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Indian Economy: Growth -2

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Indian Economy: Growth -2
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->So it is high time to examine the various aspects of the current economic boom so that a better deal can be ensured for the poorest of the citizens of the country. I hope we can have a lively debate on these issues which may genera new ideas.<!--QuoteEnd--><!--QuoteEEnd-->

Some section of society is seeing real boom, mainly educated or either in civil or IT are with surplus. Status gap is increasing and this will destroy delicate social fabric of India. Poor or rural India is still untouched by modernization or basic infrastructure. In place of opening offices in big cities or metro, they should open offices in rural India. Effort should be to use barren land, which will not only protect environment but will bring basic infrastructure in remote area.
Move out Government offices or public sector office from Delhi. Encourage private cooperate to open offices in rural area. USA is an excellent example where state Capital is always in a small town and industry or business is equally distributed.
US top most hospital; Mayo Clinic is in small town Rochester Minnesota. It sees more patients than its town population and nearest big city is more than 80 miles away.

<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->A study by the Congress Party is understood to have indicated that the move to set up Special Economic Zones in different parts of the country by State acquiring agricultural land may cause severe resentment amongst the people who are going to loose land.<!--QuoteEnd--><!--QuoteEEnd-->
Town where I live was known for its cherry and other fruit orchards. When I moved here there were lots of cherry orchards walking distance from my house. Now everything is gone in last 8-9 years because of IT dot boom and its location, being heart of Silicon Valley. Here government didn't force out farmer but economy motivated farmers to sell farms here and built offices and Apartment complex. Money they made, they bought lands in other area. They still grow cherry but not here.
By the way our area is very much environment conscious with strictest laws to protect environment.
Given India's enormous population, it is not possible to set up industries and their associated townships only on barren land. Such a strategy might work in Rajasthan and Gujarat, but will not work in West Bengal. There is also another point to be made here. Agriculture can not yield wealth for our farmers. Land-man ratio is too adverse. Poverty can be reduced only by moving rural population to industry and services sector jobs. There is no other way.

There is no future in subsistence farming.
In Ahmedabad's real-estate there is a new trend of buying residential societies at higher rates. A friend's tenament was worth around 50 lacs but a builder has offered around 1 crores for all members of that society. In return the builder gets land for the entire society.

Maybe that strategy can be employed. Moreover i think if government gets out of land procurement these problems will become non-issues.

---

On a side-note many farmers in Guj have moved on to higher value/profit-margin crops (vegetables, pulses, tobacco etc). Agriculture is not considered a substd way of making a living.
Recently, my family sold House in Gurgaon (near Delhi), buyer was a farmer who sold his farmland to builder. Buyer was illiterate; he was clueless about buying procedure. With new money he bought house and rest on electronic and car. My brother was really worried about him; he made extra efforts to get his house registry made and other paper work in proper order. He even enquired how they will make living. My brother was worried this family had sold land, no education, spent all money in junk and very soon they will be on road. Young guys in family will get involved in quick money and will not hesitate in crime.
In India, there is no system to advice rural people.
Rajeshji, The figures from the latest issue of Economist is reproduced below

India-GDP latest +9.2,2006+8.3,Industrial Production+14.4 Nov 06,Consumer Price Index +6.3

Hope these will be useful for you.
<!--QuoteBegin-->QUOTE<!--QuoteEBegin--> <b> 'If price rise not checked, jobs won't happen' </b>
Pioneer.com
Santanu Banerjee | New Delhi
<b>Even as the UPA Government presented a rosy picture about over 9 per cent GDP growth, Planning Commission Deputy Chairman Montek Singh Ahluwalia has expressed serious concern about slowing down of employment generation in organised sector and rising inflation.</b>

Talking to reporters after the advance estimate of national income for 2006-2007, projected GDP growth of 9 per cent, Ahluwalia said in the absence of conclusive data in the sphere of employment, health and education, it was not possible to have a complete picture of the trickle down effect of the plans and programmes of the Government.

Expressing concern over mismatch between growth and employment, Ahluwalia said, <b>"There is a need to know why organised sector had failed in generating adequate jobs."</b>

The Plan panel is also unhappy with the nature of available jobs. Officials said that <b>time has come to distinguish between the bad jobs (more jobs without social security in restaurant/dhabas) in unorganised sector and good jobs in organised sectors with social security networks in effect</b>.

"There should be a serious probe as to how more (good) jobs could be created in organised sectors,'' said a top Plan panel official.

Ahluwalia expressed concern over the rising inflationary trends and indicated that unless price rise was checked, the Government's programmes would be adversely affected.

<b>" Inflation is a cause of serious concern. If the Government could control in short term with administrative measures, the situation could be handled. But failure to do so will have serious ramifications," </b>he said.

<b>Taking a dig at Chinese economic models, he said "growth, democracy and political pluralism has proved that these "forces are not working at cross purposes, at least Indian experiment has come up with an example."</b>

The observers here feel that standing at the threshold of elections in four States, Uttar Pradesh, Uttaranchal, Punjab and Manipur,<b> the UPA Government was trying to send the message to the electorates that all was well with the country's growth models.</b>

But lack of definite figures on important sectors, like employment, health and education apparently reflected that it may not be so and the Government was not willing to come out with real facts and figures to hide its failures.
<!--QuoteEnd--><!--QuoteEEnd-->


Ravishji,
Now you know mystery of these entire rosy pictures – ELECTION
Thankyou guys.

The feeling I have on annual visits over the last 3-4 visits is definitely waay above the 6-7% being touted. Although I have to admit that my visits are mostly confined to Gujarat where 2 factors play a much bigger role then rest of economy. (1) stock market (2) NRI spending. I hope I am not right and inflation is really under control. I think even 6-7% inflation can be a killer to the aam-aadmi which is the supposed core constituency of UPA but I am not economist so I will let other knowledgeable people decide.
Rajeev Srinivasan:

Uttarayanam: A time of hope, of new beginnings

What the Winter has wrought
I got curious regarding this whole inflation thing and whether housing prices affect inflation and if so how - turns out that uptick in house ownership results in lower inflation - didnt expect it at all.

http://bigpicture.typepad.com/comments/200...ousing_low.html

Wonder how CPI is calculated in India.
According to the source I have quoted from above the unemployment rate in Indai 2006 was 7.6%

in addition to the above you may visit the following link:-https://www.cia.gov/cia/publications/factbook/geos/in.html#Econ

Although it is data collected by the US authrities,I feel it has not been doctored by Indian authorities but you experts are better judge.
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->in addition to the above you may visit the following link:-https://www.cia.gov/cia/publications/factbook/geos/in.html#Econ<!--QuoteEnd--><!--QuoteEEnd-->
They get information from embassy and factbook for public is different from internal record.
In India, women are not considered in unemployment data. So they don't count half of the country.
<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>Madarsa Vs market </b>
The Pioneer Edit Desk
<i>Education, not protest, is the answer</i>
The assertion by the Pasmanda Mahapanchayat, a collective of about 30 Muslim organisations, that globalisation and special economic zones (SEZs) are working against Muslims and reducing them to destitution, is both alarming and dangerously flawed. Coming as it does in the midst of an increasingly violent agitation, led by Islamic religio-political groups, against specific industrial projects in West Bengal, it may end up creating a whole new bogeyman. It could give the misgivings against economic reforms a communal colour. The argument put forward by the Pasmanda Mahapanchayat is seductive but ultimately specious and self-defeating. For India, economic reforms and globalisation have proved a process of creative destruction. They have spurred growth, made India and Indians richer, and changed the way our country is perceived. Yet, reforms have also exposed inefficiencies, disrupted protected and insular cocoons of economic activity and marginalised traditional elites and interest groups. This has hurt both Muslims and Hindus, as indeed it has hurt all Indians. Old and obsolete manufacturing - whether lock units in Aligarh or car factories near Kolkata - have been hit. The challenges to the familiar darzi and to sections of weavers have come from imports, of course, but more than that from the shifting of jobs to factories producing readymade garments. The coming of big retail - much of it Indian-owned and, therefore, strictly speaking not born of globalisation - will eventually cut into the market-share of corner shops or, as the Mahapanchayat has pointed out, have customers moving from Muslim-owned poultry outlets to big chains with better refrigeration and hygiene practices. From roadside mechanics to butchers, a higher proportion of Muslims, especially in India's cities, tend to run roadside businesses and be self-employed. Since consolidation is an inevitable consequence of economic reform, there is no doubt that some of these low-end businesses will disappear. Even so, for every story of a Muslim who has suffered the consequences of India's economic transformation, there will be two Hindu tragedies to relate, if not more. Individual cases, heart-rending as they are, cannot stop history.

<b>It would be instructive for the Muslim groups that have suddenly painted economic liberalisation as the new Satan to ponder what types of Indians have benefited since 1991</b>. Communities and families that have focused on education, aspired for an intellectual leap and embraced modernity are riding the crest of the Indian boom. The best example is Mr Azim Premji, India's most respected IT tycoon. As it happens, Mr Premji is a Muslim and would look at globalisation and SEZs very differently from his co-religionists in the Pasmanda Mahapanchayat. There is also a lesson here for the UPA Government. Despite bending over backwards to please Muslim voters, despite talking of fixed allocations for the community in development outlays, despite announcing bonuses for madarsas, why is its economic policy so alienating Muslims? The fact is simply this: Globalisation and the 21st century economy necessitate a certain skills-set, a familiarity with English, a striving for formal education, a technical training, whether at the IITs or the ITIs. <b>One of the theories as to why the Ottoman Empire failed to keep up with the West and eventually collapsed is that it delayed in adopting moveable type printing, and so blocked the easy replication and dissemination of knowledge.</b> There is a lesson here for the Pasmanda Mahapanchayat, and for the Government.
<!--QuoteEnd--><!--QuoteEEnd-->
<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>Farm news is bad </b>
The Pioneer Edit Desk
<i>Low growth means bad times ahead</i>
The Central Statistical Organisation's overall projection for the economy's growth, pegged at 9 per cent, has triggered the popping of champagne corks in corporate circles. <b>But it would be wrong to ignore a less flattering remark tucked deep in the CSO's statement which unequivocally states that the growth in the farm sector is likely to be only 2.7 per cent - or substantially down from last year's achievement of 6 per cent. Nobody can deny that an economy relying on just the manufacturing and services sector to produce wonders will, before long, run out of steam</b>. The first half of the fiscal year witnessed a magical 9 per cent real GDP growth on an annual basis. This strong growth has been achieved on account of the good performance by the manufacturing and services sectors. Agricultural growth, on the other hand, has not been impressive, primarily reflecting the poor production conditions of the previous year's monsoon. The GDP from agriculture and allied sectors has increased by 2.5 per cent during the first two quarters over the corresponding period of 2005-06 as compared to a growth of 10 per cent or more in the case of industry and services. The growth story has, therefore, been in industry and services. At the sectoral level, agriculture has had to contend with an erratic monsoon. There were periods of both deficient and excessive rainfall during the four-month-long monsoon. Across the regions, too, the experience was uneven - while the north and south had rainfall which was less than the long-term average, rainfall in the east and west was above the long-term average. Rainfall in the post-monsoon period of October-December was less than the long-term average for the period. Thus, the growth of agriculture is likely to be lower than in the previous year when real GDP from this sector increased by 3.9 per cent. The production of foodgrain has consistently fallen below the targets fixed by the Government at the beginning of the crop season in each of the last four years.

Politically, adverse results from the farm sector mean bad news for any Government.<b> The Congress, locked in fierce electoral battle in Punjab and Uttarakhand, is desperate to hide the reality. </b>But the cascading effect of a sick farm sector on prices cannot be hidden. The Prime Minister has never been economical with promises to turn the situation around. But his grand-standing and populist announcements are not taking the country anywhere. On the contrary, a <b>steep decline in the farm sector's growth, along with high prices of essential commodities, can ultimately strike a severe blow against India's ambitious plans to emerge as a global power. Falling foodgrain production and an ever-increasing population together could make the Malthusian nightmare come true</b>.
<!--QuoteEnd--><!--QuoteEEnd-->

<b>EXPECTED GDP FOR 2006-2007 : RS. 41,00,636 CRORES</b>

Rs. 41,00,636 Crores = Rs. 41,006.36 Billion

<b>@ USD 1= RS. 44.12, India’s Expected GDP 2006-2007 = USD 929 Billion</b>

Cheers <!--emo&:beer--><img src='style_emoticons/<#EMO_DIR#>/cheers.gif' border='0' style='vertical-align:middle' alt='cheers.gif' /><!--endemo-->
I am not sure that Pioneer editorial makes complete sense. Does agricultural growth need to match industrial growth ? I am not sure. However I do think that rural income growth has to match the urban income growth or there will be problems for UPA.

The counter ads that the congress ran during the india-shining campaign, are they still available somewhere ? It would be worthwhile to see the difference in aam-aadmi's condition since UPA took over. What has been the difference in aante-daal ke bhaav ?
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->I am not sure that Pioneer editorial makes complete sense. Does agricultural growth need to match industrial growth ? <!--QuoteEnd--><!--QuoteEEnd-->
Not an expert but based on my involvement in some statistical studies
Regarding India -
68 % population lives in rural India. 80% are directly working in farm industry.
Majority of them dependent on farms, are with no saving.
Drop in agricultural growth is due to weather or wrong agricultural practices.
Low agricultural productivity will increase prices, which will affect everyone.
It will increase inflation as we are already seeing. Current inflation is due to mismanagement by finance ministry, current government and poor implementation. Situation is more or less like pre-Emergency days.
Even with high prices, farmer will not make money because majority of farmers are small farmers and they end up selling product in same price or lower to survive and to buy seed and fertilizers for next crop..
At the end, farmers or those directly depends on agriculture will suffer most. Which means 68% of India’s population will hit by lightning strike twice? Rest will affected by inflation.
Only people like Amar Singh or Gandhi family who can afford 1.5 crore Bentley or fully load Land Rover for girls in farms are not effected.

Oil price is still high so is India's appetite for Oil. Iraq war is not over and Iran and US had started cold games, which may increase oil ship insurance in near future.
All this will addup.

Gullible Indians are happy what current government wants them to see.
I am more worried about sudden slow down in service sector within two years will bring chaos.


<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>Runaway inflation </b>
Pioneer News Service | New Delhi
growth process threatened by soaring prices
The sharp escalation in the prices of foodgrains has pushed the inflation up to a two-year high of 6.58 per cent, triggering major concerns for the UPA Government ahead of the Assembly elections and the Union Budget.

<b>With the RBI already hiking the interest rate by one per cent last week, the Government's options to control the inflation through drastic monetary measures are fast narrowing down. Experts feel that further hike in interest rate would adversely hit the investment and might lead to reversal of growth in manufacturing and industrial sectors.</b>   

At the same time, Finance Minister P Chidambaram may have little option but to continue tinkering with interest rate and the RBI's intervention, because the UPA Government may lack the courage to curb its burgeoning expenditure.

The rising inflation graph sparked strong criticism from the Left parties who slammed the Government for not heeding to their advice on banning futures trade in foodgrains and slashing of fuel prices to check the upward trend.

The apex industry chambers have expressed serious concern over the rising inflation and asked the Government to take immediate steps to contain price rise.

The unchecked rise in inflation has badly dented the UPA's image and may be politically costly in the Assembly elections in Punjab and Uttarakhand. The aam admi has been the worst hit as the<b> Wholesale Price Index (WPI) based inflation has been pushed up mainly by rise in prices of food articles like vegetables (0.7 per cent), eggs, meat and fish (1.4 per cent), milk (1.4 per cent), fruits and oil seeds (1.7 per cent each).</b>

Prices of foodgrains, including wheat have also been ruling high to the discomfort of the common man. Wheat prices (commonly used Dara variety) are ruling at Rs <b>990 a quintal in the wholesale market, while it is selling at Rs 12 a kilo in retail stores.</b>

<b>WPI rose by 0.1 per cent to 208.8 from 208.5 per cent. The index for primary articles, with 22.02 per cent weightage in the WPI, increased by 0.6 per cent to 215 per cent from 213.7 the previous week.</b>

Meanwhile, the<b> index for fuel, power, light and lubricants (14.23 per cent weight) and manufacturing products having 63.75 per cent weight in the wholesale price index remained unchanged</b>.

<b>With the projection for the farm sector growth pegged at a dismal 2.7 per cent, the long-term inflation scenario looks equally bleak,</b> experts feel.

In a statement, FICCI said the Government should immediately commit itself to a twin long-term strategy, which combats bottlenecks in the supply of primary articles and manufactured products.

The Government should draw up a long-term action plan that can tackle low farm productivity, volatility in production, poor supply chain infrastructure and inefficiencies in marketing infrastructure for farm products, it said.

Reacting to the rise in inflation, Assocham said the RBI needs to take certain monetary measures, which would flush liquidity in the system and amount to taming the current rate of inflation.

The Left parties slammed the Government for not heeding to their advise on banning futures trade in foodgrains and slashing of fuel prices to check the upward trend.

The parties, which provide crucial outside support to the Congress-led Government, said the rise in prices of essential commodities will bring misery to the people and spell disaster for the economy.

"The Government should take certain steps like banning futures trading in essential commodities, reducing the prices of petroleum products and cracking down on hoarders to check price rise," senior CPI(M) leader S Ramachandran Pillai said.

<b>The Left had also been demanding revision of ad-valorem duty structure on oil imports, reversal of the dilution of the Essential Commodities Act and inclusion of more items under its purview to check inflationary pressures.</b> "The rate at which inflation is increasing will spell disaster for the economy in the coming days and bring more misery to the people," CPI General Secretary AB Bardhan said.

He asked the Government to revive the Public Distribution System for supply of foodgrains as the overall inflation rate had been impacted by spiralling prices of primary articles, especially those of vegetables, pulses and cereals. Criticising Finance Minister P Chidambaram's comments that inflation levels crossing the six per cent mark is not a new phenomenon, he said "if things are going beyond control, we will take to the streets."
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http://www.hindu.com/thehindu/holnus/218...152221.htm

Inflation touches 6.73 pc; parties express concern
As aam-aadmi all i will say is sure it is supply-side but i think it might be because of money-supply and I do think that GoI has to acknowledge the problem and face it head-on.

http://www.rediff.com/money/2007/feb/27bud10.htm

<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->It squarely blamed the supply side shortages for the inflationary pressures, for which there were no immediate solutions, and said: "Poor agriculture performance, as the current year has demonstrated, can complicate maintenance of price stability with supply side problems in essential commodities of day to day consumption."<!--QuoteEnd--><!--QuoteEEnd-->
<!--QuoteBegin-rajesh_g+Feb 28 2007, 01:03 AM-->QUOTE(rajesh_g @ Feb 28 2007, 01:03 AM)<!--QuoteEBegin-->As aam-aadmi all i will say is sure it is supply-side but i think it might be because of money-supply and I do think that GoI has to acknowledge the problem and face it head-on.

http://www.rediff.com/money/2007/feb/27bud10.htm

<!--QuoteBegin--><div class='quotetop'>QUOTE<!--QuoteEBegin-->It squarely blamed the supply side shortages for the inflationary pressures, for which there were no immediate solutions, and said: "Poor agriculture performance, as the current year has demonstrated, can complicate maintenance of price stability with supply side problems in essential commodities of day to day consumption."<!--QuoteEnd--><!--QuoteEEnd-->
[right][snapback]65061[/snapback][/right]
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Not easy to face the problem head on. A squeeze of the money supply may also trigger a recession which will be like jumping from the frying pan to fire.


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