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Subsidies will be rationalised for poverty alleviation: Modi

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New Delhi: Prime Minister Narendra Modi on Friday asserted his government will rationalise and target subsidies towards the poor for their welfare and strive for reforms that positively impact the people and transform their lives.

He also said in his address at the Economic Times Global Business Summit here that India’s economic efforts should also have a positive global impact.

I am not arguing that all subsidies are good. My point is that there cannot be any ideological position on such matters. We have to be pragmatic. We have to eliminate bad subsidies, whether or not they are called subsidies,

“But some subsidies may be necessary to protect the poor and the needy and give them a fair chance to succeed. Hence, my aim is not to eliminate subsidies but to rationalise and target them,” he said.

Stressing that reforms in a country should be linked to people’s welfare, he said: “True reforms are those which results in a transformation in the lives of citizens. My goal is reform to transform. The biggest beneficiary of any reform should be the poor.”

Holding that creating new opportunities for citizens to progress is crucial for the growth of the nation, he said: “New opportunities are like oxygen to the aspirational citizens.”

Modi said that reforms will be fruitful only if they succeed in impacting the lives of citizens for the better.

We have to increase the quality of life of the common citizen and even more so, the quality of life of the poor. If a government is progressive, and runs an honest and efficient administration, the biggest beneficiaries are the poor. Poor governance hurts the poor more than it hurts others,

“I believe in the politics of empowerment. I believe in empowering the people to improve their own lives. We need to value enterprise and hard work, not wealth. Creating opportunities for cities and towns to grow is very crucial. Urban areas are an engine of growth,” he added.

Modi noted foreign direct investment (FDI) in India has increased by 39 percent in the last 18 months even while falling globally.

“The FDI in India increased by 39 percent in the last 18 months, when global FDI has fallen,” he said noting that at present, the global economy is going through a period of uncertainty.

Saying that “no country can be alone” in the globalised world today, he said: “India’s policies must be such that they make a positive contribution to the rest of the world. For the last four quarters, India has been the fastest growing large economy in the world,” he said.

Modi also noted that protecting the planet from climate change is “one of the most important tasks for this generation”. “We are committed to reducing the emission intensity of our GDP by 33 percent by 2030 even while growing at a fast pace,” he added.

Listing the government’s achievements, he said: “India’s highest ever urea fertiliser production was achieved in 2015. India’s highest ever production of ethanol as blended fuel, benefiting sugar cane farmers, was in 2015. the highest number of new cooking gas connections to the rural poor was achieved in 2015.

India’s highest ever output of coal was achieved in 2015. Shipping Corporation of India which made a loss of Rs.275 crore in 2013-14 made a profit of Rs.201 crore in 2014-15.

The prime minister also cited the benefits of the Direct Benefit Transfer scheme of cash transfers in a rationalisation of subsidies and weeding out illegal cooking gas connections.

“I was pleasantly surprised to see a noteworthy reduction in leakage, simply by eliminating those who were double counted and ineligible,” he said.(Inputs from IANS)(Picture Courtesy: economictimes.indiatimes.com)

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Economic Survey 2016-17 : Arun Jaitley Says Significant Decline in India’s Reliance on Cash

Economic Survey is a snapshot of the state the country is in

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Economic survey presents a state of the country
The Economic Survey 2016-17 was charted by Finance Minister Jaitley on August 11 (representational image) Wikimedia
  • Finance Minister Jaitley tabled the second volume of Economic Survey 2016-17 in both Houses of Parliament
  • Second volume to be presented by Chief Economic Adviser Arvind Subramanian and his team

New Delhi, August 12, 2017: The last day of the Monsoon session of the Parliament saw the Indian Finance Minister Arun Jaitley table the second part of Economic Survey 2016-2017.

The survey revealed that a sharp, however balanced decline has been observed in the use of cash after Prime Minister Narendra Modi heralded the demonetization move in November last year. This trend has been observed both, in levels, and as a share of GDP and money.

Before assessing whether the move was a success or a failure, we must first identify what were the objectives behind stalling Rs. 500 and Rs. 1,000 notes,

  • Immediate objective – flush out large amounts of black money that were hoarded in cash at the moment
  • Long term objective – transform the cash-based Indian economy into a digital economy

It was assumed that these objectives would make India an efficient economy with higher tax revenues.

Before the introduction of demonetization, India heavily relied on cash, which in turn led to an unhealthy cash-to-GDP ratio (12 percent) – a trend that was only worsening with time.

The finance minister presented the second volume of Economic Survey 2016-17 in both the houses of the Parliament with demonetization being discussed for a significant part. The following has been revealed in an attempt to gauge the outcome of the move,

  • At present, total cash in holding is Rs. 3.5 lakh crore. This figure is 20 percent less than what it would have been had the economy not been demonetized.
  • Cash as a share of GDP has also witnessed a decline by 1.6 percentage points. Previously it was 11.3 percent of GDP and now stands at 9.7 GDP.
  • Cash as a share of M1 which economically represents liquid portions of money supply, has also declined by five percentage points.

To ease understanding of everybody from a non-economic background, these trends indicate a significant reduction in Indian economy’s reliance on cash since November 2016.

Another bonus point is the huge amount of cash that was previously lying dormant with people and has now entered the banking system.

ALSO READ: Indian Government’s Demonetisation measures did not impede Future Black Money Flows: UN report

When talking about the long term objective of the move- digitalization, a significant movement can be observed across all sectors :

  • The affluent segment of the society has increasingly shifted to mobile banking, online transactions, and app-based banking solutions
  • The middle segment are using their debit and credit cards
  • People from the less affluent segment are slowly joining the digital economy with their Jan Dhan accounts and RuPay cards
  • Pensioners who were previously only undertaking transactions in cash are now being encouraged to use card-based techniques.
  • Farmers, who comprise a significant part of the Indian economy, are also being encouraged to issue and use Kisan credit cards.

The Indian banking sector is not only promoting the issuance of debit and credit cards but also their use.

The question that comes to mind here is, was demonetization successful? 

It would be wrong to say that the economy has completely transformed into a digital economy as many people have shifted back to cash. However, digital transactions are higher than pre-demonetization levels, and the overall movement is in the positive direction.

The Indian economy can thus, be rightly considered on the path to a holistic digital economy as the Economic Survey 2016-2017 notes “surge has moderated but the level and pace of digitalization are still substantially greater than before demonetization.”

However, while there is proof that the reliance on cash has declined sharply, it has also been pointed out in the survey that a “definitive judgments can only be passed if current levels of cash relative to GDP persist over time but so far”.


 
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Indian knitwear Industry Gears up to defeat China in Apparel Export

T.R. Vijaya Kumar, the great Indian clothes maker thinks it’s time for his country to take on Bangladesh, Vietnam, and even China for leadership in the global apparel industry.

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Textile. Wikimedia

Sept 17, 2016: T.R. Vijaya Kumar, the great Indian clothes maker thinks it’s time for his country to take on Bangladesh, Vietnam, and even China for leadership in the global apparel industry.

He’s a second-generation manufacturer, who transformed his small family clothing business in southern India into an apparel exporter of 1,700 employees and his goal is to double its sales by 2020. When it comes to his hometown of Tiruppur, which is mostly referred to as the knitwear capital of India, his ambitions are bigger and  broader, tripling exports and adding 500,000 jobs in the process, reported Bloomberg.

But the problem that is occurring is that other Asian countries are more ahead than India. India’s $17 billion exports of apparel were half as much as Bangladesh’s last year and its 3.7 percent global market share were behind Vietnam’s 5.1 percent. Apparel is a labor-intensive industry, which has helped developing economies transition out of agriculture. The Indian economy needs to generate more than eighty million new jobs by 2025 to keep up with its fast-growing population.

Indian Knitwear Industry in Tiruppur

PM Narendra Modi’s biggest failure so far has been an inability to boost employment, according to a recent poll. His new government recently announced a nearly $1 billion package for textile and garment makers, including subsidies for hiring, tax refunds and relaxation of overtime rules with a goal to create 10 million jobs and boost exports by $30 billion in the next three years.  Adding to the challenge is that the textile industry suffered a reputation blow last month, August 2016, when Target Corp. terminated $90 million of business with Welspun India Ltd. for labelling cheaper bedsheets as premium Egyptian cotton.

A key weakness of the sector is worker productivity, which is almost three times lower than in China. About 78 percent of Indian companies employ less than 50 workers, compared with 15 percent in China, according to Subramanium. That also means a lot of them remain below the threshold of government taxes and regulation, known by economists as the “informal” economy. A report released this year by the World Bank showed that Bangladesh had 15 times more garment workers formally employed than in the informal sector, while India has about seven times more informal garment workers than formal.

That gap could widen as foreign garment and textile producers continue to embrace automation. “India needs to start climbing the ladder fast to take advantage of its young population,” said Russell Green, an international economics fellow at Rice University’s Baker Institute for Public Policy in Texas. “Automation is making the ladder shorter and shorter over time.”

There’s more holding India back. A focus on cotton garments limitThat gap could widen as foreign garment and textile producers continue to embrace automation. “India needs to start climbing the ladder fast to take advantage of its young population,” said Russell Green, an international economics fellow at Rice University’s Baker Institute for Public Policy in Texas. “Automation is making the ladder shorter and shorter over time.”s its access to the winter clothes market, while buyers perceive the country as slower and less reliable than China or Vietnam, according to the World Bank report. In neighbouring Bangladesh, where garments account for 80 percent of overseas shipments, the monthly minimum wage is about 30 percent lower than India’s $105, and exporters don’t pay duties to the European Union.

Among them is Venkatachalam Babu, a small business owner who pays workers by the piece. In a workshop attached to his home, his staff of 12, including two family members, cut and stitch children’s underwear and pants from leftover fabric he buys from exporters.

While foreign markets are out of reach, Babu can bank on a fast-expanding domestic market that smaller rivals don’t have. Once an employee himself, he started his company 20 years ago with four workers. He’ll register it, he said, when the headcount crosses 20 people.

“We want to grow big,” he said as his mother sat cross-legged on the floor sorting pieces, surrounded by bags of fabric. “A problem is labor shortage.”

Tiruppur exporters have also joined forces to lower costs by educating companies on “lean” production management techniques and training factory staff to raise output. The government is partly funding the programs.

Kumar said the push was inspired by Modi, who during a 2013 campaign stop told the manufacturers to make proposals to expand, rather than just list concerns. Now the group hopes to take its action plan to the capital, 1,500 miles north, and have Modi mobilize all ministers at once.

– prepared by Shayari Dutta of NewsGram 

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India is better-placed to attract global investors

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image source: www.techicy.com

Dubai: India is better-placed to attract global investors Bishkek (AKIpress) – Indian economy is resilient despite a global downturn and its relative robust growth is attractive enough for global investors in a world largely devoid of growth, a leading asset management expert said, reports Khaleej Times. “Valuations are tad below long-term average and earnings growth is expected…