907 (2 of 10 series) An Exports-weak country should not turn dependent on imports

This is in continuation of post NO. 906 Click here to see post No. 906 at this blog. India is an Export-weak country, which means Export-income will be sluggish. If imports are not controlled, Balance of Trade Adversity will aggravate, leading to a Balance of Payments Crises. India has experienced such crises prior to 1991, which might have led to devaluation of INdian Rupee in the past. The Balance of Payment situation has easened after India started inviting and getting Foreign Investments into Indian Companies, by extending tax concessions, cheap land, and LPG (Liberalisation, Privatisation, and Globalisation). Though India may not be going to face a Balance of Payment Crises in short run, such possibilities cannot, altogether be ruled out, especially if Foreign Institutional Investors, Foreign Individual Investors, their Computer algorithm-driven Investment Programs decide to withdraw some investments. As India does not have Crude Oil Reserves, India's Oil Imports have become uncontrollable, compounded by the multifold increase in the number of bikes, cars, and trucks in the country. Import of food grains, lentils particularly Red Gram dal splits, onions, raw sugar for processing by Sugar Mills etc. have become nearly unavoidable to control domestic shortages, black-marketing, and spiralling rices.

Here is a link to RSTV (Rajya Sabha TV) report which deals with import of lentils etc. by India. Click here to go to RSTV website and study the steps taken by Government of INdia to import of essential goods, and to control black-marketing by traders. A few lines from the Report are worth noting:--

Date 1:04 PM, 19 Jun 2016

About 5.5 million tonnes of pulses were imported last fiscal, largely through private traders. The move comes as the prices of pulses have continued to soar and reached Rs 200 per kg in retail. Various central agencies and the Income Tax department have been conducting raids across the country for some time to check hoarding.

So far, 14,000 raids have been conducted and over 1.33 lakh tonnes of pulses seized in past few months, the sources said.

The rise in prices of pulses is due to demand-supply gap. As per an estimate, the demand is of 230-240 lakh tonnes whereas the supply is about 170 lakh tonnes.

With each passing year, there is an increase in demand of pulses by one million tonnes, thus making imports necessary. The possibility of black marketing and illegal trading cannot be wished away as hoarders try to exploit the situation to make profit, they said.

Views of ybrao-a-donkey which are not intended to be imposed on others

Why Political Parties cannot identify their own Party Members who engage in Hoarding and Blackmarketing?

If political parties can identify the traders who are engaged in hoarding and black-marketing of food items, both domestically produced and the imported stocks, and expel them from their parties, the Political Parties will get cleansed. Once the black-marketeers lose political patronage, it will become easy for Officials to book cases against Offending Traders.

To continue adding/ deleting/ modifying. सशेष. ఇంకా ఉంది.

777 Outgoing RBI Governor should stay back in India, and study the conditions of Working Class

We absolutely need to get public sector banks back into lending to industry and infrastructure; else credit and growth will suffer as the economy picks up.

I read these obituaries in the paper, I’m still alive. I will be leaving this office in September but I will certainly be coming in and out of the country on numerous occasions. I will be reading and writing and speaking at several occasions

Mr. Raghuram Rajan, the outgoing Governor of the Reserve Bank of India 2016, has humorously observed that he has been reading his obituaries in media, and that he is still alive. He has also highlighted the need for Public Sector Banks getting back into lending to industry and infrastructure. For those who wish to read this news report here is a link: Click to go to Business Standard, if you wish to read it .

This ybrao-a-donkey has designed some questions and answers on this hot topic of Current Affairs, for the benefit of our Readers who may be interested in the economic well-being of India. Here are these:--

Question: Were the Government to give an extension to Mr. Raghuram Rajan, will the situation have changed?

Answer: Nay. Very little is in the hands of Mr. Raghuram Rajan, or any other person who will succeed him as RBI Governor. Indian Economy is a monstracity beyond the control of any Regulator. There is a proverb in Telugu, which is derived from the Indian Epic Mahabharata: "karNuDi cAvuki yEDuguru kArakulu". English: Seven people are responsible for the death of Warrior Karna in the Mahabharata War. This proverb is used, whenever there is a misconception that there is one cause for some result or effect. The proverb highlights that a number of factors will be acting simultaneously in culminating to an outcome. Similarly, there is not one reason for Inflation in India, and the Indian Public Sector Banks being saddled with bad loans. Causes take 1000 pages to explain. Solutions need 1000 pages to present.

Question: Can Mr. Raghuram Rajan control inflation, by keeping the Interest Rates stable?

Answer: Whether stable interest rates help in controlling inflation or not, maintaining stable rates help the prospective borrowers to know, what to expect, and what not to expect, as far as the costs of borrowing are concerned.

Inflation in India is mainly caused by domestic scarcities-- seasonal scarcities, artificial scarcities created by blackmarketeers, logistic scarcities caused by poor transport systems, and restrictions placed by State Governments on free movement of goods across the country.

SEASONAL SCARCITIES

These are not in the hands of RBI. Seasonal scarcities get automatically corrected, unless there are persistent droughts and floods. The Government also meddles with the supplies. Without accurately estimating domestic stocks and needs, it foolishly permits exports, at lower prices. When exports lead to domestic scarcities, the same Government permits imports at higher prices, because whenever India enters markets to buy something, international black-marketeers (Even countries can turn into black marketeers), jack-up the international prices. Thus India loses both in exports and imports.

ARTIFICIAL SCARCITIES

These are not in the hands of RBI. Artificial Scarcities are created by hoarders and blackmarketeers. Even if RBI really wants to control inflation which is created by blackmarketeers, it cannot control all the factors. At the most it can partly control one factor: Curtail loans to sensitive commodities which are subject to black marketing. These were tried by RBI in the past through what are known as "Selective Credit Controls" which have been applied to the sensitive commodities. These Selective Credit Controls, Bankers were expected to implement (RBI only gives directions). Bankers have conflict of interests. As Banks, they always want to maximise their advances levels by leaps and bounds because they have high costs of operations, and they have to do cross subsidisation of priority sector lending. Hence, Banks never really bothered about the Selective Credit Controls stipulated by RBI. In the post-1991-LPG (Liberalisation, Privatisation, Globalisation) Era of Deregulation and Economic Reforms in India, Selective Credit Controls were dumped into dustbin.

Besides, Selective Credit Controls stipulated higher margins for commodities hypothecated as security. E.g.: Suppose for non-sensitive commodities, Banks stipulate a margin of 20%. It means , for every Rs. 100 value goods given as security to Banks, they can lend upto Rs. 80/-. In case of Sensitive Commodities, if RBI stipulates 40% margin, then Banks can only lend Rs. 60/-. Borrowers were interested in hoarding, and waiting till prices rise. Hence, they did not hesitate to hypothecate goods worth Rs. 170 approx. to get a loan of Rs. 100, which is obtained to finance hoarding and blackmarketing. In other words, more goods will have to be hoarded to get a loan of Rs. 100/-. Thus, there was a danger of artificial scarcities going up, when Selective Credit Controls were enforced. Anyway, all that is history, now. Today, RBI does not control credit to sensitive commodities which undergo blackmarketing, hoarding and speculation, by unscrupulous business entities, Corporates and Industrial Houses.

ybrao-a-donkey has, repeatedly stated that we need a 1000 pages to discuss this. Even Retail Malls, Marketing Chains, and Production Houses can create artificial scarcities in the Liberalisation Era. For example, if it will be sufficient for biscuit manufacturers like Britannia and Parle to maintain an average stock of say 200,000 tonnes of wheat and 200,000 tonnes of sugar, they may choose to maintain stocks 400,000 tonnes each. Again, this practice has certain advantages and disadvantages for the Economy. Suppose, Britannia and Parle enter the market to buy wheat and sugar in harvest season, it will boost a sort of price support to the farmers and sugar factories. If biscuit-makers were not there as purchasers, farmers and sugar factories may have to depend only mandi-level traders to get market prices, and the Food Corporation of India to get minimum support price.

Similar situation can prevail in case of cotton and kapas.

PROVISIONAL CONCLUSION

Very little is in the hands of RBI, about controlling inflation. If the RBI Governor believes that he can do a lot or could have done a lot, by resisting the demand from the Finance Minister, Prime Minister, their Economic Advisors, Corporate Pressure Groups etc. etc., then I must say that he is rather unrealistic. I cannot use harsh phrases like "He is living in a fool's paradise". Reason: Living in a fool's paradise, is this donkey's right.

In the same way, if our Rulers believe that there will be tremendous growth, if RBI reduces lending rates substantially, then, we must say that Rulers have been driven into a fool's paradise by the Corporate Pressure Groups like Assocham, CII, FICCI, and the owners of the Industrial Empires. We should not forget one thing. Our rulers whether Congress or BJP or UPA or NDA, or some XYZ Party, they will be constantly indebted to the Industrialists for the funds they collect to maintain their Political Parties, to buy votes, and to remain in the Electoral Battle Field. For this reason only whether Mr. Manmohan Singh and Chidambaram are the Ruling Batch, or the Narendra Modi and Arun Jaitley are the Ruling Batch, they sing the same songs, as directed by the Corporates. Cutting lending rates is one method, through which the Politicians can discharge their indebtedness to the Industrialists.

To continue. सशेष. ఇంకా ఉంది.

776 The skirmishes among Mr. Subrahmanian Swami, Mr. Raghuram Rajan, Mr. Arvind Subramanian et al, are all bourgeoisie fibs and fisticuffs

The skirmishes of Mr. Subrahmanian Swamy, Mr. Raghuram Rajan, Arvind Subramanian are all engaged in bourgeoisie fibs and fisticuffs

I have a list of 27 people, with me, who are working within the government and need to be ‘fixed’.-Mr. Subramanian Swami

Considering the various news-reports and events which have culminated in the non-extension of the term of Mr. Raghuram Rajan, the Governor of Reserve Bank of India (equivalent of Federal Reserve of United States, and the Bank of England of Europe), the view expressed by Mr. Raghuram Rajan, that he was reading his obituaries in Media, and that he is going to be in India for some more time to time, things may appear to be wierd to the World, about the choice of occupants of high posts in India.

Yet, there is nothing to wonder about all these happenings. These things happen in every country, particularly in every "Capitalist" country on this Earth. (Note: There are no true "Socialist" countries, in the world today).

At the most these can be termed as "kissa kursi kA" (The Story of the Chair). The Chair of the Governor of Reserve Bank of India is important because he is believed to control the lending rates on credit extended by Banks in India to business Corporates and Industrial Corporates. Corporates are eager, and keen that interest rates on Corporate loans extended by Banks in India are brought down drastically, so that they can make easy profits. It is perceived that Mr. Rajan is a stumbling block for fulfilment of that desire, but it may not be true. Even if we accept that Mr. Rajan is a Congress Agent, as presented by Prof. Subrahmanian Swamy, we have to recognise that Congress too is not against Cheap Interest Rates in India. As an economist made in the moulds of Western Financial Institutions such as World Bank, IMF, Harvard, and other Euro-American Universities and Schools of Economics, Mr. Rajan himself is not against lowering interest rates.

Some 10 questions are worth examining on this issue, which we shall take up shortly.

To continue. सशेष. ఇంకా ఉంది.

119 Service tax on rice

119 Service tax on rice బియ్యం రవాణాపై కేంద్ర ప్రభుత్వ సేవా పన్ను

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చర్చనీయాంశాలు: taxation, ధరలు, ఆహారం,రవాణా

కేంద్ర ఆర్ధికమంత్రి శ్రీచిదంబరం గొప్ప మేథావి. ప్రజలు ఆహారపదార్ధాల అధిక ధరలతో సతమతమవుతూ ఉండటం అనే విషయంలో శ్రీవారికి సంబంధం ఉండదు. శ్రీ మన్మోహన్ సింగ్ గారి మంత్రివర్గ సభ్యులలో పలువురికి ఈగుణం ఉంది. శ్రీవారికి ఈ బాధా రాహిత్యం (apathy) మరీ ఎక్కువ. ధరల పెరుగుదలను అదుపు చేయటం కేంద్రప్రభుత్వబాధ్యత కాదని శ్రీవారు ఇప్పటికే చెప్పారు.
ఇప్పుడు మరొక అడుగు ముందుకేశారు. బియ్యం వ్యవసాయోత్పత్తి కాదుట. బియ్యం రవాణా వ్యవసాయోత్పత్తుల రవాణా కిందికి రాదట. కాబట్టి బియ్యం రవాణా కంపెనీలు (లారీలు, ట్రక్కర్లు) తాము సంపాదించే డబ్బులపై 12.38% సేవా పన్ను చెల్లించాలిట. ఫుడ్ కార్పొరోషన్, సివిల్ సప్లయిస్ కార్పోరేషన్ మొ|| సంస్థలు లారీలవారినుండి సేవాపన్నుని మినహాయించుకోటానికి సమాయత్తం అవుతున్నాయిట.

క్రూడాయిల్ ధరల పెరుగుదల

అంతర్జాతీయంగా క్రూడ్ ధరలు పెరుగుతున్నాయన్న నెపంతో ఇప్పటికే ఆయిల్ కంపెనీలు డీజెల్ ధరలను ఎప్పటికప్పుడు పెంచేస్తున్నాయి. గజం గజానికీ టోల్ పన్నులతో లారీలవారు ఇప్పటికిప్పుడే ఉక్కిరిబిక్కిరి అవుతున్నారు. ఈగాయలతోనే రోడ్ రవాణా రంగం బ్రతికి బట్ట కట్తుందా కట్టదా అనే అనుమానం వస్తుండగా, బియ్యం రవాణాపై సేవాపన్నును వాయిస్తే, రవాణా సంస్థలవారు తమ కిరాయిలను పెంచేస్తే బియ్యం ధరలు ఆకాశమంటకమానవు. వరదలు, కరువుకాటకాలు, నల్లబజారు తాండవమాడే ఈదేశంలో కొంతవరకు రవాణారంగం బియ్యాన్ని అవసరమైన ప్రాంతాలకు చేరవేయటంలో కీలకపాత్ర వహిస్తున్న విషయం శ్రీ చిదంబరానికి తెలియదా?

మన్మోహన్ సింగ్ గారికి ప్రపంచబ్యాంకు గోలే

మన్మోహన్ సింగ్ గారికి ప్రపంచబ్యాంకు గోలే తప్ప భారతీయుల గోల అసలే పట్టదు.
సోనియా రాహుల్ లకి ఇలాంటి విషయాలను తెలుసుకోవాలనే ఆసక్తే లేదు. మన చాయ్ వాలా నరేంద్ర మోడీగారు
ఏ అస్సోచాం, సీఐఐ, ఫిక్కి వంటి బడాయిలవాళ్ళు సన్మానించి అడిగితే తప్ప ఈవిషయం గురించి ఆలోచించటం కుదరదు.

కాకులను కొట్టి గద్దలకు వేసే పన్నుల వ్యవస్థ

పెట్టుబడిదారీ ప్రజాస్వామ్యమూలసూత్రంలో ముఖ్యభాగం ఏమిటంటే, ప్రభుత్వ నిర్వహణయే ఒకవ్యాపారం. ప్రభుత్వలాభదాయకత ముందు చూసుకోవాల్సిరావటంతో ప్రభుత్వమే అమానుషంగా మారాల్సి వస్తుంది.

మార్క్సిజంలో మెరుగు

మార్క్సిజంలో పరిస్థితి మెరుగుగా ఉంటుంది. ఎందుకంటే ప్రభుత్వాన్ని వ్యాపారంగా నిర్వహించరు.