Learn from Japan and not China …


I have been writing from the past many years that we need to have clear goals …. on one side rating agencies gave thumbs up to Japan and thumbs down to India signalling a downgrade ….. time for our highly educated and incompetent people to learn from Japan and stop aping China …… see the text below from the PM’s office from Japan… Our PM never visits a farmer but an italian …… at 10 Janpath 
 
Message from Prime Minister Shinzo Abe:

Yesterday in the speech I made on the second round of policies forming my Growth Strategy, I stated that we will double the income of agricultural enterprises and farming communities over ten years.

Losing no time, today I have come to a tea plantation in Oita Prefecture on the island of Kyushu. A construction firm newly launched agricultural operations, turning abandoned farmland into a beautiful tea plantation. Through a tie-up with a major beverage manufacturer, this company is now engaged in sixth-sector industry, extending its operations to processing, commercializing its products, and other areas.

I felt very strongly that people with drive are opening up new worlds within agriculture.

We will support agricultural enterprises that are working hard, aiming to make agriculture attractive to young people.
(Originally posted in Japanese at 13:10, May 18, 2013)

Wal-Mart & how it harms small businesses and communities – Fact sheet


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Wal-Mart, Small Business and the Community

* Predatory Pricing:  Basically, the higher Wal-Mart’s market share, the higher its prices.  Wal-Mart will go into a town, charge below cost until their competition is gone, and then raise prices.  Examples include Conway, AK where Wal-Mart’s attempted to undercut drug stores and Fresh Farms in Va. where the prices of goods near the competing supermarket were markedly lower than at another Wal-Mart 20 miles away without much competition.

For more info:

1) http://www.findarticles.com/p/articles/mi_m1038/is_n5_v38/ai_17565139

2) http://www.newrules.org/retail/news_archive.php?browseby=slug&slugid=28

* Economic Importance of Local Business:  Neighborhood businesses contribute to local charities, advertise in local papers, buy from local suppliers, utilize local professionals (e.g. accountants, lawyers), pay local taxes and are often homeowner in the community.  With this “multiplier effect” local business dollars are three times more likely to re-circulate within the community than those of mega-retailers like Wal-Mart.  Box stores often supply themselves from outside the community;

For more info:

1) http://www.newrules.org/retail/econimpact.html#1

* Sales Tax Revenue – Especially in New York City, Wal-Mart proponents often mention that people already shop at Wal-Mart in New Jersey so why not keep the tax dollars and shoppers in New York State?  Though convincing on the surface, this claim is flawed.  People shop in New Jersey because they pay a significantly lower sales tax, can fill up their car with less costly gasoline and buy their soda without a deposit.  Even with a Wal-Mart, consumers will continue to flock to surrounding areas as long as New York City maintains its high taxes and prohibitive business environment.  If pundits and politicians are concerned about the “leakage” of business, they should make it easier for all merchants to do business in New York , not encourage the building of megastores that threaten neighborhoods and put a strain on public resources.

* Cannibalization: Studies show that Wal-Mart, unlike claims to the contrary, draws most of its business from local stores, not from new shoppers (84%).

* Job Growth: Wal-Mart’s entry results in the replacement of entrepreneurs and local wholesalers with low paid clerks and out-of-town suppliers.  Where you once might have had a town with ten florists, each with numerous employees, you know have 1 Wal-Mart flower manager with a couple of low wage employees.  Moreover, because the company outsources so much of its production oversees, the United States continues to lose its manufacturing base and those put out-of-work either remain unemployed or have to take lower paying jobs.

For more info:

1) http://www.walmartfreenyc.com/cultural.pdf

* Quality of Life: Crime and Traffic– A major concern of residents all across the country is their quality of life.  Though box stores like Wal-Mart promise the benefits of low prices and one-stop shopping there are tremendous costs to the community.  Due to its immense size and inventory, Wal-Mart is often a magnet for crime and because it relentlessly pursues even minor offenses community police resources are taxed.  The 200,000 sq. ft. stores also bring with it incredible traffic as well as all the related problems of air pollution, asthma and the increased response time for emergency services.

 

For more info:

1) http://www.momandpopnyc.com/campaigns/walmart/articles/index.htm#crime

* Connection to the Community – Unlike Wal-Mart and other large box stores, small businesses are strongly rooted in the community and do not have the luxury of shutting down even if profits start to shrink.  Wal-Mart however, is only considering an overall bottom line and won’t think twice about closing stores, no matter the local effect.  It has also been known to open up a discount store, drive out all competition and then close that same store to open up a supercenter somewhere else.  Therefore, the community is deprived of both local business and its Wal-Mart.

For more info:

1) http://www.sprawl-busters.com/search.php?readstory=1757

* Government Subsidies: Wal-Mart, the largest retailer in the world, is the beneficiary of billions of dollars in incentives and tax breaks not available to smaller competitors. According to Good Jobs First, Wal-Mart receives over 1 billion dollars a year in subsidies and that only takes into account 244 stores and distribution centers for which data was available.  Contrary to what Wal-Mart proponents say, neighborhood retailers are not afraid of competition.  They are, however, worried when the government creates an unlevel playing field in favor of retail behemoths.
For more info:

1) http://goodjobsfirst.org/pdf/wmtstudy.pdf

* Health Care: More than two thirds of Wal-Mart workers do not participate in the company’s health plan, due to high premiums and deductibles.  In order to obtain care, many of these low wage earners turn to government-funded (i.e. taxpayer-funded) program, costing each and everyone one of us in the end.  Nearly 700,000 Wal-Mart employees rely on government programs and Wal-Mart workers and their families are the number one users of public healthcare in states such as Florida, Georgia, Iowa and Arkansas.

For more information:

 

1) http://www.walmartfreenyc.com/waronhealthcare.pdf

2) http://www.goodjobsfirst.org/gjfhealthcaredisclosure.htm

* Competition:  Though Wal-Mart is often held up as the standard-bearer for competition, its actions reveal a company that sees competitors as nasty inconveniences.  If Wal-Mart was truly competitive it wouldn’t demand enormous subsidies for a good number of its stores, subsidies that either aren’t available for or aren’t advertised to small business.  If Wal-Mart was truly competitive it wouldn’t price items below cost, force out competitors and then raise its prices again.  If Wal-Mart was truly competitive if wouldn’t pass along health care costs to taxpayers.   In a more general sense, because Wal-Mart has eliminated businesses large and small, it is creating a more homogenous marketplace, one bereft of diverse, competitive merchants.

* The Race to the Bottom: Devastating Impact on Supermarkets and other Businesses: During the past decade, over 13,000 supermarkets have closed, which led to the replacement of unionized workers earning family-sustaining wages with low-paid and under-benefited workers.  In Mississippi, a study found that in small towns in the state, five years after the opening of a Wal-Mart, the dollar volume of grocery store trade had collapsed 17%.  For the supermarkets and other businesses that remain open after a Wal-Mart has been built the affects can be just a detrimental.  As has been seen in California, St. Louis, Missouri, and Eugene, Oregon, Wal-Mart creates a “race to the bottom” by forcing competing stores to either lower their workers’ wages and benefits or face extinction.

For more info:

1) http://www.walmartfreenyc.com/waronhealthcare.pdf

* The Affect on America’s Downtowns and Commercial Districts – Wal-Mart has destroyed communities and cities. For example:

Author Al Norman describes the effect of Wal-Mart and Home Depot “When I went for a walk in downtown Toledo, I passed the old Lamson dry goods store: 9 stories of empty retail space. Each floor is the size of a football field. The building served as the home of a Macy’s Department store from 1924 to 1984. For the past fourteen years, the store has been empty. The City now owns it, which means the taxpayers of Toledo are paying the freight for its upkeep.”

Nowata, Oklahoma. In 1982, Wal-Mart opened a store on the outskirts of Nowata, a town of 4,000 people. Half of the small businesses in downtown Nowata shut down. Then in 1994, Wal-Mart abruptly closed this store, as well as another in a nearby town, and opened up a supercenter in Bartlesville, which is 30 miles away, leaving Nowata
prostrate.

* The Need for Economic Impact Studies – All of the abovementioned issues reinforce the need to conduct thorough and economic impact studies when large box stores want to build.  Wal-Mart claims that jobs are created but what is the nature of those jobs, how many jobs will be lost and how will existing jobs be affected?  Wal-Mart claims that the town or municipality will gain much needed tax revenue but does this potential benefit outweigh the subsidies, drain on public resources and traffic that results?  The only way to find the answer to these and other questions is a complete cost-benefit analysis.

Wal-Mart has been probed for bribing officials , so Wal-Mart is not just a wholesaler / retailer of products but also, a ‘wholesaler of corruption’

Time to rise up and say ‘ Back Off  Wal-Mart, India does not need you’

Rajendra Pratap Gupta

http://www.commonmansblog.com

Is it divestment or a buy back through a family controlled firm


On 8th February , 2013, i wrote about the ‘Oxytocin’ injections that the Government is giving to our economy to draw out milk…….here is the proof.

Life Insurance Corporation was the most dependable automated teller machine for the government in the past year, buying record amounts of bonds and stocks of public-sector firms. Which was shown as ‘successful divestment by the Government’.

The state-run insurer’s purchase of government bonds rose 20%, and it bought nearly 40% of the shares sold via offer for sale (OFS) in four out of total seven PSUissues, said people familiar with the investments.

Of the Rs 4.67 lakh crore raised by the government through securities, LIC provided over Rs 1.10 lakh crore, or 21.4% of the total figure.

LIC invested Rs 236 crore in Nalco (35% of the OFS size), Rs 142 crore in RCF (45%), Rs 608 crore in Hindustan CopperBSE 0.87 % (44%), Rs 923 crore in NTPCBSE -0.35 % (5%), Rs 1,069 crore in SAIL (71%) and Rs 282 crore in NMDCBSE 2.50 % (4.7%).

LIC had contributed 81% to the government’s Rs 14,000-crore mop-up from share sales in 2011-12 by investing Rs 11,400 crore in ONGC

LIC invests in government securities with a view to holding them till maturity, and mark-to-market losses in the interim are not good. It would be a good practice to evaluate returns on redemption each time it happens and compare it with benchmark government bond rates. “Any shortfall in the return should be compensated by the government,”

Also, LICs mandate to invest 50 % in Government securities should be re-looked .

So the big question is , was this really divestment or a ‘back door buyout’ & a ‘face saver’ from a state controlled financier with public money, which could have yielded better returns had the LIC invested into blue chip companies  . We all know that the state run PSUs will perform poorly when compared to other blue chip firms . Does it not warrant a CAG inquiry into the management ( mismanagement ) of LICs investments under duress ( from Chidambaram ) ?

LIC is failing in its fiduciary responsibilities to its investors ( people of this country who buy insurance policies from LIC ) , who invest Rs. 450 crore a day in LIC . Time to raise this issue and realise , that the actual divestment figure shown by the Government was a back door forced buyback by a family firm ( Government’s family firm- LIC )

Rajendra Pratap Gupta

http://www.commonmansblog.com

Source : http://economictimes.indiatimes.com/news/economy/finance/lic-turns-out-to-be-the-governments-atm-buys-record-amount-of-bonds-and-psu-stocks/articleshow/19313481.cms

Is Indian Government lying to the world about its fiscal condition ?


Last week , i was in Delhi and met up with two friends who gave me shocking news .

One friend works as a vendor to Ministry of Defence ( MOD ). He informed that the MOD is not in a position to pay for the orders already placed as there is no money available .Always, MOD was flush with funds , and this is happening for the first time in history

Also, a senior official of the Ministry of Health informed that , they are planning with money ! This means that there is no money with the ministry but meetings with regards to planning are going on

Corroborating these two meetings with RBI’s news ( dated 5th Nov , 2011)  that , RBI  cannot pay interest on CRR. I am afraid if India has already fallen off the fiscal cliff !

News web link is http://articles.economictimes.indiatimes.com/2012-11-05/news/34925243_1_reserve-ratio-percentage-of-deposits-banks-finance-ministry

By the way, Indian Government is borrowing at the rate of 1.5 lac rupees per second to run the Government this year . Nothing more to write . I believe that the Government owes an explanation

Has the country’s central bank ( Reserve Bank of India – RBI ) collapsed ?


On 22nd March 2012, i had written that we have ‘Oversold the India story’ https://commonmansblog.com/2012/03/ ) , and what i had predicted for the economy in the April , May and June quarter,  happened ! 

Again , on 11th October 2012, i wrote on my blog ‘How India was fast turning from a ‘Emerging economy’ to a ‘Submerging Economy’ ( web link  :  https://commonmansblog.com/2012/10/11/india-from-emerging-to-a-submerging-economy/ . Now , read the fact about our Central Bank . As i said earlier , i am not worried on the 2014 for elections , but for the economic scene that will unfold in 2013 for the average Indian middle class , we are building a disaster  & fooling ourselves ! It is a call to action !

On November 5th ,2012 ,  The Economic Times carried the report that , the country’s central bank , Reserve Bank of India ( RBI ) would run into losses if asked to pay interest on mandatory percentage of deposits banks have to park with the centre bank , called the Cash Reserve Ratio ( CRR).  The RBI has stopped paying interest on such mandatory reserves since 2007.  Finance ministry had suggested the bank to pay 7 % interest on these deposits . 

 Does it mean that the country’s central bank has collapsed ?  If yes , why have we not discussed this in parliament, and are looking at FDI and other ways like stake sales in PSU’s and auctions of the sovereign assets to hide this news and infuse money in the system . 

 
Prime Minister and Finance Minister owe and explanation to this nation on this issue .
 
 

NEW DELHI: The finance ministry has decided to review the expenditure and reserves position of the Reserve Bank of India (RBI) after the central bank indicated that it is not in position to pay interest on the reserves banks maintain with it.

A government official downplayed it as a routine review of the reporting structure and disclosure requirements of the RBI, but it comes at a time when there is already obvious tension between the finance ministry and the central bank over the conduct of monetary policy.

“It is the government which tables the annual report of RBI in Parliament, so there is nothing wrong if it (government) wants to know how RBI prepares its balance sheet. We are not questioning them or raising objections,” a ministry official said.

However, another finance ministry official admitted that the review started after the RBI had indicated that it would run into losses if asked to pay interest on mandatory percentage of deposits banks have to park with the central bank, called the cash reserve ratio (CRR). The RBI had stopped paying interest on such mandatory reserves since 2007.

The finance ministry had suggested that the RBI should pay 7% interest on these deposits, pitching it as a measure that will help lower rates even if the central bank does not ease monetary policy. It had argued that all major central banks either do not mandate a reserve ratio or pay an interest on the mandatory reserves they ask banks to set aside.

“RBI had made certain arguments. Now, we want to understand their expenditure sub heads, format of disclosures so that we both are on the same page,” the official said.

The government is studying RBI’s expenditure, revenue, contingency reserves and investments, he added. On Tuesday, the RBI dashed hopes of a rate cut, but lowered the cash reserve ratio (CRR) by 25 basis points to 4.25%.

Please check more eye-opening statistics on Indian Economy on my blog .

From January , 2013, i will be working full-time to figure out the economic model for India , that will take the country out of the current crisis

Rajendra Pratap Gupta 
Healthcare I Retail I Rural Economy I Public Policy