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Old 14th August 2017, 16:44   #451
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Default Re: Recession Again ?

Surprisingly the entire narrative of economics seems to be centered around the IT/Corporate world and the so called organised sector. To be honest, I work with a MNC and have nothing against the corporate world.
Out of the national GDP, 14 to 15 percent comes from the organised sector, 15 percent from agricultural sector, roughly 15% from the government. The remainder 50% or more comes from the so called unorganized sector. It is a great misfortune that we call half of our GDP creators as unorganized. We do so because the west would call it like that. To further worsen the situation, only 5% of the non corporate sector has access to funds from official sources. The rest is funded by moneylenders, families, relatives, etc. As far as the economic theories of the day are concerned, Paul Krugman (2008 economics Nobel prize winner) said, most of the economic theories of the last 30 years are useless at best or harmful at worst!! Economics used to be a subject of sociology, where classical economists would analyse how people earn, spend and save their money. This subject has now been turned on its head by model builders who have turned it in to a subject of mathematics. To understand how financilisation has taken over, please Google the LTCM debacle where Nobel prize winning economic theory (Blacks & Shoals model) was put in to action in the market and eventually the nobel prize winners lost the prize money and had to go back to teaching. This was the time when Derevatives were born. In the peak of the 2008 crisis, according to Bank of International Settlements, the total outstanding derivatives amounted to 135 trillion!! The global GDP itself was around 60 trillion! The jobless growth that we have witnessed since 2004 is primarily due to asset price inflation. This was driven by real estate, stocks and gold. Unaccounted cash was the main driver for this growth.
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Old 1st October 2017, 09:43   #452
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Recession and job loss is truly a nightmare for the so called 'mid level manager' in any typical indian software company. On a personal front I feel for the cold cut clinical firings carried out by the now heartless HR, I am sure there are more humane ways of removing a 30/40 year old bread earner without so much as a sorry, however mostly it seems to be a result of years of neglect on the employees part, some of who I know personally. One example is of a gentleman who was until recently employeed as a senior pm in our IT bellweather company. This gentleman had last coded about 10 years back, as of now only knew pm tools and excel sheets, who is always unavailable for meetings between 10am till 4pm (because he day trades on stock markets). His vision of growth was to make more money each month, purchase more land in his village and add a storey to his villa in Buvaneswar. He was not interested in learning new skills, definitely not involved in coding, knew to speak some management jargon, and basically had time for a regular 230pm run home from work every friday afternoon.
This may be an extreme example, however there are various employees such as him, who in varying degrees just milked their companies. Now that they are getting thrown out, the wailing starts
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Old 9th October 2017, 20:54   #453
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I would love to hear what TBHP members from the brick and mortar world have to say about their current experience. Ours has been that the economic slow down in the Indian economy is very real. The extra burden on working capital imposed by GST has made the situation worse for local production and sales. Now we need equity to fund indirect taxes because the banks don't support SMEs (like mine) adequately. Our domestic only division has tanked. Fortunately the export and production abroad pieces continue to keep the head above water. I am not against GST or the Govt collecting the taxes it needs but there is an inadequate understanding amongst our bureaucrats that the so called unorganized sector is the real sector and Govt policies need to be designed to help it grow and not throttle it which is what seems to be the unintended consequence. The newspapers focus only on IT and e-Commerce and PE Funds but the bulk of the economic job creation is funded by risk takers funneling their own capital one rupee at a time. The tone and intentions of the political class of the present Govt seems to be right. I don't know to what degree the bureaucrats are willing to change and adapt.

Last edited by V.Narayan : 9th October 2017 at 21:00.
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Old 9th October 2017, 21:34   #454
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Quote:
Originally Posted by V.Narayan View Post
I would love to hear what TBHP members from the brick and mortar world have to say about their current experience. Ours has been that the economic slow down in the Indian economy is very real. The extra burden on working capital imposed by GST has made the situation worse for local production and sales. Now we need equity to fund indirect taxes because the banks don't support SMEs (like mine) adequately. Our domestic only division has tanked. Fortunately the export and production abroad pieces continue to keep the head above water. I am not against GST or the Govt collecting the taxes it needs but there is an inadequate understanding amongst our bureaucrats that the so called unorganized sector is the real sector and Govt policies need to be designed to help it grow and not throttle it which is what seems to be the unintended consequence. The newspapers focus only on IT and e-Commerce and PE Funds but the bulk of the economic job creation is funded by risk takers funneling their own capital one rupee at a time. The tone and intentions of the political class of the present Govt seems to be right. I don't know to what degree the bureaucrats are willing to change and adapt.
A balanced response to your concerns could be as follows:
- The effect of implementation of GST should be gauged in the long run. A shock such as this, while likely diminishing growth in the short term, would aid growth in the long term by making us truly a single market.
- The catch is that for it to be truly effective, it has to be well thought out and implemented

What is well thought out in the current roll-out:
- Differentiated slabs that don't push up inflation
- Retaining federal structure by ensuring states have significant sources of finance

What is not:
- The current system of determination of categories, charge back etc. are ill-advised. I recently saw an invoice that charged pickles, samosas and sweets at different rates. I can't believe the bureaucratic tangle that we've woven to determine slabs!
- Naively rolling out rules without considering impact (e.g. those that lead to working capital requirement spikes for exporters)
- Tinkering with them frequently leading to loss in predictability and consistency
- The timing, considering the weak investment and lending cycle

In this case, to abuse a Twainism, I have to believe that bureaucracy has dragged policy makers down to their level and beat them with experience. (I believe that the original Mark Twain quote was "Never argue with stupid people. They drag you down to their level and beat you with experience")

On balance, I'm inclined to wait and watch. All things being equal, the single biggest measure that I'm counting on is cleaning up the books of banks. That is simply the fundamental cure for many of the ills that plague us. The root cause of this is not the government as much as it is corrupt officials who signed off on such loans. However, cleaning the mess requires political will and execution chops that neither any government or our bureaucracy has exhibited to date.

Also, to be pedantic, slow growth does not equal to a recession

Last edited by BackInTheFold : 9th October 2017 at 21:38.
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Old 9th October 2017, 21:37   #455
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Just to add to the voes:

http://www.businesstoday.in/sectors/...ry/261692.html

5000+ on roll employees and probably 4 to 5 times are the ones who were dependent on the company in form of third party workers for their bread.
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Old 9th October 2017, 21:50   #456
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Quote:
Originally Posted by BackInTheFold View Post
A balanced response to your concerns could be as follows:

What is well thought out in the current roll-out:

What is not:

In this case, to abuse a Twainism, I have to believe that bureaucracy has dragged policy makers down to their level and beat them with experience.
Such a pleasure to read a well thought through post. GST is the right strategic move. I have been reading about it in the papers at least since 1992
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All things being equal, the single biggest measure that I'm counting on is cleaning up the books of banks. That is simply the fundamental cure for many of the ills that plague us. Also, to be pedantic, slow growth does not equal to a recession
Yup. Cannot agree more. I tell my wife that in my next janam I want to be a e-commerce guy who gets a valuation proportional to losses
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Old 10th October 2017, 07:03   #457
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What is very interesting is that Recession is biting far more in enterprise with a very high No.2 content. So the people are still to come to terms with paying their taxes. By and large it is lower in enterprise with a low black money involvement.
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Old 21st October 2017, 00:17   #458
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This article explains how India is moving towards a demographic disaster.

https://scroll.in/article/854211/the...d-but-disaster
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Old 21st October 2017, 10:52   #459
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Quote:
Originally Posted by Samurai View Post
This article explains how India is moving towards a demographic disaster.

https://scroll.in/article/854211/the...d-but-disaster
I am no tax expert, nor do I support any political regime, but I found the article to be heavily slanted against the recent reforms in addition to taking very obvious pot shots against the current regime. If one were to read this in isolation, it would seem that our economy will fold in the next couple of years.

However, creation of 'quality' jobs is indeed a concern, and that is more due to the mediocrity of Indian companies - across sectors - than the action/inaction of any regime. Enough has been talked about IT so will not go there. But even in manufacturing we are either uncompetitive at the lower end of the scale or unable to come up with products which can put Indian companies on the global map. So if you cannot increase your topline, boosting bottomlines - cutting jobs being one the measures - becomes inevitable.
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Old 21st October 2017, 11:29   #460
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Quote:
Originally Posted by Samurai View Post
This article explains how India is moving towards a demographic disaster.

https://scroll.in/article/854211/the...d-but-disaster
This portal is known to be anti current government, in today's day and time, it is very important to filter out the information based on facts. Way too many people who earn out of selling anything that can go viral.
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