REASONS FOR THE GLOOM................a layman's perspective
There is no need to be overtly negative.
The low growth is due to(pls read and comment)
Immediate reason---food security bill that will make govt spend over 3 lakh crore(govt says 1.25 lakh crore but u need to put infrastructure in place and that requires double the amount atleast)
1)policy paralysis of govt as govt has not passed any law on
a)pension reform
b)insurance reform
c)land acquisition
d)no policy on coal block allocation
e)goods and services tax(gst)
2)Environmental clearences have rattled the industry as most of the tribals are claiming the forests and the hills as their sacred property and refuse the companies to mine anything.As a result of that
a)Posco project for setting up steel unit in orissa has been hanging fire for 10 years
b)Yesterday vedanta group was refused by the tribals to let them mine bauxite from
a hill they say is sacred.By the way we have world's 3 rd largest bauxite reserves
and still remain net importer.
c)Most of the coal plants and hydropower plants are stuck
d)No clearence for new airports
So investors have no intention of facing unlimited delay and they are not investing
3)Supreme court of india(u heard it):After coal scam and iron ore mining scams supreme court has banned mining exports from goa and karnataka and this move alone has made india loose about 17 billion$ this year alone!!!
After 2g scam supreme court cancelled the licences of most of the companies so they are reluctant to invest again fearing such intervention in future too
Supreme court has told govt that gram sabhas must be convinced before mining anything fro that area.As expected foolish gram sabhas don't understand **** on how economics works!! and they are stalling everything
4)super corrupt govt.(anyone disagrees)??
5)rising interest rates to control inflation has led to fewer loans for capital ventures and has hit sme's(small and medium industries hard
6)Socialist policies of govt like food bill:Now this bill cleared the parliament yesterday and look at the markets today,rupee has hit 68 against dollar,steepest fall in like 18 years,sensex is down and ppl are terrified(except nri's who had a payday in this crisis).Now whay is this bill so dangerous??
a)Our growth forecast for this year is only 4.8% and it may still fall
b)Our current account deficit is about 70 billion dollars this year and this will only add to the bill
c)In the current pds (public distribution system) about 40% of foodgrains rot while they remain
in the open so this bill will lead to wastage and the effect will be .....NIL
d)This is the reality of our storage facilities!!
e)The provision of the bill is officially 1 lakh 25 thousand crore rupees but to set upthe mechanim
we need at least 2 lakh fifty thousand to 3 lakh crore rupees.effects will be
1)no money for infrastructure
2)decreased spending on health
3)lower spending on education
4)lower spending on sanitation and clean drinking
water
5)increased petrol and diesel prices
6)possibly increased taxes
7)And this cartoon sums up our condition perfectly
So all i am saying is that there is no fundamental flaw here but a lot of foolish decisions that have deterred the investors to shy away from india
I must admit that i am not an economics expert so feel free to tell me where i am wrong,,,,i don't mind a rebut
There is no need to be overtly negative.
The low growth is due to(pls read and comment)
Immediate reason---food security bill that will make govt spend over 3 lakh crore(govt says 1.25 lakh crore but u need to put infrastructure in place and that requires double the amount atleast)
1)policy paralysis of govt as govt has not passed any law on
b)insurance reform
c)land acquisition
d)no policy on coal block allocation
e)goods and services tax(gst)
2)Environmental clearences have rattled the industry as most of the tribals are claiming the forests and the hills as their sacred property and refuse the companies to mine anything.As a result of that
a)Posco project for setting up steel unit in orissa has been hanging fire for 10 years
b)Yesterday vedanta group was refused by the tribals to let them mine bauxite from
a hill they say is sacred.By the way we have world's 3 rd largest bauxite reserves
and still remain net importer.
c)Most of the coal plants and hydropower plants are stuck
d)No clearence for new airports
So investors have no intention of facing unlimited delay and they are not investing
3)Supreme court of india(u heard it):After coal scam and iron ore mining scams supreme court has banned mining exports from goa and karnataka and this move alone has made india loose about 17 billion$ this year alone!!!
After 2g scam supreme court cancelled the licences of most of the companies so they are reluctant to invest again fearing such intervention in future too
Supreme court has told govt that gram sabhas must be convinced before mining anything fro that area.As expected foolish gram sabhas don't understand **** on how economics works!! and they are stalling everything
4)super corrupt govt.(anyone disagrees)??
5)rising interest rates to control inflation has led to fewer loans for capital ventures and has hit sme's(small and medium industries hard
6)Socialist policies of govt like food bill:Now this bill cleared the parliament yesterday and look at the markets today,rupee has hit 68 against dollar,steepest fall in like 18 years,sensex is down and ppl are terrified(except nri's who had a payday in this crisis).Now whay is this bill so dangerous??
a)Our growth forecast for this year is only 4.8% and it may still fall
b)Our current account deficit is about 70 billion dollars this year and this will only add to the bill
c)In the current pds (public distribution system) about 40% of foodgrains rot while they remain
in the open so this bill will lead to wastage and the effect will be .....NIL
d)This is the reality of our storage facilities!!
e)The provision of the bill is officially 1 lakh 25 thousand crore rupees but to set upthe mechanim
we need at least 2 lakh fifty thousand to 3 lakh crore rupees.effects will be
1)no money for infrastructure
2)decreased spending on health
3)lower spending on education
4)lower spending on sanitation and clean drinking
water
5)increased petrol and diesel prices
6)possibly increased taxes
7)And this cartoon sums up our condition perfectly
So all i am saying is that there is no fundamental flaw here but a lot of foolish decisions that have deterred the investors to shy away from india
I must admit that i am not an economics expert so feel free to tell me where i am wrong,,,,i don't mind a rebut
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