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Old 23rd August 2013, 11:35   #46
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I think that we all can do our bit to improve the situation. We need to at least temporarily stop buying things that are to be bought by the supplier by paying dollars, for example imports from America. We need to put a check on luxury goods and services that are imported by paying in dollars. We need to switch to products which are made in India or at least from other countries such as Japan, Korea etc.
I think this is so funny and clearly someone has never opened an economics book in his life or learnt anything from that. Trade is proven to expand production frontiers of a country and benefits all. Of course, we can live in an autarchy and make everything ourselves and impoverish the people like in Myanmar and North Korea. If every country only consumes what it produces within its borders, the world will a lot worse place.

Now specifically to Japan and Korea and also to make products in India. This means that we should produce indigenously or if not, buy from Japan and Korea. That is so laughable and clearly implies a following of some autarchic types for whom Swadeshi means buying inferior products from them. Specifically what do we import out of our imports of US$492 billion in 2012-13:

1 Petroleum: $169.4 billion. We import because we simply do not have enough energy resources to meet domestic demand. OK, if we need to import, let us find oil in Japan and Korea. In the decades it will take to find oil and bring it to production in Japan and Korea, let us grind our economy to a halt and transport men and material on bullock carts.

2. India also imports nearly 50% of its vegetable oil requirements because we have not produced enough for more than 20 years to meet domestic demand. Total imports in 2012-13: $11.2 billion primarily of palm oil from Indonesia, Malaysia. Let us stop importing from them and plant palm trees in Japan/Korea. That may be marginally easier than growing tea leaves in Iceland. Till that time, our people will become fit by walking to work (no gas) and eating 0-calorie meals (no cooking oil). We can also live on domestic resources (30-50% of demand) but be prepared to pay Rs. 300/litre for petrol and Rs. 500/litre for cooking oil.

3 Coal ($16 billion). We have energy reserves in sufficient quantity only of coal but that is of poor quality and sarkari companies mean that enough is no produced. So our power plants import from Indonesia and steel plants import coking coal from Australia. Instead, let us close our power plants, suffer 10 hr cuts, stop trains (running on electricity), close steel plants (requiring gas and coal) and let the entire economy collapse. In the meantime let us then dig 1000 km inside Japan/Korea in the hope of finding coal. We may also find diamonds and gold there!!! and that brings me to the next point.

4. Let us also make at least 3 million jobless by totally stopping the import of gems and jewellery ($$23 billion) and gold (55.8 billion). So what if the entire industry and economy of Surat and the million+ jewellers in India go out of work. Find new sources in Japan and Korea even if it takes a 100 years. For the record, India’s production of diamonds and gold cannot even 0.001% of our requirement.

5. Let us take to organic farming because we cannot produce enough fertilisers to meet domestic demand and imported $9.1 billion in 2012-13. Our farmers will produce 50% less and onion will then cost Rs. 150/kg. Live with that but let us not import anything.

6. Contrary to what the poster has said, our imports from US and Germany are not only toothpastes, etc. They do not even land in the top 50 items. From US, our main imports are transport equipment, machinery, chemicals, drugs, professional equipments, metals, etc. No soaps and detergents. Let us also boycott imports from Germany of the same items and manufacture 3rd rate machinery in India or import from Japan/Korea. Clearly the intention of boycotting American products specifically soaps, toothpastes, drugs etc is to boost the sales of high priced dubious products from some ...Peeth!!! Anyway, you can bet that nearly 95% of these items are made in India and what is imported wont even constitute 1% of our imports.

There are Babas promoting Indian medicines conveniently forgetting that the average Indian life span at Independence was only 30-35 years. For that matter, human history indicates that life till the age of Western drugs was `nasty, brutish, and short'. The average life span of humans from the advent of agriculture (10-12,000 years ago) to late 19th century remained at 30-35 years (read economic histories). Lifespans improved dramatically worldwide in the 20th century and especially from the late 1940s when killer diseases such as TB, malaria, and other bacterial diseases stopped killing in the millions. Similarly for HIV in the mid-1990s. Please give credit where it is due instead of closing your mind.

7. Please note that manufacturing in Japan has hollowed out and moved substantially to South East Asia because of high labour cost. However, I am sure that they will open factories if suckers in India are willing to pay 3-times for getting products made in Japan at high labour cost.

I can go on and on but clearly someone badly needs to open an economics book.

Last edited by vasudeva : 23rd August 2013 at 11:52.
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Old 23rd August 2013, 11:58   #47
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5. Let us take to organic farming because we cannot produce enough fertilisers to meet domestic demand and imported $9.1 billion in 2012-13. Our farmers will produce 50% less and onion will then cost Rs. 150/kg. Live with that but let us not import anything.
I agree with most of your other points except this one.

I always thought non-fertiliser farming wouldn't be enough to meet demands. However, in one of the episodes of Aamir Khan's Satyame Vijayate, they showed some state in India which had totally moved to organic farming with no loss in output.
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Old 23rd August 2013, 12:08   #48
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I agree with most of your other points except this one.

I always thought non-fertiliser farming wouldn't be enough to meet demands. However, in one of the episodes of Aamir Khan's Satyame Vijayate, they showed some state in India which had totally moved to organic farming with no loss in output.
Let us not bring these highly charged and debatable issues. I agree with you but please appreciate that there is a question of scale. What may work as a pilot project or a state project may not work on a national or even a global scale.

I am not going into organic vs chemical fert debate except to state that there are reams of literature which have proved that chemical fert. cause an increase in output. So do pesticides. The evidence in the literature and the time scale record has proved the positive impact of pest./fert. on agri output and improving food security. All our gobar gas and manure could not improve yields. It was left to the seeds and fertiliser revolution (Green Rev) for India's agricultural productivity to improve by leaps and bounds.

What has raised concern is their impact on human health. That is a valid debate.

Anyway, this is not the stage for that. What I argued was the dodgy statement on US/Japan/Korea.

Last edited by vasudeva : 23rd August 2013 at 12:10.
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Old 23rd August 2013, 12:30   #49
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Default Re: The Falling Indian Rupee

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I agree with most of your other points except this one.

I always thought non-fertiliser farming wouldn't be enough to meet demands. However, in one of the episodes of Aamir Khan's Satyame Vijayate, they showed some state in India which had totally moved to organic farming with no loss in output.
LOL. This is too funny. I come from a farming background, and we actually grow a quite of produce, including onions which we sell for 11rs a kg (when onion was 30rs a kg we sold best for 9/kg). Now onion at 70 and we sell for 11 a kg.
If we do not use Pesticides, our crop will die. Yield will be down by 30%.
Our stock of buffaloes gives us manure to cultivate 5% of our land.Rest 90% needs fertilizers.
Shows like Satyameva take a overly simplistic approach.
The issue is not the use of Fertilizers and pesticides, but the "abuse" of the same, and also usage of Hormones and banned substances. We do not do that.
PAU and similar institutes offer guidelines, and quite a few farmers adhere to that. The biggest abuse happens in vegetables grows on outskirts of the cities by small setups.

Secondly, the Farm subsidy in India is far lower than what is offered in the west.
Also till recently, we farmers could not sell directly to you. there was a law which said we had to sell to middlemen. This old APMC law is now the reason that middlemen are getting fat.

From my POV, the facebook posts about using Vicco Vajratanti are an evidence that there are many people who went to school and never learnt something.

LCD TVs, luxury imports etc., curbing to control trade balance is comical

Some time back I wrote this
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India was riding a motorcycle at high speed. Suddenly on a sharp turn, a truck driven by Corruption kumar, coming on the wrong side collided head on. India came under the truck, and both the legs and arms got separated. India was wearing a full face helmet, so there was a minor cut on the face which was bleeding. Dr Singh, and Dr. Chimba have applied band-aid on the cut and they assure is this will ensure long and healthy survival of India
I being in India, do not trust the residents of this country.
I do not trust the govt.

I think they are all chors. So why would a Foreign entity trust to put their money in India?
Look at the CPI of India. At rank 94 India is one of the worst countries when it comes to corruption.

The amount of money which is looted from the nation far exceeds what the british looted before independence.

How an an economy survive such loot.

A simple 300km national highway has eaten thousands of crores and there is no work happening.

The 50 crore fine is pittance, and the company has wriggled out saying

"Illegal sand mining crackdown has resulted in shortage of raw material so we cannot make road".

What sort of banana republic says unless you allow illegal mining we cannot make infrastructure.

Only an idiot will invest in such a banana republic. Hence the doom and gloom. Banana republics do not prosper, and they have never had.

India was never shining, not even when the govts were saying yay 9% growth.
Majority has always been living in conditions so appalling that its actually a mass scale human rights violation.

so instead of band aid, unless the country sets its house in order, nobody will come to live here.

Would you go stay in a hotel where the beds have bugs, the roof leaks, the plaster is falling, and sewage water comes out of the drinking water lines?

Last edited by tsk1979 : 23rd August 2013 at 12:32.
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Old 23rd August 2013, 12:54   #50
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Look at the equation and you will see that solving the BOP crises and arresting the rupee slide will take more than policy announcements.

1. We have a current account deficit because we import more than we import. In US$ terms, we last had a trade surplus of 1976-77 which was also a pittance of $77 million.
2. So we need foreigners to lend us money to finance our deficit. That money in the BoP is reflected in 2 major flows: FIIs (short-term and hot money) and FDI (long term and relatively immune from short term crisis). There is also banking capital primarily NRI deposits.

Investors see the announcement of hiking limits from 49% to 100% or whatever. Great. But when they start the paperwork, their nightmares start and after banging their heads against various babus and ministries. Now they do not even bother to read the announcement. Our roads are potholed, the electricity deficit is 10%, goods take weeks to get from one part of the country to another. In addition to these inefficiencies which add to costs, there is the question of greasing palms which are a substantial portion of costs. Why bother at all.

To cut the deficit, either we import less (hardly possible given what we have and what our citizens need) or export more. Exporting is a question of competitiveness and that is not solved through some airy-fairy announcements.

Indians must be the most advanced and progressive of nations in making announcements but the worst in implementing them. No investor (foreign or domestic) will put in money for the long term, when there is no certainty that they will get their principal back, let alone profits.

Our Babas want us to boycott American products and buy from them. It is a question of who wants the right to swindle us (a white skin or a brown skin). Our movie stars want critics to write positive reviews so that they can swindle the public in watching their rotten movies. Our patriotic duty is to buy 3rd rate domestic products at higher cost and with a queue. Can go on an on but how does it matter...

I consider the Mahabharat one of the greatest Indian lit (and which I have read fully at least 6 times). Eclectic, non-rigid, and forgiving. It says that before a person puts his roots anywhere, he should see the state of the land and the state of the people running it. If not, he should flee. There was no mention that simply because nonsense and arajakta is being perpetrated by our own countrymen/own colour, we should put up with it,

Come to think of it, over the last 66 years, only the colour of the thieves has changed and that too not by much.

Last edited by vasudeva : 23rd August 2013 at 12:58.
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Old 23rd August 2013, 13:43   #51
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From my POV, the facebook posts about using Vicco Vajratanti are an evidence that there are many people who went to school and never learnt something.
Actually facebook has busted the myth that only illiterate rural voters in this country get swayed by empty promises. Even the "educated" in India are quite ignorant.
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LCD TVs, luxury imports etc., curbing to control trade balance is comical
Actually Electronics imports ( smartphones. Lcd tvs, computers, etc) make up a big chunk of our imports. It's around 8 % of our total imports. But the government can't increase the duties on these as they are protected by some trade agreements, hence only those that are imported by individuals have been taxed higher, but that's insignificant or rather comical as you said.
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....Can go on an on but how does it matter
+1. Agree with whatever you said in both the posts.

Last edited by Daewood : 23rd August 2013 at 13:49.
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Old 23rd August 2013, 13:49   #52
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Actually Electronics imports ( smartphones. Lcd tvs, computers, etc) make up a big chunk of our imports. It's around 8 % of our total imports. But the government can't increase the duties on these as they are protected by some trade agreements, hence only those that are imported by individuals have been taxed higher.
But what 8% of those is necessity, and what is luxury. In todays world a mobile phone is a necessity. So are LEDs, electronic components etc.,
Things like TVs etc., imported by individuals under duty free scheme is too miniscule. Such measures will only increase fear. More fear = more gloom.
Any action has multiple effects.
So if an action results in saving 0.5% of imports and and causes 2% of investment to run away ,its purely stupid.
The fact is that the govt knows whats wrong, and also knows that the rot is so deep that it needs long term vision. But right now the world ends in May 2014, so "whats the point".

Indian govt reminded me of executives who only thing about the next quarter. Eventually the company goes into a tailspin, and executives get a golden handshake and exit.
This is what is happening here. The rulers get golden handshake, make money, while the country has gone crashing.
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Old 23rd August 2013, 14:04   #53
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Actually Electronics imports ( smartphones. Lcd tvs, computers, etc) make up a big chunk of our imports. It's around 8 % of our total imports. But the government can't increase the duties on these as they are protected by some trade agreements, hence only those that are imported by individuals have been taxed higher, but that's insignificant or rather comical as you said.

+1. Agree with whatever you said in both the posts.
Electronic goods are 6.4% of our imports in 2012-13. That does include consumer goods but also a lot of non-consumer industrial goods. The source for these are China (46.6%), Malaysia (5.4%), Korea (3.9%), Japan (3.2%). One can argue that most of these are consumer goods but also a lot of non-consumer goods. Now after Malaysia, who are the biggest source of our imports of electronic goods: countries which have recently largely vacated the consumer elec. space. These include US (7%, larger than Malaysia), and Germany (4.5%).

What was comical in the recent hike in duties on these items was some Indian thieves in Aurangabad welcoming the move. They have acquired a reputation of shoddy products, running off with investors money, and not paying their dues on time. Also came to light as to what extent we Indians are being royally swindled through overpriced and overtaxed goods.
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Old 23rd August 2013, 14:18   #54
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Simple ways in which we can save rupee:

1. Reduce fuel usage: I feel bad to take a long ride or drive for pleasure in the current scenario.

2. Try commuting during non-peak hours or use public transport/ car pooling: I feel bad thinking about the fuel/ time wasted in traffic jams in Bangalore. Govt improving road infrastructure will help the country in many ways - enhance commerce, widen cities, rural development, improve investor confidence, save fuel/ time, reduce stress etc.
Disagree completely on this - it should be "pay full price". The problem of govt finances comes due to the subsidy, not the scale of consumption.

We middle class should pay our due and that itself will solve a fair bit of the problems (but the majority will remain).

Consumption should reduce because of a desire to conserve resources for our next generation, and not out of a misplaced hope that it'll improve India's exchange rate
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Old 23rd August 2013, 14:21   #55
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Dear all,

great views, but here is my take i run a small company

for us and FTE (full time equivalent) is around 1000 USD/ month, out of which we pay around 30k INR to the employee and other overheads cost another 15k earlier with $ at 45 we were barely managing, now i have more than 20k/FTE extra, this is great news for me.

Dollar going up will only effect oil prices, and its great for investments as now companies are ready to offer FTE's at 800$ against 1000$. so foreign companies will invest more.

I am happy that the dollar price is going up and would love to see it doing even better

These are my personal views.

Pramod
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Old 23rd August 2013, 14:33   #56
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So if an action results in saving 0.5% of imports and and causes 2% of investment to run away ,its purely stupid.
Very true.

In the same way, some actions taken by our Policy makers and constitutional bodies have resulted in many investors getting scared, and running away. For example when the courts arbitarily cancelled 121 Licences of the telcos that sent out a very wrong signal, that something was fundamentally wrong with this country.
The root cause for this was the over enthusiastic bidding for 3g licences by Telecos who thought that 3g revenues will be much higher than 2g. What they forgot was that only 15% of Indians among the mobile users had anything to do with the internet. Maybe the jokers thought that the entire junta will shift from voice to video calls and drive data usage. This blunder by the telecos led to the CAG getting misled and announcing a flawed number as notional loss.
The 2g incident was the tripping point for the Indian economy and it has been a downward spiral since then.

In many ways the 2g incident and the consequent downgrade of the telecom sector was similar to a mini collapse of the Indian batting lineup of the last decade, as soon as Tendulkar is given out to a questionable LBW decision by Bucknor.

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Old 23rd August 2013, 14:41   #57
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Very true.

The root cause for this was the over enthusiastic bidding for 3g licences by Telecos who thought that 3g revenues will be much higher than 2g. What they forgot was that only 15% of Indians among the mobile users had anything to do with the internet. Maybe the jokers thought that the entire junta will shift from voice to video calls and drive data usage.
OT. First the telcos overbid on 3G, then overpriced 3G. They forgot their own history in voice. Their growth revolution started only when they cut prices substantially from 1999-2000 and then was kickstarted again with the free incoming call rule.

Our broadband and 3G rates are high by developing country standards and too high by western economies. Let them cut rates and then see what happens. Data is no doubt the next big thing. Let the telcos remember what made them in telecom (voice at world record low rates) and apply it in data.
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Old 23rd August 2013, 14:46   #58
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LOL. This is too funny. I come from a farming background, and we actually grow a quite of produce, including onions which we sell for 11rs a kg (when onion was 30rs a kg we sold best for 9/kg). Now onion at 70 and we sell for 11 a kg.
This might be a bit OT, but your statement above makes me wonder, weren't the likes of Easy Day, Reliance Fresh etc supposed to give us vegitable and fruits directly from the farmer to consumer. Then how come even they are selling Onions at 70Rs !! And how and why should the likes of Wal Mart be any different from these blood sucking corporations who are now shamelessly indulging in the same malpractices they had promised to bypass?
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Old 23rd August 2013, 15:12   #59
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I work with a lot of FII; And many a times I have encountered a peculiar question - How different is India from the old colonial days? My answer to them is - It would have been good if India instead of getting Independence in 1947, would have got it in 1999 (a Like Hong Kong); we would have been a developed nation instead of a developing one. It is the Brits who got railways here (whatever might be the objective); they built roads; they built the infrastructure. I am pretty sure India would have been a much better country than what it is today.

At the same time, I would like to say that Yes, it sounds nice that we live in a Free Country but are we really Free? Socially/Politically/Morally?

I would not defer from the topic of falling Rs but I thought, I should share what I encounter very often. Political turnmoil is one factor but we also have to factor in other eually important factors like the demographics which can cause a cascading impact on the economy.
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Old 23rd August 2013, 15:39   #60
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This might be a bit OT, but your statement above makes me wonder, weren't the likes of Easy Day, Reliance Fresh etc supposed to give us vegitable and fruits directly from the farmer to consumer. Then how come even they are selling Onions at 70Rs !! And how and why should the likes of Wal Mart be any different from these blood sucking corporations who are now shamelessly indulging in the same malpractices they had promised to bypass?
Very small percentage of the produce is directly picked from the farmer.
And when companies can sell at a higher price they will, its their responsibility to consumer. More investment will mean more competition for the current retail chains.

That said, the only product where margins are low is milk. What you get from Verka or MD is only 30-40% higher than what we sell to Verka or MD.
for veggies and grain its often 100% margin thanks to the middleman hold.

Having 1-2 big retail players will actually ruin the market. When your only choice is BB or RF, there is no competition. But if there are 10 more chains competing with each other, prices will be reduced.
However, it will take time and effort(Development of a model to direct sell stuff to consumer without multiple middlemen)
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