Modi sarkar economic reforms/governance performance thread

[asterix]

^ He's right.. Whatever he said is true...

[Precambrian]

http://timesofindia.indiatimes.com/business/india-business/India-received-19-78-billion-FDI-from-nations-visited-by-Narendra-Modi-in-FY15/articleshow/48364341.cms India received $19.78 billion foreign direct investment (FDI) from 12 countries visited by Prime Minister Narendra Modi in financial year 2014-15, Parliament was informed today. During the period, Indian companies invested $3.42 billion in these countries which include Bhutan, Brazil, Nepal, Japan, the US, Myanmar, Australia, Fiji, Seychelles, Mauritius, Sri Lanka and Singapore. The total outflow and inflow of foreign investment in general for 2014-15 fiscal was $6.42 billion and $75.71 billion, respectively, Commerce and Industry Minister Nirmala Sitharaman said in a written reply to Rajya Sabha. In 2014-15, FDI in India increased by 27 per cent to $30.93 billion.

[surajmal]

For all the glue sniffers out there

Those who rue the absence of the so called ‘big bang’ reforms are missing the far-reaching initiatives of the PM in the rural economy. P.V. Narasimha Rao , the original economic reformist prime minister, often rejected the idea that he was the Margaret Thatcher of India. He strongly believed that he was in the mould of Willy Brandt, a social democrat to the core who argued that economic reforms were merely an apparatus to increase government revenues which, in turn, could lead to increased public spending and equitable wealth distribution. Contrary to general perceptions, Narasimha Rao summarily rejected the ‘trickle down’ economic philosophy and believed in greater social spending. Yet, in the first few years of the 1990s, his government was singularly responsible for some of the most far-reaching reforms, possibly without realizing the depth of those measures at times. Industrial de-licensing was one such simple reform that according to me went largely unnoticed by the intelligentsia of that era but has led to the creation of the Indian economic juggernaut. When he took oath of office in May last year, Prime Minister Narendra Modi had raised tremendous hopes across the world that he would be the first truly reformist leader of India. A year later, most economists and business analysts have started to feel disappointed. One of the favourite questions that is often asked in the media is “where are the big bang reforms?” Is Modi really scared of revolutionary reforms? It is often argued that the Indian DNA is evolutionary in nature, and revolutions are intrinsically unpalatable to us. For instance, Mahatma Gandhi led us on a slow, tiring path to achieve independence through satyagaraha rather than trying to fan a revolutionary uprising of the masses. The fact, however, is that this evolutionary spirit is not an Indian civilizational delinquency but a Victorian gift to us. For 120 years between 1800 and 1920, India virtually stood still when both India’s population and GDP grew at a pathetic 1 per cent every year while the world took giant leaps through the industrial revolution. Those 120 years of stasis may have scarred the Indian psyche so deeply that the process of slow motion became an extension of our being. However, after two decades of reforms ushered in by the Narasimha Rao government, a socialist republic had started to smell a revolution in the air of 2014. For the restless 81 crore young Indians below the age of 35, Modi came to symbolize a revolution which could liberate India from its inherently systemic slow motion. Thus the answer to the question of whether Modi is really scared of revolutionary reforms depends on who is asking the question in the first place. Modi seems to have understood his mandate of 2014 as primarily a vote for structural reform of the largely agrarian rural India which hardly finds space on the stock-market obsessed business channels or the Delhi-centric business broadsheets. There are three disruptive revolutions happening in rural India which could be potentially transformational by 2020. The first part of the agrarian revolution comes from the right economic path. For the last 10 years, the United Progressive Alliance (UPA) government blindly increased the minimum support price (MSP) for rice and wheat hugely just to keep a section of the voters happy (though the quantum did come down in the last two years) but eventually the voters punished it for growth stagnation. Data shows very clearly that while MSP for paddy increased by a whopping 75% from 2006 to 2011, yield growth per hectare slowed down to a mere 3.5% in the same period. Data further shows that the growth of rice yield per hectare was the highest in the period from 2001 to 2006 at 10.63% when MSP also increased at a much slower rate of 11.76%. In fact, in the last decade, Indian agronomy has seen the most unproductive phase since the pre-green revolution era in relative terms to GDP. This strange correlation between MSP and yield per hectare tells a story of its own; that politicians, in their mad rush to keep the voters happy, actually do more harm to an average farmer by increasing MSP, except where there is a genuine need to hike rates due to increase in input costs. One of the primary reasons for decline in yield per hectare during the years of higher MSP is simply because governments did not invest in technological advancements for rural India and instead concentrated on the populism of MSP. Gross Capital Formation (as percent of GDP) through public investment actually declined by 22% in 2011 as compared to 2006*. The Modi government, for the second year in the running, avoided biting the bullet and only marginally increased MSP for rice and wheat. This is no mean achievement coming in the backdrop of elections in the largely rural Bihar and the weatherman predicting a deficient rainfall. The fact that Modi is willing to take the temporary brunt of the rural voter to create a better agrarian economy for the future is nothing short of a mini-revolution. In fact, it may have started bearing fruits already this year as there has been a whopping 400% increase in oilseed cultivation in the sowing month of June, indicating a pattern shift. The next challenge is to liberate agricultural produce from the political control of agricultural produce marketing committees (APMCs) which would truly unshackle the Indian farmer from the crutches of MSP and the Modi government has already chosen the digital pathway to achieve this. The second part of the revolution in agronomy comes in the form of fiscal prudence. As per the Economic Survey report, India spends 2.33% of its GDP or Rs 2,35,790 crore (in 2014-15) on fertilizer, grain and sugar subsidies. These agricultural subsidies are provided both at the production and point of sale level – subsidies for urea manufacturers and indirectly through MSP for rice, wheat and sugar – as well as at the point of consumption level – controlled MRP of urea and subsidized rice, wheat and sugar at the PDS. The economic benefit of fertilizer subsidy is mainly derived by urea manufacturers whereas the farmer benefits very little; in fact, the government ends up subsidizing lavish lifestyles of failed businessmen like Vijay Mallya through the urea route. 15% of the PDS rice, a whopping 54% and 48% of the PDS wheat and sugar are lost in leakage (although the PDS costs are not subsidies directed towards agriculture). Furthermore, according to the Economic Survey Report 2014-15, only 53% of the remaining 85% of the PDS rice actually reaches the bottom 3 deciles of the population for whom the subsidy is intended. Similarly, only 56% of the remaining 46% of the PDS wheat actually reaches the poor. A simple back of the paper calculation tells us that more than Rs 1 lakh crore that the government spends on agricultural subsidies evaporates into a black hole. If this Rs 1 lakh crore were to be deployed to develop better agricultural infrastructure, it would be far more beneficial to rural India. It is in this regard that Pradhan Mantri Jan Dhan Yojana (PMJDY) could prove to be a hugely disruptive reform measure as 60% of all accounts (10.4 crore out of 17.2 crore accounts) opened in the last 11 months belong to rural households. If all the agrarian subsidies are directly transferred to the beneficiary’s account, after biometric verification (through tools like Aadhar), it could potentially mean an increase of a whopping 1% of the GDP for the government. The third part of the rural revolution is a socio-economic disruption that can completely alter the way Indian villages are quantified as economic units. Deep rooted socialist tendencies of our policy makers had ensured that rural India always remains dependent on the largess of the ruling class. Be it agricultural loan waiver schemes or MNREGA, villages were always expected to be at the mercy of governments and their lady bountiful acts. The Atal Pension Scheme and 3 different insurance schemes that the government has linked with the PMJDY bank accounts have tremendous socio-economic scale that many commentators and economists have failed to understand so far. Even if the premiums and monthly emoluments are as little as Re 1 to Rs 1400, these economic measures can have a huge two-dimensional impact. For the first time, asset classes like insurance and pension schemes are being deployed effectively in Indian villages which creates a sense of ‘ownership’ among the rural masses that is radically different from government doles like MNREGA. Rural consumption patterns are predominantly ‘present’ in nature because poor rural households try hard to subsist in ‘today’ without the luxury to plan for tomorrow. These consumption patterns can be fundamentally altered through orientation towards a better secured ‘future’ by these effective asset classes. Thus, Modi may come across as a reluctant reformer to a regular Sensex watcher. He certainly is no Margaret Thatcher. Yet, his structural rural reforms may create a revolution unbeknownst to the Delhi-based intelligentsia. A decade from now, Modi will probably be hailed as the visionary who created the rural market expansion by revolutionizing village consumption patterns and tapping surplus rural labor productively, till then, let us keep on asking, where are the big bang reforms?

http://swarajyamag.com/economy/reluctant-reformers-and-the-missing-revolutions/ If Namo's policies pan out, NDA won't lose centre for another 30 years with the help of the rural vote. (River grid/Irrigation network will be the lynchpin) GST is about to go through, Land bill be left to the states and Plenty is being spent on Infra. Namo is right in playing the waiting game. He doesn't just have the war to lift India out of a sh!thole on his hands, but more immediate is the war with the enemies sitting inside the country. So political prudence is the rational choice not a cowardly one.

[amiret]

The Great Socialist Spending Spree is Coming

Government looking to spur public spending to provide momentum to economy: Arun Jaitley At a time private sector investment is slow, public investment has to increase, Jaitley said. The government will infuse Rs 70,000 crore into state-run banks in four years and they will raise another Rs 1.10 lakh crore from the market. The government has already spent nearly a quarter of plan funds in the first three months of the fiscal year, the highest pace of spending since 2008-09. The finance ministry has already directed ministries and departments to go full speed ahead on budgeted expenditure in line with government thinking. The minister said capital expenditure increased by about 17.8 per cent in the first quarter as the government looks to target 8 per cent growth this year .

The Great Socialist spending spree is inevitable. And is just a matter of time. Hopefully Oil prices will remain low to help tide over the Fiscal deficits. From empty ditches to Bridges and roads to nowhere , everything will be justified. http://economictimes.indiatimes.com/articleshow/48367141.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

[G_B_]

Nomura Pegs India GDP Growth at 8% in FY16, Sensex at 33,500 by December

Mumbai: Maintaining a bullish stance on the Indian economy, Japanese brokerage Nomura on Friday projected an 8 per cent GDP growth for the current fiscal year while retaining its Sensex target at 33,500 by December. "We are of the view that India is in the initial stages of business cycle recovery," Nomura India chief economist Sonal Varma told reporters here. "We are expecting growth at around 8 per cent in FY16 versus 7.3 per cent in FY15," she added. Expecting the business cycle to pick up in the coming two quarters, Ms Varma noted that a number of factors such as policy efforts from both the Reserve Bank of India and government support the projections for higher growth. Government forecast GDP to grow at 7.8 per cent in FY16, while the RBI pegs it at 7.6 per cent.

http://profit.ndtv.com/news/economy/article-nomura-pegs-india-gdp-growth-at-8-in-fy16-sensex-at-33-500-by-december-1204678

[Precambrian]

The Great Socialist Spending Spree is Coming

The Great Socialist spending spree is inevitable. And is just a matter of time. Hopefully Oil prices will remain low to help tide over the Fiscal deficits. From empty ditches to Bridges and roads to nowhere , everything will be justified. http://economictimes.indiatimes.com/articleshow/48367141.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

:cantstop: "Roads to nowhere, empty ditches to bridges " - LOL! BTW, the report says the govt spent 25% of plan funds in 25% of the time. That's called a perfect run rate. And 17% increase in capital investment. Never knew that classified as 'down the drain' investment.

[G_B_]

yeah its not as if India is does not need infrastructure. There is an argument that India should live within its means. But this claim that India will build infrastructure to nowhere is laughable. Dont compare India to Japan in the 1990s. Now they literally built a bridge to no where. India at this stage of development needs the infra.

[Precambrian]

yeah its not as if India is does not need infrastructure. There is an argument that India should live within its means. But this claim that India will build infrastructure to nowhere is laughable. Dont compare India to Japan in the 1990s. Now they literally built a bridge to no where. India at this stage of development needs the infra.

Not to mention our banks need stimulus to get their stuff in order, one that helped Japan drive out of its lost decade. From the ET article Amiret posted:

The government has already proposed Rs 25,500 crore of extra spending through the supplementary demand, nearly half of which will go towards capital support to banks, which in turn is expected to help them lend more, sparking a virtuous growth cycle.

[Texan]

Government building infrastructure is now being frowned upon. A new low in AAP-tard-ness.

[The Outsider]

LOL! Instead of investigating how banks gave such crappy loans to crony capitalists, we should just give the banks more money.

[G_B_]

Its not just crony capitalists. A lot of our PSU banks are reeling from a decade of bad loans made to farmers under pressure from the government. Many times banks did make loans to private sector (again under pressure from the government) to build projects in PPP but the project ran aground because of legal delays in acquiring land or getting environmental consent. I do know based on a personal relation who does work for SBI for example that they made a loan to a company in the private sector who had won a contract to do some work on the navi mumbai airport. This work was basically clearing an area out for example before the tenders could be got it. But then there was too many delays and the company defaulted on its loan. There was no corruption involved. Just a project which was delayed due lack of a favourable business law. I am not even going to blame the Congress-NCP both the state units of these parties pushed really hard for the airport to come up in navi mumbai. But the Jairam Ramesh delayed and delayed and delayed environmental clearance.Its a case of the centre letting down its own state unit. Its very easy to blame just crony capitalists for the problem. I am not disputing they are a problem. But they are one part of the problem. Bad farmer debt is a bigger problem IMO. I dont blame the farmers either. Many social issues like sometimes they need the money to pay for dowry for their daughters wedding etc or the rains dont come. I am not blaming the government for propping these farmers up. I am nobody to judge them. In an ideal work the private sector would be taking out loans from private banks such as ICICI and bidding to build and operate infra all over the country. But its not happening as the private sector is mired in debt. So the government which has waited for a year for the business cycle to pick up has to think out of the box. PSU banks have to step in to encourage the private sector.

[Precambrian]

Its not just crony capitalists. A lot of our PSU banks are reeling from a decade of bad loans made to farmers under pressure from the government. Many times banks did make loans to private sector (again under pressure from the government) to build projects in PPP but the project ran aground because of legal delays in acquiring land or getting environmental consent. I do know based on a personal relation who does work for SBI for example that they made a loan to a company in the private sector who had won a contract to do some work on the navi mumbai airport. This work was basically clearing an area out for example before the tenders could be got it. But then there was too many delays and the company defaulted on its loan. There was no corruption involved. Just a project which was delayed due lack of a favourable business law. I am not even going to blame the Congress-NCP both the state units of these parties pushed really hard for the airport to come up in navi mumbai. But the Jairam Ramesh delayed and delayed and delayed environmental clearance.Its a case of the centre letting down its own state unit. Its very easy to blame just crony capitalists for the problem. I am not disputing they are a problem. But they are one part of the problem. Bad farmer debt is a bigger problem IMO. I dont blame the farmers either. Many social issues like sometimes they need the money to pay for dowry for their daughters wedding etc or the rains dont come. I am not blaming the government for propping these farmers up. I am nobody to judge them. In an ideal work the private sector would be taking out loans from private banks such as ICICI and bidding to build and operate infra all over the country. But its not happening as the private sector is mired in debt. So the government which has waited for a year for the business cycle to pick up has to think out of the box. PSU banks have to step in to encourage the private sector.

Indeed. In 2013, lending to priority sector (agriculture, SSIs of national importance etc) amounted for roughly 30% of the total advances made by Indian banks. But when one takes the composition of NPAs, the priority sector accounted for more than 41%. This is after write off of significant agriculture loans by the UPA government remember. The total NPAs in Indian banks amount to roughly 38 Billion USD = Rs 2.4 lakh crores! That's a staggering amount.

[G_B_]

Indeed. In 2013, lending to priority sector (agriculture, SSIs of national importance etc) amounted for roughly 30% of the total advances made by Indian banks. But when one takes the composition of NPAs, the priority sector accounted for more than 41%. This is after write off of significant agriculture loans by the UPA government remember. The total NPAs in Indian banks amount to roughly 38 Billion USD = Rs 2.4 lakh crores! That's a staggering amount.

Our agricultural system is broken.... As posted in this thread earlier yields are ****. . There are too many people working the land and they cant all be sustained. India should be looking to get these people into factories and increasing the yields of its farms. Some place like china has less land in terms of cultivable area than India and yet produces twice as much food grain. We produce 250 million tonnes of food grain. Can certainly be jacked upto 500 if yields double from what is a relatively low base. At the very least you cant achieve the same yields of china.

[amiret]

LOL! Instead of investigating how banks gave such crappy loans to crony capitalists' date=' we should just give the banks more money. [/quote'] Throwing good money after bad has always been the Govt's favorite measure. In India , even self-described proponents of the free market end up justifying the remnants of Nehruvian Socialist hokum. PSB's can be privatized . PSB's can raise capital from the market . It is the continued subsidization of their incompetency which must be offensive to all Indians but it is not.

[seedhi]

LOL! Instead of investigating how banks gave such crappy loans to crony capitalists' date=' we should just give the banks more money. [/quote']You mean like the way the the US govt gave zero percent interest loans to various banks in the US? The American taxpayer absorbed much of their losses while getting none of their profits. Please also look at how the German govt (supposedly acting on behalf of the German people) essentially took over the bad loans that the banks gave to Greece. Sneer as as you want to, but India is far from being an exception. The big banks are always too big to fail, whether in US, Europe or in India. I am not in favor of this and someone has to bite the bullet. If the Vajpayee era reforms and disinvestment had been continued, we may not have faced this situation. But 10 years were lost under a confused govt which was nominally headed by a free market economist remote controlled by a statist dole enthusiast.

[amiret]

Jems Baand junior manages money for rich Saudi Sheiks and also influences Govt Policy ?

Shaurya Doval (Ajit Doval's son) "is an increasingly influential player in shaping modi Sarkar's policy thinking" :

Junior Doval's rise since Modi Sarkar came to power has been a quiet affair. The media barely knows him. But those who know how things work in Delhi's establishment say Junior Doval practices Track 1.5 diplomacy. Like the Viveknanda Foundation, with which Senior Doval was closely associated, the India Foundation is a forum for the political right. But the son's think-tank has a reach the father's never had. Senior government officials say India Foundation is beginning to have the same influence on Modi government's policy thinking that the National Advisory Council had on UPA-1's. "It's Modi Sarkar's quasi-NAC", one bureaucrat said. NAC-like formal recognition may or may not come to the Foundation, but NAC-like access to the highest offices is evident.

Wonder if some of that Saudi Sheikh money found it's way into India Foundation and the multi-million dollar electoral campaigns of BJP politicians . :hmmm: LINK

[Precambrian]

So the guy plans the logistics of a few Modi trips outside India and he's now dictating India's economic policies :hysterical: As usual unidentified sources supplying all the evidences. And loved the connection between Saudi money and BJP's funding. Well, if that's the case, its superb, because all that money is oil money, of which a substantial part went from our own coffers. So this is just bringing it back to the economy ;)

[mishra]

^ Didnt USA and West placed embargo on Modi while Congress was in centre. It was really lowest of low from Congress which was ready to close down diplomatic ties with USA for Khobaraghade deportation but had no words apart from appreciation of no VISA to a India CM of a state with high economic importance.

[Sachin=GOD]

Govt lists GST Constitution Amendment Bill for passage in Rajya Sabha tomorrow. PTI

[diga]

Govt lists GST Constitution Amendment Bill for passage in Rajya Sabha tomorrow. PTI

when does the parliament session end? seems that these bills may be passed in a jiffy without much debate