Tag: Economy

The GDP Illusions- Why We Must Measure the People’s GDP, Not the Nation’s Arithmetic


Dr. Rajendra Pratap Gupta, PhD

I. The Arithmetic Illusion

Every year, finance ministries, multilateral agencies, and the business press celebrate a single number: GDP per capita. It is presented as a proxy for prosperity, the average income of a citizen. But it is nothing of the sort. GDP per capita is a quotient, not a truth. It is the total economic output of a nation divided by its headcount, and in that single act of division lies one of the great statistical illusions of modern economics.

Consider the logic. If ten people are in a room and one of them is a billionaire, the “average wealth” of the room is over a hundred million dollars , while nine people may not have money for dinner. This is precisely how GDP per capita operates at the national scale. It assumes that the value created by the state, by large conglomerates, by capital-intensive extractive industries, and by financial markets flows evenly into the hands of every citizen. It does not. It never has.

The result is a measurement system that tells us how large the economy is, but tells us almost nothing about how much of that economy actually reaches the people, their kitchens, their school fees, their medicines, their savings. It is time to correct this. It is time to move from the Nation’s GDP per capita to what I call the People’s GDP per Capita, a citizen-anchored, consumption-based measure of real income.

II. What GDP Per Capita Actually Measures — and What It Hides

GDP, by the expenditure method, is the sum of four components:

GDP = C + G + I + (X − M)

That is: Private Consumption (C) + Government Spending (G) + Investment (I) + Net Exports (X − M). Of these four, only one — private final consumption — represents what households actually spend on themselves. The other three are real economic activity, but they are not income in the pocket of the average citizen:

1. Government spending (G) includes defence procurement, administrative salaries, debt servicing, and capital works. A missile purchase raises GDP; it does not raise a farmer’s household budget that year.

2. Investment (I) — gross fixed capital formation — is dominated by corporate capital expenditure, real estate, and infrastructure. When a large business house builds a refinery, GDP rises sharply; the turnover and profits accrue to shareholders, and only a fraction reaches workers as wages.

3. Net exports reflect trade flows that may be concentrated in a handful of firms.

When we divide the total of all four by the population, we statistically “gift” every citizen a per-head share of government budgets, corporate balance sheets, and export receipts they will never see. GDP per capita is thus a mean of things that do not belong to the average person.

The deeper flaw is that it is a mean at all. A mean is dragged upward by extreme values at the top. When income concentration is severe, the mean bears no resemblance to the experience of the median citizen.

III. The Saudi Paradox: When Averages Lie Loudest

Saudi Arabia is the cleanest illustration of the illusion. On paper, the Kingdom’s GDP per capita is projected at roughly US$35,000–38,000 in 2026 (IMF, World Economic Outlook, April 2026) — comfortably in the league of developed economies, and around US$63,000 in PPP terms (World Bank, 2024).

But the composition of that GDP tells a different story. A dominant share of Saudi output is generated by hydrocarbons – the state-owned Aramco alone accounts for a very large slice of national income — plus sovereign investment vehicles and a small number of family-controlled conglomerates. The oil rents, the state’s fiscal receipts, and the conglomerates’ turnover are all counted in GDP and then divided across 35 million residents, a third of whom are expatriate workers, many earning modest wages.

The “average Saudi” implied by the per capita figure — a person earning $35,000 a year — is a statistical fiction. The actual distribution is a small apex earning extraordinary rentier incomes, and a broad base whose household consumption and salaries are a fraction of the headline number. Divide the nation’s oil by the people’s headcount, and you manufacture prosperity on paper.

This is not unique to Saudi Arabia. Every economy with concentrated ownership of capital — resource economies, financialised economies, and increasingly, platform-monopoly economies — suffers the same distortion. Including India.

IV. India: Drilling Down from the Headline to the Household

Let us now do for India what is rarely done: strip the headline number layer by layer, using only official and authoritative sources, until we arrive at what the citizen actually commands.

Layer 0 — The Headline. India’s nominal GDP in 2026 is approximately US$4.15 trillion, and conventional GDP per capita is approximately US$2,813 (IMF, World Economic Outlook, April 2026) — roughly ₹2.4 lakh per person per year.

Layer 1 — Remove Government Spending. Government final consumption expenditure is about 9.3% of GDP (MoSPI, National Accounts, FY2024-25). This is legitimate economic activity, but it is not household income. Removing it leaves ~US$2,551 per capita.

Layer 2 — Remove Corporate Capital Formation. Gross fixed capital formation is about 33.5% of GDP (MoSPI, FY2024-25) — factories, real estate, machinery, infrastructure. The turnover of the large business houses is embedded here and in gross value added. Removing it leaves ~US$1,610 per capita.

Layer 3 — What Remains: Private Consumption. Private Final Consumption Expenditure (PFCE) is about 56.3% of GDP (MoSPI, FY2024-25). This yields a consumption-anchored per capita figure of roughly US$1,585 per year (~₹1.3 lakh) — already 44% lower than the headline.

Layer 4 — Ground-Truth It with Survey Data. Even PFCE, being a national-accounts aggregate, over-attributes consumption relative to what households report. The Household Consumption Expenditure Survey (HCES) 2023-24 — the gold standard of ground-level measurement, covering 2.61 lakh households — found average Monthly Per Capita Consumption Expenditure of ₹4,122 in rural India and ₹6,996 in urban India (MoSPI, December 2024). Weighted by population, the average Indian consumes roughly ₹5,100 per month, or about ₹61,000–62,000 per year — approximately US$730.

Layer 5 — Correct the Mean with the Distribution. Even ₹5,100 a month is a mean, inflated by the top. Per HCES 2023-24, the bottom 5% of rural India lives on an average MPCE of just ₹1,677 a month, while the top 5% spends ₹10,137. And per the World Inequality Lab (2024): the top 1% of Indians capture 22.6% of national income — the highest since 1922 — and hold 40.1% of national wealth; the top 10% capture about 58% of income, while the bottom 50% of Indians receive only 15%. Applying that share, the bottom half of India — 70 crore-plus people — subsists on a per capita income of roughly US$840 a year, less than one-third of the headline per capita GDP.

V. The Comparison: Conventional vs. People’s GDP Per Capita (India)

#MeasureValue (approx.)% of HeadlineSource
0Conventional GDP per capita (2026)US$2,813 (~₹2.4 lakh)100%IMF WEO, Apr 2026
1Less: Government final consumption (9.3%)US$2,55191%MoSPI, FY2024-25
2Less: Gross fixed capital formation (33.5%)US$1,61057%MoSPI, FY2024-25
3PFCE-anchored per capita (56.3% of GDP)US$1,585 (~₹1.3 lakh)56%MoSPI, FY2024-25
4Survey-measured household consumption (HCES)US$730 (~₹61,500/yr)26%MoSPI HCES 2023-24
5Bottom-50% per capita income (15% share)~US$840/yr~30%World Inequality Lab, 2024
6Bottom-5% rural consumption₹1,677/month (~US$240/yr)~8.5%MoSPI HCES 2023-24

The verdict is stark: the citizen-experienced economy is roughly one-quarter of the headline economy. The conventional metric tells us India is a US$2,813-per-head nation. The ground truth is that the median Indian lives a US$700–800-a-year consumption life. Both numbers are “correct” — but only one describes the people.

(The same exercise for Saudi Arabia would compress a $35,000 headline to a household-consumption reality in the low-to-mid teens of thousands for nationals — and far less for the expatriate workforce — since household consumption is roughly 40% of Saudi GDP and income is concentrated in state and family-held capital.)

VI. The Framework: Constructing the People’s GDP Per Capita

I propose that every national statistical office publish, alongside conventional GDP per capita, a People’s GDP per Capita (PGPC) — computed through a transparent five-step deduction-and-correction ladder:

Step 1 — Remove Government Final Consumption. State spending is a service to citizens, not income of citizens. It belongs in a separate “public services dividend” account, not in the citizen’s income proxy.

Step 2 — Remove Corporate Capital Formation and Retained Earnings. The turnover and capex of large business houses should be netted out. What should remain from the corporate sector is only what it pays into households: wages, salaries, dividends to resident retail shareholders, and MSME proprietor incomes.

Step 3 — Anchor on Household Consumption. Private final consumption — cross-validated against household expenditure surveys (India’s HCES, and their equivalents globally) — becomes the base. Where national accounts and surveys diverge (as they notoriously do), the reconciliation must be published, not buried.

Step 4 — Report the Median, Not the Mean. The median household’s consumption is immune to billionaire distortion. A country’s PGPC should be its median per capita consumption, with the mean published as a secondary figure.

Step 5 — Publish Distributional Bands. Alongside the median: the per capita consumption of the bottom 50%, the middle 40%, and the top 10% (in the spirit of the World Inequality Lab’s Distributional National Accounts). One number for the nation; four numbers for the truth.

PGPC = Median per capita household consumption, survey-validated, published with distributional bands.

This is not a rejection of GDP. GDP remains indispensable for measuring output, fiscal capacity, and macro-stability. BUT insisting the foundation be true, and we must insist on “People First. Aggregates Later.” in economic measurement. A metric that cannot distinguish between a billionaire’s refinery and a farmer’s food plate is not a welfare metric.

VII. Anticipating the Objections — Honestly

Intellectual honesty demands that we acknowledge three counterarguments, and answer them.

“Government spending does benefit citizens.” True — public health, education, and subsidised food are real welfare. That is precisely why PGPC should be published alongside a “public services dividend” per capita, not silently blended into a fictional average. HCES 2023-24 itself now publishes imputed values of free welfare transfers (adding roughly ₹125/month rural and ₹82/month urban to MPCE) — a model for transparent, separate accounting.

“Corporate investment creates tomorrow’s jobs.” Also true — which is why GDP should continue to be published. But tomorrow’s jobs are not today’s income, and a welfare metric must measure the present tense of the citizen’s life.

“Isn’t this just median income, which economists already track?” Partially — but no government headlines it, no budget is judged by it, and no election is fought on it. The reform proposed here is not merely statistical; it is institutional: making the citizen-anchored number the primary, headline, budget-referenced measure of national progress.

VIII. Why This Matters Now

Nations manage what they measure. If the headline metric is total output, policy will optimise for output – mega-projects, corporate concentration, capital deepening , even when household consumption stagnates. India’s own recent debate is instructive: GDP has grown at 6.5–7.5%, yet the survey-measured consumption of the median household grew far more modestly, and the gap between the top 5% and bottom 5% of consumers remains six-fold.

For India , on its march toward Viksit Bharat 2047 — the question is not whether we will be a US$ 37 to 73-trillion economy. We can, BUT we have to undo a lot of things. The fundamental question is, whether the People’s GDP per Capita , the ₹61,000-a-year number, not the ₹2.4-lakh number will have multiplied alongside it. A nation is not developed when its arithmetic is developed. A nation is developed when its median household is.

Let us stop dividing the nation’s wealth by the people’s headcount, and start measuring the people’s income by the people’s consumption. That is the real GDP. That is the People’s GDP.

INDIA MAY BE CHASING THE WRONG NUMBERS

As the architect of the Viksit Bharat Abhiyan, I increasingly feel that our biggest challenge is not merely the lack of growth. It is that we may be measuring the wrong things, celebrating the wrong indicators, and therefore designing policies for the wrong outcomes.

THE MIDDLE CLASS IS SMALLER THAN WE THINK

In my book, Tough Choices and Hard Decisions: Making India a Developed Country in the Next 25 Years, written in 2020, I attempted to calculate the real size of India’s middle class. The conclusion was uncomfortable. India had, at best, around 20 crore people who could genuinely be considered middle class.

CAN 20 CRORE PEOPLE CARRY 125 CRORE OTHERS?

This is the question we must confront honestly. How can a middle class of around 20 crore people sustainably carry the economic burden of uplifting more than 125 crore citizens? No economy can build lasting prosperity if the productive and consuming middle remains too narrow.

THIS EXPLAINS MORE THAN WE REALISE

Why does India still struggle with purchasing power despite being one of the world’s largest economies? Why do many global companies remain cautious about the depth of the Indian consumer market? Why do successful Indian companies increasingly look overseas for their next phase of growth? Why does high GDP growth not always translate into prosperity visible in ordinary households?

Many of these answers lie in one uncomfortable reality: our middle class is simply not large enough.

GDP ALONE WILL NOT MAKE INDIA DEVELOPED

Perhaps we are looking too much at the size of the economy when we should also be looking at the size, strength and spending power of the middle class. India cannot become a developed country simply by making the rich richer or by indefinitely subsidising the poor. The real transformation will happen when hundreds of millions of Indians move decisively into a prosperous, secure and aspirational middle class.

THE METRIC WE SHOULD BE TRACKING

Not just GDP. Not just per-capita income. Not just the number of people lifted above an artificially defined poverty line.

The real question should be: How many Indians are genuinely becoming middle class every year?

A strong middle class creates consumption, entrepreneurship, tax revenues, better education, better healthcare, social stability and a more resilient economy.

WHAT WENT WRONG — AND HOW DO WE COURSE-CORRECT?

My book is now available for free download at www.viksitbharat.org. The data and arguments in it raise questions India urgently needs to confront. What went wrong? Are we measuring the right outcomes? And how do we course-correct before a crucial decade passes?

If our measurements are flawed, our policies will be flawed. And if we keep chasing the wrong numbers, we should not be surprised when we arrive at the wrong destination.

THE REAL VIKSIT BHARAT MISSION

Perhaps the most important economic mission for Viksit Bharat is simple:

Build the world’s largest, strongest and most prosperous middle class.

To achieve Viksit Bharat, we must work hard, set the right goals, and have the courage to implement bold ideas. But the starting point is to measure where we truly stand, and real GDP per capita is the most important measures of that reality.

Sources

1.       IMF, World Economic Outlook, April 2026 — India nominal GDP (~US$4.15 trillion) and GDP per capita (~US$2,813, 2026); Saudi Arabia GDP per capita projections.

2.       Ministry of Statistics and Programme Implementation (MoSPI), Government of India — National Accounts Statistics, FY2024-25: GDP by expenditure component (PFCE 56.3%; GFCE 9.3%; GFCF 33.5%).

3.       MoSPI, Household Consumption Expenditure Survey (HCES) 2023-24, Factsheet & Press Note, December 2024 — MPCE ₹4,122 (rural), ₹6,996 (urban); bottom-5% rural MPCE ₹1,677; top-5% rural MPCE ₹10,137; consumption Gini 0.237 (rural) / 0.284 (urban).

4.       Bharti, Chancel, Piketty & Somanchi, Income and Wealth Inequality in India, 1922-2023: The Rise of the Billionaire Raj, World Inequality Lab Working Paper 2024/09 — top 1% income share 22.6%; top 1% wealth share 40.1% (2022-23).

5.       World Inequality Lab, World Inequality Report 2026 — India top 10% income share ~58%; bottom 50% income share ~15%; top 10% wealth share ~65%.

6.       World Bank, World Development Indicators — Saudi Arabia GDP per capita (US$24,917, 2024) and GDP per capita PPP (US$62,677, 2024); India GDP per capita series.

Note: Figures in Layers 1–2 of the deduction ladder are illustrative arithmetic applied to official component shares; USD conversions use approximate FY2025-26 exchange rates. HCES figures pertain to survey year 2023-24.

#viksitbharat #economy #gdp #gdppercapita #IndianEconomy #India #bharat #rajendrapratapgupta

Featured

India at Inflection Point for Viksit Bharat


As we get closer to entering 2025, we need to take a step back , reflect and then plan ahead. Let’s look at some data points to chart our future course.

Between 2014 and 2024, India’s national debt has experienced a significant increase. In 2014, the total debt of the Government of India was approximately ₹55.87 lakh crore. By the end of the 2024-2025 fiscal year, this figure is estimated to reach ₹181.68 lakh crore, indicating a more than threefold rise over the decade and despite this high rise in debt, the growth is still hovering around 3% if we consider inflation.

We should also consider the alarming the debt-to-GDP ratio. In 2014, India’s government debt was about 23.9% of GDP. By 2023, this ratio had increased to approximately 81.59%. 

As of the 2024-25 fiscal year, India’s total public debt is projected to be ₹181.68 lakh crore, an increase from ₹168.72 lakh crore in 2023-24. 

At the state level, debt burdens vary significantly, often measured as a percentage of the state’s Gross State Domestic Product (GSDP).

Here is a summary of the debt-to-GSDP ratios for various states based on 2024-25 budget estimates:

StateDebt-to-GSDP Ratio (%)Fiscal Deficit (%)
Punjab44.13.8
Himachal Pradesh42.54.7
Arunachal Pradesh40.86.3
Nagaland38.63.0
Meghalaya37.93.8
West Bengal36.93.6
Rajasthan36.03.9
Bihar35.73.0
Manipur34.53.1
Tripura34.54.0
Kerala34.03.4
Sikkim34.05.4
Andhra Pradesh*33.33.8
Uttar Pradesh32.73.46
Madhya Pradesh32.04.1
Mizoram29.02.8
Telangana27.383.0
Jharkhand27.02.0
Tamil Nadu26.43.4
Haryana26.22.8
Chhattisgarh24.43.7
Uttarakhand24.22.4
Karnataka23.73.0
Assam23.473.5
Goa21.92.5
Maharashtra18.42.6
Gujarat15.31.9
Odisha13.63.5
Delhi3.940.7

*Data for Andhra Pradesh is for the 2023-24 fiscal year.

These figures indicate that states like Punjab, Himachal Pradesh, and Arunachal Pradesh have the highest debt-to-GSDP ratios, reflecting significant debt burdens relative to their economic output. 

The substantial rise in the debt over this period has been an expenditure on programs and projects which have not been able to lift India’s growth to double digits, and this will pose a major challenge in the coming years, and according to my analysis, 2025 would be a tough year. While debts continue to rise, growth continues to be a question mark. We seem to be failing to understand the real problems facing the nation, and more over, we are oblivious to the challenges appearing on the horizon.

Household Savings Continue to Decline

Over the past decade, India’s household savings rate has experienced a notable decline. In the fiscal year 2022-23, net household financial savings dropped to 5.3% of GDP, down from 7.3% in 2021-22, marking the lowest level in 47 years. 

Glaring to note:

  • Increased Household Debt: There has been a significant rise in household borrowing, with annual borrowings reaching 5.8% of GDP in 2022-23, the second-highest level since the 1970s. A substantial portion of this debt comprises non-mortgage loans, including those for consumption purposes such as credit cards and consumer durables. This is alarming for any LMIC!
  • Shift from Financial to Physical Assets: Households have been reallocating their savings from financial instruments to physical assets like real estate and gold. This shift has contributed to the decline in net financial savings, as investments in physical assets are less liquid and not readily available for productive investments in the economy. 
  • High Inflation Rates: Elevated inflation has eroded purchasing power, compelling households to dip into their savings to maintain consumption levels. The Consumer Price Index (CPI) averaged 6.7% in 2022-23, higher than the 10-year average of 5.4%, intensifying the pressure on household finances. 

This decline in household savings poses challenges for the Indian economy, including reduced funds available for investment, potential increases in borrowing costs, and heightened financial vulnerability among households.

HNIs continue to leave

Over the past decade, there has been a notable increase in the number of Indians renouncing their citizenship to settle abroad. According to government data, more than 1.6 million Indians have given up their citizenship since 2011. In 2022, a record 225,620 individuals renounced their Indian citizenship, marking the highest annual figure to date. This trend continued in 2023, with 216,219 Indians surrendering their citizenship. 

High-net-worth individuals (HNWIs) have been a significant segment of this emigrant population. In 2022, approximately 7,500 HNWIs left India, and an estimated 6,500 were projected to do so in 2023. The Henley Private Wealth Migration Report 2024 forecasts a net loss of 4,300 millionaires from India in 2024, indicating a sustained outflow of wealthy individuals. 

The primary destinations for Indian emigrants have been the United States, the United Kingdom, Canada, Australia, and the United Arab Emirates. Factors influencing this migration include the pursuit of better education and employment opportunities, favorable tax regimes, higher standards of living, and enhanced global mobility. For instance, in 2023, the UK reported that Indian nationals accounted for 253,000 non-European Union immigrants, making them the top non-EU nationality for immigration into the UK. 

In summary,over the past decade, there has been a significant increase in the number of Indians, including high-net-worth individuals, emigrating to countries like the United States, the United Kingdom, Canada, Australia, and the United Arab Emirates, driven by various factors such as better opportunities and living standards.

NPAs – Debt Waivers

Over the past decade, Indian banks have written off substantial amounts of non-performing assets (NPAs). Between the financial years 2014-15 and 2023-24, banks wrote off approximately ₹12.3 lakh crore in loans. Notably, public sector banks (PSBs) accounted for ₹6.5 lakh crore of these write-offs during the last five years (FY20-FY24). 

The State Bank of India (SBI), holding nearly 20% of the market share in India’s banking sector, led these write-offs with ₹2 lakh crore during this period, followed by Punjab National Bank (PNB) with ₹94,702 crore. The peak year for write-offs was FY19, with banks writing off ₹2.4 lakh crore.

Inflation continues to be high

Over the past decade, India’s inflation has exhibited variability, influenced by factors such as food prices, global economic conditions, and domestic demand. In 2014, the inflation rate was 6.6%, which decreased to 3.3% in 2017, reflecting effective monetary policies and favorable economic conditions. However, by 2020, inflation rose to 6.6%, driven by supply chain disruptions and increased food prices. In 2022, it further escalated to 6.7%, before slightly declining to 5.6% in 2023. 

A significant contributor to this inflationary trend has been the volatility in food prices, often exacerbated by erratic weather patterns affecting agricultural output. For instance, in July 2023, abnormal monsoon rainfall led to a sharp increase in food prices, notably tomatoes, causing inflation rates to spike. 

The real growth of India may be less than what we see as GDP Growth, as the data on which this is calculated is neither comprehensive not accurate, and the current growth rate is grossly inadequate for India’s sustenance and coming out of the Lower-middle-income country status.

Growth continues to be low

India’s average GDP growth rate over the past decade (2013–2023) has been approximately 5.5%–6.0% per year.

The above analysis presents an overview of the current situation in Bharat, and this is what we need to consider planning for Viksit Bharat.

In 2020, i wrote a detailed analysis about how to Make India a Developed Country in the next 25 years. We need a GDP growth between 13.3 – 16% to achieve the vision of Developed Country by 2047. This book has the Vision, Data and Plan for making India a developed country. This book was released by Dr. Mohan Bhagwat ji in August 2020. Listen to what he spoke about this book https://www.youtube.com/watch?v=ZIgVaN5VLjk&pp=ygUjTW9oYW4gYmhhZ3dhdCByYWplbmRyYSBwcmF0YXAgZ3VwdGE%3D

We stand at a critical juncture on our journey toward becoming a developed nation (Viksit Bharat) by 2047. We need grow at double digit to achieve a developed nation status by 2047 and we just have 22 years.

The current economic model needs a total transformation. We are creating a pathway for Viksit Bharat and will build upon the strategic framework we released in 2021 and 2022. We have so many opportunities to work upon, and I look forward to engaging with you on this important mission mode project.

It is our country, and we have to work together to reverse the situation. I look forward to working with you to fast-track India’s march into Viksit Bharat.

Wish you a great year ahead.

Dr. Rajendra Pratap Gupta, PhD

Founder

Viksit Bharat Abhiyan

http://www.viksitbharat.org

#viksitbharat #developedindia #India #bharat #2025 #HappyNewYear #RajendraPratapGupta #GDP #EconomicGrowth #IndianEconomy #Budget2025 #Indiain2050 #Indiaat100 #Indiain2047 #mohanbhagwat #rss #bjp #manifesto

The Titanic is Sinking . Can we do something ?


Global Economic Outlook 2013

http://www.conference-board.org/data/globaloutlook.cfm

The global economy has yet to shake off the fallout from the crisis of 2008-2009. Global growth dropped to almost 3 percent in 2012, which indicates that about a half a percentage point has been shaved off the long-term trend since the crisis emerged. This slowing trend will likely continue. Mature economies are still healing the scars of the 2008-2009 crisis. But unlike in 2010 and 2011, emerging markets did not pick up the slack in 2012, and won’t do so in 2013. Uncertainty across the regions – from the post-election ‘fiscal debate’ question in the U.S. to the Chinese leadership transition and reforms in the Euro Area – will continue to have global impacts in sluggish trade and tepid foreign direct investment.

Main results:

  • Across the advanced economies, the Outlook predicts 1.2 percent growth in 2013, compared to 1.1 percent in 2012. The slight uptick is largely due to Europe, which is expected to return to very slow growth of 0.3 percent after the -0.2 percent contraction in 2012. U.S. growth is expected to fall from 2.2 percent in 2012 to 1.6 percent in 2013.
  • In the medium-term, the outlook expects the U.S. and other advanced economies to go some ways toward closing large output gaps – that is, the difference between current output and the level of output an economy can produce in a noninflationary way, given the size of its labor force and its potential to invest in and create technological progress. The current output gap is a result of weak demand due to the 2008-2009 crisis. This development should allow the U.S. to average 2.3 percent annual growth during 2013-2018 before falling to 2.0 percent in 2019-2025. In the same two periods, Japan is expected to grow at 0.9 percent per annum.
  • A more significant slowdown is expected for less mature economies over the next year – and beyond. Overall, growth in developing and emerging economies is projected to drop from 5.5 percent in 2012 to 5.0 percent in 2013, with growth falling in China from 7.8 to 7.5 percent and in India from 5.5 to 4.7 percent. From 2019-2025 emerging and developing countries are projected to grow at 3.3 percent.
  • The long-term global slowdown we project to 2025 will be driven largely by structural transformations in the emerging economies. As China, India, Brazil, and others mature from rapid, investment-intensive ‘catch-up’ growth to a more balanced model, the structural ‘speed limits’ of their economies are likely to decline, bringing down global growth despite the recovery we expect in advanced economies after 2013.

StraightTalk®

Global Outlook for Growth of Gross Domestic Product, 2013-2025 (May 2013)

Europe includes all 27 current members of the European Union, as well as Iceland, Norway, and Switzerland.
**Other advanced includes Canada, Israel, Korea, Australia, Taiwan, Hong Kong, Singapore, and New Zealand.
***Southeast Europe includes Albania, Bosnia & Herzegovina, Croatia, Macedonia, Serbia & Montenegro, and Turkey.
Source: The Conference Board Global Economic Outlook 2013, May 2013 update

Global Outlook for Growth of Gross Domestic Product, 1996-2013 (May 2013)

1996 – 2005

2006 – 2012

2012

2013

Distribution of World Output 2012

GDP Growth

Contribution to World GDP growth****

Projected GDP Growth

Contribution to World GDP growth****

Projected GDP Growth

Contribution to World GDP growth****

Projected GDP Growth

Contribution to World GDP growth****
United States

18.2%

3.3

0.7

1.1

0.2

2.2

0.4

1.6

0.3
Europe*

20.3%

2.4

0.6

0.9

0.2

-0.2

0.0

0.3

0.1
of which:
Euro Area

13.8%

2.2

–

0.7

–

-0.5

–

0.1

–
Japan

5.6%

1.0

0.1

0.2

0.0

0.6

0.0

0.8

0.0
Other advanced**

7.2%

4.0

0.3

3.0

0.2

2.2

0.2

2.8

0.2
Advanced Economies

51.3%

2.7

1.7

1.2

0.7

1.1

0.6

1.2

0.6
China

16.4%

8.1

0.6

10.4

1.3

7.8

1.2

7.5

1.2
India

6.3%

6.5

0.3

7.8

0.4

5.5

0.3

4.7

0.3
Other developing Asia

5.3%

3.9

0.2

5.0

0.2

5.3

0.3

5.0

0.3
Latin America

7.7%

2.8

0.2

3.7

0.3

3.1

0.2

3.0

0.2
Middle East

3.7%

4.6

0.1

4.3

0.2

5.5

0.2

2.2

0.1
Africa

3.3%

4.6

0.1

4.7

0.1

3.7

0.1

4.2

0.1
Russia, Central Asia and Southeast Europe***

5.9%

4.0

0.2

4.0

0.2

3.6

0.2

2.9

0.2
Emerging and Developing Economies

48.7%

5.0

1.8

6.5

2.8

5.5

2.6

5.0

2.4
World Total

100.0%

3.6

3.5

3.2

3.0

*Europe includes all 27 current members of the European Union, as well as Iceland, Norway, and Switzerland.
**Other advanced includes Canada, Israel, Korea, Australia, Taiwan, Hong Kong, Singapore, and New Zealand.
***Southeast Europe includes Albania, Bosnia & Herzegovina, Croatia, Macedonia, and Serbia & Montenegro, and Turkey..
****The percentage contributions to global growth are computed as log differences and therefore do not exactly add up to the percentage growth rate for the world economy.
Source: The Conference Board Global Economic Outlook, May 2013 update.

Comparison of Base Scenario with Optimistic and Pessimistic Scenarios, 2013 – 2025 (May 2013)

2013 – 2018

2019 – 2025

GDP Growth in Optimistic Scenario

GDP Growth in Base Scenario

GDP Growth in Pessimistic Scenario

GDP Growth in Optimistic Scenario

GDP Growth in Base Scenario

GDP Growth in Pessimistic Scenario

Distribution of World Output 2025
United States

2.5

2.3

2.1

2.4

2.0

1.6

18.3%
Europe*

1.5

1.2

0.8

1.6

1.3

0.9

17.4%
of which:
Euro Area

1.4

1.1

0.8

1.6

1.3

1.0

12.0%
Japan

1.3

0.9

0.5

1.2

0.9

0.7

4.8%
Other advanced**

3.5

2.6

1.7

2.5

1.8

1.2

7.3%
Advanced Economies

2.1

1.8

1.4

2.0

1.6

1.2

47.8%
China

8.0

5.8

3.7

4.9

3.7

2.5

22.7%
India

5.7

4.7

3.6

4.5

3.8

3.2

8.2%
Other developing Asia

6.4

5.0

3.6

5.5

4.4

3.2

4.9%
Latin America

3.9

3.2

2.5

3.4

2.8

2.2

7.1%
Middle East

2.7

2.5

2.3

2.5

2.3

2.0

2.5%
Africa

5.1

4.1

3.2

5.0

4.1

3.2

2.6%
Russia, Central Asia and Southeast Europe***

3.1

2.1

1.2

2.1

1.5

1.0

4.1%
Emerging and Developing Economies

5.7

4.4

3.0

4.2

3.3

2.5

52.2%
World Total

4.0

3.1

2.2

3.3

2.6

1.9

100.0%

*Europe includes all 27 current members of the European Union, as well as Iceland, Norway, and Switzerland.
**Other advanced includes Canada, Israel, Korea, Australia, Taiwan, Hong Kong, Singapore, and New Zealand.
***Southeast Europe includes Albania, Bosnia & Herzegovina, Croatia, Macedonia, Serbia & Montenegro, and Turkey.
Source: The Conference Board Global Economic Outlook 2013, May 2013 update

Indian Prime Minister Manmohan Singh said the country’s economic slowdown was cyclical and temporary and that pessimism was unwarranted.

Many economists say hurdles to growth stem from the government’s slow pace of policy reforms as well as the country’s crumbling infrastructure and layers of red-tape.

India’s economic troubles are reflected in its gaping fiscal deficit, persistently high inflation and pessimism among businesses and consumers. This has driven down investments and demand.

Uncertainty in developed markets hasn’t helped. India’s exports, which account for about a fifth of its gross domestic product, have slowed sharply over the past year. Meanwhile, the country’s import bill has swelled, leading to a record-high current account deficit at 6.7% of GDP in the October-December quarter.

Eurozone  is a signal that worst is yet to come ?

 

http://articles.timesofindia.indiatimes.com/2013-06-01/europe/39673930_1_unemployment-rate-youth-unemployment-unemployment-figures

Unemployment across the 17 European Union countries that use the euro hit another record high in April – and appears to be on course to hit 20 million this year in what would be another gloomy landmark for the currency bloc.

Eurostat, the EU’s statistics office, said on Friday that the unemployment rate rose to 12.2% in April from the previous record of 12.1% the month before. In 2008, before the worst of the financial crisis, it was around 7.5%.

A net 95,000 people joined the ranks of the unemployed, taking the total to 19.38 million. At that pace, unemployment in the currency bloc – which has a population of about 330 million – could breach the 20 million mark by the end of the year.

The unemployment figures mask big disparities among the euro countries. While over one in four people are unemployed in Greece and Spain, Germany’s rate is stable at a low 5.4%.

The differences are particularly stark when looking at the rates of youth unemployment. While Germany’s youth unemployment stands at a relatively benign 7.5%, well over half of people aged 16 to 25 in Greece and Spain are jobless. Italy’s unemployment rate hit its highest level in at least 36 years to over 40%.

“Youth joblessness at these levels risks permanently entrenched unemployment, lowering the rate of sustainable growth in the future,” said Tom Rogers, senior economic adviser at Ernst & Young.

By contrast the US economy has been growing steadily since the end of its recession in June 2009 and the jobs market has started to improve, with the unemployment rate falling to 7.5% in April.

The asset quality is declining in tandem with the economic cycle : http://www.livemint.com/Opinion/JdBQccPTowuvisdqj9guXN/The-deterioration-in-Indian-banks.html

The financial problems of Indian companies are now being reflected in the asset quality of banks that have lent them money.

The disappointing fourth quarter results announced by the State Bank of India in May are perhaps the starkest example of how the financial condition of Indian banks has deteriorated in tandem with the economic cycle. A recent report by India Ratings and Research, an arm of Fitch Ratings, predicts further deterioration—Rs.1.26 trillion of bank loans may potentially be in distress over the next 12 to 24 months, it says.

The Reserve Bank of India (RBI) has done well to begin making it tougher for banks to brush their problems under the carpet. The central bank on Thursday tightened the rules for corporate debt recasts, asking banks to set aside more money for restructured loans as well as making promoters of companies personally liable for loan losses. This follows an earlier decision in November to increase provisioning for restructured assets.

Non-performing loans have been climbing. The problem of restructured assets has also been increasing over recent quarters. The total value of restructured loans in bank books under the corporate debt restructuring facility was an estimated Rs.2.29 trillion in March. There are an additional Rs.1.7 trillion of loans that have been restructured on a bilateral basis between individual banks and their troubled borrowers, according to unofficial estimates.

Such restructured loans as well as the usual bad loans now weigh down bank balance sheets.

The recent moves to raise the cost of loan restructurings—or the withdrawal of regulatory forbearance—is an implicit signal from the central bank that problem loans will not disappear in a jiffy. It usually makes sense to give lenders breathing space to put their loan books in order when companies are hit by a temporary downturn. A few quarters of leniency can help companies get back to their loan repayment schedules quickly. But it is now increasingly clear that the Indian economy is in the midst of a long slowdown, so banks will need to be far tougher with problem loans.

The rise in problem loans should not come as a surprise. It is the inevitable aftermath of a credit boom, as is the case in other economies as well. Loan growth in India was around twice of nominal gross domestic product in the years that immediately preceded the 2008 crisis, a sure sign of effervescent lending. Part of this unusual buoyancy in lending can be explained by the decisions taken within banks but the pressure from New Delhi to step up lending in those exuberant years was also a factor. This is the moment of the inevitable hangover.

What now? A quick improvement seems unlikely. First, it seems that India has still not seen the bottom of the credit cycle. Second, the standard metrics on the ability of companies to service their debt (such as interest cover and free cash flow) are also flashing amber. Third, a sharp reduction in interest rates seems unlikely despite the unexpectedly sharp drop in inflation in recent months. Our assessment is that asset quality in Indian banks will continue to deteriorate for at least a few more quarters (though rising bond prices as a result of a fall in long-term yields could provide some buffer to banks that collectively own more than a quarter of their assets in bonds).

The asset quality of banks is closely related to the state of the underlying economy, which is now in the midst of a structural slowdown. The recent regulatory tightening should be examined against this backdrop, as a recognition of the true state of the Indian economy.

Investors too should welcome the stricter measures, because the regulatory forbearance we saw after 2009 was an attempt to postpone the day of reckoning, when a bank has to take a hit from its problem loans.

FDI inflows declining and rupee depreciating

http://www.thehindu.com/business/Economy/fdi-dips-by-38-to-224-bn-in-201213/article4775276.ece

Government’s efforts to promote India as an investment destination does not seem to be yielding fruits as FDI inflows registered 38 per cent decline to $22.42 billion in 2012-13 compared to the previous year.

FDI inflows were worth $35.12 billion in 2011-12.

The government had taken several policy decisions in the past few months to attract foreign investments. Important among these include allowing FDI in multi-brand retail and civil aviation sectors and seeking legislative approval for increasing FDI cap in insurance and pension sectors.

In March this year, the country had attracted $1.52 billion FDI, taking the total to $22.42 billion in the entire financial year, an official in the Department of Industrial Policy and Promotion (DIPP) told PTI.

Sectors which received large FDI inflows during 2012—13 include services ($4.83 billion), hotel and tourism ($3.25 billion), metallurgical ($1.46 billion), construction ($1.33 billion), automobiles ($1.53 billion) and Pharmaceuticals ($1.12 billion), the official added.

India received maximum FDI from Mauritius ($9.49 billion), followed by UK ($7.87 billion), Singapore ($5.25 billion), Japan ($2.97 billion) and United States ($1.11 billion).

According to industry experts, there is a need to improve business environment in the country.

In November 2012, India attracted FDI worth $1.05 billion, which was two—year low.

India would require around $1 trillion in the next five years to overhaul its infrastructure sector such as ports, airports and highways to boost growth.

Decline in foreign investments could put pressure on the country’s balance of payments and may also impact the value of the rupee.

Rupee declined by 12 paise to end at 11—month low of 56.50 against the US dollar on Friday amid worries over current account deficit and GDP growth.

With FII outflows of $90 million in stocks, RBI’s poor inflation outlook and GDP growth rate falling to decade’s low of 5 per cent pushed the rupee downwards to 56.76 — its lowest since June 28, 2012.

Economic growth rate slipped to a decade low of 5 per cent in 2012—13 due to poor performance of farm, manufacturing and mining sectors.

GDP growth in Jan- March is a mere statistical growth due to base affect ?

http://www.livemint.com/Opinion/DuHmUO6Inoyspt254OeGWJ/GDP-growth-improves-a-tiny-bit-aided-by-smoke-and-mirrors.html

Has the economy turned the corner? That’s the big question the gross domestic product (GDP) numbers were supposed to answer. Has it indeed bounced off a bottom? At first glance, the answer to that question seems to entirely depend on your measuring rod. For instance, if we take the quarterly estimates of GDP at 2004-05 market prices from the expenditure side, we find real GDP growth was 3.4% in the June quarter, 2.5% in the September quarter, 4.1% in the December quarter, and 3% in the March quarter. By that yardstick, the economy hit a bottom in the September quarter of 2012-13, bounced back in the next, and then fell back again in the March quarter. The rather dubious consolation is that this yardstick is well known to be dodgy and the credibility of the expenditure-side GDP figures is rather low.

Going back to the more credible GDP data at factor cost, we find growth was 4.8% in the March quarter, a mite higher than the nadir of 4.7% reached in the preceding quarter. That would indicate that the economy has indeed bounced off a bottom, a very weak bounce, more of a twitch really.

The problem, as usual, lies in the base effect. It’s true that real GDP growth at factor cost was 4.7% in the third quarter and 4.8% in the fourth quarter compared with a year ago. That 4.7% growth was on top of 6% growth in the third quarter of 2011-12, while the 4.8% growth was on top of a much-lower 5.1% growth in the fourth quarter of 2011-12. Even the feeble bounce was entirely statistical.

The same holds true for several of the sectors. Growth in manufacturing, for example, has moved up slowly and steadily from minus 1% in the first quarter of 2012-13 to 2.6% in the fourth quarter. That looks like a decent recovery. The problem is that in the first quarter of 2011-12, manufacturing growth was 7.4% and it was a mere 0.1% in the fourth quarter of that year. In short, the entire credit for the growth in manufacturing goes to the base effect.

Apart from agriculture, with its seasonal vagaries, are there any sectors that have bucked the base effect? The financing, insurance, real estate and business services segment seems to have done just that. It grew by 9.1% in Q4, 2012-13, on top of 11.3% growth in the year ago quarter. Compare that to its much-lower 7.8% growth in Q3, 2012-13, on top of 11.4% growth in the year ago quarter.

On the other hand, there are several sectors that have done badly in spite of a favourable base effect. Consider electricity, gas and water supply, whose growth rate has gone down from 4.5% in the third quarter of 2012-13 to 2.8% in the fourth, although growth in this sector in Q4 of the previous year was much lower than in Q3 that year. This clearly shows the impact of supply-side problems in the power sector. Similarly, growth in trade, hotels, transport and communication slackened a bit in the fourth quarter compared with the third, despite a favourable base effect. Community, social and personal services, a proxy for government expenditure, unsurprisingly saw tepid growth as the fiscal deficit came down.

How much did the different sectors of the economy contribute to GDP growth in 2012-13? As much as 35% of the growth was generated by the trade, hotels, transport and communication sector, closely followed by financing, insurance, real estate and business services, which accounted for 31.3%. The community, social and personal services segment contributed 16.8% of the growth. It means these three service sectors contributed a huge 83.1% to growth last fiscal year.

Contrast the miserable performance of manufacturing, which accounted for a mere 3.3% of growth. The construction sector contributed more than double that. As a matter of fact, agriculture, forestry and fishing generated 5.4% of last year’s growth, more than the share of manufacturing. The contribution of the mining sector was negative, because of the court-directed closure of mines. The chart shows the contribution from the different sectors. Clearly, mining is the weakest link, closely followed by manufacturing.

The Central Statistical Organisation also seems to have been bang on target with its estimate of 5% real GDP growth at factor cost for 2012-13. A closer examination shows, however, that it had overestimated growth in manufacturing, mining, electricity, gas and water supply and, to a minor extent, in community, social and personal services, and underestimated growth in trade, hotels, transport and communication. That the overall growth rate came out exactly as it predicted can be attributed to an extraordinary stroke of luck.

 

India’s growth slows down – India is running out of fuel ?

http://timesofindia.indiatimes.com/business/india-business/Its-official-Indian-economy-slowed-to-a-10-year-low-of-5-in-2012-13/articleshow/20374920.cms

The Indian economy grew at its slowest pace in a decade in 2012-13, posing another fresh challenge for the UPA coalition to revive growth and boost sentiment ahead of the general elections next year.

Data released by the Central Statistical Organization (CSO) on Friday showed that the economy grew 5% in 2012-13, compared to 6.2% expansion in the previous year. It was in line with the advanced estimates released earlier.

The economy grew 4.8% in the January-March period, the fourth quarter of the 2012-13 fiscal year, marginally above the upwardly revised 4.7% expansion in the previous quarter, providing some hope of a tentative turnaround. But the overall economic scenario still remains challenging and the GDP data should come as a wake-up call for the government.

The CSO numbers are also an embarrassment for the finance ministry which had questioned the statistics office’s methodology and expressed doubts about the advanced estimates.

The finance ministry had slammed the CSO for forecasting 5% growth for 2012-13. Finance minister P Chidambaram had said the estimate of 5% was based on “dated data”. He had said that growth would be closer to 5.5% and had exuded confidence that green shoots of recovery were visible in the economy.

The high current account deficit, which widened to 6.7% in the December quarter, and stubborn inflation has acted as obstacles to easing monetary policy aggressively. While the Reserve Bank of India has cut interest rates it has cautioned about the persisting inflationary pressures and risks still facing the economy.

What has been most disappointing is that industrial output growth in 2012-13 has been a mere 1%, posing a threat to job creation and overall growth.

Friday’s data showed the farm sector rose 1.9% in 2012-13 compared to 3.6% in the year-ago period while the crucial manufacturing sector grew 1% compared with 2.7% expansion in 2011-12.

The services sector, which accounts for nearly 60% of the economy, rose 7.1% in 2012-13 compared to 8.2% growth in the year-ago period.

 

CDR gives an indication that the corporate sector is crashing !

http://www.livemint.com/Industry/h7u6wQngeSZ6jL8MfCBpGL/Restructured-loans-cross-227-trillion-pace-slows.html

The latest data from the CDR cell suggests that Indian banks added Rs. 15,016 crore of restructured loans in the March quarter, about Rs. 9,000 crore less than what they had done in the pre ceding quarter. On a cumulative basis, total restructured loans crossed Rs. 2.27 trillion, or 4.4% of the total loans given by Indian banks.

Indian banks have been hit by a surge of bad loans in the face of declining economic growth, estimated at a decade’s low of 5% in the year ended 31 March, project delays and high interest rates that have made it difficult for borrowers to repay debt. Lenders have been easing repayment terms to avoid classifying them as bad assets.

The CDR numbers do not reflect the actual pile-up of restructured loans in the banking system because lenders also recast loans outside the CDR platform, on a bilateral basis.

The aggregate figure for bilateral loan recasts is not available, but bankers said such recasts may nearly equal the CDR figure. That would take the total restructured assets of the Indian banking industry to around Rs.4 trillion.

In the whole of fiscal 2012-13, Indian banks restructured a total of Rs.77,101 crore of loans through the CDR route, nearly double the amount in the previous fiscal (Rs.40,000 crore). Analysts expect about 25-30% of such loans to turn bad.

Iron and steel contributed most to the restructured loan pile—23%—followed by infrastructure (9.65%) and power (8.13%). The textile, telecom and fertilizer sectors, and non-banking finance companies, too, are high on the list.

Despite a decline in the CDR numbers in the March quarter, bankers and financial sector analysts are sceptical about a sustainable revival at Indian companies. The pain associated with mounting bad loans is unlikely to ease at least in the next six months, they said.

Gross non-performing assets (NPAs) of 40 listed Indian banks rose to Rs.1.79 trillion in December fromRs.1.25 trillion a year ago, an increase of 43.1%. In the past, the Reserve Bank of India (RBI) had cautioned banks about the need for enhanced risk assessment tools to monitor loan quality.

Factory output shrinks 1st time in over 4 years .

http://in.reuters.com/article/2013/06/03/india-manufacturing-pmi-idINDEE95203N20130603

The sombre PMI findings came hard on the heels of data released on Friday that confirmed Asia’s third largest economy grew at its slowest pace in a decade in the fiscal year that ended in March.

The overall HSBC Manufacturing Purchasing Managers’ Index (PMI), which gauges business activity in Indian factories but not its utilities, sank to 50.1 in May from 51.0 in April, and was the third straight monthly fall.

Though the May reading was the lowest since March 2009, the overall index has held above the watershed 50 level that divides growth from contraction for over four years.

The reading for the factory production sub-index, however, showed output contracted in May from a month earlier as new orders growth slowed to a trickle. The output sub-index fell to 48.6 in May from 50.2 in April.

“Economic activity in the manufacturing sector slowed further in May as output contracted in response to softer domestic orders,” said Leif Eskesen, an economist with survey sponsor HSBC. Eskesen said power outages added to the drop in production

Defaults in Agricultural credit in another bubble ?

http://www.livemint.com/Industry/ph30HumD1FPAGaBj0XCOyH/Kisan-Credit-Cards-Bad-loan-bubble-waiting-to-burst.html

A surge in exposure to farm debt through Kisan Credit Cards (KCCs) could emerge as a risk for India’s state-run banks, according to experts.

Subsidized loans are given to farmers through KCCs by state-owned banks. Until March 2012, the outstanding amount on such loans was Rs.1.6 trillion through 20.3 million cards, as per the latest Reserve Bank of India (RBI) data. This may have risen to around Rs.2 trillion, bankers said.

Bad loans may be piling up at banks, but they don’t reflect on the books as the credit limit on such cards keeps increasing. Even if a borrower fails to pay up and the banks add the unrealized interest to the exposure because of the rising credit limits—typically 10% every year—the so-called capitalization of interest does not affect the status of the loan account.

State Bank of India (SBI) has the largest exposure to KCC loans—about Rs.44,000 crore— and 5% of this has turned bad, the bank said; Central Bank of India’s exposure isRs.8,428.05 crore and that of Bank of Maharashtra is Rs.2,045 crore.

According to RBI data, banks had Rs.33,200 crore overdue in the direct agrifinance portfolio till 2011 June. The latest figures are not available.

The credit culture in rural India deteriorated sharply after the government announced a Rs.70,000 crore debt waiver for farmers in the February 2008 budget.

The farm loan waiver was one of the United Progressive Alliance government’s key programmes in its first tenure and at least partly responsible for its return to power in 2009.

“Outstanding KCC loans have grown at around 33% in past two years while the number of credit cards has grown at around 13%,”

The share of agriculture, which once generated maximum jobs, has been shrinking as a percentage of national income in Asia’s third largest economy—from 35.75% in 1981 to 16.75% in 2012.

Agriculture is one of the largest sources of bad loans for most banks. It is contributing 9.72% to the gross NPAs of SBI and 7% of Central Bank of India. The nation’s largest lender SBI has the largest gross NPAs —Rs.53,457.79 crore, or 5.3% of loans, followed by Punjab National Bank (Rs.13,997.82 crore, or 4.61% of loans), Central Bank of India (Rs.8,938.47 crore, or 5.64% of loans) and UCO Bank (Rs.6,711.29 crore, or 5.53% of loans).

A bad monsoon could mean a dramatic turn for the worse as the June-September rainy season constitutes India’s main source of irrigation.

Brief summary :

  1. The financial problems of Indian companies are now being reflected in the asset quality of banks that have lent them money.

And the NPA’s are growing every hour.

  1. Government’s efforts to promote India as an investment destination does not seem to be yielding fruits as FDI inflows registered 38 per cent decline to $22.42 billion in 2012-13 compared to the previous year.
  1. The Indian economy grew at its slowest pace in a decade in 2012-13
  1. Industrial output growth in 2012-13 has been a mere 1%, posing a threat to job creation and overall growth.
  2. Factory output shrinks for the 1st time in over four years
  3. Farm sector rose 1.9% in 2012-13 compared to 3.6% in the year-ago period while the crucial manufacturing sector grew 1% compared with 2.7% expansion in 2011-12
  4. The services sector, which accounts for nearly 60% of the economy, rose 7.1% in 2012-13 compared to 8.2% growth in the year-ago period.
  5. The share of agriculture, which once generated maximum jobs, has been shrinking as a percentage of national income in Asia’s third largest economy—from 35.75% in 1981 to 16.75% in 2012.
  6. Until March 2012, the outstanding amount on Kisan Credit card loans was Rs.1.6 trillion through 20.3 million cards, as per the latest Reserve Bank of India (RBI) data. This may have risen to around Rs.2 trillion
  7. “Outstanding KCC loans have grown at around 33% in past two years while the number of credit cards has grown at around 13%,”

10. Gross non-performing assets (NPAs) of 40 listed Indian banks rose to Rs.1.79 trillion in December fromRs.1.25 trillion a year ago, an increase of 43.1%.

11. The total restructured assets of the Indian banking industry could be around Rs.4 trillion.

12. All the emerging or the sunrise industries are not earning enough to pay loans and this clearly shows that India is a oversold story . Iron and steel contributed most to the restructured loan pile—23%—followed by infrastructure (9.65%) and power (8.13%). The textile, telecom and fertilizer sectors, and non-banking finance companies, too, are high on the list.

13. Eurozone is passing through a crises that could worsen, and impact the Indian exporters

14. Rupee is depreciating, and is the worst performing currency in Asia

Overall, I stand by my assessment of the Indian economy in March 2012 (https://commonmansblog.com/2012/03/22/have-we-oversold-the-india-story/ ) and in October 2012 (https://commonmansblog.com/2012/10/11/india-from-emerging-to-a-submerging-economy/ )that India is an oversold story and should prepare for the worst times ahead . Also, I said on my blog in March about India facing a security threat , and we know what China did (https://commonmansblog.com/2013/03/03/economy-downgrade-and-downfall-both-are-a-foregone-conclusion/) .

I see no reason to believe that India will be back to normal before 2015-16, and that too, provided politicians become realistic . In the current environment , none of the political parties or the politicians have a plan to salvage the situation, and my prediction is , that  India’s growth rate might fall below 4 % .  The Indian Titanic is in mid of a turbulent sea, heading towards a more severe storm . The Titanic is sinking . Can we do something ?

Rajendra Pratap Gupta

http://www.commonmansblog.com

New Year might have plenty of bad news for the Economy


The New year ( 2012 ) will not be a good year for India . The industrial production is falling , interest rates have gone up , corruption is on the rise , inflation is going up, rupee is going down compared to the dollar, and the investment outlook for India is negative due to wrong policies pursued by the congress government over the past several years .

It is time to change and bring a fresh look at the fundamentals of the economic policy & social disbursements 

I was speaking with one of my friend from abroad , and he was of the view that USA / Europe  is headed for the worst and India is no better off ! Hope it is not true !

Hoping that things will change miraculously !

Rajendra Pratap Gupta 

 

 

 

FDI in retail – This is a harsh reality – Is FDI really a boon for India at this time ?


Government’s arguments for FDI in retail are a proof of the fact, that this government does not understand India, and looks at Indians from USA’s businessmen’s perspective. Congress government has become the biggest lobbyist for pursuing the business interest of nuclear & retail corporations from USA & Europe at the cost of India’s middle class

Today’s Economic Times (26th November 2011) headline ‘ Govt Sells Multi-Brand FDI with best bargains’ gives a list of reasons why the government is supporting, (rather pushing FDI ) in retail. Let me put the Common Man’s view and take on each of these arguments

1.     It will create 10 million jobs in the next 3 years

A) According to the CII report in 2007, ‘India will need 10 to 12 million skilled workers every year for the next five years to meet the growing demand from the support services and there is a need for strong intervention to ensure the availability of the workforce’. So is the government trying to say that it is only the retail chains that will create 10 million jobs in the next three years?

B) Let us examine how many jobs Wal-Mart created in America & how many jobs did Wal-Mart create in India for the past 3 years of operations both as a wholesaler and as a retailer ? How many jobs our Indian retailers like Future group, Aditya Birla retail and Reliance retail created in the past 3 years?  We will clearly see that they did not even create a million jobs!

C) Also, government does not talk how many Kirana stores will shut down in the next 5 years and how many homes will be denied of a source of income ?

D) Wal-Mart or for that matter any retailer works on the least number of workers per square feet (lean management structures ) ,and so it will kill the 50 Kirana stores thereby get at least 250 people out of jobs and then create 50 jobs per super market.  Is this factored in the statement? I am willing to prove this in the current retail scenario leave alone the scenario when the foreign retailers come in?

 2.     Several billion dollars of investment in retail

A) If retail is a great business, the government banks should give loans from domestic financial institutions and let the homegrown retailers grow and build scale and size and let the profits remain in India. Why should we give 51 % of the ownership to foreign players, as these people will sell to Indians and take the profits out of our country.  USA / Europe will solve their income and earnings problems and India will get into problems of high inflation and more volatile stock market. Also, Indian retailer being less than 50 % of their share in the retail will become servants to these MNC chains under the current 51 % FDI norms.

B) Why did the government not start with 26 % FDI in multi brand retail for the first five years? Why suddenly start with 51 %. Please justify?

C) Often it has been quoted that the foreign retailers will bring technical know how to Indian retail market and boost the economies of scale and productivity? Which technical know how is the government talking, it needs to explain? I have been a COO / Board member of a major fortune 20 company’s retail operations in India, and I can tell you that these foreign retailers only bring money and no other expertise! They work on high profits, highly automated environment and lean man power structures.  So government’s reason of the technical know how is fallacious and is showing that we Indians do not understand retail. Let us look inward and see our home-grown retailers like Future group and Aditya Birla retail .They are certainly growing . Government must bring out a detailed white paper on the so-called ‘Technical Know how’ these foreign retailers bring to Indian retail market?

D) With these billions of dollars coming in India, India’s real estate will become expensive thereby, contributing to keep the inflations levels high for the medium class not just for real estate but for all the sectors

E) Also, these billions of dollars are not charities to India or Indians . These are investments by retailers which follow a ROI ( return on investment concept ) for every dollar spent. So for sure , they people will invest in retail one dollar and take out 10 dollars from India over the next couple of years . Retail is mostly done on inventory management which is on credit from vendors . These retailers follow a credit cycle which ranges from 15 days to over month . So with a double-digit profit margin , these retailers will only be investing one time into infrastructure and then make money without investing at all ,as all the inventory is on a credit cycle . ‘Sell and pay’ is the mantra for these FMCG retailers ! Even the space which is rented by these retailers is leased to product companies for hefty display charges. These retailers charge a heavy fee for listing products in its store before selling .Our policy makers , wake up and understand the real dangerous game of FDI in retail and don’t get carried away by the billions of dollars of investment . It is not true . One time investment by these retailers will be a life long profit for their parent company’s home country

3) Farmers will get more than 12-15 % of the consumer price they get for fruits and vegetables

A)    In reality, farmers will never get a higher price but will be exploited by these MNC Chains  .In fact, these MNC retailers will push in for stringent quality checks and other prohibitively expensive conditions for these farmers thereby, forcing the poor Indian farmer out of his livelihood. Most of the retailers will take to contract farming, and thus the farmers will be reduced to being laborers in the hands of these MNC chains.

B)    The History of these MNC chains has shown the these chains are out to squeeze blood out of their vendors and farmers will certainly be vendors for these MNC chains and nothing else . Wal-Mart and other retailers are facing dozens of cases of exploitation and gender bias in developed country where the legal system is strong . Imagine what will happen in our country ?

4) Consumers will get producers at Cheaper Prices, as competition will bring down the prices

A)    Even without competition the prices will come down by a few paisas or may be a few rupees, but, all these chains will increase the MRP  (Maximum retail prices) of the products, and so the consumer will end up paying more than what s/he pays today. Take an example of the MNC pharma companies. Since there is a ceiling of price increase by 10 %, so every year the pharma companies increase the prices by 9-9.5 % and thereby, circumventing the price increase regulations.

B)    It is clear that the consumer is not a winner, no one pay’s from its pocket OR profits to the consumer. If there is a price increase on the input costs, the same is passed on to the as an increased MRP or the quantity is reduced for the same price. So the consumer’s pocket is always ripped apart by these retailers

 

5) 30 % mandatory sourcing from small-scale sector will help small industry

A)    This has not been a convincing argument, so we are trying to tell that a small company out of Varanasi will compete with HUL and win? Come on Dr.Manmohan Singh, are you trying to fool Indians? I understand that you studied at Oxford, doesn’t mean that rest of the Indians are going to get carried away with these statements

B)    Also, these MNC chains will put conditions that are either too stringent to be complied to or prohibitively expensive to be implemented by these SME’s, and so finally, these chains will find a reason to evade buying from these SME’s. Also, that the SME’s are not just limited to India, but across the world, so probably, Chinese SME’s would benefit more than Indian SME’s

C)    These retailers charge a heavy fee for listing products in its store before selling. How will SME’s afford that ? The fee currently for Indian retailers varies from few thousand to over a lac for products for companies . SME’s will never be able to benefit from these chains even if they are able sell to them, as they will pay for listing and then cry for the payment – which will depend on the vendor payment cycle varying for weeks to months and small vendors (SME’s ) cannot survive this big box retail game

6) 70 % of retail is in food items and these are mostly sourced locally

A) If 70 % of the retail is in food items and this is sourced locally, why allow 51 % of the profits to go out of India? So FDI should not have crossed more than 30 %!

B) Local Indian retailers (existing Kirana stores ) must be trained to deal in these food items and deliver better value for the country and its economy.

C) This argument of the government goes against its own policy. So whereas, 70 % of the products would be food items, 51 % profits from these categories would go out of our country, thereby, clearing pushing the inflation higher perpetually for the next couple of decades. As there will be less money in our country chasing more goods ( as money would have found its way to parent MNC)  – Simple economics Mr. Kaushik Basu!

 

7) Ikea already sourcing 30 % of inputs from India

A) So if Ikea is already sourcing 30 % inputs from India, let other chains also do the same before starting their shop in India.

B) If these MNC chains buy from India and sell in India and take 51% of the profits abroad, what is India’s gain? The government must come out clean on this?

8) Approval only after investors meet all conditions, including 50 % investment in back end

A) This statement of investment in backend is a foolish statement. Already 100 % FDI is allowed in wholesale, why justify it for retail and link it up? Let these retailers first invest in back-end for the first five years and next five years invest in front end

B) Government has FCI (Food corporation of India) godowns and what is the government doing for enhancing the efficiency of this biggest warehousing corporation – Can this FCI not  become the Cash and Carry for small retailers ? A drastic improvement in supply chain of FCI godowns can bring down the wastage of food grains by hundreds of tons if not thousands of tons. Please pursue the project of Mr.Atal Behari Vajpayee of Golden Quadrilateral and link up all the FCI godowns, and start a national Agriculture produce transport corporation to start weekly transport during the harvesting season from the farms to FCI and nearest towns. The farmers co-operative and IFFCO should manage this. With this, farmers will not only get good prices but the wastage will be reduced substantially. Why are you looking at FDI to solve this simple problem of inflation . This can not only solve the inflation problem but also improve productivity at all levels , create more jobs ( may be , millions of low & middle-income but high productivity jobs ) and reduce inflation .

C) Learn from ‘operation flood’ by AMUL and how it solved the shortage of milk problem of our country and created a world-class brand. See what M.S.Swaminathan did with ‘Green Revolution’ to increase the production of grains in our country. Please do not justify that foreign retailers will help you bring down inflation. Remember that ‘Inflation is reversible but FDI is not’ and do not sell our country to foreigners for a short-term gain of a few billion dollars to our economy. This is anyway not the dollars to our economy, but the investment of dollars to take back dollars. I am sure that all these MNC chains a ROI (return of investment) method of calculating the investment returns. So I wish to ask our government that what does the ‘retail FDI dollar’ bring to India, which Indian government cannot do with its own money?

9) Government will have the first right over procurement of farm produce

A) This statement has no value. Government has shown no concern for farmers except considering them as voters and leaving them at the mercy of rain gods.

Questions that the government must answer

  1. What has the government spent to train local Kirana stores in the past five years?  When yesterday only the government asked for Rs.56000 crore of the tax payers money despite a huge budget deficit, why did it not ask for even a Rs. 1000 crore for retailers training and up gradation?
  2. Why did the government not start with FDI in retail at 26 %? Why suddenly at 51 %? Has the government become a lobbyist for MNC chains?
  3. Has the government done its own independent studies for the impact of retail chains on Kirana stores?
  4. The biggest plank of allowing the FDI is that inflation will come down. So despite allowing FDI, if the inflation does not come down, will the government revoke FDI in retail? Does that rider appear in the CP (Condition Precedents) for allowing FDI in retail?
  5. Government needs to prove that FDI in retail can create million jobs every year. How and why, and which retailer will do that. All this must be put in the business case for allowing FDI? Why is government becoming the spokesperson for these MNC retail chains? What is the deal?
  6. Where and how much wills the retailers invest in back-end? This has not been specified?
  7. Why has the government not capped the retail margins of foreign retailers in India?
  8. See point 5 B, why have women self-help groups / handicrafts been excluded from being the beneficiaries of the retail entry
  9. Why are retailers not mandated to invest in retail training ?
  10. More questions to follow

Rajendra Pratap Gupta

Healthcare I Retail I Public Policy

Email:  office@rajendragupta.in , office.rajendra@gmail.com

Unhealthy Promotions- Banning toys with food products meant for Children


February 21, 2011.

Shri Ghulam Nabi Azad

Minister of Health & Family Welfare

Nirmal Bhawan, New Delhi – 110108

Subject: For Immediate action-banning of toys given as free gifts with food products & drinks, & framing guidelines on Child Health & Preventive care

Hon’ble Minister,

I am writing this important petition on behalf of the Disease Management Association of India – DMAI; The Population Health Improvement Alliance. DMAI is founded by global healthcare leaders to help improve the population health in India by focusing on the entire continuum of care.

In November 2010, during my visit to the US , I was with Senator Tom Daschle ( Senator Tom was nominated as Health & Human Services Secretary by President Obama , which he declined, and is often referred to as a senior Advisor & Mentor to President Obama). During the discussion, he asked me; how is India a better bet than China? I told him that, in the next three decades, while India will have majority of working age population, China will have one working person and three retired persons. This should put China in serious productivity issue!! India is the youngest nation today, with an average age of approximately 25.9 years, and this is often referred as a ‘demographic dividend’.

While statistically, India is having a tremendous demographic dividend , if we do not attend to the ‘ Child Health’ as a top priority , our demographic dividend will become a ‘Demographic Disaster’, as our working population would be ‘Unhealthy’ and thus drastically impact the productivity of the nation . This is the biggest hurdle for India to attend, if we need to overtake China in the long-term for being a developed & a vibrant economy

For Immediate action: Media has proliferated & children have dedicated channels on TV.They watch T.V. , which is flooded with animated cartoons & other Sci-fi serials, and children get fancied with such shows. The companies have started giving the characters associated with these shows as free gifts to entice the children to buy their food products and drinks. So children force their parents to buy the foods stuff or drinks just for the sake of these ‘Freebies’ , and they also consume these products, so that the parents do not scold them for spending so much on these food items !! Due to this, our children are fast becoming obese & unhealthy!! Just for the sake of an example , I am quoting my son who buys Mc Donald’s ‘Happy Meal’ just for the sake of getting the toy that comes free with it & I can see that he is least interested in the meal , but then he consumes the ‘Burger’ , and ‘Cold Drinks’ that comes with the ‘Happy Meals’ to ensure that next time he gets a chance to buy the Happy Meal from Mc Donald again and most importantly , get the free toy . He already weighs 40 KG at the age of 7 years. Luckily, he has joined the Gym with me. But imagine, the severely ‘Obese’ children that are a result of such ‘Unhealthy’ Promotions with food products meant for children. I have just quoted Mc Donald for the sake of example, but we have most of the companies selling ‘Unhealthy foods’ with promotions aimed at enticing children, playing for their ignorance and their intense desire for playing with toys!

Through this note, I call upon the policy makers to ban such toys and also the advertisements related to such promotions in national media with immediate effect. I also call upon the ‘responsible’ companies to sell & market their products for ‘nutritional value’ and not on ‘Unhealthy promotions’ or ‘Freebies’.

Also, the MOHFW should come up with “hand book on Preventive Healthcare for Children” below 12 years If we fail to take immediate and strict action now, our future generations will grow up to curse this generation for inaction, and the nation will be burdened by poor productivity and high healthcare costs with no signs of health ! It is a call to action . I do look forward to prompt action on the same from all the concerned.

If the policy makers fail to take action, DMAI will initiate a nation-wide campaign for such ‘unhealthy promotions’.

With best regards

Rajendra Pratap Gupta

CC.

Sonia Gandhi ,Rahul Gandhi , Dr.Manmohan Singh , Dr.Murli Mahohar Joshi , Shri Ghulam Nabi Azad Min,  for information & Broad Casting,  Montek Singh Ahluwalia,  Dr.Syeda Hameed,  Shri L.K.Advani , Smt. Sushma Swaraj,  Shri Dinesh Trivedi , Sitaram Yechury , Members of Parliament , Sam Pitroda , Secy, Health & Family Welfare, GOI , Dr. K. Srinath Reddy , Chief Minister’s of States,  Media

An Open letter to the Prime Minister


13th September 2010

Dr. Manmohan Singh

Prime Minister

Government of India

7, Race Course , New Delhi-110011

An Open letter from a common man

Dear Dr.Singh,

Namaskaar

I wrote you a letter on 14th February this year asking about creating wealth and employment ( available on my blog www.rajendragupta.wordpress.com ). Post that letter , i did hear Pranab da stating that we need to create wealth ……..but as always, i have not seen a concrete action plan post that “loaded statement”

For the past few months , i have been wanting to communicate to you what an ordinary Indian thinks about the current state of affairs, so that you can take appropriate action. Since so many things have happened, i will just randomly start than prioritizing any particular issue

Wastage of Food grains : In India , it has been a tradition of not wasting food on the plate . But we are wasting more than 50000 of tons of food grain and on the other side , we are having unprecedented and unchecked inflation. Conditions are revolting for the common man. If i was born in a deprived family , i would have become a ‘Civilian with a gun, out there to seek revenge’; what you can call as a naxalite !! But i have a very decent corporate job , i live with my family in Mumbai and i have a more sophisticated way to vent my anger with this note ( i presume that is the reason why we say that the Pen is mightier than the sword ! ). Else , for sure , i would be a more dreaded naxalite that Koteshwara Rao !! My social & financial standing prohibit me to think on those lines for moment  …………

Back to the point of the wastage of food grains , i am quite surprised that supreme court ( knowing well , that our courts are the most inefficient & corrupt  ). Still they felt that the government should distribute grains free than letting them rot and even passed an order . Not just the citizens but the court also believes that the government is a laggard when it comes to addressing the issues of the common-man & So it had to pass an order !)

What are the steps you are taking to ensure that this wastage does not happen again ?  Have you taken the FCI & Ministry of agriculture to task for a poor job on forecasting the production , planning storage and facilitating distribution of grains or exporting them rather than letting them rot when the country is facing a double digit inflation ? If i were in your position, i would sack the minister , the secretary of the Ministry & a bunch of senior officials responsible for the criminal waste and start the legal proceedings to penalise them & disqualify them from holding any post ever . So that no one would ever repeat this even for one KG of food grain, leave alone 50,000 tonnes. You seem to be enjoying as a silent spectator !!

Dr.Singh , how would you feel if your children or grand children slept hungry for a few days or just had one meal a day ? Do not forget that , 4 lac of children have their first birthday as their last  & 56 % of the women suffer from anaemia . All this is easily preventable . I wish your children were malnourished and then you became the Prime Minister

Honesty , inefficiency & Corruption : Dr.Singh, i sometimes wonder why people call you honest ! In my view , you are not  honest at all . Yes you might have some integrity ( though you have become morally flexible to a large extent ). Let me quote your silence on ministries handled by Mamta , Lalu, Raja,  Sharad and others……..if you were honest , you would never tolerate their incompetence and corrupt practices ! You are the patron ( rather the Head ) of this gang of inefficient ministers  . CBI has become ‘Congress Blackmail & Bachane ka institution” . When there is a show of strength in Lok Sabha or there is a need for support  , CBI goes to the Supreme court to withdraw cases against Mulayam , Maya and Lalu etc .  Whenever these people take congress to task , CBI starts knocking the door with charge sheets. Which honesty are you talking about Dr.Singh or are you selectively blind ?

Leadership abilities : You had once remarked that the history will judge you & not the opposition . Let me tell you that history would judge you as the most incapable leader who moved with the tide & sometimes it worked ( like in 1990’s ) and most of the time you failed miserably

Your party always projects you as the person who modernized India. Totally wrong !! In 1990’s , you were pushed against the wall with foreign exchange left for just a few days . Dr.Singh, you had no choice but to let the rupee devalue , and let the foreign investors bring money , and that too, was envisioned by PVNR ( who will never get his due share as he is was not from the Gandhi clan !! )

If you are such a great economist ( Look at your team: Finance minister is an economist , Home minister is a past finance minister , Montek is a finance man , In addition to this , you have Kaushik Basu, Raghuram Rajan etc….bunch of economic advisors ) . Then, why the hell are you all floundering !! You are all simply clueless about inflation and its solution!

I heard Pranab da saying yesterday that he was worried with inflation rising again !! He actually meant that he was failing ! I know that sometimes it is hard to put the right words, but public is not a fool Dr.Singh . We can make out what is underneath your statements .

Here is what historians would actually consider while rating you :

  1. Allegiance to the Gandhi clan and not to the nation
  2. Sharm-Al Shaikh & your love for Bush ( the residents of America hated the man and you loved him , i always fail to understand this one )
  3. Double digit Inflation ( You even failed as a astrologer here )
  4. Common Wealth Games fiasco
  5. Kashmir violence ( Worst thing to imagine is that house wives are on the streets pelting stones & Omar & you are on the same boat !! )
  6. Naxalites
  7. Relations with China ( Visa row clearly indicates that relations are at an all time low )
  8. US sanctions against outsourcing and increasing the VISA fees ( you just get flattered by Barack’s calling you ‘Guru’ , and you have gone overboard to get the nuclear deal through . Look at India’s past, and you will see that whenever India has faced sanctions , India has come out with its innovative research and developed the capabilities . Agni & Chandrayaan were built by Indian scientists. I don’t think that we should have surrendered our ‘Nuclear Sovereignty’ by signing the nuclear deal with a lot of riders and opening our sites for inspection to foreign powers …..You have let us down & undermined the capability of our scientists Dr.Singh ! Long term prospects of India of being the nuclear giant is gone with the deal . Without the deal , we could have taken longer but become stronger
  9. Relations with Pakistan , Nepal & Sri Lanka have gone at an all time low during your regime
  10. Farmers suicides are a blot to this nation
  11. Andhra Violence
  12. You are the only Prime Minister who has appointed & tolerated incompetent & disobedient ministers like Mamta , Sharad , Raja , Tharoor et al.

Under your Prime Ministership the political health, Social health & Economic health of the nation has touched a new low . I am not a fan of Advani , but when i see what Mani Shanker Aiyer did recently w.r.t. the Common Wealth Games or what Tharoor did a few months back or what Digvijay Singh has been saying about the Home minister or your own M.P’s criticizing the Kapil Sibal or Jagan defying congress and continuing with its Odarpu Yatra , i think Advani was right in saying that you are a weak Prime Minister . This is the worse government we have ever seen . The things have gone so bad that people curse you and your team . Even those who are well to do, are revolting in conscience and criticizing you …………you should be ashamed Dr.Singh  of still sticking in your chair . Media calls you night watch man !! I feel ashamed to mention the language common man uses for you .

Dr.Singh , you represent the ‘political culture’ of this nation . If you are silent ( or helpless  ) seeing  the corruption and inefficiency of the ministers who report into you , how can you expect the citizens of this nation to stand up against corruption and inefficiency ? You are leading by a wrong example . Please change it immediately or do not give talks that calls the people to stand up & raise voice , when you are silent and blind to acts of corruption , inefficiency and nepotism !!

Seeing what you have done , i can put here that you never could become a politician and failed , and also that the professor in you died as you could not convince your colleagues of looking after the nation as per the mandate given to your government .

Every minute you stay in office or every inch you move is financed by my taxes ( read common man’s tax money  ), and i have every right to question you about your indecision and decisions both . Please do not ignore the concerns of the common-man . Change your style of working , make changes in your cabinet , let the corrupt ministers go …….and do not do the mistake to pass off Rahul as a representative of youth for the nation ………He does not represent the youth , he represents the Gandhi’s

I expect you to act on this ……………you already have a detailed note sent out to you on Feb 14th about the steps you could consider to take in the interest of this nation . Else , resign and go. For sure , we will get a better Prime Minister ……..

Rajendra Pratap Gupta

Email: Office@rajendragupta.in

President@countryfirst.org

3G & the high speed downfall of the Telco’s


3 G spectrum has been over-sold . Keeping in mind the fact that,  the average yearly penetration of 3 G users has been highest at 5 % in developed countries like Japan. It took them 7 years to increase the penetration of 3G services to 35 %. India is a country with 150- 220 million middle income people , and not everyone requires 3G !!

In India , do we need high speed internet in our daily lives ? We are pretty okay with Blackberry,  emails and voice calls- Just 70 million internet users !!

Industry has perhaps gone overboard to pay “Obnoxious” sums for 3G spectrum.

To ensure profitability , 3G players will have to invade few sectors to make it viable ( trust me , it is a big challenge for immediate future  ). The sectors that need to be invaded are HEART ( Healthcare , Education & Entertainment , Agriculture ,  Rural India & Travel & Tourism , Telemedicine )

People have wrongly understood the first wave of telecom revolution . The first wave came because of the following

  1. Before the cell phones were launched , getting a land line from the government “monopoly” ( BSNL /MTNL ) was difficult – wait times was uncertain & services pathetic even after bribing the lineman the things would not work !
  2. ‘Rich’ people could afford the luxury of a ‘Cordless’ phone, that would have a coverage of 10 or 20 Feet . Suddenly , with a cell phone , people could roam with a phone across India or the world !! I think people in the telecom sector have believed that the craze for 3G would be the same as the first wave for cell phones !! But believe me , it will never happen . I have used cell phone since 1996 , when it was launched and paid an “Airtime’ of Rs.16.40 per minute + normal call rates !!
  3. The actual number of cell phone users are still as per what i call  the 1/3rd Rule ( we just have approximately 200 million cell phone users and not 654 Million, what the Telco’s & the government talk about  )
  4. Handsets to use the features of the 3G are not evolved as yet

Overall, paying and bidding for 3G was a lot easier than to manage the profits out of the networks using 3G. This will leave only two players doing something worthwhile ( Vodafone & “may be” , Mukesh Ambani ). Rest will have to work hard to avoid “Consolidation” of the industry

May be , some players will use 3G airwaves to enhance the voice quality

MNP ( Mobile number portability ) : MNP was delayed for obvious reasons !! But once the system is operational, it will crash due to the overload of the people applying for the same . There is a lot of anger amongst users for poor service quality . People will change the provider not for better service but to vent out anger at the existing service provider.  Some Telco’s will lose millions of users in months ( who gains in the long run is going to be a billion dollar question )  Time to wake up and take corrective action,  and innovate the services !!

Two big challenges 3G & MNP – Head ache of CEO’s of all Telco’s

3G might become the high speed to downfall – Thanks to the myopic government policies and over excitement of the bidders. May be , that’s the reason why MNC’s stayed out of the bidding. Perhaps, they will wait for some companies to bleed, and then, buy them out

Rajendra Pratap Gupta

Email : office@rajendragupta.in

Dr.Bamboo – Tall & impressive but hollow – Dr.Manmohan Singh


I think , Dr. Manmohan Singh is like a Bamboo . Tall & Impressive in stature , but hollow .

See what he is doing  ? All across, the country is failing but his image continues to be a hit !

China has decided to do a nuclear deal with our Pakistan ! India has failed to check it

America is not as friendly with India , as it is with Pakistan

Inflation is going up and the government is clueless

Naxalites control 1/6th of India

This government is a failed government and BJP is not reining in the government ! I fail to understand why BJP is not addressing the important issues !!

Dr. Manmohan Singh is the Bamboo Prime Minister !! Time to raise voice and get the right issues addressed

Rajendra Pratap Gupta

Email : office@rajendragupta.in

from CSR to ISR


Thanks  Paritosh,

Keep up your good work. I hope that the article is as per your request on the issue of Naxalites . Though , i have covered other issues as well.

Here is what i want to do next . Your newsletter reaches out to 2 lac people . Let’s bounce this to them and build upon this

For a prosperous India – Fixing accountability is the biggest challenge and how we can address it

All the money that we pay as taxes is frolicked by these politicians without any questioning or accountability

Consider  these examples :

  1. Air India & Indian airlines ( NACIL ) will lose this year Rs. 4500 crore . Does the public realise that we will pay for these loses from our pocket as increased taxes on our fuel , service tax , property tax etc ? The parliamentary committee has asked the Ministry to pay for these loses as they have resulted from a wrong decision to merge these two incompatible airlines . Should we not sell it off to avoid thousands of Crores as loses ?
  2. BSNL will lose a lot of money this year . While all private telecom players are making money and some are even open to acquiring foreign telecom companies . Why is BSNL losing money ? What has the government done to make it profitable ?
  3. Dr. Manmohan Singh , Our ‘honest but inefficient’ PM & his team delayed the auction of the 3G spectrum by almost two years which would fetch our nation some Rs.30,000.00 crore. This delay caused our nation a loss of atleast Rs.6000.00 Crores . Now imagine that it was just an action of air waves with no hard infrastructure to be built in ? This year 8 new services were added in the budget to raise another Rs.3000 crore . We as citizens will pay newer and more taxes for the inefficiency of these leaders ? Who is responsible for this loss to the citizens ?
  4. 7 out of 11 major projects announced by Mamta Banerjee have been given to West Bengal . This is when it will take another five years to connect the nation by railways ? No one asked her to justify the reasoning behind such an allocation !!
  5. Last year , in the budget ,  the health minister announced National Urban Health Mission and allocated money for the same . This year , the project was shelved . Why was this announced in the first place ?  No one has questioned why it was shelved
  6. Austerity drive for the bureaucrats & political leaders is over . Now they can travel business class.  On what basis has this decision been taken when we are falling short of budgeted revenue by thousands of Crores ? Public does not realise that it is our hard earned money that is being wasted. Domestic travel is on an average an 2 hours flight . Why should business class be offered at all. Infact, it should only be Economy class
  7. Mayawati is installing statues from the money that people like you and me pay as taxes.
  8. All ministers spend the largesse in their home constituency , while they represent the nation . They are biased .  Why are they not questioned and removed ?

Now the question is , do these politicians realise that it is not their personal money ?

Most importantly , do the people know that directly or indirectly we are paying for all this  from our hard earned money ? It is the money we pay as taxes that goes in such spending .

Every minute a politicians remains in office and every inch he or she moves , is funded by our money . Why do we not hold them accountable ?

I think , we need to form a tax payers association and ask these reckless spenders on everything they do that is a loss to us ?

We are paying more for food , fuels and more taxes with every year passing by, but there is no improvement in our lives . Nation is plagued by ‘Powerful announcement and powerless execution’

We cannot take all this with our eyes open and mouths closed.

Let us initiate the ‘Tax Payers Association’ and create education , awareness about all these and fix the accountability . Let’s fix this inefficient and corrupt national leadership  . it is time to change ‘CSR – Corporate social responsibility ‘ into ISR – ‘Individual’s social responsibility’

It is our people, our money and our nation . Let’s not sleep anymore

I had discussions with Praveen Khandelwal, Secretary , CAIT – largest traders body with 5000 Supporting organizations and he is keen to take this idea further.

Let’s do it

Best regards

Rajendra