Government’s broad strategy to cut CAD disappoints, says Nomura

According to Nomura, the government’s broad strategy throws up no surprises and is mildly disappointing, given the build-up of expectations, also the measures broadly fall in the category of quick fix solutions and there is no detail on sustainably lowering the CAD

Finance Minister P Chidambaram on Monday unveiled much-anticipated proposals to narrow the FY14 current account deficit (CAD) at $70 billion or an estimated 3.7% of gross domestic product (GDP).


Speaking in the Lok Sabha, the finance minister outlined the government’s broad strategy to address balance of payments concerns. This includes steps to compress oil and gold import demand, curb on imports of non-essential items, liberalizing external commercial borrowing (ECB) norms for companies, allowing oil companies to raise additional funds via the ECB, allowing sale of quasi-sovereign bonds by state companies, and to liberalise non-resident Indian deposit schemes.


However, Nomura Financial Advisory and Securities (India) Pvt Ltd, said the government’s broad strategy throws up no surprises and is mildly disappointing, given the build-up of expectations.  The measures broadly fall in the category of quick fix solutions and there is no detail on sustainably lowering the current account deficit, it added.


"While the government’s estimate of a smaller current account deficit is in line with our view, the real issue is financing the deficit. Weak domestic growth prospects suggest that portfolio equity inflows and overseas borrowings will be much lower this year. Hence, we expect net capital inflows to slow, which will make financing the current account deficit difficult. Hence, we expect balance of payment pressures to continue,' Nomura said in a note.


Amid din and uproar in the House over various issues including Telangana, the Minister said, "notifications in respect of tariff rates will be laid before Parliament in the usual course."


He said that with the fresh measures, "CAD will be contained at $70 billion, while the inflows will increase to a level that will be sufficient to finance the CAD.


"If the CAD is contained at $70 billion, it will amount to 3.7% of the GDP as against 4.8% FY13," he said in a statement.


Stressing that like the global economy, Indian economy too is facing challenges, the Minister said, "We believe that we have to do more to contain CAD, to reduce volatility in the currency market and to stabilise the rupee."


India trade deficit in July better than expected, says Nomura

According to Nomura, the sharp pickup in exports suggests that global demand is recovering. Even though external demand has improved, weak domestic demand has kept a lid on India's imports

After two months of fall, India’s trade deficit remained flat at $12.3 billion in July from $12.2 billion in June due to better-than-expected export growth. During July, goods exports shot up 11.64% to $25.83 billion buoyed by a growth in shipments of pharmaceuticals, textiles, chemicals and heavy machinery.


In a note, Nomura Financial Advisory and Securities (India) Pvt Ltd, said, "The sharp pickup in exports suggests that global demand is recovering. Even though external demand has improved, weak domestic demand has kept a lid on imports. Imports contracted 6.2% in July compared with a decline of 0.4% in June."


A sharp decline in gold and silver imports to $2.97 billion in July 2013 compared to $4.47 billion of imports in the comparable month last year, resulted in an overall 6.2% fall in overall exports to $38.10 billion.


Trade deficit narrowed to $12.26 billion during the month compared to the previous months bringing some relief to policy makers grappling to keep the current account deficit in check.


According to commerce secretary, SR Rao, a depreciating rupee had helped exporters as their realisation had increased but a stable foreign exchange helped in long-term contracts.


Oil imports during July 2013 was 8% lower at $13.816 billion, while non-oil imports at $25.39 billion were 5.26% lower than the same month last year.


In the April-July period, exports rose 1.72% to $98.29 billion. Imports during the period posted a growth of 2.82% to $160.73 billion. Trade deficit during April July 2012-13 was $62.44 billion compared to $59.69 billion last year.


Rao said the incentives announced recently to boost exports would show results in the coming months.


Exports in 2012-13 fell 1.6% to $300.6 billion as slowdown in the global economy shrunk demand while imports increased by a marginal 0.44% to $491.48 billion from $489.31 billion creating a trade deficit of $190.91 billion.


"With domestic demand weak and global demand improving, the trade deficit should improve this fiscal year. We expect the current account deficit to moderate to 4.0% of GDP in FY14 from 4.8% in FY13 due to lower gold imports and lower non-oil and non-gold imports due to subdued domestic demand. However, we expect net capital inflows to also slow due to worsening domestic growth prospects, which will result in a balance of payments deficit," said Nomura.


National Land Reform Policy - how realistic is it?

Free-gifts are often ‘recycled’ and in the case of a landless peasant, nothing prevents this legacy being misused. Giving land on a free of cost basis is a grave mistake that any government can make, as this simply will kill the initiative to create wealth

The National Land Reform Policy that has been prepared by the Rural Development Ministry, in its draft form, is in circulation, which is based on the consultations with other ministries.


As and when it is passed, it is likely to be a crowning achievement for Jayaram Ramesh, the minister and will give a tremendous boost to the Congress party when the elections are held in 2014.  The opposition are now between the devil and the deep sea-they cannot oppose the Bill as it will cost them a heavy turn against by it beneficiaries, and so, they need to find a way to support it to garner public support!


What does this National Land Reform Policy propose to achieve? It proposes to redistribute excess government land to the landless poor, cover every single village in the country and provide equal opportunity and right for women to own their land. In India, traditionally land has always been "owned" by the "karta" or head of the family, though, in some parts (mostly South) land has been bequeathed to daughters by their parents. Joint ownership has been possible. Land has been given as a part of "dowry" where the benefits accrue to the women, but she cannot sell it!


The available statistical land data shows that 47% of land is used for agriculture; 22.6% is forested and 13/6% is fallow. From time to time, poor monsoon rains or floods have played havoc with our agriculture.


While the full details of the Policy have not been made public, presumably because of the expected comments and suggestions from various state governments, who have to play a vital role in its execution, this proposal will be gigantic in operation. The actual process of identifying excess government land, separating agriculture and non-agriculture categories and ensuring that these are not illegally occupied and used is not easy task to comply. It is a tall order, implementation of which, will take at least a decade or two, considering the country's size, population and various customs and practices in different states.


We must bear in mind that, in the recent past, land acquisitions have caused enormous problems in setting up huge industries in many parts of the country, POSCO, ArcelorMittal, Zuari and Tata Motors being recent examples. Therefore, for the time being, we shall restrict our thoughts to the National Land Reform Policy and how it can be implemented.


Looking at agriculture, a large percentage of workers is bonded labour of one kind or another. Land-owning farmers who actually till their own land are a minority. Because agriculture is a seasonal in nature, there has been migration of farm labour to the towns and cities, specially the "landless" people. The intention of this Reform policy is laudable, but these farmers have now settled outside villages, in towns and cities, and will therefore have to be enticed to return back to their roots and take up agriculture again. Not an easy task, by any means!!


The landless labour who are now working for a pittance for the land owning zamindars and feudal lords, though we do not "accept" their presence anyway, will now want to "lodge" in their claim for getting free-land from government under the Reform Policy, thereby creating a labour vacuum in the present setup! That these labourers may be deep in debt owing their lifetime in servitude to the landowners or the moneylenders in these villages are more horrendous issues to write about.


Surely, all these factors may have crossed in the minds of authors of this Proposal. It, however, remains to be seen how they propose to handle these explosive issues, when the details are made public. This we shall await with interest.


It must be admitted that the Reform Policy is practically a time bomb that will explode if all these factors are not suitably covered and amendments are made as we go along. Or, it may be worthwhile, for the government, to implement this policy, on a trial and error basis, starting with one state, and slowly moving on to the others.


If at all such a distribution of excess land is mandated, it must be ensured that the government fixes a price/value for the land allotted, but ensuring that the ownership can be only acquired after a certain period of actual use, and that too on paying the price determined at the outset. And to ensure that this is not misused, the law must provide that such land cannot be sold at all, and that it can be transferred to the members of the family, who must continue to be involved in agriculture. And to ensure all these happen, if the farmers are returnees from cities and towns, proper rehabilitation must be provided.


We must remember that free-gift has no value in society today. In simpler sense, it is ‘recycled’ and in the case of a landless peasant, nothing prevents this legacy being misused.  Giving land on a free of cost basis is a grave mistake that any government can make, as this will simply kill the initiative to create wealth.


We must remember to teach a person to catch a fish; not give it free!


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)



Sunil Patil

4 years ago

This is too much , the land reforms is being suuggested by people who lack the basic knowledge of Agriculture and the economy related to it . The policy of new sealing act as proposed in the draft will further decrease the agriculture produce and thus add to the number of poors of this country . I want to ask Mr Jairam Ramesh how can a non irrigated land of 15 acres take care of the needs of upto 10 members of family .If such a policy comes into being then god help the farmers whose only source of income is agriculture , there will be more cases of suicide ,bankruptcy, debt . The farmers who are helping thier family and also employing labours will find it difficult to survive. This policy is absurd and seems to have a larger conspiracy in bringing corporate farming .As farming won't be viable with such small portions of land and then corporates would be introduced who would then take these lands on lease from the farmers . If such is not the case then please Mr Minister try to understand that having small portions of agriculture lands will make farmers even poorer and those who get the benifit from this also wont be able to take the benifit from such a proposal because they wont earn sufficiently from these small land holdings .You cant plan to make farmers labourers of the corporates .


Dayananda Kamath k

In Reply to Sunil Patil 4 years ago

the land bill has been brought only to benefit the politicians. it is the politicians who get the first information about land acquisition. so they can buy land and then sell it at 4 times the market value and get all the benefits. but who is coming to invest in india if for land you have to pay 4 times the market value. in equity you may demand 4 times the current market rate for shares you are selling today.


4 years ago

First give the correct price to the crops, it will be be a big reform in country. without proper price, the farmers have to suicide for losses.


4 years ago

first govt have to check all family member & then redistribute the land for landless people in my family there are min 10 member we have only 50 acre farm but income of that farm is only 9 lac per year in that 9 lac we have to spend money 5 lac for home & education



In Reply to sanjay 4 years ago

we r not happy with this land ceiling act we r happy with old land ceiling act
jay hind jay maharashtra


4 years ago

Hello Dr Ramdas and Mr Nimbalkar
There is a specific provision for redistributing land in the proposed Land Reform Policy Act, To add more to problem there will be division of land based on household not individual. The core idea is to increase land holding on household basis. Therefore, the proposed policy will make agriculture unsustainable and drive profitable large farmers to be marginal farmers. If you need additional details please email me on Mr Nimbalkar I belong to farming family from Maharashtra (Sholapur District). All your assessment of past ceiling limits laws is correct and if the government does not learn for the past mistakes we are helpless. Its better we organize and fit back to populist policies.

Prakash Chhotulal Patel

4 years ago

God save our country from Sonia Gandhi and Jairam Ramesh.
Sonia for Food security bill and Jairam Ramesh for Land Reform Bill.
politicians do not know problems of indian agriculure.Farmers don't get workers even at the high wages as nobody wants to work,thanks to guarenteed wages in MGNREGA.Farmers are going for those crops where their is minimum labour is required like sugarcane which is water intensive.Over exploitation of ground water is leading to water table going down acompanied by increasing soil salinity.It is learnt that by this bill Ramesh also want to reduce land ceiling limit.He must have educated in west and know that economy of scale is required in farming also as in case of any manfacturing industry.


Dayananda Kamath k

In Reply to Prakash Chhotulal Patel 4 years ago

they are continuing the british legacy. destroy the economy then people will automatically become slaves. they have destroyed the indian economy for their prestige only. public transport was not developed to support maruti. tax laws were drafted to benefit only maruti. and now we are talking about petrol import bill. mgnrega has destroyed the cheap labour the usp of india,and lined the pockets of politicians by wrong implimentation. industries were developed withought power generation. it is clear mismanagement to line their own pockets.

Dayananda Kamath k

4 years ago

if they teach people to catch fish how poiticians can reap harvest every year. since independence our govt has followed a policy of selective benefits to selective people. they have vested interest in keeping people poor.their main issue is some how remain in power let the people and country go to dogs.because the family got the power on platter the toiling of crores of people. we have become slaves of nehru gandhi family from british.they have foloowed the same british policy of devide and rule.

Dr Anantha K Ramdas

4 years ago

dear mr Nimbalkar: After sending my reply, I did some background check and agree with your anxiety.

There is a lot of objection and public reaction to such proposal is actually aimed at feudal landlords and zamindars!

Personally, I think those of you in the same (or similar situation) should join hands and take up the issue through a qualified and honest lawyer or thru a reliable political party leader. You may also, all of yu I mean, jointly make an appeal and petition to the President of India directly or via the Minister Jayaram Ramesh.
Also, when they took away 50 acres from your family, they ought to have given suitable compensation?

Also your lawyer will probably tell you to divide the land amongst all of your family in such a way that the total holding remains same.

I fully agree with you that it is unfair for anyone to snatch away your traditional family land property. You must all put up a joint stand and fight this issue. I will also consult some friends and let you know in due course.

Meantime, good luck and god bless, and do your best to increase productivity and create wealth foryour self and family.


Prakash Chhotulal Patel

In Reply to Dr Anantha K Ramdas 4 years ago

No compensation is given in Land ceiling. As far as your suggestion for division of land among other family members,I must say, nobody will be benefited more than patwaris ( talathis in maharashtra) who will demand hefty sums of money for splitting the owership of land.


4 years ago

Thank you dr. Ramdas.
I have read the draft and there is a suggestion given to the states to revisit their existing ceiling acts and reduce the permissible land holdings from the existing limits to 5 to 10 acres of cultivable land and 10 to 15 acres of dry land.

Now we have 2 holdings. One of my parents and the other of us three. Hence we will be able to hold only 2 units multiply by 10 avers each which comes to 20 acres. Rest of the land we will have to surrender.

The same thing had happened in the previous two ceilings.

Kindly correct me if I am wrong.


D. R. Nimbalkar.

Dr Anantha K Ramdas

4 years ago

dear mr nimbalkar: Thanks for your comments. Actually, the article covers what the government wants to do with the excess land they have and which they want to give it away to the landless farmers.

To the best of my knowledge, I do not think the government plans to take away your land or anybodyelse's.

In fact, please let me know what crops you are cultivating and whether you are getting any help in your agriculture from any government department. Are you getting subsidized fertilizers?

Indeed, I am pleased, and so will be many other readers, that your educating your son, looking after your parents and taking care of the land. Hope you are also making compost so as to produce quality farm products.

I will write to you again and am glad you responded. Hope you and your wife are spending time to learn about cultivation of organic vegetables/fruits etc as these will also give you extra income.

good luck, god bless and Jai Hind


Prakash Chhotulal Patel

In Reply to Dr Anantha K Ramdas 4 years ago

There is very informative article in marathi newspaper SAKAL dated 17th August 13 by Ms.Mrinalini Nanivadekar on this subject of land ceiling.


4 years ago

I am a 38 year old farmer from asu, tal. Phaltan, dist: satara, maharashtra.
We are totally 5 of us in the family, my parents both r in their late
60's, my wife, myself and our son who is 9.

I read your land reform draft yesterday and am particularly disturbed
about the ceiling clause in it.

When my parents got married their land holding was 100 acers. In the
first two ceilings they lost 50 acres and their holdings came down to
50 acres.
This 50 acres is all that we have.
From the income of this my parents educated their 3 children, got 2
daughters married and were able to live a dignified life.

Now they are old and cannot work.
Now we I.e. My wife and myself look after the farm and try to live our life.

Our present income from 50 acres after taking 2 crops per year is
about 10 lacs per year. We are happy in it. In fact we would like to
expand our farm, get new machines and make it more profitable but we
cannot do it because of the land ceiling act.

We r also building a house for which we have taken a loan of 30 lacs
from the bank.

Now if your new land ceiling act comes into effect then our land
holding will come down to 20 acres.
From this we will be able to earn about 2 lacs per year which comes to
17000 per month.
Our monthly expense is 7000
Sons school fee per month is 7000. We have to keep him in a boarding.
Hence total  outgoing is rs 14000.
Remaining is 3000.
Home loan emi is 25000.
Hence monthly loss will be 22000.

According to the above calculations I will not be able to pay the emis
of the bank and will default.
The bank in some time will attach my house and land and we will be land less.

We will have to migrate to the cities and look for some small jobs or
beg on the streets.

You might collect our land and give it to the land less but you will
make us land less in their place.

According to my knowledge a country progresses when the people progress.
I know only farming, I think I  am good in it. I would like to expand
in it but I can't because of this law.
If a person has a right to expand his business to gain prosperity why
can't I have the same?

Can u ever make a law limiting the salary of people or can u make a
law to confiscate factories of industrialists  in the name of poverty
eradication. Why are they allowed expand but we are not. If they
provide employment so do we. At present we employ 10 ladies and 3
gents everyday.

I request you to visit our village.
There are people who have got land from the last ceiling act. Come and
meet them and see their state. It is the same. In fact some have sold
their awarded land and are worse now.

If my parents would have had the original 100 acres they would have
produced double than what they produced in 50 acres and that to for 40
years. Our country would have been self sufficient in food, inflation
would also be low.

Sir this law has done more harm to our great nation then good, kindly
do not repeat the same mistake, but compounded many times, by reducing
the land holding.

Please don't make us land less.


D. R. Nimbalkar
Bhavani farms
Asu, tal : phaltan
Dist : satara



In Reply to Diptiman 4 years ago

Hello Mr Nimbalkar

Please contact me on I have similar concerns as you are having. My parents are in the same situation as you are. I have drafted a paper that suggests that decrease in land holding leads to inefficient production.

I am from Solapur District in Maharashtra


sreeram boppana

In Reply to Ranjit 4 years ago

I am so upset about this mindless act to distribute land to landless.

First of all so far they didn't improve life of any small or marginal farmer in that case what are they trying to achieve by distributing a acre of land to any one ?

On one hand you support capitalism helping one or two individuals amassing lakhs of crores but you cant let a farmer build his farm to a sustainable level.

I am a software engineer working in USA , and my dream was to get back to india and start farming. Current 50 acre land limit itself is so small when compared to any developed country farm size. Now if you divide it further how do they propose to improve the living standard of these small farmers.

by Continuing to keep small farmers their agenda is to drive the corporates into farmsector without any major capital.

If you look at this bill along with the corporatization proposals diff state governments are bringing their ulterior motive is to divide bigger land holding to smaller and then prove that farming is nonviable on small scale , then they can bring corporates to help farmers by taking the lands on lease.

All these politicians eat away all the subsidies of farm sector ,which are in different forms like fertiliser, seeds, pesticides minimum support prices all these are money making avenues will be well established for politicians.

On one hand they are bringing FDI into retail sectors , who deals only with big farmers or big groups of producers. Thus all the individual small farmers will become so vulnerable at the mercy of the corporates.WHo has to sell at the prices dictated by Corporates. Then Corporates can get huge profits.

Already Congress has screwed the sustainability of the country by killing the farmer and farming . Gandhi's dream of stronger self sustainability of village has been killed by weakening the panchayati raj system .

All the political parties are selfish for power , Every one wants votes Congress, BJP ,CPI,CPM one and all are in the same boat.

All these khadi wearing swiss bank holders are looting happiness and future of India


Dayananda Kamath k

In Reply to sreeram boppana 4 years ago

as long as indian people are hungry for free lunch these types of laws will be brought.they have vested inerest in keeping the people poor. and country also poor.

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