Economics, India

R.I.P – Small and Medium Enterprises, Tamil Nadu

Thanks to the rising power cut, most of all the small and medium industries in Tamil Nadu have already shut shop. This year, there has been a significant reduction in industrial output as well as agricultural output from T.N.

Kanchipuram the famous destination for silk sarees, Tripura the famous destination for T-Shirts et all are waiting endlessly for power.

NO CURRENT, NO MANUFACTURING

To add insult to injury, the activism against industries, factories, dieing units are ensuring the final nail is punched on the coffins of TN industry and put to rest once and for all. . My communists frineds who are all in the Facebook,  happily forgetting it as an AMERICAN CORPORATE and accessing it in their MADE IN CHINA laptops/ipads/iphones etc and who patriotically rise their fist against capitalism and target small and medium industries in Tamil Nadu and ensure nothing would ever be stamped with MADE IN TAMIL NADU/INDIA, please do listen – Already there are huge influx of products from china and pushed into the hands of all tamil people with the stamp MADE IN CHINA.

Have a look at the  ‘kosu ‘ bat, the mobile phones which are owned by poor tamil famers/people or even the smart phones like Apple and even cheap grinders, mixies, toys et all…ah forgot even the solar panels doesn’t have the tag MADE IN TAMIL NADU , they are all MADE IN CHINA.

MADE IN CHINA
Naanga Jaaychitommm!!!

I never mind Sterlite getting closed. Since Vendantta has enough acumen to shift their factory to china but do you think the small dieing units, the small power hand loom units have acumen to shift their factory to china or any where else in India for that matter ?. Dear Facebook communist friends..they have no where to go. ( A point to consider – Doesn’t Indian Railways often cause accidents and provide only ‘ compensation ‘? Shouldn’t they be asked to shut down?)

FREE, FREE, FREEEEEE
FREE, FREE, FREEEEEE

But then never worry. Tamil Nadu will now become famous for free TV, free mixie, free grinder, free laptop and all the more important free electricity(not kiddding its there in the promises). Coupled with 100 days of labour provided by the center with the most efficient PDS system, and forgot to mention the various ‘RIGHTS’ –  Right to food, Right to Education etc added with now famous  ‘ AMMA HOTELS ‘   will ensure every tamilan will now be given hand-to-mouth survival. Yes the future is here.

Govt shall give,  MADE IN CHINA Kanchipuram pattu sarree, MADE IN CHINA dindugal pootu for FREEE and we shall have 100 days of labor and eat to our full in AMMA Hotel.

Well, the govt promised that they would work on war footing but never imagined this was the plan.

So, the message :  R.I.P – SME, TN.

R.I.P – TN Industry

Hell!!, even the coffin would be MADE IN CHINA!!

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Economics, India

Politics, Mass Madness and Dr. Manmohan Singh.

Rupee down, economy down and UPA under the ground. But one should not worry as yet, since the economy is in safe hands – INTELLIGENT POLITICIANS.

Well in UPA, there are two types of politicians.

  1. Intelligent
  2. Differently intelligent.

You may wonder, what is this ‘Differently Intelligent‘  is?  Mind you, you never ought to call a  ‘ disabled’ as ‘disabled’, instead we ought to call them as ‘ differently-abled ‘. Likewise,  we ought to call  ‘ un-intelligent ’ politicians as DIFFERENTLY INTELLIGENT politicians. Since that is ethics.

Intelligent politicians are the ones who would predict that the world would go like this and this. And then reason out why it did not went like that. On the other hand, our differently intelligent ones would themselves be unpredictable. So forget about them predicting how the world would go.

Growth rate, GDP, fiscal deficit, industrial production et al were projected to be ‘ something something’  by intelligent ones and now all those turns out to be  ‘nothing nothing’. And as they are the intelligent ones they have come out with the some brilliant  reasoning on why they are always wrong.

REASON 1 – EURO-ZONE CRISIS

  • China’s growth rate in the second quarter of the year  is expected to dip below 7%.
  • Brazil has grown just by 2.5% in 2011 compared to 7.5% in 2010.

And so, India would feel the repercussions of euro-zone crisis as the way other countries does. But still, India  is expected to grow at 5%. And FYI, India has contributed $10 million towards IMF for rescuing euro-zone. So our economy is not doing that BAAAAAD as what many would say it to be so, but never the less it is tough.

REASON 2 – TOUGH POLITICAL CLIMATE

This reason has to be read between the lines. ‘ Tough political climate ‘  is not between the government and the opposition but rather it is within congress itself. Between Sonia’s welfare oriented policies and Manmohan singh’s growth oriented policies. This diarchy at the top has led to what many now call as policy paralysis.

OTHER REASONS

Those reasons are given by UPA’s top brats. But the opposition has given out a huge list – Corruption, black money, policy paralysis et al. But one reason , seems to be accepted by all – Dr.MANMOHAN SINGH.

Yo the newspaper brain-wallah’s!!  First know who is Manmohan Singh before you begin to criticize him.

The man who has been blamed for the economic non performance, is not an ordinary Singh, rather he is Dr. Manmohan Singh. FYI, he has studied Economics and got his bachelor’s and master’s degree, standing first throughout his academic career. He has been the Governor of RBI and chairman of planning commission.

But he is known for the Finance minister role that he played during the crucial 1991 period. Back then,  India’s fiscal deficit was close to 8.5 per cent of the gross domestic product, the balance of payments deficit was huge and the current account deficit was close to 3.5 percent of India’s GDP India’s foreign reserves barely amounted to US$1 billion, enough to pay for a few weeks of imports, in comparison to US$283 billion today.

Former PM V.P Narasimha Rao and Singh opened up the economy and implemented policies that would change India future forever. As of 2009, about 300 million people—equivalent to the entire population of the United States—have escaped extreme poverty. The fruits of liberalization reached their peak in 2007, when India recorded its highest GDP growth rate of 9%. With this, India became the second fastest growing major economy in the world, next only to China.

More-over these are the very many awards that he has won. We may not like or respect him. But friends from  Pakistan envy him. The reason is here.

So what am I trying to do or trying to prove here? Instead of just criticizing am trying to put things in right perspective so that we could unearth more confusion to put us off.

Let me start off from where it hurt us the most –

Petrol

Do you know, why we Indians pay more for a liter of petrol? Look at the math down

Lets say crude oil costs 100$ a barrel. At today’s exchange rate it would come to Rs. 5600. A barrel of oil, produces approximately 150 liters of petrol. A simple math, 5600/150 would put cost of petrol at Rs 37.33. After adding cost of refining crude, transportation and reasonable margin for oil marketing companies, it should cost like Rs 42/liter. But we pay Rs. 75 per liter of petrol. And the reason is TAXES.

Fuel Component-52%
Customs Duty – 0%
Excise Duty -Rs.14.45
Sales VAT – 15% – 27%
Dealer Commission-2%

The Customs and Excise duty are charged by the center. VAT is charged by the state government. And it is different for different states. Only a year ago, customs duty was nullified from 4% and Excise duty was brought down from 25% to a fixed Rs 14.45.  And the devil over here is the state governments VAT. State Govt earn Rs 12 on a every liter of petrol sold to splurge on populist policies with an aim of making every citizen a beggar of Govt. doles.

Now which state govt is ready to decrease their state VAT? And unfortunately PM cannot decrease state VAT because it the sovereignty of the state govt.

GST & Black Money

Have you heard of this GST reform? – Goods and service tax.

Today we are paying central sales tax, state level sales tax, turnover tax, tax on consumption, transportation tax et all. GST avoids this multi layer taxation and creates a single, unified tax . Thus creating a single unified Indian market to make our economy stronger. This is stalled again because of the various state govts.

More over GST would be a major tool to fight Black Money. FYI, owing undeclared assets/money is termed as black money. With current complex and ambiguous tax system it makes undeclaring assets better than declaring. Hence it results in creation of black money. And so more ‘black money’ is well within India than anywhere else. There is also another reason for the same. Tell me which country offers highest rate of return for their money? Currently its India, boss!! Why would some one park their money in a place which offers them less rate of ineterst?

And so, to abolish black money having simple lean rules which would be easy to implement is the need of the hour. GST is the harbinger of all reforms. Will Jayalalitha, and other BJP ruled chief ministers would allow this to happen? NO. Reason – Politics.

Worse its that GST law requires a Constitutional amendment. After the GST is passed by both Houses at the centre with a two-thirds majority, 50 per cent of states will have to ratify it through a vote in their legislatures. The UPA simply does not command these numbers, and this why it needs the cooperation of the BJP. The BJP, during its last general election campaign, had highlighted its commitment to the GST in its election manifesto. However, after the loss in the election, it forgot about the GST.

There are few who do ‘andholan’ for bringing back black money. Please do tell them that to solve black money issue reform is needed and not more complex unexecutable laws.

FDI in retail

FDI in retail did get every one’s attention. Thanks to Mamata’s gimmicks, it ensured the reform get back tracked.

But why do we need FDI at all? The simple reason is that Money has to be made on earth, it is not given as manna from heaven. Imagine if Telecom sector was not opened up, we would had to wait for that big moment in finance minister budget for the allocation of money unto the sector for its development. By the time we would have built the infrastructure for 2G the world would have been in 12G. Opening up the sector fast tracked its development. And now,  can any one say that poor is not being benefited out of it? Compare it to 1990 days, when people had to wait for years to get a telephone connection. And at that Telephones were state monopoly.  So, you yourself ascertain  when did the poor benefit, then or now?

Likewise, opening up the retail sector would fast track the development of cold chain, post harvest technologies, procurement technologies which is the need of the hour. See how wheat rotting in government warehouses.

Coal & Electricity

Like FDI in retail there is also FDI in pension and insurance, which are quite important to push forward your slumped economy. But, without electricity no company would be in a position to survive leave alone investing.

60% of our electricity is generated through thermal power plants. The main raw material for thermal power plants is COAL.

Do you know the country, which has the highest reserves of coal? – India. But you know what, we import 70 million tonnes of coal a year.  The reason behind it is the mines nationalization act of 1973. This law made Coal India, the public sector company, monopoly in mining. Thanks to political interference, it has made coal India deviant of sophisticated modern technology, and  never to meet the growing demands of the country.

Govt allocates coal to specific companies at below the market rates through a vehicle called as Captive Mining. These captive mines are allocated to iron and steel companies and power generation companies. This allocation is done through a screening committee. Back in 2004 PMO made a proposal to auction coal mines again it was opposed citing soverginity of state govt. And so it was allocated allocated through screening committee much to satisfaction of everybody, except for the CAG now.

Infrastructure Projects

At one point in time, India touched a growth rate of 9%. What fueled the growth, was that infrastructure companies like GMR, Lanco et al saw the opportunity in building road & ports etc. These activities with thousands and crores of investment generated jobs and consumption in the last decade. Compare it to now, when the biggest ever FDI investment(read:Posco) has been stalled and just about 300km of road projects were bid compared to fiscal year target of 8000km, what would you expect. 

Like the way kudankulam was stalled for months, so is Posco being stalled. And ideology prevents from opening up road projects.

PM’s To-Do list

In short, Prime Ministers bucket list is filled with,

  • Speeding up infrastructure creation.
  • Coal supply issues.
  • Environmental roadblocks.
  • Spectrum policy.
  • Aviation FDI.
  • Retail FDI.
  • The new insurance bill.
  • Sorting out land acquisition mess

To add insult to injury he must also manage this

And now  my question is

Do you have a magic wand to manage this and get all the above done to get the economy back?

The Mass Madness

Today, the state government want more & more money from the central government to fulfill all their populistic agendas but none is willing for modification in rules and regulations.

Judiciary for most of its time has interfered into executive’s work. Its judgement cancelling 122 licenses and giving an ambiguous verdict such as, ‘all natural resources should be auction ‘, has put the government in doldrums.

CAG by imaginatively coming up with astronomical numbers as loss for the government which is devoid of any logic and hiding itself under the term ‘notional loss’ has created big hue and cry for both government and the industry. Further more it has forgotten that policy making is the prerogative of the government and CAG’s role is to audit the policy implementation and to NOT to question the policy itself.

Media, picking up the noises, sensationalizing myths as realities and creating mass madness  has done further damage. Its biggest complaint is P.M doesnt communicate i.e doesn’t give interviews to media so that the following would happen……

For all you machaans, machi’s, mama’s, mami’s and news-paper brains, I want to tell you that Singh is King.

Did you know?

Eminent writer Dr. Khuswant Singh said, “When people talk of integrity, I say the best example is the man who occupies the country’s highest office”.

Did you know?

In 2005 when he visited Kaula Lumpur for the India-ASEAN Summit he was introduced at the ASEAN Business Forum meeting as “the world’s most qualified Head of Government”!

Did you know?

when he was working at the United Nations under the famous economist Raul Prebisch, he got an offer to join Delhi School of Economics as a lecturer. He immediately accepted that invitation and decided to return to India. Dr. Prebisch was shocked. So many brilliant economists would be delighted to get a UN job and this young man was giving it up to teach in India? “You are being foolish,” Prebisch told Manmohan Singh,  adding, “But, sometimes in life it is wise to be foolish!”

Did you know?

When Dr Singh was the finance minister, he called up Dr. Verghese Kurien, the Chairman of IRMA. He was  expecting a discussion on grants/finances. Instead Dr. Singh politely enquired about his daughter, who was a student at IRMA, and only then Dr. Kurien knew that he had a famous daughter on his institute’s rolls. Humility, it seems, runs through the family.

Did you know?

No rich parents, no influential uncles, no wealth, no inheritance, no one to pull strings and ‘put in a word’ – it was always his merit, his hard work, his honesty, his intelligence and, above all, his deep love for India that energized him.

In an era where politicians propose shrillness in strategy and mistake testosterone for tactics, Manmohan Singh is almost an image from the past. Self-effacing and polite to a fault, he is more the fatherly professor one would go to with doubts. While politicians were busy indulging in machinations, toppling games and lobbying for plum posts, all familiar Congress activities, he remained a man of no demands.(via Dipti)

It has been our cherished dream for long to have a well educated, honest person as our leader. Now we do have one. Terming him as an ‘underachiever’ would be NOT be a shame unto him but unto our system which only works for the crooked, devious, deceptive, dishonest politician. This, for me is our national shame.<dot>

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Economics

THE FREE-DOOM POLITICS

Raining freebies and crushing the previous govt schemes Chennai Super Queen Amma has announced her commeback in her signature style.

Free Rice………………
Free Gold……………..
Free Fan…………….
Free Mixie…….
Free Laptop………..
what not??

Apo tamilam quater ku matum olacha podhum……!!!

If I would sit in d time machine and travel ma self back to 2006, it was d dime amma bited d dust and d Big K rose up. And it was K who first announced slew of freebies and signed them on d day he took oath. Dat dime amma cried foul, saying free bies would cause a huge loss to govt excheueur and would deprive the state economy. And now come 2011, she s doing d same wat she opposed 5 yrs back. All it seems politicians are affected by Sanjay Ramaswamy disease. The only change is Sanjay Ramaswamy would forget things every 5 mins but our dear politicians forget things every 5 yrs. Itu seemsu she forgot wht she spoke 5 yrs before.

So…….it is undoubtaubly clear dat politicians are using freebies only to woo voters.

But wht is the cost of economics bcause of such free-bees??

As per economics, if the price or the cost has to come down then the supply must be more than the demand……..enna puriyalaye?????????

ok………….will Xplain……………………………

itz simple.

Say if chennai city requires an average of 10kgs of onion per day and on a particular day if only 5kgs of onion is present then the cost of onion can be expected to double up. But say,  if 20kgs of onion is present on a particular day then price would decrease.

This is the the reason why a product price increases or decreases. And it is purely dependent on the market forces.

And so, if the government wants to give rice at Rs.1 per kg then the amount of rice produced must be tripled up so much so that rice can be provided at Rs.1/kg. If the production of rice gets decreased due to unfavorable weather conditions then the cost of rice would surely get doubled. Under those circumstances NO GOVERNMENT will be able to provide this scheme.

It also DAMAGES……………………………………………………………………………….

Mr.Murugananthan an innovator, created a low cost sanitary napkin making machine which created a revolution in rural India. Using this machine sanitary napkins can be created at the cost of 1 rupee, which would be affordable for every rural women. Also his ambition is to sell the machine to SHG who would operate the machine and would sell the napkins to women’s in nearby villages. But our vari vallal Dr Kalaigar Karunanadhi brought in a plan to give sanitary napkins FREE OF COST. For which his govt, signed 2000 crore rupee deal with 2 MNC for manufacturing the sanitary napkins.

Had karuna not brought this FREE sanitary napkin scheme, it would have created atleast 1000’s of jobs and would’nt have cost Rs 2000 crore for govt exchequer.

Yes.. ……….a disaster is there in the making……………………………………………………………….

#1 Giving freebies kills industries which means it kills job creation mechanism.

#2  If industries go down and if people dont have jobs, the govt tax revenue would take a hit.

#3 It is using this tax payers money freebies are given. Hence there would be no money left in govenment gajana to provide these various schemes.

#4 Freebies would be the gateway for more corruption. Take a look at this.

And so………………………………………………………………………………………………………………..

Point No 1 : PRICE is always controlled by market forces and it cannot be controlled by govt forces.

Point No 2 : Giving freebies kills industries, kills jobs and kills government revenue.

Point No 3: It induces more corruption.

Point No 3:  No industry + No jobs + No govt revenue+ Corruption = Economic disaster.

By following such populous schemes the very future of people is put in the dock. And TN is dire in need of a POLITICIAN LEADER who could think beyond providing freebies.

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