India to inch closer to China in growth rate: World Bank

[Abingdonboy]

I saw a documentary by Journeyman which was claiming constructing ghost cities is one of the main reasons for high GDP growth in China, then they showed world's largest shopping Mall in China which was abandoned.

Right now, China is looking towards HSR to maintain high GDP growth.

To be fair this sort of investment by the Chinese govt kept the Chinese economy afloat/sheltered during the 2008 crisis without this massive stimulus package the Chinese economy would have been in serious trouble. Something needed to be done and this was the option they took, you can't criticise all that much considering they still managed to average ~8% growth in the past 4 years!

I know though at many Chinese economists were impressed that the Indian economy stayed relatively untouched by the '08 crisis without a need for such a massive stimulus because of huge domestic consumption. The Chinese will need/want to get to this sooner or later.

 

[Sergi]

India's growth rate has been impressive over the past 2 decades esp.

The key is sustainable growth like @Sergi said. What plans does India have to improve infrastructure and to ease some of the red-tape?

It's same as everywhere in world. Try getting help from outside , motivate private player and even after that some area is untouched govt itself took that development in hand.

Infrastructure development speed in India isn't bad. If the world economy would have not fall in last two years we were going good. It's a momentary setback for the speed of development and not to the development. This year all economies are climbing back ( Hope ) so we should be good.

 

[RazorMC]

... huge projects like the delhi mumbai industrial corridor with the help of Japan that will change the face of India and increase manufacturing industry.

In regards to red-tape that is a big challenge to open a business in India we are very poor in this and rank low compared to other countries.

More info regarding the corridor would be nice.
And what does Japan gain from helping India's manufacturing sector? Wouldn't they be more concerned about improving their own sector even more?

And honestly, India has enough tech now, locally developed or imported, to do this herself. 100% Made in India.

 

[Yeti]

More info regarding the corridor would be nice.
And what does Japan gain from helping India's manufacturing sector? Wouldn't they be more concerned about improving their own sector even more?

And honestly, India has enough tech now, locally developed or imported, to do this herself. 100% Made in India.

Delhi Mumbai Industrial Corridor :: An Indo-Japan Mega Infrastructure Project



They have provided India with a initial soft loan to kick start the project $4.5 billion of the total $90 billion



Japan urged to help build India's infrastructure | The Japan Times Online

 

[RazorMC]

It's same as everywhere in world. Try getting help from outside , motivate private player and even after that some area is untouched govt itself took that development in hand.

Infrastructure development speed in India isn't bad. If the world economy would have not fall in last two years we were going good. It's a momentary setback for the speed of development and not to the development. This year all economies are climbing back ( Hope ) so we should be good.

True.
The international meltdown really affected even China among others. I mean look at the EU crises since the recession.

But my question was aimed at specific developments in India that could promote growth. The Delhi-Mumbai corridor was one example by @Yeti.
Are there others like transport-related developments and improvement to the telecom sector being upgraded to fiber optics etc?

OK. Just checked Yet's post. That project is a huge undertaking.

 

[Yeti]

TOKYO — A Japanese government-affiliated lender will take a 26% stake in an Indian company charged with building a massive infrastructure project linking Delhi and Mumbai, as Tokyo seeks to increase its infrastructure-related exports to emerging markets.

“The Indian government has approved that the Japan Bank for International Cooperation will take a 26% stake in the Delhi-Mumbai Industrial Corridor Development Corp.,” Japan’s Minister for Economy, Trade and Industry Yukio Edano said Tuesday at a press conference.

DMIC Corp. is a state-funded company that will design and execute various infrastructure projects between Delhi and Mumbai. JBIC will invest about 260 million rupees ($4.67 million) to take the 26% stake, and will send an executive to sit on DMIC’s board, said Masashi Iwanaga, METI’s Financial Cooperation Director.

“It is important that Japan can participate in DMIC’s decision-making,” said Mr. Iwanaga, to help India’s development while increasing business opportunities.

The core project is a freight railway linking Delhi and Mumbai, with other infrastructure such as industrial parks and power stations expected to be developed around the railway.

The DMIC was first proposed by Japan in 2006 when India’s Prime Minister Manmohan Singh visited Tokyo. In December last year, Japanese Prime Minister Yoshihiko Noda promised roughly $4.5 billion of financial support for projects conducted by DMIC.

To increase its infrastructure-related exports, Japan has suggested not only lending money but also helping to formulate development plans in emerging economies. Besides India, Japan has proposed similar schemes in Vietnam, Thailand and the Philippines




It benefits Japan also they have a stake in the project

 

[BigDaddyWatch]

I accept ur point India has large trade deficit with world....

Now can u name me top 2 Indian imports

1) Crude oil.....constitute 35% of it ...can't help it need energy ...Thats why India is giving big push to Alternative Energy Sources

2)Gold and jewellery ...Constitute 20% of it ........What do think happens to gold that All Indians buy ..its gets vanshished in Smoke like crude oil..it Appreciate in Value....So its in Sort of Investment

But still GoI feel its a burden hence to reduce Local gold demand it increased duty on Imported gold from 4 % to 6%

But still GOld fever in India continues.....And gold keeps hitting new highs everyday


3)Third Biggest Imports is Nuclear technology and boilers and related Machinery which constitute 7% of import which will help to reduce the import number one


THis three constitute 62% of all import

India's Gold Imports Jump - WSJ.com

Although CAD is high ...Our Econmist will take care of it.....its going toward building a better nation ....

steps taken by GoI to increase Manufacturing jobs

India now has a progressive manufacturing policy, let?s create 100 million jobs by 2025 - Economic Times

India Proposes Curbs on Tech Imports - WSJ.com





Source of Above import figure

Top Export Import Products of India | Major Import Export Items

Its true that India's gold imports will benefit India in the long run however that doesn't take away my point that India doesn't produce enough to sell to the rest of the world to off set these purchases. And i don't see India able to produce enough in the foreseeable future to offset the imports that it needs.

We are working on that the delhi mumbai industrial corridor will see new industrial SEZ's being setup to increase our exports and promote manufacturing.

Building up a manufacturing industry is about more than just setting up a few SEZ and building a few roads. Its a ecosystem of suppliers, logistics and customers. What about power generation ? What about the human infrastructure like plant managers, engineers, technicians ? What about laws regarding labor and land acquisition ? All these things need to be in place for these SEZ's to succeed. And the world has changed since the days that ASEAN and China where opening up to foreign direct investment. Back in the 1980's and 1990's people didn't mind outsourcing as it is seen by many a salution and a natural progression of the economy from low end manufacturing to high end production. That idea has over the past few years been proven wrong and now people around the world are now hostile toward outsourcing of jobs. This has made it harder for nations to attract foreign direct investments.

 

[Yeti]

True.
The international meltdown really affected even China among others. I mean look at the EU crises since the recession.

But my question was aimed at specific developments in India that could promote growth. The Delhi-Mumbai corridor was one example by @Yeti.
Are there others like transport-related developments and improvement to the telecom sector being upgraded to fiber optics etc?

OK. Just checked Yet's post. That project is a huge undertaking.

GIFT city in Gujarat is another example to make another financial/services centre in India because Mumbai alone with it's small land mass can not be the sole financial centre of India.

GIFT city will have the latest underfloor cooling system and Optical Fibre Cable (OFC) is also being laid the first 2 buildings in GIFT city are being completed now and cladding is underway.

Also with the price for office space in Mumbai being $$, GIFT city hopes with better infrastructure/power it can attract companies to setup offices/HQ there instead of Mumbai.

 

[Yeti]

Im not sure India's gold imports actually help India as alot of it is in hands of normal people such as women they buy jewellery for Diwali etc and it stays in the hands of families what benefit it has on India? I fail to see.



http://www.ft.com/cms/s/0/33290844-5e2e-11e2-8780-00144feab49a.html


This was a good article I was reading on the subject

Indian consumers, however, have a history of ignoring attempts to wean them off their addiction to gold



Not going to change we have loved our gold since ancient times it is part of our culture

 

[arp2041]

To Grow Fast, we have to take some tough decisions over the years, Growing fast is not important, getting a sustained Growth over a large period of time is an important thing, as far as i can see, we are currently even fumbling to maintain a 7% Growth rate over a decade's time, this even when we hit the figures of 9.5% for three years in a row. Blaming outside forces for our less GDP growth rate is not an answer, GOI has to come up with a FIRM plan to maintain atleast (no matter what) a growth rate of 7% for the next 2 decades so that we can be counted as a middle income economy & that will easily make us among the TOP-3 economies of the world. No matter which govt. comes to the center, this policy should stay for the next couple of decades. For that certain important steps need to be taken:

1. Increase of GOI financing in Healthcare, education & Infrastructure (with important role to be played by the Private sector), these three important sectors are responsible for the overall GOOD HEALTH of an economy.

2. Increase in consultations b/w two major parties (Congress & BJP) - This is b'coz it is near impossibility for a govt. to be formed at the center without either of them involved in it, this will ensure smooth conduct at the center (just like they have Republicans & Democrats in the US).

3. Reform policies initiated by one Govt. shouldn't be revoked by successive govts. & there should be a continuity in policies.

4. Increase FDI & Private player participation in certain areas.

 

[janon]

Im not sure India's gold imports actually help India as alot of it is in hands of normal people such as women they buy jewellery for Diwali etc and it stays in the hands of families what benefit it has on India? I fail to see.



India tackles its costly gold addiction - FT.com


This was a good article I was reading on the subject

Indian consumers, however, have a history of ignoring attempts to wean them off their addiction to gold



Not going to change we have loved our gold since ancient times it is part of our culture

It's an investment for the families, in times of need, they can sell or pawn their gold for money. But we can't sell or pawn off the petrol/diesel we buy, they get burnt out, while foreign countries keep the money we paid for it.

Nothing we can do about that, since we don't have crude oil (other than investing in alternate forms of energy). But the money one pays for gold is not lost, its just money in another form.

 

[nForce]

More info regarding the corridor would be nice.
And what does Japan gain from helping India's manufacturing sector? Wouldn't they be more concerned about improving their own sector even more?

And honestly, India has enough tech now, locally developed or imported, to do this herself. 100% Made in India.

Delhi-Mumbai Industrial Corridor is a mega infra-structure project of USD 90 billion with the financial & technical aids from Japan, covering an overall length of 1483 KMs between the political capital and the business capital of India, i.e. Delhi and Mumbai.

A MOU was signed in December 2006 between Vice Minister, Ministry of Economy, Trade and Industry (METI) of Government of Japan and Secretary, Department of Industrial Policy & Promotion (DIPP). A Final Project Concept was presented to both the Prime Ministers during Premier Abe’s visit to India in August 2007.

Finally Government of India has announced establishing of the Multi-modal High Axle Load Dedicated Freight Corridor (DFC) between Delhi and Mumbai, covering an overall length of 1483 km and passing through the six States - U.P, NCR of Delhi, Haryana, Rajasthan, Gujarat and Maharashtra, with end terminals at Dadri in the National Capital Region of Delhi and Jawaharlal Nehru Port near Mumbai. Distribution of length of the corridor indicates that Rajasthan (39%) and Gujarat (38%) together constitute 77% of the total length of the alignment of freight corridor, followed by Haryana and Maharashtra 10% each and Uttar Pradesh and National Capital Region of Delhi 1.5 % of total length each. This Dedicated Freight Corridor envisages a high-speed connectivity for High Axle Load Wagons (25 Tonne) of Double Stacked Container Trains supported by high power locomotives. The Delhi - Mumbai leg of the Golden Quadrilateral National Highway also runs almost parallel to the Freight Corridor. This corridor will be equipped with an array of infrastructure facilities such as power facilities, rail connectivity to ports en route etc. Approximately 180 million people, 14 percent of the population, will be affected by the corridor’s development.


This project incorporates Nine Mega Industrial zones of about 200-250 sq. km., high speed freight line, three ports, and six air ports; a six-lane intersection-free expressway connecting the country’s political and financial capitals and a 4000 MW power plant. Several industrial estates and clusters, industrial hubs, with top-of-the-line infrastructure would be developed along this corridor to attract more foreign investment. Funds for the projects would come from the Indian government, Japanese loans, and investment by Japanese firms and through Japan depository receipts issued by the Indian companies.


This high-speed connectivity between Delhi and Mumbai offers immense opportunities for development of an Industrial corridor along the alignment of the connecting infrastructure. A band of 150 km (Influence region) has been chosen on both sides of the Freight corridor to be developed as the Delhi-Mumbai Industrial Corridor. The vision for DMIC is to create strong economic base in this band with globally competitive environment and state-of-the-art infrastructure to activate local commerce, enhance foreign investments, real-estate investments and attain sustainable development. In addition to the influence region, DMIC would also include development of requisite feeder rail/road connectivity to hinterland/markets and select ports along the western coast.


It is also envisaged that the alignment of the proposed corridor will have nine junction stations for exchange of traffic between the existing railway system and the DFC. The junctions are:


• Vasai Road: To cater to traffic to/from Mumbai, other than J.Nehru Port

• Gothangam: For traffic to/from Hazira Complex, Jalgaon-Udhna

• Makarpura (Vadodara): For traffic to/from Ahmedabad, Vadodara and Vadodara -Godhra Routes

• Amli Road (Sabarmati): For traffic to/from ICD-Sabarmati, ViramgamSabarmati Route, Ahmedabad, Rajkot and Bhavnagar Divisions of Western Railway

• Palanpur: For traffic to/from Kandla/ Mundra Ports and Gandhidham Area

• Marwar Junction: For Traffic from/to Jodhpur area (and lCD-Jodhpur)

• Phulera: For traffic to/from Jaipur- Tundla and Jaipur-Sawai Madhopur Routes'

• Rewari: For traffic to/from Rewari-Hissar-Ludhiana/Bathinda Routes'

• Pirthala (Tughlakabad): For traffic to/from Tughlakabad (and ICDTughalakabad)


Delhi-Mumbai Industrial Corridor is to be conceived as a Model Industrial Corridor of international standards with emphasis on expanding the manufacturing and services base and develop DMIC as the 'Global Manufacturing and Trading Hub'. The Government is considering this ambitious project to establish, promote and facilitate Delhi-Mumbai industrial corridor to augment and create social and physical infrastructure on the route which is world class and will help spurring economic growth of the region.

Integrated Corridor Development Approach for DMIC

High impact/ market driven nodes - integrated Investment Regions (IRs) and Industrial Areas (IAs) have been identified within the corridor to provide transparent and investment friendly facility regimes. These regions are proposed to be self-sustained industrial townships with world-class infrastructure, road and rail connectivity for freight movement to and from ports and logistics hubs, served by domestic/ international air connectivity, reliable power, quality social infrastructure, and provide a globally competitive environment conducive for setting up businesses. An Investment Region (IRs) would be a specifically delineated industrial region with a minimum area of over 200 square kilometers (20,000 hectares), while an Industrial Area (IAs) would be developed with a minimum area of over 100 square kilometers (10,000 hectares). 24 such nodes - 9 IRs and 15 IAs spanning across six states have been identified after wide consultations with the stakeholders i.e the State Governments and the concerned Central Ministries. It is proposed that 6 IR and 6 IAs would be taken up for implementation in the First Phase during 2008-2012 and rest of the development would be phased out in the next 4 years. The nodes identified for Phase-1 are:


Short listed Investment Regions (IRs):


• Dadri – Noida - Ghaziabad Investment Region in Uttar Pradesh as General Manufacturing Investment Region;

• Manesar – Bawal Investment Region in Haryana as Auto Component/ Automobile Investment Region;

• Khushkhera – Bhiwadi – Neemrana Investment Region in Rajasthan as General Manufacturing/ Automobile/ Auto Component Investment Region;

• Pitampura – Dhar – Mhow Investment Region in Madhya Pradesh

• Bharuch – Dahej Investment Region in Gujarat as Petroleum, Chemical and Petro Chemical Investment Region (PCPIR);

• Igatpuri – Nashik-Sinnar Investment Region in Maharashtra as General Manufacturing Investment Region;

Short listed Industrial Areas (IAs):

• Meerut – Muzaffarnagar Industrial Area in Uttar Pradesh, Engineering/ Manufacturing;

• Faridabad – Palwal Industrial Area in Haryana, Engineering & Manufacturing;

• Jaipur – Dausa Industrial Area in Rajasthan, Marble/Leather/Textile;

• Neemuch – Nayagaon Industrial Area in Madhya Prdaesh

• Industrial Area with Greenfield Port at Alewadi/ Dighi in Maharashtra, Greenfield Port Based

Organizational Structure & Project Implementation Framework:

Source

I saw a documentary by Journeyman which was claiming constructing ghost cities is one of the main reasons for high GDP growth in China, then they showed world's largest shopping Mall in China which was abandoned.

Right now, China is looking towards HSR to maintain high GDP growth.

We have our share too(read Lavasa)...Its a beautiful place that they have created.But it seems this city is serving very little practical purpose now.I have been there.Nowadays,they are mostly hosting meetings for big companies.

 

[Abingdonboy]

To Grow Fast, we have to take some tough decisions over the years, Growing fast is not important, getting a sustained Growth over a large period of time is an important thing, as far as i can see, we are currently even fumbling to maintain a 7% Growth rate over a decade's time, this even when we hit the figures of 9.5% for three years in a row. Blaming outside forces for our less GDP growth rate is not an answer, GOI has to come up with a FIRM plan to maintain atleast (no matter what) a growth rate of 7% for the next 2 decades so that we can be counted as a middle income economy & that will easily make us among the TOP-3 economies of the world. No matter which govt. comes to the center, this policy should stay for the next couple of decades. For that certain important steps need to be taken:

1. Increase of GOI financing in Healthcare, education & Infrastructure (with important role to be played by the Private sector), these three important sectors are responsible for the overall GOOD HEALTH of an economy.

2. Increase in consultations b/w two major parties (Congress & BJP) - This is b'coz it is near impossibility for a govt. to be formed at the center without either of them involved in it, this will ensure smooth conduct at the center (just like they have Republicans & Democrats in the US).

3. Reform policies initiated by one Govt. shouldn't be revoked by successive govts. & there should be a continuity in policies.

4. Increase FDI & Private player participation in certain areas.

Sir you cannot discount the external factors when you talk about globalised economies. 2012 is a prime example of this- the entire world took a hit for the problems in Europe and the US. I agree tough decisions need to be made and I am confident they will be eventually. I am looking foreword to 2013 as I expect it to be the year where the legislation and reforms are passed that bring about the next 10 years of high economic growth. India needs 15-20 years of 7-8% growth and the. After that 3-5% growth for a subsequent 2 decades to get to a healthy economic postion. As CD said- it is hard for large economies to achieve high growth rates after a certain point, when they have for to a certain stage what is needed is sustained modest growth rates. Even relatively low economic growth in an economy as large as US or China is still adding HUGE amounts to GDP becaus the base is so high.


And I don't like China and India being compared all the time. The two are VERY different countries with different cultures, different economies, different leadership, different judiciary, different political class etc.


I do hope the two "Asian giants" find more and more ways of working together though.

 

[Yeti]

It's an investment for the families, in times of need, they can sell or pawn their gold for money. But we can't sell or pawn off the petrol/diesel we buy, they get burnt out, while foreign countries keep the money we paid for it.

Nothing we can do about that, since we don't have crude oil (other than investing in alternate forms of energy). But the money one pays for gold is not lost, its just money in another form.

Yeah Indians will never stop buying gold we have traded with it since ancient times not such a bad thing though investing in gold but right now prices have dipped a bit.

(Could mean more people will buy gold) lol


Sometimes I do wonder how much gold we have in the country must be tonnes of the stuff in private hands.

 

[arp2041]

Sir you cannot discount the external factors when you talk about globalised economies. 2012 is a prime example of this- the entire world took a hit for the problems in Europe and the US. I agree tough decisions need to be made and I am confident they will be eventually. I am looking foreword to 2013 as I expect it to be the year where the legislation and reforms are passed that bring about the next 10 years of high economic growth. India needs 15-20 years of 7-8% growth and the. After that 3-5% growth for a subsequent 2 decades to get to a healthy economic postion. As CD said- it is hard for large economies to achieve high growth rates after a certain point, when they have for to a certain stage what is needed is sustained modest growth rates. Even relatively low economic growth in an economy as large as US or China is still adding HUGE amounts to GDP becaus the base is so high.


And I don't like China and India being compared all the time. The two are VERY different countries with different cultures, different economies, different leadership, different judiciary, different political class etc.


I do hope the two "Asian giants" find more and more ways of working together though.

Agreed that External factors were there but not that big as they were in 2008-09, even than we managed to clock close to 7% growth rate, but now we have a projection of dismal (w.r.t. Indian economy) 5.3% this can be attributed to policy paralysis of UPA-2 even when Congress was in much stronger position than in UPA-1 (when Left parties were it's ally). Budget deficit has grown to more than 6% of GDP & they are bringing more & more social sector schemes in the shape of Food Guarantee scheme (I mean where is the money for it ).

As for year 2013 is concerned, i don't have much enthusiasm since the GOI will soon turn into ELECTION MODE.

+ Again, being a big economy is no reason for low growth as we have hardly averaged 4% over entire 65 years of Independence when China is growing at 10% for more than 3 decades now (we both started around the same time, but now China is entirely in a different league).

P.S. OMG, i m sounding so Pessimistic