The Weaker Side of a Stronger Rupee Monday, Feb 4 2008

This page has been moved to the location below

The Weaker Side of a Stronger Rupee

8 Responses »

 

Shopping Spree of India Inc Friday, Sep 7 2007

This article has been moved to the location below

Shopping Spree of India Inc

3 Responses »

 

India – The Road ahead to become a economic superpower Sunday, Jul 22 2007

Introduction

China and India – two competing nations for the status of a superpower..

It is a foregone conclusion that America will have to give up its sole superpower status within the next 2-3 decades, at least in the economic field… It is just a matter of time.. Two nations with a population of over 1 billion each are surging ahead..

But who will replace USA? India or China?

China – with a population of 1 billion has world’s largest forex reserves today, its exports are moving all around the globe.. cheap exports.. due to a weak chinese currency controlled by the Chinese government.. China is also the world’s largest autocracy with a dictatorial communist regime.. See Tiger Vs Panda

India -with a population of 1 billion again.. but with a difference.. Indian population is much younger compared to the Chinese. Chinese population will comprise mostly of retired people in the next 1-2 decades.. India is the youngest country in the world with over 70% of its current population being below 35 years of age! What’s more, India is the largest democracy in the world! Unlike Chinese currency, Indian currency is controlled by the open market..

A Comparison

So let us see where does the road lie ahead for India to become a superpower..

The Chinese economy is export oriented.. China is making money by its Cheap exports.. The day other countries come up with even cheaper alternatives to Chinese goods, or the day the true value of Chinese currency is enforced in the markets , Chinese exports will be hit and so will be the Chinese economy…

Indian economy needs to grow in an opposite direction.. Instead of being export oriented nation, India has to become consumer oriented.. India has a population of 1 billion.. It is 1/6 of world’s market.. the world’s largest youth population exists in India.. This market has to be tapped by Indian industries and the government should encourage consumption within India…

The American Angle

Note that America did not become a superpower by exporting its cheap products.. In fact American products were costly due to a strong USD in the earlier decades..

Instead Americans encouraged a consumer based economy inside USA. Americans used to buy everything on this planet.. So the companies there also started manufacturing everything on this planet.. the consumer oriented nature of its economy lead to more technological innovations.. by maintaining a stronger USD against other countries, the american government also ensured that its hungry consumer society got products from all over the world at a lower price. Which is also the reason why other countries exporting their products to USA ended up with inflation within those countries, while the american dollar remained stable! The very reason why american dollar never faced a huge inflation in US was because the rest of the world was exporting cheap goods to USA, thanks to their weak currencies against USD.

The lesson India needs to learn from this consumer oriented chapter of american economy is that India should move towards becoming a consumer based economy where even Indian companies start producing world class products which first gets sold in India and anything extra gets exported. For this India needs to have a very strong rupee first. Because when the rupee is stronger, it means you will get very little in return for exports.

Suppose 1 Indian rupee = 1 USD, then why would Indian manufacturers want to export their goods, because either way the returns are the same!

Even more, suppose 1 Indian rupee = 2 USD, well in that case the Indian manufacturers will prefer to sell their products within India instead of exporting it to US. This will increase the standards of life inside India. Infact, a rupee stronger than USD will mean that american companies will line up to export their products to India!! Just imagine in that case how the standards of living will go up in India. Well, yes there is also an energy angle to this!

Today what is happening is the best of the products manufactured inside India are exported and whatever is left is made available to the Indian consumers. Reason, exports bring more money than selling within India! This is exactly how americans got best of the products worldwide sold to Americans by maintaining currencies of other countries at a lower level than USD.

For instance today, best of the breed of Indian mangoes are exported to America! They are not available to Indians even though they are grown in India! This is just a simple example.

How about a stronger rupee? The price of a big 5 bed room house in USA for instance is about 4,50,000 USD ! Imagine buying a big 5 bedroom house in USA for 4,50,000 rupees!! In that case every young Indian IT professional today can buy about 10 such 5 bedroom houses in USA

US Economy

Inspite of a strong american dollar, the current US national debt is about $28000 per head! India, inspite of its weak rupee has a national debt of about 20000 rupees per head! Just imagine how the situation would reverse further as Indian rupee becomes even stronger.. The Indian average debt would come down to as low as about 2000 rupees per head without even having paid back a single penny, just because of a stronger rupee!

The best way ahead right now for India would be to use its heavy forex reserves for large scale infrastructure development projects within India, and this has to be done well before USD falls even lower. So let India not keep its forex reserves tied up inside the bank lockers..

Indian IT

The issue is that Indian IT industry will be hit if it continues to depend on a weaker rupee for its profits. Indian IT instead has to concentrate on developing core system products which has market both inside and outside India. In the next 10 years millions of new computers would be added in India thanks to more Indians coming online. If Indian companies can manufacture operating systems, compilers, databases, browsers, media players and what not.. just imagine the size of the market they can rule! This is just an example alternate approach I am suggesting for all similar export oriented industries – make use of the vast Indian consumer base.

Summary
To become a true superpower, India needs to concentrate on expanding its own consumer based market within India, there by making available best of the products to its own people..

Just by increasing forex cash reserves like China, no country can become an economic superpower. Just imagine what will be the status of China if the value of dollar crashes tomorrow? What will happen to its forex reserves of 1 Trillion USD?

So Indian economy needs to become a self sufficient economy with minimal dependency on exports. The government needs to encourage more spending within the country, than to solely depend on more selling outside the country.

8 Responses »

 

Stronger Rupee = Stronger India Friday, Jul 20 2007

This article has been moved to http://www.hitxp.com/in/20072007.htm

113 Responses »

 

Union Budget – Garibonko Hatao Sunday, Mar 4 2007

Lets go through the joke of the year…..
We as the middle class professionals in the country who are the major souce of income to the government as honest tax payers have all the rights to know what this govt is doing with all our money.
 
SUMMARY OF THE BUDGET:
Without management degree Lalu was able to present a feel-good railway budget and can even preach management graduates!
With a harvard degree in management Chidambaram failed to deliver on the AAM AADMI KA needs!
 
HIGHLIGHTS:
Laptops, Mobiles, TV, AC, Cars, Perfumes, Dog food etc Cheaper
Vegetables, Grains, LPG, Kerosene, Scooters etc expensive!!
 
Can anyone tell me a bigger joke than this? This govt claims to be a AAM AADMI KA govt. Tell me guys what does the AAM AADMI in this country use? Laptops and mobiles OR LPG and Vegetables? Cars or two wheelers?
 
Please any one let me know how to prepare food using Cosmetics and perfumes…Millions are waiting to know… please.. any one
 
DETAILS:
 
FM (Finance Minister) has increased the threshold slab for income tax payers by Rs 10,000. This will marginally reduce tax liability by Rs 1,000. But at the same time, he has increased the education cess by another 1% to fund secondary education in the country. For people with a tax liability above Rs 100,000, the net impact of both these measures is negative. He gives it with the right hand and takes more than what he gave with his left hand. Chidambaram’s generosity is unbelievable. He is doling out a 1000 rupee cut to every tax payer when the inflation level is running at 7% … Hahaha
 
The FM has increased the threshold limit of indidual exemption limit to 1,10,000/-but has taxed the divident of mutual funds!
 
This govt simply believes in filling its coffers more and more by taxing the honest salaried middle class tax payers more and more and giving nothing in return. What about the corruption in this country? The total debt of the country today is 24,73,562 crore. The total amount of money in the KNOWN corruption scams till to date is over 48,00,000 crore!! Now tell me is India poor? Do we deserve to be taxed so much? Mr FM find ways to unlock the Swiss bank accounts. You dont need a harvard degree to do that.
 
It seems crazy that in a democratic country, honest employees in companies who earn a salary pay tax at 30% plus whereas persons who are “smart” and play the stock market and engage in risk averse activity are subject to only 10% of less tax on capital gains. Is he trying to push all employees to put their money into the stock market and risk everything?
 
Now we employees will have FBT levied on the stock options given to us at about 33% whereas persons who play the stock market will pay no tax or only 10% tax on their gains. This is nonsensical and plain cheating in a democratic society.
 
Even worse is that he has not looked into the issue of what constitutes residency for the purpose of double tax treaties. As a result, FII’s and foreign VC’s can invest in the Indian stock market, earn huge profits (as they have!) and pay absolutely no tax, other than negligible FTT.
 
We do not understand why a learned man has no sense of managing funds without harassing lower income group. Our country freedom fighters and martyr’s including Gandhi fought to remove lagan’s (taxes) on essential items.
 
Higher a person earns through legitimate means, higher he pays the tax.
 
Is it not better to be a landless agriculturer labourer these days than to be a salaried executive?
 
Is it not better to be a citizen of one of the Bimaru states than to be from Mumbai, Chennai, Hyderabad or Bangalore? FM has provided a special package for non-performing states. This is disgusting when these states are hell-bent on not improving, are ruled by a bunch of crooks and are the most corrupt of the lot. Progressive states are ignored as if the progress they made was their only fault.
 
FM literally taxes the very people who work hard, excel and then tells him that they have excelled. Is he discouraging people to earn more. Or is he encouraging people to hide their true income.  
 
I cannot understand how the sop’s given to pan masala manufacturers help the country.. For Gods sake Mr. Chidambram have you got no sense left in you?
 
His approach seems to be, reward the foreigners, reward the stock wallahs, punish the employees. Its a disgrace and shameful!

FM has reduced taxes on pets and non tabacco pan masala. What message are they giving? CONGRESS KA HATH, AMBANI AUR MITTAL KE SATH.
 
INSTEAD OF REDUCING TAXES ON ESSENTIALS, THEY’VE REDUCED TAXES ON NON ESSENTIALS
What a cruel joke on indian people. you won’t hear such joke in USA or europe.
 
What did the government do with the education cess collected in the previous year? The condition of education is still the same it was..so why this 1% adition? To pay for all their nonsense reservations which are bound to create a second class knowledge society in this country?
 
Who said that with two prominent economists at the helm of affairs, we were heading towards happy days?
 
Is it not ironical that the rates of pulses, vegetables, cooking gas, fuels are spiralling beyond Aam Aadmi’s grasp whereas Mobile phones, tariffs for the same, toys,colas, electronic gadgets, consumer durables, cars are becoming cheaper?
 
If this is the performance of our visionary economists, then we better have Laloo Prasad Yadav as our FinMin.
 
Our Economy moved in the right direction not because of the politicians but because it became necessary to open it up and align it with the world economy. Otherwise India was on the brink of going bust Like Russia. Till today IT ITES BT are working fine bcos govt has not interfered in it. But now instead of tackling the issue of Chinese taking over the offshoring services, the govt wants to bring in reservations here too and for sure mess up the whole thing.
 
The most worrying issue is inflation which is the real issue that affects the AAM AADMI. It has to be controlled. I’m not happy with FM reducing the import duty to control inflation. It is more reactive (with short term vision). This government needs to be proactive and introduce schemes that helps increase our produce (mainly Agriculture and Textiles). FM is solely responsible for killing the appreciation of rupee which directly controls the inflation.
 
Just look at this joke once again.
LPG and Kerosense expensive !!
Cosmetics Perfumes Makeups all cheaper !
pulses vegetables grains expensive !! (Eat imported junk become more unhealthy..)
TV mobile laptop cheaper
Tea expensive coffee cheaper?? Note that tea we use is made in india and coffee is imported!
 
Hey We are FOOLS unnecessarily Don’t Blame Congress !
They Care a lot abut India!.I will explain Why
 
1)Automobiles and Two Wheelers: Expensive.
A)Because of this we Wont buy any more so Pollution Is reduced Automatically!
 
2) Cosmetics / Makeup accessories ,Perfumes, Clothes and Fabrics—–Cheaper
A) Now we can dress up like Britisher’s & can give tough competition in fashion market…wah wa!
 
3) Kerosene — Expensive
A) Now a day’s farmers and poor people are attempting suicide (especially in andhra) so to protect them they have raised the cost.
 
4) LPG & petrol —- Expensive.
A) Forcefully saving fuel which is precious & spending it is dangerous to environment
 
5) TVs (including Flat Screen), Mobiles , Laptops ——- Cheaper..
A) Creating another east india company! Now We can proudly say that India is Developed Country (Not Developing Country).
 
One thing is very clear.. The budget clearly shows the influence of the FII’s and the persons controlling FDI’s… the items which are being brought into india.. like DVD’s fltrons etc… will be cheaper … they are already making tonnes of money from that… and how do they become cheaper… govt cuts their part of duty/levies.. and SONY/ Hyundai etc… reap the benefit!!
At the same time the bikes and other two wheelers manufactured by Indian companies and which are essential and where the Indians play a significant role… they become expensive!!
 
This is the same foolish thing that King Rehoboam (son of Wise King Solomon) did. Bcoz of which he lost maximum part (10/12) of his kingdom
 
Maybe we should stop sending our kids to schools so that they do not become moronic like our FM / PM.
 
How many households have Dish washing machines now and how many are going to buy in near future.. What is the point in Reducing prices for this ??? FM has gone Crazy… Someone stop him..
 
Kerosene, LPG, Pulses, grains are going to be expensive; mobile and perfume are going to be cheaper.. hialrious; from where did congress import this FM.. You need real high IQ and an extremely crooked mind to do this.
 
We will start eating TV, Mobile, Laptops coz these will be sold in the market like vegetables.
And Loan agents will come to our house to finance grains, LPG, Kerosin, meat…
which means more call centre thriving on making calls for loans to individuals for grains n vegetables and other basic commodities.. Amazing!!! think how these multi national banks will thrive.
 
FM is telling that, “you poor, get lost, Indian economy is not for you”!!
 
I am sure those days are not so far when we get offers like if we buy a quintal rice bag we will be given a Laptop FREE….. Haha
 
But on second thoughts what good are cheaper electronics etc as there is barely any electricity to run them. Water shortage is common so washing machine se accha dry clean kareinge
 
Thoug edible oil will become cheaper, the rise in prices of LPG,Kerosine,pulses,vegetable, could make the concession on reduction of sunfower oil meaningless. In short you were tie,use laptop, but stand naked.
 
They are taking india to 500 years back when ppl used to cook food without LPG/kerosene !!
 
Homegrown Commodities fit For EXPORT are dearer for INDIANS, but cheaper to foreigners.

Gas and keroene to cost more but there is a reduction in petrol and disel. The question is whether kitchen is important or car. You buy a car than a gas cylinder and you will feel inflation has not hit you.

The budget will really help congress reducing poverty, since the items like Pulses, Grains, Vegetables, LPG and Kerosene are made expensive making difficult for poor people to survive.
The policy of congress is “if poverty can’t be removed, remove poor people” and its not ‘GARIBI HATAO’ It is ‘GARIBONKO HATAO’
 
One day PC found out that his pet’s foods are being consumed faster than before. He ordered CBI investigation. Results………. Guess what?? Pet’s food were ate by his servants and some were sold to poor by his securitymen. Now, he started thinking what to do? After considering situation, he decided to reduce duty on Pet’s food so that poor people can afford it and his securitymen don’t sell it to the poor and his pets also get their food.
 
Fellow coutrymen should decide for themselves whether it was wise to give the reigns of the country in the hands of this unscrupulous bunch of jokers in May 2004.
 
I still have a doubt if the FM may have read the budget reversed.
 
A typical ad in the newspapers will look like this now.
‘Second hand colour T.V brand Sony for sale, 10 months old with remote, Seller cant afford food’
 
ANDHER NAGARI CHAUPAT RAJA
ANDHER NAGARI CHAUPAT RAJA
ANDHER NAGARI CHAUPAT RAJA
ANDHER NAGARI CHAUPAT RAJA
 
BHAGWAAN INDIA KO BACHAO
AUR SABHI SE VOTE DALWAO
CONGRESS KO BHAGAO
 
Good going Punjab and Uttaranchal…..

One Response »

 

Swadeshi Friday, Jan 6 2006

A friend of mine asked me today looking at my Nokia handset, “You talk so much about India and Indian, why are you having a handset manufactured by a foreign company?”
I replied to him, “Not only my mobile handset, there are many other things in my house starting from TV, Refrigerator, Washing Machine etc which are manufactured by foreign companies”.
The concept of swadeshi is being entirely misinterpreted. I bought a Nokia handset for the simple reason because no handset manufactured by an Indian company matched the number of features or quality the Nokia handset had. I dont want to buy an Indian handset even if it is of a low quality just because it is of an Indian company and thereby end up giving false statistics to that Indian company that their handsets are of good quality and so the sales are high… Let them face the competition and manufacture quality handsets, I will buy one then. Else the result will be only swadeshis will have those products and internationally nobody will buy them and in that case our exports will come down, we cant compete with china, market will be restricted only to India and what not….

By wrongly interpreting swadeshi, please dont end up buying all Indian things just because they are Indian without testing the quality. But if there are equal qualitative Indian products as well, then in that case PLEASE BE SWADESHI AND BUY INDIAN PRODUCTS ONLY.
For me the definition of being swadeshi is buying India products when I have a choice of both Indian and foreign products with same quality. In fact I will be more happier if the Indian product is far superior in quality compared to the foreign one. But if the Indian products are less superior in quality than the foreign ones, then I WILL BUY FOREIGN PRODUCTS.

What my friend didn’t ask me when he asked about my handset, was my mobile subscriber. I have been subscribed to Airtel (an Indian company) for the past three years even when there were cheaper offers by Hutch (a foreign company) for the simple reason that quality of Airtel was superior than that of Hutch. Airtel had signals even on highways away from city and places in western ghats where Hutch didnt have signals.

BE INDIAN, BUY INDIAN – BUT QUALITY DOES MATTER

Please ensure that Indian companies are able to compete internationally and offer quality products and services. To ensure this buy only quality Indian products and services. Never try to sustain an Indian industry with false growth and feedback. WE DONT NEED SYMPATHY, A DAY SHOULD COME WHEN JAPANESE BUY INDIAN MICROELECTRONICS PRODUCTS. FOR THOSE WHO DONNO, READ HOW AKIO MORITA MADE SONY AND ‘MADE IN JAPAN’ SYNONYMS TO THE WORD QUALITY!!

YOUNG INDIAN FACTUntil 1896, India was the only source for diamonds to the world

YOUNG INDIAN QUOTE“In India I found a race of mortals living upon the Earth. but not adhering to it. Inhabiting cities, but not being fixed to them, possessing everything but possessed by nothing.”- Apollonius Tyanaeus, Greek Thinker and Traveller 1st Century AD 

3 Responses »

 

American living standards for India Tuesday, Jan 3 2006

What does it mean when we want India to become a developed country? We want the living standards of all Indians to be equivalent (at least) to that of other developed nations. Let us consider USA as a standard to improvise the living standards of Indians. When I say considering USA as a standard, I mean elevating the living standards of Indians to that of american standard.

The measure of living standard of a society is its energy consumption. The more energy available to consume the higher will be the living standards. For instance, if there is not enough electricity available even to light a bulb every night, then what is the use of having ceiling fans or televisions in the house? But if adequate energy is available then we can even go for luxuries like air conditioners, refrigerators, washing machines, etc.
Hence to elevate the living standards of Indians we need adequate supply of energy. Now since we have taken America as our standard for living, let us see what the equation turns out to be.

United States of America consumes half of the world’s energy resources. Population of this country is 1/16 of world population.
Population of India is 1/6 of world population. By simple mathematics we can see that if all Indians have to live the standards of Americans then India alone needs nearly one and a half times the energy consumed by the whole world today!!!
Looking at the practicality of the problem, how do you think we can generate so much of energy at affordable rates and without causing any pollution. (We better forget any polluting energy sources rather than become a developed country as otherwise it simply means accelerating the deterioration of the environment finally making life uninhabitable on this planet).

Also note the practical time schedule required to develop technology that can develop this amount of energy along side considering the population increase in India during that period.

Note that in this blog I have concentrated only on production of adequate energy. But what is also required to improve the living standards of our people is to make the energy affordable. If you make practically infinite petrol resources available but increase the price of petrol to 500 Rupees, I don’t think there will be any buyers.

YOUNG INDIAN FACTThe world’s first known University was established in Takshashila, India in 700BC. Here more than 10,500 students from all over the world studied more than 60 subjects

YOUNG INDIAN QUOTE“We owe a lot to the Indians, who taught us how to count, without which no worthwhile scientific discovery could have been made.”- Albert Einstein 

15 Responses »

 

Social Division in Modern India Monday, Jan 2 2006

While it is an undeniable fact that Information Technology has improved the standard of living of urban India a lot, at the same time it also has to be observed that it is creating a wider social division in terms of financial power across the society.

There are three major divisions in the Indian Society with unequal wealth distribution.
The upper class, the middle class and the lower class.

The social division prior to the arrival of Information Technology was as follows:

The upper class people had access to all kinds of luxuries in life and they included industrialists, politicians, top bureacrats etc. But they formed a very small percentage of the population.

The middle class people had access to all basic necessities of life and they included regular salaried employees and formed the second major chunk of the population after the lower class people.

The lower class people did not even have access to the basic necessities of life and they included all those unemployed and under employed people living below the poverty line. They formed a major chunk of the society.

Come IT. A new class called upper-middle class has been created and this includes Salaried IT professionals. Their salaries being much higher than those of middle class people (who are basically employed in non-IT sectors), the upper middle class has access to many of the luxuries in life.

The issue here is that the social division in terms of unequal wealth distribution has been constantly increasing and while there is no way that IT can be blamed for this, adequate steps should be taken to bridge the gap between the above mentioned sections of the society to prevent a social collapse of the society structure.

One can make out the differences in the society by having a journey through rural UP and Bihar AND Bangalore and Pune.

It is always in the best interests of a society to ensure that the monetary difference between least paid and most paid employees is as small as possible throughout all sectors to ensure an overall growth of the society. Because when there is not much of a salary difference amongst different sectors, the youth will be able to opt for a job which he is good at and interested in than going for the one that pays him most.

A person interested in painting need not become a software engineer and give up his passion just because he cannot earn more by painting. A person good at running should become an athlete and not be forced to study medicine just because the parents have money for a payment seat. The social division has already made us lose great talents by forcing them into a job which they like only because of the monetary returns.

The onus lies with both, the parents and the administration. Parents should encourage their children to become not what the parents want, but what the children are really good at. It is the responsibilty of the parents to identify their children’s skillset and talents and nurture the same in the right direction. It is the responsibility of the administration to ensure that the children get a good financial backbone in pursuing their interests.

Until this happens, there is no way we can dream about topping the medals tally in olympics or bagging nobel prizes. Creative minds are to be set free from having to worry about the next meal.

YOUNG INDIAN FACTWorld’s oldest democratic kingdom was established in Kalinga in North India as long back as 300 bc.

YOUNG INDIAN QUOTE“India is the cradle of the human race, the birthplace of human speech, the mother of history, the grandmother of legend and the great grand mother of tradition.”- Mark Twain 

5 Responses »