Hi, this is the summary of the article I read in ET dated Oct 22, 2010. Nothing in this is manipulated. Its an excerpt from the article.
The real macro economic success of this phase of India's reform process has been increase in our savings rate. This has resulted in higher investment rate. That led to higher level of GDP growth, which is a good indicator for growth of National Economy !!
The three components of savings rate: household, Corporate and Public Sector savings.
Corporate savings contributed alot from 4% to 10% of GDP.
So what made this corporate savings contribute this much??
1. Overall Profitability : PAT/Sales increased.
2.At the same time companies decreased the dividend rate from half of profits.
3. Hence Profitability doubled as they distributed less of their profits.
4. This led to double of their savings.
There is an other factor for this.
It is increase in Corporate Tax collection. The increased direct tax collection from corporate sectors. This only contributed 10.7% of GDP. (It was 8.7%)
Liberalisation of Indian economy has led to the Corporatesector becoming a much more significant engine of the improving Indian Story.
The dramatical improvement of the Corporate Performance is largely because of Micro Reforms.
1. Take the case of Telecom. It contributed $50 B USD. This itself contributed 5% to India's GDP.
2.This is largely because of new telecom policy 1999.
3.Take the case of Power. Higher contributions of Prvate sectors will address India's power shortages.
4. The case of better roads and ports made efficient and faster transportation possible for domestic market conditions as well as exports.
Yet there is one more Indian School of thought that believes what has contributed to this growth is the growing importance of stock market s in promoters’ thought process.
The upfront value creation by these people increases the profitability and hence Cash is kept in business as it leads to better upfront value creation !
From all these we can safely say that there have been actual performance improvements caused by imprvmt in overall operating environment in different various sectors.
Sectors lik Faster infrastructure build out, Lower Inflation and interest rates, Inprovemnts in agriculture, economic pass in rural areas, education, vocational training,health, labor reforms,debt markets, water management, fiscal policy etc.
Such micro reforms on sector to sector basis is need to go on to ensure our MACRO ECONOMIC position continues to stay healthy to support India’s growth aspirations.
nachiketa !!
Source: Economic Times , Oct 22,2010
The real macro economic success of this phase of India's reform process has been increase in our savings rate. This has resulted in higher investment rate. That led to higher level of GDP growth, which is a good indicator for growth of National Economy !!
The three components of savings rate: household, Corporate and Public Sector savings.
Corporate savings contributed alot from 4% to 10% of GDP.
So what made this corporate savings contribute this much??
1. Overall Profitability : PAT/Sales increased.
2.At the same time companies decreased the dividend rate from half of profits.
3. Hence Profitability doubled as they distributed less of their profits.
4. This led to double of their savings.
There is an other factor for this.
It is increase in Corporate Tax collection. The increased direct tax collection from corporate sectors. This only contributed 10.7% of GDP. (It was 8.7%)
Liberalisation of Indian economy has led to the Corporatesector becoming a much more significant engine of the improving Indian Story.
The dramatical improvement of the Corporate Performance is largely because of Micro Reforms.
1. Take the case of Telecom. It contributed $50 B USD. This itself contributed 5% to India's GDP.
2.This is largely because of new telecom policy 1999.
3.Take the case of Power. Higher contributions of Prvate sectors will address India's power shortages.
4. The case of better roads and ports made efficient and faster transportation possible for domestic market conditions as well as exports.
Yet there is one more Indian School of thought that believes what has contributed to this growth is the growing importance of stock market s in promoters’ thought process.
The upfront value creation by these people increases the profitability and hence Cash is kept in business as it leads to better upfront value creation !
From all these we can safely say that there have been actual performance improvements caused by imprvmt in overall operating environment in different various sectors.
Sectors lik Faster infrastructure build out, Lower Inflation and interest rates, Inprovemnts in agriculture, economic pass in rural areas, education, vocational training,health, labor reforms,debt markets, water management, fiscal policy etc.
Such micro reforms on sector to sector basis is need to go on to ensure our MACRO ECONOMIC position continues to stay healthy to support India’s growth aspirations.
nachiketa !!
Source: Economic Times , Oct 22,2010
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