Indian economy slows to 7% growth, recovery far off : Modi failed! : TOI (ache din KAHAN hain ??? :)

[modern.fakir]

India economy slows to 7% growth, recovery long way ahead : Modi failed!



Quarterly gross value added at basic price at constant prices too grew at a sluggish 7.1 per cent in the first quarter of the fiscal as compared to a year ago. - See more at:

http://indianexpress.com/article/bu...er-cent-in-june-quarter/#sthash.2hBSQm9g.dpuf
New Delhi: Economic growth slowed by more than expected in the quarter to June, according to data released on Monday that will worry Prime Minister Narendra Modi and prompt more urgent calls from his aides for interest rate cuts.

Gross domestic product expanded an annual 7 per cent rate in the April-June quarter, government figures showed. That was slower than provisional growth of 7.5 per cent in the previous quarter.

Analysts polled by Reuters expected growth for the quarter to come in at 7.4 per cent, but a weak showing from the services sector acted as a drag on Asia's third-largest economy.

"Growth conditions are still weak and are picking up in a very, very gradual manner," said A. Prasanna, economist at ICICI Securities Primary Dealership.

While India matched growth in China, the loss of momentum comes just as PM Modi's image as the country's economic saviour starts to fade 15 months after his historic electoral triumph.

He swept to power on a promise of speedier growth creating millions of manufacturing jobs. But businesses are getting restless with slow progress in removing barriers to growth.

The data will also strengthen the chorus from Modi's administration for a rate cut. Some bureaucrats are already arguing for an immediate reduction of as much as 50 basis points in the Reserve Bank of India's main 7.25 per cent policy rate.

"In our view, (it) clearly paves the way for two more repo rate cuts before the close of the financial year," said Jyotinder Kaur, principal economist at HDFC Bank.

The RBI has cut the policy repo rate 75 basis points since January. But it left the rate on hold at its last policy review early this month.

While it has not ruled out further monetary easing, it has tied up future rate cuts to the inflation outlook.

Many in the government are worried that growth could slip below the official target of 8 to 8.5 per cent for the year to March, and sees the RBI's caution as worsening the situation.http://indianexpress.com/article/bu...c-growth-slows-to-7-per-cent-in-june-quarter/

 

[modern.fakir]

GOD ...we had some major idiots on this forum thumping their chest about the Indian economy and its growth rate when the reality is that the Indian Economy is in a RECESSION and modi was brought on to bring on the "Ache din" . Now the question is after all these failures :

1- Defence deal with France collapsed
2. Economy is recession
3. Patel community up in arms
4. Confrontation with neighbours particularly Pakistan
5. Agitation in several states as ASSAM and several other CM's of indian states REJECT modi's gujrat model of FAKE development.


Everyone is asking kay "BHAI ....ACHE DIN KAHAN HAI AUR ANAY BHI HAIN KAY NAHI" ???[hilar][hilar]

 

[Pathfinder]

Modi only has one Itch and to scratch that Itch he has to make retarded remarks, go abroad and make silly gestures cause disturbances in its neighborhood. The 5 year Itch is getting worse with more places to Itch flaring up!

 

[abhay]

It was expected for India to grow 7.4% this quarter but couldn't reach that target due to bad weather and world economy slowdown and grew 7%.

Last year Indian economy grew by 6.7% in the same quarter hence India grew 0.3% faster than the last quarter.

 

[abhay]

last year India grew 6.7% and this year 7% then how is this slowdown?

 

[modern.fakir]

Because economy goes forwards and not backwards you dumb idiot.

When the economy grew at 7.5 % last quarter and it SLOWED down to 7 % ...then this shows a weakness. The conditions last year were different. Next quarter might be 6 % , will you then ALSO compare it to Year over year ??:biggthumpup:

last year India grew 6.7% and this year 7% then how is this slowdown?

 

[modern.fakir]

Modi magic fading?

Prime Minister Narendra Modi won a landslide election in 2014 on a promise to reform and revive the Indian economy and create millions of jobs for the burgeoning population of young adults.


Modi-fied India in upbeat mood



However, many of Modi's proposed reforms have stalled in India's parliament, where his Bharatiya Janata party (BJP) lacks a majority.

One sign that India's economy isn't as robust as had been hoped is a slowdown in the real estate development sector. There's a backlog of about 700,000 unsold homes. Across India, housing starts fell 40 percent in the first half of the year, according to consultancy Knight Frank

"The slowdown in the construction sector is very, very depressing, which will have a negative impact on overall GDP growth numbers," Samantak Das, chief economist at Knight Frank India, told Reuters news agency last week.

 

[modern.fakir]

A slowdown or recession?

The problems are not confined to the rich or emerging markets but encompass the world.


The RBI Governor, Raghuram Rajan, has very good credentials to talk about the state of the global economy. A former chief economist of the IMF, Dr. Rajan is among the very few who foresaw the great financial crisis of 2008 triggered by the collapse of the iconic investment bank Lehman Brothers. His performance at the RBI needs no major elucidation. Taking over the stewardship of the central bank at a difficult time, he managed to stabilise the macro-economy fairly quickly.
All these as well as his academic credentials ensure that his views and comments on the global economy would be listened to with more than ordinary interest. This explains why a speech delivered at an academic forum, the London Business School, should have such a tremendous impact on the financial markets that the RBI subsequently sought to “moderate” the tenor of the speech.

As reported by the PTI, Dr. Rajan had warned of the global economy slipping into problems reminiscent of the Great Depression of the 1930s. He had urged central banks from across the globe to “define the rules of the game” to find a solution It is not for the first time that he had recommended such a course of action.

The problems are not confined to the rich or emerging markets but encompass the world.

As per the clarification provided by the RBI, the Governor was not suggesting that a Great Depression was round the corner. In his speech, he had drawn attention to the “beggar thy neighbour policies” that ruined the world economy in the 1930s. Those practices are once again being followed in some advanced countries. These countries are deliberately keeping their currencies weak for the sake of export competitiveness which ultimately benefits no one.

Premature optimism

Dr. Rajan’s speech might have been out of context and interpreted to be an advance warning of a great depression. But it has spawned a debate on the state of the global economy — whether at the next turn of the cycle, the world economy will slowdown but escape a recession or what is worse a general depression.

There is some basis to be less than optimistic about the state of the global economy. This view is despite the fact that after a long time, there are signs of recovery across the globe, notwithstanding problems in Europe. In the rich world, the fight against deflation is won. According to the IMF, in 2015, every rich country will expand. The Federal Reserve will very likely raise interest rates from their rock bottom levels, thereby vindicating its belief in sustained recovery and reduction in unemployment. Most other data also support the view that the U.S. economy is well and truly on the mend.

The good news extends in varying degrees to other rich countries. In the euro zone, unemployment is down and prices have been rising. It is a very important development considering the threat of deflation that had very recently threatened many countries in the region. There are definite expansionary signs in the U.K. Recent released figures show broad-based growth in Japan.

There are, however, weaknesses which cannot be ignored. Europe is deeply in debt and dependent on exports. In the U.S., a fall in unemployment would mean higher wages. That could eat into profitability of companies and bring down valuations. Japan is still combating deflation. Emerging economies, including India and China which were in the forefront of global recovery in the post-crisis years, have ceded leadership.

Exhausting all ammunition

Quite ominously, the unorthodox policies that have benefited rich countries such as the ultra-monetary stance of the U.S. Federal Reserve may not be available when the next downturn occurs.

To many economists and policy makers, the inevitability of a slowdown is not in doubt but there is no agreement on the nomenclature be used — recession or the more severe depression.

The denouement in Greece will be the time to reassess individual economies; strengths and weaknesses. For India, the solution is to step up public investment, especially in infrastructure projects and stimulate private investment. India’s competitiveness in merchandise exports and services should be enhanced to gain a larger share.

Getting back to the main theme of this article, recession or worse — the view that we are heading to something as severe as a global depression is by no means extreme.

An informed debt market trader with a leading financial institution is pessimistic for the following reasons: Governments are stretched on debt/GDP; asset prices reflect investor money rather than the real economy; global unemployment at peak levels; cash rich companies not sufficiently incentivised to put their money to work; banking sector (as in India) burdened with non-performing assets and constrained for growth; and, most importantly, with central banks having zero space for additional support, there is really no economic agent having the space for real economic activity.

Keywords: Raghuram Rajan, Indian economy, Reserve Bank of India Governor, economic slowdown, Indain recessionary trend

 

[modern.fakir]

some comments from the good indians ..

Jagar Achhe din ?GDP growth lower quarter on quarter.

 

[modern.fakir]

Why does India have few large factories?

Large factories account for a smaller share of India’s industrial workforce than they did three decades ago

​

---

Roshan Kishore

The decline in the average number of workers employed by Indian factories partly reflects the growing use of outsourcing in the new Indian economy. Photo: Hindustan Times

When Taiwan’s Foxconn Technology Group said it would invest $5 billion to build a new manufacturing facility in Maharashtra, and eventually, set up a dozen new factories to create a million jobs across India, it immediately created a huge splash. Even if a million jobs don’t materialize, the sheer scale of Foxconn’s initial investments is unusual in a country where large factories have become a rarity.

A Mint analysis of data on organized manufacturing employment published by the Annual Survey of Industries (ASI) shows that large factories (or those employing more than 1,000 workers) employ a smaller share of India’s organized industrial workforce today than they did three decades ago. Between 1980-81 and 2011-12, the share of these large factories in total industrial employment fell by 16 percentage points to 28.5%. While the share of small factories (those employing less than 100 workers) has increased only marginally, the share of mid-size factories in total industrial employment has increased significantly over the past three decades, as the chart below shows.

Click here for enlarge​

Overall, there has been a decline in the size of factories in India even as the country’s economic growth engine picked up pace over the past three decades. From around 65 in 1970-71, the number of workers per factory came down to around 45 by 2012-13. Barring a few exceptional years, this ratio has fallen steadily over the past three decades, as the chart below shows.

Click here for enlarge​

There are significant variations within the Indian industry when it comes to the size of factories. For instance, the textile and apparel industries have seen sharp reversals of fortunes. While textiles manufacturing suffered the biggest decline in the number of workers per factory between 1973-74 and 2012-13, manufacturing of apparel has seen the biggest rise in the same ratio among all major manufacturing sectors.

The decline in the average number of workers employed by Indian factories partly reflects the growing use of outsourcing in the new Indian economy. Earlier, firms used to manufacture most of their requirements in-house, but such vertical integration has become less frequent over the years, said R. Nagaraj, a professor of economics at Indira Gandhi Institute of Development Research.

In a forthcoming paper, Nagaraj refers to the increasing share of middle-size firms in Indian manufacturing as a correction of the problem of “missing middle”, a term used by economists such as US-based Anne Krueger to describe the small share of mid-size firms in Indian industry. Nagaraj also cautions against taking the figures for less than 100 workers category at face value. Surveys by economists show that many small firms under-report employment numbers to evade various statutory requirements of registration and provision of social security, he said.

While Indian industry may have got rid of the “missing middle” problem, it still suffers from a scale problem: big factories are far rarer than they used to be. While the share of employment in large factories has gone up marginally over the past decade, it is still much less than what it used to be in the 1980s. Apart from the growing use of outsourcing over the past few decades, the other big change in India’s industrial landscape has been the shift away from labour-intensive manufacturing units to capital-intensive ones. As a result, the job-generating potential of new industrial units is typically lower today than what it used to be.

Among India’s top 20 states by gross state domestic product, Uttarakhand (96.2) had the highest number of workers per factory in 2011-12. Delhi (20) had the lowest number of workers per factory. Between 1980-81 and 2011-12, Himachal Pradesh suffered the biggest decline in the number of workers per factory, while Odisha witnessed the biggest gain in this ratio.

Click here for enlarge​

This is the first of a two-part data journalism series on India’s jobs challenge. The second part will examine the spread of factory jobs across Indian states.

 

[modern.fakir]

 

[modern.fakir]

Modi ji sirf acche din denge..
.
.
.
.
.
Acchi rato ka intezam khud karna hoga!

 

[modern.fakir]

India needs a big jobs miracle

Narendra Modi has a number of possibilities to unleash the manufacturing sector’s potential, but none are easy

​

---

Russell GreenGavin Martin

Photo: Hemant Mishra/Mint

Prime Minister Narendra Modi’s heroic image has suffered some setbacks, and his Independence Day speech shows he is struggling to find his way back onto his pedestal. He must avoid indulging in populism and return to making job creation the focus. A jobs focus resonates with the youth and “aspirational India” that elected him.

Of course, the key to generating new jobs is pro-business reform that ushers in more growth. Modi should apply his formidable communication skills to selling the aam admi on the hard steps needed to achieve more jobs—real jobs, sustainable jobs.
A jobs agenda should focus on facilitating high-productivity sectors to accelerate wage growth and raise the standard of living. Looking broadly across sectors for maximum impact, the two best candidates are formal manufacturing and modern services. The former is distinguished from the informal sector, and the latter means tradable information technology enabled services like financial intermediation and communications. Both have much higher productivity levels than other industries.
Political capital, bureaucratic capacity and the public’s bandwidth to support initiatives are all scarce resources. A jobs agenda would benefit from focusing exclusively on formal manufacturing.

The reasons for preferring formal manufacturing to modern services are threefold. First, formal-sector manufacturing requires the low-skilled workers that India has in abundance. Its expansion therefore solves many social and economic problems at once.
The many workers in the informal manufacturing sector would much rather be employed by a formal company (i.e., one that incorporates, pays taxes and tries to comply with the regulatory structure). While 81% of manufacturing workers toil in the informal sector, it is mostly just disguised unemployment with super low productivity.

Second, formal manufacturing exhibits a higher employment elasticity of growth—the rate of employment generation as it grows. If both grow at the same rate, the formal manufacturing sector will create jobs at a faster pace than modern services.
Third, policy barriers do not significantly hold back the potential for modern services to unleash a wave of new growth. Services has already blossomed despite the inhospitable Indian business climate, so it bears less potential to benefit from further liberalization. Manufacturing, on the other hand, is clearly constrained by factors that policy changes could rectify.

The downside to trying to grow through manufacturing is that it is highly competitive and hard to break into. Further, the global industry is shifting to automation at lower and lower wage levels. Yet India is luring major companies such as Foxconn, the world’s largest electronics contractor manufacturer, and Indian labour is still cheap enough to compete with robots. The country may not be able to ride manufacturing all the way up to Korean—or even Chinese—levels of income, but its workers still stand to become much better off by leaving farms even for bottom-rung factory jobs.

We used a simulation to estimate the impact on the Indian economy if the Modi government (with lots of help from state governments) pushed hard to create a formal manufacturing-friendly environment. Formal manufacturing’s currently limited size means that it has a lot of room to break out and grow rapidly. If a policy change occurs, our estimated growth rate of 14% for the sector puts it right up there with East Asian countries during their booms.

The simulation found that 58 million new jobs could be created in the formal manufacturing sector in the next 20 years above what we would have with status quo policies. This scenario would produce corollary benefits for the construction and utilities, modern services and traditional service sectors as well, creating a further 84 million new jobs in those sectors by 2035. Altogether, India would finally meet the oft-repeated need for 10 million new jobs each year.

These simulations should be taken as rough guesses. Yet even a rough guess suggests that a major push to facilitate growth in formal manufacturing would be worthwhile.

How to start a new boom in formal manufacturing? Modi has a number of possibilities to unleash the sector’s potential, but as seen with the Land Acquisition Amendment and Goods and Services Tax, few are easy. The question therefore is not what to do, but how.

The solution lies in better articulating his end-goal and outlining the steps needed to get there. A clearer picture would undercut his opposition, and a heightened focus on job creation would make it harder to be branded anti-poor. In fact, there is probably nothing Modi could do more effectively to regain momentum and restore his image than return to the dream of better jobs that he promised in his campaign.

Russell Green and Gavin Martin are, respectively, the Will Clayton Fellow in International Economics at Rice University’s Baker Institute for Public Policy and a student at the University of Texas, Austin.

 

[arafay]

o bhai 7% buht high rate ha. iska matlab ha ke 10 years indian economy ka size aaj ke mukbalay me double hojaiga! yani ager aaj indian gp 100 ha tu 2025 me 200 hoga.

 

[modern.fakir]

Bhai yeh cheeze pakistan kay saath bhi hogi mager at the current rate in 2030 because our rate is slower LEKIN that is not the topic of the thread.

The topic of the thread is the DECREASING RATE of Growth.... next quarter if this rate drops to 6 % and Pakistan's picksup up to 6% then Both economies will DOUBLE by 2025 :biggthumpup:

o bhai 7% buht high rate ha. iska matlab ha ke 10 years indian economy ka size aaj ke mukbalay me double hojaiga! yani ager aaj indian gp 100 ha tu 2025 me 200 hoga.

 

[arafay]

Bhai yeh cheeze pakistan kay saath bhi hogi mager at the current rate in 2030 because our rate is slower LEKIN that is not the topic of the thread.

The topic of the thread is the DECREASING RATE of Growth.... next quarter if this rate drops to 6 % and Pakistan's picksup up to 6% then Both economies will DOUBLE by 2025 :biggthumpup:

pakistan's growth rate right now is 4.2%. that means it is going to take around 17 years to double the gdp. i dont see pakistan hitting 6% until energy crisis is resolved. the only industrial sector growing in pakistan is construction/real estate and main reason is that it doesnt require electricity. sme and large scale manufacturing the real growth drivers require electricity at affordable rates.

 

[modern.fakir]

Thats a good analysis for the structural weaknesses in Pakistan .

pakistan's growth rate right now is 4.2%. that means it is going to take around 17 years to double the gdp. i dont see pakistan hitting 6% until energy crisis is resolved. the only industrial sector growing in pakistan is construction/real estate and main reason is that it doesnt require electricity. sme and large scale manufacturing the real growth drivers require electricity at affordable rates.

 

[abhay]

Because economy goes forwards and not backwards you dumb idiot.

When the economy grew at 7.5 % last quarter and it SLOWED down to 7 % ...then this shows a weakness. The conditions last year were different. Next quarter might be 6 % , will you then ALSO compare it to Year over year ??:biggthumpup:

it's not mechanical thing that only goes one way, it's organic and ups and downs are always expected

 

[modern.fakir]

thats right which is why right now the cycle is in a depression...

it's not mechanical thing that only goes one way, it's organic and ups and downs are always expected

 

[abhay]

o bhai 7% buht high rate ha. iska matlab ha ke 10 years indian economy ka size aaj ke mukbalay me double hojaiga! yani ager aaj indian gp 100 ha tu 2025 me 200 hoga.

you are absolutely right

In year 1993 Indian economy was 4.2 times of pakistani economy and In year 2015 it is 9.25 times.

the gap is only going to get wider by every passing year

compare an economy of 250 billion dollar growing at the speed of 4.5% an year to an economy 0f 2300 billion dollar growing at 7+ % an year