Largest Emerging Economies, E7+Pakistan, growth prospects and challenges

[sangsharma]

Pakistan should better pay more attention to streamline its fiscal management instead of asking more foreigner in your country. Dont look for FDI neither tourism at this stage of economy. These are quick fix and will shadow your long term reform that needed in the economy. Just see how Indian economy is going down too. PK and India followed the same path only that PK failed earlier and India still sitting on a bomb.

Agreed. Right now India needs a govt that can take strict policy decisions.

 

[Cheetah786]

Tourism? Seriously? Well, if you're into being kidnapped I guess...

Last decade, the U.S. lost out on 78 million overseas visitors - you wanna question other countries seriously ?specially the ones paying the price for Americas war.

 

[Hello_10]

Pakistan should better pay more attention to streamline its fiscal management instead of asking more foreigner in your country. Dont look for FDI neither tourism at this stage of economy. These are quick fix and will shadow your long term reform that needed in the economy. Just see how Indian economy is going down too. PK and India followed the same path only that PK failed earlier and India still sitting on a bomb.

Im 50% agreed with you. many economists of India advocate "food security"/ "right to get a job" etc in India which is not possible until the Indian government may control its population. they simply can't feed 1.2bil population from the limited natural resources they have . USA is 3 times bigger in area than India but population of India is 4 times to USA? and on the top of that, Indian government wants to give welfare/ heavy subsidies to its people? if India face a sudden fall like ASEAN in late 90s and South America like in 80s, all these they will have to withdraw after that so better they keep habit to live in less and get rid off the unnecessary subsidies . about 2 months before, Pakistan increased petrol and diesel prices by around 10 rupees each as they can't afford to give subsidies while the people of Pakistan are poorer than India but Indian government is hesitating to do so? but the day they will reach level of Pakistan, just one good economic fall is required/ the bomb you said, and India will learn all by themselves, wait for few years and you will see that .

only those countries may may feed their people for nothing/ give subsidies and welfare who may control their population which isnt true in case of India. until Indian government can't reduce its population, it can't feed its people for nothing and have welfare/ subsidies

 

[Hello_10]

Pakistan should better pay more attention to streamline its fiscal management instead of asking more foreigner in your country. Dont look for FDI neither tourism at this stage of economy. These are quick fix and will shadow your long term reform that needed in the economy. Just see how Indian economy is going down too. PK and India followed the same path only that PK failed earlier and India sitting on a bomb.

below is the list of bomb size, you are talking about. this year, Budget deficit of India is likely to touch 7%, similar to Pakistan last year and getting closer with the budget deficit of falling economies, the G7, they have at around 10% of their GDP. growth rate of India for the last quarter of 2011 was just 6.9% and for the quarter ending March 2012, it would be around 6.1% only. and the way their budget deficit is also being increase due to hefty subsidies, soon India economy would come in the category of falling economies, the G7, with close to 10% budget deficit

This entry records the difference between national government revenues and expenditures, expressed as a percent of GDP. A positive (+) number indicates that revenues exceeded expenditures (a budget surplus), while a negative (-) number indicates the reverse (a budget deficit). Normalizing the data, by dividing the budget balance by GDP, enables easy comparisons across countries and indicates whether a national government saves or borrows money. Countries with high budget deficits (relative to their GDPs) generally have more difficulty raising funds to finance expenditures, than those with lower deficits.

Rank Country Value Date of Info

19 Brazil +2.90 2011 est.
36 Russia 0.40 2011 est.
58 Indonesia -1.20 2011 est.
68 Turkey -1.60 2011 est.
71 China -1.80 2011 est.
91 Mexico -2.40 2011 est.
132 World -4.20 2011 est.
149 India -5.00 2011 est.
154 South Africa -5.20 2011 est.
178 Pakistan -7.00 2011 est.
190 United Kingdom -8.80 2011 est.
191 United States -8.90 2011 est.
193 Greece -9.60 2011 est.
198 Ireland -10.10 2011 est.

Budget surplus (+) or deficit (-) 2012 country ranks, By Rank

if you have a look, among the E7, India is on the bottom on the budget deficit, the worse among the E7. and the way Congress is having more subsidies, budget deficit, soon India would become one of the 'pigs', one of PIIGGS economies like US/ UK/ Ireland/ Greece etc, wait for few more years to come

 

[TopCat]

below is the list of bomb size, you are talking about. this year, Budget deficit of India is likely to touch 7%, similar to Pakistan last year and getting closer with the budget deficit of falling economies, the G7, they have at around 10% of their GDP. growth rate of India for the last quarter of 2011 was just 6.9% and for the quarter ending March 2012, it would be around 6.1% only. and the way their budget deficit is also being increase due to hefty subsidies, soon India economy would come in the category of falling economies, the G7, with close to 10% budget deficit

You are quite right but did not touch the main point. You can still survive a budget deficit through inflation and printing money domestically. But you cant survive a current account deficit and could turned out to be a defaulter. Just see how India reacted to S&P credit rating which is getting closer to Junk Status. Most developing countries are doing extremely well with BB- rating (BD, Vitenam, Indonesia etc) yet India cant survive even with a BB+ rating. Why is so? As growth rate falls below 6% the FDI will run dry which will have a chain effect on further downgrading of rating. As with huge trade deficit India is completely dependent on FDI and portfolio investment to cover its current account deficit, the same as Pakistan. Pakistan defaulted because of WOT and rapid withdrawl of capital and dried out FDI. India following the same path and waiting for the inevitable to happen.

I dont find fundamental difference of PK and IND economy.

 

[yyetttt]

Pakistan is in N11, indian *** burning

 

[Hello_10]

You are quite right but did not touch the main point. You can still survive a budget deficit through inflation and printing money domestically. But you cant survive a current account deficit and could turned out to be a defaulter. Just see how India reacted to S&P credit rating which is getting closer to Junk Status. Most developing countries are doing extremely well with BB- rating (BD, Vitenam, Indonesia etc) yet India cant survive even with a BB+ rating . Why is so? As growth rate falls below 6% the FDI will run dry which will have a chain effect on further downgrading of rating. As with huge trade deficit India is completely dependent on FDI and portfolio investment to cover its current account deficit, the same as Pakistan. Pakistan defaulted because of WOT and rapid withdrawl of capital and dried out FDI. India following the same path and waiting for the inevitable to happen.

I dont find fundamental difference of PK and IND economy.

Look, I find India is on a very good position than many other countries to handle any type of economic crisis. But yes they gotto be quick to respond otherwise they may lose the train. I mean, their current state of economy is quite good than many other countries, but they have to take few certain measures to avoid any type of economic crisis.

first, India may have current account deficit (CAD) at around 3.5% of GDP this year while even total gold import bill of India was around $60bil last year, around 3.5% of GDP

Full-year exports have topped $300 billion, Sharma said, exceeding the target of around 20 per cent export growth set by the government despite a slowdown in the major export destinations such as the United States and Europe.

However, imports have surged to $485 billion during April-March, a jump of 38.2 per cent from the previous year. Apart from the crude bill, gold imports of nearly $59 billion have also helped widen the trade deficit.

In 2010/11, Indian imports rose 21.6 per cent from a year earlier to $350.7 billion, while exports grew 37.6 per cent on year to touch nearly $246 billion.

With imports far outstripping exports, India's current account gap has steadily widened since last April.

In the three months to end-December, current account deficit widened to 4.3 per cent of the GDP from 4.1 per cent in the previous quarter. New Delhi has projected the deficit for 2011/12 to be 3.6 per cent of the GDP.

With the global economic recovery remaining fragile, outlook for Indian merchandise exports, for the which the United States and Europe are the key markets, remains uncertain.

"Looking forward, there will be challenges because of the continuing weakness in the global economy," said Shubhada Rao, chief economist at Yes Bank in Mumbai.

"We expect the current account deficit to remain at about 3.5 to 4 per cent of GDP for the fiscal year 2012/13."

India's trade deficit widens on crude import bill - India News - IBNLive

from here, we have a news as below about gold 'export' from India in early 2009, during recession. it was because Indian rupees got depreciated in early 2009 as much that gold price in Indian market in rupees term got expansive than the international market in $ term:

05 June 2009

In the last few years, India has been the largest importer and consumer of gold. In 2008, India imported around 400 tonnes of gold, which is mainly used for making jewellery items and gold coins. But in the last five months of 2009, India’s gold imports have fallen to negligible levels, compared to previous years, that bullion dealers are now importing scrap gold to Dubai.

In the last five months months-January, February, March, April and May-of 2009, India exported nearly 30 tons of gold coins to Dubai, the City of Gold, which has several large India-based gold jewellery show rooms, according to unofficial figures from various jewellery and bullion trade bodies in the country.

http://www.commodityonline.com/news...-coins-scrap-gold-to-dubai-18378-3-18379.html

this way, if we may face any recession in world even right now, India won't import gold of $60bil yearly and 'zero' account deficit this way

but Im the man who favor gold import as it is a foreign currency which help India keep on safe side for the bad time like any recession we had in early 2009. Gold has been proved to be the safe haven for investments as it gives the highest ROI, even during the recession period of early 2009. Im quite happy with rupees depreciation by 6% from 50/$ to 53/ $ right now as it will make the import expensive with giving new breath to the exporters also. India needs to remove subsidies from petrol/ diesel to make it expansive enough for its lesser use, which will decrease import bill of oil which was around $155bn for India last year, more than total export of Iran also last year. India is just facing policy paralysis right now, nothing else

have a look on the oil import bill of India and 'total' export level of top oil exporting countries. even if India export refined oil of round $30bil, its total bill of $150bil+ is quite high which has to be reduced by making it expansive enough by removing subsidies from it

While gold and silver imports grew by 44.4 per cent year - on-year to USD 61.5 billion, crude oil imports went up by 46.9 per cent to USD 155.6 billion in 2011-12

Crude oil, gold imports push trade gap to highest-ever $185 bn - Economic Times

List of countries by exports

13 Saudi Arabia $350,700,000,000

21 United Arab Emirates $265,300,000,000

33 Iran $131,800,000,000

List of countries by exports - Wikipedia, the free encyclopedia

Most developing countries are doing extremely well with BB- rating (BD, Vitenam, Indonesia etc) yet India cant survive even with a BB+ rating .

India following the same path and waiting for the inevitable to happen.

I dont find fundamental difference of PK and IND economy.

also, BB+ is 2 step higher than BB-? I think, BBB+ would best suit a developing country like India which has to first improve its infrastructure to get AAA

there are few fundamental economic difference between India and Pakistan. Public Debt of Pakistan is around 60% to its GDP but for India its 50%. foreign reserve of India is 20 times to Pakistan but Indian foreign debt is only 5 times to Pakistan. budget deficit of India was 5% last year but for Pakistan it was 7% last year. and the main thing, Investment of India is around 31% to its GDP but of Pakistan its 11% only. Pakistan is facing bigger problem of bad governance than India

 

[Hello_10]

Pakistan economy is in bad shape due to extremely worst governance. The corrupt mafia of elites are busy looting the wealth of the country & saving it in their foreign accounts. 4.5 years of democrazy & whole country is destroyed economically, zardari regime had done nothing for Pakistan, infact he had created millions problem for the next ruling govt. The electricity crises had worsened, textile industry is moving towards collapse, IT industry almost collapsed, electricity/gas/petroleum etc charges jump to triple times, national institutions such as PIA/PR/PSM etc collapsed, all the development works started during last govt term has been terminated or stopped, TIP reports of almost 100billion US$ corruption in just 4 years. Coming towards media, the so called free media is not even free & must be puppet of some external force. Corrupt media, instead of exposing & criticizing fail govt is busy in bashing of Military institution & call it that they are working for strengthen of democrazy, someone plz tell these jokers that a common Pakistani wants jobs, education, food & that comes by good govt be it democrazy or military rule.

Pakistan will never ever manage to go beyond 2.5-3% annual economic growth unless it focus exclusively on bad governance issue, corruption & making a decision & vision to reach top economic might countries. Hell guys, it is 60+years pass since indepandance & Pakistan can't even manufacture a small car lets say comparable to Mehran. Pakistanis need to get out of PA's fear, PA will only coup if there is bad governance or so, so it is simple don't give them chance, don't do bad governance, focus on building economy.

Bad governance is a big problem of both India and Pakistan. When we visit foreign and get caught in political talks, the very first thing we have to answer about India is, “whether rise of India will help the world become a better place to live or its rise will destroy the world order, making the world a Hell?” I support people like Imran Khan as I have seen him fighting for Pakistan on cricket ground and if he has a true intention to see his nation successful, he will get all the talents of Pakistan’s bureaucracy who will guide him while taking key decisions. That’s why I support people like Sachin and Siddhu also as they have a spirit to see their country a success, rest we have all the talents who may help them on the side of politics/ economy

Indian government must clear, whether it is right to rule India by West, similar to British Raj, or, India may come in front of the world with a face which may prove that success of India will be good for the world. Fall of US/ West has a certain meaning, that is, the world is now going to become ‘bi-polar’ and this way a rising power/ economy, India, must prove that their rise as a big economy/ power will not threaten the world. Either India would be able to solve its internal problems which may threaten the world or India would surrender its governance to rest of the world, like how the Western Champions are trying to colonize India right now. like its very high population which is a threat to world as richer Indian population will demand more in future, making the products/ raw materials more expansive in world/ with higher green house emission from India/ China in future

Indian government must clear how they will be able to feed 1.2bil people by the limited resources they have in India. Area of US is 3 times to India, having 3 times natural resources than India, but population of India is 4 times to US? In 2011, US had to borrow around $1.2tn of which 70% was used to pay for welfare/ pensions in US. And now debt to GDP ratio of US is over 100%. This way we find no matter how much advanced technologies and hefty natural resources, the US has, with around $2.2tn/ year export also if we include service export also, but it is still not easy for US government to bear expanses of welfare/ subsidies of their hardly 310mil people. Then how the Indian government may bear expanses of welfare/ subsidies of 1.2bil Indian people if they have just 30% natural resources than US?

 

[Hello_10]

Bad governance is a big problem of both India and Pakistan. When we visit foreign and get caught in political talks, the very first thing we have to answer about India is, “whether rise of India will help the world become a better place to live or its rise will destroy the world order, making the world a Hell?” I support people like Imran Khan as I have seen him fighting for Pakistan on cricket ground and if he has a true intention to see his nation successful, he will get all the talents of Pakistan’s bureaucracy who will guide him while taking key decisions. That’s why I support people like Sachin and Siddhu also as they have a spirit to see their country a success, rest we have all the talents who may help them on the side of politics/ economy

Indian government must clear, whether it is right to rule India by West, similar to British Raj, or, India may come in front of the world with a face which may prove that success of India will be good for the world. Fall of US/ West has a certain meaning, that is, the world is now going to become ‘bi-polar’ and this way a rising power/ economy, India, must prove that their rise as a big economy/ power will not threaten the world. Either India would be able to solve its internal problems which may threaten the world or India would surrender its governance to rest of the world, like how the Western Champions are trying to colonize India right now. like its very high population which is a threat to world as richer Indian population will demand more in future, making the products/ raw materials more expansive in world/ with higher green house emission from India/ China in future

Indian government must clear how they will be able to feed 1.2bil people by the limited resources they have in India. Area of US is 3 times to India, having 3 times natural resources than India, but population of India is 4 times to US? In 2011, US had to borrow around $1.2tn of which 70% was used to pay for welfare/ pensions in US. And now debt to GDP ratio of US is over 100%. This way we find no matter how much advanced technologies and hefty natural resources, the US has, with around $2.2tn/ year export also if we include service export also, but it is still not easy for US government to bear expanses of welfare/ subsidies of their hardly 310mil people. Then how the Indian government may bear expanses of welfare/ subsidies of 1.2bil Indian people if they have just 30% natural resources than US?

Indian government must answer how they will provide subsidies/ welfare to 1.2bil people if 3 times bigger land of US can't afford to pay for the social expanses of hardly 310mil population, with all the high technologies and over $2.2tn export also, if we include their service export also. have a look on the datas as below and see where the US is heading for, while bearing social expanses of hardly 310mil population and where the India will be ended up with 1.2bil population with just a third of natural resources/ land than US, even if India may have as good technologies as US after 10-12 years?

The Primary Drivers of Spending

The two biggest line items in Obama's proposed budget for 2012 are health care (22.62%) and Social Security (20.04%). Together, these two line items account for 42.66% of the proposed budget for 2012. According to the Congressional Budget Office, all of the projected growth in government spending as a share of GDP over the next 25 years is attributable to health care and Social Security.

Policy Responses and Implications

For all the clamor and confusion surrounding the national debt, the reality is that we have exactly three options: we can increase revenues, reduce outlays or make use of some combination of the two. Given the magnitude of the problem, the third option (some combination of raising revenues and reducing outlays) seems to be the only realistic option. The CBO predicts that the national debt could reach 190% of GDP by 2035, leading to an unsustainable and potentially ruinous level of debt service (the CBO estimates that debt service could reach 9% of GDP by then).

The U.S. Debt Crisis: A Glossary and Guide to the Key Issues in 2012 - Charles Davi - Business - The Atlantic

have a look on US's budget expenditure with 9% budget deficit as below and check in which direction they are moving in, with hardly 5% expenditure on infrastructure and rest around 80% on social spending/medicare, defense expenditure, interests payments on debt etc. does the Indian government want the India to reach this level while they have only a third of the natural resources of US with 4 times more population than them?

Mandatory spending is also expected to increase as a share of GDP. According to the conservative Heritage Foundation, spending on Social Security, Medicare, and Medicaid will rise from 8.7% of GDP in 2010, to 11.0% by 2020 and to 18.1% by 2050.[11]

Expenditures in the United States federal budget - Wikipedia, the free encyclopedia

 

[Hello_10]

You are quite right but did not touch the main point. You can still survive a budget deficit through inflation and printing money domestically. But you cant survive a current account deficit and could turned out to be a defaulter. Just see how India reacted to S&P credit rating which is getting closer to Junk Status. Most developing countries are doing extremely well with BB- rating (BD, Vitenam, Indonesia etc) yet India cant survive even with a BB+ rating. Why is so? As growth rate falls below 6% the FDI will run dry which will have a chain effect on further downgrading of rating. As with huge trade deficit India is completely dependent on FDI and portfolio investment to cover its current account deficit, the same as Pakistan. Pakistan defaulted because of WOT and rapid withdrawl of capital and dried out FDI. India following the same path and waiting for the inevitable to happen.

I dont find fundamental difference of PK and IND economy.

sir I didnt get your reply, you there? lets discuss why can't the country like India, Brazil, Turkey, South Africa, Mexico, Russia, Indonesia of E7+SA members can have AA ranking like China of E7 itself? why rest of E7+SA are ranked BBB by almost by all the credit agencies and are 'Blue' while the China is 'Green' with AA, similar to developed countries? and reasons why our last member of E7+Pakistan, Pakistan, is Red in this picture by either B or CCC ranking by most of the credit agencies?
List of countries by credit rating - Wikipedia, the free encyclopedia

List of countries by credit rating - Wikipedia, the free encyclopedia

its true that spending on infrastructure is the main problem why we are in blue. then here, why can't India and other major E7+SA countries have spending on infrastructure by 10% like China?

India will spend close to $1.0tn on infrastructure development by next 5 years, could you please come with the similar datas for Pakistan and Bangladesh also?

India needs to raise infrastructure spending to 10% of GDP: IDFC Projects
May 5, 2012

MANILA: India needs to raise infrastructure spending to 10 per cent of GDP to achieve and sustain economic growth target of 9 per cent in the coming years.

"In order to sustain growth targets, this (investment in infrastructure) would need to increase further to over 10 per cent of GDP by 2017," IDFC Projects Ltd Managing Director Pradeep Singh said in a presentation at the annual meeting of Asian Development Bank here.

India's infrastructure spending is 8 per cent of the Gross Domestic product, as against China's 9 per cent, he said. The country's GDP was $1.4 trillion at the end of March 2011.

Acknowledging that India has a long way to go in terms of meeting its infrastructure requirements, Singh said the 12th Five Year Plan (2012-17) envisages $1 trillion investment in the sector.

Of the total targeted investment, private sector is expected to invest $500 billion - with around $350 billion through debt and $150 billion of equity over next five years.

Domestic funding sources, Singh said, will not be sufficient to meet these needs.

However, during the 11th Plan period ended in March, investment in infrastructure sector fell short of its target of $500 billion.

Total investments during the past five years was about $425 billion, Singh said.

Despite the aggressive growth in last five years, India's basic infrastructure ranked 86th in Global Competitive Report-2010 by World Economic Forum, he pointed.

Projecting India as investment destination, State Bank of India Chairaman Pratip Chaudhuri said, in a separate presentation, that Qualified Foreign Investors were allowed to directly invest in Indian equity market in January.

Besides, he said, the overall FII investment limit in government securities and corporate bonds has been enhanced to $60 billion.

Chaudhuri also said India has a well regulated banking system, with 98 per cent of the banks fully computerised.

India needs to raise infrastructure spending to 10% of GDP: IDFC Projects - Economic Times

 

[TopCat]

sir I didnt get your reply, you there? lets discuss why can't the country like India, Brazil, Turkey, South Africa, Mexico, Russia, Indonesia of E7+SA members can have AA ranking like China of E7 itself? why rest of E7+SA are ranked BBB by almost by all the credit agencies and are 'Blue' while the China is 'Green' with AA, similar to developed countries? and reasons why our last member of E7+Pakistan, Pakistan, is Red in this picture by either B or CCC ranking by most of the credit agencies?
List of countries by credit rating - Wikipedia, the free encyclopedia

List of countries by credit rating - Wikipedia, the free encyclopedia

its true that spending on infrastructure is the main problem why we are in blue. then here, why can't India and other major E7+SA countries have spending on infrastructure by 10% like China?

India will spend close to $1.0tn on infrastructure development by next 5 years, could you please come with the similar datas for Pakistan and Bangladesh also?

You missed my whole point earlier.
It was not about how India is strong enough to avert the catastrophe but my point was that India certainly needed FDI or foreign fnd to cover its current account deficit.

I will come to infrastructure later. First lets talk about two core issues which took away the flexibility of Indian macro economic management.

1) Deficit. You are wrong that India has a deficit of 5-6% rather it is more than 10% if you add the deficit of state level budgetary deficit. Some of Indian states are already bankrupt (eg. West Bengal)

2) Current Account Deficit: Thats where main danger lies. You said that India can avert any catastrophe through stopping importing gold. Well thats a nice suggestion but do you know India earns 18% of its export earning throw jewelry. Gujrat will go broke if that happens.


Now coming to Chinese example. China is a complete different story. Chinese government owns all of its land and the land sale from where Govt most revenue comes from. Thats why Chinese govt can invest huge in infrastructure. The following reading could give you some more insight to it.

I will go through more details after your response.

China governments in hole as land sales plummet

BEIJING (Caixin Online) — The development-ready land market, long a reliable revenue source for local governments across China, has suddenly turned cold. And city halls are shivering.

Government-sponsored land auctions in cities nationwide have slowed dramatically in recent months, reflecting shrinking consumer demand and what one executive called a “winter mode” strategy among major developers. Nominal land values have fallen, and some auctions have been canceled due to a lack of bidders.

“The land market is basically deadlocked,” said Chen Xiaotian, president of China Real Estate Information Corp. (CIRC), a market research firm.

The cool-down follows last year’s decision by the central government to rein in soaring home prices and dampen speculation with measures such as stricter mortgage terms for buyers of second and third homes, as well as restrictions on bank loans for developers.


The government has also stepped up construction of subsidized housing for low-income families. And under central government instructions, more than 40 first- and second-tier cities introduced specific home purchase limits.

The market controls have indeed yielded the intended results. According to the China Index Academy, home prices in 100 Chinese cities tracked by private real estate researchers fell an average 0.28% in November from October, the third monthly decline in a row.

But local governments now face a dilemma. On the one hand, they see a need to control real estate prices, and would never dare disagree with or try to disrupt central government policies. But land sales have plunged, hurting their ability to pay for public services, ranging from police patrols to teacher salaries.

For example, in the Shandong Province capital Jinan, not a single developer bid for nine of the 11 plots offered by the city in early November. The two plots that sold went for bottom-line prices.

A city with a serious land market crash is Guangzhou, where in November some 32 plots failed to sell. In some cases, auctions were suspended by the city government, which blamed poor market conditions.

These plots were supposed to generate about 18.7 billion yuan ($2.95 billion) for Guangzhou’s city government, representing some 29% of the planned land sale revenues written into the 2011 fiscal budget. Asking prices averaged 5,584 yuan per square meter of floor space.

Han Shitong, president of Guangzhou Hantong Investment Advisory Co., said developers have been shunning local auctions across the country because city officials have set unreasonably high asking prices.

“In a good market,” the land on Guangzhou auction blocks “might have sold,” Han said. “In a market this bad, it’s another matter.”
China governments in hole as land sales plummet - MarketWatch

 

[Hello_10]

You missed my whole point earlier.
It was not about how India is strong enough to avert the catastrophe but my point was that India certainly needed FDI or foreign fnd to cover its current account deficit.

I will come to infrastructure later. First lets talk about two core issues which took away the flexibility of Indian macro economic management.

1) Deficit. You are wrong that India has a deficit of 5-6% rather it is more than 10% if you add the deficit of state level budgetary deficit. Some of Indian states are already bankrupt (eg. West Bengal)

2) Current Account Deficit: Thats where main danger lies. You said that India can avert any catastrophe through stopping importing gold. Well thats a nice suggestion but do you know India earns 18% of its export earning throw jewelry. Gujrat will go broke if that happens.


Now coming to Chinese example. China is a complete different story. Chinese government owns all of its land and the land sale from where Govt most revenue comes from. Thats why Chinese govt can invest huge in infrastructure. The following reading could give you some more insight to it.

I will go through more details after your response.

there is nothing lie in any of my posts. I say nothing without a credible source of information. check my post '64' for budget deficit of countries and another post stating India 'exported' gold in early 2009, in post '67'. about credit ratings, I already said that for E7+SA, the best can be BBB+ until they may have built infrastructure like developed nations, check my previous post. check one more credible reference of budget deficit of countries as below

https://www.cia.gov/library/publica...dia&countryCode=in&regionCode=sas&rank=152#in

in place of discussing lie or truth, if i give a credible reference for showing any data then you would also come with a credible source of information for your claims, isn't it? do i say anything without any 'credible' reference even for budget deficit of nations? then why you say anything without any reference to support your claims?

please note that whenever we talk about a country, its about the country as a whole, not for any particular state. and yes due to rupees depreciation, subsidies on oil import will have increased its budget deficit to around 7% this year, I said this also somewhere to you in my last post, did you check? rest, I dont know what else I may talk with you in this thread......

 

[Hello_10]

sir I didnt get your reply, you there? lets discuss why can't the country like India, Brazil, Turkey, South Africa, Mexico, Russia, Indonesia of E7+SA members can have AA ranking like China of E7 itself? why rest of E7+SA are ranked BBB by almost by all the credit agencies and are 'Blue' while the China is 'Green' with AA, similar to developed countries? and reasons why our last member of E7+Pakistan, Pakistan, is Red in this picture by either B or CCC ranking by most of the credit agencies?
List of countries by credit rating - Wikipedia, the free encyclopedia

List of countries by credit rating - Wikipedia, the free encyclopedia

its true that spending on infrastructure is the main problem why we are in blue. then here, why can't India and other major E7+SA countries have spending on infrastructure by 10% like China?

India will spend close to $1.0tn on infrastructure development by next 5 years, could you please come with the similar datas for Pakistan and Bangladesh also?

The Global Competitiveness Report 2011-2012 for E7+Pakistan:

http://www3.weforum.org/docs/WEF_GCR_CountryProfilHighlights_2011-12.pdf

China continues its steady progression in the rankings, rising by one rank to 26th. Indeed, it has improved its score and rank each year since 2005. The world’s most populous country continues to lead the BRICS economies by a significant margin, with South Africa—second among the BRICS—placing 50th. 24 China’s performance improves in most pillars of the GCI and is stable in the remaining ones. As in previous years, its macroeconomic situation is again very favorable (10th), despite a prolonged episode of high inflation. China is one of the world’s least indebted countries, boasts a savings rate of some 53 percent of GDP, and runs only moderate budget deficits. These factors, combined with good economic prospects, contribute to an improvement of the quality of its sovereign debt far greater than that of the other BRICS. China also achieves relatively high standards in terms of health and basic education (32nd), with positive trends in health indicators and nearly universal access to primary education, which is well assessed in terms of quality. Turning to the more sophisticated areas of competitiveness, China ranks high in business sophistication (37th) and innovation (29th), particularly when considering its level of development. On a less positive note, a number of challenges persist in the areas of corruption and judicial independence within the institutions pillar (48th). Moreover, the sentiment among businesses is that the country has become less safe over the past three years, resulting in higher costs for protection against diverse forms of crime and violence. Finally, standards of business ethics (57th) and corporate accountability (66th) are below those found in a number of other economies. As in previous years, China’s fairly poor results in the financial market development and technological readiness pillars pull down the economy’s overall competitiveness performance. However, the country improves markedly in the first of these (48th, up nine spots), thanks to an increased availability and affordability of financial services and better access to credit. It also makes strides in the technological readiness pillar (77th, up one), largely because of double-digit growth in the penetration rates of Internet use and mobile telephony.

Indonesia drops two places this year to 46th, following an impressive improvement of 11 places over the past two years. Indonesia remains one of the best-performing countries within the developing Asia region, behind Malaysia and China yet ahead of India, Vietnam, and the Philippines. The macroeconomic environment (23rd, up 12 places) continues to improve despite rising fears of inflation. Sound fiscal management has brought the budget deficit and public debt down to very low levels, attributes that contribute to further upgrading the country’s credit rating and to raising the country’s ranking on the macroeconomic environment pillar to 23rd this year (up from 89th in 2007). The situation is also improving, albeit from a much lower base, in the area of physical infrastructure (76th, up six places), yet the quality of port facilities remains alarming and shows no sign of progress (103rd, down seven places, with a score of 3.6) and the electricity supply continues to be unreliable and scarce (98th). The assessment of public institutions continues to deteriorate, with a 10-place drop in the related pillar (71st), even though Indonesia does relatively well on selected components. Despite efforts to tackle the issue, corruption and bribery remain pervasive and are singled out by business executives as the most problematic factor for doing business in the country. Security, or the lack thereof, is again becoming a concern, and the business community assessed this indicator at levels similar to those seen in 2005 (91st). Because it is now close to entering the efficiency-driven stage of development, according to the GCI classification, Indonesia’s competitiveness increasingly depends on more complex elements, such as market efficiency. Addressing the many rigidities (120th) and inefficiencies of the labor market (94th) would ensure a more efficient allocation of labor. Additional productivity gains could be reaped by boosting technological readiness (94th), which remains very low, with slow and scant adoption of ICT by businesses and the population at large.

South Africa moves up by four places to attain 50th position this year, remaining the highest-ranked country in sub-Saharan Africa and the second-placed among the BRICS economies. The country benefits from the large size of its economy, particularly by regional standards (it is ranked 25th in the market size pillar). It also does well on measures of the quality of institutions and factor allocation, such as intellectual property protection (30th), property rights (30th), the accountability of its private institutions (3rd), and its goods market efficiency (32nd). Particularly impressive is the country’s financial market development (4th), indicating high confidence in South Africa’s financial markets at a time when trust is returning only slowly in many other parts of the world. South Africa also does reasonably well in more complex areas such as business sophistication (38th) and innovation (41st), benefiting from good scientific research institutions (30th) and strong collaboration between universities and the business sector in innovation (26th). These combined attributes make South Africa the most competitive economy in the region. However, in order to further enhance its competitiveness the country will need to address some weaknesses. SouthAfrica ranks 95th in labor market efficiency, with rigid hiring and firing practices (139th), a lack of flexibility in wage determination by companies (138th), and significant tensions in labor-employer relations (138th). Efforts must also be made to increase the university enrollment rate of only 15 percent, which places the country 97th overall, in order to better develop its innovation potential. In addition, South Africa’s infrastructure, although good by regional standards, requires upgrading (62nd). The poor security situation remains another important obstacle to doing business in South Africa. The business costs of crime and violence (136th) and the sense that the police are unable to provide protection from crime (95th) do not contribute to an environment that fosters competitiveness. Another major concern remains the health of the workforce, which is ranked 129th out of 142 economies—the result of high rates of communicable diseases and poor health indicators more generally.

Brazil improves five places to rank 53rd overall. The country benefits from several competitive strengths, including one of the world’s largest internal markets (10th) and a sophisticated business environment (31st), thus allowing for important economies of scale and scope. Moreover, the country has one of the most efficient financial markets (40th) and one of the highest rates of technological adoption (47th) and innovation (44th) in the region. On a less positive note, Brazil still suffers from weaknesses that hinder its capacity to fulfill its tremendous competitive potential. The lagging quality of its overall infrastructure (104th) despite its Growth Acceleration Programme (PAC), its macroeconomic imbalances (115th), the poor overall quality of its educational system (115th), the rigidities in its labor market (121st), and insufficient progress to boost competition (132nd) are areas of increasing concern.

India ranks 56th in this year’s assessment. The country drops five places and demonstrates only minor changes in its competitiveness performance since last year.25 Among the BRICS, India continues to rank on a par with South Africa (50th) and Brazil (53rd) and ahead of Russia (66th), but its gap with China is widen-ing: the score difference between the two economies has increased sixfold between 2006 and today, the gap expanding from less than 0.1 to 0.6 points. India continues to be penalized for its mediocre accomplishments in the areas considered to be the basic factors underpinning competitiveness. The country’s supply of transport, ICT, and energy infrastructure remains largely insufficient and ill-adapted to the needs business (89th). Indeed, the Indian business community continues to cite infrastructure as the single biggest hindrance to doing business in the country. It must be noted, however, that the situation has been slowly improving since 2006, although this does not translate into a higher ranking because other countries have been improving faster. The picture is similar in the health and basic education pillar (101st). Despite improvements across the board over the past few years, public health and education quality remain a prime cause of concern. While we observe some encouraging trends in these two areas, the same cannot be said of the country’s institutions and macroeconomic environment, the other two dimensions comprising the basic requirements component of the GCI. In the past five years, discontent in the business community about the lack of reforms and the apparent inability of the government to provide a more conducive environment for business has been growing. Corruption (99th) and burdensome regulation (96th) certainly fuel this discontent. Since 2006, India’s score in the institutions pillar has plunged from 4.5 to 3.8. Once ranked a satisfactory 37th in this dimension, India now ranks 69th, having dropped 11 places this year alone. Meanwhile, the macroeconomic environment (105th) continues to be characterized by large and repeated public deficits and the highest debt-to-GDP ratio among the BRICS. More recently, the stability of the country’s macroeconomic environment is being undermined by high inflation, near or above 10 percent. As a result, India has been hovering around the 100 mark in this pillar for the past five years. Despite these considerable challenges, India does possess a number of remarkable strengths in the more advanced and complex drivers of competitiveness. This “reversed” pattern of development is characteristic of India. The country boasts a vast domestic market that allows for economies of scale and attracts investors. It can rely on a well-developed and sophisticated financial market (21st) that can channel financial resources to good use, and it boasts reasonably sophisticated (43rd) and innovative (38th) businesses.

With one of the highest improvements in the regional rankings, moving up eight spots, Mexico occupies 58th position this year. The country’s efforts to boost competition—although it remains an important weakness (103rd)—and its regulatory improvements that facilitate entrepreneurial dynamism by reducing the number of procedures (34th) and the time (35th) required to start a business seem to be paying off, contributing to an improvement of the overall business environment. This development, coupled with the country’s traditional competitive strengths such as its large internal market size (12th), fairly good transport infrastructure (47th), sound macroeconomic policies (39th), and strong levels of technological adoption (58th) have led Mexico to improve its competitive edge. However, the country still suffers from important weaknesses that are holding back its capacity to further enhance competitiveness. Not much progress has been made in addressing the flaws in the public institutional framework (109th). Despite many efforts to fight organized crime, security concerns still exact a high price from the business community (139th). Adopting and implementing policies to boost domestic competition (107th), especially in strategic sectors such as ICT, energy, and retailing, along with additional reforms to render the labor market more efficient (114th) are still needed to increase the efficiency of the Mexican economy. Moreover, as the country continues to grow and move toward a higher stage of development and production costs rise, sustainable growth and higher wages will increasingly call for further reforms and investment to improve the educational and innovation systems. The current overall poor quality of the educational system (107th), insufficient company spending in R&D (79th), and limited innovation capacity (76th) can jeopardize the future ability of the country to compete internationally in higher-value-added sectors.

Turkey moves up by two places this year to 59th position. The country benefits from its large market (17th), which is characterized by intense local competition (13th). Turkey also benefits from its reasonably developed infrastructure (51st), particularly roads and air transport, although ports and the electricity supply require upgrading. In order to further enhance its competitiveness, Turkey must focus on improving its human resources base through better primary education and healthcare (75th) and higher education and training (74th), increasing the efficiency of its labor market (133rd), and reinforcing the efficiency and transparency of its public institutions (86th).

The Russian Federation drops three ranks to 66th position this year. The drop reflects the fact that an improvement in macroeconomic stability was outweighed by deterioration in other areas, notably the quality institutions, labor market efficiency, business sophistication, and innovation. The lack of progress with respect to the institutional framework is of particular concern, as this area is likely to be among the most significant constraints to Russia’s competitiveness. Strengthening the rule of law and the protection of property rights, improving the functioning of the judiciary, and raising security levels across the country would greatly benefit the economy and would provide for spillover effects into other areas. In addition to its weak institutional framework, Russia’s competitiveness remains negatively affected by the low efficiency of its goods market. Competition, both domestic as well as foreign, is stifled by market structures dominated by a few large firms, inefficient anti-monopoly policies, and restrictions on trade and foreign ownership. And despite many efforts, its financial markets remain unstable, with banks assessed very poorly (129th). Taken together, these challenges reduce the country’s ability to take advantage of some of its strengths—particularly its high innovation potential (38th for capacity for innovation), its large and growing market size (8th), and its solid performance in higher education and training (27th for the quantity of education).

Up five places , Pakistan (118th) partially bounces back from last year’s significant drop in rank. Yet, in several categories, it remains one the poorest performers of the developing Asia region, and indeed of the entire sample of economies. It is particularly worrisome that Pakistan earns its lowest marks, with no sign of improvement, in the most basic areas of competitiveness, namely institutions (107th), infrastructure (115th), health and primary education (121st), and the macroeconomic environment (138th). In order to benefit from the scale advantages associated with its significant market size (30th), Pakistan will have to decrease regu-latory rigidities in the labor market (now ranked 136th) and reduce barriers to domestic and foreign competition in order to render the markets for goods and services more efficient (93rd). Last but not least, boosting the technological adoption of firms and the public at large would allow for considerable productivity increases in the country.

http://www3.weforum.org/docs/WEF_GCR_CountryProfilHighlights_2011-12.pdf

India invested $425 billion in infrastructure during the past five years which fell short of the targeted $500 billion. Despite the aggressive growth in last five years, India’s basic infrastructure ranked 86th in Global Competitive Report - 2010 by World Economic Forum.

The 12th Five Year Plan (2012-17) has set a target of $1 trillion for the infrastructure sector. Of the total targeted investment, private sector is expected to invest $500 billion - with around $350 billion through debt and $150 billion of equity over next five years.

India needs to increase investment in infrastructure to 10% of GDP - Yahoo! India Finance

 

[Hello_10]

The Global Competitiveness Report 2011-2012 for E7+Pakistan:

http://www3.weforum.org/docs/WEF_GCR_CountryProfilHighlights_2011-12.pdf

I believe in bringing FDI from whole world to India and support of Indian government for the foreign investors by exceeding their expectations from India. but yes its true that Foreign Investments, whether FDI or FII, are 'Hot Money' and foreign investments come with foreign interferes also and if India may not handle these two things together, Western Champions may do the same with India like what they did with Brazil in 80s.

but regardless any type of political difficulties, Indian government must make India one of the most preferred destination of Foreign Investments

we have a good news as below:

India’s yearly FDI hits record of USD 50 billion in FY2012
Posted by Manas on May 7th, 2012

India’s Foreign Direct Investment (FDI) for the previous financial year 2011-12 touched the record high of USD 50 billion, easing concern of slowdown in global economic growth and domestic macro-economic condition. This is much higher compared to FDI of USD 19.43 billion in financial year 2010-11 and USD 25.83 billion in financial year 2009-10.

This yearly FDI is the highest since India opened up different domestic sectors for foreign investments. This data confirms that despite of current adverse macro-economic condition, India continues to be one of the most preferred destinations for foreign investment. India secured 3rd rank in the list of countries based on FDI investment after China and US.

India

 

[Hello_10]

Emerging Markets Are Going To Spend A Massive $6 Trillion On Infrastructure In The Next Three Years

Each week, more than one million people are either born in or migrate to cities around the world.

Much of this rapid urbanization comes from the emerging world, putting tremendous pressure on that country’s feeble infrastructure.

Pipes burst, roads are jammed, the water is tainted and the lights even go out.

Merrill Lynch estimates that $6 trillion will need to be spent by selected emerging market countries over the next three years to meet the basic needs of these citizens. Water, transportation and energy investments will consume the bulk of these funds, accounting for 82 percent of total projected spending. Nearly every emerging market country Merrill researched will make an investment in all three.

While each developing country could benefit from an upgrade, needs vary. This table details how different emerging market countries stand up against each other in terms of quality for the country’s roads, rails, ports, etc. We’ve highlighted the specific areas where the countries rank in the bottom half among the 133 surveyed by the World Bank.

You can see that Brazil has the worst overall ranking among the countries listed. Though the country is a large exporter, the extremely poor condition of the country’s roads and rails has hampered the growth of internal textile and farming industries. However, there is light at the end of the tunnel for the country, as the government already has a plan in place to improve these conditions (Read: Brazil’s Infrastructure Plays Catch Up).

India’s infrastructure also rates poorly, and is slowing the country’s ascent to top of the world’s economies (Read: India’s Achilles Heel). One of India’s key issues is electricity. Merrill says that nearly 40 percent of Indian households do not have access to electricity, the worst of any major developing economy.

Power is also a problem in South Africa where a major power plant has not been built in 20 years and blackouts/power outages have hurt the country’s mining industry in recent years. Merrill projects $54 billion will need to be spent on the country’s power system over the next three years, accounting for nearly half total infrastructure spending.

China, which accounts for more than half of that $6 trillion estimate, ranks far above emerging peers in terms of infrastructure at the 65th percentile. Merrill says that one of China’s biggest needs is in water and environmental development. The firm estimates that the Asian country will need to build roughly 40,000 reservoirs at Rmb 12.5 million a piece to create an internal water distribution system and alleviate pressure when regions experience extended droughts such as what China is seeing presently.

The needs of a growing global population set to reach 7 billion later this year and investment needed to supply these people with sufficient water, roads, housing and power is why we identified infrastructure as a megatrend in 2007 and made it the key investment theme of the Global MegaTrends Fund (MEGAX).

Although some infrastructure investments, such as those in Russia, have seen delays as fiscal dollars have been diverted during the financial crisis, we continue to believe in the long-term viability of the story.

Emerging Markets Are Going To Spend A Massive $6 Trillion On Infrastructure In The Next Three Years - Business Insider

even if Brazil is ranked below to India in overall infrastructure status, its really funny to see electricity supply status of India