Indian Economy : News,Discussions & Updates
- Thread starter Butter Chicken
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I dont think we should be bothered with ideologies , communism or liberalism whichever makes us stronger & better. We should pick the best and move on , rather than painting them in different colors.
The the economists are the usual suspects. kisi ko nahi pata kyun ho raha hai.. but sab doctor ban baithe hain..
Non-Banking Financial Collapse in the horizon is direct result of demonetization, its the domino effect, let me elaborate.
India had a sizable & flourishing Unorganized companies, like for example traditional plastic fly beater, unbranded, hiring laborer's, paid in cash etc on monthly basis, now how did these Unorganised Informal Companies get the finances from, since they were outside the preview of Formal sector, the only place they could get finances was Non-Banking financial sector.
A huge part of that Unorganised companies disappeared post Demonetization including massive jobs they provided, as they didn't get any decent time to migrate from & sustain operations on a regular basis due to liquidity crunch. So the Non-Banking Financial sector is all but broke due to bad loans & risk of defaulting, as cant carry forward bad loans in books, they would have tried to ride it out, but it was impossible to begin with.
So here the looming domino effect
Unorganised Informal Companies (sizable part disappeared) --> Non-Banking financial sector (broke due to bad loans & risk of defaulting) (This is 1/5th of economy loans) --> Formal Banking sector (as Non-Banking financial sector work on taking loans from Formal Banks)
So fall of one - risks the fall of other, unless Govt moves in and gives massive relief, else can lead to Economic Meltdown in 2-3 years time, with whole system collapsing. Need tons of Liquidity influx to resolve ASAP.
Demonetization wont have had any negative consequence, had new currency already printed & available in banks prehand to exchange & the exercise of demonetization carried over 6 months period, rather than 3 months, giving unorganized companies time to migrate to organized. It was too sudden & too big to break the proviable Camel Back
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Don't worry they can be discarded as incompetent fools trying to become paper pushers. If you want more enlightened discussion you can follow Sushant Sareen he will tell how worthless is IAS officer and he is nothing but a Babu however armchair defence analysts working few hours a day in AC compound provided by Reliance foundation to peddle agenda based BS are real change makers.
It's useless to debate or discuss this when "magnanimous" people start looking down upon others and degrading those who are struggling to make the ends meet. Why don't these bloody idiots die instead of spoiling their beautiful cities.
I am not getting into same debate again, let the real achievers and change makers on this forum mock these idiots trying to better their life and tell them how they turn around their life and bought 2BHK or a farm house nearing retirement instead of trying to be a paper pusher. The positive change they brought in society by abusing and looking down upon them on forums, telling how unemployable and incompetent they are.
I have a different take on this -
I think the article touches upon 2 issues directly. The paucity of jobs in the pvt sector or the presence of the pvt sector up North and the lack of specific skill sets by the said prospective candidates and many more who seek salvation only in government / PSU jobs. With the result we have the same churn of BA / BCom / BSc graduates coming into the mainstream fighting for a diminishing quota of jobs in both public & pvt sector.This category will soon be replaced by BBA / BMS & other parts of the alphabet soup without adding to specific skillsets among our new generation. Consider this - I read recently that the number of industrial apprectices in India is barely 3 lakhs where as it touches 1 million on both Japan & China & exceeds it in Germany .Modi's skill development initiative was a good venture. One wonders how successful is it. It requires a much more holistic look and enhanced participation from the government - both central & state, schools / universities, industry, etc for it to really take off in right earnest. Right now, I believe it's still meandering and work in progress.
The lack of an entrepreneurial culture or spirit except from among the Mercantile castes in this area is also to be noted. You know coming from Bombay as I do, the Gujarati or a Sindhi sees it as an affront to serve anybody else. He'd rather content himself on a small business then associate himself with a company as an employee. Of course this is a generalisation but it's true to a large extent of them. The lack of such a spirit and an enabling environment is also to blame. We talk about macro reforms but when will we reform our state governments or municipal bodies. Why can't licences be sold on an annual basis to petty traders who ply their wares on the streets in selected areas? Doesn't this provide employment and income to families? Ditto for attracting MSME's in industrial zones. While the process is certainly much better as compared to say a decade or two ago it's still time consuming and requires greasing palms.
These and many more issues will have to be tackled on a war footing if Modi is serious about providing mass employment.
There is not enough employment in private sector either, the lack of skill is mostly used as an excuse to hide the problem. We are overpopulated and growing too slow with government doing zilch to salvage the situation, they have only made things worst and in this glorious win this issue maybe buried but it's like time bomb. Almost every MSME is overstaffed or too little work and struggling to pay the loan in small cities and areas. The one being blamed for not being skilled enough if you compare them with already employed this myth will be busted.
People can throw any kind of dressed up numbers from NITI Aayog or private agencies but they never reflect the human element or reality on ground.
The crisis so deep that I can't even begin to explain, one of my relative is a bigshot kind of teacher having a very big coaching network in his name. He broke down few days back in tears and anger because he daily gets hundreds of letters, comments, messages, emails where young minds of India are so desperate that they find no other option left but to commit suicide, he has to hire multiple counsellors so that these kids dont really take such steps. Some are sleeping in park from last 10 days or railway platform because they are overdue on rent and landlord will ask for money if they go back to room, some living on one meal per day, some not able to pay the fees of job application form. Desperation and frustration is so high that human resource that India can capitalize is not just getting wasted but bordering criminality and it's a huge number not talking about few thousands but many lacs.
It's true people are attracted to government jobs but it's not a whole story a lot of them are there because of lack of jobs in private sector. It's a serious situation and government really need to intervene before it's too late no matter whose fault it is, these are the cards you are dealt with, act now instead of blaming. You really need to walk these areas if you want to see the seriousness of situation, it can't be reported. Just walk around, look at those eyes, those fasting steps, those restless anxious talks, it's scary.
Some solutions I think could be:
- Reducing retirement age to 55
- Educating them of financial planning
- Serious steps to control population
- Revamping academic system that produce unskilled people (as they are blamed to be even after completing standards set by government).
- Reducing wages of overpaid public sector employees (PSU pays absurd but not limited to them, in village a teacher get paid over 50,000 and most of them are way too incompetent to teach, 50k is absurd amount of money for people in village, it should depend on your location).
Some harsh steps needs to be taken so that instead of few people grabbing everything all get something till population control measures, high growth effects kicks in. It will also reduce the incentive for younger people to go crazy for government jobs.
While I tend to agree with the gist of your opinion, The reality on the ground is that there is perhaps very little that the government can do to revive the situation. I belong to the school of thought that subscribes to the idea that the fundamental issue plaguing Indian economy is the lack of demand vs economy's capacity. Everything else, including the paucity of jobs, the stagnation of salary, is a symptom and not by itself the issue. Ergo the only way to fundamentally improve the situation is to stimulate a revival in demand. It's not a straightforward task.
The solutions you speak of might help one or two or a thousand, but they will not have a material change in the lives of the tens of millions of unemployed and underemployed youth. Furthermore, we are of the opinion that government is not a employment agency, meant to suck up excess human resources. It is not the job of the government to provide government jobs. We prefer government to focus on capex, where each rupee invested has positive multiplier effect on productivity and capacity generation. Increasing government workforce is basically increasing revenue expenditure which by definition is an expense and is therefore fundamentally an unproductive proposition. It might help one or two, but makes the rest that much worse off.
We appear to be in a new, historically unparalled economic regimen, where high end knowledge drives the economy, and thus by extension, the holders of high end information and skills and capital are the ones benefitting from the economic growth. Everyone else has been shortchanged by the economy. I wish there was a one stop solution to the problem. I wish I came up with one. But it appears there will be no simple fixes this time. It might take a generation or longer for the issues to be sorted out.
True, exactly my thoughts.
Well it is, desperate times desperate measures, when they let the problem grow by inaction you are not left with many options. Government influence every sphere of our life and it's duty of government not to let something grow too big to be a threat to whole system.
Issue is too big to resolve by own who else is big enough to step in and ease the situation?
That's not what I suggested but they need to do even that because ultimately the money end up in system increasing demand, government revenues almost doubled in 5 years and still they have reduced the workforce by significant numbers. Instead of creating a communist kind of regime of throwing freebies for votes better give them jobs, low paying ones will do just fine.
I have not said that government alone can solve this by hiring absurd number of people but they need to increase number of people they are hiring and take other reforms to boost private sector jobs too.
Net growth in exports in 5 years is almost ZERO. With Trump tightening screws of China companies are trying to shift the manufacturing base, a lot of them already have into South East Asian countries how many came to India? We do see propaganda pieces claiming 200 companies are going to come to India but we have already missed the opportunity and we are not making any serious attempt to lure them.
You diagnosed issue correctly that it's lack of demand but how can you increase demand with joblessness and decreasing/peaked purchasing power? India is growing at 6.5-7 percent from past 5 years yet net growth in exports is ZERO (maybe negative) it's your public that is driving this growth but for long and how much?
Is it not busting the myth of unskilled labor not able to satisfy demand of MSME, how can MSME grow, how much they could have grown if you see these numbers?
In the end, the govt has to step back and let credit flow keep recovering. People under-appreciate just how much that was a problem (by UPA 2 complete utter mismanagement and then their diversion to subsidy reliance) in how it percolates to businesses to hire in private sector.
If you want more jobs and growth, the govt needs to see what private sector issues exactly are, what are the (specific govt-related) chokepoints that stop them or slow them. There also need to be lot better information flow on where the jobs (esp regarding trades/blue collar) actually are...given such jobs are actually not being filled because everyone is fed narrative you need to be white collar degree (no matter what the college degree costs, what the quality is, and whether its even relevant to job market in the end) type to make it in todays economy.
If higher (result seeking) govt understands that chokepoints is where the middle to lower govt babu types thrive on (and thus want status quo there for their own benefit) and undertakes more broad merit based performance + assignment there (an arduous, not talked about "reform" but probably the most important one long term for a country)...then you will get better in economic fundamentals. Posters here over think a lot of this as to what the role of govt should even be....trust me....you do NOT want indian govt to get involved more than it is now (in jobs, economy)....it has to hone what it actually already in involved with....and scale back where its doing a net-bad job.
Modi term 2 will be litmus test since term 1 was stabilising the awful utter crap that UPA 1+2 did (costing India at least 1 -2 trillions of dollars in todays GDP, probably lot more). Credit recovery + time to take effect (esp private sector) is a big deal for indian economy....everything else is just lubricant. If they can get land and labour reforms done more...that is extra on top. No there is no instant feedback of modi-magic or anyone when it comes to a macro-economy....5 years simply can only show so much when 10 years of utter crap were done before. People (young or old) in the end also need to take stock of their information chains, decisions and responsibilities better.
means 1440 billion dollar?? wonder if that much is invested even by 2029....I assume 50 lakh crore on water,road,railways, SCM infra etc in 10 years, 20 lakh crore in energy(nuclear, solar, wind, dam) in 10 years. So total max 70 lakh crore that will sum upto 1 trillion dollar.