What the government should do to generate more assets ?

Well Vivek, I also agree that agriculture needs developement with more scientific methods and not saying to stop helping the farmers. What my point was merely based on agriculture, we can't develop. While quoting the lines, "are we going to eat money..." didn't you even think that still we are third world countries. We take loans from developed nations to improve ourselves. Any big descition of ours which has international values relies on their permission. Why? because they are developed countries. They have power and how did they get it ? They have money....they are the large industrialists......

Let developement of agriculture go on paralally, but it should not be made the primary issue. Industrialization should be our main objective. Once we also become a developed nation and become free from all bondages more money and technology will come which will help agricultural sectors also...

The Budget reminds me of 20-20 cricket. Both raised unprecedented expectations from Indians in recent memory. The Budget stood as an odd man out in the league of several public communications on the economy and strategic thinking that is gaining ground with the various constituencies of stakeholders. As Swainathan Ankleshwar Iyer put it, the presentation was shabby although contents were not. There are two major factors which make Government spending to grow through debt and monetisation of debt (may be 50:50) simply inevitable. One: the current economic crisis. Two: (I consider this to be longer cycle) the human face of economic reforms. I, for one, will not fault Government on increased spending through increased borrowing programmes. The challenge may be in not outcrowding the Private or rather PPP investments that need capital and borrowings too in unprecedented numbers. But there are not many choices available before the Government. While the government spending goes up, questions are justified to rise in higher decibel about where the money is going and whether assets are created in a reasonable proportion, if not rupee per rupee. Here, the spending is ahead of several other institutional developments who have not yet come of age. For instance, after four decades of nationalization we are still debating financial inclusion which is not a reality. The vast populations continue to be in the unorganized sector. We have the paradox of labour reforms knocking at our door as an incentive to investment, while there is no guarantee of work for the millions who have no way to progress in life through the limited opportunities and often the only meagre opportunities urbanization is offering to skilled and semi skilled labour, which is not in reality building the social capital which India deserves to have. The spending is substantially channeled through NREG which is a social security measure direly needed. In a way, this scheme has led to an improved purchasing power in the hands of the rural population who have been relatively insulated from the snowballing effect of the economic downturn. The proof of the pudding is in the sustained growth of GDP at a pace that remains positive, which is among the few silver linings for the world economy. The budget fell short of expectations because it failed to communicate strategically for the full term. Let us remember, this budget does not even represent a complete year; in fact, preparations will get soon under way for the next budget. And budget is only one instrument among many. Let us move on with a host of measures to be taken for reducing  unemployment in segments hit by the global recession. Any savings by minimizing wastages in unproductive spending are worth considering, while Govt spending overall may be unavoidable.

The government should definitely support farmers, but not in the form of loan waivers. Concentrate on increasing production through scientific methods and marketing facilities. I think we need to boost our exports also.

I feel I owe a simpler way to understand how wealth for nations are created. I take it for granted that it is wealth when you mean assets when assets can be even capital assets.

Everyone who has played the board game Monopoly know how to win by buying assets. The game stipulates that there should be a Banker who pays each player a certain amount of currency on the onset of the game and as the dice roles one reaches asset bases and one chooses whether to buy or forfeit the property. The player who utilises his or her endowment of currency handed down by the banker ultimately wins.

Wealth of nations are created similarly including assets. The only difference is people are given opportunities to endow themselves not by banks as in the game but by the facilitating and paternalistic functions of the government. Then citizen use all dimensions of their mind to better their life and in the process the countries wealth improves. Government here unlilike the banker in the game regulates greed of the players using their regulatory functions, like implementing competition laws or antitrust laws which makes sure that resources are allocated to the best imporved player among citizen rather than to unskilled who has nothing or wrong things to exchange for. Then they make sure that the redistribution of revenue earned and benifits earned from economic activity is maintained to improve life of people.

One should play Monopoly then one can get a grip of how things happen in economy where how human need to improve ones utility ultimately create the Nations state which is wealth, health and wise.

Thanks Mr. Saboo for your thoughts on my opinion. You are right if the government just stands by as a bystander without doing nothing which is not what I meant. What I meant  was a government shouuld do what it is supposed to do and don't do things which is not supposed to do. Where human greed sprouts and distorts the sanctity of a Nation then that is where the government should interfere not anywhere else.

Adam Smith is very relevent everywhere, countries like Mordovia which is a splinter Russian state has all millionaires following Adam Smiths ideas. It is a fact of the present. Let us forget the contributions of Americans to the world economy in the past a country rooted in Adam Smith's ideas.

The role of a governemt is charecterised in four functions of it 1) Paternalism, redistribution 3)regulation and 4)faciitation. They are supposed to do all four to be considered functional. Tampering with markets is not one of it. It fails the redistribution function. Let me explain how ? Suppose if Cement companies are charged more Excise, sales or vat taxes. The citizen who are employees of other companies will in turn ask for more pay to pay for the raised price of cement. Now when companies relent they will inturn raise prices of their products creating a spiral of inflation. Ultimately the cement marketw become an exclusive market for only the well endowed which is only a few percentate of the larege population and the normal citizen live in Mud Holes per se which was what was happening in India for 50 years. Now if things don't change I think we are not reaching anywhere when the purchasing power is tampered the redistribution function of the government is a failure.

For what you wrote about greedy elements creating monopolies, the interest rates going up and the prices skyrocketing which we still have. We have Trusts which control corporations. The trusts can influence the Markets. We have no state of the art infrastructure. So having a government which fails in its functions is by not introducing reforms where it is required where all the functions of the government can be visible to every citizen not only to a few. All the problems you mentioned are still present, we have low currency value due to continued price hiked due to bad regulation and interference in the past by governments.

To what Esha wrote on improving the wealth of a nations there is no other alternative other than introduce free market reforms all others tend to fail or is already failed personified by the rampant poverty prevailin in the country.

adam smith was relavent in his times.every situation and time is different,if government does not intervene..your trades would collapse..foreign exchanges would cuddle with volatality..inflation would rise.interst rates would touch sky high.

business would cheat..there would be monopolies...there would be mass distruction.the hard work of hundread or years of economic growth and companies would colapse in just a few days.

adam smith assumed all business would strive for better ment of masses.

adam smith assumed a lots of things when he gave his theories.

be practical..and you should have intervention when needed.you should have government providing stability.there are always tendencies to over do by business houses..just look at reliance group,tata group..they want to be in every field.they have huge resources at there disposal..huge influence.they need to be controled they are running a parallel government behind the visib;e government.adam smith may not have seen smart people ,who can break any law...who can twist any argument.adam smith never had a era of mass advertisement..adam smith never had a era were you create a demand for anything within no time.

adam smith never could think we could grow at such rapid pace.adam smith never knew changes would take place at such huge pace.so in more sense then ever adam smith was relavent in his times.

lets follow the art of practcing contemporary thoughts which would be very much applicable today..we have a tendency to fall back on great peoples name and use them in todays time.with out actually comparingthe situation in which he or she must have said what they have said.

Yes Mr. Sandesh Saboo, what point you made is relevant...

actually jyothi we need to re learn our finance subject,theory and practice is so different.well i think it would be a worth while idea to join the bandwagon and  learn from them.the practical of finance.

functional knowledge is essential you know.you and me can only write theory real practinior of finance is ramalingam raju and likes of those who take bank loan on agricultural land and buy another agriculture land and take another loan and do not repay.any way one government or another is going to wvave the loans.

hey jyothi,

the politician know only one language,they are always farming for votes ,it is there profession,running the country is incidental to that.they only implement ideas given and backed by beurocrates.if they feel it would fetch them more votes,they nod immediately.

i am of the opinion even in th eloan wavers they are creating a rural demand.in any case majority of the money was sunk already and was not likely to be recovered because of wested interest.

i have heard people plan buy a agricultural land,take a loan from bank and do not pay.no on ewould ask you to repay.and in a decades time there would be a loan waiver.so people buy agriculture land take loan on that land and go back and buy another land and take loan on that land and do not pay the banks.

this seems to be a effort to clean the balance sheets of the banks of bad debts.and the money is actually a reimbersement to the banks and not fresh loans.the entire system is corrupt,when you cannot beat them in the game join them.