Post by talk2santosh on Feb 18, 2004 23:30:32 GMT -5
Is India shining?
By: Mahesh Vyas and Kamal Chenoy
January 18, 2004
--------------------------------------------------------------------------------
Let me shine
Is India Shining as the government’s large advertisements state? I think it is celebrating. It is expressing its confidence with a mobile phone, a new automobile and a housing loan.
There is a sense of confidence in the future as a phone, an automobile and a housing loan — all commit the buyers to an expense stream in the future.
The willingness of the buyer to commit to such future expenses can only be based on the confidence that there will be a corresponding income stream in the future. I find this expression and this confidence in the future to be worthy of celebration.
The spending and the optimism we witness today is based on real growth. Official statistics inform us that the economy grew by seven per cent in the first half of the 2003-04. We have not seen such growth since 1995-96.
We, at CMIE believe that the economy would grow even faster in the second half of the year and, 2003-04 would end with a growth of 8.2 per cent. This is the highest pace of growth in well over a decade. It is higher than the growth rates witnessed by India in the famous mid-1990s. It is also among the fastest growth rates in the world.
Agriculture
A large share of the credit for this year’s growth goes to the agricultural sector who have benefitted from a good monsoon. India is projected to grow 208 million tonnes of food-grains — cereals and pulses — in 2003-04 compared to 183 million tonnes produced in the previous year.
The growth in food-grain production works out to 14 per cent. The corresponding growth in the non-foodgrains — oilseeds, cotton, sugarcane, fruits, vegetables, etc is expected to be 13 per cent.
Prospects for the rabi (winter) crop look bright. Rabi sowing till end — December 2003 was 11 per cent higher than it was at the end of December 2002. Water storage in the major water reservoirs was 24 per cent higher and rains have benefitted the standing rabi crops.
In the previous year, India witnessed a severe drought. And, this year’s growth is, to a great extent, a recovery from the drought. This recovery has brought about a substantial rise in the income in the hands of the farming community.
The rise in farm incomes has had a direct positive impact upon the industrial sector as the farmers spend their inflated incomes to buy larger quantities of these goods and services.
The automobiles sector has seen some exceptionally high growth rates during the current year. Sales of cars during April-November 2003 was 29 per cent higher than it was in April-November 2002. Sales of multi-utility vehicles was up by 31 per cent in the same period. Motorcycles sales grew by 14 per cent. That of commercial vehicles was up by 34 per cent.
I believe that agriculture holds the key to India’s progress. Nearly two-thirds of the population depend upon agriculture. If these people grow rich on a sustainable model, the country as a whole is bound to grow rich.
Infrastructure
It was not long ago that India painted a dreadful picture of power blackouts and a severely clogged infrastructure. Power shortages were close to 14 per cent.
Today, these are lower than seven per cent. The massive government investment in roads in the recent years has made a tangible difference to the country.
Travel time has reduced substantially. While this difference is experienced by the population, the changes in other infrastructure is less visible. The turnaround time at the ports has declined and so has the turnaround time of railway wagons.
Revenue earning freight movement in November was above target. It was also eight per cent higher than the year ago level. Cargo handled at the major ports increased by 12 per cent in November. Air passenger traffic during April-August 2003 was 7.8 per cent higher than the year ago levels.
The population of cellular phone subscribers in November 2003 was more than twice the subscribers in November 2002. On an average more than a million subscribers are being added every month since June 2003. All this is real and handsome growth.
Industry
Automobiles is not the only sector to have witnessed good growth. The industrial sector as a whole has been performing very well. The Index of Industrial Production grew by 6 per cent during April-October 2003.
This is higher than the 5.6 per cent growth recorded during the same months of 2002.
We expect industrial growth to accelerate in the coming months of this year. We expect the demand for industrial goods to improve. The buoyancy in automobiles and steel is likely to be maintained. Steel has seen tremendous growth this year in the overseas markets.
We also expect the demand for industries such as fertilisers, textiles and chemicals to improve compared to the first half. The food products sector would see its growth rate fall. Corporate results have been excellent. Sales and profits increased handsomely during the first half of the current year.
Correspondingly, the stock markets celebrated with a the various indices reaching new highs.
How long will this growth last and, how will the euphoria continue? The current growth is essentially a consumption expenditure led growth caused essentially by a substantial rise in farm incomes.
However, the investments climate (that is the setting up of new plants) is still quite tepid. It is important that investments (particularly private investments) into new plants and machinery pick up soon for the current growth to be sustained.
Mahesh Vyas is managing director and CEO, Centre for Monitoring Indian Economy P Ltd
Taking the shine off
Times are exciting...
The most exciting thing that happened in India where the government was involved was the Gujarat carnage in which around 1,500 to 2,000 Muslims were butchered and the Supreme Court had to intervene to ensure that cases of communal killings are pursued.
Last year was also a year marked by suicide killings among farmers in states like Andhra Pradesh and Punjab. Though the government shows data from employment exchanges, there are many in this country who do not register there and the present unemployment figures stand at a record low.
Add to this, rewriting of textbooks in schools on communal lines, threats hovering over secular institutions, disbanding of whatever existed of the public distribution system and absolute reduction in the allocation of funds towards education. These times are not exciting, in fact they are quite depressing.
Villages are progressing...
Seventy per cent of India’s population does not receive potable water and it’s almost like the government has told its people, a la Marie Antoinette, “If you cannot drink water, drink Pepsi.”
Also, there has been no marked improvement since 1998 in rural employment, basic village infrastructures like electricity, roads, education and health. The agricultural production per se, has grown, but this is primarily because last year was an acute drought year. In terms of actual agricultural productivity, there has been no significant change for years.
Economy is booming...
First of all, the economy cannot be measured on the basis of figures from one quarter. Also, stock markets and the profitability of big companies cannot alone represent a booming economy.
The real economy is one that affects the lives of ordinary people — an area where things have remained stagnant and below the promises made since Independence. The relevant statistics are those concerning numbers below the poverty line or relative price of agricultural produce, which is never taken into account to give an accurate picture of the economy.
Tourism is thriving...
Yes, that’s true, but what does that have to do with the current government? Because of attacks by the al Qaeda in neighbouring tourist destinations like Bali or Istanbul, tourists feel safer in India. In any case, growth, especially in manufacturing sector, geared towards equitable distribution is more important than tourism.
Expenses are settling...
It’s a myth that expenditures in the economy are under control. The latest series of pre-election sops by the finance minister will increase the revenue deficit.
It is an indication of the priorities of this government that instead of productive use of subsidies and investment in the social sector, or generating income opportunities for the backward classes, it is resorting to populist gimmicks.
These are pre-election stunts, not good economics.
Budgets are balancing...
The budgets in this country are all deficit budgets. The estimate of revenue is overtly optimistic and the actual expenditures are understated. The entire budget making exercise has now become one of statistical jugglery and does not reflect the true nature of the economy.
Revised expenditures are always higher than budget estimates, similarly in most sectors, there is a shortfall of revenue receipts.
Mothers are smiling...
Now, why should mothers be smiling when their children work in difficult conditions, under law and order problems and large-scale unemployment? Mothers are not smiling because their children go to sleep hungry. India is shining... but who is paying?
The people are paying through indirect taxes, through revenues being utilised to subsidise the rich, the poor being displaced for rich projects, commercial felling of forests, industrial and water pollution. It is the poor, not the rich and privileged, who are paying. No reason why India then is shining.
Kamal Chenoy, social scientist, JNU and member, organising committee, World Social Forum, spoke to Mayank Shekhar
By: Mahesh Vyas and Kamal Chenoy
January 18, 2004
--------------------------------------------------------------------------------
Let me shine
Is India Shining as the government’s large advertisements state? I think it is celebrating. It is expressing its confidence with a mobile phone, a new automobile and a housing loan.
There is a sense of confidence in the future as a phone, an automobile and a housing loan — all commit the buyers to an expense stream in the future.
The willingness of the buyer to commit to such future expenses can only be based on the confidence that there will be a corresponding income stream in the future. I find this expression and this confidence in the future to be worthy of celebration.
The spending and the optimism we witness today is based on real growth. Official statistics inform us that the economy grew by seven per cent in the first half of the 2003-04. We have not seen such growth since 1995-96.
We, at CMIE believe that the economy would grow even faster in the second half of the year and, 2003-04 would end with a growth of 8.2 per cent. This is the highest pace of growth in well over a decade. It is higher than the growth rates witnessed by India in the famous mid-1990s. It is also among the fastest growth rates in the world.
Agriculture
A large share of the credit for this year’s growth goes to the agricultural sector who have benefitted from a good monsoon. India is projected to grow 208 million tonnes of food-grains — cereals and pulses — in 2003-04 compared to 183 million tonnes produced in the previous year.
The growth in food-grain production works out to 14 per cent. The corresponding growth in the non-foodgrains — oilseeds, cotton, sugarcane, fruits, vegetables, etc is expected to be 13 per cent.
Prospects for the rabi (winter) crop look bright. Rabi sowing till end — December 2003 was 11 per cent higher than it was at the end of December 2002. Water storage in the major water reservoirs was 24 per cent higher and rains have benefitted the standing rabi crops.
In the previous year, India witnessed a severe drought. And, this year’s growth is, to a great extent, a recovery from the drought. This recovery has brought about a substantial rise in the income in the hands of the farming community.
The rise in farm incomes has had a direct positive impact upon the industrial sector as the farmers spend their inflated incomes to buy larger quantities of these goods and services.
The automobiles sector has seen some exceptionally high growth rates during the current year. Sales of cars during April-November 2003 was 29 per cent higher than it was in April-November 2002. Sales of multi-utility vehicles was up by 31 per cent in the same period. Motorcycles sales grew by 14 per cent. That of commercial vehicles was up by 34 per cent.
I believe that agriculture holds the key to India’s progress. Nearly two-thirds of the population depend upon agriculture. If these people grow rich on a sustainable model, the country as a whole is bound to grow rich.
Infrastructure
It was not long ago that India painted a dreadful picture of power blackouts and a severely clogged infrastructure. Power shortages were close to 14 per cent.
Today, these are lower than seven per cent. The massive government investment in roads in the recent years has made a tangible difference to the country.
Travel time has reduced substantially. While this difference is experienced by the population, the changes in other infrastructure is less visible. The turnaround time at the ports has declined and so has the turnaround time of railway wagons.
Revenue earning freight movement in November was above target. It was also eight per cent higher than the year ago level. Cargo handled at the major ports increased by 12 per cent in November. Air passenger traffic during April-August 2003 was 7.8 per cent higher than the year ago levels.
The population of cellular phone subscribers in November 2003 was more than twice the subscribers in November 2002. On an average more than a million subscribers are being added every month since June 2003. All this is real and handsome growth.
Industry
Automobiles is not the only sector to have witnessed good growth. The industrial sector as a whole has been performing very well. The Index of Industrial Production grew by 6 per cent during April-October 2003.
This is higher than the 5.6 per cent growth recorded during the same months of 2002.
We expect industrial growth to accelerate in the coming months of this year. We expect the demand for industrial goods to improve. The buoyancy in automobiles and steel is likely to be maintained. Steel has seen tremendous growth this year in the overseas markets.
We also expect the demand for industries such as fertilisers, textiles and chemicals to improve compared to the first half. The food products sector would see its growth rate fall. Corporate results have been excellent. Sales and profits increased handsomely during the first half of the current year.
Correspondingly, the stock markets celebrated with a the various indices reaching new highs.
How long will this growth last and, how will the euphoria continue? The current growth is essentially a consumption expenditure led growth caused essentially by a substantial rise in farm incomes.
However, the investments climate (that is the setting up of new plants) is still quite tepid. It is important that investments (particularly private investments) into new plants and machinery pick up soon for the current growth to be sustained.
Mahesh Vyas is managing director and CEO, Centre for Monitoring Indian Economy P Ltd
Taking the shine off
Times are exciting...
The most exciting thing that happened in India where the government was involved was the Gujarat carnage in which around 1,500 to 2,000 Muslims were butchered and the Supreme Court had to intervene to ensure that cases of communal killings are pursued.
Last year was also a year marked by suicide killings among farmers in states like Andhra Pradesh and Punjab. Though the government shows data from employment exchanges, there are many in this country who do not register there and the present unemployment figures stand at a record low.
Add to this, rewriting of textbooks in schools on communal lines, threats hovering over secular institutions, disbanding of whatever existed of the public distribution system and absolute reduction in the allocation of funds towards education. These times are not exciting, in fact they are quite depressing.
Villages are progressing...
Seventy per cent of India’s population does not receive potable water and it’s almost like the government has told its people, a la Marie Antoinette, “If you cannot drink water, drink Pepsi.”
Also, there has been no marked improvement since 1998 in rural employment, basic village infrastructures like electricity, roads, education and health. The agricultural production per se, has grown, but this is primarily because last year was an acute drought year. In terms of actual agricultural productivity, there has been no significant change for years.
Economy is booming...
First of all, the economy cannot be measured on the basis of figures from one quarter. Also, stock markets and the profitability of big companies cannot alone represent a booming economy.
The real economy is one that affects the lives of ordinary people — an area where things have remained stagnant and below the promises made since Independence. The relevant statistics are those concerning numbers below the poverty line or relative price of agricultural produce, which is never taken into account to give an accurate picture of the economy.
Tourism is thriving...
Yes, that’s true, but what does that have to do with the current government? Because of attacks by the al Qaeda in neighbouring tourist destinations like Bali or Istanbul, tourists feel safer in India. In any case, growth, especially in manufacturing sector, geared towards equitable distribution is more important than tourism.
Expenses are settling...
It’s a myth that expenditures in the economy are under control. The latest series of pre-election sops by the finance minister will increase the revenue deficit.
It is an indication of the priorities of this government that instead of productive use of subsidies and investment in the social sector, or generating income opportunities for the backward classes, it is resorting to populist gimmicks.
These are pre-election stunts, not good economics.
Budgets are balancing...
The budgets in this country are all deficit budgets. The estimate of revenue is overtly optimistic and the actual expenditures are understated. The entire budget making exercise has now become one of statistical jugglery and does not reflect the true nature of the economy.
Revised expenditures are always higher than budget estimates, similarly in most sectors, there is a shortfall of revenue receipts.
Mothers are smiling...
Now, why should mothers be smiling when their children work in difficult conditions, under law and order problems and large-scale unemployment? Mothers are not smiling because their children go to sleep hungry. India is shining... but who is paying?
The people are paying through indirect taxes, through revenues being utilised to subsidise the rich, the poor being displaced for rich projects, commercial felling of forests, industrial and water pollution. It is the poor, not the rich and privileged, who are paying. No reason why India then is shining.
Kamal Chenoy, social scientist, JNU and member, organising committee, World Social Forum, spoke to Mayank Shekhar