Do it yourself

The popular commentary these days is suggesting, rather aggressively, that the largest economy the USA has overcome all its problems – unemployment, fiscal deficit, public debt, housing market, household leverage and above all growth and investment cycle. In the same breadth it is also mentioned that emerging markets that have thrived on the excessive liquidity created by US Federal Reserve are destined for a painful grind to dust as the Ben Bernanke starts withdrawing the liquidity. In our view, nothing could be farther from truth. The USA still has over 7% of its workforce unemployed. Number of people surviving on food stamps is highest in recent decades. Growth for the current year is expected to be mere 2%. Investment cycle is far from robust. Deficit has come down on spending cuts, but continues to be threateningly high. This is when Fed had been printing 24X7. A lunch break of 45minutes is expected to worsen things again. Moreover, with 3/4 th of global population in des...

Recent sectoral credit and weighted average lending rate data published by RBI raises some pertinent questions: (a)    The share of industry in GDP over past two decades is unchanged, but the share of industry in bank credit has fallen by 25% despite rate for industry falling the most. Does this explains supply side constraints of the economy? (b)    The share of agriculture in GDP has fallen by 50% over past two decades. But the share of credit to agriculture sector has fallen by just 12%. Does this explain higher capital intensity of agriculture or populism, as there has been little improvement in productivity. (c)    Share of personal loans has more than doubled over past two decades, though housing loan rates in 2012 were 40% higher as compared to 1992. Does this imply speedier urbanization or unsustainable bubble in housing sector? Thought for the day “Confusion is a word we have invented for an order which is not understood...

Traversing through the incredibly wonderful landscapes and meeting over 10000 people across 15 states we tried to discover India in past few months. We sought to explore the country to understand the current social, political and economic milieu. What we found was quite reveling though not completely surprising. The primary learning was that after 65years of becoming a political union, India is perhaps still merely the one. We have made little progress in becoming social and economic union. Consequently, a national approach to anything was conspicuous by its complete absence in general public discourse. This state of affair is clearly reflected in diverse socio-economic conditions of different states and in many cases of various regions within a state. In our view, therefore, any program, policy, or strategy that is formulated purely from a national viewpoint has little chance of successful implementation in India. To be successful, the programs, policies and strategies hav...

If a survey is conducted to find out major events of the extant UPA II regime, infamous 2G and Coalgate scandals would certainly find prominent place in the outcome. These alleged scams have caused serious damage to the Indian economy by adversely impacting the confidence of businesses and investors, diminishing the credibility of institutions like CAG, CBI, PMO, impeding the investment in new projects, and leading to higher stress in the financial system as many large projects would remain stuck at various stages of implementation till the long drawn legal process is completed. From the ongoing process for grant of new banking licenses we conclude that the government and regulators have learned little even from their recent experience. It is a common knowledge that the status of financial inclusion in the country is extremely wanting. Over two third of adult population does not have a bank account and less than 10% adults have access to formal credit of any sort. Under...

We visited Tamil Nadu (TN) in past few days in the last leg of our Discover India study tour. We traversed through 15 out of 32 districts falling under Chera Nadu, Pallav Nadu and Nadu Nadu regions of the State. The most striking part of our TN was problem in communicating with people. For the first time in our journey across the country we felt stranded. In many villages we could not find anybody who could communicate in Hindi or English. With all road signs and sign boards also in Tamil, not taking a local help along was a mistake. Only Google Maps rescued us. Nonetheless, the people in general were very congenial. It was wonderful to traverse through beautiful landscape inhabited by happy and pious people. The only problem perhaps is that seemingly they have extended their pious nature little too far. All achievers in the State are invariably accorded the status of God – be it politicians, movie stars, sportspersons, artists, teachers, local administrators, police office...

We visited 15 out of 23 districts Andhra Pradesh (AP) in past one week. After Bihar and West Bengal, AP appeared like a different world altogether. Bountiful nature exploited judiciously, people forward looking, women emancipated, agriculture productivity high, farmers and agriculture labors doing well, education a movement, primary health facilities perhaps best in the country. On the negative side, economic disparities are very high. The difference between top 10% and bottom 10% would probably be the highest in the country. The society is deeply divided on caste lines, though not so on religious lines. The key highlights of the visit are as follows: (a)    We found Andhra one of the most balanced economies in the country. Except for a few northern districts, agriculture is well developed and productivity high. A strong education movement has provided a strong base for services sector. Industry, especially knowledge based industry such as IT services, and high...

Our team travelled through 11 out of 19 districts of West Bengal in past week. What we witnessed was not totally surprising but still shocking. It seemed like a different world altogether. Most of the 90mn population lives in abysmal poverty. Persistent exploitation appears to have turned rural Bengal into a deeply disturbed society. The internal disturbance manifests itself in profound rebellion against authority and system . We found the state completely cut off from the rest of country in terms of socio-economic development. The key highlights of our West Bengal tour are as follows: (a)    Over three decades of communist rule has little ideological impact on the peoples’ life. The only thing they seem to have imbibed from communist rule is rebelling against authority and system. The society is still divided on caste and religion lines. Economic disparities are as high as ever. There is little sense of “commune” or “community” insofar as economic activities ...

In the last phase of our Discover India tour we travelled through 23 of 38 districts of Bihar state spanning across 8 divisions covering over 2300kms. With population of over 100mn people, the state is considered critical for aggregate growth and development of the country. Traversing through this land of rich heritage, bountiful nature and brilliant people was a rather disappointing experience. Abysmal poverty, poor social and physical infrastructure, completely fractured political establishment, disinclined administration and deeply divided society on caste lines. We saw a little reflection of much acclaimed 10%+ growth beyond a few large and tier two towns. The key observations of our Bihar states were as follows: (a)    The state of agriculture in this predominantly agrarian state is pathetic. Frequent floods, lack of labor (major surprise) uneconomical holdings, poor marketing infrastructure, lack of formal credit, social biases, scant food processing indu...