The State of India

by fulltimestudent 3 Replies latest social current

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  fulltimestudent

  Indian Families Struggle:

  I think the report below is referring to middle-class families. The enormous number of Indian people living in extreme poverty, just worry about getting something to eat.

  Indians despair as rupee hits record low Date: August 24, 2013 Ben Doherty - South Asia correspondent for Fairfax Media Families are struggling as the currency goes into freefall. From every note, the smiling, paternal visage of the Mahatma gazes back. People here have always been careful with their rupees, but perhaps now, they hold them a little tighter than before. The headlines scream daily of India's economy in collapse, of a currency in freefall, having lost 15 per cent of its value this year, and 5 per cent in the past week. But in the markets of Delhi, the discussion is far more prosaic. Less concerned with currency fluctuations and deficits, the talk here is of the unseasonably high price of onions and tomatoes. Advertisement News of a ''brainstorming session'' by the finance minister - break out the butchers' paper - is seen here as busy work by a government that can't, or won't, find anything to actually staunch the economy's bleeding. People are worried about an impending rise in the price of petrol, or electricity, and wondering if they can absorb another rise. "Now, my family and I are spending double what I'm earning. Earlier, things were different and we were able to save some money," 42-year-old Omprakash Gupta said in a south Delhi market. "The price of petrol and cooking gas is hurting us most. The rupee is going down in value compared to the dollar and the price of items are going up in the market." India's rupee is Asia's worst performing currency this year, hitting a record low this week of 64.6 to the US dollar. A quarter of its value has been wiped in two years, and it may fall further. Deutsche Bank has predicted it could touch 70 to the dollar in a month. The cause is India's current account deficit, which, coupled with high inflation, low growth, and a stymied reform program, has sent foreign investors out of the market. To reduce pressure on the rupee, the Reserve Bank has restricted how much citizens and companies can invest abroad, and has said it will inject $US1.3 billion into the country's banking system by buying long-term government bonds. Most Indians feel little connection to foreign currency fluctuations or their central bank's manoeuvrings. But the impact, realised or not, is being felt in the markets and at the kiranas, India's millions of owner-run corner shops. Income levels have been rising in double digits in recent years, albeit from a low base. The average income is now $US90 a month. But an estimated 400 million Indians still subsist on less than a dollar a day. For these poor Indians, and for the ''aspirational'' class a step above them - those trying to break in to the bottom of India's already 300-million-strong middle class - even the smallest price rise has the potential to send them tumbling backwards, and they are vulnerable on several fronts. A weak rupee means costlier crude oil, iron ore, coal, fertiliser, edible oil, and medicine, all of which India imports. For the average consumer, that means food will be more expensive, because of higher transport and production costs. Already, staples such as onions and tomatoes have experienced double-digit inflation because of poor harvests this year. This will be compounded by a weak currency. The price of petrol is offset by costly government subsidies, but, as India moves towards deregulation, consumers will be hit by international oil price movements and the weakness of the rupee. Power, too, unreliable as it is, will become more expensive. India imports millions of tonnes of coal a year to feed its growing power needs, and as these imports soak up rupees, that burden that will be passed on to consumers. But for now, the concerns remain the micro, not macro-economic. "Everything is expensive now, but food and school fees are costing most," mother of four Kanti Saha said at her local market. "A month ago, the price of onions was 20 rupees a kilogram, tomatoes were 30 rupees, and flour 20 rupees. But now onions are 80 rupees, tomatoes are 50 rupees and flour is 25 rupees. "It is difficult to manage a household. Our income remains the same but expenditure continues to rise." India's government is run by economist Manmohan Singh, but neither he, nor anybody else in the administration, appears to have any ready answers. Despite the grim reality, Singh continues to issue positive declarations on India's prospects - "I believe that this phase of slow growth in India will not last long" - while steadily downgrading forecasts, and having to accept results even below that. After a decade of growth at 9 and 10 per cent, the economy grew at just 5 per cent last year. Finance Minister P. Chidambaram held a crisis meeting this week, promising, "we cannot allow the rupee to go into freefall". But there is, as always, political hay to be made from any crisis. India is amid an undeclared election campaign and political observers can almost hear the opposition BJP whistling as the government stumbles to find a solution to its latest catastrophe. Narendra Modi, the BJP's presumptive prime ministerial candidate, was at his forthright, hyperbolic best: "the country is drowning in despair". Read more: http://www.smh.com.au/business/indians-despair-as-rupee-hits-record-low-20130823-2sh7e.html#ixzz2cxXcWflP
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  JakeM2012

  I'm sorry to hear of the Indians' families stuggle, the worlds economy are in poor shape and there are many suffering worldwide. Thank you for the update, you will not see this on most news channels. Everyone is claiming inflation, but I don't see a stable monetary supply.
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  fulltimestudent

  http://www.independent.co.uk/voices/comment/india-needs-fixing--financially-and-morally-8780667.html UK Independent Thursday 22 August 2013 India needs fixing - financially and morally The country's most famous economists, Amartya Sen and Jagdish Bhagwati, have different solutions. But both ignore one key problem Suddenly India, which was creaming along for years with growth rates of nearly 10 per cent, is in serious trouble: this week the rupee plunged to a new, historic low against the dollar; growth has slumped to 5 per cent; inward investment is barely 10 per cent of China's*. And the economists setting policy at the Reserve Bank of India seem in a panic. In a nutshell, their dilemma is simple: raise interest rates to restore foreign confidence in the rupee and you risk choking off the paltry growth that remains. Keep the rates where they are and the rupee will continue to slide, making the energy imports the economy depends on ever dearer. India is in a grievous fix. The years of growth have wrought great and important changes in a country to which change has never come easily. And many of these changes affect the (relatively) poor as well as the rich. Ten years ago, the only really cheap way to negotiate Delhi was on the terrifyingly accident-prone public buses, crammed with passengers, where women risked molestation or worse. Today the city has a fine though far from comprehensive subway system, built by the Japanese, and getting around is a much less brutal affair. In cities across the country, the housing situation has been transformed, with millions moving into modern apartments. Middle-class India, which includes millions on incomes that would never give them that status elsewhere, is in a different place now. Yet the poor remain, in their hundreds of millions**. And the more gleaming the shopping malls, the more congested the roads and the more fatuously consumerist the private television broadcasting, the more startling is India's failure to deal with the one problem that stuns every first-time foreign visitor the moment they leave the airport. Now India's two most famous economists have joined battle on the issue: both educated at Cambridge, both professors at top American universities, both widely admired far beyond India. And with radically different ideas for tackling poverty. Amartya Sen, the Nobel prizewinner, argues in his latest book, An Uncertain Glory, that the reason India is stuck is because the state has failed to invest adequately in health, education and welfare. "Rapid economic growth has not achieved much ... to reduce India's horrendous levels of child under-nourishment," he writes. This government, he adds, thinks "that the only thing that works is business". Jagdish Bhagwati, who also has a book to promote, is equally earnest about abolishing poverty but says the public provision beloved of Sen has failed: the only hope is to build up growth again and let the wealthy, inspired by the charitable traditions of religious groups such as the Jains and Vaishnavite Hindus, help the poor from their own pockets. Best of luck to these two Titans with their new books, and to the parties with which they are identified, Congress and the Hindu Nationalist BJP respectively, in next year's general election. But with all due respect, there is an elephant in the room and both are tiptoeing around it. I have seen poverty in India, and I have seen how charity deals with it. I remember the throngs of skeletal beggars outside Karim's restaurant in Old Delhi, crouching and cringing outside the window as the manager doles out curry, doing his religious duty. Likewise I recall how populist politicians fire up their poor constituents with rhetoric about "development", only to plunder the public purse savagely once re-elected. Poverty in India is structural: inequality was ordained millennia ago by religion, and even today it is nice for the middle class to have a healthy supply of cheap servants to work half to death and pay peanuts to. India is in an economic fix, but its moral fix has even deeper roots.

  * Foreign Investment in China is also falling, as investors, believing (hoping?) that the worst may be over in the USA amd Europe start returning funds to those areas

  ** The number of people living in poverty, my double in the next decade or two. The birthrate is out of control.
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  designs

  India's corruption makes our corruption look amateurish.