Hindu Nationalist RSS Leadership Criticizes Jobless Growth in India

Akhil Bharatiya Pratinidhi Sabha (ABPS), the top decision-making body of India's RSS (Rashtriya Swayamsevak Sangh), says that “the young generation is suffering from unemployment and the pandemic has made things even grim... We cannot turn a blind eye to unemployment. It is a crisis and it needs to be addressed.” The RSS was apparently reacting to the falling labor participation rate in India relative to Pakistan and the global averages. The RSS leadership wants the government of Prime Minister Narendra Modi to focus on helping small and medium sized enterprises (SMEs) to create jobs.  RSS likes Modi government's ‘Make in India’ initiative “but it needs to be sharpened even more and get more investment.” The resolution is titled, ‘The need to promote work opportunities to make Bharat self-reliant’. The solution offered by ABPS resolution: Take agro-based local initiatives to promote rural areas and create jobs, according to Ram Madhav, a member of the RSS executive committee. 

Falling Employment in India. Source: CMIE

India's labor participation rate (LPR) fell to 39.5% in March 2022, as reported by the Center for Monitoring Indian Economy (CMIE). It dropped below the 39.9% participation rate recorded in February. It is also lower than during the second wave of Covid-19 in April-June 2021. The lowest the labor participation rate had fallen to in the second wave was in June 2021 when it fell to 39.6%. The average LPR during April-June 2021 was 40%. March 2022, with no Covid-19 wave and with much lesser restrictions on mobility, has reported a worse LPR of 39.5%.

Labor Participation Rates in India and Pakistan. Source: ILO/World Bank

Youth  unemployment for ages15-24 in India is 24.9%, the highest in South Asia region. It is 14.8% in Bangladesh 14.8% and 9.2% in Pakistan, according to the International Labor Organization and the World Bank.  

Youth Unemployment in Bangladesh, India and Pakistan. Source: ILO, WB

In spite of the headline GDP growth figures highlighted by the Indian and world media, the fact is that it has been jobless growth. The labor participation rate (LPR) in India has been falling for more than a decade. The LPR in India has been below Pakistan's for several years, according to the International Labor Organization (ILO). 

Indian Employment Trends By Sector. Source: CMIE Via Business Standard

Construction and manufacturing sectors in India have been shedding jobs while the number of people working in agriculture has been rising, according to CMIE. 

Pakistan Employment By Sectors. Source: PBS via Bilal Gilani

It is important to note that Pakistan’s economy has created 5.5 million jobs during the past three years – 1.84 million jobs a year, significantly higher than yearly average of new jobs created during the 2008-18 decade, according to the findings of Labor Force Survey (LFS) as reported by the Express Tribune paper. The biggest jump in share of employment (1.5%) was in the construction sector, spurred by Naya Pakistan construction incentives offered by the PTI government. 

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Riaz Haq said…
Medium Small and Micro Enterprises (SMEs) have always been the backbone of an economy in general and secondary sector in particular. For a capital scarce developing country like India, SMEs are considered as panacea for several economic woes like unemployment, poverty, income inequalities and regional imbalances.


The MSME Development act classifies manufacturing units into medium, small and micro enterprises depending upon the investment made in plant and machinery. Any enterprise with investment in plant and machinery of up to INR 50 million is considered as medium enterprise while those having investment between INR1.0 million to INR2.5 million is a small enterprise and one with less than INR1.0 million is a micro enterprise. In service sector, any enterprise with the investment limit of INR1.0 million, between INR 1.0-20 million and of upto INR 50 million is called as micro, small and medium enterprise respectively.

The MSMEs have played a great role in ensuring the socialistic goals like equality of income and balance regional development as envisaged by the planners soon after the independence. With the meagre investment in comparison to the various large scale private and public enterprises, the MSMEs are found to be more efficient providing more employment opportunities at relatively lower cost. The employment intensity of MSMEs is estimated to be four times greater than that of large enterprises. Currently, around 36 million SMEs are generating 80 million employment opportunities, contributing 8% of the GDP, 45% of total manufacturing output and 40% of the total exports from the country. MSMEs account for more than 80% of the total industrial enterprises in India creating more than 8000 value added products.

The most important contribution of SMEs in India is promoting the balanced economic development. The trickle down effects of large enterprises is very limited in contrast to small industries where fruits of percolation of economic growth are more visible. While the large enterprises largely created the islands of prosperity in the ocean of poverty, small enterprises have succeeded in fulfilling the socialistic goals of providing equitable growth. It had also helped in industrialization of rural and backward areas, thereby, reducing regional imbalances, assuring more equitable distribution of national income.Urban area with around 857,000 enterprises accounted for 54.77% of the total working enterprises in Registered MSME sector whereas in rural areas around 707,000 enterprises (45.23% of the working enterprises) are located. Small industries also help the large in industries by supplying them ancillary products.
Riaz Haq said…
Bulk of India’s unemployed population is in the middle-income households that earn between Rs 2 lakh and Rs 5 lakh a year despite the fact that they have the highest labour participation rate among non-rich household groups, the Centre for Monitoring Indian Economy said.


Citing its Consumer Pyramids Household Survey (CPHS) data, CMIE said the middle class households accounted for half of the total households and also half of the unemployed and the largest number of unemployed people while the average labour participation rate (LPR) of this group was 43% compared to the overall average LPR was 40.8%. Also, it experiences an elevated unemployment rate of over 9%.

“India’s biggest challenge on the employment front is to provide jobs that yield about Rs 2,00,000 a year to about 16 million unemployed in the middle class households,” CMIE said in its weekly labour market analysis.

CMIE has divided households into five income classes. At the bottom of the income pyramid are households that earn less than Rs 100,000 a year. The next group earns between Rs 100,000 and Rs.200,000 a year and is called the lower middle class. The third group of households earns between Rs 200,000 and Rs 500,000 a year and belong to the middle income class. The fourth earns between Rs 500,000 and Rs 1 million a year and could be classified as the upper middle class and the richest group of house earn more than Rs 1 million in a year.

Further, a little over a third of the unemployed reside in the lower middle income households that earn between Rs 1 lakh and Rs 2 lakh. These households accounted for about 45 per cent of all households and the share of this class in the total unemployed increased from 33% during September-December 2019 to 39.5% during May-August 2021 as a significant portion of this income group migrated to lower income groups during 2021-22.

According to CMIE, the poorest households accounted for 9.8% of all the households and only 3.2% of all the unemployed before the pandemic in 2019-20. However, in 2020-21 and the first half of 2021-22 they accounted for 16.6% of all households but still accounted for only 3.5% of all the unemployed.

The richer households, however, suffer the least pain of unemployment. They account for about 0.5% of all households and contain a similar proportion of all unemployed. Their average LPR at 46.3% is the highest among all income groups.

As per CMIE, their unemployment rate had shot up the most among all income groups but has since declined. It was over 15% during the first wave of the pandemic. But, in 2021, the rate averaged at 5.2%. The employment rate has been mostly over 40% but shot up to 45% during September-December 2021.

“However, even India’s best case employment rate at 45% is much worse than the world average of 54%,” it concluded.
Riaz Haq said…
Subramanian Swamy slams Modi for failing to achieve economic growth


Hyderabad: BJP Rajya Sabha MP Subramanian Swamy on Tuesday lashed out at Prime Minister Narendra Modi for the latter’s failure to achieve targets of economic growth. Terming Modi ‘clueless’ about China, he felt that the national security has also weakened hugely.

“In 8 years in office we see that Modi has failed to achieve targets of economic growth. On the contrary, growth rate has declined annually since 2016. National security has weakened hugely. Modi inexplicably is clueless about China. There is scope to recover but does he know how? (sic)” he tweeted.

Subramanian Swamy’s latest attack on Modi came amidst mew report on the soaring inflation. India’s annual wholesale price-based inflation increased to a record 14.55% in March from 13.11% in February. He also criticised Modi even on China policy. He vehemently disagreed with the Prime Minister for the latter’s claims that China did not occupy Indian territory on eastern Ladakh in the Galwan valley.

When a netizen asked him why he was not advising the Prime Minister, Swamy replied, “Ancient rishis have advised that knowledge should be parted to those who have shradhha to receive it. (sic)”

The BJP Parliamentarian who is known for ‘calling a spade a spade’ as well as his wit, also differed with one of the Modi supporters who said that there was no better alternative to the current Prime Minister. Responding to him, Swamy said, “That is what the British Imperialist said: India will fall apart if British left.”
Riaz Haq said…
Eight-Hour #Power #Blackouts Hit #India After Hottest March on Record. #Coal shortage threatens to exacerbate #energy, #food #inflation. Nomura warns of ‘stagflationary shock,’ drop in factory output. #Modi #BJP #Hindutva #economy #Loadshedding https://www.bloomberg.com/news/articles/2022-04-21/eight-hour-blackouts-hit-india-after-hottest-march-since-1901

Riaz Haq said…
"Anti-Minority" Image Will Hurt #Indian Companies, Warns Ex RBI Gov Raghu Rajan the day after #bulldozers tore down #Muslim homes & businesses close to a #mosque in #Delhi's Jahangirpuri area. #Modi #BJP #Islamophobia #Hindutva #genocide https://www.ndtv.com/india-news/anti-minority-image-will-hurt-indian-companies-warns-raghuram-rajan-2908962 via @ndtv

Amid concerns over minorities being targeted in India, former Reserve Bank governor Raghuram Rajan on Thursday cautioned that an 'anti-minority' image for the country can lead to loss of market for Indian products and may also result in foreign governments perceiving the nation as an unreliable partner.
India enters the perception battle from a position of strength, the professor at Chicago's Booth School of Business said, alluding to credentials like democracy and secularism, but warned that this battle is "ours to lose".

The comments came a day after bulldozers tore down several concrete and temporary structures close to a mosque in Jahangirpuri as part of an anti-encroachment drive, days after the northwest Delhi neighbourhood was rocked by communal violence.

Speaking at the Times Network India Economic Conclave, Rajan said, "If we are seen as a democracy treating all our citizens respectfully, and, you know, relatively poor country, we become much more sympathetic. (Consumers say) 'I am buying this stuff from this country which is trying to do the right thing', and therefore, our markets grow."

He added that it is not just consumers who make such choices over whom to patronise, but warmth in international relations too is decided by such perceptions, as governments take a call on whether a country is a "reliable partner" or not, based on how it handles its minorities.

The outspoken academic added that China has been suffering from such image problems because of its treatment of Uighurs and to an extent the Tibetans as well, while Ukraine has seen huge support because President Volodymyr Zelenskyy is seen as someone standing up to defend ideas that a democratic world believes in.

The services sector export presents a large opportunity for Indians and the country will have to seize it, Rajan said, adding that we need to be very conscious of the West's sensitivities on privacy.

One of the opportunities which can be leveraged is in the medical sector, Rajan said, warning that being perceived as a country which does not satisfy data security and privacy concerns can make it difficult to succeed.

He also said undermining the constitutional authorities like the Election Commission, Enforcement Directorate or the Central Bureau of Investigation (CBI) erodes the democratic character of our country.

In other comments on domestic affairs, Rajan said the Indian administration will have to grapple with the challenges of governance by discussing changes with key stakeholders to avoid instances like the three farm laws. The three legislations were repealed last year after protests by farmers.

Meanwhile, Union Minister of State for Information Technology, Rajeev Chandrasekhar, who also spoke at the event, blamed IT companies for poor planning, saying this lack of foresight has led to wage inflation in the over USD 230 billion sector.

He also said getting high-quality connectivity to every corner through both wired and wireless connectivity is a policy priority and the ministry is working towards the same.

Riaz Haq said…
#Indian lawmaker arrested after tweet criticizing Narendra #Modi. Jignesh Mevani accused prime minister of idolizing Nathuram Godse, killer of Mahatma #Gandhi. #Hindutva #BJP #Islamophobia #India #RSS https://www.theguardian.com/world/2022/apr/22/indian-lawmaker-arrested-after-tweet-criticising-narendra-modi?CMP=share_btn_tw

A state lawmaker in India was arrested for criticising the prime minister, Narendra Modi, in a tweet, officials have said, raising concerns over freedom of speech in the world’s largest democracy.

His arrest coincided with the arrival of the British prime minister, Boris Johnson, in the country.

Jignesh Mevani, a prominent campaigner for India’s marginalised low-caste Dalit community, accused the Hindu nationalist leader of idolising Nathuram Godse, the assassin of India’s independence icon Mahatma Gandhi.

Some fringes of the Indian rightwing revere Godse as a hero for killing the man they blame for the partition of India and Pakistan – comments that Modi has criticised in the past.

But Mevani tweeted this week that Modi “worships and considers Godse as God”, accusing the prime minister of fomenting religious division.

He also demanded that Modi apologise for communal violence in Gujarat, where Mevani is a member of the state legislature.

He was arrested on Thursday on accusations of attempting to disturb “public tranquillity and peace”, the police said.

He was taken across the country to Assam in India’s north-east, where the complaint had been filed, and a court in Kokrajhar denied him bail, ordering him to be held in custody for three days.

Freedom of speech is enshrined in India’s constitution and Mevani’s lawyers called the arrest “illegal” and “unconstitutional”.

The tweet in question has been taken down by Twitter in India after a legal complaint.

The police have previously arrested social media users for “provocative” tweets that were critical of Modi or the rightwing government, sparking fears that the government was crushing dissent.

Mevani is believed to be the first elected politician detained on such grounds.

The activist-politician is a vocal critic of Modi’s right-wing politics and rose to national prominence after launching a protest campaign over the flogging of seven Dalits by cow vigilantes – zealots who target Muslims and Dalits to protect the bovines sacred to many Hindus.


Sectarian violence and rightwing Hindu vigilantism have increased since Modi came to power in 2014, and critics allege the popular leader’s reluctance to condemn radical elements is emboldening them.

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More than a dozen Indian states have witnessed violent clashes between Hindus and Muslims over the past two weeks, with one person killed in Gujarat.

In the capital, Delhi, bulldozers have demolished the homes of Muslims accused of rioting.
Riaz Haq said…
India’s auto market at a decade low; 6 red signals, from high fuel prices to chip shortage, stall the road to recovery this year


Over 40% idle capacity in auto industry
Tractor sales down for 7 consecutive months
Motorcycle and entry-level car demand under pressure
Implementation of OBD to increase 2W price by 6%-7%
No major indicator for rural market revival
Commodity prices soar by up to 200%
Fuel prices hover above INR 100/litre
PV exports at a decade low
Increase in booking cancellations
New Delhi: India’s automobile sales in the domestic market nosedived to 17.51 million in 2021-22, lowest since 2012-13 when the total wholesales were at 17.82 million, says the Society of Indian Automobile Manufacturers (SIAM).

Two-wheelers, the worst-hit segment, declined to a decade low in 2021-2022 to 13,466,000 units. It was in 2011-2012 that the two-wheeler sales were close to this number at 13,409,00. In the peak year FY19, the nation's two-wheeler market was at over 21 million units.

The deficit in the ICE two-wheeler is incredibly wide even after adding the electric two-wheelers, including low-speed and high speed, which were at about 3 lakh units. ICE three-wheelers volume also remained at 260,000 units, less than 50% of the peak volumes, while the total installed capacity is over a million units. The electric vehicles are catching up the fastest in this segment with almost 35% penetration.

Riaz Haq said…
Majority of #India’s 900 Million #Workforce Stop Looking for Jobs. #Labor participation rate dropped from 46% to 40% in 5 years. Only 9% of #Indian #women are employed or looking for jobs. #unemployment #BJP #Modi #economy #Hindutva #IslamophobiaInIndia https://www.bloomberg.com/news/articles/2022-04-24/majority-of-india-s-900-million-workforce-stop-looking-for-jobs

By Vrishti Beniwal
April 24, 2022, 4:31 PM PDT

India’s job creation problem is morphing into a greater threat: a growing number of people are no longer even looking for work.

Frustrated at not being able to find the right kind of job, millions of Indians, particularly women, are exiting the labor force entirely, according to new data from the Centre for Monitoring Indian Economy Pvt, a private research firm in Mumbai.

Riaz Haq said…
#India NITI Aayog’s first “SDG India - Index & Dashboard 2019-20” report showed that of 28 states/UTs it mapped, #poverty went up in 22, #hunger in 24 and #income #inequality in 25 of those states/UTs. #unemployment #economy #COVID19 #BJP #Modi #Hindutva https://www.fortuneindia.com/opinion/how-many-are-poor-in-india/107883

First, the IMF’s estimation.

The IMF used (i) the HCES of 2011-12 (the fiscal year 2011 for the IMF) as the base and estimated consumption distribution for all the years until 2020-21 (IMF’s 2020) “via the use of estimates based on average per capita nominal PFCE growth” and (ii) also took into consideration “the average rupee food subsidy transfer to each individual” for the years of 2004-05 to 2020-21.

The second factor – taking the money value of subsidised and free ration for 2020-21 – was considered because it said without this any exercise of poverty estimation “solely on the basis of reported consumption expenditures will lead to an overestimation of poverty levels”.

Several questions arise out of this methodology. The first is its extensive use of HCES of 2011-12 while being dismissive of the HCES of 2017-18 (which showed poverty growing). The second is, PFCE maps the consumption expenditure of all Indians, rich or poor, except government consumption (GFCE), and doesn’t tell which segment (income level) of society spends how much – making it impossible to know the status of households, which can be considered for poverty estimation.

The third is about the IMF’s assumption that the subsidised and free ration (which started during the pandemic under the PMGKY) reached two-thirds of the population and that the free ration will continue forever (eliminating extreme poverty). The IMF report cheers the Aadhaar-linked ration cards. None of these assumptions can be taken at face value.

The CAG report tabled in Parliament earlier this month highlighted several flaws in the Aadhaar’s functioning, including 73% of faulty biometrics that people paid to correct, duplications and verification failures. Besides, one year after the mass exodus began in 2020, migrant workers had not received subsidised ration, forcing the Supreme Court to lambast the central government (for its failure to operationalise the App being developed for the purpose and work-in-progress “one-nation-one-ration card” system) and direct state governments to ensure ration to migrants.

And what happens when the free ration is discontinued after September 2022? The decline in extreme poverty would return, wouldn’t it? So, does the IMF believe this amounts to poverty elimination?

On the other hand, the WB report seeks to marry the NSSO’s 2011-12 HCES to private sector data, the CMIE’s Consumer Pyramid Household Survey (CPHS), to inform its poverty estimation.

This is when the WB report admits that (i) the CMIE’s CPHS data is not comparable with the NSSO’s and that (ii) it “reweighed CPHS to construct NSSO-compatible measures of poverty and inequality for the years 2015 to 2019”. It said the CPHS data needed to be transformed into “a nationally representative dataset”.

As for the CPHS data, an elaborate debate about its ability to capture poverty took place last year. Several economists, including Jean Dreze, pointed out “a troubling pattern of poverty underestimation in CPHS, vis-à-vis other national surveys”. Several others accused the CPHS of a pronounced bias in favour of the “well-off”, which the CMIE admitted and promised to look into.

Another question arises from the use of the CPHS.

If a private firm like the CMIE can carry out household surveys every month or every quarter (for example, its employment-unemployment data is monthly) why can’t the government with decades of institutional knowledge and experience and huge human and financial resources?
Riaz Haq said…
#India’s #Muslims mark #Eid under attacks. #Islamophobia & attacks have surged across the country, including stone throwing during religious processions & subsequent demolitions by authorities of a number of properties belonging mostly to Muslims. #Modi

SRINAGAR, India (AP) — Muslims across India marked Eid al-Fitr on Tuesday by offering prayers outside mosques, with the celebrations this year following a series of attacks against the religious minority during the month of Ramadan.

“We will not have the same kind of festivity” this year, said Mohammad Habeeb ur Rehman, a civil engineer in India’s financial capital, Mumbai. “This is the most painful Eid with the worst memories for Indian Muslims.”

Anti-Muslim sentiment and attacks have surged across the country in the last month, including stone throwing between Hindu and Muslim groups during religious processions and subsequent demolitions by authorities of a number of properties belonging mostly to Muslims.

The community, which makes up 14% of India’s 1.4 billion population, is reeling from vilification by hard-line Hindu nationalists who have long espoused an anti-Muslim stance. Some leaders of India’s ruling Hindu nationalist Bharatiya Janata Party have tacitly supported the violence, while Prime Minister Narendra Modi has so far been silent about it.

Eid al-Fitr is typically marked with communal prayers, celebratory gatherings around festive meals, and new clothes, but celebrations in India for the past two years have been marred by COVID-19 restrictions.

In the Indian-controlled portion of disputed Kashmir, the Muslim festival has been subdued for the past three years because of an unprecedented military lockdown after India stripped the region’s semi-autonomy in 2019, followed by the pandemic. The region also saw a rise in violence during Ramadan, with at least 20 militants, two civilians and five police and soldiers killed.

“As we prepare to celebrate Eid, a strong sense of collective loss jars at us,” said Bashir Ahmed, a businessman in Srinagar.

A violent insurgency against Indian rule in the Muslim-majority region and New Delhi’s brutal response have raged for over three decades. Tens of thousands of people have died in the conflict.

In India’s capital, New Delhi, hundreds assembled in the Jama Masjid, one of the country’s largest mosques, to offer Eid prayers there for the first time in over two years due to pandemic restrictions. Families came together early Tuesday morning and many people shared hugs and wishes.

Mohammed Hamid, a software engineer, said he was grateful to be offering prayers at the mosque again.

“It’s a good feeling because there was a lockdown for the past two years. With the grace of God, we are able to offer Eid prayers here with the children and we are thankful,” Hamid said.

Riaz Haq said…
CMIE: #India's #unemployment rate jumped to 7.83% in April from 7.60% in March. #Urban #jobless rate soared to 9.22% from 8.28% in March. #Modi #BJP #economy #Hindutva #Islamophobia https://www.business-standard.com/article/economy-policy/india-s-unemployment-rate-rose-to-7-83-in-april-shows-cmie-data-122050201088_1.html

The unemployment rate in the country grew to 7.83 per cent in April from 7.60 per cent in March, according to the Centre for Monitoring Indian Economy (CMIE) data.

The unemployment rate in urban areas was higher at 9.22 per cent compared to 8.28 per cent in March, the data released on Monday showed.

In the rural area, the unemployment rate was at 7.18 per cent in April compared to 7.29 per cent in the previous month.

Unemployment rate was the highest in Haryana at 34.5 per cent followed by Rajasthan at 28.8 per cent, Bihar 21.1 per cent and Jammu and Kashmir 15.6 per cent, the data showed.

CMIE managing director Mahesh Vyas told PTI that it is important to note that the labour force participation rate and the employment rate also increased in April.

"This is a good development," Vyas said.

The employment rate rose from 36.46 per cent to 37.05 per cent in April, he added.
Riaz Haq said…
Cause of concern! Bank credit to manufacturing declines
Bank credit to 10 out of the 15 sectors declined in the last decade, an analysis by MVIRDC World Trade Centre (WTC) Mumbai shows.
By JOE MATHEW,  May 5, 2022 3 min read

The share of manufacturing sector in the total non-food bank credit declined from 24% to 13.5% in the last decade (2011-12 to 2020-21) due to banks' shift towards lending to personal loans, infrastructure, weaker sections and services sectors, an analysis by MVIRDC World Trade Centre (WTC) Mumbai shows. The outstanding bank credit to the manufacturing sector as a share of manufacturing GDP also declined from 16% in 2011-12 to 13% by 2020-21, it points out.

The analysis, based on Reserve Bank of India (RBI) data, also shows that bank credit to 10 out of the 15 sectors declined as a share of total bank credit. This includes sectors such as base metals, textiles, chemicals, food processing, engineering, automobiles and gems & jewellery.

Noting that the decline in bank credit exposure to manufacturing sector is also reflected in the slow growth in manufacturing investment in the country, WTC analysis says that gross capital formation (a proxy for investment in the economy) has grown at a tepid pace of 2% CAGR in the manufacturing sector during the last 10 years from 2011-12 to 2020-21, compared to a growth of 6% in overall investment in the economy. "The share of manufacturing in India's gross capital formation also shrunk from 17.2% in 2011-12 to 14.36% in 2020-21. On the other hand, sectors such as transport, storage, communication, trade repair, hotels and other services witnessed growth in their share of total capital formation in the economy," it says.

"The stagnancy in bank credit exposure to these core manufacturing sectors does not bode well for our Make in India and Aatmanirbhar program. It is welcome that the share of personal loans, credit to weaker sections and credit to the services sectors have been growing in the overall bank credit. At the same time, we need to promote bank lending to manufacturing sectors, especially in labour intensive segments such as leather, textile, food processing to prevent a situation of jobless growth," Vijay Kalantri, chairman at MVIRDC WTC Mumbai, says.

The analysis notes that in the last 13 years since 2008, the share of personal loans in total bank credit grew from 23% to 27%, while the corresponding figure for credit to weaker sections has grown from 4.8% to 7.5%. Similarly, the infrastructure sector witnessed higher share in overall non food credit, up from 9.3% to 10.2%. The WTC report says that as the central government establishes a dedicated financing institution for the infrastructure sector and as asset monetisation pipeline is implemented effectively, the burden of infrastructure financing on banks will reduce, which in turn may enable banks to focus more on funding to the manufacturing sector.

Riaz Haq said…
Sidharth Bhatia (India)
A banker friend, a strong supporter of the present regime, said last night, we (India) will be worse than Sri Lanka in five years. Not one economic indicator is doing well or is likely to improve, he said. "I'm not an alarmist, I'm just scared."

Riaz Haq said…
Problems Facing Indian Economy
25 February 2022 by Tejvan Pettinger


Since 1991, the Indian economy has pursued free market liberalisation, greater openness in trade and increase investment in infrastructure. This helped the Indian economy to achieve a rapid rate of economic growth and economic development. However, the economy still faces various problems and challenges, such as corruption, lack of infrastructure, poverty in rural areas and poor tax collection rates.

1. Unemployment

Despite rapid economic growth, unemployment is still an issue in both rural and urban areas. The fast rate of economic growth has left unskilled workers behind, and they have struggled to find work in growing industries. In 2017, the official unemployment rate was just below 5%. However, a report by the OECD found over 30% of people aged 15-29 in India are not in employment, education or training (NEETs). Livemint reported on March 6, 2017. WIth, little if any government welfare support for the unemployed, it leads to dire poverty.

2. Poor educational standards

Although India has benefited from a high % of English speakers, (important for call centre industry) there is still high levels of illiteracy amongst the population. It is worse in rural areas and amongst women. Over 50% of Indian women are illiterate. This limits economic development and a more skilled workforce.

3. Poor Infrastructure

Many Indians lack basic amenities lack access to running water. Indian public services are creaking under the strain of bureaucracy and inefficiency. Over 40% of Indian fruit rots before it reaches the market; this is one example of the supply constraints and inefficiency’s facing the Indian economy.

4. Balance of Payments deterioration.

Although India has built up large amounts of foreign currency reserves, the high rates of economic growth have been at the cost of a persistent current account deficit. In late 2012, the current account reached a peak of 6% of GDP. Since then there has been an improvement in the current account. But, the Indian economy has seen imports growth faster than exports. This means India needs to attract capital flows to finance the deficit. Also, the large deficit caused the depreciation in the Rupee between 2012 and 2014. Whilst the deficit remains, there is always the fear of a further devaluation in the Rupee. There is a need to rebalance the economy and improve the competitiveness of exports.

5. High levels of private debt

Buoyed by a property boom the amount of lending in India has grown by 30% in the past year. However, there are concerns about the risk of such loans. If they are dependent on rising property prices it could be problematic. Furthermore, if inflation increases further it may force the RBI to increase interest rates. If interest rates rise substantially it will leave those indebted facing rising interest payments and potentially reducing consumer spending in the future

6. Inequality has risen rather than decreased.

It is hoped that economic growth would help drag the Indian poor above the poverty line. However, so far economic growth has been highly uneven benefiting the skilled and wealthy disproportionately. Many of India’s rural poor are yet to receive any tangible benefit from India’s economic growth. More than 78 million homes do not have electricity. 33% (268million) of the population live on less than $1 per day. Furthermore with the spread of television in Indian villages the poor are increasingly aware of the disparity between rich and poor. (3)

7. Large Budget Deficit

India has one of the largest budget deficits in the developing world. Excluding subsidies, it amounts to nearly 8% of GDP. Although it is fallen a little in the past year. It still allows little scope for increasing investment in public services like health and education.

Riaz Haq said…
#Indian Rupee dropped 51 paise to an all-time low of 77.41, surpassing the previous low of 76.98 in March. #INR has been staggering since the beginning of the year. Foreign funds have pulled out $17.7 billion from Indian stock market this year already. https://www.businesstoday.in/latest/economy/story/rupee-hits-all-time-low-heres-how-it-may-impact-your-life-332831-2022-05-09


Rupee hit an all-time low against the US Dollar on Monday, bringing further bad news for the economy that is already reeling under high inflation. The Rupee dropped 51 paise to an all-time low of 77.41, surpassing the previous low of 76.98 in March.

The Rupee has been staggering since the beginning of the year. Foreign funds have pulled out $17.7 billion from Indian equities this year already.

Sharat Chandra, Vice President of Research and Development, Earth ID, said that taming inflation will be an uphill task in such a scenario. However, Heena Naik- Research Analyst - Currency, Angel One Ltd was more optimistic about the depreciating Rupee.

“This negative trend in Rupee is temporary as markets are expected to be braced by IPO-related inflows which shall provide support to the Indian Rupee,” said Naik.

Chandra, however said, "The depreciating Yuan has led to the fall of many Asian and emerging market currencies, but the Indian rupee hitting new lows is worrisome for the economy because India, one of the biggest importers of crude oil, is more vulnerable to rising crude oil prices. This would also increase the trade deficit resulting in an expected current account deficit of 3 per cent and impacting the balance of payments. RBI's data suggests that India's current account deficit (CAD) increased to US$ 23.0 billion (2.7 per cent of GDP) in Q3:2021-22 from US$ 9.9 billion. In this context, taming inflation is going to be an uphill task for RBI. High-interest rates may force Indian businesses to cut down on capital expenditure."

How it will impact your life

The depreciating Rupee is likely to have a direct impact on your spendings.

Imports: Importers need to buy Dollars to pay for imported items. With the dip in Rupee, importing items will get more expensive. Oil imports will get costlier, which can directly impact consumers.

Additionally, other imported items as well as components are also likely to get costlier, which will increase the prices for consumers. This means that cars and appliances are likely to get expensive.

Escalating prices might accelerate inflation, which is already high currently.

Loans: There is likely to be an indirect impact on loans. As Rupee depreciates, import prices go up, making items and commodities more expensive. This pushes inflation. Now, with rising inflation, RBI resorts to altering the repo rate – which has already been hiked by 40 bps to 4.40 per cent. High repo rates means banks increase their lending rates, making EMIs costlier. Banks have already increased their loan rates.
Riaz Haq said…
Can #Indian #economy survive a global downturn? #India's currency #INR is at an all-time low, #unemployment is high. #Food, #energy prices are rising. #COVID19 , #UkraineWar and the #Shanghai lockdown could derail the world economic recovery. #inflation https://www.thehindubusinessline.com/opinion/can-the-indian-economy-survive-a-global-downturn/article65401455.ece

Everyone was hoping this would be the year of recovery when the global economy climbed off its Covid-19 sickbed and took the first tentative steps towards normalcy. As we recovered from Omicron, there were faint hopes we might have put the illness behind us. That brief spurt of optimism now seems premature.

The grim truth is the world couldn’t be in a worse shape. For a start, Covid-19 hasn’t gone away. Then, there’s the Russia-Ukraine war, now stretching into its 77th day with no end in sight. If all that isn’t enough, Shanghai, China’s biggest industrial city, is still undergoing a prolonged lockdown and supply disruptions could throw the global economy out of gear.

Inflation has become a global phenomenon, and the Reserve Bank of India and other central banks are all hiking interest rates with more tightening to come. Throw in the falling rupee and that will push up the prices of all imports starting with oil, coal, steel and cement and other commodities. Inevitably, prices of everyday necessities to luxury goods will rise. The Indonesians have already banned edible oil exports which we need in large quantities and prices of pulses are also rising, driven in part by the Russia-Ukraine war. And as consumers abandon discretionary spending, this lowers tax revenues and leaves the government in a tighter-than-ever squeeze with less to spend on key projects.

Mercedes Benz’s India CEO has gone on record to say he doesn’t have enough vehicles to meet strong demand. On a different level, companies like Maruti and Hero are saying there’s insufficient demand for their lower-end vehicles, suggesting buyers in those categories are stalling on purchases due to financial worries. Throw in sliding stock markets for the more well-heeled and it’s clear discretionary spending will suffer.

Outsourcing to China where manufacturing was cheaper seemed like a great idea until now when the perils of putting all your production eggs in one basket are becoming clear. Over the last 30 years, China has become the world’s factory and there’s nothing left in the West. Take shipbuilding for instance. The world’s 10 top shipyards are in South Korea and China.

Now, with China in lockdown, it’s disrupting global supply lines and creating shortages globally. It’s unclear when Shanghai will get Xi’s all-clear to open up. We’ve seen from our own experience a two-to-three week lockdown doesn’t stamp out Covid-19 totally and Omicron is especially fast-spreading.

Can India escape the effects of a global slowdown? We emerged relatively unscathed in 1999 and also 2008. But now we’re more interlocked with the world and it’s tough to see us escaping the multiple blows that are striking different corners of the globe.

Riaz Haq said…
The Indian economy is being rewired. The opportunity is immense And so are the stakes


Who deserves the credit? Chance has played a big role: India did not create the Sino-American split or the cloud, but benefits from both. So has the steady accumulation of piecemeal reform over many governments. The digital-identity scheme and new national tax system were dreamed up a decade or more ago.

Mr Modi’s government has also got a lot right. It has backed the tech stack and direct welfare, and persevered with the painful task of shrinking the informal economy. It has found pragmatic fixes. Central-government purchases of solar power have kick-started renewables. Financial reforms have made it easier to float young firms and bankrupt bad ones. Mr Modi’s electoral prowess provides economic continuity. Even the opposition expects him to be in power well after the election in 2024.

The danger is that over the next decade this dominance hardens into autocracy. One risk is the bjp’s abhorrent hostility towards Muslims, which it uses to rally its political base. Companies tend to shrug this off, judging that Mr Modi can keep tensions under control and that capital flight will be limited. Yet violence and deteriorating human rights could lead to stigma that impairs India’s access to Western markets. The bjp’s desire for religious and linguistic conformity in a huge, diverse country could be destabilising. Were the party to impose Hindi as the national language, secessionist pressures would grow in some wealthy states that pay much of the taxes.

The quality of decision-making could also deteriorate. Prickly and vindictive, the government has co-opted the bureaucracy to bully the press and the courts. A botched decision to abolish bank notes in 2016 showed Mr Modi’s impulsive side. A strongman lacking checks and balances can eventually endanger not just demo cracy, but also the economy: think of President Recep Tayyip Erdogan in Turkey, whose bizarre views on inflation have caused a currency crisis. And, given the bjp’s ambivalence towards foreign capital, the campaign for national renewal risks regressing into protectionism. The party loves blank cheques from Silicon Valley but is wary of foreign firms competing in India. Today’s targeted subsidies could degenerate into autarky and cronyism—the tendencies that have long held India back.

Seizing the moment
For India to grow at 7% or 8% for years to come would be momentous. It would lift huge numbers of people out of poverty. It would generate a vast new market and manufacturing base for global business, and it would change the global balance of power by creating a bigger counterweight to China in Asia. Fate, inheritance and pragmatic decisions have created a new opportunity in the next decade. It is India’s and Mr Modi’s to squander. ■
Riaz Haq said…
The world has been hit with a double whammy - on one hand there is a recessionary trend with demand falling, at the same time prices are going up. Central banks around the world took inflation too lightly, says Swaminathan Aiyar. Stagflation signs are around. While we (India) may not collapse like Sri Lanka or Pakistan but we are certainly in trouble, he believes.


We are at highest rate of inflation in years. The wholesale price index for April had just come in at 15.05%. The consumer price index 7.8%. These are extraordinarily high rates and there is nothing special about India. In America where the target inflation is 2% their latest inflation rate 8.5%, it came down a little to 8.3%. So there is global inflation.

Prices of commodities, services, manufacturing - have been soaring in the last 12 months. The inflation began in 2021 and the Ukraine war has accelerated it. The world is caught in a huge inflationary trap right now . The physical shortage of a large number of commodities has been building up over time, and over and above that came the shock of war and the sanctions imposed on Russia, which is an important supplier of number of items. The Black Sea, which is one of the greatest supply routes out of Russia and Ukraine, has been blocked by the war.

On top of everything else China has committed a kind of hara-kiri by having a complete lockdown in an attempt to stomp out COVID - so there is a separate supply shock because there is no production going on in China. These different strands have all come together for a gigantic shock.

We are in a situation where on the one hand there is a recessionary trend, recession is coming because demand is falling, at the same time prices are going up. Some people call this stagflation.

In the case of India we have been hit both ways. We were expecting this to be a very good year for growth. The World Bank, IMF had said India would be the fastest growing major country, and perhaps that will still be the case but earlier they were hoping for 9% growth or things like that, now people say maybe 7%, 7.5%, maybe 6%. So, we are in a tough position right now with inflation is rising fast because inflation is rising everywhere else in the world and because of that we cannot escape it alone and the downtrend, the recessionary trend is also coming the world over and we cannot escape that. We are perhaps better positioned to withstand the problem that some other countries. We will not collapse like Sri Lanka or Pakistan but we are certainly in trouble
Riaz Haq said…
We (India) may not collapse like Sri Lanka or Pakistan but we are certainly in trouble, he (Swaminatham Aiyar) believes.


Do you think the situation is under control. Can central banks control inflation just by raising the rates?
Raising interest rates is not going to solve the supply problem. Raising interest rates is a way of-- if there is an overheated economy with too much demand then you can say I want to slow down that demand by raising interest rates and making it difficult for people to buy but that is not the case today. India does not have an overheated economy where there is too much demand, in fact there is not enough. Take a look at the India Inc earnings - the auto sector is not in good shape, demand is low and so production is also being affected.

There is a shortage in areas like metals but even there the prices have come down very sharply. So right now, the problem of inflation cannot easily be solved by tightening the interest rates. It can be tightened in some cases, the government is trying to do it in the case of wheat by putting an export ban. If you look at the world price of wheat it costs about Rs 40 a kilo and if we freely allow the export of wheat and all our surplus buffer stocks we can have a huge export boom but then if the Indian price equates with the world price at Rs 40 a kilo there will be mayhem and there will be riots on the streets so the government has tried to do supply management by saying we will stop all exports of wheat.

This I think was a bad move, I mean it should have been more gradual and they should be allowing some exports but right now that is one thing that they can do. They have put a ban to improve the supply of wheat and this can help to reduce inflation on that front. Beyond that you will have to live with the global trends, you cannot wish away the global trends and just as Indonesia has put this restriction on edible oil, we are a very large importer of edible oil we are going to suffer.

The government up to a point can reduce import or excise duties on commodities like edible oil, crude oil, petrol, diesel - but all this would be limited amount of relief. It is not the case that prices will come down but you can you can limit the extent to which the prices rises beyond that you will have to wait for this war to play out and for this business cycle to play out, those are items beyond your control.

What do you think is the best course of action for the RBI now?
Central banks around the world, including the RBI, were too relaxed about inflation. They kept thinking this is some temporary delaying it will go away. Then they thought that some increase has taken place last year it will go away then they thought no, then when the war came then again people thought that this may be just temporary, there will be a quick solution to the war.

There is no quick solution to the war and it has now become very clear that inflation has gone out of control compared with what you expected it to be.

In America the target is 2% and it went to 3-4% they said you know okay it could come down again instead it has gone to 5%, 6%, 7%, 8%, 8.5% so panic has broken out there and they are tightening and tightening. The RBI cannot afford to be left out and therefore the RBI has been reluctant to raise interest rates but when everybody else is doing it they say we will have to do so because if we do not do so there can be an attack on the rupee.

You cannot have a situation where everybody else just raising the interest rates and India is not, if you do that huge amount of money can flow out of India so because of that the RBI reluctantly is increasing its rates and will continue to raise its rates there is no option and apart from protect any our foreign exchange reserves it will also help tame inflation up to a point.
Riaz Haq said…
Autonomous Hindutva could devour both India and the Bharatiya Janata Party
In a formally secular India, religion indeed seems to have become the opium of the people, a mass distraction from the transformative social agenda that the country needs

Last Updated at May 23, 2022 09:46 IST

Bharat Bhushan


With the rapid radicalisation of sections of Hindu society, the Hindutva project has become dangerously autonomous. It is no longer possible to see it only as an electoral strategy of the Bharatiya Janata Party (BJP). Today one does not need to even presume the direct hand of the BJP or the Rashtriya Swayamsevak Sangh behind Hindutva’s every move.

Its exponential social growth may have placed it beyond their control. In a formally secular India, religion indeed seems to have become the opium of the people. When Marx described religion as “the sigh of the oppressed ...

Riaz Haq said…
Why is India's economy looking so bleak?



Biting the bullet
Large businesses have responded. Consumer goods companies have decided to bite the cost bullet. Prices of goods have been increased, package sizes will get smaller, and downtrading—switching from expensive products to cheaper alternatives—is the new reality for daily household purchases. The construction of homes will get more expensive as the prices of cement, transportation, materials all climb higher.

Do small businesses have the same luxury and leeway? Not really. In an interview to the Business Standard, Jitubhai Vakharia, the president of the South Gujarat Textile Processors’ Association in Surat, explained how the input cost of coal has almost doubled. The cost of dyes and chemicals have increased by 25% to 40% and the price of some chemicals like sodium hydrosulphite of soda or discharging agent like safolite have increased by 140% to 150%. Input costs have increased he says.

So can they raise costs? Increasing prices is difficult he admitted, as demand is already low in the market.

What that means is, more business could be forced to close, more jobs are lost, and more households are left wondering how they will get by. The government’s own data shows that 5,907 businesses registered as micro, small, and medium enterprises were shut during financial years 2020-’21 and 2021-’22. In the 2021 financial year, 330 MSMEs were shut down.

It is perhaps with an eye to this simmering discontent around price rise and seeing the neighbouring country of Sri Lanka quite literally go up in flames over spiralling inflation, that finance minister Nirmala Sitharaman announced on Saturday an excise cut in petrol and diesel taxes and a 200 rupees ($2.58) subsidy for those buying cooking gas cylinders, along with some customs duty cuts. While the move is being criticised as an optical illusion, the Narendra Modi government has clearly sensed dissatisfaction around the way costs have risen and moved to do some damage control.

The latest State of Inequality in India Report by the economic advisory council to the prime minister had these observations to share. The income of the top 1% shows a growing trend, while that of the bottom 10% is shrinking—the top 1% of income earners in India cumulatively earn more than three times of what is earned by the bottom 10%. Within that, a person who earns an average of Rs25,000 per month is now part of the top 10% of the total wages earned bracket. What does that mean for the others, what are people earning and how are they getting by in an environment of continuous cost rise?

This economic strife also begets the question, why doesn’t it translate into protests, electoral punishment? Why aren’t people voting out governments when they feel the pressure of rising costs, no jobs, and less and less ability to spend?

Riaz Haq said…
Why is India's economy looking so bleak?



This economic strife also begets the question, why doesn’t it translate into protests, electoral punishment? Why aren’t people voting out governments when they feel the pressure of rising costs, no jobs, and less and less ability to spend?

Difficult conditions
One, this does not have a singular unified impact. In the run-up to the Uttar Pradesh elections, many roving reporters thrust their mikes into the faces of people. What do you worry about, what is a concern, they were asked? “Mehengai,” the rising cost of living, the interviewees would respond. Prices of cooking oils like mustard oil and sunflower oil had risen, gas cylinder prices were up, jobs were scarce and running a household was an uphill struggle. India’s overall unemployment rate rose to 7.83% in April, up from 7.6% in March.

Yet, it did not impact voting choices and the ruling state government was elected back with a clear majority. It is because my inflation is not your inflation. My household cost pressures are not yours. I have a job, but you don’t. Cost rise is too fluid and wide a challenge to cement together an entire population into making a political choice borne of it.

There is also the insulation that welfare schemes have created for the very poor. Food schemes, cash transfers, and some workdays through the Mahatma Gandhi National Rural Employment Guarantee, which assures rural families of 100 days of work a year. The slice left vulnerable and besieged is India’s large and diverse middle class that is now feeling the pain. Households that own a motorcycle and dream of a small car, households that want to move from their one-bedroom rented accommodation, to a two-bedroom home of their own.

The rise of political marketing
Two, we now have a changed polity. With close to 500 million users, India has the most WhatsApp users. All of whom have been nursed with consistent messaging around political agenda. If the last 10 years have seen economic missteps, they have equally been marked by the rise of marketing in politics. More than Rs6,500 crore was spent on elections by 18 political parties between 2015 and 2020. Of this, political parties spent more than Rs3,400 crore or 52.3% on publicity alone.

The Bharatiya Janata Party spent 56% (over Rs3,600 crore) of the total election outlay by all 18 parties in the five years and Congress spent 21.41% (over Rs1,400 crore). In the last five years, the BJP has spent 54.87% (over Rs2,000 crore) of their total election expenditure on “advertisements and publicity” compared to 7.2% (Rs260 crore) on marches, rallies, and other campaigns. The Congress, in the five-year period, has spent 40.08% (Rs 560 crore) of the total election expenditure on election-related publicity.

Does all this matter? Higher public expenditure on publicity and advertising in an election year is a major factor for a state government to retain power, In a May 2021 State Bank of India report titled “State Elections: How Women are Shaping India’s Destiny,” Soumya Kanti Ghosh. the Group Chief Economic Adviser, writes that in most of the states, on an average in order to be re-elected, incumbent governments make huge spends in an election year.
Riaz Haq said…
Why is India's economy looking so bleak?



Does all this matter? Higher public expenditure on publicity and advertising in an election year is a major factor for a state government to retain power, In a May 2021 State Bank of India report titled “State Elections: How Women are Shaping India’s Destiny,” Soumya Kanti Ghosh. the Group Chief Economic Adviser, writes that in most of the states, on an average in order to be re-elected, incumbent governments make huge spends in an election year.

In a few states where publicity expenditure was low in election year, the incumbent government mostly lost the election. It may be fair to say then that this marketing blitz can mould voter opinion, whether it is to highlight the benefits of a regime—or to demonise a section of the population.

What does all this have to do with the stock market that’s battling its own losses and the fear of a prolonged bear trading patch? It is an ugly situation for markets, there’s no denying. Selling in the equity universe will come in waves and lashes, this purging of stocks, prices, and holdings. However, this too shall pass. It may leave the markets in a dull trading range for many months where things move neither higher nor lower. Or it may bounce back faster than expected, egged on by better global news and the return of the prodigal foreign institutional investors.

Key lessons
But it leaves important lessons to think about. What did I learn from this, was I truly looking at investing when I picked up the small cap stock? Do I know enough to be trading in the futures and options market, sharp as a knife and fast as a bullet? A young India that was bedazzled by the cryptocurrency market will also have to collect its broken earnings and dreams. India has been one of the world’s fastest-growing cryptocurrency markets, increasing by 641% between July 2020 and June 2021. Much of that was India’s young population, from the B and C cities. In the crash burn we have seen this year, many young traders have been left singed.

The ultimate lesson, I believe, is this. When there is a cancer in the system, it will spread. For all those who believed the market, or one segment of the economy, would continue to grow even as the broader market and population was crumbling under the pressure of the last few years, it has not worked that way.

It is also true that we still remain a nation of great potential, a large working force, a diverse geography, a huge market size. But will India continue to walk into the future with only a rich few, or will we take all our people with us? As James Baldwin wrote, “Neither love nor terror makes one blind; indifference makes one blind.”

This article first appeared on Scroll.in. We welcome your comments at ideas.india@qz.com.
Riaz Haq said…
Modi Govt @ 8


‘Sabka saath, sabka vikas’ defined and operationalised an ambitious, universal, and effective redistribution agenda.

The PM Awas Yojana for housing, Saubhagya for electricity, Ujjwala for LPG connections, Swachh Bharat Abhiyan for toilets, and Ayushman Bharat for medical insurance reached out to all without critical basic facilities, and delivered benefits without discrimination.

The universal Aadhaar identity, and widespread use of fintech for direct benefit transfers, made delivery of benefits efficient, and eliminated corruption.

The adoption of ambitious renewable energy goals — first 175 GW by 2022, and then 450 GW of by 2030 — offered hope of saving India from pollution, and controlling carbon emissions.

Despite some unnecessary convulsions such as demonetisation, India’s economic management was indeed stellar in Modi’s first term.

Wobbly Second Term

Come the second term of the BJP-led NDA government, starting 2019, and the economic performance is facing headwinds.

Imposition of the most stringent and unimaginative lockdown in March 2020 was a disastrous self-goal. Scars of that lockdown are still visible. Consumer demand and value added in sectors such as construction and services have still not returned to pre-COVID-19 levels.

The government’s privatisation programme has floundered. Privatisation of two banks announced in the Budget 2021 has not seen any tangible progress. The Bill to amend the bank nationalisation law is nowhere in sight. The privatisation of BPCL is off the table. Privatisation of CONCOR, Shipping Corporation, IDBI Bank, a general insurance company etc. are all stuck. Privatisation transactions of Pawan Hans and CEL have been stopped after announcing acceptance of bids.

Monetisation in the railways, pipelines, and the power sector is stalled. The government is wrongly branding coal and gas block allocations as monetisation of assets.

It is expanding instead of downsizing. Many new ministries and departments have been created; while none closed or downsized. This government is on the defensive. It had to backtrack on agriculture reforms. Consolidated labour laws, despite having been enacted more than 20 months earlier, are in cold storage.

Import duties on cells and modules, key ingredients for executing the renewable energy agenda, have been raised putting the renewable energy programme in jeopardy. Delhi continues to be a pollution nightmare in winters.

In The $10 Trillion Dream, I have called India’s economic performance “the worst first three years of any Government”.

The Way Ahead

India is in a state of policy stasis.

The economic populism of Aatmanirbhar Bharat has dragged India into a quagmire. Tariffs were raised and imports banned in the name of Aatmanirbhar Bharat. India’s imports and trade deficit, however, have risen massively. Foreign portfolio investors have withdrawn their investments in droves.

The government’s policy to control inflation is wobbly and jerky. It is raising export duties, and reducing import duties. After steel, others will likely follow. The government has banned the export of wheat despite India carrying large surplus stocks.

The government is now running one of the largest fiscal deficits in India’s history. Wholesale inflation is at its worst in 30 years. Consumer inflation is well above tolerable limits, and is likely to stay there for many months. India’s foreign exchange reserves are dwindling.

It seems quite likely that remaining two years of the Narendra Modi government will be low growth and high inflation years. Even if one assumes growth of 7 percent a year, India’s GDP would grow at about 3.5 percent a year in Modi’s second five-year term. It will be the lowest growth performance of any government in many decades.
Riaz Haq said…
Sidhu #MooseWala: The murdered #Indian rapper who 'made sense of chaos'. He delivered a biting commentary on the shrinking scope for dissent in #India. "There will be a debate in the name of religions. If you speak the truth, you will get 295 (section)" https://www.bbc.com/news/world-asia-india-61629133

Fans say that Moose Wala was merely confronting the dark truths about modern life and holding up a mirror to society. "He was just making sense of the chaos, whether it was corruption, violence or the gun problem in Punjab," one fan said. "And that contribution in itself is valuable."

Moose Wala's music has meant different things to different people. Some say they admired him for the "courage and I-don't-care attitude" that was evident in his songs. Others liked the way he added English words to his Punjabi songs, which gave it a contemporary sheen.

"His simple and colloquial style of writing made it easy to understand for his audiences. Also, we loved the way he answered his critics through his songs," 27-year-old Niyamat Singh, one of his fans, told BBC Punjabi.

Mr Singh is particularly fond of the track 295, in which the singer delivers a strong-worded commentary on the shrinking scope for dissent in the country. The song's title is a reference to Section 295 of the Indian Penal Code which deals with "injuring or defiling place of worship with intent to insult the religion of any class".

"Every day there will be controversy with someone or the other. There will be a debate in the name of religions. If you speak the truth, you will get 295 (section) And if the son progresses, he will get hate," Moose Wala sings in the track.

Mr Singh told BBC Punjabi that he loves the way the singer "says what it is".

Ms Sethi remembers a concert Moose Wala did at an upmarket Delhi hotel a few months ago. "People from every walk of life came to see him perform. The excitement was so high that people were willing to pay extra money just to get a glimpse of him," she says.

Fans also credit him for baptising hip-hop - which until recently clung to the fringes of popular culture in South Asia - as a mainstream genre. His songs were hugely popular not just in India but across the subcontinent, and especially among the Punjabi speaking population in Pakistan.

In 2021, he decided to enter politics. He contested elections as a candidate for India's principal opposition, the Congress party, in the 2022 Punjab assembly elections. Although he lost, his popularity as a "people's leader" continued to grow. He was especially invested in the betterment of his village. "That is why I chose to be known not by my name but by that of my village," he would tell people during his political rallies.
Riaz Haq said…
Pakistan Labor Force Survey 2020-21

It (unemployment) goes down from (6.9%) in 2018-19 to (6.3%) in the LFS 2020-21. Decrease is observed both in case of males (5.9%, 5.5%) and females (10.0%, 8.9%). Generally the unemployment rate in females is more pronounced as compared to males during the comparative period. Area- wise disaggregated figures indicate that unemployment rate goes down both in urban (7.9%, 7.3%) and in rural areas (6.4%, 5.8%) Comparative figures suggest significant decrease in rural males (5.5%, 5.1%) and females (8.5%, 7.4%) and in urban male (6.5%, 6.0%) and urban females (17.1%, 16.4%). 


Comparative surveys estimates indicate changes in the employment shares. Decrease is observed in agriculture/forestry/hunting & fishing (39.2%, 37.4%), wholesale & retail trade (14.5%, 14.4%) and other category (2.2%, 1.5%) while increase is noted in construction (8.0%, 9.5%) and Community/social & personal services (14.9%, 16.0%). Manufacturing (15.0%, 14.9%) and transport storage & communication (6.2%, 6.2%) remain steady during the comparative periods.

Riaz Haq said…
India’s Economy Is Growing Quickly. Why Can’t It Produce Enough Jobs?
The disconnect is a result of India’s uneven growth, powered and enjoyed by the country’s upper strata.

By Emily Schmall and Sameer Yasir


Among the job seekers despairing over the lack of opportunities is Sweety Sinha, who lives in Haryana, a northern state where unemployment was a staggering 34.5 percent in April.

As a child, Ms. Sinha liked to pretend to be a teacher, standing in front of her village classroom with fake eyeglasses and a wooden baton, to fellow students’ great amusement.

Her ambition came true years later when she got a job teaching math at a private school. But the coronavirus upended her dreams, as the Indian economy contracted 7.3 percent in the 2020-21 fiscal year. Within months of starting, she and several other teachers were laid off because so many students had dropped out.

Ms. Sinha, 30, is again in the market for a job. In November, she joined thousands of applicants vying for much-coveted work in the government. She has also traveled across Haryana seeking jobs, but turned them down because of the meager pay — less than $400 a month.

“Sometimes, during nights, I really get scared: What if I am not able to get anything?” she said. “All of my friends are suffering because of unemployment.”

The struggles of working-class Indians, and the millions of unemployed, may eventually cause a drag on growth, economists say.

NEW DELHI — On paper, India’s economy has had a banner year. Exports are at record highs. Profits of publicly traded companies have doubled. A vibrant middle class, built over the past few decades, is now shelling out so much on movie tickets, cars, real estate and vacations that economists call it post-pandemic “revenge spending.”

Yet even as India is projected to have the fastest growth of any major economy this year, the rosy headline figures do not reflect reality for hundreds of millions of Indians. The growth is still not translating into enough jobs for the waves of educated young people who enter the labor force each year. A far larger number of Indians eke out a living in the informal sector, and they have been battered in recent months by high inflation, especially in food prices.

The disconnect is a result of India’s uneven growth, which is powered by the voracious consumption of the country’s upper strata but whose benefits often do not extend beyond the urban middle class. The pandemic has magnified the divide, throwing tens of millions of Indians into extreme poverty while the number of Indian billionaires has surged, according to Oxfam.

The concentration of wealth is in part a product of the growth-at-all-costs ambitions of Prime Minister Narendra Modi, who promised when he was re-elected in 2019 to double the size of India’s economy by 2024, lifting the country into the $5 trillion-or-more club alongside the United States, China and Japan.

The government reported late last month that the economy had expanded 8.7 percent in the last year, to $3.3 trillion. But with domestic investment lackluster, and government hiring slowing, India has turned to subsidized fuel, food and housing for the poorest to address the widespread joblessness. Free grains now reach two-thirds of the country’s more than 1.3 billion people.

Those handouts, by some calculations, have pushed inequality in India to its lowest level in decades. Still, critics of the Indian government say that subsidies cannot be used forever to paper over inadequate job creation. This is especially true as tens of millions of Indians — new college graduates, farmers looking to leave the fields and women taking on work — are expected to seek to flood the nonfarm work force in the coming years.

“There is a historical disconnect in the Indian growth story, where growth essentially happens without a corresponding increase in employment,” said Mahesh Vyas, the chief executive of the Center for Monitoring Indian Economy, a data research firm.
Riaz Haq said…
Why Multinational companies are quitting #India? 8 years after #Modi first urged foreign companies to “Make in India”, #Indian #economy is seeing thousands of foreign firms leaving. #MakeinIndia #Islamophobia #Hindutva #BJP #bigotry #violence #hate


Eight years after Prime Minister Narendra Modi first urged multinational companies to “Make in India”, Asia’s third-largest economy is seeing many foreign firms give up on the country

A slew of big names including German retailer Metro AG, Swiss building-materials firm Holcim, US automaker Ford, UK banking major Royal Bank of Scotland, US bikemaker Harley-Davidson and US banking behemoth Citibank have chosen to
pull the plug on their operations in India or downsize their presence here in recent years. That is a worrying trend at a time when India is trying to position itself as an alternative to China, in a post-Covid world where many MNCs are looking to diversify their supply chain.

A total of 2,783 foreign companies with registered offices or subsidiaries in India closed their operations in the country between 2014 and November 2021, Commerce and Industry Minister Piyush Goyal told Parliament late last year. That is not a small figure, given that there are only 12,458 active foreign subsidiaries operating in India.


This might also explain why some of the world’s biggest chipmakers have not warmed up to India despite its government rolling out a red carpet for them by approving a $10 billion incentive plan last year to establish chip and display industries in the
in the country.


When asked if he would consider setting up a factory in India, Tesla CEO Elon Musk tweeted last month that the automaker would not set up a manufacturing plant “in any location where we are not allowed first to sell & service cars”.

Musk will instead look for potential opportunities in Indonesia, known for its business-friendly policy and production of nickel, a critical ingredient in making EV batteries.

Riaz Haq said…
Foreign #investors flee #India, putting pressure on #Indian #currency. #Modi government raises #import taxes on #gold to preserve #forex reserves, support #INR, amid rising #inflation and twin current account and fiscal deficits. #BJP #Hindutva #economy

Investors reeling from the brutal emerging markets selloff over the past six months again fled the rupee as India’s currency hit new lows, prompting the government to curb gold imports and oil exports to arrest a widening deficit.

The government raised import taxes on gold, while increasing levies on exports of gasoline and diesel in an attempt to control a fast-widening current account gap. The moves sent Reliance Industries Ltd NSE -7.20 %. and other energy exporters tumbling, bringing down the benchmark index by as much as 1.7%. The rupee fell again.

The actions underscore how emerging economies, specially with twin current account and fiscal deficits, are increasingly facing pressures on their currencies as forceful rate hikes by the Federal Reserve accentuate outflows. Despite having the world’s fourth-biggest reserve pile, the rupee has hit a succession of record lows in recent weeks. The Indonesian rupiah, the other high-yielder in Asia, fell to its lowest in two years on Friday.

Policy makers in many emerging markets face stark choices as they battle soaring inflation and capital flight as the Fed tightens policy: raise rates and risk hurting growth, spend reserves that took years to build to defend currencies, or simply step away and let the market run its course.

New Delhi’s move also underscores the economic challenges faced by Prime Minister Narendra Modi’s government as inflation in the world’s sixth-largest economy accelerates and external finances worsen. The central bank has been battling to slow the currency’s decline, and runaway rupee depreciation will worsen price pressures, and may spur more rate hikes that weigh on growth.

The measures “aim to reduce the impending pressure on the current account deficit and thus the currency,” said Madhavi Arora, lead economist at Emkay Global Financial Services. “Complementary policy efforts from both fiscal and monetary side essentially reflects the looming pain on the balance of payments deficit this year.”

While the Reserve Bank of India has been seeking to smooth out the rupee’s 6% decline this year, banks have reported dollar shortages as investors and companies rushed to swap the rupee for other assets or to pay for imports. The latest measures were spurred by a sudden surge of gold imports in May and June, the Finance Ministry said Friday.

The government raised the import duty on gold to 12.5%, reversing a cut last year. The higher taxes on shipments of gasoline and diesel sent shares of Reliance Industries, a key exporter, down by as much as 8.9%.

India is the world’s second-biggest gold consumer and local futures rose as much as 3% in Mumbai, the biggest intraday jump in almost four months, due to the higher import costs.

Finance Minister Nirmala Sitharaman said on Friday that India is seeking to discourage gold imports as it helps preserve foreign exchange. She added “extraordinary times” require such measures including the imposition of a windfall tax on fuel exports.
“The challenges are emanating from the same source, which is higher commodity prices,” said Rahul Bajoria, senior economist, Barclays Bank Plc. “India can neither find supply onshore nor we will be able to cut back the consumption of oil. That makes the whole situation a lot more unpredictable both in terms of how this plays out and how long this continues for.”

For the broader fuel market, a drop in Indian exports could further tighten global markets that are grappling with reduced supply from Russia and rising post-pandemic demand.
Riaz Haq said…
#India’s World-Beating Growth Isn’t Creating #Jobs. #Unemployment rate is hovering around 7% or 8%, up from about 5% five years ago. The labor force participation rate has dropped to just 40% of the 900 million #Indians of legal age. #Modi #BJP #Hindutva


No other major economy has been expanding as fast as India lately, beating both China and the US. But beyond the headlines lies the grim reality of rising unemployment. The nation of 1.4 billion people isn’t creating enough jobs for its growing workforce, despite campaign promises by Prime Minister Narendra Modi to make it a priority. Output is increasing as a result of pandemic-related government spending while the private sector sits on the fence, deterred by dim conditions for new investment. Meanwhile, pandemic-related disruptions and rising inflation are making it harder for everyone to get by. Tensions boiled over in June when angry youth facing bleak job prospects blocked rail traffic and highways in many states for days, even setting some trains on fire.

The unemployment rate in India has been hovering around 7% or 8%, up from about 5% five years ago, according to the Centre for Monitoring Indian Economy, a private research firm. At the same time, the workforce shrank as millions of people dejected over weak job prospects pulled out, a situation that was exacerbated by Covid-19 lockdowns. The labor force participation rate -- meaning people who are working or looking for work -- has dropped to just 40% of the 900 million Indians of legal age, from 46% six years ago, according to the CMIE. By comparison, the participation rate in the US was 62.2% in June.
Riaz Haq said…

Kaushik Basu
India’s unemployment rate in August shot up to 8.3%. This is the highest in 12 months, according to CMIE data. This is causing extra hardship because it is happening amidst high inflation. This is where we need to focus all policy attention.





India's unemployment rate surged to a one-year high of 8.3 per cent in August as employment sequentially fell by 2 million to 394.6 million, according to data from the Centre for Monitoring Indian Economy (CMIE).

During July, the unemployment rate was at 6.8 per cent and the employment was 397 million, the CMIE data added.

"The urban unemployment rate is usually higher at about 8 per cent than the rural unemployment rate, which is usually around 7 per cent. In August the urban unemployment rate shot up to 9.6 per cent and rural unemployment rate also increased to 7.7 per cent," CMIE managing director Mahesh Vyas told PTI.

Vyas further stated that erratic rainfall affected sowing activities and this is one of the reasons for the increase in unemployment in rural India.

The unemployment rate in rural India rose from 6.1 per cent in July to 7.7 per cent in August. More importantly, the employment rate fell from 37.6 per cent to 37.3 per cent.

"Going forward, the rural unemployment rate may come down as delayed monsoon will increase agricultural activities towards the end of the monsoon season. However, it is not clear how the urban unemployment rate will play out in the coming months. Currently, it is quite elevated," Vyas added.

During August, the unemployment was the highest in Haryana at 37.3 per cent followed by Jammu and Kashmir at 32.8 per cent, Rajasthan at 31.4 per cent, Jharkhand at 17.3 per cent and Tripura at 16.3 per cent, according to the data.

While the unemployment was the lowest in Chhattisgarh at 0.4 per cent followed by Meghalaya at 2 per cent, Maharashtra at 2.2 per cent and Gujarat and Odisha at 2.6 per cent each, the data showed.

Riaz Haq said…
Kaushik Basu
Over 2020-22 India's annual GDP growth is 0.43%. This places India in the middle of the world's growth table. What's worrying is that a decade ago India was in the top 3. Also youth unemployment at 28.3% is the highest in decades. So the growth that's happening is all at the top.

Riaz Haq said…
India's Economic Situation 'Bleak'; We Know the Issue but Not the Solution: Pronab Sen
In an interview with Karan Thapar, the country's former chief statistician said that India will miss the RBI's target of 7.2% growth for this financial year and that it'll come around 6-6.5%. (real growth going forward will be around 4%)

Pranab Sen: Demonetization and COVID lockdown dried up the informal credit and killed a large percentage of small and medium enterprises.



In an interview where he paints a bleak and disturbing picture of the state of the economy, India’s former chief statistician professor Pronab Sen has said that we can identify the problems that are retarding growth but we don’t know how to tackle them.

Worse, professor Sen says he is not sure if the government has diagnosed the problems because it has not spoken about them and its silence can be variously interpreted. Consequently, he says that India will miss the RBI’s target of 7.2% growth for this financial year and that it will growth will only come in somewhere around 6-6.5%.

However, he points out, in real terms growth will actually be just 4% which, he adds, is at least 2.5% below the growth India needs to create jobs for its population. This means, professor Sen points out, we can boast of being the fastest growing economy but it’s equally true that we are considerably falling short of the rate of growth we need (6.57%) to create sufficient jobs for our people which, in turn, will boost consumption and spending and create incentives for investment.

In these circumstances, professor Sen said that first quarter growth of FY23 at 13.5% is clearly disappointing.

In a 42-minute interview to Karan Thapar for The Wire, professor Sen, who is currently the country director of the International Growth Centre, identified two critical areas where the Indian economy faces serious problems about which we are not sure what we should do.

The first is the MSME sector which, he added, has undoubtedly shrunk in size over the last two years. The problem is not a question of encouraging and helping existing MSMEs so much as creating the environment for new MSMEs to emerge. The specific problem is that the informal credit line on which they depend has dried up and we don’t know how to revive that credit line. The government does not have a clear way of doing so.

And, the problem afflicting MSMEs, professor Sen says, is the reason why manufacturing has only grown year-on-year by 4.8% and why joblessness and unemployment are an increasing concern. Most jobs are created by MSMEs or the wider unorganised sector and that seems to have stopped or, at least, is not happening in sufficient measure.

The second problem professor Sen identified is the critical services sector of trade, hotel, transport, communication and broadcasting services, which represent 30.5% of employment but is still 15.5% below pre-pandemic levels. Once again, he said we don’t know what we need to do to boost this sector back to pre-pandemic levels. He pointed out that many MSMEs work in this sector and its future is, therefore, directly linked to MSMEs.

Professor Sen also pointed out that the global situation will not be of much help to India. Interest rates are likely to remain high and exports, which have been a support to the economy until recently, will face problems in markets like Europe and America and, therefore, fail to provide the boost to growth they have previously given. However, he believes oil prices could come down.

He believes India is clearly locked into a K-shaped recovery and the arms of the K are moving further and further apart.

Whilst scoffing at commentators and newspapers that have called for broad-based reforms, without identifying what they would be, professor Sen said that the key reform needed would be credit lines that would service MSMEs and provide funds for new MSMEs to start up.
Riaz Haq said…
“The poverty in the country is standing like a demon in front of us. It is important that we slay this demon. That 20 crore people are still below poverty line is a figure that should make us very sad. As many as 23 crore people have less than Rs 375 income per day. There are four crore unemployed people in the country. The labour force survey says we have an unemployment rate of 7.6 per cent,” said Dattatreya Hosabale. Also Read - 23 Crore Indians Pushed Below Poverty Line Amid COVID-19 Pandemic, Says Study


He also spoke about the rising levels of economic inequality that the country is witnessing today. Acknowledging that India is among the top six economies of the world, he said top 1 per cent holds 1/5th (20 per cent) of the nation’s income. He added that 50 per cent of the country’s population has only 13 per cent of the country’s income. Hosabale went on to quote United Nations’ observations on the poverty and development in India. Also Read - Today Will be Your Last Working Day With Uber: Ride-hailing Firm Lays Off Nearly 3,700 Employees Via Zoom

“A large part of the country still does not have access to clean water and nutritious food. Civil strife and the poor level of education are also a reason for poverty. That is why a New Education Policy has been ushered in. Even climate change is a reason for poverty. And at places the inefficiency of the government is a reason for poverty.”

In his speech, Hosabale also stressed on the importance of creating an entrepreneurship-friendly environment apart from the need to carry skill-training from the urban to rural India.

“During Covid, we learnt that there is a possibility of generating jobs at the rural level according to local needs and using local talent. That is why the Swavalambi Bharat Abhiyan was launched. We don’t just need all-India level schemes, but also local schemes. It can be done in the field of agriculture, skill development, marketing etc. We can revive cottage industry. Similarly, in the field of medicine, a lot of Ayurvedic medicines can be manufactured at the local level. We need to find people interested in self-employment and entrepreneurship,” Hosabale said.
Riaz Haq said…
PM Modi: The Joke Indians are Not Allowed to Crack
4 April 2022, by THOMAS Rosamma


Parul Khakhar, a poet from Gujarat, posted a poem on Facebook in May, expressing her anguish at the sight of bodies flowing down the Ganges at the height of the second wave of the coronavirus pandemic. ‘Shav vahini Ganga’ – Ganges the Carrier of Corpses – was read widely, translated into several languages and shared on social media. The state government’s literary mouthpiece came down heavily on the poet, claiming it was “misuse of a poem for anarchy”.

Ganges, the Carrier of Corpses
Translated by Salil Tripathi
Don’t worry, be happy, in one voice speak the corpses
O King, in your Ram-Rajya, we see bodies flow in the Ganges
O King, the woods are ashes,
No spots remain at crematoria,
O King, there are no carers,
Nor any pall-bearers,
No mourners left
And we are bereft
With our wordless dirges of dysphoria
Libitina enters every home where she dances and then prances,
O King, in your Ram-Rajya, our bodies flow in the Ganges
O King, the melting chimney quivers, the virus has us shaken
O King, our bangles shatter, our heaving chest lies broken
The city burns as he fiddles, Billa-Ranga thrust their lances,
O King, in your Ram-Rajya, I see bodies flow in the Ganges
O King, your attire sparkles as you shine and glow and blaze
O King, this entire city has at last seen your real face
Show your guts, no ifs and buts,
Come out and shout and say it loud,
“The naked King is lame and weak”
Show me you are no longer meek,
Flames rise high and reach the sky, the furious city rages;
O King, in your Ram-Rajya, do you see bodies flow in the Ganges?


Riaz Haq said…
Aakar Patel
manufacturing share of gdp has fallen after launch of make in india

a report by ashoka ceda’s ankur bhardwaj showed jobs in manufacturing in india had halved after 2017

the beauty of new india is that popularity is dissociated from performance/governance



CEDA-CMIE Bulletin No 4: May 2021

With the second wave of the coronavirus pandemic battering India at present, the Indian economic outlook looks bleak for the second year in a row. In 2020-21, India’s real GDP growth is estimated to be minus 8%. This would also put pressure on India’s employment numbers. In previous bulletins, we have analyzed the impact of Covid-19 pandemic on employment, individual and household incomesand expenditures in 2020.

In this CEDA-CMIE Bulletin, we try to take a longer-term view of sector-wise employment in India. We base this on CMIE’s monthly time-series of employment by industry going back to the year 2016. For this bulletin, we have focused on seven sectors, viz. agriculture, mines, manufacturing, real estate and construction, financial services, non-financial services, and public administrative services. These sectors make up for 99% of total employment in the country.

Riaz Haq said…
Princeton Economist Ashoka Mody: How India’s growth bubble fizzled out


The slowdown is not a short-term disruption. What can replace India’s finance-construction growth model?

As the finance-led growth model collapses, India must invest in its future. India will need at least a generation to build necessary human capital alongside more productive urban spaces

India’s gross domestic product (GDP) growth has slowed sharply from 8% a year last year to 5% in the second quarter this year. Optimists, Indian and international, say growth will pick up soon. The International Monetary Fund (IMF) projects the Indian economy will hum at 7.5% a year by 2021. Such optimism is dangerous.


’Shining India’ years

Domestic policymakers and international observers celebrated the high headline growth numbers. Indian software producers gained disproportionate spotlight as markers of success. In March 1999, the Bengaluru-based Infosys became the first Indian-registered company to be listed on the Nasdaq stock exchange. In March 2000, the then US President Bill Clinton visited India, making a stop in Hyderabad, dubbed “Cyberabad" under the tech-savvy chief minister Chandrababu Naidu. Clinton spoke in awe of India’s dazzling diaspora in the US Silicon Valley; he applauded India’s young multimillionaires.

Some months before Clinton’s visit, in October 1999, a BJP-led coalition had gained a stable majority in the Lok Sabha. But the essential philosophy established by Manmohan Singh—more open markets, financial deregulation—remained unchanged.

India now decisively missed the second wave of global competition in labour-intensive products. When, on 11 December, 2001, China became a member of the World Trade Organization, Chinese exporters powered into the new markets opened up to them.

India’s finance-construction growth model continued apace. In 2003 and 2004, two new private banks, Kotak Mahindra and Yes Bank, joined the crowded financial field. The BJP built more highways, which created more need for private finance and gave more fillip to construction. The barely hidden nexus of politician, bureaucrat, and financier became tighter. India steadily became one of the world’s most unequal economies. The BJP’s 2004 Lok Sabha campaign with the slogan “Shining India" felt hollow and cynical to far too many people.

Human capital

Losing to international competition in this second wave failed again to bring home the message that India lacked a core ingredient of success: human capital. From the time of the industrial revolution in the late 18th century, economic growth and human capital development had been closely related. Each round of successful new entrants on to the global stage had pushed the human development frontier further.

The Americans achieved near-universal high school education in the early 20th century and they followed it up after the Second World War with the spread of state-financed universities. The East Asians understood this historical lesson well.

Even for labour-intensive manufacturing, quality and timely production required a high degree of industrial literacy. East Asian—including by now Chinese—schools got steadily better; the governments there began the task of building world-class universities.

In India, the illusion continued. The years 2003 to 2008 were heady. Although China was chewing up export market shares, it was also a major importer of raw materials and industrial products. Thus, the Chinese boom fuelled extraordinary global trade volumes. The entire world rode that rising global tide—and so did India.
Riaz Haq said…
India’s economic activity looks set to slow as resilience wanes


India’s economy appeared to slow rather than accelerate last month, as high-frequency indicators tracked by Bloomberg signaled worsening business and consumption activity.

Although a dial measuring so-called animal spirits showed activity was steady for a fifth straight month in November, the needle was just one bad data point away from swinging to the left. Exports, a key growth lever in the past year, was among three of eight metrics that performed poorly. The rest were unchanged.

Bloomberg’s dashboard reflects a broadly grim outlook for 2023 as tighter global interest rates take a toll on demand. The gauge uses a three-month weighted average to smooth out volatility in single-month readings.

Below are more details:

Business Activity

Purchasing managers’ surveys for November showed that activity across the services and manufacturing sectors improved, though the three-month weighted average was still weak. New orders expanded at faster rates in both sectors, while output prices rose at the quickest pace in three months.

Pollyanna De Lima, economics associate director at S&P Global Market Intelligence, said the latest results are good news, even if the trend for inflation is somewhat concerning. “Evidence of stubborn inflation may prompt further hikes to the policy rate at a time when global economic challenges could negatively impact" India’s growth, she said.

Exports barely improved last month, increasing 0.6% from a year ago after declining 16.7% in October, data released by the trade ministry showed. Only half of the 30 sectors posted growth. The government attributed the tepid performance to weak demand for engineering and iron ore products.

Imports climbed 5.4 percent, keeping India’s trade gap above $20 billion for the eighth consecutive month. That adds pressure to the country’s current account deficit, a key vulnerability for the economy and the rupee, the worst-hit major Asian currency this year after the Japanese yen.

Consumer Activity

Demand for bank credit remained healthy at 17.2 percent, even amidst tighter liquidity conditions and higher borrowing costs, Reserve Bank of India data showed. Goods and services tax collection, which helps measure consumption in the economy, rose 11 percent, a modest performance compared to October’s 24 percent jump.

Market Sentiment

Electricity consumption, a widely used proxy to gauge demand in the industrial and manufacturing sectors, was weak, with the peak requirement last month rising to 162 gigawatts from 155 gigawatts in October. India’s unemployment rate climbed to 8 percent, according to data from the Centre for Monitoring Indian Economy Pvt.

Riaz Haq said…
India's Unemployment Rate For December Is 8.3%, A 16-Month High: Report


Mahesh Vyas, managing director of CMIE, said this is "not as bad as it may seem" as it came on top of a healthy increase in the labour participation rate

India's unemployment rate rose to 8.3 per cent in December, the highest in 16 months, from 8 per cent in the previous month, data from the Centre for Monitoring Indian Economy (CMIE) showed today.
The urban unemployment rate rose to 10.09 per cent in December from 8.96 per cent in the previous month, while rural unemployment rate slipped to 7.44 per cent from 7.55 per cent, the data showed.

Mahesh Vyas, managing director of the CMIE, said the rise in the unemployment rate was "not as bad as it may seem" as it came on top of a healthy increase in the labour participation rate, which shot up to 40.48 per cent in December, the highest in 12 months.

"Most importantly, the employment rate has increased in December to 37.1 per cent, which again is the highest since January 2022," he told Reuters.

Containing high inflation and creating jobs for millions of young people entering the job market remain the biggest challenge for Prime Minister Narendra Modi's administration ahead of national elections in 2024.

The main opposition Congress launched a march in September from the Kanyakumari to Srinagar to mobilise public opinion on issues such as high prices, unemployment and what it says are the "divisive politics" of the BJP.

"India needs to move from a single focus on GDP growth to growth with employment, skilling of youth and creating production capacities with export prospects," Congress leader Rahul Gandhi, who is leading the 3,500-km march on foot, told reporters yesterday.

The unemployment rate had declined to 7.2 per cent in the July-September quarter compared to 7.6 per cent in the previous quarter, according to separate quarterly data compiled by National Statistical Office (NSO) and released in November.

In December, the unemployment rate rose to 37.4 per cent in Haryana, followed by 28.5 per cent in Rajasthan and 20.8 per cent in Delhi, CMIE data showed.
Riaz Haq said…
#India's numerous #jobs #scams show the depth of its #unemployment crisis. Just one such ring has reportedly conned at least 50,000 people since 2020, making it one of India’s biggest job frauds in recent times. #Modi #BJP #economy https://finance.yahoo.com/news/indias-numerous-jobs-scams-show-105500472.html?soc_src=social-sh&soc_trk=tw&tsrc=twtr via @YahooFinance

India’s latest organised job scam episode has affected people in the Indian states of Gujarat, Karnataka, Andhra Pradesh, West Bengal, and Odisha. They were duped of crores of rupees after being promised jobs, reports said.

“The scam was being run by a group of tech-savvy engineers from Uttar Pradesh with the help of some expert website developers. This core group was assisted by around 50 call center employees. These employees were paid 15,000 rupees ($181) per month and were from Jamalpur and Aligarh localities of Uttar Pradesh,” according to Jai Narayan Pankaj, a senior Odisha police officer.

Candidates paid up to Rs70,000 for training and other orientation programmes, including Rs3,000 in registration fees. However, the training never happened, Pankaj said.

In another incident unearthed in December, around 30 people were tricked into counting the arrival and departure of trains at the New Delhi Railway Station for a month, BBC reported. They were told this was part of their training for the positions of travel ticket examiner, traffic assistant, and clerk. Each of the duped candidates had paid up between Rs2 lakh and Rs24 lakh for the coveted Indian Railways job.

Scammers are not limited to operating within India’s borders either. Some work through agents even in Dubai and Bangkok. Aspirants are sometimes persuaded to move to countries like Thailand. Many are taken illegally to Myanmar, Laos, and Cambodia where they are held captive and forced into cybercrime.

India is just not creating enough jobs
In September and October, India added over 8.5 million jobs in the formal sector. However, that was not enough, considering the number of applicants, along with fresh graduates, exceeded the number of available jobs.

In December, India’s unemployment rate rose to 8.3%, the highest in 16 months, data from the Mumbai-based Centre for Monitoring Indian Economy (CMIE) showed.


Worsening this is the global inflationary pressure and fears of an impending recession, sparking layoffs in recent months. This is besides the enduring effects of the pandemic years.

“One of the alarming possibilities for India...is the fact that our additions to the labour workforce are likely to slow down as it happened in China or in Europe and other developed economies,” TeamLease Services co-founder Rituparna Chakraborty told The Indian Express newspaper.

A study by CMIE and the Centre of Economic Data and Analysis of Ashoka University showed that over 12.5 million people aged 15-29 years not only lost jobs in 2020 but also stopped looking for new ones.

The number of farm jobs, meanwhile, increased during this time but that only underscored the economy’s weakness, the study found.

Riaz Haq said…
India’s economy is growing at the fastest pace of any major country, fueled by corporate earnings and middle-class consumption of the sorts of goods these companies (delivery companies) are rushing to deliver.


But there has been no commensurate growth in steady jobs in India’s deeply unequal society. That has left the legions of working poor who toil as delivery drivers to serve a middle class that they have fewer and fewer hopes of ever entering.

Millions have been pushed into gig work as Prime Minister Narendra Modi has moved to privatize public entities and cut red tape, enacting a series of changes to labor regulations that have diluted protections for workers.

The number of gig workers is projected to reach 23.5 million in 2030, nearly triple the number in 2020, according to a June report by Niti Aayog, a government research agency.

With India’s public sector shrinking, the informal sector now accounts for more than nine out of 10 jobs, International Labor Organization data show. Such jobs, without guaranteed health insurance, social security or pensions, range from the treacherous — construction work without hard hats or other protective gear, or assembly-line labor in illegal firetrap factories — to the merely miserable.

Work as a delivery driver can seem a better alternative. Delivery app companies dangle offers of 45,000 rupees per month, or more than $540, in targeted ads on social media, about double the country’s median income.

But drivers say they rarely earn anything close. What they do get is constant hounding by customers and automated calls from the companies to go faster. The algorithms that assign orders, they say, reward drivers with high ratings, which are based on the speed and number of past deliveries. Drivers say delays — regardless of the reason — can mean a reduction in assignments or even a suspension, pressure that sometimes pushes drivers to put themselves in danger.

Mr. Niralwar joins other delivery app drivers every evening as they mill about in a dusty, unpaved parking area in Hyderabad. They chat between orders, lifting pant legs to compare motorcycle injuries.

Ankit Bhatt, 33, moved to Hyderabad four years ago so that his wife could take a job at a call center. Without a college degree, he had more limited employment options: low-paying retail or informal manual labor.

Ready to begin his evening shift for Swiggy Instamart, Mr. Bhatt tried to log in but found that his ID had been temporarily blocked — punishment, he said, for failing to deliver an order after his motorcycle clutch had given out.

“You could be sick, you could have an accident, your bike could have mechanical issues. You will be penalized for that,” Mr. Bhatt said.
Riaz Haq said…
India will soon overtake China as the world’s most populous country
But it will struggle to reap the benefits of a young workforce


You might expect production to shift to labour-rich India. That is especially so as relations between China and the West become more hostile. But companies, especially in more advanced industries, tend to set up production in places where there are already suppliers and skilled workers. That is where India has a problem.

India’s development has relied less on industry than that of other emerging economies. Manufacturing generates 14% of Indian GDP, compared with 27% in China. What industry India does have clusters in the relatively prosperous south and west. But it is the poorer northern states that are making more babies (see map). Uttar Pradesh, for instance, is home to 17% of India’s population but has only 9% of its industrial jobs. That mismatch will hamper India’s economic growth.

Internal migration would help. Road, rail and air connections are improving. The government is investing massively in digitisation, which should encourage people to move by helping them to hold on to their ID cards, welfare benefits and voting rights and to communicate with their families at home.

Yet these efforts will take years, maybe decades, to pay dividends. Even as India’s population grows, it will struggle to capitalise on the potential of its young workforce.
Riaz Haq said…
India will take 40 yrs to draw level with China's car penetration: Bhargava
As a result, the small car market has been shrinking as two-wheeler customers shelve or delay plans to upgrade to a four-wheeled drive


Maruti Suzuki India Chairman R C Bhargava on Monday at a media interaction said that even with the number of cars per 1,000 population projected to grow by three to five per year, India would still take 40 years to draw level with China.

In the past five years, car penetration on average grew by a mere one per 1,000 population, especially with the closure of plants and disruption of sales during the pandemic.

The key drivers for the car industry’s sluggish growth — and consequently penetration — are twofold: high taxation and higher cost of regulatory compliance, especially for small cars.

Bhargava pointed out that currently, the penetration ratio in India is 30 cars per 1,000 population, as opposed to China’s 221 cars per 1,000 population.

“Based on this calculation, we will take around 40 years,” he said.

The message clear: the Indian car market is not growing as fast as it ought to.

He said the low penetration is reflected in a torpid passenger car market.

“In the first decade of this century (2000-2010), the passenger car market grew at around 10-12 per cent per annum. In the next 12 years, the average growth was a mere 3-4 per cent.”

Unlike other developed countries like Germany that build their manufacturing prowess on the strength of their automotive (auto) industry, India, he said, continues to be dismissive of cars as a product of luxury.

“Government policies are such that they treat cars as luxury products that need to be heavily taxed,” he lamented, adding, “Car affordability is not at all related to income.”

“Taxation on cars in Japan is 10 per cent; in Europe, 19 per cent. Apart from the goods and services tax (GST), cess, state taxes, and a one-time road tax, the tax incidence in India is anywhere from 40 per cent to as high as 60 per cent for premium sport utility vehicles. It’s a call the government has to take,” he said.

At present, four-wheelers are taxed at 28 per cent GST, with additional cess ranging between 1 per cent and 22 per cent, depending upon the type of vehicle.

Cars imported as completely-built units attract Customs duty ranging between 60 per cent and 100 per cent, depending upon engine size and cost, insurance and freight value being less or above $40,000.

He said the cost of regulatory compliance (implementing Bharat Stage VI norms, for instance), especially on smaller and cheaper cars, has been going up. While the cost of doing so is similar for both versions, the impact as a percentage of cost is far higher on a smaller car.

As a result, the small car market has been shrinking as two-wheeler customers shelve or delay plans to upgrade to a four-wheeled drive.

For instance, the market share of a Rs 5 lakh and below car has fallen from 25.8 per cent in 2018-19 to a meagre 10.3 per cent in 2021-22. In the same period, the market for cars of Rs 7 lakh and below fell from 60 per cent to 43 per cent.

Bhargava also took a contrarian view on India’s decision to go in for free trade agreements (FTAs) with different countries — a move strongly resisted by many auto companies that feared the absence of tariff barriers opening the floodgates to imported vehicles entering the country.
Riaz Haq said…
Ritesh Kumar Singh
While domestic #demand is hampered by high taxes on both vehicles, fuels, motor insurance and repair and maintenance as well as traffic congestion that jack up the cost of owning #vehicles relatively stronger rupee is hurting #Exports, for instance, of 2W.


Two-wheeler sales stuttering, how long before it gets better?
After signs of recovery, two-wheeler sales slipped in December showing weakness in domestic demand as well as exports. Expectations are that improving rural demand will drive sales, albeit after a couple of quarters


ighlights December saw leading two-wheeler firms report a sales drop both year-on-year and month-on-month Domestic demand is yet to grow beyond 2019 pre-pandemic levels Rural sentiment is turning positive but yet to translate into two-wheeler purchases Exports were hit due to devaluation in currencies of importing markets After a couple months of improvement, a weak December for two-wheeler (2W) sales is a setback for forecasts of recovery in 2023. This auto segment registered a marginal year-on-year (yoy) sales rise, while declining compared to the previous...
Riaz Haq said…
Two-wheeler volumes drop to FY 10/12 levels. Huge drop in entry level Motorcycle sales indicate pain in rural/semi-urban areas. Experts say at least 50% capacity lying idle at two-wheeler factories.
Point to deeply worrying economic realities.

#India 2-Wheeler Sales Volume Declines to 2012 Level: 12.2 Million in 2022. Capacity utilization down to 50%. #Modi #MakeInIndia #Manufacturing #Unempolyment #economy https://timesofindia.indiatimes.com/auto/bikes/two-wheeler-market-set-back-by-decade/articleshow/97265718.cms


Riaz Haq said…
#Apple’s #manufacturing shift from #India to #India hits stumbling blocks. Only 1 out of every 2 components coming off the #Indian casing production line is in good enough shape to eventually be sent to Foxconn for assembly. #MakeinIndia #Modi #Quality https://www.ft.com/content/0d70a823-0fba-49ae-a453-2518afcb01f9

Apple is hitting stumbling blocks in its effort to increase production in India, as the US tech giant faces pressure to cut its manufacturing reliance on China.

The iPhone maker has been sending product designers and engineers from California and China to factories in southern India, to train locals and help establish production, according to four people familiar with the operations.

It comes as Apple attempts to unwind its dependence on a China-centred supply chain strategy, following months of Covid-19 disruption that led to it reporting its first decline in quarterly revenues in three and a half years earlier this month.

Apple is building up nascent operations in India in an overdue diversification strategy, following the blueprint it set in China two decades ago, with engineers and designers often spending weeks or months at a time in factories to oversee manufacturing.

While Apple has been producing lower-end iPhones in India since 2017, last September was significant with Indian suppliers building flagship models within weeks of their launch in China, where virtually all iPhones and other Apple hardware are made.

But its experience in recent months has demonstrated the scale of the work to be done in the country.

At a casings factory in Hosur run by Indian conglomerate Tata, one of Apple’s suppliers, just about one out of every two components coming off the production line is in good enough shape to eventually be sent to Foxconn, Apple’s assembly partner for building iPhones, according to a person familiar with the matter.

This 50 per cent “yield” fares badly compared with Apple’s goal for zero defects. Two people that have worked in Apple’s offshore operations said the factory is on a plan towards improving proficiency but the road ahead is long.

Jue Wang, consultant at Bain, said Apple is at the start of its expansion into India. “We’re not talking the same scale of the Zhengzhou factory” — a factory hub in China known as “iPhone City” that employs some 300,000 workers — “and everybody acknowledges there will be different efficiency, but it is happening”, she said.

In China, suppliers and government officials took a “whatever it takes” approach to win iPhone orders. Former Apple employees describe instances in which they would estimate a certain task might take several weeks, only to show up the next morning to find it already completed at inexplicable speed.

Operations in India are not running at that sort of pace, said a former Apple engineer briefed on the matter: “There just isn’t a sense of urgency.”

A person involved in Apple operations said the process of expanding to India is slow in part because of logistics, tariffs and infrastructure. This person said Apple’s diversification into south-east Asia has been smoother thanks to the Regional Comprehensive Economic Partnership, a free trade agreement among 10 regional nations.

Mark Zetter, president of Venture Outsource, a consultancy for the contract electronics industry, said such inertia has been a problem for years.

Five years ago, when Zetter did research for the Indian think-tank Gateway House, he found contract manufacturers would “frequently claim they can fulfil any need” for an electronics client. But in reality they would be “slow to respond to customer concerns after the deal is signed” and “lack flexibility” to respond to changes.

The Apple engineers have also, at times, been housed at city-centre hotels in Chennai, the capital of the southern Indian state of Tamil Nadu, two hours away from the factories where they are working. This requires four hours of daily commuting, with occasionally poor WiFi connections along the route.

Riaz Haq said…
India’s economic activity cooled off at the start of the year as higher borrowing costs tempered demand at home and abroad, signaling more pain ahead as the global economy slows down.


The needle on a dial measuring so-called animal spirits moved left and was back where it was for six straight months before showing momentum in December. Falling exports and a slack in manufacturing and services drove the weakness in business activity, offsetting improvement in consumption drivers reflected by tax collections and job growth, according to eight high-frequency indicators tracked by Bloomberg.

Domestic recovery, that has been driving momentum so far, is getting wobbly. The Reserve Bank of India, which has raised borrowing costs six times since May to 6.50 per cent, is seen increasing interest rates again in its April review amid inflation topping estimates and further tightening by global central banks.

Bloomberg’s animal spirits barometer uses a three-month weighted average to smooth out volatility in single-month readings:

Business Activity
Purchasing managers’ surveys indicated activity in both manufacturing and services slacked in January. Output and new orders grew at softer paces, and dragged the composite index lower from an 11-year high in December.

“Although manufacturers received new orders from international markets, the increase was slight at best and moderated considerably to a ten-month low,” said Pollyanna De Lima, economics associate director at S&P Global Market Intelligence.

Exports fell 6.58 per cent in January from a year ago to US$32.9 billion (S$43.9 billion), data released by the Trade Ministry showed, indicating lower demand for goods abroad. Imports dropped 3.63 per cent from a year earlier and that pushed the trade gap to the lowest in a year, fueling hopes of a significantly narrower current account deficit.

The sharp fall in imports reflects the moderation in discretionary demand in the goods sector and the decline in commodity prices, said Garima Kapoor, economist at Elara Capital.

Consumer Activity
Liquidity in the banking system tightened, but credit growth picked up again, rising 16.33% in January, from 14.87 per cent in December, Reserve Bank of India data show.

Goods and services tax collections, which help measure consumption in the economy, rose 10.5 per cent from a year earlier to 1.56 trillion rupees – a feat achieved only once before in the history of the levy introduced in 2017. New vehicle registrations surged 14 per cent in the month, with passenger vehicle sales growing 22 per cent year-on-year, according to data from the Federation of Automobile Dealers Associations.

Market Sentiment
Electricity consumption, a widely used proxy to gauge demand in the industrial and manufacturing sectors, held steady, with the peak requirement last month rising to 173 gigawatt from 171 gigawatt in December due to increased heating requirements. India’s unemployment rate dropped to 7.14 per cent, from a 16-month high of 8.30 per cent a month ago, according to data from the Centre for Monitoring Indian Economy. BLOOMBERG
Riaz Haq said…
Analysis: India's surging services exports may shield economy from external risks


IT services still accounted for 45% of India's total services exports in April-December.

Professional and management consulting grew the fastest - at a 29% compounded annual growth rate over the last three years, as per estimates by economists at HSBC Securities and Capital Markets.

The recent growth in services exports has been largely powered by global capability centres, which have started to offer global clients a range of high-end and critical solutions such as accounting and legal support.

This, together with a drop in merchandise trade deficit, resulted in the current account deficit shrinking more than expected to $18.2 billion, or 2.2% of GDP.


A surge in India's services exports, which hit a record high in the October-December quarter, is expected to shield the economy from external risks as a slowing global economy will likely weigh on the country's merchandise exports.

Service exports are no longer being driven by IT services alone but also by more lucrative offerings such as consulting and research and development, analysts and economists told Reuters.

India's services exports rose 24.5% on year in October-December 2022, hitting a record $83.4 billion during the quarter, data released by the Reserve Bank of India (RBI) on Friday showed.

The services surplus, which deducts any imports in the category, also rose 39.21% to a record $38.7 billion.

This, together with a drop in merchandise trade deficit, resulted in the current account deficit shrinking more than expected to $18.2 billion, or 2.2% of GDP.

"We expect services exports to grow to over $375 billion by March 2024, as compared to $320-350 billion for the year ending March 2023," said Sunil Talati, chairman of the Services Export Promotion Council.

Services exports will likely surpass goods exports by March 2025, he said.

October-December merchandise exports stood at $105.6 billion, according to latest RBI data.


As a result, such exports will hold up better compared to goods exports in the face of a weakening global economy, analysts said.

Over the last two to three years, there has been a rapid growth in global capability centres, said Sangeeta Gupta, chief strategy officer at software industry lobby group Nasscom.

Nasscom estimates that India is home to over 45% of such global capability centres in the world.

According to Pranjul Bhandari, chief India economist at HSBC Securities and Capital Markets, such centres started off providing support functions, but they have now moved up the ladder to tech enablement, business operations, capability development, and even R&D and business development.

While U.S. companies were the first movers in India, a lot of companies from Europe, Australia and Asia are also exploring stepping up their operations, Nasscom's Gupta said.

An acceleration in digitalisation after the Covid crisis and a lack of adequate tech talent in some of these countries are key factors, she added.

Sectors such as tourism, education, financial services and health also contributed to India's higher service exports.
Riaz Haq said…
Over 10,000 MSMEs shut during 2016-2022 period; 96% in past 3 years, shows govt data | The Financial Express


Ease of Doing Business for MSMEs: The government has come out with consolidated data on the number of MSMEs closed over the past six years including the Covid period in the country. According to the combined data from the Udyam registration portal and the erstwhile Udyog Aadhaar Memorandum (UAM), 10,067 MSMEs were shut from 2016 to 2022.

Sharing data in the Rajya Sabha on Monday in a written reply to a question on the closure of units, Minister of State for MSMEs Bhanu Pratap Singh Verma noted that 400 MSMEs (4 per cent of total closures) were shut during the 2016-2019 period as per the UAM data. On the other hand, the majority 96 per cent units — 9,667 were shut between 2019 and 2022, according to the UAM and Udyam portal data.

In reply to a separate question on the Covid impact on MSMEs, Verma shared that 2,870 MSMEs registered on the Udyam portal were shut between April 1, 2022, and July 20, 2022, along with employment loss for 19,862 people. Likewise, 6,222 Udyam-registered MSMEs were shut in FY22 with 42,662 people losing jobs. Between July 1, 2020, and March 31, 2021, 175 Udyam units were closed and 724 jobs were lost.

“Closure of MSMEs is certainly a concern for the government for which necessary steps and studies have been undertaken. The closure is one of the reasons cited by units for cancelling their MSME registrations, but the reason for closure is not always mentioned by them. Other reasons for cancelling registrations include stopping the manufacturing of goods or moving to other businesses or they just don’t need the registration anymore,” Ishita Ganguli Tripathy, Additional Development Commissioner, Ministry of MSME told Financial Express Online.

Citing studies by SIDBI, SBI, and others, Tripathy noted that while there have been closures, some of them have been temporary and due to schemes such as Emergency Credit Line Guarantee Scheme (ECLGS), many MSMEs have been able to save employment as well.
Riaz Haq said…
72% of MSMEs stagnant since past 5 years: Survey | The Indian Express


Over three-fourth of the micro, small and medium enterprises (MSMEs) are of the view that their business remained either stagnant or decreased or wound up during the last five years, a survey said. The survey by industry body Consortium of Indian Associations of 1,08,500 entrepreneurs also stated that 76 per cent of the respondents are not making profit and access to bank finance remains a big issue.

“During the last 5 years, the performance of 72% of the respondents is either stagnant or
decreasing or stopped or wound up. Only 28% of the respondents have confirmed that they are growing. This is a warning sign. 76% of the respondents have said they are not making a profit,” it said.


Jawhar Sircar
Modi’s economics —
where Demonetisation destroys MSMEs —
who provide 90% of jobs in India.
Corporates, esp Cronies make profit —
but no jobs are created.
Low tax helps corporate — obviously, nothing comes free —
which may explain BJP’s money power and godi media support

Riaz Haq said…
Only a cheaper rupee can spur Indian growth


Elite interest favours a strong currency, to the detriment of the nation

While other Asian policymakers, such as those in South Korea and China, have strategically used sizeable depreciations of their currencies to bolster export competitiveness, Indian elites bemoan every infinitesimal decline in the rupee’s value as a national humiliation. A unique economic and political confluence first entrenched this bogus pride in the country’s psyche in the mid-1960s. And since the 1990s, the country’s corporate leaders and new rich have wanted to maintain a strong rupee. As a result, the country’s export-based growth has suffered, as have jobs for low-skilled workers.

India is triply handicapped in exporting manufactured goods: it has a poorly educated workforce, few women in its factories and an overvalued currency. Education and female labour force participation are key to raising productivity, but take years to achieve. Today, only a much cheaper currency — about 100 rupees per dollar rather than the current 82 — can spur Indian exports. It is low-hanging fruit.

In a rare sane moment in 1949, a newly independent India devalued the rupee from Rs3.3 to Rs4.8 per dollar, bringing relief to its uncompetitive economy. Indian manufacturers could earn profits even when they lowered dollar sale prices, which helped increase exports. Costlier imports slowed import growth, helping reduce the current-account deficit. But the task was never completed. With low productivity and high inflation, India could not match countries such as Japan in labour-intensive manufactured exports. The World Bank and the IMF financed India’s large current account deficit, creating the illusion that it did not need currency devaluation.

When those two institutions finally threatened to stop financing that deficit, the country’s officials foolishly negotiated the rate to Rs7.5 per dollar in June 1966. This too-little-too-late devaluation did not compensate for the rise in domestic production costs. Taiwan and South Korea raced ahead, helped by currency devaluations; Indian exports languished.

The perceived failure of the 1966 devaluation to spur exports forever tarnished Indian belief in an activist exchange rate policy. Rather than encouraging more aggressive nominal devaluation to offset the rise in production costs and thus achieve real depreciation, devaluation “by stealth” was always too little, too late. In the 1980s, China used aggressive exchange rate depreciation as key to its monumental export push.

India’s 1991 financial crisis was another all too brief moment of sanity. Authorities devalued the rupee in July 1991 and let it float in March 1993. But new forces strengthened the currency. Software exports and remittances from workers in the Middle East had a bolstering effect. More importantly, once global money managers began funding large Indian companies, a strong rupee helped that small elite minimise the costs of repaying international creditors and investors. A strong rupee also helped aspirants to elite status shop for fast cars and handbags, often in Milan and Singapore.

Reflecting the national sense of pride and elite preference, political gamesmanship conditioned policymakers to focus on stemming the currency’s decline. In 2013, prime ministerial candidate Narendra Modi bemoaned the fall in the currency, saying: “Our rupee has been admitted into the ICU.” After Modi became prime minister, hot money flowed in and the rupee appreciated briefly. But when it fell again, leaders of the opposition trolled the government by repeating Modi’s phrase: the rupee was in the ICU.

Riaz Haq said…
Only a cheaper rupee can spur Indian growth


Elite interest favours a strong currency, to the detriment of the nation

Sadly, the nominal depreciation was not enough. According to the Bank for International Settlements, between 1994 and now, India’s domestic costs of export production have risen by about 60 per cent relative to competitors. As a result, the real exchange rate, which determines international competitiveness, has strengthened by 12 per cent. Vietnamese manufactured exports, following the East Asian playbook, are poised to exceed India’s manufactured exports.

India’s accumulated cost-of-production disadvantage requires the rupee to drop to about Rs90 per dollar; Rs100 per dollar would provide an ideal cushion. But Indian authorities continue to avoid an activist exchange rate policy, and rely on dodgy policy tools: tax cuts and subsidies for corporate India, tariff barriers to shield inefficient producers and weaker labour protections. Such measures simply make the rich richer, while doing little for low-skilled workers. An exchange value of Rs100 per dollar would temporarily give Indian exports a much-needed boost. The time to act is now.
Riaz Haq said…
Ritesh Kumar Singh
India's premature #deindustrialisation: 12 out of the 23 #manufacturing industries that make up the IIP (Index of Industrial Production) are at levels lower than 7 years ago



India's industrial growth falls to 3.7% in June


India's industrial output grew by 3.7 percent in June, according to data released by the Ministry of Statistics and Programme Implementation on August 11.

At 3.7 percent, the latest industrial growth figure as per the Index of Industrial Production (IIP) is at a three-month low. It is also below the consensus estimate of 5 percent.

Industrial growth had come in at 5.2 percent in May - now revised to 5.3 percent - and was 12.6 percent in June 2022.

For the first quarter of 2023-24, IIP growth stood at 4.5 percent, down from 12.9 percent in April-June 2022 when the data was boosted by a favourable base effect.

Industrial growth in June was dragged down by a weaker increase in the manufacturing output, which rose by 3.1 percent year-on-year compared to 5.8 percent in May.

The performance of the manufacturing sector has an outsized impact on the headline industrial growth number as the sector accounts for more than three-fourths of the IIP.

While manufacturing output grew at a slower pace, that of mining and electricity rose at a faster clip. In June, mining output rose by 7.6 percent, up from 6.4 percent in May, and electricity production was up 4.2 percent. In May, electricity production was up a mere 0.9 percent.

The improved performance of mining and electricity sectors was down the low rainfall in June as drier conditions allow increased mining activity.

"IIP growth print in June has disappointed," said Suman Chowdhury, chief economist and head of research at Acuité Ratings & Research.

"Clearly, the manufacturing sector has not been able to sustain the growth trend that had been seen in the first two months of the last quarter. The manufacturing output grew only by 3.1 percent and actually saw a sequential contraction of almost 1 percent," Chowdhury added.

"Within manufacturing, output in metals exhibited a healthy performance while export-intensive categories such as textiles and wearing apparel continued to remain pressured," noted Rajani Sinha, chief economist at CareEdge.

In terms of the use-based classification of goods, there were some big shocks. While production of primary and intermediate good rose at a greater rate in June - 5.2 percent and 4.5 percent, respectively - there were weaknesses in other spheres, with output of consumer durables falling 6.9 percent in June after rising for the for the first time in six months in May.

Capital goods' output was up just 2.2 percent - down from 8.1 percent in May - while that of consumer non-durables rose a mere 1.2 percent. in May, it had posted a growth of 8.4 percent.

Output of infrastructure goods grew by 11.3 percent - the same as in May.

According to Aditi Nayar, ICRA's chief economist, the performance of most high-frequency indicators improved in July relative to June, although there were some laggards in the form of vehicle registrations and finished steel consumption.

"Based on these trends, ICRA expects the IIP growth to witness an uptick to 4-6 percent in July," Nayar said.

Riaz Haq said…
‘Note ban, GST, COVID shocks cost ₹11.3 lakh cr., 1.6 crore informal sector jobs’

India Ratings says in FY23, GVA in the economy by unincorporated businesses was 1.6% below 2015-16 levels; firm estimates 63 lakh informal enterprises shut down between FY16 and FY23


In 2022-23, the Gross-Value Added (GVA) in the economy by such unincorporated enterprises was still 1.6% below 2015-16 levels. Moreover, their compounded annual growth rate (CAGR) was 7.4% between 2010-11 and 2015-16, but slipped into a 0.2% contraction since then, the rating firm reckoned based on the recently released findings of the government’s Annual Survey of Unincorporated Sector Enterprises (ASUSE).


The latest data suggests that the real GVA of unincorporated firms in manufacturing, trade and other services (MTO) was ₹9.51 lakh crore in 2022-23, with an 18.2% share in India’s real MTO GVA, falling sharply from 25.7% in 2015-16.

“The shrinkage has been sharper in other services and trade, with the informal sector’s share dropped to 32.3% and 21.2% in 2022-23 from the pre-shock level of 46.9% and 34.3%, respectively. In the manufacturing sector, the share of the informal sector fell to 10.2%, from 12.5% during the same period,” the firm said in its report.


Had the macro shocks not taken place during the post 2015-16 period and the growth in these enterprises followed the pattern between 2010-11 and 2015-16, the total number of such firms would have reached 7.14 crore in 2022-23, with the number of workers employed rising to 12.53 crore, India Ratings concluded.

The unorganised sector contributes over 44% to the country’s GVA and employs nearly 75% of the work force employed in non-agricultural enterprises, as per the 2022-23 Periodic Labour Force Survey.
Riaz Haq said…
1.6 Crore Jobs Lost Due To Note Ban, GST, Covid: India Ratings & Research Study


India’s informal sector has faced a series of macroeconomic shocks since 2016, leading to substantial economic losses. According to India Ratings and Research, the cumulative impact of these shocks, including demonetisation, the rollout of the Goods and Services Tax (GST), and the COVID-19 pandemic, has resulted in an estimated economic loss of ₹11.3 lakh crore or 4.3% of India’s GDP in 2022-23. This blog explores the severe impact on the informal sector, job losses, and the implications for India’s economy.

Impact of Macroeconomic Shocks
Demonetisation, GST, and COVID-19
The informal sector has been severely impacted by demonetisation, the GST rollout, and the COVID-19 pandemic. These shocks have disrupted the functioning of informal enterprises, leading to a decline in economic activity and job losses. Sunil Kumar Sinha, principal economist at India Ratings, noted that 63 lakh informal enterprises shut down between 2015-16 and 2022-23, resulting in the loss of about 1.6 crore jobs.

Decline in Economic Contribution
The Gross-Value Added (GVA) by unincorporated enterprises in the economy in 2022-23 was still 1.6% below the 2015-16 levels. Their compounded annual growth rate (CAGR) fell from 7.4% between 2010-11 and 2015-16 to a 0.2% contraction since then. The real GVA of unincorporated firms in manufacturing, trade, and other services (MTO) dropped significantly, with their share in India’s real MTO GVA falling from 25.7% in 2015-16 to 18.2% in 2022-23.

Employment Challenges
Job Losses and Sector Shrinkage
The informal sector has seen a significant decline in employment. The number of workers employed in the non-agricultural sector increased to 10.96 crore in 2022-23 from 9.79 crore in 2021-22. However, this was lower than the 11.13 crore people employed in the sector in the ‘pre-shock period’ of 2015-16. The manufacturing sector witnessed a notable decline in jobs, with employment dropping from 3.6 crore in 2015-16 to 3.06 crore in 2022-23.

Structural Shift Needed
India’s over 400 million informal labour market requires a structural shift to address the challenges posed by these macroeconomic shocks. The rise in the formalisation of the economy has led to robust tax collections, but the reduced unorganised sector footprint has implications for employment generation. The informal sector’s share in various sectors has decreased sharply, highlighting the need for measures to support and revitalise this critical part of the economy.

Future Prospects and Recommendations
Addressing the Decline
To mitigate the impact of these shocks and support the informal sector, India needs targeted policies and interventions. The government should focus on providing financial assistance, improving access to credit, and enhancing the business environment for informal enterprises. Additionally, measures to ensure job security and create new employment opportunities are crucial to addressing the challenges faced by the informal labour market.

Enhancing Economic Resilience
Strengthening the resilience of the informal sector is essential for sustained economic growth. Promoting digital literacy, enhancing skill development programs, and providing incentives for formalisation can help informal enterprises adapt to changing economic conditions. Ensuring social security and welfare measures for informal workers will also contribute to building a more inclusive and resilient economy.

India’s informal sector has borne the brunt of multiple macroeconomic shocks, resulting in significant economic losses and job reductions. Addressing these challenges requires a comprehensive approach that supports informal enterprises, enhances economic resilience, and promotes inclusive growth. By implementing targeted policies and interventions, India can mitigate the impact of these shocks and ensure the sustained growth of its informal sector.
Riaz Haq said…
India ‘clearly has a problem’ finding new drivers for economic growth, JPMorgan’s Jahangir Aziz says


India “clearly has a problem” figuring out new drivers for its economic growth even as its economy expands at a fast clip, JPMorgan’s Jahangir Aziz said, following the country’s union budget.

India’s chief economic advisor V Anantha Nageswaran said Monday that the economy is expected to grow at 6.5% to 7% in financial year 2025, lower than the Reserve Bank of India’s 7.2% growth forecast.

India “clearly has a problem” figuring out new drivers for its economic growth even as its economy expands at a fast pace, JPMorgan’s Jahangir Aziz said, following the country’s union budget.

“If you look at India over the last two years post the pandemic, recorded growth has been strong. But if you look at the drivers of growth, it’s essentially these two: Public infrastructure and services export,” Aziz, chief emerging markets economist at JPM, told CNBC’s “Street Signs Asia” on Tuesday.

The country’s finance minister on Tuesday said capital expenditure for fiscal year 2025 will be 11.11 trillion Indian rupees ($133.9 billion) — or 3.4% of GDP — backing India’s ambitions to enhance its physical and digital infrastructure as it strives to become a developed nation by 2047.

According to estimates by the Ministry of Commerce and Industry, India’s services exports will likely hit $30.3 billion in June, compared with $27.8 billion in the same month last year.

“Services export is sort of stabilizing at a high level, it isn’t growing as fast as it was a couple years back,” Aziz said, adding that the government should focus on increasing private investments and boosting consumption.

“It is going to be very difficult for India to keep sustaining the 6% to 7% growth rate just on public infrastructure and on services export … The question is, can India broaden its growth drivers to consumption, but more importantly private investment? We haven’t seen that happen in a long, long time.”

India’s chief economic advisor V Anantha Nageswaran said Monday that the economy is expected to grow at 6.5% to 7% in financial year 2025, lower than the Reserve Bank of India’s 7.2% growth forecast.

According to the International Monetary Fund’s latest World Economic Outlook, the country’s growth is predicted to decline to 6.5% in 2025.

Although India’s large youth population is steering the country toward becoming the world’s third largest consumer market by 2027, consumption is unlikely to increase if high unemployment stands in the way, warned Raghuram Rajan, professor at the University of Chicago Booth School and former governor of the Reserve Bank of India.

The country’s unemployment rate climbed to 9.2% in June, from 7% the month before, according to the Centre for Monitoring Indian Economy.

“You’ve seen consumption growth relatively tepid over the last few quarters, and unless people feel more confident that they have jobs, that they are well paying jobs, you are going to see that be a drag on growth,” Rajan said.

He questioned the employment initiatives such as pledging to train 2 million young people over five years, and providing a month’s worth of wages of about 15,000 rupees ($179) to first-time employees entering the workforce, announced in Tuesday’s budget.

“Are they of the magnitude that India requires given the enormous concerns about joblessness?”

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