India headed for economic doom, prominent US thinktank says

[MST]

NEW DELHI: India is heading straight for economic failure post-Chidambaram's budget as a direct result of the lack of meaningful economic reform, says Heritage Foundation, an important conservative thinktank in the US. Assessing finance minister, P Chidambaram's budget, Derek Scissors of the Washington-based organization said that it "leaves India on the same, failing course it's been on of undisciplined spending and unrealistic expectations".

The Indian economy is in dire health, he said, not only because Indians' incomes have stagnated, income growth slowed and consumer inflation is high, but because manufacturing that should lead the Indian economy that would create jobs for the swelling ranks of young Indians is refusing to take off.

"Services lead in large part because the labour market is more flexible in services industries than in manufacturing. Rather than labour market reform, the Indian government offers a state-led infrastructure program. But the infrastructure program has no chance to succeed while property rights to land remain so ill-defined," he explained

According to him, India is making the same mistake as the US like substituting spending since reform is politically difficult. "The proposal for this year is a triumph of hope over courage: Spending is to increase by 17%, yet the deficit is to fall to 4.8% of GDP. This won't happen. Spending will have to be curbed or the deficit will balloon again," he said.

The high growth between 2004 and 2007 was largely due to the reforms of the years before. "Without a sustained reform process, which will take considerable time, India will not return to the days of fast growth. Government revenue and GDP will continue to disappoint, deficits will continue to be high, and consumers will continue to suffer. This is the path India remains on," he added.


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Looks like Chidambaram and Congress Party have been caught with their Pants down. God save India.

 

[Skull and Bones]

This budget was a joke, clear lack of long term planning. Neither they made any concrete policy to facilitate manufacturing industry nor any incentives for FDI/FIIs.

 

[illusion8]

NEW DELHI: India is heading straight for economic failure post-Chidambaram's budget as a direct result of the lack of meaningful economic reform, says Heritage Foundation, an important conservative thinktank in the US. Assessing finance minister, P Chidambaram's budget, Derek Scissors of the Washington-based organization said that it "leaves India on the same, failing course it's been on of undisciplined spending and unrealistic expectations".

The Indian economy is in dire health, he said, not only because Indians' incomes have stagnated, income growth slowed and consumer inflation is high, but because manufacturing that should lead the Indian economy that would create jobs for the swelling ranks of young Indians is refusing to take off.

"Services lead in large part because the labour market is more flexible in services industries than in manufacturing. Rather than labour market reform, the Indian government offers a state-led infrastructure program. But the infrastructure program has no chance to succeed while property rights to land remain so ill-defined," he explained

According to him, India is making the same mistake as the US like substituting spending since reform is politically difficult. "The proposal for this year is a triumph of hope over courage: Spending is to increase by 17%, yet the deficit is to fall to 4.8% of GDP. This won't happen. Spending will have to be curbed or the deficit will balloon again," he said.

The high growth between 2004 and 2007 was largely due to the reforms of the years before. "Without a sustained reform process, which will take considerable time, India will not return to the days of fast growth. Government revenue and GDP will continue to disappoint, deficits will continue to be high, and consumers will continue to suffer. This is the path India remains on," he added.


Source

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Looks like Chidambaram and Congress Party have been caught with their Pants down. God save India.

The fiscal deficit has actually fallen - and the think tank is wrong

India's fiscal deficit during the April-January period was 4.66 trillion rupees, or 90.7 percent of the budgeted full fiscal year 2012/13 target, government data showed on Thursday.

During the same period in the previous fiscal year, the deficit was 105.4 percent of the budgetary target.

 

[Backbencher]

The budget was not that bad either !! You just cant expect an economist to possess a magic wand .
The best thing about the bugdet was it increased the taxes on Foreign vehicles which meant more and more customers opting for the likes of TATA and M&M .
He raised the tax on cinema ticket ,mobiles, restaurant food etc which clearly shows that if youre rich then be ready to shed $$ from your pocket !!
This wouldnt bother the rich because we can buy a ticket for 300 which formely was 275 isnt it ??

 

[Srinivas]

Now the US is after Indian economy, I heard lot of stories and fairy tales which predicted Chinese doom in the past decade and still nothing happened

US of A should try to fix its own economy before lecturing Indians. Indians know how to cope with their economy.
Our economy is neigther capitalist not socialist and is a flexible one with an some protectionism and continuous to do so.

 

[KRAIT]

No one take Heritage Foundation seriously after Iraq Debacle.

I would rather read RAND International take on this.

The budget was not that bad either !! You just cant expect an economist to possess a magic wand .The best thing about the bugdet was it increased the taxes on Foreign vehicles which meant more and more customers opting for the likes of TATA and M&M .He raised the tax on cinema ticket ,mobiles, restaurant food etc which clearly shows that if youre rich then be ready to shed $$ from your pocket !!This wouldnt bother the rich because we can buy a ticket for 300 which formely was 275 isnt it ??

That's why I say, COngress is good at folling people that after 4 years of bad governance, billions worth of scandals, they put Feel Good factor in pre-election year budget, which is nothing, as Diesel and Petrol prices are already high and in control of companies now.

Let the Diesel price hike hit on farmers and Transporters, you will see that everything will get more costly which affect the lower income class the most.

Now the US is after Indian economy, I heard lot of stories and fairy tales which predicted Chinese doom in the past decade and still nothing happened
US of A should try to fix its own economy before lecturing Indians. Indians know how to cope with their economy.
Our economy is neigther capitalist not socialist and is a flexible one with an some protectionism and continuous to do so.

$ 85 billion cut is already causing waves in US.

 

[CZAR]

Economic Doom?! Due to one budget?!

Let's be fair to the Finance Minister. To reverse the service sector bias of our economy in a single budget would be asking too much. And to carelessly use the word - "reform" - to criticize the budget is also unwarranted.

The more immediate concern is of fiscal consolidation. The fact that this fiscals deficit did not breach the 5.3% mark does add some confidence.

As for manufacturing, one underplayed aspect of his speech was the tax benefit announced for any investment greater than 100 cr in plant and machinery. This benefit is not available to the services industry, but rather designed for the manufacturing sector. More such measures are required to induce growth in the manufacturing space - but it is a gradual process.

To expect a turnaround of the GDP's orientation from services to manufacturing within a single budget only shows how detached some of these critics are from commercial reality.

 

[Backbencher]

No one take Heritage Foundation seriously after Iraq Debacle.

I would rather read RAND International take on this.

That's why I say, COngress is good at folling people that after 4 years of bad governance, billions worth of scandals, they put Feel Good factor in pre-election year budget, which is nothing, as Diesel and Petrol prices are already high and in control of companies now.

Let the Diesel price hike hit on farmers and Transporters, you will see that everything will get more costly which affect the lower income class the most.

$ 85 billion cut is already causing waves in US.

Arrey baba their is no denying that Congress had given us huge headaches in the recent past through scams , slow work progress etc but atleast give credit where due .
This bugdet has been praised by almost most of the corporate players within India . Btw i am also a Modi supporter yar , these chaps in the parliament cant fool me

 

[MST]

The fiscal deficit has actually fallen - and the think tank is wrong

Its the projected number buddy for the 2013-2014. But the maths don't add up and thats what every economist is saying. As Yashwant Sinha said this is a 'Bazigari wala budget'. Just wait for a few months and you will find out why.

 

[illusion8]

Its the projected number buddy for the 2013-2014. But the maths don't add up and thats what every economist is saying. As Yashwant Sinha said this is a 'Bazigari wala budget'. Just wait for a few months and you will find out why.

re read the quoted part.

 

[MST]

re read the quoted part.

Thats what I am saying they are talking about 2013- 2014. They are talking in future tense.

Spending is to increase by 17%, yet the deficit is to fall to 4.8% of GDP.

correct me but i think you quote is for the year 2012-2013

 

[illusion8]

Thats what I am saying they are talking about 2013- 2014. They are talking in future tense.



correct me but i think you quote is for the year 2012-2013

I meant my quoted part

India's fiscal deficit during the April-January period was 4.66 trillion rupees, or 90.7 percent of the budgeted full fiscal year 2012/13 target, government data showed on Thursday.

During the same period in the previous fiscal year, the deficit was 105.4 percent of the budgetary target.

Source: http://www.defence.pk/forums/centra...rominent-us-thinktank-says.html#ixzz2MSwE3Ve7

 

[Chinese-Dragon]

NEW DELHI: India is heading straight for economic failure post-Chidambaram's budget as a direct result of the lack of meaningful economic reform, says Heritage Foundation, an important conservative thinktank in the US.

Don't these American "think tanks" have better things to do?

Oh wait, this its exactly what they always like to do anyway.

They just replaced the word China with India and went back to the collapse theories.

 

[illusion8]

Thats what I am saying they are talking about 2013- 2014. They are talking in future tense.



correct me but i think you quote is for the year 2012-2013

I said it has dropped

April to January 2012 / 13 - fiscal deficit was 90.7 percent of the whole budget, while the same period of 2011 / 12 it was 105.4 %

They are talking about 2013 / 14 which is still to happen - I don't see any reason why the fical deficit cannot be brought down as targeted.

 

[ChineseTiger1986]

Now the US is after Indian economy, I heard lot of stories and fairy tales which predicted Chinese doom in the past decade and still nothing happened

US of A should try to fix its own economy before lecturing Indians. Indians know how to cope with their economy.
Our economy is neigther capitalist not socialist and is a flexible one with an some protectionism and continuous to do so.

Of course, most of their predictions are bullsh!t, so next time don't bash China with those western articles.