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The speeches of the Reserve Bank of India governor, Raghuram Rajan, are always a pleasure to read. In his latest speech made on 20 April 2016, Rajan said:

India is the fastest growing large country in the world, though with manufacturing capacity utilization low at 70 percent and agricultural growth slow following two bad monsoons, our potential is undoubtedly higher. Growth, however, is just one measure of performance.
The level of per capita GDP is also important. We are still one of the poorest large countries in the world on a per capita basis, and have a long way to go before we reasonably address the concerns of each one of our citizens.RBI Governor Raghuram Rajan

Rajan further said:

We are often compared with China. But the Chinese economy, which was smaller than ours in the 1960s, is now five times our size at market exchange rates. The average Chinese citizen is over four times richer than the average Indian. The sobering thought is we have a long way to go before we can claim we have arrived.

RBI Governor Raghuram Rajan
The point that Rajan was trying to make was that:

As a central banker who has to be pragmatic, I cannot get euphoric if India is the fastest growing large economy...The central and state governments have been creating a platform for strong and sustainable growth, and I am confident the payoffs are on their way, but until we have stayed on this path for some time, I remain cautious.RBI Governor Raghuram Rajan

This was essentially a retort to politicians who keep tom tomming India’s dodgy economic growth numbers. While Rajan did not say that he does not believe in the economic growth numbers, he did try and make it clear that if India needs to reach anywhere, it needs strong and sustainable economic growth in the years to come. And achieving that is easier said than done.


Further, Rajan also made a more important point in his speech about India’s low per capita income. What is per capita income? John Lanchester defines per capita income in his book How To Speak Money as: “The total Gross Domestic Product(GDP) of a country divided by the number of people in the country.

As he further writes: “It is a measure of how rich the country’s citizens are on average - though it is a very rough measure of that, since a country’s WEALTH is often very unevenly distributed.”

The phrase to mark in the above paragraph is on average. The question is does an average always represent the right scenario? As Robert H Frank writes in Success and Luck-Good Fortune and the Myth of Meritocracy:

It is of course possible for most people to have a trait the measures higher than the corresponding mean value for the population to which they belong. Since a small number of people have fewer than two legs and no one has more, for instance, the average number of legs in any population is slightly less than two. So most people actually do have “more legs than average”.Robert H Frank In Success And Luck-Good Fortune And The Myth Of Meritocracy

How does the above paragraph apply in the context of the GDP? What it tells us is that the average income of India is not equal to the income of the average Indian. Now what does that actually mean?

Let me explain that through an example. Let’s say on a given day in the city of Mumbai, an Ambani, an Adani, a Birla and a Tata, walk into a local Udupi restaurant in Matunga. The restaurant is known for its soft idlis and fabulous coffee. And this has attracted the four industrialists to this small place.

The moment these four walk into the restaurant, the average income of the people seated in the restaurant goes up by leaps and bounds. If I may rephrase the last sentence, the per capita income of the restaurant goes up leaps and bounds, when the four industrialists walk into the Udupi restaurant.


But this increase in per capita income of the restaurant will have no impact on the incomes of the other people seated in the restaurant. (This example is essentially an adaptation of an example Charles Wheelan uses in his book Naked Statistics).

As Charles Wheelan writes in Naked Statistics: “The mean, or average, turns out to have some problems in that regard, namely, that it is prone to distortion by “outliers”, which are observations farther from the center.”

So basically, the Ambanis, Adanis, Birlas and Tatas, of the world, essentially India’s rich, push up the average income of India i.e. the per capita income. As Wheelan writes: “The average income...could be heavily skewed by the megarich.”

In this scenario, the average income does not give us a correct picture. Further, it is safe to say, that the income of the average Indian is lower than the average income of India.

At this point it is important to introduce another term i.e. the median. As Wheelan writes: “The median is the point that divides a distribution in half, meaning that half of the observation lie above the median and half lie below.”

Hence, the median income is the income of the average Indian. Given this, the median income is the right representation of the income of the average Indian. This is because the rich outliers (the Ambanis, the Adnanis, the Tatas and the Birlas) are taken into account. Data from World Bank shows that the top 10 percent of India’s population makes 30 percent of the total income. And this pushes up the per capita income.

The trouble is that it is not so easy to find median income data in the Indian context. A survey carried out by Gallup in December 2013, put India’s median income at $616. Data from the World Bank shows that India’s per capita income during the same year was $1455.Hence, the median income was around 58 percent lower than the average income or the per capita income. And that is not a good sign at all.

This shows the tremendous amount of inequality prevalent in the country. The difference in the income of the average Indian and the average income of India is thus huge. In fact, I had written about this inequality in the column published on April 19.

In 2015-16, the average income of those not working in agriculture was 4.9 times those working in agriculture (using GDP at current prices). If we were to use GDP at constant prices (at 2011-12 prices), the ratio comes to 5.5. Constant prices essentially adjust for inflation. And this is really a big worry!

http://swarajyamag.com/economy/the-...cantly-lower-than-the-average-income-of-india


Source: https://defence.pk/threads/the-inco...average-income-of-india.431874/#ixzz49XBmiCq6
 
http://blogs.wsj.com/indiarealtime/2016/05/25/modis-first-two-years-economic-report-card/

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Govt mulls 10-year tax holiday for low-value electronics manufacturing

NEW DELHI: In a major shift in strategy, the BJP-led NDA government could soon incentivize low value added electronics manufacturing in India as against high-value added products encouraged by its predecessor besides granting a 10-year tax holiday to manufacturers setting up base in India.

Government's premier think-tank NITI Aayog has come up with a two-pronged draft electronic products strategy that would give a strong push to Prime Minister Narendra Modi's Make in India initiative.

India's electronics hardware industry is pegged at less than $65 billion in relation to the world market that is in excess of $2 trillion, and a huge part of this is catered by China for its scale of operation. India's total electronics hardware production in 2014-15 is estimated at $32.46 billion, just about 1.5 percent of world electronic hardware production while the domestic consumption in 2014-15 was $63.6 billion with imports accounting for 58% of this consumption.

According to the draft policy, the BJP-led NDA government will work on export-oriented strategy as well as an import substitution strategy to boost manufacturing of electronics in India. "The objective behind export-oriented strategy is to create an ecosystem in which Indian electronics industry becomes globally competitive while the objective of import substitution strategy is to expand the production of electronic goods in the short run," draft policy said. The Aayog has sought comments from stakeholders on the draft policy till June 15.

Under the export-oriented strategy government would provide investment incentives, simplifying tax regime, ending the inverted duty structure, setting up of coastal economic zones dedicated to electronics manufacturing, forging free trade agreements that can help India capture duty free markets . "A ten-year tax holiday for a firm that invests $ 1 billion and provides employment to 20,000 people may be considered," the draft policy has recommended.

Citing the example of manufacturing of i-phones in China, NITI Aayog has recommended not to shun low value addition per unit. "If produced on a large scale, low value addition per unit still translates in a large total value addition and large number of jobs," it said.


Under the import-substitution strategy, the Aayog has proposed modifying the preferential market access policy of DeitY to allow preference in government procurement, especially in the area of defense. Besides, it has suggested differential taxation of imports versus domestic production. "These measures can attract challenges in the WTO," it has cautioned.

"Explaining the rationale behind its import substitution strategy, the Aayog sad, "It is however imperative to move ahead with the measures aimed at reorientation towards export simultaneously. This will ensure that the present opportunity to capture the large world market in electronics arising out of China's rising real wages is not missed.

Read more at:
http://economictimes.indiatimes.com...ofinterest&utm_medium=text&utm_campaign=cppst
 
Exports are down because India's major export was refined oil,which has been affected due to low oil prices
 
you couldn't find a more credible person than sanjay nirupam to make your point?

It works for him. Beggars can't be choosers. Jahan se jo aa raha hai le lo. Posting random tweets of nobodies (not Nirupam) is what he has to satisfy himself with. The kick in the nuts that was the 19th may results has them running helter skelter.

Former Shiv sainik is now a beacon of secularism. He lost the 2014 Lok Sabha election from Mumbai North constituency by a margin of about 4.5 lakh votes.:coffee:
 
you couldn't find a more credible person than sanjay nirupam to make your point?
It works for him. Beggars can't be choosers. Jahan se jo aa raha hai le lo. Posting random tweets of nobodies (not Nirupam) is what he has to satisfy himself with. The kick in the nuts that was the 19th may results has them running helter skelter.

Former Shiv sainik is now a beacon of secularism. He lost the 2014 Lok Sabha election from Mumbai North constituency by a margin of about 4.5 lakh votes.:coffee:
Take a look at @SitaramYechury's Tweet:
Take a look at @gops333's Tweet:
 

sir look at the other side of the coin as well for a minute without being biased

you know the strange thing, you and I both are here because we both are concerned about our country and want to see it develop but you being from a certain religious community have reservations about BJP and that is why you consciously ignore development work those are being done under present government.

what I think is you want to see India develop as much as I do but not under BJP regime because it will pave the way for them to reelect.

regards

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India's current account deficit may swing to surplus in Q1 2016: Nomura

http://articles.economictimes.india...ccount-deficit-october-december-nomura-report
Since 1947, CAD had remained positive for India for only 6 years. If CAD remains positive for Q1 FY2017, it is historic but not very significant. Indian exports are declining for 17 months straight. India has benefitted a lot from slump in international crude oil prices. GOI is doing the right thing by increasing the excise duty on petroleum products which is being spent on capital expenditure and social schemes in a more robust manner.
 
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