Dr. Gullapalli H.S.

Email- [email protected] Twitter handle- @GP4IND About Me: I am passionate for the rapid paced development of India. Loves the subjects of Economy and Finance.

[hgullapalli2000]

--Internationalisation of the Indian rupee--

If we achieve internationalisation of rupee it would be the biggest financial reform effort of Honorable PM Narendra Modi ji then it would be the most landmark reform in the history of independent India 🇮🇳 due to which Indian economy will emerge as the numer-uno economy 💱 in the world surpassing both USA 🇺🇸 and Chinese 🇨🇳 economy in nominal term by as early as 2030. 

US dollar is used as medium for settlement of international trade and as well as used as foreign exchange reserves that gives USA an extraordinary previledge to become the biggest consumption centre in the world with least unemployment rate in the history by printing dis-proportionate amount of dollars. It's a classic case of services and consumption driven economy- The model India has to follow rather than Chinese manufacturing led model. As India is a democratic country, it failed to push hard reforms required for manufacturing like land and Labour reforms, expenditure reforms etc to push infrastructure investment so there is a huge gap in manufacturing sector global competitiveness with China 🇨🇳 that is causing prolonged slump in manufacturing sector exports for almost a decade. Now with advanced communication technologies, India can become a service and innovation led economic 💱 powerhouse. To achieve this the most important pre-requisite is internationalisation of #Rupee. India 🇮🇳 has to take mantle of the global economy so as to power it through exponential rise of trade. Recently due to wrong policies of @federalreserve board resulted in excessive liquidity for certain period of time then severe liquidity contraction led to the fall of emerging market economies like Sri Lanka , Bangladesh 🇧🇩 etc. So GoI can utilise this opportunity to replace USD with #Rupee to control global liquidity by boosting global trade growth and prosperity. 

Due to latest digital payment technologies, digitisation of all trade transactions and rapidly rising India's share of the global trade our country can internationalise rupee far rapidly than we though before.  Previously, it use to take a decade to internationalise currency but because of UPI it would take few years.

With internationalisation of UPI or acceptance of UPI platform globally we can achieve internationalisation of #Rupee in an extremely swift manner replacing US SWIFT system globally with decentralised currency settlement system in #Rupee.

What will help GoI to internationalise #Rupee is:

1. Exponential rise in India's international trade .

2. Extensive service sector exports & #startupindia led innovations driving forex inflows.

3. High tech defence product exports that cements India's 🇮🇳 tech prowess to boost India's  engineering goods exports. India has to increase high-tech defence exports which will not only earn forex but also will create country's high-technology capabilites brand image, promote our engineering goods exports and strengthen #Rupee beyond imagination like USD.

If @RBI opts for swift internationalisation of #Rupee to facilitate international trade transactions  and eventually will go for implementation of full capital account convertibility as Indian economy is on the foothill of the greatest trade & economic growth never witnessed in the history of mankind.

For achieving the internationalisation of #Rupee, GoI should know one thing is that the country needs to achieve full capital account convertibility (FCAC) which is the most important pre-requisite.

Other important pre-requisites to achieve #rupee internationalisation:

1. Drastic reduction in the fiscal deficit which reduce current account deficit (Twin Deficit) led fall in #rupee value. 

2. Extensive fiscal-monetary co-ordination to reduce inflation.

3. Extensive core sector reforms like Electricity Amendment bill, Labour and Land acquisition reforms, banking and financial reforms, big privatisation efforts to boost global competitiveness of Indian 🇮🇳 manufacturing.

4. Very high and efficient public capex on highly productive and high impact infrastructure sector by reducing subsidies and drastically increasing tax/GDP ratio. 

5. No freebies like free electricity. 

6. Cutting popular subsidies like food and fertilizer. 

This GoI move of internationalisation of #Rupee many benefits will flow into the Indian 🇮🇳 economy so that it can hit multiple birds in one stone by allowing oil trade settlement in the local currency with Russia 🇷🇺 , Iran 🇮🇷 , Iraq 🇮🇶 etc so that the trade surplus money  should be allowed to invest in GoI treasury.

1. This will mobilize huge flood of foreign savings for investment in India in an orderly fashion.

2. Reduce downward pressure on #Rupee substantially. 

3. Reduce need for foreign exchange reserves due to settlement of trade in domestic currency. 

4. Allow hostile oil  exporting nations to USA 🇺🇸 can divert their forex reserves away from US dollar so that they can circumvent US sanctions. 

5. This move will reduce local bond yields which in turn can help GoI to spend extensive amount of money on infrastructure. 

Internationalisation of #Rupee will not only boost services and consumption led economy 💱  of India 🇮🇳 but also it will also turbocharge the global economy in high gear which will eventually end the world's dependence on US 🇺🇸 consumers and dollars  for growth. It will power global  trade eventually pulling 2 billion people out of poverty in the world 🗺 by 2030 becoming the biggest consumption centre in the world to emerge as #vishwaguru & propagate 'वसुधैव कुटुम्बकं:'.

--

Dr. Gullapalli H.S.

20/08/2022

( My blog site www.hgullapalli2000.tumblr.com and Twitter ID @GP4IND)

[hgullapalli2000]

Unraveling the intricacies of inflation targeting framework in India.

Inflation targeting framework is up for review by the GoI. I am very glad to to put my views on this critical and the most intricate issue.

First of all I would like to enlist failures of the 'inflation targeting framework' mechanism. This is probably the most important subject in recent years to deal with !

"Inflation is the most complex animal."

Unofficially IT was adopted before 2015 and officially in 2015.

Since then:

There was significant demand compression.

Excessive and idle capacities in the economy.

Flat investment growth due to less demand and excessive capacities.

Very tepid credit growth.

Rising NPAs & inflation relationship :

Our credit growth slipped to very low level that ⬇️ demand ➡️⬆️ NPAs ➡️⬆️ stress on bank ➡️⬇️ interest rate cut transmission ➡️⬇️ liquidity ➡️⬇️ demand vicious cycle.

This led to slow GDP growth and unemployment rose.

Today's inflation definitely won't increase bankruptcies in fact it will do opposite of it ⬇️ Real interest rates ➡️⬆️ credit growth ➡️ ⬆️ liquidity ➡️ ⬆️ demand ➡️ ⬆️ consumption ➡️ ⬆️ capacity utilisation ➡️ ⬆️ investment ➡️⬆️ jobs ➡️ ⬆️ demand ➡️ virtuous cycle.

NPAs in the banking system can be reduced only by increasing inflation that is debasing currency for a period of time and boosting private credit growth.

One achievement 'inflation targeting framework' on which the proponents are counting is, 'throughout this period inflation expectations were anchored within mandated range.' but it brought untold misery to the Indians.

My only one question to RBI : If indeed the 'flexible inflation targeting framework' was so successful then why the investment revival did not happen throughout this period, so jobs, demand and full capacity utilisation?

India's Inflation targeting framework is blindly derived from western countries with single minded focus on inflation with absolutely no flexibility but developed country central banks are dealing with near free trade economies with free floating currencies in sharp contrast to India.

They are now eyeing mainly employment levels as main variable at the same time allowing inflation to run hotter for some period of time. They are calling it as 'Average Inflation Targeting' (AIT). They have shifted policy from 'Inflation Targeting' to 'Average Inflation Targeting' according to the situation and need for fostering full employment level in their economy and narrowing income disparity by ushering faster wage growth.

India has to devise it's own interest rate policy according to its own situation and needs rather simply copying the western countries or under the pressure of rating agencies.

India's partially floating currency is hugely important factor in influencing inflation & interest rates because heavy intervention by RBI in forex markets to manage level of Rupee to maintain India's export competetiveness.

G4+ countries released huge amount of liquidity in the world market to undo the malefic effects Covid related economic disruptions. The same liquidity is hitting India.

Excessive forex intervention leads to huge domestic inflation and rise in bond yields along with rising inflation expectations and if it is not done then currency appreciation that would hurt export competetiveness of India.

Higher interest rates would accentuate the problem of higher forex inflows and lowering of interest rates to deter foreign inflows would accelerate inflation.

So, forex intervention or global liquidity plays very an important role in India to decide on inflation, inflation expectations, interest rates and bond yields.

Interest rates, inflation and capacity utilisation share complex inter-relationship. If capacity utilisation of services, manufacturing, industry & jobs in the economy is less then decrease in interest rates causes fall in inflation temporarily till near capacity utilisation is approached then the inflation increases. This is paradoxical and non-linear relationship should be considered by the central banks holistically while setting up the interest rates.

India's measures of inflation that is CPI is completely rudimentary system of measurement, doesn't reflect the underlying real inflationary forces and it's based on 2012 year.

Inflation in majority is supply side inflation that is cost push inflation by oil, vegetables and agricultural commodities, metals etc. Out of this prices of vegetables are hugely varied according to season with weightage in the basket about 7%.

Food and beverage along with fuel contribute 50% in the CPI basket which is disproportionately high.

It gives very wrong reading and perception of headline CPI to baffle the policymakers at MPC.

CPI measure stripped of its volatile and arguably interest-rate-independent food and fuel components. However, since 50% of India’s consumption basket is dominated by these items and if considered during interest rate setting then demand compression would be more than inflation stabilisation because these are interest rate insensitive or demand inelastic.

India should device a mean personal consumption expenditure index in line with what is tracked by the USA Federal Reserve Board. It is the inflation measure of price changes at the level of mean consumption of goods and services.

The PCE price index is known for capturing inflation (or deflation) across a wide range of consumer expenses and for reflecting changes in consumer behavior. For example, if the price of beef rises, shoppers may buy less beef and more chicken. Also, BEA revises previously published PCE data to reflect updated information or new methodology, providing consistency across decades of data that’s valuable for researchers. So, this data is the most closely watched by Federal Reserve Board before arriving on any interest rate related decision.

To summarize :

Interest rates should be based on the new inflation measuring system with realistic weightage to the consumption basket much of it based on US PCE.

Capacity utilisation in the economy with respect to industrial, manufacturing, services & employment level should be taken into consideration till the desired interest rate stimulates adequate level of investment in the economy.

Calibrated forex intervention should be done to achieve desired interest rates and inflation by maintaining adequate liquidity.

Inflation above 6 to 7 % is must for India to generate a good level of aggregate demand.

Decrease in interest rates to achieve 1% increase in the target of inflation band would increase the GDP by 2.5% because of demand decompression within the limits of capacity utilisation in the economy.

If the above recommendation followed judiciously India may achieve monetary expansion, reduce NPAs and GDP growth would get hastened to the new stratospheric high level !

Taking view of the above situation I request and recommend the GoI to enact mechanism of true inflation tracking and increase the centre of inflation band to 5% so that there would be ample of scope for interest rate reduction.

--

Dr. Gullapalli H.S.

(Follow me on Twitter @GP4IND, blogsite: https://hgullapalli2000.tumblr.com)

[hgullapalli2000]

--How to make better use of surging forex inflows into India 🇮🇳 ? --

2021 would be the year of tremendous global capital inflows due to awash of global liquidity released by G4+ nations to bring their economies out of the clutch of deflation will hit Indian economy. India has to tread carefully to achieve the best out of surging inflows.

Some scenarios:

Excessive forex intervention leads to huge domestic inflation if it is not done then currency appreciation that would hurt export competetiveness of India.

Higher interest rates would accentuate the problem of higher forex inflows and lowering of interest rates to deter foreign inflows would accelerate inflation.

So, the best way to come out of this tricky situation is increasing fiscal deficit target to 8% on the back of magnanimous increase in infra spend that will increase current account deficit to increase #globalcompetetiveness of exports and inturn it will keep #Rupee value down to boost exports. This is like killing two birds in one stone !

I request GoI to go through this recommendation and implement it judiciously that can help GoI to escape out of this 'chakravyuh' of increased forex inflow and tepid exports.

--

Dr.Gullapalli H.S.

[hgullapalli2000]

Japanification of the world economy

------

( Important Message : The part of blog written 6 1/2 year back - https://t.co/1coVUvgTay)

So far in the recent past there is no revival of investment in India as our manufacturing is no more competitive in the global markets mainly due to intense competition from China. Not only India is suffering from manufacturing investment drought ; many countries around the world like Japan, European countries, USA and middle income countries like Brazil, Indonesia, Malaysia, Thailand and other developing countries like Cambodia, India and Vietnam.

Almost all countries in the world from developed ones to developing and poor countries also suffering from investment drought and drop in the GDP growth as China is giving them huge competition in each and every product categories whether it is labour intensive goods or technology intensive or high technology products like microprocessors or mobile phones.

That is why many countries around the world are slipped into middle income trap like Malaysia and Thailand, Brazil as well as there is high income trap like European countries and Japan who are suffering right now with falling GDP growth due to falling credit growth and deflation. European countries so far have not recovered still from recession of 2008 because during this period of time European countries lost their high technology manufacturing competitiveness against China. China faced investment boom and in European countries investments faltered during course of time so do in other countries like Taiwan and some others in electronic exports.

In India like countries in labor  intensive manufacturing got heavily affected. Going by this policy China soon will not emerge out of middle income trap and will not let others to come out of it whether it low income , middle income or high income trap to avert industrial recession and unemployment domestically. One of the biggest thing China fears is unemployment as it is having authoritarian regime which does not act as shock absorber like democratic countries. Another thing is that China heavily failed to stimulate consumption in its country due to various reason so for GDP growth it has to depend on investment growth. Due to this policy of China investments will be subdued in other countries for at least some years to come that itself means 'relative Japanification' of the world 🗺 economy 💱!

👆 Exact core blog with some modification and introduction of terms I had written on Tumblr almost 6 1/2 year back (https://t.co/1coVUvgTay) to @narendramodi government before launch of #MakeInIndia project I predicted failure and explained the reasons for it. It's a truth now !

--

Dr. Gullapalli H.S.

[hgullapalli2000]

Dr. Gullapalli H.S.

[hgullapalli2000]

Fallacy of targeting 🎯 fiscal deficit by Finance Ministry and inflation by RBI at the same time⌚that adversely 😱 affecting wide swathes of sectors including farming and business communities.

Respected Sir /Madam,

I had written extensively on the fallacy of the fiscal deficit targeted by the Finance Ministry (Take a look at these search results: https://twitter.com/search?q=%40GP4IND%20fiscal%20deficit&s=09 ) which has brought tremendous misery to Indians in the form of low GDP growth, higher unemployment rate , industrial 🏭 recession, industrial and services sector overcapacity, resulting in rising NPAs ➡️ ⬇️ bank 🏦 credit growth ➡️ liquidity crunch (Take a look at these search results: https://twitter.com/search?q=%40GP4IND%20liquidity&s=09) ➡️ severe demand recession for every goods and services ➡️⬇️ corporate profitability ➡️⬇️investment ➡️ ⬇️ consumer demand➡️⬇️tax collection . So in this way, the aforementioned vicious cycle 🚴 continued since last 6 years , which had been initiated by the previous government and continued by the present government.  4   years back, i had written a blog (https://t.co/IkQunjHZEN) , regarding the fallacy of the fiscal deficit targeting and the need for changing or abandoning it altogether. 

The fiscal deficit target 🎯 are given to the emerging markets by the foreign  rating agencies ,so that, the emerging markets act as the dumping ground for their capital, hence, making money in resultant currency appreciation as well as the interest rate yield differential. But then, the reality is, fulfilling the fiscal deficit target given by agencies,  greatly crowds out domestic savings and investments in turns leading to the increased consumption which doesn’t go well for the economy 💱 in long run. The current scenarios is, while the government is chasing the fiscal deficit target 🎯 it's compromising on the infrastructure spent, which is significantly lowering the global competitiveness of the industry 🛠️ since last 6 years. No wonder there is no  significant increase in the manufacturing exports figures since many years but there is significant growth in imports which is leading to increase in current account deficit and trade deficit. 

The basic tenet of economics is that you can't target 🎯 two variables i.e. inflation and fiscal deficit at the same time⌚. Neither it's written nor there is any set standards for the same. Even developed country like USA or developing country like China 🇨🇳 do not  follow it. USA 🇺🇸 stimulates it's economy by breaching all set standards to stimulate consumption and China 🇨🇳 spends huge amount of money on infrastructural investments. So this way USA 🇺🇸 is star of consumption and China 🇨🇳 of manufacturing. So in summary, India 🇮🇳 is dangling nowhere but somewhat leaning towards more consumption. 

Since long we are unable to generate good employment because of no investment in #MakeInIndia front (Take a look at these search results: https://twitter.com/search?q=%40GP4IND%20%23MakeInIndia&s=09) as the credit deployment data ( Take a look at these search results: https://twitter.com/search?q=%40GP4IND%20credit%20deployment&s=09) shows little or no credit growth to the industry 🛠️ since almost 5 years. So we could not shift labor from Agricultural to industry which led to more absorption of labor in agricultural sector that tremendously increased agony 😰 of the sector to manifest in to huge number of suicides. The farming community is not getting remunerative prices for their produce mainly because severe consumer demand recession as the government is keen on targeting the fiscal deficit number. 

No wonder now every political party is promising the farm loan waiver to win the election as the farmers saddled with debts due to less remunerative prices that whittled down the profitability of this sector. Already the farm loan waiver has become the buzzword for political parties and many industrialists are defaulting on their debts. For this we have set up NCLAT and passed IBC to bring all defaulters due to the wrong policy of government under hammer thus killing smart domestic entrepreneurs the nation spawned in decades in one go. So almost we haven't achieved anything by chasing fiscal deficit target but at the receiving end 🔚 of enormous pain. We ended up in giving farm loan waiver and recapitalization of banks saddled with industrial 🏭 NPAs. Announcing and implementation of MSP for crop 🌾 is same. Government asking for the surplus reserve transfer from RBI would lead to ⬆️ in the fiscal deficit. So these all above mentioned things would amount to the accounting transfer of money 💵 with more of social expenditure and less of capital expenditure on infrastructure which is disastrous.The biggest casualty of chasing fiscal deficit target and inflation target at the same time ⌚ is infrastructure. Neither central nor the state government preoccupied with farm loan waiver are not investing in infrastructure sector in required amount to boost #globalcompetitiveness that is what the reason behind extremely poor performance on exports front. This way sector by sector profitability is falling and becoming weak ending up in debts and despair 🤤 especially for farmers and industrialists. The same story running 🏃 from farm sector to textiles, telecom and aviation. 

The only solution for this is targeting the inflation as only variable like in USA 🇺🇸 with the help of instruments like interest rate 📈 adjustment in intermediate term and liquidity management facility in short term as lever. This way we can adjust inflation which is needed for the long term economic 💱 growth, rupee (Take a look at these search results: https://twitter.com/search?q=%40GP4IND%20%23Rupee&s=09) stability and massive employment generation as the availability of money 💵 in the hands of government will be more which can be utilized for infrastructure sector. It may depreciate the #Rupee in short term and sensex may go down but in intermediate and long term we would likely to reap enormous benifits of it. If we adapt the dynamic fiscal deficit goalposts the  Finance Ministry can target desired growth & inflation according to the prevailing global financial scenarios which are changing dynamically like crude oil 🛢 prices etc. with the help of expenditure and borrowing as lever. This way the Finance Ministry can control both inflation and the interest rates 📈 indirectly while RBI can act as a bystander. For the same self-discipline is the most important requisite. If Finance Ministry achieves it then it would turn into a sure recipe to boost the GDP growth and employment which is assured way to get re-elected🙏🏼. 

I request the government of India 🇮🇳 to acknowledge this very important email 📧 and give the reply to it at the earliest as the issue I have raised is of national importance that would likely to change the course of economic development 🙏🏼🙏🏼. 

(© Dr.Gullapalli H.S. Twitter handle @GP4IND Blogsite hgullapalli2000.tumblr.com) 

Thanking you, 

--

Dr.Gullapalli H.S. 

Mob.No.+918903318772, [phone]

[hgullapalli2000]

#AadhaarEnabledBanking to achieve #CashlessEconomy

After the #DeMonetisation process @narendramodi gov is going full throttle ahead on achieving #CashlessEconomy to ease the effects of cash crunch. There are various recommendations are pouring in to achieve the PM vision of #CashlessEconomy.

My prime suggestion is to include Aadhaar as the greatest tool to achieve financial inclusion for millions of banking deprived people as well as improving the tax compliance in India which is studded with #BlackMoney generation by avoiding taxes. For this my suggestion is to convert all Aadhaar card holders by default in to bank account holders in each and every traditional bank, payment bank and e-wallets. Assign the code to each bank or e-wallet like IFSC code which can be as short as 3 digits only which will be easy to remember. So there will be only two numbers to remember for completion of entire process one is Aadhaar number and other is bank code so here there is no need of remembering pin also. The biometric enabled e-KYC system is enough for cash withdrawal & deposits. The telecom companies already running one million e-KYC points for authenticated distribution of SIM cards. They have achieved this with the help of the fingerprints probe attached to the smartphone which is extremely low cost solution as compared to POS terminals, mPOS etc. This same infrastructure can be multiplied by 20 times and installed in all merchant shops which can be used as the #CashlessPayment as well as money deposits or withdrawal in any desired bank just by authenticating the fingerprint and punching the 3 digit code number of bank will complete the transaction for the bank. The merchants can behave like white label ATM working for any possible bank or e-wallet in India spreading the service to the remotest corner with cost effectiveness as one merchant can deal with multiple bank transactions. Due to the biometric method of authentication the skills required to complete the transaction will be completely reduced. So various banking services can be provided by semi-illiterate persons at lower cost. Almost there are 4 million e-recharges points in India can covert to the white label bank branches overnight. Apart from this 30 million merchants population across India can use this platform to enable #CashlessPayments to the goods and services they are offering. This will completely weed out the need of carrying multiple cards of different banks for different purpose like withdrawing money or filling fuel and paying hefty intermediation charges to Visa, Master card and Rupay. It will reduce the transactions charges substantially and will pave the way for wider adoption by the merchants community due to reduced transaction charges. This will greatly help India to achieve the #CashlessEconomy, complete & automatic GST compliance, direct tax compliance and improvised transparency. This will completely fulfill the objective financial inclusion for millions of banking deprived population and make #digitalindia program the best success.

(Dr Gullapalli H.S. Twitter handle @GP4IND Blogsite hgullapalli2000.tumblr.com)

[hgullapalli2000]

Promoting #CashlessEconomy

It is expected from @narendramodi government to for #CashlessEconomy when India is facing huge liqudity crunch as effects of #demonetisation of 85% of floating currency . #cashlesseconomy to increase the transparency, tax compliance, weeding out #BlackMoney and reducing the cash transactions. Heavy amount of money is needed for printing currency, transportation, logistics and it dispensing on public. Going cashless is the best way to deal with the multiple problems in single stroke. For #CashlessEconomy my suggestion : Make the payment banks operations more renumerative so that they can create new payment solution to the merchants in the digital era like Paytm, MobiQuik, freecharge etc which will reduce merchant and payment transaction costs innovation in software and hardware and India will move to completely #CashlessEconomy with micro payments as well as macro payments with debit and credit cards reduced transaction costs .Make it compulsory for everyone to use debit card or credit card when the purchase amount exceeds Rs. 2000. Indian government needs heavily subsidise installation of POS, mPOS, microATM etc which are in heavy shortage, various payment modalities and transaction costs also has to be weived off & tax rebates can be given for such transactions so that the cash need in the economy will reduce. Once the cash need in the economy reduces then India can stop all high denomination notes in the circulation i.e. Rs.1000,Rs.500. So that no one will carry bulky notes of Rs. 100/- for transactions which makes physical wallets difficult to handle. Due to this everyone will use either cards or m-wallet for transactions which will enormously increase the transparency of cashless transactions and increase the tax compliance enormously. (©Dr.Gullapalli H.S. Twitter handle @GP4IND Blogsite hgullapalli2000.tumblr.com)

[hgullapalli2000]

Curbing #BlackMoney in India

Respected PM, Only 4% of #BlackMoney lies in the form of cash rest in the form of overseas investments, hawala rout through Mauritius, participatory note rout through stock market, real estate, gold, bullion, commodities hoardings etc. 90%of #BlackMoney is with 3% of people of India. Due to #DeMonetisation 4% of #BlackMoney in cash form exited in the form of gold, bullion, foreign currency or other commodities etc overnight and sufferer are 97% common people who has nothing to do with the #BlackMoney. I request @narendramodi government to device galley proof mechanism to target select 3% who are the real #BlackMoney hoarders rather giving unnecessary hardship to the common man of India. 👍 Steps to curb #BlackMoney 1) Close all hawala routes originating from india which launder money overseas. Now as all #BlackMoney heavens in India closed the people will move #BlackMoney out of India. So there will be significant amount of capital outflows. Multinational co-operation is needed to catch hold the Indian who hoarding the #BlackMoney in the safe heavens like Switzerland, Seychelles, Mauritius etc. Most of the Indian #BlackMoney is made white in Mauritius and the money is coming to India through participatory notes in Indian equities. E-kyc should be made compulsory for the participatory notes rout investment in the Indian stock market. 2) All real estate transactions happened in last 15 years should be linked with PAN card and Aadhaar card so that all Benami properties will come on the block which can be confiscated. The all transactions should be made accountable retrospectively so that if unaccounted wealth is found on the transactions can be taxed accordingly. 3) Quoting of PAN card and Aadhaar card must be made compulsory for any value above Rs. 20000/- so that gold purchase will become accountable and a exise tax and import duty should be levied on the gold purchase.With the help of intelligence tip off or information from the jewellers raids has to be conducted on the people properties who have not declared the enormous amount of gold in their vaults. Consficate the lockers of these fellows who keep the most amount of gold in the lockers. So it will completely keep the tab on the gold hoardings and future gold purchases. In some commodity hoardings the #BlackMoney involved like agricultural commodities, steel, cement, granite etc should be investigated properly 4) Income tax rate should be reduced to increase the tax compliance which is the root cause of the #BlackMoney generation with introduction of higher rate of GST. This rationalizations will eliminate the #BlackMoney to the most extent. 5) Then comes #CashlessEconomy : Make the payment banks operations more renumerative so that they can create new payment solution to the merchants in the digital era like Paytm, MobiQuik, freecharge etc which will reduce merchant and payment transaction tax and India will move to completely #CashlessEconomy with micro payments as well as macro payments with debit and credit cards.Make it compulsory for everyone to use debit card or credit card when the purchase amount exceeds Rs. 2000. Indian government needs heavily subsidise installation of POS, mPOS, microATM etc various payment modalities and transaction costs also has to be weived off & tax rebates can be given for such transactions so that the cash need in the economy will reduce. Once the cash need in the economy reduces then India can stop all high denomination notes in the circulation i.e. Rs.1000,Rs.500. So that no one will carry bulky notes of Rs. 100/- for transactions. Everyone will use either cards or m-wallet for transactions which will enormously increase the transparency of cash transactions and tax compliance. (©Dr.Gullapalli H.S. Twitter handle @GP4IND Blogsite hgullapalli2000.tumblr.com)

[hgullapalli2000]

China caught in the no man's land

Every one is talking now about the China’s recession and domestic financial crisis which I predicted 9 years back in my article. ( China’s bulging forex reserves and Yuan http://hgullapalli2000.blogspot.in/2007/05/chinas-bulging-forex-reserve-and-yuan.html?m=1). I predicted that China excessive forex intervention will bring the bad things in future for China which is now happening. China excessive investments in the labor intensive manufacturing is emerging a big problem now which is as the result of the colossal credit extension by Chinese state owned banks on the back of improving infrastructure investment. But it has reached at the stage where it is unable to control as the foreign countries unable to absorb Chinese goods. That thumb rule says that excessive investment and lack of consumption leads to deflation is happening in China domestically,Japan, Europe and other advanced countries who are the major trade partners of China. Deflation which leads to financial crisis in China as well as in Europe or other advanced countries. Now China is no more globally competitive. Domestic manufacturing industries are turning bankrupt. China amassed $34 trillion dollars of debt which is Amos 290% of GDP which is equivalent to the any developed country. So they amassed this much of debt at very low per capita level and exchange rate with poor and and least productive and labor intensive industries. So this is emerging as trap out of which it is difficult for China to migrate to advanced nation easily as China is reluctant to allow the industries fail and unemployment to rise. As China fears rising unemployment rate will be detrimental to the communist party rule. So at this level to prevent domestic financial crisis due to bankruptcies arising due to closing the uncompetitive industries China has to do the #yuandevaluation. (Copyright of Dr. Gullapalli H.S. Blog www.hgullapalli2000.tumblr.com & twitter handle @GP4TG) This slight #yuandevaluation resulted in massive global turmoil in the month of August of 2015. As a result of it there is increased speculative attack on Chinese Yuan in hope that it will get devalued. Huge amount of capital is moving out of China right at this moment which is putting huge pressure on China’s currency reserves. They are depleting fast at the rate of $1.6 trillion per year. China ending up in fighting on 5 fronts simultaneously at a time. 1) Defending Yuan devaluation against the speculative attack due to huge capital outflow. 2) Preventing domestic financial crisis as a result of losing #globalcompetitiveness of manufacturing sector as a result of lack of Yuan devaluation leading to rise in NPAs. 3) Fear that #yuandevaluation will lead to currency war in the emerging markets leading to #EMcurrencycrisis which will end up in no one gaining out of it. This will lead to outright #deflationaryworldrecession. 4) Due to lack of #yuandevaluation the industries are closing which is leading to huge unemployment in China. Ultimately it will cause the social unrest in China which might end up challenging communist party rule. 5) This uncertain situation might challenge the Xi Xingping authority over China may lead into political instability. This China’s strictly peg of currency with USD resulting in to catch 22 situation & China caught into no man’s land where China unable to decide whether to go for #yuandevaluation to export financial crisis abroad or just hold on Yuan level keep the financial crisis domestically & suffer from huge bankruptcies & unemployment. Only one solution lies in this is coordinated global action of various central banks mainly @FederalReserve board, PBoC, @ecb, BoJ and UK MPC so that it will minimize the volatility but this is impossible scenario. This will inevitably lead to #deflationaryworldrecession led by China. Author: Dr. GULLAPALLI H.S. You can reach my Twitter handle – @GP4TG For latest updates. My other previous blogs on China. (Debt of China - Problem for other countries tmblr.co/Z61VPr1TVOWzC ). (China’s Moral Deficit associated with Rising Debt http://tmblr.co/Z61VPr1TbsZhZ) ( My all outstanding blog can be reached on link www.hgullapalli2000.tumblr.com)

[hgullapalli2000]

Inevitable China led #deflationaryworldrecession

The problem with which China is suffering now is very much excessive export oriented and very high productive manufacturing investments fueled by colossal debts funded by Chinese government banks. This colossal debt reached to the amount of 28 trillion dollar and still growing at the rate 15%. So there are no sign of slowdown in the debt growth which is approaching 280% of it’s GDP. They are unable to stimulate domestic consumption to absorb their excessive manufacturing capacity and on the other side relatively tougher liquidity condition due to fed rate hike world economy unable to absorb their goods. This is what causing deflation in China due to lack of overseas demand of their goods creating glut in the domestic market and rising NPAs with Chinese banks due to impending failure of manufacturing companies. If China doesn’t do the the Yuan devaluation it would not be possible for them to export the domestic financial crisis to the developed world in the form of deflation and if does then it will lead to global financial turmoil with emerging market crisis at forefront. In any situation they will export deflation worldwide either by devaluing Yuan or very high magnitude domestic financial crisis which will cause crisis in all countries especially developed countries in the form of deflation, inflation in the commodity exporting countries due to collapse of commodity prices and emerging market due to currency crisis. Eventually Chinese crisis will lead to Emerging markets currency and equity collapse like 1997 Asian financial crisis. FIIs are offloading the stock already in emerging markets especially in China. But not at the pace which will completely lead to turmoil .. But Chinese crisis has not completely unfolded yet. If you see the upcoming Chinese crisis this time it will be pea nut in front of 2008 recession.. China’s manufacturing is collapsing and domestic financial crisis is unfolding as China is unable to devalue Yuan in a fear that it will cause emerging markets crisis & currency war. So in summary China has two choices either to devalue currency and export financial crisis in the form of deflation to the developed nation or maintain Yuan level to prevent forex outflow and suffer domestic economic crisis and slowdown. In both the cases the commodity prices will go lower. But the crisis is inevitable. 😰😰😰😰 So the only solution to this problem lies in excessive consumption by the developed countries mainly USA by providing ample of liquidity in the form of reversing the recent rate hike and very high negative interest rates by all developed countries around the world to stem this #deflationaryworldrecession.

My other previous blogs on China. (Debt of China - Problem for other countries tmblr.co/Z61VPr1TVOWzC ). (China’s Moral Deficit associated with Rising Debt http://tmblr.co/Z61VPr1TbsZhZ) My all outstanding blog can be reached on link www.hgullapalli2000.tumblr.com) Author Dr. GULLAPALLI H.S You can reach my Twitter handle – @GP4TG For latest updates.

[hgullapalli2000]

Rising technology boom for India and bust for USA and China..

Crashing renewable energy prices will make way for power generation in India. Electric vehicles will make way.... So end of oil and gas. Distributed power consumption so end of power transmission. End of distribution companies in USA & China. Cheap renewable energy end of costly thermal and nuclear power plants in USA & China.. Telecom sector India mega 4G spectrum auction. End of late starter 2G & 3G early starter advantage. Better than both USA and China.. 👍 If manufacturing shifts to developed nations China stand to lose and India stand to gain. Our international standing stand to gain with rise in renewable and fall in oil & gas.. commodities Where we are heavy importers.Coal will be dead along with oil. Thermal plants soon become unviable after 3 years. Complete use of LED bulbs will save 30000 mW of energy India..Adding LED bulbs means you are generating more power.Solar will thermal power plants completely. So there won't be any demand for coal.. No freight so no need of big transport infrastructure like China has built to achieve same level of development. So do with steel.. Due Information, communication & entertainment ICE engine growth.. India less infra for same level of development as China is having like road railways and highways. We need not to have same bullet train network and airports to achieve that much per capita. After building record network of bullet trains China remains poor saddled with huge amount of debt. Compared with Australia which is not having the railways or highways network but still has comparatively more times per capita income than China. India is at the unique position because it is the late starter in comparison to USA and China almost in each and every field. So there are more chances that India will take lead.

[hgullapalli2000]

India's Response to the global recession

Recent global stock market rout indicates we are entering in to the global recession. So how to avoid the effects of the global recession on India ?

Which is the biggest question suffering the policy makers especially due to the parliamentary logjam. This has completely stalled the crucial reforms in india. In absence of the legislative reforms India should go for massive non-legislative and executive reforms. 

Here this recession is the China led global recession. This is the situation arose due to excessive investment in Asia in general and very particular in China. This excessive investment and lack of the consumption engines led to the deflation and recession in the world. There use to US the consumption center but it is not absorbing the goods arising from China sufficiently which is the basic cause of the recession. Now India along with China remains only large nations which can absorb this excessive capacity and save the world from this recession.India is at better position as compared to any emerging market in the world.India's current account deficit and trade deficit are under control. Foreign exchange reserves are at record level to control the wild fluctuations of the domestic currency.

Now the question arises how India can escape from this recession?

India is at the best position than any other economy in the world to escape from this recession. India is a very big commodity importing nation and the commodity prices are record low in general and oil in particular. Oil prices are tumbling everyday which is a very big positive for india. We can reduce the rate of petroleum product slightly and increase the excise duty on them a bit to collect more taxes.This increased taxes can be utilized to increase public infrastructure spending.if we reduce the rates of petroleum product then it will reduce the rate of inflation. Reducing rate of inflation will give the consumption and investment upshot.India can go for fiscal expansion in the time of deflationary global recession comfortably on the back of very heavy increase in infrastructure spending and associated increase in consumption. India is a very infrastructure deficient country left in the world where lot of bottlenecks are there in this sector. Very slight investment can crank out very much high growth from this sector to GDP which is not possible for any other developed nation in the world in general and China in particular.

China can't announce the stimulus package now but India can announce massive stimulus package for infrastructure sector to give a big boost to the domestic consumption which can eventually lift the global economy as the India is the consumption center of last resort in the world studded with excessive investment and deflationary recession.

(This all I explained in my previous blogs @ www.hgullapalli2000.tumblr.com)

[hgullapalli2000]

#Makeinindia In steel sector

With passage of MMDR act the mines are now only be auctioned so this hugely hampers the competitiveness of the Indian base metal manufacturers vis to Chinese. Chins with the help of superior infrastructure without significant resources is importing raw materials from all over the world and producing base metals. It manufactures the base metals with the help of imported resources still it is competitive at the world stage. At this moment also China is the most competitive in the base metal manufacturing. It producing almost 50% of world’s base metal.

Our domestic steel sector is in completely mess. The profitability of the companies is reducing due to large scale dumping of the cheap imported steel in the Indian market. The profits are off completely and the investments are completely faltered in this sector.

This is all due to loss of the global competitiveness of india at the global stage. Steel sector should be seen as the test case for #makeinindia and analyzed properly for the effects of the changing global competitiveness and its effect on the domestic industry.

The response to this should be given in the form of heavy public investment in the infrastructure which improves the competitiveness of the industry as a whole. 

Now due to ongoing global recession the commodity prices once again start falling in turn which is shrinking our export markets as well as due to the competition from China due to its superior infrastructure. So reduced export demand, domestic glut, falling domestic consumption and reduced commodity prices puts lower pressure on the domestic inflation. So India can loosen it’s purse string  for fiscal expansion on the back of rising public infrastructure investment and reducing social subsidies will boost economy in a very big way which I explained in my previous blog.

http://tmblr.co/Z61VPr1eza1SX

This is my kind request to @narendramodi government to go overdrive without thinking on the fiscal limitation for stepping up public infra investment  which is the only sure and long term way to boost our GDP growth.

[hgullapalli2000]

Changing India's fiscal goalposts

Recently various comments of all three top honchos of the economy like Raghuram Rajan, CEA Subramanian and MoS Finance minister Jayant Sinha that rupee is overvalued. 

I have written my previous blogs that the Rupee is overvalued as compared to the competing currencies of Yuan and other right now in the global currency positions. Dollar index strengthened against the basket of the currencies by almost 22% in last 7 months alone but Rupee remained stable against dollar as compared to the other currencies around the world. This is severely hurting India’s global competitiveness vis other countries mainly China, Europe, ASEAN etc. This is mainly hurting our exports as well as increasing the manufactured good imports from the crisis stricken countries like Russia, China, Europe etc which are affecting domestic industry as well as the investments severely. 

So mainly the global competitiveness is affecting the Indian investments not the interest rates or the high corporate taxes and the poor quality of the infrastructure that is prevalence in India. We can take examples of the case of the close cousins to know about the effects of global competitiveness on the investments and profitability position of companies. Cement and the steel industry which are closely related to the construction industry and whose demand depends on the domestic factors. The cement industry able to pass the price hike recently to the consumers because it’s price depends on the local demand & strictly local supply. As it can’t be imported so it prices depends on the ability of the local supply to meet the demands. So here local supply is not matching the rapidly increasing demand so the cement prices started firming rapidly in the local markets. So the same case is not true with it’s close cousin that is steel sector whose demand depends on the construction activity and almost similar to the cement demand. But it’s supply depends on the global factors as it can be freely imported. So slackening global demand of steel this commodity is being hugely getting dumped in India from the countries like China and Russia which is affecting profitability of the steel companies severely and affecting their investments plan severely.

 Thus wherever in any industrial sector imports are possible due to reduced global competitiveness as result of overvalued currency India’s investment position is getting hurted severely in those sectors particularly as suggested by the recent RBI credit growth data.

There is almost 6 % growth of the credit to the industry which is almost and completely led by the construction,beverage and tobacco which demand and supply are dependent on almost on the local factors. In almost all sub sectors of industry which demand and supply depends on the global factors the credit growth to such sectors are contracting. This means there is no investments are going on in the sectors which are hardest hit by the reduced global competitiveness as a result of overvalued Rupee due to change global currency exchange dynamics. So it is nothing to do with the interest rates as such or reduction in the corporate profit. Even if we cut the interest rate as the data show only the personal loans will get increased which in turn will fuel consumption. The rising consumption without investments will increase the inflation afterward. This is the most likely thing which is going to happen due to the recent rate cut of the RBI governor Raghuram Rajan.

This situation of overvalued currency itself implies that  world want India to consume more and invest less because already somebody over invested and consuming less like China.  Which I already explained (Things to do before starting  Make in India campaign - http://tmblr.co/Z61VPr1RdGj9s  Debt of China - Problem of other countries  tmblr.co/Z61VPr1TVOWzC ). I would like to ask one question in this regard that in last one year the sensex increased by 50%. Did this got translated in to equal amount of increase in the investments and the increase in the corporate profits in the same quantum?

The answer is certainly it is not and in fact it is moving in the opposite directions.This is the stark reality India is facing right now.

 Cause of Rupee overvaluation:

 Mainly because the fall in the oil prices in particular & other commodities in general and the India being the biggest importers of all such items. So obviously this confers relative strength to the Indian currency. Another reason of strength of the currency is the buyout capital markets and inflation tracking debt market which are facing huge FII inflow. Along with it there is pick up in the FDI inflow in the various sectors of the economy. This is also adding to the strength of Rupee. As I explained earlier that the foreign fund inflow does not come as the bounty but it will act as the double edged sword. It causes overvaluation of the domestic currency and will inhibit the exports and increase the imports which in turn will slow the domestic investments and  curb output growth. ( This I very well explained in my blog of Fiscal Expansion vs. Consolidation debate http://tmblr.co/Z61VPr1criCMt )

So how to boost global competitiveness??

The government should understand that the every dollar that is coming in to the country will reduce the global competitiveness and will demand much more investments in the infrastructure sector & very paced reforms to boost the competitiveness of the economy. I suggested in all my previous blogs that there need to increase fiscal deficit target as it is a simple number which should not be fixed and has to be changed according to the persistent situation & global dynamics as any economic number like currency exchange rate & GDP growth figure changes according to situation. The fiscal deficit target goalposts should be changed according to the strength of currency,investment scenario,pace of job generation, capital flows, pace of reforms process, trade growth, and changing global dynamics etc. Just like what China did in past 30 years to keep rising social problems at bay. We need to formulate the fiscal policy which is flexible and based on judicious and intuitive mix of the  above named factors. Now the present situation demands high fiscal goalposts in the back of very high growth in the public infrastructure spending which will boost India's global competitiveness. . 

 This will achieve twin objectives: 

1) It massively enhance global competitiveness of India which in turn will stimulate strong domestic private investments. 

 2) It will increase inflation in short run as a result of increased demand which will deter foreign investments in the country . This will reduce foreign fund inflow in to India which will reduce the upward pressure on Rupee. This way India should change it's fiscal goalposts according to the situation instead of sticking to certain number which are determined by credit rating agencies with respect to the change India's global competitiveness to maintain adequate level of investments which are very much important to generate adequate pace of job generation.

The history suggests that any democratic government's survival in the world depends on the adequate pace of job generation. If it falters then it will surely bring down any strong looking government within very short span of time as we have seen in India in 2014 and Greece very recently. According to my own estimates the current budget is not enough to boost India's global competitiveness so the things more or less will remain as it is especially in the coming months. So the situation is not going to change drastically in favor of the incumbent government.

So taking view of above situation I request  to the @narendramodi government that extensive overhauling is needed to change the fiscal deficit target, infrastructure spend, government expenditure reforms and various economic reforms to boost India's global competitiveness and put India on solid & sustainable growth in GDP and the adequate pace of job generation.  

(My all outstanding recommendation to the Narendra Modi government can be read at http://hgullapalli2000.tumblr.com/ . For latest information and updates you can follow my twitter handle @GP4TG )

[hgullapalli2000]

Check out @markets’s Tweet:

This data confirms that the deflation in Eurozone is easing and recent data shows that USA is in deflationary mode. Due to anemic growth and deflation in Eurozone the Euro fell against USD to record low. So the deflation got exported to USA due to strong dollar. This made USA exports noncompetitive vis Eurozone exports. This is causing the manufacturing slowdown due losing global competitiveness of USA due to strong dollar and causing exports to tumble & imports soaring to the new high especially from Eurozone.

This somewhat reduced deflationary pressure in Eurozone and stopped contraction of manufacturing output to some extent.

The implications for India :

India is suffering from the same malaise since last 4 years.Our manufacturing sector is not recovering and our investments remains subdued. This is because our manufacturing sector lost its global competitiveness against China due to relative currency exchange position vis China. The way Eurozone exported it’s financial crisis to USA by weakening Euro against dollar in the same way China keeping Yuan low against dollar and becoming competitive in the global market compared to India.( Debt of China -problem of other countries http://tmblr.co/Z61VPr1TVOWzC ) Thus it has pushed India in to the low income trap like middle income trap of Malaysia and high income trap of Europe.Seven months back I wrote the same thing about the #MakeInIndia campaign and warned against the Chinese competition for India in the manufacturing sector. (China competition to India in manufacturing sector. http://tmblr.co/Z61VPr1RdGj9s)Now the recent February HSBC Manufacturing PMI shows slowdown in manufacturing sector in February month and slowing credit growth to industrial sectors in India by RBI.

Sectoral Credit deployment data by RBI:

Shows there is deceleration of the credit growth to the all industrial sector which are affected due to the global competition but increased credit growth to the construction or the sub-sectors which are not affected due to the global competition. This clearly indicates the faltering investment in the industrial sectors which are affected due to the global competition means that India lost the global competitiveness due to the relative currency appreciation just like USA affected due to strengthening dollar.

This same data Indicates the personal loans are increased by 16% which are at same level like previous year where the major credit growth is coming from.This means our GDP growth is led by consumption not by investment.So in the scenario of decreased global competitiveness does the interest rate cut revive investment? ( Low interest rates won't stimulate investments - http://tmblr.co/Z61VPr1cVVbr5 )

Certainly it would not revive investments. Instead it will revive consumption due to low interest rates as explained by the Mr. Jayant Sinha and as per the credit growth data shown by the RBI.

 So if it is the case then it will stimulate the consumption due to reduced outgo on the EMIs . This definitely will increased the inflation afterwards due rising consumption and lack of investments.

In this situation when there is certainty that the reduced interest rates will increased consumption and inflation how it will be prudent to demand the interest rate cut from the RBI.

 Impact of reduced global competitiveness of India on steel sector:

There deceleration of credit growth to every sector of industry which is affected by cheap import. This is the reason for slumping profits of steel companies in India due to cheap imports from China. Russia due to change in the global competitiveness of India in recent 7 months. 

The things are definitely not good for the country especially in manufacturing sector and investment front.The way investments have significantly faltered in USA due to strong dollar in recent months in the same way it is faltering in India especially in last 7 months.

Faltering US investments:

 In USA the investment decreased only in one quarter from +9.9% to -7.5%  when interest rates are remaining 0 but the changes are only in the global competitiveness which is decreased due to strong dollar.

CEA Subramanian demands Rupee Devaluation to boost the global competitiveness and in turn exports:

In India's prospective it won't hold true. The defect lies in the huge gap between the infrastructure in India and the competing countries mainly China. The policies China is pursuing is completely different.It is hugely competitive in terms of infrastructure, devalued Yuan and economic policies vis India. So even with the devaluation of Rupee will lead to the rise in inflation in India and will eventually negate the effects of devaluation. So in all  it will turn out to be a zero sum game. So raising infrastructure spend with the help of massive fiscal expansion will devalue Rupee as well as increase the global competitiveness of India. (Things to do before starting  Make in India campaign - http://tmblr.co/Z61VPr1RdGj9s  Debt of China - Problem of other countries  tmblr.co/Z61VPr1TVOWzC )

There is huge difference of income in USA and India but manufacturing sector growth, GDP growth & investments position are almost same. Both these countries growth is led by consumption especially in last 7 months not by investments primarily. So it always harbingers the seeds of future inflation so interest rate cut won’t help India and interest rates rise won’t help USA either. 

India's  factory growth slips:

January core sector output growth slips:

With all the indications are coming that the growth is faltering in India rapidly. The situation is turning from bad to worse due to change in the global competitiveness of India due to recent changes in the currency positions worldwide.

There are three pillars by the global competitiveness of India can be raised:

1] Public infrastructure spend

2] Economic and financial reforms

3] Pushing #digitalindia project on fast forward mode.

The #budget2015 has increased the public spend on infrastructure only by 70000 crore which is surely not enough to raise the global competitiveness of India's manufacturing sector especially due to change in the current changing global currency scenario. Certainly the situation will be more or less same for India moving forward. 

( Economic Ways to tackle challenge posed by Opposition of NDA2 http://tmblr.co/Z61VPr1d2Rx1g )

We need to calculate the investments in infrastructure needed due to change in the global currency situation to step up the private investment and job generation. But I should say sadly that this budget is will not result the faltering investments to rise anytime soon and the job generation pace to pick up which will be enough to suppress voices of discontent people.  So this is my kind request to @narendramodi government of India to concentrate on very high level of public infrastructure spending than ever before to revive investments and the manufacturing sector in India when the global competitiveness scenario is completely changed today.

(My all outstanding recommendation to the Narendra Modi government can be read at http://hgullapalli2000.tumblr.com/ . For latest information and updates you can follow my twitter handle @GP4TG )

[hgullapalli2000]

New model for NOFN project Implementation

As per initial reports with the present situation also the NOFN project is running short of the target. So as I explained in all my previous post it is the most important and crucial infrastructure project of India to envisage the #digitalindia vision. I suggested through my tweets (handle @GP4TG) relentelessly about the importance of this projects to change fortune of country completely.I suggested various things and improvements and importance of the private secto participation in this project to boost its commercial and technological viability in the fast changing world. So i requested the government for complete public private partnership model to revitalise this project and put it on the fast forward mode.

Here are my few recomendations:

1] In NOFN project government should lay the pipes by own by laying aquiring land and right of way with the help of local bodies.Once for all the government should lay at least three sets of pipes to connect almost all villages by laying the 8 lac kilometers of length.

2] For all India basis the government should auction 5 slots of fibre optic cables to to six companies to lay fibre optic through pipe with complete target given to them to give 2.5 lac point of presence across the India in all villages withing time bound manner with strict rollout obligation for the same. This will keep off the the higher limit for the bidding due to stringent rollout obligation. All these new companies will use ultramodern technology available in the world and will compete each other to provide bandwidth to the cable operators, MSO, landline companies, Gram Panchayat, Private companies, commercial buildings, telecom towers etc. Due to intense competition amongst the players will result in to significant reduction in the cost of bandwidth to the end user. This is due to the subsidy provided by the government in the form of readymade pipes to lay the optical fibre cables.

3] Out of this 3 pipes government should keep the 2 slot with it and 2 slots reserve for some different purpose for the use of different companies at local level as well as reserve in case of escalation of price of bandwidth by forming the cartel. 4] Wherever the companies are reluctant or delaying the the connectivity projects the government can take a lead on providing connections.

5) Data centres : Government should open the data centre for giving the boost to the e-governance & e-education so that the people will not face the dearth of bandwidth. Government should promote construction of data centres by various companies at various places across India so that due to decentralised model it will boost the availability of bandwidth in each part of India. Same model can be followed by the governemnt for pushing the data centre construction at each and every possible site in India. The government should open data centre parks in line with software technology parks with all infrastructural facilities at various important sites in India to boost bandwidth availability in India to the remotest corner of the country.

This is my kind request to @narendramodi gov is that with the partnership of various states & private player implement this crucial project in record time and with the help of the best available technology in the world with the services at very competitive prices.

My blog on achieving #digitalindia vision- http://tmblr.co/Z61VPr1dTPZ_m  

(My all outstanding recommendation to the Narendra Modi government can be read at http://hgullapalli2000.tumblr.com/ . For latest information and updates you can follow my twitter handle @GP4TG )