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Yogesh Gupta

Reservoir Engineer, Shell International E&P

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Can someone please correct my economics?

In India, 55% population is working in agriculture sector, 20%-25% in service and industry sector, 7-10% in public sector, 10% nearly unemployed.

Though the service and industry sector in India contributes the most to the GDP (55%), population wise it employs the least (20-25%).

If say the developed nations demand less goods and services, this would mean developing nations like India would see fall in exports of goods and services and also see fall in its imports of energy like oil an gas. This would create a surplus of supply in energy sector and costs would go down.

Hence, if the developed nations reduce the import of goods and services from India, I agree it may contribute in less income to nearly 20-25% of the population involved in the service and industry sector, but would help nearly 70% of the population to have an increase in their income as their energy costs (direct and indirect) go down.

The current economic difference between the poor and rich is very high. I believe this slow down will give time to the country to bring about a balance.

In the current economic crisis, many companies let go the most experienced staff or elderly staff and retained the young ones since they are low cost to the company. I believe similar effect will be seen if a slowdown happens in India. The rich elderly executives will be forced retired (can still lead a good life) and on the other hand the 70% population gets a chance to catch up with the rich.

Let me know if i am missing something in my view.

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    Dec 12 2012: Hello John,

    Yes i agree with your view, but if goods and services are reduced, say 10% people get fired. But then other 70% people would be able to live better with lower energy and food costs.

    I already see there is already movements against corruption and against social barriers in the country. My parents are not really educated but they have educated me and my siblings. But this does not mean the problem is rooted out in all families. Somehow I prefer the slow progress, not to lose culture.

    I believe we are going through the same stage that the developed nations went through in past, like labor abuse, poor health, education slack, etc.
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      Dec 12 2012: Seeing that spices are my favorite imported good from India, I’m thinking that reduction of India exports is also hitting the agriculture sector. A tread worldwide for consumers is to buy straight from the food grower, and with that in mind setting up a grower to consumer system may be a way to improve the agriculture sector’s GDP.

      Look at it this way any savings in lower energy and food cost will be offset by their lower income, due to the reduction in exporting their goods and also the rich reduction in buying their goods. So you end-up with a lose-lose outcome, instead of the lose-win outcome your envisioning.
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        Dec 12 2012: I agree with your view. My main aim is to spread awareness of reduction in use of non essentials. In my own company there is a lot of energy wasted in form of electricity for office lighting. Most of IKEA products are just waste of energy, drive-in ATM's, excessive lighting in trains, fuel drinking cars, etc.

        I myself love eating different food and i do not want you to give up spices. :D
    • Dec 12 2012: Energy cost is set by global demand; firing 10% of the high-earners in India will not make a difference to that, will it? But then these 10% of the people also use the services of other Indians... including servants, taxi drivers, etc. What percent of the population could lose its jobs before it starts adversely affecting those at the bottom? I believe that no one can answer the question. And this, exactly, is the problem with Keynesian economics -- the approach that some Grand Designer can meddle with parameters, in the hope that that will fix the economy. I am now referring to India's yearly budgets and its 5-year plans.

      I am also of the opinion that education will reduce culture. Culture one of the factors that is keeping India underdeveloped. ;-) Europeans had something of a "personal" culture too, about a century ago. But, as people started paying more attention to what is important to their own well-being, this kind of culture became less and less relevant.

      One thing that's different about India, compared to the earlier struggles of developed nations is India's immense population. Assuming that there is no corruption, and the economy is running smoothly, don't you think that if India's trade balance and its own internal supply of fuel is not sufficient to support its population, its population has to reduce to meet its available resources? If the population does not reduce, there will be wide-spread suffering, of the kind we see already. Of course, the suffering now is worsened by the Indians' non-resource-related problems.

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