Modi sarkar economic reforms/governance performance thread

[randomGuy]

i think you can say FDI has been the biggest gainer for India. Stuff like inflation and even GDP India got lucky with relation to oil etc. I can say based on personal expirience my parents who have invested in India are getting emails from the government of bjp ruled states and the central government in invest in these schemes. Ie there seems to a big push to attract more capital to India. Did not seem to happen with the last government. IMO If Modi government manages to push through major reforms in the coming months then its similar to sowing in April and harvesting in Ocotober. These reforms are going to pay major dividends in a few years time.

Right said. FDI , low inflation both are amazing for india. both are GoI's achievement but FDI more so, a direct consequence of make in India and of PMs visits to various nations and also meeting leading CEOs there. First sign of recovery will be seen in banking sector(NPA reduction and credit growth) and eventually in capital goods and infra companies ( larger deal pipeline.)

[mishra]

All of sudden our media is obsessed with China. Every other day, We are being compared with them. Its like Paki media comparing there economy with India. Too big of gap. http://timesofindia.indiatimes.com/business/india-business/Fresh-data-shows-Indian-economy-grew-faster-than-Chinas-in-March-quarter/articleshow/47472951.cms http://www.ft.com/cms/s/0/62ab2acc-0604-11e5-868c-00144feabdc0.html#axzz3bX4jGsQp

[G_B_]

One of the reasons they are mired in debt because they built up excess capacities when money was cheap and public sector banking regulations were lax. Both the cement and steel industries are suffering from overcapacity but the prices are not declining . This is especially true of cement : -domestic demand is stagnant , -companies have large unutlised capacity, -the companies have comfortable levels of debt - Yet cement prices are resilient and higher compared to China . In my opinion , the Govt needs to stop protecting certain uncompetitive domestic industries from cheaper imports. After successful lobbying the Govt increased import duty on Steel to protect the local industry from chinese imports. Agree with the need for rate cuts but i am sure there are cogent arguments on the other side of that debate.

I agree in general. Re the rate cuts. I think the degree of cuts it the issue. Some say it should be lowered to 6%. That might be a bit short sighted. But there is certainly no harm in cutting them to 7% in the coming quarters.

completely against any kind of fiscal stimulus , though i believe that is exactly what this Govt will do , prodded by short-sighted Corporate india. Let Govt lower taxes instead of engaging in profligate public spending .

India already has one of the lowest tax to gdp ratios in the world. Its a regressive move. Better government start spending on infrastructure. India will need infra. I am not talking about lending money via the banks. I am talking about building roads bridges and other items. Will take care of the stagnant cement demand as you said. I dont think the PPP model is the way to go right now.

[G_B_]

Data shows Indian growth outstrips China's but economists doubtful http://in.reuters.com/article/2015/05/29/india-economy-gdp-idINKBN0OE1ES20150529

[G_B_]

Foreign Direct Investment in India Up 61% since Last Year

Attracting FDI, or foreign direct investment, was one of the key promises made by the now one-year-old Narendra Modi–led government. Has the government kept its promise? According to data from the RBI (Reserve Bank of India), India attracted foreign direct investment worth $34.9 billion between April 2014 and March 2015, or fiscal year 2015. This quantum was up 61.7% from the previous fiscal year. It appears that Modi’s trips abroad are working, and that his schemes and plans have attracted foreign direct investment into the country. Foreign direct investment by country Mauritius continues to be the country contributing the single-largest share of the foreign direct investment pie. According to data from the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, FDI equity inflows from Mauritius amounted to $8.4 billion between April 2014 and February 2015. With data for March 2015 yet to come, this amount could nearly double the $4.8 billion that came from the country into India in fiscal 2014. FDI equity inflows from Singapore trailed Mauritius, with $6.4 billion in the fiscal year until February 2015, up from ~$6 billion in all of fiscal 2014. Inflows from the US have more than doubled to $1.7 billion, up from $806 million in the full-year ended 2014. FDI equity inflows from France have nearly doubled as well. Meanwhile, inflows from the United Kingdom have fallen by over 60%, down to $1.2 billion between April 2014 and February 2015. In the previous fiscal, the UK invested $3.2 billion in India. Sectors attracting foreign investment The services sector, which includes companies such as Infosys (INFY) and Wipro (WIT), attracted ~$2.9 billion in foreign direct investment between April 2014 and February 2015. Telecom is also a clear beneficiary, with $2.8 billion invested during this period, up from $1.3 billion in the entire previous fiscal. Computer software and hardware saw FDI equity inflows nearly double, from $1.1 billion in fiscal 2014 to $2 billion in fiscal 2015 up to February. Drugs and pharmaceuticals (RDY) and the automobile industry (TTM) in India are other sectors attracting foreign direct investment (INDY) (EPI). Clearly, foreign investors are looking at India as a viable investment destination. Speaking of investment, let’s see if India-related ETFs have attracted any inflow this past year.

https://marketrealist.com/2015/05/foreign-direct-investment-india-61-since-last-year/

[The Outsider]

Even Modi cheer girls like Surjeet Bhalla have zero faith in the GDP figures. It is laughable and embarrassing that a country is unable to calculate its GDP numbers using a method where the rest of the world is comfortable with the calculation.

[seedhi]

Extremely encouraging to see the increase in manufacturing growth rate.

[seedhi]

I agree in general. Re the rate cuts. I think the degree of cuts it the issue. Some say it should be lowered to 6%. That might be a bit short sighted. But there is certainly no harm in cutting them to 7% in the coming quarters. India already has one of the lowest tax to gdp ratios in the world. Its a regressive move. Better government start spending on infrastructure. India will need infra. I am not talking about lending money via the banks. I am talking about building roads bridges and other items. Will take care of the stagnant cement demand as you said. I dont think the PPP model is the way to go right now.

Yes, this is what the govt is planning to do. Cut wasteful expenses like NREGA and redirect them to infrastructure creation.

PM Modi speeds up capital spending on roads, rural infrastructure, railways in April to boost growth http://www.hindustantimes.com/business-news/pm-modi-speeds-up-spending-on-roads-railways-and-rural-infra-in-april-to-boost-economic-growth/article1-1352764.aspx

[randomGuy]

^corporate leaders had suggested that govt. spends on infra projects to spur economic revival. DMIC is the focus. CEO amitabh kant's videos are available on utube. ------------- New Delhi: Ahead of the assembly elections in Assam, the Narendra Modi government has decided to issue an executive order to help religious minorities from Pakistan and Bangladesh who live in India, to get residential permits, sources told NDTV. The decision is expected to affect the fate of lakhs of immigrants who are residing across the country but do not have any papers to support their residential status. For those who wish to avail the offer, the cut-off date for immigration is December 31, 2014, the sources said. http://m.ndtv.com/india-news/hindu-sikh-immigrants-from-pakistan-bangladesh-may-soon-be-legal-residents-of-india-766252 Good job. It is India's moral obligation

[G_B_]

Even Modi cheer girls like Surjeet Bhalla have zero faith in the GDP figures. It is laughable and embarrassing that a country is unable to calculate its GDP numbers using a method where the rest of the world is comfortable with the calculation.

I think most people will agree the numbers are suspect. However these new method of calculation is actually what the rest of the world does. They have adjusted the base year taken market prices. Maybe rather than 7.5% its fair to say the economy is growing between 6.5 to 7% but its not as if the economy is growing at like 2% and modi gov is saying 7.5%. If it makes you comfortable you can say with confidence India is growing at 6.5%

[G_B_]

Right said. FDI , low inflation both are amazing for india. both are GoI's achievement but FDI more so, a direct consequence of make in India and of PMs visits to various nations and also meeting leading CEOs there. First sign of recovery will be seen in banking sector(NPA reduction and credit growth) and eventually in capital goods and infra companies ( larger deal pipeline.)

agree. This is an FDI led recovery IMO. If exports come to the party IMO its going to be a 10 plus growth rate. I think if i had to make a call India is growing at about 7%. With inflation between 5-6%. With the Modi led gov making investment options easier for NRIs i expect FDI and remittances to rise substantially over the period of these 5 years. @seedhi rg Re Infra I think the key point is raising capital for infra projects. I was reading the Economist and it said only 18 billion USD had been raised via the stock exchange since 2008. The way Indian firms raise capital for projects needs a fundamental change. While debt usually does top equity in terms of raising money , (Pecking order theory) there needs to be a degree of flexibility. So Modi gov needs to ensure that the stock markets are a real source of raising money for firms. Especially locals. I notice one of the key issues in Modi's visit to China was their sovereign wealth fund lending money to Indian firms in terms of the Yuan. I feel that is a disaster waiting to happen. The yuan is an undervalued pegged currency. Its all well and good if the peg remains to the USD. But if its gone then the debt becomes expensive. I feel they need more IPO's and more disinvestment of the government held assets to raise capital. The same can be directed into infra. GST is also important in this regard. From Malayasia to New zealand GST (or VAT in the UK) has raised the net tax collected. So it gives the government more money to pour into infra. India needs to spend its way out of this exports crisis. Infrastructure is the only way forward.

[Khalpat]

Jayaprakash Narayan @JP_LOKSATTA 26m

GoI's impact on India is limited to fiscal & monetary policy,key infrastructure &national security.All things that matter are in states All states are trapped in vicious cycle of vote buying, corruption, transfers, freebies & divisions. We need radical change in states Modi's agenda of growth & jobs needs honest, competent & innovative state govts. One way is to directly elect chief ministers We need serious national debate about direct election to transform state governance.Rs 5-10 cr for Assembly &daily pressures will not do.

[amiret]

@GB The problem with the revised GDP numbers is that they are not comparable with the past . In the words of the chief Statistician TCA Anant of the Central Statistics Office : " It is entirely possible that 5% growth rate in the old series is qualitatively in the same ballpark as 6.5% or 7% in the new series. It is possible. I don't know," he said " LINK 4.7 % of 2013-14 has been revised to 6.9% , I doubt the 9% + growth years under Dr.MMS will be revised upwards , if the govt propagandists have anything to do with it. modi govt can claim we are growing at 15% + but unless we can effectively compare with the past they have very little meaning . Again in the words of TCA Anant : "Once the back-series is worked out and understood, only then-...higher growth rates relative to the past become meaningful," Anant said at a conference called by the Central Statistics Office . The back series data will be available only by the year end .

[The Outsider]

I think most people will agree the numbers are suspect. However these new method of calculation is actually what the rest of the world does. They have adjusted the base year taken market prices. Maybe rather than 7.5% its fair to say the economy is growing between 6.5 to 7% but its not as if the economy is growing at like 2% and modi gov is saying 7.5%. If it makes you comfortable you can say with confidence India is growing at 6.5%

The new calculations make no sense. 4.7% of 2014 became 6.9% and 4.5% of 2013 became only 5.1%! I agree that the extrapolation doesn't have to be linear but a change in the base year and some other minor changes alone can't possibly play out to give such numbers.

[Cricket_Hacker]

Core sector output dips 0.4% in April, against 5.7% rise in the same period a year ago Read more at: http://economictimes.indiatimes.com/articleshow/47501441.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

[G_B_]

@amiret yes lets wait. I think there is a degree of mumbo jumbo in the new GDP figures. I am not going to deny that. @outsider cant disagree. All we have to do is wait. But i think we can all agree that the economy is improving. The degree to which it is improving is up for debate. We have to keep in mind that the absolute GDP has not changed. Clearly with a fall in oil prices (which is India's second largest import and impacts inflation) it was going to boost GDP growth by 1-2%. Thats rudimentary economics. With rate cuts going to come I feel in a few years India will be a solidly 8% plus economy. So if you say the indian economy grew by 4.7% in 2013-2014 as per the old figures. With the dip in oil and improvement in macro economic situation + rate cuts which have already taken place i think its fair to assume that the Indian economy is in the 6.5%-7% zone say for 2014-2015. http://www.economist.com/news/international/21627642-america-and-its-friends-benefit-falling-oil-prices-its-most-strident-critics Many economists are saying that the dip in oil prices have added about 2% growth to the Indian GDP. With a combined effects of rate cuts (inflation falling) better fiscal deficit and macro indicators. Lets also keep in mind the price of another commodity which India imports a lot gold has also fallen on average from 2013-2014 and other key commodities like Copper Aluminium have also fallen.

[G_B_]

Core sector output dips 0.4% in April' date= against 5.7% rise in the same period a year ago Read more at: http://economictimes.indiatimes.com/articleshow/47501441.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

Indian factory growth accelerates in May, strong domestic demand-PMI Read more at: http://economictimes.indiatimes.com/articleshow/47496517.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

The headline HSBC India Purchasing Managers' Index (PMI), compiled by Markit, surged to 52.6 in May, from 51.3 in April, with levels of production and new orders rising at the fastest rates since January 2015. The PMI is a composite gauge designed to give a single figure snapshot of manufacturing business conditions. A figure above 50 indicates the sector is expanding while below that level means contraction.

conflicting news.... maybe its just the economy moving through the gears...reminds me of middle overs consolidation before going all out in the final 15 overs... (with powerplay)

[Gollum]

Going through posts must say G_B_ your GK especially w.r.t politics, global affairs, economics is staggering.

[mishra]

Going through posts must say G_B_ your GK especially w.r.t politics' date=' global affairs, economics is staggering. [/quote'] +1. More of like 'internal guy'

[G_B_]

I thank you for the compliments (if indeed they are :P) In general on the revised Indian figures, i would also like to raise a point that a big chunk of India's economy remains in the informal sector. I think some 15% of Indian pay their taxes or are even reaching the threshold to pay taxes. There is no accurate documentation and the range of India's informal economy is from 40% of GDP to 100% of GDP. I dont think traditional metrics of measurement of the GDP are 100% applicable to India or even any south Asian nation. I was reading a while back for example the Hawala receipts to India and Pakistan are nearly as big as official remittances. This article endorses that feeling. Maybe its just a case of the new numbers provide a better picture of the informal economy. Italy did that in the 1980s to add to its GDP , known as the Il sorpasso http://en.wikipedia.org/wiki/Il_sorpasso_%28economics%29 China has routinely added new segments to its GDP provided a better measure of the informal economy, This article does highlight the problem in documenting change in India and the villages http://www.economist.com/news/asia/21586891-activities-out-sticks-may-add-more-gdp-was-thought-hidden-value

Yet statisticians struggle to capture the change. Measuring an economy in which the informal sector generates half of output and over nine-tenths of jobs is a tough task. The GDP data depend on infrequent surveys of productivity. Soon, however, the figures will go through one of their periodic rebasings. The last rejig was in 2004-05. Mr Mishra thinks the next one could revise India’s GDP up by 15%. Pronab Sen, chairman of the National Statistical Commission, reckons it will be perhaps 8%—in line with earlier revisions, although he adds that the spread of mobile phones and their economic effect makes things unusually uncertain this time. Raghuram Rajan, the new head of India’s central bank, reckons a revision of 10% is possible.

It could very well be that even as a BJP supporter who poo pooped the MMS government, things were maybe not as bad as they were made out to be in the later years of UPA-2