India’s questionable growth story :
While the government’s overall inflation figures remained at record lows of 0-1.5 %. The average wholesale price of food items had increased by a whopping 17.5 % in past one year as per the government announcement yesterday
Despite the growth of 6.8 %, the country’s fiscal deficit at the end of the first half of the current year ( April – September 2009 ) stood at 7.9 % of the nominal GDP compared to 4.4 % in the corresponding period last year . It is very difficult to contain the deficit at budget targets . Pranab Mukherjee has estimated the full year fiscal deficit in the budget 2009 presented in July at 6.8% . A sharp pick up in the economic activity will not help bridge the gap as the tax collections remain depressed.
If we strip the government consumption , then the real growth for the rest of the economy was 4.9 % in the September quarter, at 1999-2000 constant prices. That's lower than the 5.5. % year-on-year growth notched up during the preceeding quarter. The last instalment of the pay commission arrears has already been paid , so no further boost to government consumption is expected. What will happen to growth realising that the rain God were not approving the plight of farmers under the current government and thought it wise to boycott India !!
How will the government fund ambitious schemes ?
What is the plan to bridge the deficit ?
Is divesting PSU a short term goal ? If we keep divesting this way , after some time , when the deficit widens , we will be left with nothing except to sell the nation !!
Rajendra Pratap Gupta
Email : office@rajendragupta.org
Showing posts with label Economic crises. Show all posts
Showing posts with label Economic crises. Show all posts
Thursday, December 3, 2009
Wednesday, September 16, 2009
USA & the New World Order- Rajendra Pratap Gupta
Speech delivered by Rajendra Pratap Gupta at the US-ASIA Business forum at Los Angeles , USA on 12th September 2009 at the Los Angeles Convention Center , LA, USA
Global Economy – in the new world order
Good Morning ladies and Gentlemen
A very interesting session !!
Like an earth quake changes the topography , the recession changes the eco-geography ( Economic Geography ) . Every time a recession has sets in , the world is put on a reset button. We have seen in the past that the earlier recessions have changed the world order. The 20th century recession changed the world .The supremacy of the British empire ended paving the way for a bi-polar world from a uni-polar world. This recession will shift the world order again . It will now change to a multi-polar world . It is a natural progression from a uni-polar world to a bi-polar world to a multi-polar world
For more than a century since the invention of the Steam Engine, America has been a source of inspiration and awe for the world. Today , it is a source of learning and unlearning . It has shown the difference between being ‘Big’ and being ‘Great’.
Over the years , we have also seen the growing interdependence of the developed economies on the developing world.
We have seen how G-4 nations, the group of four biggest economies have, over a period of time expanded to G-5, G-8, G-14 & now G-20. After the recent crises , India, China & other developing economies have been invited to participate and play a role in revival of the Global economy. We are just seeing the economic evolution , which is similar to the Human evolution. It was earlier the survival of the biggest , then came the survival of the fittest and now will be the survival of the most agile & interdependent economies .
We have seen that the corporations that stood tall for over 150 years, collapsed in weeks last year. It had a cascading effect . Companies that were associated with such global corporations suffered huge losses. Nothing is infallible in this dynamic world. We need to have foresight , intelligence & be responsible to keep standing tall.
I see that there has been a lot of hue and cry on outsourcing, and I don’t understand how can people drive the market by such ad hoc policies ? We must not forget that outsourcing was started to create economic, internal efficiencies and customer focus , and this finally lead to Globalization. Globalization is an irreversible process . It is a fact that market conditions drive the economies today. It is more important to see the index of the stock exchange every day and not the GDP of a nation to gauge the market sentiment and the economic outlook. Today, the companies are not driven by market share but by share market . So are the economies. We must not forget that the developed economies or the world class cities & global conglomerates have been built by immigrants and locals working together . Today, this is more relevant . We have moved to an interdependent World
Out sourcing is market driven and it will always exist, where ever companies & countries want to grow .
This year, for the first time, we have seen that about 20000 of the 65000 H1B VISA’s have not been used out of the yearly quota . This signals a drastic shift . Till last year , the applications were over quota on the first few days of the opening . And there used to be a lucky draw for allocating H1B Visa to applicants in India. Suddenly , there are no takers this year. The very ‘brand America’ is hit badly.
Today, there is one world economy interlinked with three category of customers – developed , developing and under-developed countries
The developed countries have reached the peak and are saturated , and growth is going to be marginal . Investments will not be forth-coming in such a scenario and money invested might not yield good returns . The major corporations from the developed world need to support and get support from the rest of the world for future growth.
Developing countries like India & China support more than 2.4 Billion consumers . A great place !! These customers need more investment, and growth & returns would be fantastic . These countries also need to learn from the experience of the developed world , they need knowledge sharing , technology support & investment to scale up and work with the developed world
Under –developed countries; The more we invest, the more better & bigger markets we will be able to create for developed & developing countries . This is the future
Today , the mix of the world economies present a unique synergy and a tremendous opportunity to work together and progress; much more , much faster. There is no competition at all globally , we just require to understand the growth equation in the world order & invest , collaborate and scale much ahead . Horizons are expanding as we are trying to reach them. The world is not just a market where we represent either sellers or buyers , but it is a family knit more closely than ever before . Globalization is not just irreversible but is also indispensible force that drives us together , ahead . Remember , we are equity partners in the global economic progress where wars drive down our returns and growth increases our returns . We know that , today, business interests drive the political decisions . So we require a more close and a strong business relationship between the developed , developing and the under-developed economies to ensure a lasting peace and progress universally.
For more than a decade , America has been a land of opportunity for the rest of the world . Today, the rest of the world is a land of opportunity for America .
I would like to define the developed , developing and under-developed economies as the past , present and future of the new world order and without past , you cannot plan your future !
Two important points to note :
First : There is a reversal of destinations , innovation has moved out of the developed world , as innovation always follows the struggling race. Today , developing and under-developed world houses the world’s best innovative minds & the real consumers . They are the fertile economies . Let’s accept this fact and shape our vision accordingly. The destinations have reversed in the last 15 years and we need to see them as interdependent destinations
Second: You cannot give up outsourcing and still sell your products and services to the developing and under-developed countries. You need to understand that the developing economies are also the consumers. Today China might be a developing economy but also is the biggest lender to America & has 1.3 billion consumers . If China decided to en-cash all the American bonds , the American economy will come down today evening . But we understand that the valuation of dollar is what holds the value of Chinese economy’s reserves. If China decides to en-cash US securities , Dollar will fall and so both the economies will collapse simultaneously. So today , we are closely inter woven and cannot bully a nation. We are partners in progress and partners in downfall alike . Today no country can be independent in resources to meet its population’s needs without interdependence . We depend on oil from Middle East , manufacturing from China & IT & Knowledge from the eastern countries like India . Indian & Chinese economy suffered a hit due to slowing down of the US economy but do you know why Germany slowed down ? Because the Chinese and Indian companies stopped buying heavy machinery from Germany and so was the case with many such countries . It was not just the US economy driving down production , it was also the developing economies that affected the developed world. We have to understand the fact that, it is a either win –win –win or a lose-lose-lose for the interdependent world in today’s equation. The world has come close together like one family during this crisis . We need to use this as an opportunity to develop more understanding for a longer and a deeper global partnership so that we can avoid future recessions . We are all living in a fully integrated and inter-dependent world. It is like a necklace . One weak link can break the entire chain and the necklace will fall off.
Also, America needs to have a re-think on some of its strategies . It needs to invest more on development of the developing world . Just think $ 568 billion was given as aid in S. Africa for the last 42 years and more than $ 642 Billion is being spent on Iraq war . Today the world could have been a much better place & probably out of recession, had the war money gone to the development of the world’s under-developed and developing economies . These could have been the biggest customers for US companies !! We should not forget the point that the majority of the biggest corporations in the world are from America .
Globalization according to me, means a truly interdependent and an intertwined world.
So, it is clear that we live in a truly interdependent world & that we need more even distribution of opportunity and challenges all over the world , and invest more on economic opportunities than enhancing military capabilities; to share more wealth to a much larger mass of population . Thriving businesses can do that faster without much involvement from the government . The forums like US-ASIA business forums must happen more frequently to develop an understanding , partnerships and facilitate a better flow of resources , ideas , goods & services to all the three categories of customers & vice versa
I would suggest my friend Kevin Kaul to take the US- ASIA business forum to a much broader scale and help develop the understanding of interdependence of the new world order between the past , present & future i.e. developed , developing and under developed economies to bring all round progress for the whole world
Thank you and enjoy the rest of your day
Rajendra Pratap Gupta
515-450-8036 (USA)
+91-922 33 44 542 ( India )
+971-553 121829 (UAE )
Email : office@rajendragupta.org
office.rajendra@gmail.com
Global Economy – in the new world order
Good Morning ladies and Gentlemen
A very interesting session !!
Like an earth quake changes the topography , the recession changes the eco-geography ( Economic Geography ) . Every time a recession has sets in , the world is put on a reset button. We have seen in the past that the earlier recessions have changed the world order. The 20th century recession changed the world .The supremacy of the British empire ended paving the way for a bi-polar world from a uni-polar world. This recession will shift the world order again . It will now change to a multi-polar world . It is a natural progression from a uni-polar world to a bi-polar world to a multi-polar world
For more than a century since the invention of the Steam Engine, America has been a source of inspiration and awe for the world. Today , it is a source of learning and unlearning . It has shown the difference between being ‘Big’ and being ‘Great’.
Over the years , we have also seen the growing interdependence of the developed economies on the developing world.
We have seen how G-4 nations, the group of four biggest economies have, over a period of time expanded to G-5, G-8, G-14 & now G-20. After the recent crises , India, China & other developing economies have been invited to participate and play a role in revival of the Global economy. We are just seeing the economic evolution , which is similar to the Human evolution. It was earlier the survival of the biggest , then came the survival of the fittest and now will be the survival of the most agile & interdependent economies .
We have seen that the corporations that stood tall for over 150 years, collapsed in weeks last year. It had a cascading effect . Companies that were associated with such global corporations suffered huge losses. Nothing is infallible in this dynamic world. We need to have foresight , intelligence & be responsible to keep standing tall.
I see that there has been a lot of hue and cry on outsourcing, and I don’t understand how can people drive the market by such ad hoc policies ? We must not forget that outsourcing was started to create economic, internal efficiencies and customer focus , and this finally lead to Globalization. Globalization is an irreversible process . It is a fact that market conditions drive the economies today. It is more important to see the index of the stock exchange every day and not the GDP of a nation to gauge the market sentiment and the economic outlook. Today, the companies are not driven by market share but by share market . So are the economies. We must not forget that the developed economies or the world class cities & global conglomerates have been built by immigrants and locals working together . Today, this is more relevant . We have moved to an interdependent World
Out sourcing is market driven and it will always exist, where ever companies & countries want to grow .
This year, for the first time, we have seen that about 20000 of the 65000 H1B VISA’s have not been used out of the yearly quota . This signals a drastic shift . Till last year , the applications were over quota on the first few days of the opening . And there used to be a lucky draw for allocating H1B Visa to applicants in India. Suddenly , there are no takers this year. The very ‘brand America’ is hit badly.
Today, there is one world economy interlinked with three category of customers – developed , developing and under-developed countries
The developed countries have reached the peak and are saturated , and growth is going to be marginal . Investments will not be forth-coming in such a scenario and money invested might not yield good returns . The major corporations from the developed world need to support and get support from the rest of the world for future growth.
Developing countries like India & China support more than 2.4 Billion consumers . A great place !! These customers need more investment, and growth & returns would be fantastic . These countries also need to learn from the experience of the developed world , they need knowledge sharing , technology support & investment to scale up and work with the developed world
Under –developed countries; The more we invest, the more better & bigger markets we will be able to create for developed & developing countries . This is the future
Today , the mix of the world economies present a unique synergy and a tremendous opportunity to work together and progress; much more , much faster. There is no competition at all globally , we just require to understand the growth equation in the world order & invest , collaborate and scale much ahead . Horizons are expanding as we are trying to reach them. The world is not just a market where we represent either sellers or buyers , but it is a family knit more closely than ever before . Globalization is not just irreversible but is also indispensible force that drives us together , ahead . Remember , we are equity partners in the global economic progress where wars drive down our returns and growth increases our returns . We know that , today, business interests drive the political decisions . So we require a more close and a strong business relationship between the developed , developing and the under-developed economies to ensure a lasting peace and progress universally.
For more than a decade , America has been a land of opportunity for the rest of the world . Today, the rest of the world is a land of opportunity for America .
I would like to define the developed , developing and under-developed economies as the past , present and future of the new world order and without past , you cannot plan your future !
Two important points to note :
First : There is a reversal of destinations , innovation has moved out of the developed world , as innovation always follows the struggling race. Today , developing and under-developed world houses the world’s best innovative minds & the real consumers . They are the fertile economies . Let’s accept this fact and shape our vision accordingly. The destinations have reversed in the last 15 years and we need to see them as interdependent destinations
Second: You cannot give up outsourcing and still sell your products and services to the developing and under-developed countries. You need to understand that the developing economies are also the consumers. Today China might be a developing economy but also is the biggest lender to America & has 1.3 billion consumers . If China decided to en-cash all the American bonds , the American economy will come down today evening . But we understand that the valuation of dollar is what holds the value of Chinese economy’s reserves. If China decides to en-cash US securities , Dollar will fall and so both the economies will collapse simultaneously. So today , we are closely inter woven and cannot bully a nation. We are partners in progress and partners in downfall alike . Today no country can be independent in resources to meet its population’s needs without interdependence . We depend on oil from Middle East , manufacturing from China & IT & Knowledge from the eastern countries like India . Indian & Chinese economy suffered a hit due to slowing down of the US economy but do you know why Germany slowed down ? Because the Chinese and Indian companies stopped buying heavy machinery from Germany and so was the case with many such countries . It was not just the US economy driving down production , it was also the developing economies that affected the developed world. We have to understand the fact that, it is a either win –win –win or a lose-lose-lose for the interdependent world in today’s equation. The world has come close together like one family during this crisis . We need to use this as an opportunity to develop more understanding for a longer and a deeper global partnership so that we can avoid future recessions . We are all living in a fully integrated and inter-dependent world. It is like a necklace . One weak link can break the entire chain and the necklace will fall off.
Also, America needs to have a re-think on some of its strategies . It needs to invest more on development of the developing world . Just think $ 568 billion was given as aid in S. Africa for the last 42 years and more than $ 642 Billion is being spent on Iraq war . Today the world could have been a much better place & probably out of recession, had the war money gone to the development of the world’s under-developed and developing economies . These could have been the biggest customers for US companies !! We should not forget the point that the majority of the biggest corporations in the world are from America .
Globalization according to me, means a truly interdependent and an intertwined world.
So, it is clear that we live in a truly interdependent world & that we need more even distribution of opportunity and challenges all over the world , and invest more on economic opportunities than enhancing military capabilities; to share more wealth to a much larger mass of population . Thriving businesses can do that faster without much involvement from the government . The forums like US-ASIA business forums must happen more frequently to develop an understanding , partnerships and facilitate a better flow of resources , ideas , goods & services to all the three categories of customers & vice versa
I would suggest my friend Kevin Kaul to take the US- ASIA business forum to a much broader scale and help develop the understanding of interdependence of the new world order between the past , present & future i.e. developed , developing and under developed economies to bring all round progress for the whole world
Thank you and enjoy the rest of your day
Rajendra Pratap Gupta
515-450-8036 (USA)
+91-922 33 44 542 ( India )
+971-553 121829 (UAE )
Email : office@rajendragupta.org
office.rajendra@gmail.com
Sunday, March 29, 2009
Recession - Solution to the Indian economic crises - Rajendra Pratap Gupta
India & Recession – Why & When
It is more than one and a half year that we have heard and read about recession , slowing economy, reduction in industrial output , high inflation , negative agricultural growth , voluntary cut in production , lay-offs , reduction in wages , shutting down of companies etc . Prime Minister and other ministers kept assuring that we are a decoupled economy with very ‘strong fundamentals’, and that India will not be affected. In the interim budget they did not give anything as ‘Stimulus’. Suddenly, when Standard and Poor down-graded our economy ratings to one level above ‘Junk status’. Overnight, the government announced a stimulus for the economy, and still keeps saying that, the economy will grow around 7 %. Personally, I am compelled to be optimistic, as I can’t afford to see my colleagues losing jobs, factories shutting down, people dying of hunger. A country with a billion populations fights a blame game. Government will finally put it on the global crises. But India was supposed to be a self reliant economy? Right? So are we saying we are beggars to the world and when the world goes belly up we will be reduced to what we are? Shame on the politicians who are liars of the highest order and distorting facts
There are five big questions that need answers from all of us and not just the government whom we have voted to power. These questions are related to the so called recession
1. Why it happened
2. Who failed us or who let us down
3. Where are we today
4. What is the solution
5. What we can do to prevent the same
Why it happened?
Congress ruled India for around 50 years .They gave us the infamous license raj, where it was difficult to produce without a license, available only to a select few. Outcome , politicians became rich , corporate houses became richer and the masses in India remained poor. When it came to voting, it was easy to ‘Influence’ and ‘Buy’ votes by offering ‘Daaru’ and ‘Sarees and cycles’. 70 % of the population lives in villages and they are the people who count when it comes to voting, and not people like you and me who read these blogs are merely 40 million in a population of over 1000 million?
In the 1990’s, our economy’s balance of payments situation became worse and Manmohan devaluated the currency twice and opened the economy to the foreign sector. After that, there was no looking back. Our immediate problem was solved but long term problems started. We started measuring our economic strength in the foreign exchange reserves in the country. These foreign investors also got into the stock market. Over the years, we got a very high Sensex- 21000. WOW!
As a result, Mukesh Ambani became the richest man in the world (albeit for a few days!!).
Just a few Indians who left the Indian shores for abroad and made it big ( V.S.Naipaul, Amartya Sen , Indira Nooyi , Arun Sarin etc..) or Arcelor , Tetley, Land Rover & Jaguar , or Corus acquisitions . These were merely aberrations. In India, where 16 % of the world populations reside, why do we not have 16 % of the top executives and 16 % of the top class firms in every sector? So these achievements were not a part of the Indian government’s plan or strategy. Clearly, these were a few aberrations and we arrogated them to India coming of an age. If you are asked about five top Indian names in the global corporate sector, you would find it difficult to reach the number. If you were asked to name five Indian fortune 500 companies, you would start looking at the wall. Is this what a land of billion minds should have produced? So we went wrong in our human resources management
We measured India with how many contracts Infosys or Wipro’s signed in Europe and India, how many call centers started serving US and European clients, and how many dollars got invested into India.
On the other hand , Ambani’s , Birla’s & Tata’s were looking at these ‘News’ and assuming that the entire India is growing fast . The reports that Indian government churns out is nothing but a bunch of information that government wants the public to know , so that the government remains in the good books of the public and makes it win the elections and give it another term.
While Manmohan had opened the economy, he did nothing for farmers or small scale industries or BPL people. The result, we created a huge disparity in the income generation and spread. This was the sowing of seeds for a long term economic failure that our economy is facing today. Ideally, 25 out of the 100 richest people should have been from India, 100 of the fortune 500 companies should have been from India and 50 % of all patents should have been from India. Our billion plus population is for a mere statistics. Actually, our effective population is not more than 150 million. Rest is mere numbers or rather they have been just treated as numbers. I recall a definition of a politician ‘One who promises to protect rich from the poor and poor from the rich on the pretext of extracting money from the rich and votes from both’
Who failed us ?
Government did not fail alone. Media, in my belief, which is the teacher of modern society failed by selling its ethics and focusing on yellow journalism. Most of the top journalists are known to enjoy privileges and selling their conscience to others and write what their ‘Actual employers’ pay.
Judiciary: I read a day before yesterday a judge having said that, they should not equate to politicians & judges should not be asked to disclose their assets. SHAME ON YOU MR. Judge. Hopeless is a charitable word to describe judiciary in India . All the pillars of democracy have failed as judiciary is corrupt to an extent of over 90 %. Can you imagine the rot when a judge issued the summons to the President of India, Dr.A.P.J.Abdul Kalam? What worse can you imagine? If the president can be a victim of this inefficient judiciary what can a common man expect? If the judges have any shame they must quit en masse! You are a bunch of corrupt and inefficient people on the tax payer’s money and you don’t want to disclose your assets? Why the hell you want to keep them secret? Tell me a reasonable cause
Could you not try cases related to political corruption on priority things would have been different. But these greedy judges are not worth trusting for any worthwhile things for a suo moto action. They just keep passing judgments that gives them publicity.
No one trusts the government; everyone fears the judiciary and enforcement agencies. In all, the system has failed to deliver. I am not commenting the education and healthcare system as they don’t exists in the country
In all, I believe that our education system & more importantly teachers, media and judiciary have failed and delivered a fatal blow to our democracy
Teachers should be blamed for not being able to inculcate values amongst the students
Where are we?
A country is as strong as its citizens. When more than 80 % of the people are struggling to earn a two meals a day even after 61 years of Independence, have we gone the right way?
We are today in midst of two serious crises. One is the economic crises and the other is political crises.
Economic crisis can further be divided into two.
First, the one that has resulted into wrong economic policies blindly focused on FDI inflow and on making India a body shopping country. Also that, Indian government did not focus on developing the agriculture, infrastructure, SME, Retail & research based education. This had created a ‘Big economic divide’. Our politicians did not realise that the capacity building that could have resulted on building these sectors could have catapulted India to a different growth trajectory in the last two decades.
Second is the one that has been due to FDI, stock markets and the so called retail revolution. This was limited to about 35 towns directly and indirectly this gave employment to a lot of rural migrants. Knowing well that, most of agricultural families also depend on the members that work in towns and send money back home. These people have been affected due to reality and retail sector that is slowing down. All these are having a cascading effect.
Most important : Every one , right from the Reserve Bank governor to PM says that the worst is yet to come but they don’t tell what is the worst and when it will come and what is the solution ? It is like an astrologer telling you that you will die. Everyone dies one day , so what big a deal to tell that ? One should be able to tell when and how will you die .
I believe that , We are actually nearing the mid of recession cycle, and we will come of it in another year and a half.
Political crises: For more than 50 years, our country has been ruled by Gandhi family – A family of Kashmiri Pandits. This is enough to understand their commitment.
Who took the Kashmir issue to UN? Jawaharlal Lal Nehru, and we blame Pakistan for internationalizing the issue? Learn history
Congress lead by Gandhi’s has created a vicious cycle. Even today, Sonia Gandhi is the Chairperson of UPA, constitutionally authorized to oversee the implementation of CMP. Why these dual centers of power? Ideally, the Prime Minister’s role should not have been decimated. Why in the first place this extra authority created? Gandhi’s love for power is not hidden and they will keep away anyone who comes in their way. Gandhi’s have never allowed anyone to be number one in the party or politics. Whether it was Sharad Pawar or anyone else. No matter what. Also, that they have paid the price for this? What the Gandhi family is doing is against the law of nature. Power is like sand being held in the fist. The more you tighten the fist, more the sand will flow out. I would not be shocked if the family suffers a few adversaries in the times to come. They have always paid the price for their misconduct and the country had paid more …………………..Till the country gets rid of this family in politics, nothing can change.
Also, every Indian citizen has failed by not being active in politics and just making politics a tea table and road side discussion item. It is such a serious issue and has been treated casually by the Indian population.
What is the solution?
Complex problems have simple solutions – Read my earlier blog – An open letter to the PM.
Economic crisis has a political solution and political crises have an Economic solution.
First thing that needs to be done is to cut interest and lending rates in one shot and not in installments. I have been telling our PM since last year that we don’t need ‘Baby steps’, we need firm and drastic measures
Secondly, we must announce massive investments in infrastructure, Education & Research and IT (Government should set at least 100,000 IT kiosks as Government’s touch points for public access). The work should be given to IT companies of small and medium scale to retain the young IT talent.
FDI In retail should be discouraged and stopped immediately. We need an Indian version of FDI – Finance from domestic institutions.
Agriculture should be given a big push with incentives for organic farming & cash crops. According to NSS (National sample survey), even if one works for a day in a field, he is a farmer!! Which inflates the number of farmers in the country?
Five sectors can relieve India of its miseries; Infrastructure, Agriculture, Education, Retail & IT. Fortunately, we are at a nascent stage in every major sector . Be it agriculture , SME, Retail , IT , Automobiles, industrial growth , urbanization etc . In the US , the problems are of plenty , saturation & wastage . We are just at the reverse . Whilst US might find it difficult to protect and grow , we can log on to a massive growth with the right initiatives . Infact, India and US are at the two extreme ends of the growth cycle. All sectors in India have a potential for phenomenal growth. The 800 million Indians have to be made earning class and a spending class, and this one thing will take India to a 10 % + growth for the next twenty five years . We have a long way to go . Right governance can help us . NREGA Is not the right solution for a long term growth
Where will money come from?
What do you do when your family gets into financial problems? You sell a part of your assets for temporary relief and buy them back or buy better things in the good times or when the financial condition improves
India needs to re-look at the ‘Navratnas’ and dilute the equity and follow a moderate privatization drive to raise money to invest in the five sectors mentioned above. This is the way India can come out of the recession faster and build an economy with 8-10 % GDP growth every year or more.
India’s parallel economy is much bigger than the economy of taxes ( Black money economy is for sure a lot bigger than our 1000 Bn USD economy ). This money needs to be brought back and invested . I am not at all mentioning the money hoarded in Swiss banks and other heavens. All this can solve India’s problems today evening. This is a must , if we want to build an economy based on solid Economic & Social foundation.
Lay-offs are one part of the problem what about the fresher’s who are struggling for jobs. We need to create more job opportunities. No one seems to be addressing the issue knowing well that, we will have more 10 crore people who will get hunting for jobs in the next 5 -10 years
Defence spending should be cut and the same be invested in infrastructure. The defence strategy should be re-looked and reworked
All tenders for house-keeping, parking stands, vendors in public places and railways etc………should be reserved for both educated and uneducated youth irrespective of caste but on financial background
We must have guidelines where we build economy on 40 % services, 50 % manufacturing and 10 % on global trade. We must never exceed exports more than 10 % of our GDP
Need driven services never go slow or out of business? Indian economy must be 'inward looking’ and should be build on essential services and these should not be imported. All the national demand should be met by domestic producers. Need driven sectors like agriculture , FMCG, Healthcare , textiles , processed food , Education , Oil and natural gas should be country centric and needs more thrust for explosive growth .
Any tender worth 500 Crores or more should not be allotted to bidders who have manufacturing outside India. This will increase capacity building within the country
Seeing that it is recession time, the EMI of housing and vehicle loans for people who have lost jobs should be adjusted for at least two years. If the loans of 65000 crore can be waived for an income class that does not pay income tax (farmers). Why not give a moratorium on payments for the income class that pays tax. The two years EMI that are deferred for payments should have the interest based on the PLR or at reduced rates.
Every Indian needs to spend 10 minutes a day for politics and community work – An hour a week. Go start a neighborhood-nation building programme to ensure good governance. Rest I will add in my next blog
There are three sources of growth for an economy, increase in capital, and increase in labour force, and improvement in productivity. We will have to address all three
There is a difference in Economic growth and economic development. Economic growth is purely GDP but economic development is a broader concept that includes not just GDP but also indicators like social justice , income distribution, political freedom, pollution , Equality of income …………GDP captures average national income , but do not reflect how that income is spent.. Even increase in aids and cancer incidences in the country will add to the GDP expenditure on health services , Also, calamity will lead to the increase in GDP due to increase in reconstruction activities.
Moreover, GDP growth rate is inadequate measure of growth as it is calculated largely on the basis of rate of growth of income of the upper 20-30 % of the population who receive disproportionately large share of income. It calculates only money transactions and leaves many important activities and social measures and conditions like adult literacy rate, life expectancy and HDI rank
We must change our economic measurement methods from Economic growth to economic development
India needs to re-look into the growth measurement model. We have a solution for economic crises. We need to act fast and grow faster. Rest in my next blog
Good luck
Rajendra Pratap Gupta
President
Country First
Mobile:
India + 91 9323109456
Email: President@countryfirst.org / mail@rajendragupta.org
www.countryfirst.org
www.linkedin.com/in/rajendragupta
It is more than one and a half year that we have heard and read about recession , slowing economy, reduction in industrial output , high inflation , negative agricultural growth , voluntary cut in production , lay-offs , reduction in wages , shutting down of companies etc . Prime Minister and other ministers kept assuring that we are a decoupled economy with very ‘strong fundamentals’, and that India will not be affected. In the interim budget they did not give anything as ‘Stimulus’. Suddenly, when Standard and Poor down-graded our economy ratings to one level above ‘Junk status’. Overnight, the government announced a stimulus for the economy, and still keeps saying that, the economy will grow around 7 %. Personally, I am compelled to be optimistic, as I can’t afford to see my colleagues losing jobs, factories shutting down, people dying of hunger. A country with a billion populations fights a blame game. Government will finally put it on the global crises. But India was supposed to be a self reliant economy? Right? So are we saying we are beggars to the world and when the world goes belly up we will be reduced to what we are? Shame on the politicians who are liars of the highest order and distorting facts
There are five big questions that need answers from all of us and not just the government whom we have voted to power. These questions are related to the so called recession
1. Why it happened
2. Who failed us or who let us down
3. Where are we today
4. What is the solution
5. What we can do to prevent the same
Why it happened?
Congress ruled India for around 50 years .They gave us the infamous license raj, where it was difficult to produce without a license, available only to a select few. Outcome , politicians became rich , corporate houses became richer and the masses in India remained poor. When it came to voting, it was easy to ‘Influence’ and ‘Buy’ votes by offering ‘Daaru’ and ‘Sarees and cycles’. 70 % of the population lives in villages and they are the people who count when it comes to voting, and not people like you and me who read these blogs are merely 40 million in a population of over 1000 million?
In the 1990’s, our economy’s balance of payments situation became worse and Manmohan devaluated the currency twice and opened the economy to the foreign sector. After that, there was no looking back. Our immediate problem was solved but long term problems started. We started measuring our economic strength in the foreign exchange reserves in the country. These foreign investors also got into the stock market. Over the years, we got a very high Sensex- 21000. WOW!
As a result, Mukesh Ambani became the richest man in the world (albeit for a few days!!).
Just a few Indians who left the Indian shores for abroad and made it big ( V.S.Naipaul, Amartya Sen , Indira Nooyi , Arun Sarin etc..) or Arcelor , Tetley, Land Rover & Jaguar , or Corus acquisitions . These were merely aberrations. In India, where 16 % of the world populations reside, why do we not have 16 % of the top executives and 16 % of the top class firms in every sector? So these achievements were not a part of the Indian government’s plan or strategy. Clearly, these were a few aberrations and we arrogated them to India coming of an age. If you are asked about five top Indian names in the global corporate sector, you would find it difficult to reach the number. If you were asked to name five Indian fortune 500 companies, you would start looking at the wall. Is this what a land of billion minds should have produced? So we went wrong in our human resources management
We measured India with how many contracts Infosys or Wipro’s signed in Europe and India, how many call centers started serving US and European clients, and how many dollars got invested into India.
On the other hand , Ambani’s , Birla’s & Tata’s were looking at these ‘News’ and assuming that the entire India is growing fast . The reports that Indian government churns out is nothing but a bunch of information that government wants the public to know , so that the government remains in the good books of the public and makes it win the elections and give it another term.
While Manmohan had opened the economy, he did nothing for farmers or small scale industries or BPL people. The result, we created a huge disparity in the income generation and spread. This was the sowing of seeds for a long term economic failure that our economy is facing today. Ideally, 25 out of the 100 richest people should have been from India, 100 of the fortune 500 companies should have been from India and 50 % of all patents should have been from India. Our billion plus population is for a mere statistics. Actually, our effective population is not more than 150 million. Rest is mere numbers or rather they have been just treated as numbers. I recall a definition of a politician ‘One who promises to protect rich from the poor and poor from the rich on the pretext of extracting money from the rich and votes from both’
Who failed us ?
Government did not fail alone. Media, in my belief, which is the teacher of modern society failed by selling its ethics and focusing on yellow journalism. Most of the top journalists are known to enjoy privileges and selling their conscience to others and write what their ‘Actual employers’ pay.
Judiciary: I read a day before yesterday a judge having said that, they should not equate to politicians & judges should not be asked to disclose their assets. SHAME ON YOU MR. Judge. Hopeless is a charitable word to describe judiciary in India . All the pillars of democracy have failed as judiciary is corrupt to an extent of over 90 %. Can you imagine the rot when a judge issued the summons to the President of India, Dr.A.P.J.Abdul Kalam? What worse can you imagine? If the president can be a victim of this inefficient judiciary what can a common man expect? If the judges have any shame they must quit en masse! You are a bunch of corrupt and inefficient people on the tax payer’s money and you don’t want to disclose your assets? Why the hell you want to keep them secret? Tell me a reasonable cause
Could you not try cases related to political corruption on priority things would have been different. But these greedy judges are not worth trusting for any worthwhile things for a suo moto action. They just keep passing judgments that gives them publicity.
No one trusts the government; everyone fears the judiciary and enforcement agencies. In all, the system has failed to deliver. I am not commenting the education and healthcare system as they don’t exists in the country
In all, I believe that our education system & more importantly teachers, media and judiciary have failed and delivered a fatal blow to our democracy
Teachers should be blamed for not being able to inculcate values amongst the students
Where are we?
A country is as strong as its citizens. When more than 80 % of the people are struggling to earn a two meals a day even after 61 years of Independence, have we gone the right way?
We are today in midst of two serious crises. One is the economic crises and the other is political crises.
Economic crisis can further be divided into two.
First, the one that has resulted into wrong economic policies blindly focused on FDI inflow and on making India a body shopping country. Also that, Indian government did not focus on developing the agriculture, infrastructure, SME, Retail & research based education. This had created a ‘Big economic divide’. Our politicians did not realise that the capacity building that could have resulted on building these sectors could have catapulted India to a different growth trajectory in the last two decades.
Second is the one that has been due to FDI, stock markets and the so called retail revolution. This was limited to about 35 towns directly and indirectly this gave employment to a lot of rural migrants. Knowing well that, most of agricultural families also depend on the members that work in towns and send money back home. These people have been affected due to reality and retail sector that is slowing down. All these are having a cascading effect.
Most important : Every one , right from the Reserve Bank governor to PM says that the worst is yet to come but they don’t tell what is the worst and when it will come and what is the solution ? It is like an astrologer telling you that you will die. Everyone dies one day , so what big a deal to tell that ? One should be able to tell when and how will you die .
I believe that , We are actually nearing the mid of recession cycle, and we will come of it in another year and a half.
Political crises: For more than 50 years, our country has been ruled by Gandhi family – A family of Kashmiri Pandits. This is enough to understand their commitment.
Who took the Kashmir issue to UN? Jawaharlal Lal Nehru, and we blame Pakistan for internationalizing the issue? Learn history
Congress lead by Gandhi’s has created a vicious cycle. Even today, Sonia Gandhi is the Chairperson of UPA, constitutionally authorized to oversee the implementation of CMP. Why these dual centers of power? Ideally, the Prime Minister’s role should not have been decimated. Why in the first place this extra authority created? Gandhi’s love for power is not hidden and they will keep away anyone who comes in their way. Gandhi’s have never allowed anyone to be number one in the party or politics. Whether it was Sharad Pawar or anyone else. No matter what. Also, that they have paid the price for this? What the Gandhi family is doing is against the law of nature. Power is like sand being held in the fist. The more you tighten the fist, more the sand will flow out. I would not be shocked if the family suffers a few adversaries in the times to come. They have always paid the price for their misconduct and the country had paid more …………………..Till the country gets rid of this family in politics, nothing can change.
Also, every Indian citizen has failed by not being active in politics and just making politics a tea table and road side discussion item. It is such a serious issue and has been treated casually by the Indian population.
What is the solution?
Complex problems have simple solutions – Read my earlier blog – An open letter to the PM.
Economic crisis has a political solution and political crises have an Economic solution.
First thing that needs to be done is to cut interest and lending rates in one shot and not in installments. I have been telling our PM since last year that we don’t need ‘Baby steps’, we need firm and drastic measures
Secondly, we must announce massive investments in infrastructure, Education & Research and IT (Government should set at least 100,000 IT kiosks as Government’s touch points for public access). The work should be given to IT companies of small and medium scale to retain the young IT talent.
FDI In retail should be discouraged and stopped immediately. We need an Indian version of FDI – Finance from domestic institutions.
Agriculture should be given a big push with incentives for organic farming & cash crops. According to NSS (National sample survey), even if one works for a day in a field, he is a farmer!! Which inflates the number of farmers in the country?
Five sectors can relieve India of its miseries; Infrastructure, Agriculture, Education, Retail & IT. Fortunately, we are at a nascent stage in every major sector . Be it agriculture , SME, Retail , IT , Automobiles, industrial growth , urbanization etc . In the US , the problems are of plenty , saturation & wastage . We are just at the reverse . Whilst US might find it difficult to protect and grow , we can log on to a massive growth with the right initiatives . Infact, India and US are at the two extreme ends of the growth cycle. All sectors in India have a potential for phenomenal growth. The 800 million Indians have to be made earning class and a spending class, and this one thing will take India to a 10 % + growth for the next twenty five years . We have a long way to go . Right governance can help us . NREGA Is not the right solution for a long term growth
Where will money come from?
What do you do when your family gets into financial problems? You sell a part of your assets for temporary relief and buy them back or buy better things in the good times or when the financial condition improves
India needs to re-look at the ‘Navratnas’ and dilute the equity and follow a moderate privatization drive to raise money to invest in the five sectors mentioned above. This is the way India can come out of the recession faster and build an economy with 8-10 % GDP growth every year or more.
India’s parallel economy is much bigger than the economy of taxes ( Black money economy is for sure a lot bigger than our 1000 Bn USD economy ). This money needs to be brought back and invested . I am not at all mentioning the money hoarded in Swiss banks and other heavens. All this can solve India’s problems today evening. This is a must , if we want to build an economy based on solid Economic & Social foundation.
Lay-offs are one part of the problem what about the fresher’s who are struggling for jobs. We need to create more job opportunities. No one seems to be addressing the issue knowing well that, we will have more 10 crore people who will get hunting for jobs in the next 5 -10 years
Defence spending should be cut and the same be invested in infrastructure. The defence strategy should be re-looked and reworked
All tenders for house-keeping, parking stands, vendors in public places and railways etc………should be reserved for both educated and uneducated youth irrespective of caste but on financial background
We must have guidelines where we build economy on 40 % services, 50 % manufacturing and 10 % on global trade. We must never exceed exports more than 10 % of our GDP
Need driven services never go slow or out of business? Indian economy must be 'inward looking’ and should be build on essential services and these should not be imported. All the national demand should be met by domestic producers. Need driven sectors like agriculture , FMCG, Healthcare , textiles , processed food , Education , Oil and natural gas should be country centric and needs more thrust for explosive growth .
Any tender worth 500 Crores or more should not be allotted to bidders who have manufacturing outside India. This will increase capacity building within the country
Seeing that it is recession time, the EMI of housing and vehicle loans for people who have lost jobs should be adjusted for at least two years. If the loans of 65000 crore can be waived for an income class that does not pay income tax (farmers). Why not give a moratorium on payments for the income class that pays tax. The two years EMI that are deferred for payments should have the interest based on the PLR or at reduced rates.
Every Indian needs to spend 10 minutes a day for politics and community work – An hour a week. Go start a neighborhood-nation building programme to ensure good governance. Rest I will add in my next blog
There are three sources of growth for an economy, increase in capital, and increase in labour force, and improvement in productivity. We will have to address all three
There is a difference in Economic growth and economic development. Economic growth is purely GDP but economic development is a broader concept that includes not just GDP but also indicators like social justice , income distribution, political freedom, pollution , Equality of income …………GDP captures average national income , but do not reflect how that income is spent.. Even increase in aids and cancer incidences in the country will add to the GDP expenditure on health services , Also, calamity will lead to the increase in GDP due to increase in reconstruction activities.
Moreover, GDP growth rate is inadequate measure of growth as it is calculated largely on the basis of rate of growth of income of the upper 20-30 % of the population who receive disproportionately large share of income. It calculates only money transactions and leaves many important activities and social measures and conditions like adult literacy rate, life expectancy and HDI rank
We must change our economic measurement methods from Economic growth to economic development
India needs to re-look into the growth measurement model. We have a solution for economic crises. We need to act fast and grow faster. Rest in my next blog
Good luck
Rajendra Pratap Gupta
President
Country First
Mobile:
India + 91 9323109456
Email: President@countryfirst.org / mail@rajendragupta.org
www.countryfirst.org
www.linkedin.com/in/rajendragupta
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