever "manufacture phones in India? These guys are resellers, the most they ever did was possibly re-assemble a phone locally, and even that's a big maybe.
Tibarn Posted August 31, 2019 Posted August 31, 2019 (edited) 3 hours ago, sandeep said: No amount of name-calling is going to mask the absence of logic in there. Pot meet kettle, why don't you do your usual "Bhakt, sanghi, chaddi, bigot,ignorant " refrain. Oh congrats, here is one thread where you've avoided it(so far). Talk about a victim-complex, searching for things in posts that have nothing to do with you to whinge about. In case you didn't notice, the other poster asked for information on a topic and I gave it to him, an entire 30 minute lecture explaining the topic, with my opinion underneath. I literally give 0 cares that you exist or care about whatever you post, and I mentioned you 0 times, yet you take me calling a stupid idea supported by brainlets(ie multiple people) as a personal attack on you. Get over yourself. I will say it again people who want to focus on SEZ rather than structural reforms are brainlets. The people who support this stupidity seem to be fools who still cling to the idea that command-economies are a functional model. Pro-tip: if I wanted to insult you, I would, here: you have a strange victim-complex, which combined with your fragile ego, leads to your disturbing tendency to hallucinate attacks on you when none are there. You also lack reading-comprehension ^Whinge about that, an actual insult to you. Quote EZ'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. No, they are a half-assed approached which makes little sense. "Islands of competency" can and would emerge themselves organically if actual structural reforms occurred, as has actually happened in the actual economically developed world. Show me one of the wealthier countries in the world that developed its economy through the use of SEZs. The idea that a government should waste effort and most importantly time to set about some costly project, with 0 guarantee that it would even succeed, and which would become redundant once important structural reforms actually occur, is a Socialist-era stupidity. Command economy decisions, like what an SEZ is effectively, hardly have some great success rate. Choosing one country in China, one that hasn't even escaped the middle-income trap yet, and projecting their "success" with these types of projects proves what exactly? I'll take the weight of economic history that says SEZ are unnecessary. You do realize there are/have been several thousands of these SEZ around the world and not all of them are Shenzen? India already has had hundreds of these as projects. Over 50 of these were in Maharashtra alone. Most of these projects have failed. Why isn't Maharashtra Shenzen? Just setting up a SEZ doesn't guarantee its success. Pro-tip: the best bet for an economic policy is to adopt policies which have proven to work, ie structural reforms, not waste time, resources, and effort to create special areas with significant failure rate just to salvage one's own Socialist cult-ideology. Show me one piece of actual evidence, beside meandering posts devoid of facts, which show setting up a SEZ is a more effective and efficient way to spur growth than doing what actual wealthy countries did. I'm not interested in your feelings. Quote No amount of name-calling is going to mask the absence of logic in there. No amount of playing-the-victim will give credence to an argument that has no basis. It's time for you to learn that. Quote S 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. Nice strawman, where did I mention the entire country needs to be connected via roads and electricity before manufacturing can start to get going. Do you even know what a structural reform is or are you just mouthing-off about things you don't understand? I am talking about reforming the laws that throttle businesses(particularly small and medium size), thereby allowing businesses and economic hubs to organically develop where the talent already is. As these entities develop, the local and state, and eventually the national governments will provide any additional push in infrastructure according to actual demand for it. Where is this evidence that these SEZs are going to spur manufacturing, aside from your baseless claims (ie drivel)? Where is the evidence of investing in these being more effective and efficient than doing actual structural reforms ie labour laws, land reforms, license-reforms. Quote Far easier to bash, indulge in ad hominem attacks and pontificate like an empty vessel on how "governments should reform entire country". A remarkable moment of self-awareness about yourself displayed here. I am proud of you. You truly are an empty vessel with no content, I am glad we agree on that. This guy is giving gyaan to a government to adopt a strategy that not a single developed country has used to reach the point which they are at, yet he is taking his position as the default as the roadmap to economic growth. What's worse, he is denying the model that literally every other country adopted as ridiculous. Talk about a lack of self-awareness. Newsflash: it is easier to do structural reforms than it is to created a guaranteed success in a SEZ, let alone multiple. Quote Can't even get one decent SEZ going, and wants to "reform" the entire country. ^This is an example of someone shooting oneself in the foot. Their own entire argument is based around claiming that an SEZ will spur manufacturing activity, but, at the very end, he acknowledges India has struggled to set up even a decent one up until now. So this guys grand strategy to spur manufacturing is to chase a pink elephant, hoping he will catch one one day. He wants to do this, instead of the government focusing on reforming legal documents and the babudom. The former will likely take years of trial and error before even "one decent SEZ" is made, with no guarantee it will ever get-going. The later requires politics to convince the relevant stakeholders to hop on board. --------------------------------------------------------------------------------------------------------------------------------------------------------- For people who want to see the actual Indian experience with SEZs and how it has been an utter failure in this country, please look up this paper, which also discusses positives and negatives of the concept. Its 34 pages long: Moberg, L. (2013). The Political Economy of Special Economic Zones. SSRN Electronic Journal. doi:10.2139/ssrn.2297871 I will give excerpts from the paper to illustrate what I am saying Page 17 Quote India introduced their first SEZ in 1965 but had by 2000 only established seven zones (Gopalakrishnan, 2011: 139). These first zones were small enclaves for export manufacturing. They formed very few linkages with the rest of the Indian economy, and had virtually no impact on the country (Palit and Bhattacharjee, 2008: 19; Engman, Onodera and Pinali, 2007: 18). They also did not help improve India’s negative trade balance or even increase the country’s exports (Seshadri, 2011a). Pages 17-18 Quote India introduced a new SEZ Act in 2005, modeled on the Chinese SEZ scheme. The goal was to further promote zone exports and develop zones of larger scale (Palit and Bhattacharjee, 2008: 88-9, 97; Seshadri, 2011a: 28). With the new law, the number of zones has increased. By the end of 2010, India had approved as many as 580 SEZs, 112 of which were actually exporting. 3 Alas, many SEZs became grounds for real estate speculation (Mitra, 2007; Seshadri, 2011b). Meanwhile, there has been much controversy over the dispossession of farm land, with opposition to SEZ development resulting in violence (Roy, 2009: 79). The 2005 Act has also been criticized for pricing farmers out from their lands and causing “conversion of the fertile land into cement structures” (Mitra, 2007: 13; Levien, 2011; Kahn, 2008: 14). Many SEZ plans have been obstructed by unpredictable and burdensome government policies. The SEZs that currently operate are allegedly not very profitable (Govardan and Srivastav, 2012). Let us start with India’s possible knowledge problem. From the start, the Indian governmental authorities often determined both zone location and the nature of zone production. In several cases, they chose poor, backward and unattractive zone locations. As a result, SEZ investments did not match market conditions. The most successful zones were already high performing before becoming SEZs. In addition, SEZ regulations frequently posed obstacles for businesses in the zones to subcontract with firms outside the zones (Seshadri and Storr, 2010: 363). Page 18 Quote India has made some progress towards decentralization. Prior to 2005, the Indian zone authority was a government department office that lacked autonomy over SEZ approval clearances and zone development (Aggarwal, 2005: 16).4 With the 2005 SEZ Act, India moved towards more decentralized political decision making. State and central governments both have greater discretion to regulate the zones (Burman, 2006: 5). There is also more emphasis on private zone development (Palit and Bhattacharjee, 2008: 174). Still, decentralization does not seem to have gone far enough. The central government has imposed significant limits on how the SEZs may operate. Even though the aim is to develop larger scale SEZs like those in China, the zones have been limited to 5,000 hectares (Mitra, 2007: 15). On the other hand, while the government designated many of the new zones in urban areas, they set a minimum size of 1,000 hectares for the zones. In areas where vacant land is scarce, such a requirement is an impediment to SEZ development (Patil, 2013). Pages 18-19 Quote Other regulations are likely to stem India’s SEZ success. Prospective private developers must specify what facilities will be developed, how much investment they will attract and how many jobs they will create (Palit and Bhattacharjee 2008: 114). At least 35% of zone areal must host processing activities, and 60% of the new zones are allegedly designated as technology zones (Harding, 2011: 166).5 In 2008, all SEZs in India except twelve were industry specific, which means that the government only allows for a particular form of production in them (Palit and Bhattacharjee 2008: 170). With all the government’s regulations and restrictions, it seems unlikely that India is overcoming the knowledge problem. Page 19 Quote Palit and Bhattacharjee (2008: 182) argue that the government needs to conduct more research and gather more information to make better decisions about SEZ policies. The Indian government is a frequent employer of think-tanks, which provide policy analyses and the necessary information to design the zones (Id.). However, no amount of government induced research will give policy-makers the market knowledge that they would need to improve on the economy. A solution to the knowledge problem should rather lie in more solid decentralization of decisionmaking. India’s incentive problem can also help explain the modest performance of the SEZs. Corruption in India makes it an unattractive place for investors (Keshava, 2008: 18), and has plagued much government planned infrastructure in the country (Mitra, 2007: 11). It is therefore worth noting that the Indian SEZ scheme to a large extent relies on single-factory zones. Introduced in 1980, by 1998, India had 1,210 such “zones” in production, compared to 525 regular zones (Seshadri, 2011a: 36). As previously discussed, single-factory zones facilitate rent-seeking. The fact that the country relies so much on them indicates their potential role as vehicles for graft Pages 19-20 Quote Low-level corruption is pervasive in India (TI, 2011: 12), which contributes to the incentive problem with SEZs, as they offer officials additional opportunities to extract rents. Aggarwal (2005) finds that prior to 1991, the Indian Board of Approval granted companies SEZ status first, after which additional permission was needed from the Secretariat of Industrial Approvals, the Ministry of Commerce, and state and central government departments. A possible rationale behind such an arduous process is the creation of rent-seeking opportunities. As of 2005, most companies had to go through 15 authorities to enter an Indian zone. In a survey, over 60% of SEZ firms reported frequently making “irregular payments”, both to custom clearance and zone authorities (Id.: 26). Since 2005, a “single-window” policy is meant to simplify the registration process. The 2005 law is however complicated and unclear, so the process may still be too opaque to enhance the adverse incentives surrounding the SEZs (Harding, 2011: 164). Page 20 Quote India is allowing for more private development, which could be a way to alleviate the incentive problem. Private developers have the incentive to create good conditions for businesses, as they compete for investments with other zones. The developers should only invest in SEZs to the extent that they create value, because they must finance the development and still need to make profits (Mitra, 2007: 12). Harding (2011: 163) points out however, that the Indian government still has broad powers to direct resources to the new SEZs. Urban land is largely a state monopoly, which inevitably induces rent-seeking (Seshadri, 2011b: 9). Indian officials thus have the incentive to use the SEZs in corrupt and inefficient ways. As a blatant example of this, the government has allegedly used eminent domain to sell land to private developers at artificially low prices (Levien, 2011: 460). While private investments have been modest, local governments have not had the incentive to contribute in their stead. Because many SEZs have not been successful, state governments are reluctant to support them or finance the infrastructure. Some states even discourage their creation (Govardan and Srivastav, 2012). That is the entire portion on the Indian experience with SEZs. What exactly from our experience shows that it is a good idea to try again with this method? India has been doing this same stuff since 1965, and hasn't had a great success as of yet, but brainlets like to smash their skulls into a wall endlessly thinking this time the wall will bleed. A lot of the same problems that SEZ's have are those that businesses outside of SEZ have in India as well, including corruption, excessive red tape, an inability to acquire land, etc. Why would we not target those issues at the national level rather than try again, after hundreds of previous attempts with SEZs? Edited August 31, 2019 by Tibarn G_B_ and Moochad 2
cowboysfan Posted August 31, 2019 Posted August 31, 2019 1 hour ago, rkt.india said: Do you remember how our gdp grew during NDA 99-2004 and then tanked during UPA? Fiscal deficit risen as well. http://statisticstimes.com/economy/gdp-growth-of-india.php
Stan AF Posted August 31, 2019 Posted August 31, 2019 (edited) 10 hours 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. Are you really buying this 5% growth?. I don't!!. The former CEA Himself acknowledged that atleast 2-2.5% points must be deducted from the GDP calculations. https://www.thehindubusinessline.com/economy/indias-gdp-growth-overestimated-by-25-says-former-cea-arvind-subramanian/article27788143.ece I will be surprised if it is anything above 3%, I doubt even that. And yes you are right it has to be in negative terms but there are more than one way to determine recession. Recession can be termed interms of unemployment as well. A dip of more than 2 percent in a calendar year is also termed as a recession. We have the worst unemployment numbers in 45 years and the government stopped it from releasing this data before elections(Jan 2019) and when it released it was 6.1%. https://www.thehindubusinessline.com/economy/unemployment-rate-at-61-per-cent-in-2017-18-government-data/article27379160.ece Now it is closer to 8%. https://unemploymentinindia.cmie.com/ Edited August 31, 2019 by Stan AF
rkt.india Posted August 31, 2019 Posted August 31, 2019 India's growth slumps to over 6-year low of 5% in June quarter; below China's https://timesofindia.indiatimes.com/business/india-business/indias-growth-slumps-to-over-6-year-low-of-5-in-june-qtr-below-chinas/articleshow/70914221.cms So we had lower growth rate in 2013. if it was not a recession in 2013 then how it is now?
G_B_ Posted August 31, 2019 Posted August 31, 2019 2 hours ago, Stan AF said: Are you really buying this 5% growth?. I don't!!. The former CEA Himself acknowledged that atleast 2-2.5% points must be deducted from the GDP calculations. https://www.thehindubusinessline.com/economy/indias-gdp-growth-overestimated-by-25-says-former-cea-arvind-subramanian/article27788143.ece I will be surprised if it is anything above 3%, I doubt even that. And yes you are right it has to be in negative terms but there are more than one way to determine recession. Recession can be termed interms of unemployment as well. A dip of more than 2 percent in a calendar year is also termed as a recession. We have the worst unemployment numbers in 45 years and the government stopped it from releasing this data before elections(Jan 2019) and when it released it was 6.1%. https://www.thehindubusinessline.com/economy/unemployment-rate-at-61-per-cent-in-2017-18-government-data/article27379160.ece Now it is closer to 8%. https://unemploymentinindia.cmie.com/ Its funny how when it comes to gdp growth figures you tend to rely on arvind subramanian But when it comes to rbi transfering dividends to GoI , something which he aggresively endorsed, he is missing from the argument... Selective cherry picking...
Singh bling Posted August 31, 2019 Author Posted August 31, 2019 1 hour ago, rkt.india said: India's growth slumps to over 6-year low of 5% in June quarter; below China's https://timesofindia.indiatimes.com/business/india-business/indias-growth-slumps-to-over-6-year-low-of-5-in-june-qtr-below-chinas/articleshow/70914221.cms So we had lower growth rate in 2013. if it was not a recession in 2013 then how it is now? GDP is not the only parameter of economy. There are several other factors like MSME's business market sentiments , consumption etc ask any businessman how is market and you will get the answer.
G_B_ Posted August 31, 2019 Posted August 31, 2019 6 minutes ago, Singh bling said: GDP is not the only parameter of economy. There are several other factors like MSME's business market sentiments , consumption etc ask any businessman how is market and you will get the answer. Ask any individual what inflation was in 2013 and what it is today and you will get a bigger answer... What india suffered in 2013 was stagflation. Much worse than anything today. Currently pakistan is going through it....
velu Posted August 31, 2019 Posted August 31, 2019 1 hour ago, G_B_ said: Its funny how when it comes to gdp growth figures you tend to rely on arvind subramanian But when it comes to rbi transfering dividends to GoI , something which he aggresively endorsed, he is missing from the argument... Selective cherry picking... He trusts only livemint G_B_ 1
Stan AF Posted August 31, 2019 Posted August 31, 2019 2 hours ago, G_B_ said: Its funny how when it comes to gdp growth figures you tend to rely on arvind subramanian But when it comes to rbi transfering dividends to GoI , something which he aggresively endorsed, he is missing from the argument... Selective cherry picking... I'm sorry. Did you miss the part where sitharaman said she can't comment on what the money is going to be used for
Moochad Posted August 31, 2019 Posted August 31, 2019 14 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." From the lecture, it seems China had lax labour laws in their SEZ areas. I wonder how that would work in India. Our union culture is much stronger here, and unions/workers actually have rights unlike in China. If the corporates have a choice, they will prefer the zones to be in more business friendly states, so MH, GJ, TG, types. If we put the zones in the Keralas, Bihars, Bengals, where they are most needed, state level politics could cause issue with it
Moochad Posted August 31, 2019 Posted August 31, 2019 Found this economist article on special economic zones https://www.economist.com/leaders/2015/04/04/not-so-special Quote WHEN the first modern free-trade zone was established at Shannon airport in 1959, few outside Ireland paid much attention. Now everyone seems to be an admirer of “special economic zones” (SEZs) that offer a combination of tax-and-tariff incentives, streamlined customs procedures and less regulation. Three out of every four countries have at least one. The world now counts about 4,300 SEZs, and more are being added all the time. Myanmar and Qatar have recently unveiled new ones; Indian officials call their SEZ ambitions “revolutionary”; Shinzo Abe, Japan’s prime minister, announced special strategic zones as part of his reform agenda. Fans of SEZs can point to several success stories, none bigger than China’s zone near Hong Kong, set up in 1980 and since dubbed “the Miracle of Shenzhen”. This was a way to experiment with economic reforms that Chinese leaders were fearful of rolling out nationwide in one go. Shenzhen attracted thousands of foreign investors, and the policies tested there have spread to other cities. But the craze for SEZs suggests that governments too often see them as an easy win: make an announcement, set aside some land, offer tax breaks, and—hey presto!—deprived regions or struggling industries are healed. If only it were that easy. Popular as they are, SEZs are often flops (see article). Africa is littered with white elephants. India has hundreds that failed to get going, including more than 60 in Maharashtra state alone in just the past few years. Nor are these efforts cost-free. The incentives offered to attract investors mean forgone tax revenues (at least in the short term). They create distortions inside economies, one reason why nationwide liberalisation is always better than patchwork efforts. Zones are increasingly a haven for money-laundering through, for instance, the mis-invoicing of exports. To ensure that these costs are more than offset by jobs and investment, governments must learn from the failures. First, offering nothing but fiscal incentives may help get a zone off the ground, but it does not make for a lasting project. The most successful zones are entwined with the domestic economy: South Korea, for example, has been good at fostering links with local suppliers. Zones need to be connected to global markets. Improving infrastructure for this purpose has a bigger impact on the success of zones than tax breaks do. This often requires public spending to upgrade roads, railways and ports to handle the extra freight. Lack of such investment has been the downfall of many an SEZ in Africa. Lots of the continent’s new zones will fail for lack of a reliable power supply or because they are too far from a port. Second, the right balance has to be struck between adequate political oversight and freedom from government bureaucracy. Too much interference from the centre negates the opportunity to experiment. There are legitimate worries that Japan’s new zones will fail because central-government officials reject ideas for deregulation for fear of offending vested interests. Bringing in private developers to run zones may help: that was done to good effect in the Philippines. Yet ambitious ideas for “charter cities”—zones built around new urban areas with the power to set their own laws—may be too close to setting up states within states. Zoning out The concept also has its limits. Export-focused zones work best in relatively low-end manufacturing, and have the biggest impact when trade barriers are high (think Bangladesh and clothing). China’s new zone in Shanghai, centred on financial services, has roused limited enthusiasm—the piecemeal deregulation of activities like foreign-exchange trading is hard to pull off and potentially destabilising. If they encourage experimentation in otherwise sclerotic economies, SEZs can be useful. The failure of some may seem a price worth paying, if you end up with a Shenzhen-style blockbuster. But they require patience and planning, and they are always inferior to nationwide reforms that cut trade barriers and boost competitiveness. The countries that don’t need zones at all are the really special ones.
G_B_ Posted August 31, 2019 Posted August 31, 2019 4 hours ago, Stan AF said: I'm sorry. Did you miss the part where sitharaman said she can't comment on what the money is going to be used for and what has that got to do with anything? for the record isnt it obvious that we are recapitalising the banks (or making an attempt) to improve liquidity. Re subramanium he has simply cherry picked 17 indicators out of a possible 300 to further his argument. https://www.thehindubusinessline.com/opinion/gdp-over-estimation-argument-is-flawed/article28066659.ece Its nothing more than a working paper in harvard. Something to write about in the Indian express. For example automobile sales are down but second hand car sales and revenue of ola and uber is growing rapidly. So it is really wise to look at automobile manufacturing in isolation when the very concept of car ownership is being questioned. The truth is we have probably moved away from the rock bottom this quarter, Both manufacturing and services have seen a rise in PMI in July which indicates positive sentiment. since you seem to love livemint, https://www.livemint.com/news/india/india-services-activity-reverses-course-surges-in-july-pmi-1565010269698.html This positive sentiment was generated after government has started to heavily spend on stuff like infra. The lag in Q1 was due to the elections and a lag in government formation.
Recommended Posts