Economy

Mohammad Anas Wahaj | 03 jan 2014

The two most important constituents of the Indian demographic, the rural population (nearly 70% of the 1.2 billion) and youth (65% of the population is under the age of 35) should be the main focus while gauging or predicting the future of India. In the article Adil Zainulbhai and Barnik C. Maitra, co-editors of McKinsey report 'Reimagining India', provide their views regarding the changes that India is going through and what are the opportunities and possibilites to drive speedier inclusive development of its population. They mention that India's innovative use of technologies at lesser cost to provide healthcare services in remote and rural areas, efficient delivery mechanisms for government's social services and benefits availed by the needy population, access to MOOCs from world-class sources through better internet connectivity and cheaper devices to enable and facilitate a learning revolution, application of innovative processes in the areas of infrastructure and energy by leapfrogging the traditional models, and utilizing similar innovative and technology enhanced methods in other areas like retail, banking, finance, agriculture etc to reach every Indian citizen will help India achieve better and faster inclusive growth and development. Read on...

CNN: How India can leapfrog to the future
Authors: Barnik Maitra, Adil Zainulbhai

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Mohammad Anas Wahaj | 28 dec 2013

Urbanization is a reality and a challenge that India continues to face and manage. According to recent studies 350 million Indians are expected to migrate to urban areas by 2030 and this number may increase to 700 million by 2050. In the article Amitabh Kant (CEO & MD of the Delhi-Mumbai Industrial Corridor Development Corporation) shares his views and insights to effectively and efficiently manage the exodus of rural population towards cities and inturn make it a growth and development platform for the better future of India. He mentions examples from China that managed similar urbanization process with sucessful results and built new cities as part of industrialization and modernization policy. According to him agriculture can only sustain a growth rate of 3% while Indian economy requires 9-10% growth to uplift vast segments of its population out of poverty. He says that cities are centers of growth, innovation & creativity and India has to take active steps to upgrade infrastructure of current cities and evolve a framework to build and develop new cities with focus on sustainable urbanization. Read on...

Mail Online: The future of India's growth process lies in its cities
Author: Amitabh Kant

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Mohammad Anas Wahaj | 26 dec 2013

Consumer spending is an important indicator to gauge the market conditions and economic activity. It is proportional to the disposable income of consumers. Current state of Indian economy shows less consumer confidence resulting in sluggish consumption activity. Article provides detailed analysis of the Indian consumer and how the various segments of the consumers and their spending patterns will affect the economy in near and distant future. The top 20% of Indian households by income, account for 40-50% of total household consumption and 40-60% of household income. This segment (50 million households, 45% of urban India & 10% of rural and per capita GDP of US$ 4000) is divided equally between urban and rural households, with 1/3rd of rural and half of urban having a salaried primary wage earner with stable and predictable income. This 'Top 20' segment holds the key to the Indian consumption scenario in 2014. Moreover marketers also have to play their role confidently in attracting investments from this group. The other two segments, 'The Next 40' (40% with per capita GDP of almost US$ 1000, account for 40% of consumption expenditure and are 2/3rd rural & 1/3rd urban) and 'The Bottom 40' (1/3rd urban poor and 2/3rd rural), have challenging prospects and less potential to make significant impact on improving the consumption activity. 'The Next 40' due to budgetary constraints and 'The Bottom 40' due to their dependence on welfare schemes and insignificant disposable income. Read on...

Live Mint: The future of Indian consumer markets
Author: Rama Bijapurkar

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Mohammad Anas Wahaj | 25 dec 2013

Local and global economists have diverse views and approaches to assess and predict India's economic future. Particularly since the elections for the next parliament are due in 2014 the debate has got further exacerbated on which model will evolve after the formation of the new government. Jagdish Bhagwati and Amartya Sen debate has currently been in the news with Professor Sen focusing on investments in social infrastructure and inclusive development while growth will follow and on the other hand Professor Bhagwati advocating growth as the primary and main catalyst for development and long term sustainability of the economy. In this interview Professor Arvind Panagariya of Columbia University, and co-author of the book 'India's Tryst with Destiny' with Jagdish Bhagwati, explains his views on various aspects of Indian economy, political and economic scenarios and future prospects for India. He suggests three things that the government can do to steer the economy in the right direction - (1) Speedy clearance of projects to continue economic recovery (2) Build infrastructure at faster pace (3) Reforms need to happen with long term perspective and would include land and labor market reforms and replacement of a large number of welfare programs. He also suggests further opening of FDI and scaling back public distribution system. He mentions that Food Security Bill will not have any impact to boost cereal consumption and India will surpass China in terms of growth rate. Read on...

The Wall Street Journal: Arvind Panagariya on Fixing India's Economy
Author: Sriram Balasubramanian

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Mohammad Anas Wahaj | 14 dec 2013

Finance Minister of India, Mr. P. Chidambaram, provides analysis of the past 33 years of economic reforms and performance of the Indian economy during this period. He also shares his perspective on how the future of India's economy will shape itself and what would be the critical and game changing ideas and steps that should be taken to achieve inclusive and balanced growth. According to him in the past the game changers of the Indian economy were - Making the rupee convertible on the current account (1991); Slashing of tax rates (1997); Value added tax (VAT) that replaced sales tax (2005). While in the future the game changers would be - Direct tax code; Goods and Services Tax (GST); Insurance and pension reforms; Uniform financial code recommended by the commission for financial sector legislative reforms; Aadhaar and Direct Benefit Transfer scheme. He also suggests that India has to find the right balance between the three main institutions of democracy - Executive; Legislature or Parliament; Judiciary - for better governance. He mentions that in recent times the balance has swung away from the executive and also from legislature and more power seems to have gone towards judiciary that might have altered the balance that is required for governance and sustained long term growth. Read on...

The Economic Times: Future of India depends on inclusive growth and reforms driven by game changing ideas, institutions
Author: P. Chidambaram

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Mohammad Anas Wahaj | 28 nov 2013

There are varied and different, local and global perspectives on how a particular country pursues economic development. Oftentimes it is difficult to completely and totally agree or disagree with one or the other. Similar is the case with India with often conflicting approaches competing with each other and trying to gain relevance both within and outside the government. Governmental policies are often directed towards the developmental agenda based on the majority view within the political party in power and its vision that was depicted in its election manifesto. Moreover global economy and its direction also plays an important role in choosing the development plan as in the globalized and connected world, economies and countries find it unimaginable to pursue their own agendas in isolation. Article explores one such view that questions the neoliberal economic development model that the current government is implementing and provides some alternative concepts and approaches towards India's development considering the massive poverty and social inequality that is prevalent - focus on well-being of the population; invest heavily on education, healthcare and welfare programs; ensure and encourage sustainable farming communities; controlled urbanization; reduce environmental degradation etc. Read on...

Global Research: Mass Poverty and Social Inequality in India - The Devastating Impacts of the Neoliberal Economic Development Model
Author: Colin Todhunter

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Mohammad Anas Wahaj | 31 oct 2013

According to Professor Douglas McWilliams of Gresham College in UK, India will become the world's largest economy by 2048 by surpassing China which will displace US from the top slot in 2023. He points out that the pace of change in the Eastern economies is so fast that the population of these economies have not become used to prosperity and their employees still work more then their Western counterparts (Singapore - 2307 hours/year; Hong Kong - 2287 hrs/yr, UK - 1625 hrs/yr). Moreover Singapore's GDP is 30% higher then UK and Hong Kong's 50% higher. These figures indicates resurgence of the East and the West has to be prepared to compete with these economies and adapt to the new realities or there is a probability of stagnation and later on economic collapse. Read on...

The Telegraph: India 'will become world's biggest economy in less than 40 years'
Author: Emma Rowley

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Mohammad Anas Wahaj | 28 jul 2013

According to a latest global research on maternal and child nutrition, economic prosperity leads to faster rate of increase in the number of obese women as compared to rate of decrease of underweight women. Moreover 10% increase in GDP (Gross Domestic Product) reduces stunted growth among children by 6% but leads to 7% rise in obesity. Middle and low income countries like India are most affected by stunting, malnutrition as well as obesity among mothers and children. The paper mentions that although India has made progress in reducing mortality but still a lot is desired as most programs focus on survival diets and not on diet diversity for better growth and development. The investments are to be made in nutrition relevant schemes. Some Indian experts argue that merely focusing on correlation between GDP growth and health sector development leads to over simplification of these complex health issues. Read on...

Live Mint: Undernourishment and obesity seen as India's economy grows
Author: Vidya Krishnan

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Mohammad Anas Wahaj | 25 jul 2013

Household/Domestic savings are the most important constituent of the amount of money that a country saves (other contributors are private corporate sector and public sector). The recently released RBI report dated 27 June'2013 provides indicators of financial stability of India and mentions that the Gross Domestic Savings as a proportion of GDP has fallen to 30.8% in 2011-12 from the earlier 36.8% in 2007-08. This reduction is attributed to dramatic fall in financial savings, that includes savings in the form of bank accounts, life insurance, pension etc, which itself is a result of high inflation in recent times. This means people have to spend more money to buy the same amount of goods that they bought in the past, thus affecting their savings. Double digit rise in salaries and rate of return on consumer financial products like fixed deposits, public provident fund etc has also been neutralized by high inflation. This environment has created a surge for investment in gold and real estate and lot of Indian companies have been forced to borrow from outside India. These factors have further exacerbated the dollar-rupee problem as India has less gold production and it has to be bought in dollars in the international market and also the external borrowings are to be repaid in dollar, thus creating a high demand for dollar and devaluation of rupee. So inflation and to some extent other issues like mis-selling of insurance by insurance companies, financial frauds etc are the main cause of the current problematic state of the Indian economy. Read on...

FirstPost: This economic number shows all that is wrong with Indian economy
Author: Vivek Kaul

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Mohammad Anas Wahaj | 20 jul 2013

Although India has become the third largest economy in the world after US and China but there are multiple issues, disparities and inefficiencies within its political and socio-economic domains that give it shades of a third world nation. So it might not be a major power in its own right but it can be what Parag Khanna terms as 'swing state' meaning that India is capable of shifting the balance of power in Asia and even in the world. This is the reason why India has become an attractive alliance partner for major nations. India has continued its policy of non-alignment and has preferred bilateral military ties providing itself a place of importance on security and economic fronts in Asia. Read on...

The Times of India: India is key to Asia's balance
Author: Subir Bhaumik

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