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Indian Economy: Growth -2
<b>Wealth pool: Haryana beats B'lore</b>
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Delhi and Mumbai continue to be the major centres of wealth in India, accounting for half of the roughly 20,000 crorepati households in the country<!--QuoteEnd--><!--QuoteEEnd--><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->If you think this is only because of Kolkata’s significantly bigger size, consider this: 180 households of every million households in Kolkata are crorepati compared with 113 for every million in Bangalore. Cyberabad is only just a little better than the eastern megapolis on this count with 191 crorepati homes for every million households.<!--QuoteEnd--><!--QuoteEEnd--><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->In Haryana, for instance, the number of rural households with annual incomes above Rs 1 crore is more than the number of crorepati urban homes. In fact, with 482 crorepatis, rural Haryana beats Bangalore, which has only 137 crorepatis. In Punjab, too, there are almost as many crorepatis in the villages and small towns (those with less than 5 lakh population) than in the bigger cities.

Sample this: 350 of every million households in small towns have a Rs 1-crore-plus annual income, considerably higher than the proportion even in metros like Kolkata, Bangalore and Hyderabad. In fact, rural and small-town Haryana and Punjab, too, have higher densities of crorepatis than Bangalore or Kolkata.
Lot because of atitude plus after independence Punjab and Harayana received maximum subsidy in every front. Rest of India was neglected by leaders.
Prosperity is visible in Punjab and Harayana.
<b>Cochin to get another mega shipyard</b>

MUMBAI: It could be a shipyard to rival the existing Cochin Shipyard. Cochin Port Trust (CoPT) has floated a global tender inviting international shipyards to set up a mega ship repair complex in Kochi.

CoPT wants to develop the project under build-operate-transfer (BOT) or joint venture format, for which an area of 19.2 hectares in Puthuvypeen has been earmarked. Companies who are satisfying the requisite experience and financial capability will have to submit their offers, before the deadline of October 31.

A senior port official said the shipping ministry had asked the port to go ahead with a shipyard project, instead of just a repair yard. "The plan is to attract joint venture companies with foreign participation, and we would be able to offer all tax incentives, since the project is going to be a part of the proposed special economic zone (SEZ).

The yard would build Panamax ships and VLCCs," said the official. CoPT will dredge the approach channel to 14.5M, and provide a draught of 11.5M at the berth for the yard.

"Within a couple of years from now, Cochin Port will become one of the largest major ports in the country, with large mother vessels hoping to visit. The proposed ship repair yard would complement the other projects," said a senior port official.

Cochin is an all weather port, trategically located to the trunk sea routes from Europe to Australia and to Far East and the Singapore-Gulf route. Cochin has well-established connection to the length and breadth of the country through the network of National Highways and Railways.

The existing port facilities are located on Willingdon Island, which divides the navigational channel into the Ernakulam and Mattancherry channels, inside the harbour. There are two wharves on the island -- Mattancherry wharf and Ernakulam wharf.

The container terminal -- Rajiv Gandhi Container Terminal, is currently operated by Dubai Ports International (DPI), which will eventually shift out to the nearby Vallarpadam, when the international hub terminal is built.

There are three oil berths in Cochin -- Cochin Oil Terminal (COT), North Tanker Berth (NTB) and South Tanker Berth (STB) which can accommodate 1,15,000 DWT, 30,000 DWT and 18,000 DWT vessels respectively.

Other berthing facilities comprises of a fertilizer berth, which can accommodate 60,000 DWT and one boat train pier, which can accommodate 35,000DWT vessels and two jetty berths for miscellaneous cargo with capacity for vessels up to 12,000 DWT and 15,000 DWT.

Petronet LNG is in the process of setting up a 5MTPA LNG terminal and regasification facility at Puthuvypeen.

A senior port official said the shipping ministry had asked the port to go ahead with a shipyard project, instead of just a repair yard. "The plan is to attract joint venture companies with foreign participation.

<b>Indian economy grows 8.1% in first quarter</b>

Why believe in India

Because it has made tremendous progress—and there’s more to come.

Ranjit V. Pandit

The McKinsey Quarterly, 2005 Special Edition: Fulfilling India’s promise

India has always held great promise. Soon after independence, in 1947, its foreign reserves were among the world’s largest, at $2.1 billion in 1950–51, and it accounted for 2.4 percent of global trade. Over the next 44 years, however, attempts to follow the Soviet model of self-sufficiency brought the country to the verge of bankruptcy. Domestic savings failed to keep pace with the investment needed to contain unemployment, especially as India’s working-age population expanded. The crisis begged for drastic reform, and in 1991 the government delivered.

This reform program took its cue from China, which by 1991 had surpassed India on all major economic indicators. But in the shadow of the Chinese economic miracle, it is easy to overlook what India’s reforms have accomplished during the past 14 years. A solid foundation for growth is now in place: the program of renewal, backed by successive governments, has increased the country’s foreign reserves to an enviable $137 billion and raised annual economic growth from an average of around 4 percent in the four decades before reform to almost 7 percent today. Growth rates of 8 to 10 percent are within reach. The amount of foreign direct investment coming into the country, often cited as a failure of India’s policy, has grown from about $100 million in the early 1990s to about $5.5 billion today. If China were not the yardstick used to measure India, this increase would be a matter for celebration, not censure.

The automotive and airline industries illustrate how far the country has come and how much further it could go with more foreign investment and competition. Since neither industry was high on anyone’s political agenda, both were among the first to be deregulated. From just one state-owned airline in 1991, India now has eight competing carriers and is the world’s second-largest commercial-aircraft market. On-time performance and service levels have risen dramatically and fares have dropped. As a result, passenger traffic is expected to grow by 20 percent annually over the next five years. In the automotive sector, deregulation sparked competition and led to the emergence of a local champion, Tata Motors, which has captured 15 percent of the domestic market. Total annual car sales have increased from around 150,000 in 1991 to more than 1,000,000 today, while the industry’s employment has tripled. Successes like these allowed the government to liberalize many other sectors, though retailing, banking, defense, and the news media remain the notable holdouts.

Extensive reforms have also affected India’s capital markets, corporate and individual tax regimes, and judiciary. Such measures as easing capital controls, liberalizing equity pricing, and creating a regulatory authority (the Securities and Exchange Board of India) have been instrumental in bringing the country’s money markets on par with those in the developed world. As a result, foreign investors can easily move funds in and out of India. Individual and corporate income taxes have been reduced to levels in line with those in the rest of Asia. And judicial reform has empowered citizens, giving them an effective tool to fight, for example, corruption, voter fraud, human-rights violations, and environmental degradation.

These efforts have made India one of the world’s fastest-growing economies. In the future, the government must focus on stimulating domestic demand—a vital step if it hopes to attract the foreign investment needed to reach its growth targets. In addition, the country must intensify its efforts in important areas of reform in order to build a more competitive economy that benefits businesses and consumers alike.

Act to boost demand

Indians save too little to finance the economic growth needed to provide jobs for the country’s expanding working-age population. Our projections show that the economy must grow by 8 to 10 percent a year or risk markedly higher unemployment, so foreign investment is essential to fill the gap.

Restrictive policies have also limited gains in foreign direct investment in some Chinese industries. See "Making foreign investment work for China."

But most foreign companies see India only as a source of low-cost skilled labor, particularly in IT, not as a major market for products and services. This crucial distinction helps explain why China attracts upward of ten times more foreign direct investment than India does. (Investment restrictions, to be addressed later, are also an important factor.) As part of the government’s efforts to attract more foreign investment, the country must take three steps to stimulate domestic demand.

First, the Reserve Bank of India (the central bank) must keep interest rates regionally competitive to sustain a buoyant economy. Since 2002, the bank has reduced them to the current 6 to 8 percent, from 14 to 18 percent. Spurred by this decline, consumer lending has increased by more than 30 percent a year, and residential construction and consumer durables have also seen healthy growth.

Second, India’s 28 states and union territories must all implement the value-added-tax (VAT) system1 introduced in April. Eight have yet to do so. The VAT system will allow overall consumption taxes to fall to 15 to 20 percent by 2007, from the current 30 to 60 percent, thus releasing a flood of latent demand. China, for example, experienced a sudden increase in demand in 1994, when the government introduced a standard 17 percent VAT on factory prices2 for most manufactured goods and services. India can expect a similar surge once the VAT system has been fully implemented, since for every 25-percentage-point decline in prices, consumer demand increases three- to fivefold, according to our estimates. States that have already adopted the standard VAT rate have experienced, on average, a 12 percent increase in tax collections for the second quarter of this year. These results suggest that the government has room to reduce overall consumption taxes even further—to around 12 percent—without affecting its revenues.

Last, state governments must work to reduce their budget deficits. The central government has pledged to cut its deficit to 3 percent of GDP by 2009, from the current 4.3 percent. But as the center tightens its belt, state governments have allowed their deficits to grow steadily, for an aggregate state deficit of 5.1 percent of GDP today. As a result, the combined deficit of the central and state governments has held steady at about 8 to 9 percent of GDP throughout the reform effort. These deficits not only put pressure on interest rates but also lead to massive government borrowing, which siphons off funds that would otherwise be available for capital investment or consumption. Servicing this debt is also a huge burden, so the government must cut the total public deficit to 4 to 6 percent of GDP.

Increasing competition

To unlock India’s true potential, accelerated consumption must be coupled with continued liberalization of the country’s markets. The reform agenda must focus on eight areas.

Product market reform. Having picked the low-hanging fruit, India must find the resolve to deregulate politically sensitive sectors—particularly retailing, banking, the news media, and defense. Exposing the retailing sector to world-class scale, skills, technology, and capital, for example, wouldn’t lead to greater unemployment, as some claim. Rather, it would help workers to find jobs that add more value: for instance, jobs with distributors (delivering goods to retail outlets) and with intermediaries such as transport agents (delivering goods from manufacturers to wholesalers). Consumers would also benefit from better quality and lower prices. As reform spreads, other industries will experience similar outcomes.

Infrastructure. The government has invested in India’s infrastructure and upgraded ports, telecommunications, and highways. But several important areas, such as power, water and sewerage, railways, and airports, remain troublesome, in part because intransigent state governments often block progress. Disputes over water-sharing rights, for instance, have slowed a $150 billion project that would link a number of India’s rivers (the Brahmaputra, the Ganga, the Godavari, the Krishna, and the Yamuna) with a system of waterways. If completed, these canals would provide much-needed water to millions of Indians and boost agricultural productivity.

Meanwhile, the Electricity Act of 2003 aims to provide businesses with uninterrupted, low-cost power. The act permits the delicensing of power plants and provides for open access to generation, transmission, and distribution while phasing out cross-subsidies. So far, however, only eight state electricity boards have unbundled power generation, transmission, and distribution—a necessary step for implementing the measure. For this landmark effort, state regulators must also clarify myriad other details, such as the rules and access charges for third parties that supply industrial power and a clear definition of the contractual obligations of the generating companies. While these kinds of initiatives have failed to gain traction in the past, the central government has recently shown remarkable creativity in getting the states to play along.

Land reform. One of the greatest problems plaguing India today is confusion over land titles. Because of high stamp duties, property owners have long avoided registering transactions and instead transfer land through other means, such as powers of attorney. As a result, many titles do not correspond to the people actually in possession of the properties. Stamp duties must be reduced to international levels, and the government must streamline the registration system by establishing fast-track courts and implementing electronic record-keeping systems. Andhra Pradesh’s progress in this area should encourage other states to follow its lead.

Urban renewal. Since India’s independence, its urban population has grown fivefold, leading to overburdened facilities and greater numbers of urban poor. The central government has budgeted an initial $1 billion to finance its National Urban Renewal Mission, but states must also do their part. Measures that state governments ought to adopt include increasing usage charges such as property taxes and water and sewerage fees, improving collection rates for fees and taxes, enhancing the efficiency of municipal corporations, and making better use of assets in and around cities. In Mumbai, for instance, where terrible flooding recently underscored the need for quick progress, we estimate that the state could immediately finance about $10 billion in infrastructure improvements through measures such as reforming the property tax regime and improving collections from their current minimal levels. Public investments of this kind could attract an additional $40 billion in private funding. All told, these investments could greatly improve the quality of life for Mumbai’s population.

Asset recovery. The government must continue to expedite the recovery of assets from bankrupt companies. To address the new market realities and to sustain the economy’s long-term health, it should bolster recent measures that help lenders recover dishonored checks and assets from indebted companies. In particular, the government should clarify the mandate of the Asset Reconstruction Company of India, established recently by a consortium of banks, by giving the company a more active role in debt restructuring and recovery. Foreign institutions must also be allowed to invest in such ventures. Moreover, the government should encourage the sale of nonperforming loans by allowing foreign banks to purchase them and by making these transactions exempt from stamp duty.

Enforce measures protecting intellectual property. Over the past decade, the evolution of knowledge sectors such as pharmaceuticals, biotech, and IT services has been phenomenal. The patent law passed earlier this year will augment their growth. Now the government should enforce IP protection measures effectively and expeditiously; only then can India promote creativity and innovation and sustain its cultural, scientific, and technological development. To improve the protection of IP, India should also align its patent regime with global standards in order to prevent the sharing of proprietary information in areas such as data exclusivity and to improve the overall capacity and quality of the infrastructure and resources in the country’s patent offices.

Labor reform. To increase exports of manufactured goods rapidly, the government must permit the free use of contract labor for all work and repeal a law forcing companies with more than 100 workers to obtain state approval before cutting jobs. In tandem, India’s labor benefits should be extended to all workers, not just those in the organized sector.3 Reform legislation should also consider establishing safety nets and policies that ease the retraining of workers. Simplifying labor laws could unleash unprecedented levels of foreign direct investment and foster brisk growth in light-manufacturing industries, such as toys, leather, shoes, textiles, and apparel, where India’s cost advantage and skilled workforce should help it become a strong global presence.

Privatization. In India as in other countries, selling state assets is controversial, but the government must build on its success in privatizing Indian Petrochemicals, Hindustan Zinc, Bharat Aluminium, and the international telecommunications service provider Videsh Sanchar Nigam, among others. To manage political opposition, the government might consider creating a trust or special-purpose vehicle to act as a holding entity, much as Singapore’s Temasek does. After the assets have been transferred, the holding company could be taken public, effectively diluting the state’s share in the companies (without privatizing them) and releasing them from statutes applying to the public sector. As long as these companies, representing 60 percent of the country’s capital stock, remain in the state’s hands, their full potential will not be realized. Proceeds from the sales could also be used to bring down the public deficit.

After more than four decades as a closed economy and 14 years of reform, India has ascended the world stage and laid the groundwork for rapid growth. Low interest rates have also provided a lift for the economy. If policy makers continue on the path of economic reform—with a focus on increasing demand and competition—the flow of foreign direct investment to India will most likely increase, helping it to harness the immense potential of its young and educated workers. The foundation is in place for the economy to grow by 10 percent a year, but further effort and unwavering commitment are needed for India to emerge as an undisputed global economic leader.

About the Authors
Ranjit Pandit is a director in McKinsey’s Mumbai office.

1 The value-added-tax regime covers all manufactured goods and services, with proceeds shared between the central and state governments in a 68:32 ratio. The system is being implemented in three phases: the consolidation and unification of state taxes, the consolidation and unification of central taxes, and the equalization of tax rates for all manufactured goods and services.

2 Or approximately 14 percent on retail prices.

3 The organized sector essentially consists of companies that employ more than ten people.
<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>Global: Here Comes the Indian Consumer </b>
OCTOBER 31, 2005
Stephen Roach (from Melbourne)

India is on the cusp of something big. After my third trip there in 18 months, I am as enthusiastic about India as I was about China in the late 1990s. While comparisons with China are inevitable, the case for India is very different. What excites me the most is the potential for an increasingly powerful internal consumption dynamic -- an ingredient sorely missing in most other Asian development models, including China. India’s constraints -- infrastructure, saving, foreign direct investment, and politics -- are well known. Yet on this trip, I saw visible progress on most of those fronts. Moreover, the consumption story -- the organic sustenance of sustainable growth and development -- casts India in a very different light.

Don’t get me wrong -- the Indian consumer is hardly a powerful force on today’s global stage. As the accompanying chart shows, India’s per capita income and consumption levels are about half those of China’s. But it is growth at the margin that always drives powerful macro and market trends. And the Indian consumption story is, first and foremost, one of accelerating growth off a low base. <b>The potential comes from the structure of the Indian economy: Private consumption currently accounts for 64% of Indian GDP -- higher than shares in Europe (58%), Japan (55%), and especially China (42%). India’s transition to a 7% growth path in recent years is very much an outgrowth of the emerging consumerism of one of the world’s youngest populations. The increased vigor of private consumption provides a powerful leverage to the Indian growth dynamic that is rarely found in the externally-dependent developing world. </b>

This came through loud and clear on my recent travels through India. Over a span of four days, I met with a number of corporate executives, investors, and senior government officials. Everywhere I went, the focus was on the Indian consumer. I met with the managements of a good cross-section of India’s major consumer companies -- Hindustan Lever (softgoods), Pantaloon (retail), Raymond Textiles (clothing), and McDonald’s (fast food). I also spoke with executives from banks and drug companies -- all of whom have important consumer businesses. And I met with leading industrial companies such as Reliance, where a major five-year initiative has just been announced for the development of nationwide chain of hyper-stores and super-markets. I even went to the Phoenix shopping mall in Mumbai, which was bustling with activity. I<b> have made similar trips to malls in China. There was one key difference between these two experiences -- the locals were buying in India. This is consistent with what I heard from most of the consumer companies I saw -- solid acceleration in same-store sales comparisons over the past six months.</b>

In my discussions with India’s major consumer companies, one thing stuck out -- strategy. These companies all had very sophisticated marketing and product development plans. Moreover, the multinationals that were operating in India were doing so with business models that were tailor-made to local markets and customs. For example, while McDonald’s has the same look and feel as its global brand, about 95% of the menu content differs from that offered in the US. Big Macs come in chicken and vegetable forms. In the pharma area, Indian business practices are tilted increasingly toward consumers -- especially those at the low end of the income spectrum in serious need of medicine. In the softgoods area, sophisticated “upgradation” strategies are pushing consumers up the value chain. And all of the banks I met were very focused on consumer-oriented growth strategies, especially in the mortgage finance and credit and debit card businesses.

Most of India’s major consumer players are looking for an imminent consolidation of the country’s highly fragmented retail sector. Currently, there are over three million retail outlets in India -- an industry structure that is ripe for efficiency enhancement. The threat of foreign competition is already spurring a big consolidation push. Wal-Mart is apparently poised to enter India as soon as restrictions on retail FDI are lifted. That appears to be no more than 18 months away. In the meantime, local players like Pantaloon and Reliance are scaling up in an effort to meet the coming Wal-Mart challenge head-on. The competitive juices are coursing through the veins of India’s consumer industry. Unlike other Asian economies, India’s entrepreneurs are eager to compete.

For me, the highlight of this trip to India was a meeting with Prime Minister Manmohan Singh. Unlike most of the meetings I have had with heads of state in the past, the room was not swarming with aides or other visitors -- it was basically just the two of us discussing macro. And unlike most heads of state, his rich portfolio of experience as an economics professor, central bank governor, and finance minister put this discussion on a very different plane. In his characteristically soft-spoken manner, he challenged me with some very tough questions -- from US current-account financing sustainability and the China investment formula to Indian infrastructure deficiencies, fiscal constraints, and rural employment and income deficiencies.

Dr. Singh is the real thing when it comes to India’s reforms -- he led the charge in the opening up of the early 1990s. Today’s political context is obviously quite different: As a majority party official he was able to drive the process far more forcefully back then than is the case today, with a delicate left-leaning coalition government. Mindful of those constraints, the key code word in current coalition governance circles is “inclusive” -- emblematic of a development strategy that is being refocused to deal with the income-disadvantaged citizens of rural India. The Prime Minister is very philosophical when it comes to integrating his reform philosophy within the political imperatives of a broader base of Indian economic development. While his government has been stymied by the politics of inclusion on several fronts -- namely on infrastructure and privatizations -- I get the strong sense that Dr. Singh does not interpret these developments as fundamental setbacks on the road to Indian reform. In my opinion, he still has the heart of a reformer and the quiet determination to stay the course in the context of major political constraints.

The same conclusion was buttressed by recent conversations I had with other government officials and corporate executives in India. The “inclusive economy” is viewed as one that is biased toward consumption-led growth -- reinforcing my conclusions on the coming shift to Indian consumerism. To the extent that rural development will result in Indian productivity enhancement -- a very reasonable presumption -- real incomes and consumer purchasing power should rise. The bulk of the early dividends from rural reform are widely expected to come from small and medium-size businesses. Successful agricultural reform would be the icing on this cake. Given the already large consumption share of the Indian economy, rural development could actually end up being a levered play on the Indian consumer. Investors always cringe when they hear words like “left, rural, and agriculture.” For India, they conjure up images of long standing failures on the development front. I think it is important to get beyond that knee-jerk reaction. <b>With a foundation of consumer support that is broadening and deepening, the underlying Indian GDP growth dynamic could now shift toward the upper end of a 7-8% range</b>.

In addition, I think there is risk of going too far in condemning the recent backsliding on reforms. That’s especially the case with respect to infrastructure. Here, I will commit the cardinal sin of macro and rely on the personal anecdote. The roads and airports are still terrible in India -- the traffic jam and driving conditions going to the Mumbai airport the other night were unbelievable. But compared with conditions I saw 9 to 18 months ago, there is a palpable sense of improvement. Signs of road construction are evident everywhere. I saw my first new airport terminal in Mumbai, and watched passengers jump on several new low-cost airlines, such as Deccan and Kingfisher, which have helped push annualized growth in domestic passenger traffic up by 20-25%. At the same time, the government knows full well it must come to grips with India’s FDI deficiency. Likely breakthroughs on the retail front (i.e., Wal-Mart) are especially encouraging, as is a $1.5 billion, or 10% stake, just taken by Vodafone in Bharti Tele-Ventures, India’s largest mobile phone operator. These are clear signs that multinational corporations are also betting on the Indian consumer. <b>As long as the government doesn’t get in the way, I suspect that the momentum of market-based reforms will continue to outweigh the political constraints. For the time being, Prime Minister Singh seemed very comfortable with such a second-best outcome.

The China comparison can’t be avoided when it comes to analyzing India. What strikes me most in that regard is the sharp dichotomy between China’s export- and investment-led growth and India’s more balanced growth dynamic. Collectively, exports and fixed asset investment make up over 80% of Chinese GDP -- and are still growing at close to a 30% annual rate. The recent acceleration in Chinese GDP growth reflects further gains in these two sectors. <span style='font-size:14pt;line-height:100%'>Without the foundation of private consumption, this is not a sustainable growth dynamic for any nation, including China. India, by contrast, has the balanced-growth foundation that China would die for. Over the past 25 years plus, China has repeatedly outdistanced India by its brilliant execution of resource mobilization -- putting together the pieces of the greatest export machine the world has ever seen. But now transition time is looming for China. It must come up with new sources of growth such as those that are evident in India’s consumption-led model. India lost the first round of the race with China by a wide margin. The jury is still out on the endgame. </b></span>

Of all the trips I make around the world, India is by far the toughest. It’s not just the quality of the travel experience. Poverty is everywhere -- not just in rural India but in the swanky neighborhoods of its vast urban centers of Mumbai, New Delhi, as well as in the pulsating new tech centers of Bangalore and Hyderabad. And it is poverty and human tragedy on a scale unlike anything I have ever seen -- including that of rural China. An inclusive India seems utterly determined to meet this daunting challenge head on. As far as I am concerned, there is nothing but upside to such efforts -- it’s just a question of degree. But with that upside comes yet another new source of Indian consumption growth -- absolutely vital for India’s balanced economic growth dynamic. I have long argued that global rebalancing will not occur as long as the world remains hooked on one consumer -- namely the American variety. Think India if you want a way out of that trap. And prepare yourself -- here comes the Indian consumer.
The telecom revolution in India was long overdue, as is many of the other infrastructural deficiencies.The Reliance Industry has been a major player in the whole game but we should not overlook the role that the other GSM operators have played and are playing in sustaining the growth of telecommunications.The only deficiency we find is that with so many players , the consumer is not always able to get the best deal. On an average, India is adding about 2 million new subscribers a month. Yhis is a good development but we are still to go a long way to be anywhere near China or any other fast growing economy.
One of the most interesting developments over the last few years has been outsourcing within India. That model needs to be institutionalised. I have a few friends who are small business types, whose main business is service oriented. They do contract work for other big companies and thus the trickle down effect. Reliance telecom for example outsources the setup of towers, land lines, home connections, etc to other small operators - these small operators in turn employ a whole bunch of employees. Same goes with tata indicom, hutch etc..

And yes, everybody i know spends like crazy.. <!--emo&Smile--><img src='style_emoticons/<#EMO_DIR#>/smile.gif' border='0' style='vertical-align:middle' alt='smile.gif' /><!--endemo-->
<b>The arguments that have been put forward about the insincerity of the policy makers sitting in New York and Geneva, have just been demonstrated once again by the response of the developed nations towards the South Asian Earth quake victims. In this case, the victims are the poorest of the humans in this globe. Unfortunately for them, people from the West were not visiting the place for tourist pleasure at that point of time. Therefore, the casualty list neither has EU citizens nor US citizens.</b>
I think main reason for lack of support from west is due to donor fatigue. For last 3-4 years there were so many disasters.
Even TV channels were avoiding any earthquake coverage.
It is the true reflection of what the affluent West feels about the have knots of this world. By the will of God, not much damage has happened in India. However, that should not make us impersonal in our attitude to the sufferings of the poor people on the other side of the LOC.
Yes it is true that we have serious political difference with the political leaders on the other side of the LOC. Having said that, we should also remember that we represent one of the most ancient civilizations of the world. Our Government has no doubt made a modest contribution to the relief efforts; this is obviously keeping in view the resource constraints on our side of the LOC and in India at large.
It would be in the fitness of things that our leaders should also join in with all the other leaders and statesman in voicing concern about the inadequacy of the aid that has been actually received so far and to have the flow of funds speeded up. India which aspires to be a member of the UN Security Council should certainly put its weight behind this urgent call for more funds and assistance.

OCTOBER 28 2004 : USD 143.774 BILLION



JUNE 2004---------: USD 113.144 BILLION


DECEMBER 2004--: USD 120.897 BILLION

MARCH--------------: USD 123.454 BILLION

JUNE-----------------: USD 122.147 BILLION

Cheers <!--emo&:beer--><img src='style_emoticons/<#EMO_DIR#>/cheers.gif' border='0' style='vertical-align:middle' alt='cheers.gif' /><!--endemo-->
It would perhaps been wiser on the part of the Indian authorities to use a part of this reserve for creating infrastructure for the poorest of the poor.At present, there has been much deliberation about it in the Planning Commission of India. However, very little have actually happened at the grassroot level.The need of the hour is sustained development of the economy of the 200 most backward districts of India.

The various articles that have been put up in this discussion, gives a clear indication that the economy is doing well and so is the Indian industry. However, the most important aspect that needs to be tackled is improvement in the condtion of the rural poor, removal of slums in the big cities and providing of shelter at night to those who still sleep under the open sky.
<b>Ravish :</b>

As I see it India’s Foreign Exchange Reserves are USD 143 Billion and India’s External Debt Outstanding is USD 123 Billion.

So it seems India’s <b>Net Foreign Exchange Reserves</b> are about USD 20 Billion.

Now, who owns this Foreign Exchange? Is it fully owned by the Government of India or is it owned by Indian Exporters who have received this Foreign Exchange and would be able to use it, if necessary, to Import Goods via the “Import Entitlement” Route?

Would be grateful if you will kindly explain the <b>mechanics</b> of this <b>Foreign Exchange Reserves</b> being used for India’s Development of Infrastructure as well as for the Social and Economic Uplift of the common Indian.

Thanks in advance

Cheers <!--emo&:beer--><img src='style_emoticons/<#EMO_DIR#>/cheers.gif' border='0' style='vertical-align:middle' alt='cheers.gif' /><!--endemo-->
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->It would be in the fitness of things that our leaders should also join in with all the other leaders and statesman in voicing concern about the inadequacy of the aid that has been actually received so far and to have the flow of funds speeded up.<!--QuoteEnd--><!--QuoteEEnd-->
It will not go well with Indian citizens. Public will force UPA to pack bags. Any offer made by India was turned down by Paki leadership and in return we had Delhi blast.
Pakistan is not making any effort to discourage terrorsim, we should not forget Pakistan Army will never like any peace with India. So why we should even consider helping people of otherside.
UN is another part of The great game. Yes its better to be part of fancy club of big boys, but its not end of world if it get delayed and not over dead bodies of Indians.
We will get our due position in world and it should be in our own terms.
<!--QuoteBegin-Mudy+Nov 6 2005, 03:06 AM-->QUOTE(Mudy @ Nov 6 2005, 03:06 AM)<!--QuoteEBegin-->Pakistan is not making any effort to discourage terrorsim, we should not forget Pakistan Army will never like any peace with India. So why we should even consider helping people of otherside.[right][snapback]40699[/snapback][/right]

<b>Mudy Ji :</b>

The following Article is in support of your statement :

<b>'Pak regime not resolving problems with India'</b>

<b>New Delhi : <span style='font-size:14pt;line-height:100%'>A leading Pakistani jurist has said the military regime in the country was not really interested in resolving all problems with India, including Kashmir, as it would adversely affect the interest of the armed forces.

"A military government can never solve the problems with India, including Kashmir. Because if they do it, the raison de etre of their existence disappears.

"Pakistan has the fifth or sixth largest army in the world and it is not there to fight either Iran, China or Russia," Dr Farooq Hassan, the only lawyer to have served as advisor to four prime ministers of Pakistan, including Benazir Bhutto and Nawaz Sharif, said here.</span></b>

In a free-wheeling interaction organised by prominent think-tank, Security and Political Risk Analysis (SAPRA), he said, "Is the army the military arm of the mullahs or the mullahs the political wing of the army ... it is very difficult to say. If the army is ousted, the mullahs will also be out and there will be a return of civilian rule. That is why both are interested in keeping the mainstream secular, democratic parties isolated."

<b>Hassan said the lower ranks of the Pakistan army, till the rank of colonel or major, were now "dominated" by religious extremist elements as a majority of them came from low and lower middle-class financial background with lack of education.</b>

The prominent lawyer, who is also a Special United Nations Envoy, said the extremist outfits including the Lashkar-e-Toiba or the Jaish-e-Muhammad were "not fringe outfits" but held considerable sway among the low income, unemployed, madrassa-educated youth.

"Pakistan is the laboratory for all kinds of training to all kinds of groups -- from Afghanistan and Chechnya to China," he said, adding that the ban imposed on several such outfits by the Pervez Musharraf regime was "cosmetic".

To questions on the present status of mainstream political parties, Hassan said the Muttahida Majlis-e-Amal (MMA), the umbrella organisation of primarily religious parties, were "not really opposing the army rule. These parties have leaders who propped up the Taliban which was supported by the ISI and the army."

On the other secular, democratic parties like PPP and Muslim League (Nawaz), he said these parties would not attract political attention unless either Benazir Bhutto or Nawaz Sharif return to Pakistan, and added that there was a "slim" chance of this to happen at this moment.

"The Pervez Musharraf regime would be increasingly criticised by the international community, but the burning problems of the people would not be resolved," he maintained, adding that the problems had been aggravated by the lack of relief and rehabilitation work for the victims of the recent massive earthquake.

Cheers <!--emo&:beer--><img src='style_emoticons/<#EMO_DIR#>/cheers.gif' border='0' style='vertical-align:middle' alt='cheers.gif' /><!--endemo-->
<!--QuoteBegin-Ravish+Nov 5 2005, 03:39 PM-->QUOTE(Ravish @ Nov 5 2005, 03:39 PM)<!--QuoteEBegin-->It is the true reflection of what the affluent West feels about the have knots of this world. By the will of God, not much damage has happened in India. However, that should not make us impersonal in our attitude to the sufferings of the poor people on the other side of the LOC.[right][snapback]40682[/snapback][/right]<!--QuoteEnd--><!--QuoteEEnd-->

<b>Ravish :</b>

Inshallah you should not forget that when India suffered the Gujarat Earthquake the Pakistan Leaders – especially the Religious ones danced with joy at Allah punishing Gujarat for the Death of 800 Muslims in Godhra – these Muslims were killed in retaliation of the Muslims ‘Torching” the Railway Compartment in which 56 Hindu Yatris wee travelling.

The Pakistani Leaders especially the Religious ones did the same at the time of the Tsunami disaster until Inshallah they realized that the major Tsunami Destruction and Suffering was in Muslim Indonesia.

Since this issue is not an Economic one I would request you, Inshallah, to please discuss it in the Earthquake or the TSP Thread.

BTW : As per Pakistanis in the Pakistani Media only 30% of the Aid is used for the People and the remaining 70% goes into the Pockets of the Jurnails and their Ilk in the Pakistani Army Junta.


Cheers <!--emo&:beer--><img src='style_emoticons/<#EMO_DIR#>/cheers.gif' border='0' style='vertical-align:middle' alt='cheers.gif' /><!--endemo-->
<b>Ravish :</b>


The Pakistani and Bangladeshi Leaders – especially the Religious Ones – danced at the Gujarat Earthquake and declared it as a punishment for the Derelict Babri Mosque Demolition.

Apologies for the error.

Cheers <!--emo&:beer--><img src='style_emoticons/<#EMO_DIR#>/cheers.gif' border='0' style='vertical-align:middle' alt='cheers.gif' /><!--endemo-->
<b>I am not fully aware of the mechanism. However I have the impression that the Forex earned by the exporters are kept in the custody of the RBI through merchant Banks. The exporters can utilize forex for their own use, as specified by RBI from time to time. This leaves a gap of forex which is now on the plus side. Regarding, debt repayment, India is required to pay back as and when the installments become due. In some cases, depending upon the term on which it was drawn; repayment can be made before time also with out any penalty. India has been using this process to reduce its debt liabilities.

In June 2003, the Government of India decided to discontinue receiving aid from certain bilateral partners with smaller assistance packages so that their resources can be transferred to other developing countries in greater need of Official Development Assistance. In India, new aid in future, where accepted, would be directed towards NGOs working in specified areas. India will not accept any tied aid in future.

Now, India is a net creditor to the IMF/WB. Backed by robust forex reserves and a strong external position, India has been chosen by the International Monetary Fund (IMF) to join its Financial Transaction Plan (FTP), under which the country will contribute to the Fund’s liquidity that is used to help countries overcome balance of payment problems.

The IMF selects countries with strong BoP and foreign exchange reserves position for contributing to the FTP. These countries help the IMF finance the balance of payments needs of other countries. </b>
<b>Ravish :</b>

Thanks for your detailed reply.

How much of India’s Total Foreign Exchange Reserves of USD 143 Billion less the Foreign Exchange Debt of USD 123 Billion i.e. say USD 20 Billion can the Government of India use for India’s Development of Infrastructure as well as for the Social and Economic Uplift of the common Indian?

Cheers <!--emo&:beer--><img src='style_emoticons/<#EMO_DIR#>/cheers.gif' border='0' style='vertical-align:middle' alt='cheers.gif' /><!--endemo-->
Thanks Ravish for detalied information.
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->India, new aid in future, where accepted, would be directed towards NGOs working in specified areas.<!--QuoteEnd--><!--QuoteEEnd-->
In that case, India should monitor NGOs, as they are used by western and anti-India organization for Social engineering in India and destabilize govt as and when required. Recent examples are Dalit Network, Muslim organization, NRI-SHAI, ASHA, AID etc.

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