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  #1  
Old February 28th, 2007, 12:11 PM
HarHarMahaDev HarHarMahaDev is offline
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2007 India Budget

Manmohan and Chidambaram deliver another stinker of a budget...I will compile my thoughts and post.

Here is the link: http://indiabudget.nic.in/ub2007-08/bh/bh1.pdf

What worries me is this:

Growth in money supply (M3) is 21.3%, which means more Rupees are sloshing around in the market chasing fewer goods. If inflation is low, it is only because it is artificially suppressed by PDS, rent control regimes, fix on oil prices, etc. If it were truly a 'free' market, inflation would have been OUT OF CONTROL!! But, basic laws of economics suggest that if you try to control in one place, it will show up in other places....it is showing up as ASSET INFLATION. Real estate prices are astronomical, stock market is zooming, etc....

I have to compile my thoughts..as of now, I think we (india) are well on our way to a financial disaster!!
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  #2  
Old February 28th, 2007, 12:17 PM
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Re: 2007 India Budget

Quote:
Originally Posted by HarHarMahaDev
I have to compile my thoughts..as of now, I think we (india) are well on our way to a financial disaster!!
I am waiting for your objective analysis as why do you think so.
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Old February 28th, 2007, 12:28 PM
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Re: 2007 India Budget

(According to my limited economy knowledge) I think we still have good economic base in terms of large consumer base, foriegn investment and stronger base in certain sectors.

I am very disappointed to see there are no new steps to bring more people into tax bracket. Till we do that, people who pay taxes have to pay more and more taxes every year (1% additional education cess this year) where as tax money is equally distributed to everybody (except muslims and dalit who get more ). This is plain injustice and causing massive loss to Govt.

Nothing specific to boost upcoming entrepreneurs. Until we motivate people to do innovations and start their own businesses we wont be counted in global powers. We just cant move ahead with just foreign investment and IT. Like USA who create new markets, we need to innovate and create new markets fueling new jobs and money.

One good thing is defence budget is increased. So if we have good concrete plan of using those additional $$$, this is good step.
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  #4  
Old February 28th, 2007, 12:37 PM
HarHarMahaDev HarHarMahaDev is offline
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Re: 2007 India Budget

My POV is that a country also has to run like an efficient corporation.

I am typing things as I read....

Here are some general things that bother me:

http://indiabudget.nic.in/ub2007-08/afs/afs2.pdf
http://indiabudget.nic.in/ub2007-08/afs/afs1.pdf

Our GROSS TAX REVENUE is 468,000 crores
TOTAL REVENUE (TAX and NON-TAX): 524,000 crores

Interest Payment and Servicing of Debt: 151,000 crores

Why is it so high? Because these goons raise capital by taking loans for their shitty welfare schemes..then they scam it away. Then, the next generation has to pay it off!!


TOTAL DISBURSEMENTS (or expenses): 644,000 crores

Last edited by HarHarMahaDev; February 28th, 2007 at 12:45 PM.
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  #5  
Old February 28th, 2007, 12:42 PM
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Re: 2007 India Budget

Someone needs to explain this to me...

Expenses for Police force: 14000 cr (sounds about right)
Expenses for Jails: 0.43 crores (THATS IT??) (aaj kal an executive salary is more than this!)
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  #6  
Old February 28th, 2007, 10:11 PM
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Re: 2007 India Budget

What was even more funny was the reaction of Gurudas Dasgupta. he said that nothing had been done to contain i=the infflation and in the next breath said that service tax had not been raised. Now would not raising service tax cause more inflation!
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Old March 1st, 2007, 11:02 AM
HarHarMahaDev HarHarMahaDev is offline
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Re: 2007 India Budget

Quote:
Originally Posted by sgars
What was even more funny was the reaction of Gurudas Dasgupta. he said that nothing had been done to contain i=the infflation and in the next breath said that service tax had not been raised. Now would not raising service tax cause more inflation!
Inflation is measured by indexing a basket of goods. The government can conveniently swap items within that basket to fudge inflation statistics. The REAL inflation is far higher than 6% (as suggested by the govt, which is a high figure by itself).

If the growth is 9%, out of which 6% is contributed by inflation, then that does deflate the GDP numbers, right?

The dictionary meaning for inflation is increase in money supply. Money supply is increased through credit creation and money printing.

For e.g. the government decides to bail out oil companies...so if offers them Oil bonds of 10,000 crores. What is the real physical transaction? They are giving IOC and other govt run enterprises 10 year notes (pieces of paper which offer 6-7% interest rate). These companies sell these notes on the stock exchange and get cash!

Who is now paying the interest on these notes? The government using tax money.

Now think about this - oil is used more by rich people to power their cars. Oil is used by taxpayers as well as tax evaders. But the subsidies are funded by taxpayers exclusively. Which means, TAXPAYERS ARE POURING GAS INTO THE TANKS OF TAXEVADERS.

If there is a shortfall, they just print money and give it to the banks who then give it to the check-bearer. So what is wrong with that? There is a lot more rupees in the market chasing the same basket of goods. That causes prices to shoot up.

However, private companies and industries use technology and efficient processes to achieve economies of scale. This brings prices down. That is good. But the good deeds of private enterprise are completely watered down by the reckless deeds of the government!!

Take a look at these stats:

How did the govt spend the money last year:

Few things:
Grants in aid to state govt8656013.43845Tourism3640.056511Rural employment290704.51312Food, storage and warehousing245863.816979Water supply and sanitation22330.346673SC/ST358.20.055611General Ed187952.917925Sports4790.074365Arts6810.105725Medical and public health40610.630471Interest payments15069123.39479Defense540868.396856Admin services188992.934071Parliamentary and fiscal57560.89362

Worth noticing how much money we spend on interest payments. This is not because of population explosion or other stuff...this is because of decades of poor economic planning!!!

Anyways..this is one person's pov
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  #8  
Old March 5th, 2007, 06:16 AM
HarHarMahaDev HarHarMahaDev is offline
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Re: 2007 India Budget

I have contended before, and I assert it now, that India is NOT exactly a FREE country.

In a free economy, the government doesn't dabble with pricing.

http://economictimes.indiatimes.com/...ow/1724741.cms

If you look at above article, the govt is asking private corporations to roll back prices..why? to contain inflation...

You cannot force companies to set prices...that is against free market rules!
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  #9  
Old March 5th, 2007, 06:25 AM
HarHarMahaDev HarHarMahaDev is offline
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Re: 2007 India Budget

Indians are getting gang banged from all directions..but no! I am the bad guy for stating the facts...

- Inflation is extremely high and is definitely going to remain high.
- Interest rates are high and are headed upwards
- Taxes are high and are headed upwards
- Job growth is limited to IT and BPO sector, which sooner or later (sooner than later) will begin to retract. There are already big signs of that happening.
- With this budget, retail will suffer, VC fundings will suffer, auto industry will suffer, manufacturing will suffer, oil companies will suffering (all of them are already suffering...now bankruptcy is the next destination). The only beneficiaries are welfare groups, minority groups, education and rural groups. That is only more eyewash than anything else.
- All minority groups have much to rejoice...but hope they can hold the torch that has been snatched from the meritorious candidates. Women, muslims, and SC/ST can rejoice over the freebies...
- Rural farmers can rejoice over the bailouts they receive from their bad loans.

This government is sending India to hell in a handbasket!! Just my opinion!
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Old March 5th, 2007, 06:33 AM
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Unhappy Re: 2007 India Budget

Quote:
Originally Posted by HarHarMahaDev
I have contended before, and I assert it now, that India is NOT exactly a FREE country.

In a free economy, the government doesn't dabble with pricing.

http://economictimes.indiatimes.com/...ow/1724741.cms

If you look at above article, the govt is asking private corporations to roll back prices..why? to contain inflation...

You cannot force companies to set prices...that is against free market rules!
I agree with you that it is against free market policy to make private companies roll back prices but then how else can an inefficient govt. such as GoI control inflation? esp. in a country like ours where 30 crores of ppl live below poverty line, it is sometimes necessary for Govt. to make such moves. It is really unfair for those private companies but if inflation increases further, the govt. cannot guarantee its survival!
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Last edited by rameshp; March 5th, 2007 at 12:06 PM.
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  #11  
Old March 5th, 2007, 06:37 AM
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Smile Re: 2007 India Budget

Quote:
Originally Posted by HarHarMahaDev
Indians are getting gang banged from all directions..but no! I am the bad guy for stating the facts...

- Inflation is extremely high and is definitely going to remain high.
- Interest rates are high and are headed upwards
- Taxes are high and are headed upwards
- Job growth is limited to IT and BPO sector, which sooner or later (sooner than later) will begin to retract. There are already big signs of that happening.
- With this budget, retail will suffer, VC fundings will suffer, auto industry will suffer, manufacturing will suffer, oil companies will suffering (all of them are already suffering...now bankruptcy is the next destination). The only beneficiaries are welfare groups, minority groups, education and rural groups. That is only more eyewash than anything else.
- All minority groups have much to rejoice...but hope they can hold the torch that has been snatched from the meritorious candidates. Women, muslims, and SC/ST can rejoice over the freebies...
- Rural farmers can rejoice over the bailouts they receive from their bad loans.

This government is sending India to hell in a handbasket!! Just my opinion!
No one is against you just for stating facts. But please do so more objectively. Of all the things you mentioned, Inflation is the only new negetive fact that is 'new' to this whole analysis. The rest of the 'facts' have always been true to India that critics have been crying about for the past decade. Yet I see Indian economy flourishing year after year!
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Old March 5th, 2007, 06:42 AM
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Re: 2007 India Budget

Quote:
Originally Posted by rameshp
I agree with you that it is against free market policy to make private companies roll back prices but then how else can an inefficient govt. such as GoI control inflation? esp. in a country like ours where 300 crores of ppl live below poverty line, it is sometimes necessary for Govt. to make such moves. It is really unfair for those private companies but if inflation increases further, the govt. cannot guarantee its survival!
As you have stated..the GoI must control inflation by making its operation more efficient...not by forcing companies to comply to their diktats. The companies are doing nothing illegal, then why cant they price whatever they believe is in the best interest of their company? Inflation doesnt simply push up the price of steel, but also wages and salaries, raw material, power, etc etc. The corporation would have taken all that, and supply and demand factors into consideration before making any pricing decisions.

If we have to depend on the Govt to tell us what the price of XYZ should be, then what is the difference between the British rule and the GoI? Just the color of their skin?
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Old March 5th, 2007, 07:00 AM
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Re: 2007 India Budget

Quote:
Originally Posted by rameshp
I agree with you that it is against free market policy to make private companies roll back prices but then how else can an inefficient govt. such as GoI control inflation? esp. in a country like ours where 300 crores of ppl live below poverty line, it is sometimes necessary for Govt. to make such moves. It is really unfair for those private companies but if inflation increases further, the govt. cannot guarantee its survival!


i guess indian population is around 100 crores....
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Old March 5th, 2007, 07:07 AM
HarHarMahaDev HarHarMahaDev is offline
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Re: 2007 India Budget

Quote:
Originally Posted by rameshp
No one is against you just for stating facts. But please do so more objectively. Of all the things you mentioned, Inflation is the only new negetive fact that is 'new' to this whole analysis. The rest of the 'facts' have always been true to India that critics have been crying about for the past decade. Yet I see Indian economy flourishing year after year!
The facts, which are generally stated, are objective enough...I am not going to start posting pie charts and all (if thats what you mean by objective analysis)...the facts are true. Inflation, interest rates, taxes are all headed upwards..it is not a figment of my imagination. So I don't know what you sarcasm you intend to convey by using quotes around the word 'facts'.

Inflation did not happen overnight. There is nothing 'NEW' about it. Inflation is about increase in money supply and I believe I have been stating that India's M3 supply has been out of control in several other threads. Inflation is going to continue to wreck havoc in India, because money supply has not reduced, but increased dramatically.

But a new phenomenon is emerging. Japan is raising interest rates, which is putting a crunch on global liquidity. That is going to put heavy selling pressure on the Indian stock market. And gradually, as money gets pulled out of the bourses, the bubble will deflate...when that happens, dont say that I said something 'NEW'.

The 'economy is flourishing' argument is simply government eyewash. You may choose to believe the government rhetoric and support them all they way while they lead the country into a gutter.
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Old March 5th, 2007, 09:06 AM
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Re: 2007 India Budget

Some bedtime reading if you guys are interested...
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