Indian Economy-News & Updates

[SpArK]

 

[Iggy]

You should give credit to low fuel price for that..

BTW 7 lakh crore is the expected amount going to recieve from coal block allocation.. should slap congress in public for this.. bastards.

 

[TejasMk3]

Not sure if these two have been posted, but gives you about and about Gadkari's plans
Inland waterways: How Nitin Gadkari is steering some of modern India's biggest infrastructure projects - Economic Times

Another one about roads:
Will accomplish in five years what has not been done in the past 25: Nitin Gadkari - The Economic Times

From the above:

By and large, the sector is in better shape now. When I started, we were averaging 2 km per day of road construction. By March 2015, it would be up to 15 km per day and in the next two years we will achieve the 30 km per day target. This year we targeted award of 7,000 km of roads. We should be able to achieve up to 8,000 km, which was my target by March.

I remember hearing about these figures, in a lecture given in London on infra projects during NDA and UPA
During the mid of NDA-1 road construction was around 27-28km/day, and slowed down to 20km towards the end. But later during UPA-1 it was cut down to half that and then slid to 2km at the very end.

 

[lightoftruth]

S&P raises India's GDP forecasts, says it's a bright spot in Asia | Business Standard News

 

[sancho]

S&P raises India's GDP forecasts, says it's a bright spot in Asia | Business Standard News

Standard & Poor's sharply raised India's growth forecasts for the next several years to reflect a recent change in how gross domestic product is calculated by the government, and said the economy should be a "bright spot" in Asia.

The ratings agency S&P raised its India GDP growth forecast to 7.9% from 6.2% for the year ending March 2016, citing as well rising investment and low oil prices.

The agency also raised its growth forecast for 2016/17 to 8.2% from 6.6% previously.

So the raise is not because of improved economic situation, but because of the new calculation system. More interesting will be what the forcasts say after the budget was announced, because that shows what economical improvements can be expected and how far the government want to go to push the economy.

 

[Abingdonboy]

So the raise is not because of improved economic situation, but because of the new calculation system. More interesting will be what the forcasts say after the budget was announced, because that shows what economical improvements can be expected and how far the government want to go to push the economy.

The "sharp" rise in GDP growth projections is down to the new calculations but the GDP growth was always going to be higher this year thanks to what the UPA-2 did in their last few months and what the NDA has done in their first few months.

 

[lightoftruth]

So the raise is not because of improved economic situation, but because of the new calculation system. More interesting will be what the forcasts say after the budget was announced, because that shows what economical improvements can be expected and how far the government want to go to push the economy.

Calculation system is not merely a change of base year it includes various other sectors of economy which were earlier not included.Significant part is the projected increase in growth rate ,of course budget will give a clearer picture but if we go by the economic survey today laid down by the govt GDP is moving towards double digit growth rates provided reforms continue.

 

[sancho]

Calculation system is not merely a change of base year it includes various other sectors of economy which were earlier not included.

Exactly and both are part of the new calculation system, which is why you have to look at the given figures with caution and in relation to the base...

Significant part is the projected increase in growth rate ,of course budget will give a clearer picture but if we go by the economic survey today laid down by the govt GDP is moving towards double digit growth rates provided reforms continue.

...because the GDP is not moving double digit on economic base, only on basis of the the new calculation system!

Economical improvement is around 6% and growing, just as expected a year ago and based on the reforms and policy changes of UPA2 as @Abingdonboy said.

 

[Abingdonboy]

..because the GDP is not moving double digit on economic base, only on basis of the the new calculation system!

Economical improvement is around 6% and growing, just as expected a year ago and based on the reforms and policy changes of UPA2 as @Abingdonboy said.

Sir, what you seem to be saying about the economy growing at around 6% is tantamount to saying the new, higher, figures are fudged when in reality they are more indicative of the actual growth in the Indian economy and this isn't a one-off re-calculation but they apply to the last so many years including the UPA years meaning the UPA years actually saw higher true growth than what was stated at the time.

 

[sancho]

Sir, what you seem to be saying about the economy growing at around 6% is tantamount to saying the new, higher, figures are fudged when in reality they are more indicative of the actual growth in the Indian economy and this isn't a one-off re-calculation but they apply to the last so many years including the UPA years meaning the UPA years actually saw higher true growth than what was stated at the time.

I'm not saying there are fudged, just that one have to see them in the right perspective!

If we say the new calculation system is correct and from now on we calculate with 8% it's fine, but that doesn't mean that the economy has grown for 2% in the last year. That's why I'm saying that there is a figure based on the calculation system and one for the actual economic growth. We see growth continuing as expected, but it's not a jump as the figures might suggest, if you take them out of context.
And yes, if we take 8% as the correct figure now, one has to admit that the UPA did a great job in the last term, completely contrary to public perception and that we had a high growth right within a global crisis!
But then we would have to take the 8% as the base now and see next year how much more this figure could had been pushed, because that's then effected by the new government, it's economical policies and reforms.


Btw, the funny thing is, if the UPA would had been in power for just 1 more year, things would had looked so different for them.
They could had boasted about 8% growth now, they would had been as lucky from the reduced inflation and still would be politically meaningful. Strange isn't it.

 

[lightoftruth]

Exactly and both are part of the new calculation system, which is why you have to look at the given figures with caution and in relation to the base...

Caution is always welcomed and necessary but if credit rating agencies are validating it ,we have few less things to worry about.

...because the GDP is not moving double digit on economic base, only on basis of the the new calculation system!

Economical improvement is around 6% and growing, just as expected a year ago and based on the reforms and policy changes of UPA2 as @Abingdonboy said

Their i disagree,fiscal deficit targets are reducing which an year ago was impossible ,the fuel bill has shrank,subsidies have reduced,coal imports reduced,and their are various other reasons from clearances or increased FDI which clearly shows that things have moved ahead from UPA2 times ,their has to be a positive affect on it .

 

[sancho]

Their i disagree,fiscal deficit targets are reducing which an year ago was impossible

How so? The NDA has taken the same limits that the UPA2 government stated in their interim budgets too. It's not like they have aimed at a far higher reduction of the deficit.

and their are various other reasons from clearances or increased FDI which clearly shows that things have moved ahead from UPA2 times ,their has to be a positive affect on it .

FDI was a necessary step, just as the tax reform is, but as you can see on the market and the industry, that alone was not enough to push the economic growth beyond of what was expected for the last year anyway. What we have seen by the NDA government for the most part was, the hope that they can use the positive sentiment from the election and about change, to attract more investments into India and therefor to spend less on their own. That however has not worked, because even the Indian industry is cautious on how the government plans on the mid to long term, before they start investing on their own. Foreign investors are even more restrictive at the moment, because of the difficult situation of the global markets. We simply can't ignore what's happening around us and say, we do something and get back to 10% GDP, because that happened during good times of global economy, where money and the market was available. Now both it limited and we have to attract investors with more efforts, just as the claim of low production costs in India and name it "Make in India", doesn't make foreign companies to divert production, when they are selling less anyway. We have to attract them with more than just good PR and sentiments and that is what the new budget has to show.

Btw, I am far from saying nothing has changed, but for the huge mandate they got and with all the promises they gave, not much was achieved so far. The last year was a modest start (in terms of defence it was even pretty poor), but now the government has simply to show that they are better and have to work much harder, to show more changes.

 

[lightoftruth]

How so? The NDA has taken the same limits that the UPA2 government stated in their interim budgets too. It's not like they have aimed at a far higher reduction of the deficit.

Actually they did the fiscal deficit target of 4.1% will be met in FY15 on which everyone had a consensus at the time of interim budget that it is impossible to achieve and the economic survey has aimed to reduce it further at 3%.

FDI was a necessary step, just as the tax reform is, but as you can see on the market and the industry, that alone was not enough to push the economic growth beyond of what was expected for the last year anyway. What we have seen by the NDA government for the most part was, the hope that they can use the positive sentiment from the election and about change, to attract more investments into India and therefor to spend less on their own. That however has not worked, because even the Indian industry is cautious on how the government plans on the mid to long term, before they start investing on their own. Foreign investors are even more restrictive at the moment, because of the difficult situation of the global markets. We simply can't ignore what's happening around us and say, we do something and get back to 10% GDP, because that happened during good times of global economy, where money and the market was available. Now both it limited and we have to attract investors with more efforts, just as the claim of low production costs in India and name it "Make in India", doesn't make foreign companies to divert production, when they are selling less anyway. We have to attract them with more than just good PR and sentiments and that is what the new budget has to show.

Btw, I am far from saying nothing has changed, but for the huge mandate they got and with all the promises they gave, not much was achieved so far. The last year was a modest start (in terms of defence it was even pretty poor), but now the government has simply to show that they are better and have to work much harder, to show more changes.

I agree on FDI part but that is limited to fewer areas for eg FDI in insurance irrespective of the sentiment or restrictive opening it will attract investment due to the nature of that industry,FDI is more of a case to case study ,Tax structure is concerned biggest reform is GST and the states are most likely now on board due to increased revenue share from central taxes and complete coal auction revenue.This will lead to an early implementation of GST and it is likely that tomorrow their will be some road map about it,"Make In India" actually is nothing more than a push for DMIC NMIZ SEZ's and other economic corridors if the land ordinance amendments gets cleared (maybe by a joint session) things will drastically change its not merely a PR but actual manufacturing industry push.These are all big reforms.

This Govt is not a capitalist one as projected actually far different from it,they believe in improving the current structure through reforms rather than getting it privatized..

 

[sancho]

its not merely a PR but actual manufacturing industry push.

Which however is dependent on a market that buys products manufactured in India, but in the current global situation, the market is dull and export limited. That's why even China is reducing it's growth and manufacturing rate by far and why the Make in India PR didn't gained investments from foreign countries so far and why more credible reforms or investments of the government itself are needed. Take the railway budget too, where the government hoped initially on privat companies investing too, which reduced the need of government spending, that didn't worked and now the government makes a U-Turn and invests on it's own, at least to assure commitment to other investors. Similarly, we have to see some actions tomorrow, to assure the market and investors, that India is pushing with the clear support of the government and that works only with government spending and reforms.

 

[lightoftruth]

Which however is dependent on a market that buys products manufactured in India, but in the current global situation, the market is dull and export limited. That's why even China is reducing it's growth and manufacturing rate by far and why the Make in India PR didn't gained investments from foreign countries so far and why more credible reforms or investments of the government itself are needed. Take the railway budget too, where the government hoped initially on privat companies investing too, which reduced the need of government spending, that didn't worked and now the government makes a U-Turn and invests on it's own, at least to assure commitment to other investors. Similarly, we have to see some actions tomorrow, to assure the market and investors, that India is pushing with the clear support of the government and that works only with government spending and reforms.

These manufacturing corridors will take decades to build for eg DMIC phase 1 is projected to be completed by 2019 which will most likely delay,so the current demand conditions will not be the same.Eitherway we have huge domestic market and our manufacturing share is not comparable to other economies it anyway has to improve .Their will be huge migration from rural areas as land is already limited due divisions in inheritance and potential in agriculture is not comparable to opportunities in cities.This urbanization around these corridors increases real estate growth in india which accounts for substantial share of economy,so these corridors are not limited to exports sector .
Railways budget is looking for 8.5 lac crore investment from coming 5 yrs this cannot come from govt alone,PPP model will anyway has to be introduced,for the first time govt shifted away from populism and investors will be keeping an eye on it.
Yes reforms have to continue will see how it turns out tomorrow.