Slow growth and high rates to stay for a while longer in India

General elections outcome in May is critical to improvement in growth mix, which includes, increasing capex and lowering fiscal deficit, says Morgan Stanley in a research note

The outcome of general elections in May 2014 will be critical to determining the pace of recovery in India, says Morgan Stanley. Considering the constraints facing domestic demand, the strength of the overall growth improvement will depend largely on improvement in exports in the near term and measures to boost productivity in the medium term, it says in a research note.


“A meaningful recovery in private capital expenditure (capex), government spending or private consumption will be difficult to achieve over the next six to twelve months in the Indian economy, while policy makers focus on improving macro stability indicators, such as inflation, the current account deficit, and banking sector balance sheets. Industrial companies will also need to de-lever their balance sheets (average debt equity ratio of industrial companies is at 2:1),” the note added.


Morgan Stanley observes that in terms of government policy post-elections steps must be taken towards: (a) fiscal consolidation for sustained improvement in macro stability; (b) moderating rural wage growth to be in line with the productivity trend; (c) improving the investment outlook by reducing regulatory hurdles, and (d) cleaning up public sector banks' balance sheets and infusing capital.


In the context of CPI inflation remaining above 8% in the near term, Morgan Stanley expects Reserve Bank of India (RBI) to keep policy rates on hold at the next monetary policy meeting. Seasonally favourable factors in 1H FY2015 would help to improve liquidity conditions and result in some easing in short- term market rates.


Morgan Stanley expects the full-year F2014 current account deficit to narrow to 1.7% of GDP (vs. 4.8% of GDP in F2013) and further to 1.6% of GDP in F2015.


For financial stability, there is a need for adjustment in underlying deposit growth for sustained improvement in credit deposit ratio. While deposits have been growing at a faster pace than credit recently, underlying deposit growth adjusted for Non- Resident Indian (NRI) deposits is still slower than credit growth, indicating that the underlying adjustment process of lifting deposit growth above credit growth is still not complete. Morgan Stanley believes that as CPI (consumer price index) inflation moderates and real rates build up gradually, they will help to improve deposit growth, which is required to correct the persistent gap between credit and deposit growth.


Morgan Stanley’s snapshot on macroeconomic forecasts is given in the table below:


India-Sri Lanka bilateral trading can reach to $10 billion

Indo-Sri Lankan bilateral trade has the definite potential to reach $10 billion in the next few years, if efforts are made by both sides, considering the existence of free trade agreement signed way back in 2000

Sri Lanka, our southern neighbour, occupies a close, strategic and religious association and connection with India, from time immemorial. True, there was a brief period of problems created by LTTE and with the elimination of Prabhakaran in the north, peace has slowly returned to this emerald Island.


It is predominantly an agricultural country and, has been a leading grower of quality tea throughout the world for almost a hundred years now. It may be remembered that the back bone of the plantation workers were originally from India (mostly Tamils) who were taken to the island by the British masters, and who has stayed there all these years.


Sri Lankan imports are a little over $20 billion and the imports about $11 billion, according to information published by the Ministry of Commerce, Government of Sri Lanka, for the year ending 2011. It has a large non-resident population of working men and women in the Middle East, who are the biggest foreign exchange earners, and who, dutifully remit the funds back to the country. It traditional exports, apart from tea and spices, are textiles, apparels, pharmaceuticals, precious stones like diamonds, rubies and emeralds. Other items of importance are rubber and rubber products, coconut, fish etc.


Only recently, Cairn India has discovered some gas offshore and further explorations are underway. However, the country continues to import petroleum and allied products, textile fabrics to support the apparel industry which is well organized in the country, mineral products, steel and allied products, foodstuffs and transportation equipments are the major items.


Imports of many of these items come from India, and the Indian share in 2011 (calendar year) was 21.3%; China was a close second with 16%; Singapore at 8.6%; Iran at 7.7% UAE 4.4% and Malaysia at 4.3%.


Indo-Sri Lankan bilateral trade has reached $5 billion and has the definite potential to reach $10 billion in the next few years, if efforts are made by both sides, considering the existence of free trade agreement that was signed way back in 2,000!


Being India's closest neighbour, Sri Lanka is also subject the whims of the Monsoon which can play havoc in its agriculture. The last monsoon, unfortunately, was insufficient and has brought untold misery to its farmers.


Media reports indicate that the ensuing harvest is likely to be much less than half of what was obtained last year, particularly for the Northern province. Rice cultivation has been hit hard and for the "aam aadmi" in Sri Lanka, the main food on the plate has been traditional rice with dry fish! There is fear about the New Year celebrations, which falls around the middle of April (and it coincides with the Tamil New year for the Sinhalese, which comes a day before or after).


In so far as fishing is concerned, the Tamil population on either side, both the Sri Lankan Tamils in the north and the Tamils from Tamil Nadu, have been at logger heads, each accusing the other for poaching in "their" waters, with Lankan Navy playing a role, causing heartburn to both!


According to information available, the Northern Provincial Council has been trying to obtain foodgrains from farmers' cooperatives for supplies to the people, but this is not happening, simply because the last monsoon was not bountiful; there is not guarantee, at this stage, that the ensuing monsoon will be adequate to drench the parched lands!


Estimates vary, but overall production of rice may fall between 25% and 35% of the requirements. Already small quantities of rice are being continuously imported, in the last few months from Thailand, China and India.


Sri Lanka may be heading for a food crisis and the only way they can manage to overcome the current impasse by immediate imports of foodgrains, such as rice, wheat, maize and items like sugar and pulses.


India must not wait for Sri Lanka to approach for assistance. India must offer all that is required, if necessary, on medium to long term credit all these items. Our marketing effort in that country has been inadequate, to say the least.


Sri Lanka is our friend; it needs assistance and India must volunteer to meet this need.


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also 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.)



Dr Anantha K Ramdas

3 years ago

dear tee wee:

I understand your sentiment but please remember that majority of the sri lankans have looked upon India as as an elder brother and we have too many common traditions that we cannot overlook because of this or that politician from one country or another.

Politicians are just interested in themselves. It is the people, by and large, who make the country. It is not in the interest of Sri Lanka or India to think that we do not need each other. We do.

If there are differences in our approach to a problem, these can be resolved by being together. Every country has its own quota of bad politicians and people must learn to avoid them, not elect them to power.

I am sorry you appear to have had some unfortunate experience and I have had the opportunity to deal with thousands, really, thousands of sri lankans in my life time and we both had never ever problems.

Please forgive and try your best to forget the unfortunate incidents, and let us carry on our lives and leave a better legacy for our children.

tee wee

3 years ago

Sri Lanka should reduce our trade activities with India to have a better control over our Industrial development. History shows India created LTTE to paralize our economic growth when Indira Gandi became the world's second Female Prime minister. Of Course worlds'first female Prime Minister was Srima Bandaranayaka, lead the country country toword prosperity and shown the world her credibility of leading the country to be a developed nation. However mentally disturbed Indira Gandi with her under mined activities she created LTTE in Sri Lanka to destroy our potential Growth. Ghandi regime trained LTTE in India physically.
Also in history shows that we never did lein on to Indians. Sri Lanka should reduce our business just enough to have friendship as Indian politicians are snakes on grass.

Supreme Court asks govt to withdraw orders making Aadhaar mandatory

Directing the UIDAI not to share personal info of Aadhaar holder with any agency, the Supreme Court asked the Indian government to withdraw all orders making Aadhaar mandatory for availing services

In a path breaking decision, the Supreme Court on Monday asked the Indian government to withdraw all orders making Aadhaar or the unique identification (UID) number mandatory for residents. The apex court also asked Unique Identification Authority of India (UIDAI), not to share any information, including biometrics that it has collected under the Aadhaar project through registrars, with any government agency without the permission of the person.


The Supreme Court pronounced this decision on a public interest litigation (PIL) filed by retired Karnataka High Court judge Justice KS Puttaswamy and Maj Gen (retd) SG Vombatkere, who retired as Additional Director General, Discipline and Vigilance in Army HQ, challenging the Constitutional validity of Aadhaar. In addition, the UIDAI had also challenge a decision of Goa Bench of Bombay High Court asking it to share its biometric data to solve a criminal case. Both the cases were heard before the three-judge Bench.


Shyam Divan, the counsel for Maj Gen (retd) Vombatkere, told the Court, that there is no statute to back the (Aadhaar) project and even if there were one, the statute would be violative of Fundamental Rights under Articles 14 (right to equality) and 21 (right to life and liberty) of the Constitution as the project enables surveillance of individuals and impinges upon right to human dignity. “The action under the impugned project of collecting personal biometric information without statutory backing is ultra vires even where an individual voluntarily agrees to part with biometric information," he said.


Adv Divan had contended that “…the (Aadhaar) project is also ultra vires because there is no statutory guidance (a) on who can collect biometric information; (b) on how the information is to be collected; (c) on how the biometric information is to be stored; (d) on how throughout the chain beginning with the acquisition of biometric data to its storage and usage, this data is to be protected; (e) on who can use the data; (f) on when the data can be used.”


According to Gopal Krishna of Citizens Forum for Civil Liberties (CFCL), the SC order paves way for a verdict against the unscientific exercise of indiscriminate biometric data collection by Planning Commission's UIDAI, Home Ministry's Registrar General of India for Aadhaar number and National Population Register (NPR) and other government and private agencies.


The Goa case

Earlier, a Magistrates Court in Goa had asked UIDAI to share with the Central Bureau of Investigation (CBI), biometric data of all residents enrolled in Aadhaar scheme from the state, to help the agency solve the gang rape of a seven year old girl in Vasco.


UIDAI challenged the Court's decision before the Bombay HC. The Goa Bench, however directed the director general of the Central Forensic Science Laboratory to examine the technological capabilities of the UIDAI database. The HC also observed that UIDAI had agreed to test the competence of its database in comparing the chance fingerprints with its biometric record.


Aggrieved by the HC decision, UIDAI had approached the Supreme Court.


According to a report from the Indian Express, even as the UIDAI describes its biometric technology as one of the best in the world, it pointed out that there was a 0.057% occurrence of false identification. "Therefore, the implications of the False Positive Identification Rate of 0.057% when applied in the UIDAI database of 60 crore residents, will imply false matches of lakh of residents," the report says quoting the petition filed by UIDAI.


The biometric number is an identifier, which is used to "authenticate" and verify whether or not the person is what the person claims to be. A stunning aspect of how the UIDAI was sought to be implemented without the nod of parliament is the high level of ignorance about who can get an Aadhaar and implications of biometric based identification. On 31 January 2013, it came to light that the members of Union Cabinet were unaware whether it is a number or a card. Instead of facing the issue upfront, a Group of Ministers (GoM) was set up to resolve it but no one knows whether it has been resolved.


"Biometric data itself has scientifically been proven to be 'inherently fallible' especially because of constant decay of biological material in human body. Global experience demonstrates that the trust in junk science of biometrics is misplaced. The stolen biometric passport of a passenger in the missing Malaysian airliner has exposed its claims for good. We demand that the opposition parties should promise that new government after the Lok Sabha elections will destroy the illegal and illegitimate database of biometric features as has been done in UK and other countries," Gopal Krishna added.


Notably, the Strategy Overview document of the UIDAI said that "enrolment will not be mandated" but added, "This will not, however, preclude governments or registrars from mandating enrolment." It must be noted that Nandan Nilekani, former chief of UIDAI and now a Congress candidate from South Bengaluru constituency, headed dozens of committees whose recommendations made Aadhaar mandatory.


Tricked by the marketing blitzkrieg, some political parties were wary of taking a position that would appear anti-poor. They did not realise that what may be the real beneficiary of this biometric identification is UIDAI, which wants to meet its target of enrolling 60 crore Indians by 2014.


Earlier, in November 2013, Adv Divan, the counsel for Maj Gen (retd) Vombatkere, in the Supreme Court stated “The Aadhaar project was ultra vires as it did not have a statutory backing. Moreover, no statutory guidance exists on crucial questions such as—who can collect biometric information, how it is to be collected and stored, protection of collected data, who can use the data and when it must be used.”


He pointed out to a two-member bench of Justices BS Chauhan and SA Bobde, how UIDAI signed memorandum of understanding (MoU) with States which had no legal sanctity. He said, “State appoints registrars, who could even be a private person, who engaged private companies to collect biometric data. There is also the fear that the private party which collects the data then stores it in a personal laptop, which does not belong to the government.”


He also told the apex court about how UID changes the relationship between the state and the citizen. “Convicted criminals relinquish some privacy rights. They have their fingerprints taken for record. Here the government is treating all people as criminals,” Adv Divan had said.


Last year in September, the Supreme Court had ruled that Aadhaar or the UID number, the United Progressive Alliance (UPA)'s ambitious scheme, is not mandatory to avail essential services from the government. While hearing a public interest litigation (PIL) filed by retired Karnataka High Court judge Justice KS Puttaswamy and advocate Parvesh Khanna questioning the legal sanctity of Aadhaar, the apex court said, "The centre and state governments must not insist on Aadhaar from citizens before providing them essential services."


A Bench of Justices BS Chauhan and SA Bobde also directed central and the state governments not to issue the Aadhaar to illegal immigrants.


In its reply, the Centre had earlier claimed that for an Aadhaar, consent of an individual was indispensable and hence it was a voluntary project, with an objective to promote inclusion and benefits of the marginalised sections of the society that has no formal identity proof.


In July, replying to an un-starred question in the Lok Sabha on 8 May 2013, Rajiv Shukla, minister of state for parliamentary affairs and planning said, "Aadhaar card is not mandatory to avail subsidized facilities being offered by the Government like LPG cylinders, admission in private aided schools, opening a savings account etc."


Read more about UID/Aadhaar


You may also want to read…


The Prime Minister’s Fingerprints: Aadhaar and the garrotting of civil liberties


Aadhaar: Supreme Court exposes complicity of political parties


How Supreme Court issued notices to state governments over Aadhaar

Supreme Court says Aadhaar not necessary for essential services


Is the LPG subsidy in your bank account taxable?


Aadhaar & LPG: Cabinet puts subsidy transfer scheme on hold; raises subsidised LPG cylinder cap to 12


Aadhaar for LPG: Mess created by UIDAI, OMCs and citizen victims-Part 1


Aadhaar for LPG: How you can get justice? –Part2


Aadhaar: HPCL, IOC and BPCL in contempt of Supreme Court order?


Read more articles from a series on Aadhaar by Gopal Krishna





3 years ago

Dear Author

I would appreciate if you can study about Social Security Number aka SSN in USA Social Insurance Number in Canada and how it's connecting the government to common man in their day today life, you would understand the concept behind UID. UID is way ahead of SSN being used by USA. It's one of the best thing that has happened in India after independence. So please don't mislead people by writing wrong and basless article and bring down the credibility of other contents on your website. I do understand every new project may have some issues but that can be sorted and better process can be adopted but just don't the whole idea. UID is not just a number, it's platform to build welfare application for efficient governance and weed out ghost and duplicate beneficiary from the system. Just an example do you believe India has 81.4 crore actual voters as it is claimed by Election Commission?



In Reply to Sandeep 3 years ago

Thanks for your comment.
There has been misinformation by UIDAI that the social security number (SSN) of the US is equivalent to the UID in India. This is not the truth. The SSN does not have your biometrics, it is just a number.

Introduced in the 1930s in the USA, as a way to track individuals for taxation purposes, SSN were never designed to be used for authentication—moreover, these cards don't carry biometric data.

The US was trying to introduce something called the Real ID, which has biometrics, and this is being stiffly resisted by Americans.

The US, UK and Australia have shelved their proposed public ID cards after public protests. Even China withdrew the clause to have biometric data stored in its cards. A London School of Economics report has noted that "Identity systems may create a range of new and unforeseen problems. These include the failure of systems, unforeseen financial costs, increased security threats and unacceptable imposition on citizens."

The possession of a UID can at best serve only as proof of a "unique and singular" identity and does not guarantee either citizenship or benefits.


Dayananda Kamath k

In Reply to Sandeep 3 years ago

do you believe the gdp fiscal deficit inflation data of india. uid is just an adress and identity proof based on already existing data except biomatric details. they do not accept other data provided. just to give id proof do you have to spend so much of money. biomatrical data is picked up early of criminals only. so you have made all prople potential criminals list. what about the privecy of the individual.


In Reply to Dayananda Kamath k 3 years ago

money spent(3800 crore) on UID by looking at returns is just peanuts...UID has already paid off(5000 crore) by saving LPG subsidies by eliminating duplicates. India spends about 300000 Crore every year on subsidies and 10-40% is leakage just because of ghost, duplicates or diversions. So even if you save 10% every year because of UID, it's cash cow for coming generations.

Yes you're right UID is just an ID proof but it's unique, verifiable online and next to impossible to duplicate if you combine other demographics.

By giving bio metrics you don't become criminal,if that's case why people readily agree go for VISA and passport??

Privacy?? in india!!? least I can say is UID is still safer than photo copy guy at your street's corner, selling your Driver license copy for 5 to anyone asking for an ID. when 70% population is struggling for 2 meals a day you talk of is just a shield by people trying to derail this project so that these middlemen keep looting the country. now don't tell me that bangladesis are getting this they don't have ration card,dl or some other form of ID that they showed to have UID??then why this noise for UID. even if there are some bangaladesi, nepali...1-2% in a population of 1.2 billion what difference does it make?? they were there before and they are now...UID has atleast provided a way to track them if they do something wrong


In Reply to Sandeep 3 years ago

Thanks for your comment.

It seems that you will have to do a lot of reading to understand the UID/Aadhaar issues in India.

Aadhaar is the UIDAI brand and logo. The Aadhaar Number is a random, unique 12 digit number issued to each person who successfully enrols. The project cost is in excess of Rs1.50 lakh crore and though there is no specific legislative or indeed even administrative notification that permits UIDAI to use ‘biometric information’, this is the foundation of the project.

On 23 April 2013, Nandan Nilekani said, "We came to the conclusion that if we take sufficient data, biometric data of an individual, then that person's biometric will be unique across a billion people. Now we have to find that out. We haven't done it yet. So we'll discover it as we go along". At his lecture at World Bank on 24 April 2013, he said, “nobody has done this before, so we are going to find out soon whether it will work or not.” No one can tell as to what his premise is, what the inference is, or how the inference is deduced.

Amidst leakage of files from the Prime Minister’s Office (PMO) and leakage of public money from scam after scams in the Congress-led government, the claim of attempting to reduce leakage in the system by using questionable plumbers like Nilekani does not inspire even an iota of confidence. Nilekani admitted at his lecture the Centre for Global Development in Washington in April 2013 that UIDAI has "created huge business opportunity for fingerprint scanners, iris readers."

The purchase of these machines is also a leakage that merits probe. Leakages can be plugged by rigorous implementation of Right to Information (RTI) Act and decentralisation of decision making, instead of adopting a centralisation approach and technological quick fixes.


Dayananda Kamath k

In Reply to Sandeep 3 years ago

this could have been saved without resorting to uid. how you know that the amount has been credited to only those who have purchased gas cylinder. when you know that an mp can take delivery of 365 cylinders in a year as per rti quiry. no action is taken. it is only mechanism devised by congress so that nobody can verify where the subsidy amount has gone. whenyou can not monitor 5 accounts properly how you can monitor millions of accounts.

Simple Indian

3 years ago

Despite the SC having said earlier that Aadhar / UID can't be made mandatory for availing government welfare schemes, just last week when i visited my LPG distributor, their staff asked me to provide Aadhar details. Seems govt works differently and hardly cares about SC verdicts.

Dayananda Kamath k

3 years ago

it is high time supreme court initiate contmept of court proceedings against rbi and all other agencies who continued to make adhaar mandatory during the period. court should monitor implimentation of its order.otherwise it will take another decade of litigations to enforce it. a small example is s.c.civil appeal 10956/13 bob v/s s.k.kooldt 11/12/13. regarding pension elegibility banks are still refusing claims based on this judgement.

Mahesh S Bhatt

3 years ago

Blue eyed IT boy from Banglore forgot the fundamental database maangement process of using Home Ministries existing database.

Americans are snooping the world with Facebook/mails etc & encroaching upon fundamental issue of Individual privacy.

Data later has risk of abuse by private/government tax & other security agencies.

Hackers are easily breaking into US Pentagon/Wikileaks in leaking Government sensitive information cables much to global embarrassment.

As a Security expert its best thing to have happened.

Yerram Raju Behara

3 years ago

The Supreme Court has once more held the honour of the citizen high thanks to the judgment. But in a country that failed to provide resources for safe drinking water and affordable health and education to all indulged in this futile attempt amidst a ocean of controversies and the person who indulged in this vandalism is now aspiring to sit in the Parliament gallery. There is no accountability for the lakns of crores of rupees that wentdown the drain!! The UPA would any way not come to power but such men would move with honor is a shame.


3 years ago

What Government tells the Supreme Court and what it does on the ground are two different things. If the Government had any respect at all for the "Rule of Law" and "Equality under Law", more than 80% of the cases pending in Indian courts would never have been there in the first place!


3 years ago


Many people not received their Aadhar Cards. What happened to these cards? Any foul play?

We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)