Corruption and Poor Governance Hurt India's Image at Davos 2011

[EjazR]

@Patrician


Let me clear up something, I become eligible to vote in 2003, didn't vote in the 2004 elections and voted for the TDP candidate in HYD constituency despite an INC candidate being there.

What my post mentioned was the plain facts about India's growth rate. Does it solve everything? no. But when someone says that the growth rate has gone down, I think its anyone who knows the facts to correct it because he/she may be mistaken.

I think we truly need a centre right party. I don't agree with the Right to Food bill. I think the NAC passing this bill is foolish and a bigger burden on the state and gives more chances for corruption.

The best way to check corruption is not to have a big govt. in the first place. Get rid of all the subsidy and the PDS system. But generate micro and SME companies so that jobs are created for the poor. Use the private sector to get rid of poverty rather than give subsidies.

But do we have a party bold enough to advocate these reforms? Unfortunately no.

The Congress at present adopts a centrist approach of some FDI reforms but also populist subsidy measures. The BJP does pretty much the same. When they were in power, they didn't reform the PDS system and actually made it bigger. In BJP ruled states, you again have the freebie culture of free bikes and term deposits of girl childs and what not. And cutting down on subsidies also cuts down on corruption. The free bike scheme has become a massive gaping whole with major corruption scandals around it as well, just like any other populist scheme.

The BJP at least in the economic arena is just a B-team of the Congress. And this is unfortunate. Maybe we need a revival of the Swatantrata party which was a truly centre right party and advocated a market economy early on. But maybe Im just a dreamer.

 

[rcrmj]

India really needs to pay extra attention on the FII into the economy. This was how the 1997 Asian financial crisis triggered.

FII investors including funds, mutual funds, hedge funds, insurance company funds and pension funds. all of these institutions are not actually producing or selling any physical 'products' to their customers or clients.

and their returns are constituted by speculating the market fluctuation they invested in, the more swings the market has the more attactive to them``which is the distinct differences from FDI where they prefer stable market```and the real money is invested in the market and to produce feasible goods and directly benetited the local economically, technologically and socially.

FII is taking advantages of India's open stock and financial market

 

[kawaraj]

Agreed.

read the headlines today,

Obama's talking about something big, what could that be?

Tax cut, get all the money back home(MNLs), that will drain all the liquidity back to US to grow jobs, businesses, etc.

India should be alerted. This is serious thing.

 

[jdme]

I am so afraid. Pakdef Messiah has spoken!

 

[rcrmj]

lol a pathetic consolation

 

[IndoCarib]

@ EjazR

If you can give credit to MMS for growth rate, then should we not blame him for uncontrollable inflation and slowing growth !

On UAPA , is this law really effective as POTA

NIA & UAPA: How effective? | Hard News

Anti-terrorism laws in India & The need of POTA - Author - Siddharth

 

[RiazHaq]

Indian rupee hit record low amidst high inflation and high twin deficits, according to Wall Street Journal:

The Indian rupee fell to a record low against the U.S. dollar Tuesday as high inflation and a gaping current-account deficit weighed on demand for the local unit, before a recovery in global risk appetite helped trim the greenback's gains.

The dollar was at INR52.30 late Tuesday, up from INR52.16 late Monday, after rising to as much as INR52.725 during the session, its highest ever. The dollar's previous high was INR52.1950 on March 3, 2009.

The pace of the rupee's fall caught most market watchers off guard, forcing firms with unhedged overseas debt to rush for cover, accelerating the fall.

Adding to this, exporters have been wary of locking into a dollar rate for their future revenue, when the dollar's rally may well have more steam.

"The rupee is being swept by a self-fulfilling squeeze--capital is being pulled from hot money markets in Asia, and the rupee is just far more vulnerable than other Asians with its trade deficit," said Sean Callow, a Sydney-based currency strategist at Westpac Bank.

But some argue that the rupee's slide could be on its last legs. UBS, for example, argues that the rupee's fall has less to do with local factors such as inflation and slowing economic growth in India, and more to do with re-rating the rupee to a basket of currencies that's more sensitive to the global economy. The Swiss house advises buying the rupee at this point, as a bet on a global cyclical rebound.

Rupee bulls got a boost when a federal government official told Dow Jones Newswires that the central bank was planning to offer a dollar liquidity window to oil importers. Under the planned window, oil importers would be able to pay for their greenback purchases by selling the central bank the so-called oil bonds, which are issued to them by the government in exchange for selling fuel products at below-market prices.

If this window comes into effect, it would take a key source of greenback demand out of the currency market, helping to ease the rush for the dollar, said the treasury head of a foreign bank.

In the sovereign debt market, Indian government bonds were under pressure on the growing view that the federal government would struggle to stick to its fiscal deficit target.

The benchmark 8.79% 2021 bond ended at INR99.64, from Monday's INR99.76.

Royal Bank of Scotland reckons India's fiscal deficit will overshoot its target of 4.6% of gross domestic product by at least one percentage point because of rising subsidies on food and fuel and dwindling tax revenue.

Traders say an overshoot of the fiscal deficit of that magnitude could push the benchmark bond yield beyond 9%.

India Rupee Falls To Record Low; Bonds Down - WSJ.com

 

[RiazHaq]

Goldman Sachs' Jim O'Neill, who coined BRIC, says India's performance most disappointing, according to Economic Times:

LONDON: Growth in all four BRIC economies has surpassed expectations in the decade since the term came into existence but India's record on productivity, FDI and reform has been the most disappointing, the chairman of Goldman Sachs Asset Management Jim O'Neill said on Tuesday.

O'Neill, who coined the term, BRIC, in December 2001 to jointly describe the four biggest developing economies, Brazil, Russia, India and China, was speaking at the London leg of the Reuters 2012 Investment Outlook Summit.

"All four countries have become bigger (economies) than I said they were going to be, even Russia. However there are important structural issues about all four and as we go into the 10-year anniversary, in some ways India is the most disappointing," said O'Neill who oversees almost a trillion dollars in assets at Goldman.

Just this week, India's government caved in to opposition pressure and put on hold a landmark reform of the retail sector that was seen opening the doors to billions of dollars in foreign direct investment in the supermarket sector.

The long-awaited measure, passed earlier this month, had been hailed as ending the government's economic reform paralysis that is widely seen as the root cause of high inflation, shrinking capital inflows and a wider current account deficit.

"India has the risk of ... if they're not careful, a balance of payments crisis. They shouldn't raise people's hopes of FDI and then in a week say, 'we're only joking'," O'Neill said. "India's inability to raise its share of global FDI is very disappointing," he said.

United Nations data shows that India received less than $20 billion in FDI in the first six months of 2011, compared to more than $60 billion in China while Brazil and Russia took in $23 billion and $33 billion respectively.

The glacial reform pace has hit India's hopes for double-digit economic growth, O'Neill said, adding: "India is as bad as Russia is on governance and corruption and, in terms of use of technology, Russia is in fact much higher than India."

On the other BRICs, O'Neill said Brazil's main problem was an overvalued currency which puts the country in danger of "Dutch disease" - a term first used to describe how North Sea oil discoveries in the 1960s triggered a surge in Dutch energy exports but also in the Dutch currency, pummelling much of the country's manufacturing. China's challenge was to effectively manage a transition to a higher-consumption economy with slower growth, he said.

O'Neill remains positive on Russia but said much depends on what Prime Minister Vladimir Putin can deliver in terms of reform following an election at the weekend that left his ruling party with a much reduced parliamentary majority.

India most disappointing among BRIC nations: Goldman's O'Neill-Foreign Trade-Economy-News-The Economic Times on Mobile

 

[harshad]

the more the corruption and poor governance in india gets exposed the better it is for development of india