Why no pictures of hugging pakodawallahs?

There is a severe shortage of jobs in India, wrote C Bhagat. "Many educated youngsters continue to live with their parents," he wrote. "Whatever the government might think they are not happy just to be 'pakodawallahs'." A 'pakoda' is deep fried vegetables coated in spicy batter. Pakodas became news when the Prime Minister, responding to rising unemployment, said that earning Rs 200 per day selling pakodas is also employment. It is not just unemployment, a much bigger problem is under-employment, in that people resort to anything to earn just enough to survive, wrote G Sappal. Government programs have failed to create large scale meaningful employment. Employment levels actually fell between 2014 and 2016. "Employment in the total Indian economy shrank by 0.1% in financial year 2015-16 and by 0.2% in 2014-15," wrote M Chakravarty. These were years of high growth, with the GDP "growing by 7.4% in 2014-15 and 8.2% in 2015-16". Gopalan and Singhi used Labour Bureau data to conclude that the theory of 'jobless growth' is a myth. They found that 75 million jobs were created between 2009-10 and 2015-16, much more than the total of 61 million job seekers. 84% of workers earned less that Rs 10,000 per month, just over Rs 300 per day, and 40% of workers found work only for a part of the year. This view is countered by M Vyas who wrote that the same Labour Bureau figures show that job creation was good till 2011-12 but fell off sharply after that, so it should not be generalized. From now on workers maybe hired for fixed terms in all industries, the government said recently. From now "no notice of termination of employment shall be necessary in the case of temporary and badli workmen" said the amendment. 'Badli' means 'replacement'. India's labor laws are so stringent that companies are reluctant to expand in size so as to avoid employing more regular workers. Apparently there are 44 federal labor laws, some dating back to 1923, and 150 state laws in India. "Revamping labour laws and encouraging urbanization could create as many as 110 million jobs over the next 10 years," said Goldman Sachs. Unions condemned the government's move as an attempt to "make employment absolutely fragile just in the name of ease of doing business". Actually the shift to contract labour has been growing for 17 years, wrote M Chakravarty. From 1997-98 to 2014-15 the Compound Annual Growth Rate, or CAGR, of directly employed workers was 0.55% while the CAGR of contract workers was 6.79% over the same period. Contract workers increased from 16.41% to 35.35% in organized manufacturing. More than 90% of workers are in the informal sector without any job security anyway. While advising people to sell pakodas the Prime Minister is on a hugging spree. Better than fiddling?

Even if no deficit why allow theft of $600 billion a year?

In 2013, India was counted among the "Fragile Five", along with Brazil, Indonesia, South Africa and Turkey, wrote W Pesek. "Even before Donald Trump came along, India and Indonesia had been moving toward favoured-investment status among Wall Street set," Trump may have started a trade war. "That puts sizeable and rapidly growing, but integrated economies at a unique advantage. In Asia, that primarily means India, Indonesia and the Philippines." Japan and South Korea have their own problems with Trump and Taiwan's existence is threatened by China. So these 3 countries with "vibrant and growing consumer sectors" are the best bet. Why India is considered a safe investment destination is difficult to understand because the economy is growing without producing jobs, as shown by 28 million applications for 90,000 mainly manual jobs in Indian Railways. Growing consumption without increase in production results in a current account deficit every year. Despite slogans about Make in India, we have been running a deficit every quarter ever since this government came to power. Current Account Deficit means an outflow of wealth to other countries and results in a weakening of currency. "The trade war is a symptom of the waning clout of the US," wrote M Chakravarty. As a country becomes wealthy other countries start to compete so that the dominant economy shifts to financial services. Financialization leads to loss of its dominant position. This apparently happened to Britain, as it lost its place in manufacturing to the US, and to the Netherlands earlier. Britain's wealth was dependent on wholesale plunder of resources from colonies, conquered by military brutality. The US has its own resources, exporting oil to India for the first time last year. China is now a bigger economy in terms of Purchasing Power Parity. If Britain's wealth was by robbery China's wealth is by theft. China forces foreign companies to transfer their intellectual property and encourages an enormous industry of fakes. How much has it stolen? From $225 billion to $600 billion annually for years. When Britain lost its pre-eminent position John Maynard Keynes, once an "ardent advocate of free trade", reversed his position and supported protectionism. After calculating balance of trade in goods and services Prof R Hausmann came to a net debt of $9.1 trillion for the US. At 4% the US should be paying $364 billion a year in interest. But it pays nothing. Because the invisible earnings of companies like, Apple, Google and Facebook, wipe out all the deficit. So the US is not weakening after all. Crafty.

Bailing out before bailing in becomes law.

"People have made a run on banks, withdrawing money from ATMs and banks fearing the banks could collapse due to scams that have come to light recently and a provision in the Financial Resolution and Deposit Insurance (FRDI) Bill 2017. Even though there is no risk to banks due to either of these factors, a prolonged bank run can affect banks adversely," was a news report. ATM machines have been shut down because of lack of cash and banks are allowing withdrawal of up to Rs 20,000-40,000 per person per day. This probably reinforces fears that banks are trying to prevent withdrawals because they are bankrupt. People are queuing up to withdraw money prematurely from fixed deposits. The Finance Minister has assured people that their deposits are protected but people do not believe him. The FRDI Bill 2017 is meant to address bankruptcies in financial services providers, like banks. The bill contains a 'bail in' clause, which means that the failing company has to use its own assets, including depositors money, to pay its debts. This is opposed to a 'bail out' clause which means rescue by a third party, usually the government. Most other countries have a bail in provision to prevent use of taxpayer money to save banks, especially after the financial crisis of 2008, when governments bailed out banks considered too big to fail. In fact, India has had a similar provision since 1993 which protects a total of Rs 100,000 of deposits a person has in any particular bank. However, previously the government has protected depositors even of failing private banks. Thus, in 2003 the Punjab National Bank, a public sector bank, took over Nedungadi Bank and in 2004, another public sector bank, the Oriental Bank of Commerce, took over the failing Global Trust Bank. Since the government is the majority owner of public sector banks it protected depositors from losing their money. Why are people taking their money out of public sector banks despite reassurances from the Finance Minister. Probably because people have lost their trust in this government after the sudden demonetization of of high value notes in 2016. Yet a survey in 2017 found that 85% of Indians trust the government. This makes the present run on banks in Andhra Pradesh and Telengana inexplicable. In the absence of a social safety net Indians tend to save a high proportion of their income, though it has fallen from a high of 36.82% of GDP in 2008 to 29.98% in 2017. If people withdraw their money they will invest it in gold, real estate or keep it in cash. Banks will have less money to lend and the current account deficit, which is the difference between savings and investment, will go up. Trust is like Humpty Dumpty. You cannot put it together once it breaks.

Can a 5 foot wall stop a cyber attack?

Prime Minister Narendra Modi's app sends user information, including email address, photos, gender and name, to a US company called Clever Tap, without consent of the user, tweeted a French cyber security expert, Elliot Alderson. Clever Tap is classified as a phishing site by G-data, a software firm specialising in cyber security, based in Germany. Clever Tap, set up by three Indians, said that the data was used for analysis only and never shared with anyone else. The BJP, Modi's party, denied that the website was hosted in the US. After it had been exposed the app quietly changed its privacy policy. Elliot Alderson is a pseudonym for this expert who also claims to have hacked into Aadhaar, an identity number, based on photograph, prints of all 10 fingers and iris scans, which has been forced on all Indians by the government. UIDAI, which stands for Unique Identification Authority of India, called his claims "irresponsible". US internet companies were demanding Aadhaar information before providing services. "...American biometric technology provider L-1 Identity Solutions, open-source document database MongodB, and consulting firms Accenture and Ernst and Young - are holding all our data," said independent legal researcher U Ramanathan. The Attorney General, the top government lawyer, assured the Supreme Court that Aadhaar data is safe behind walls that are 13 feet high and 5 feet thick. It would be comical if it wasn't so dangerous for the nation. A Right to Information activist has shown that foreign firms already have access to full Aadhaar data and are allowed to maintain it for 7 years. "....an administrator login ID and password to gain access to the UID portal can be acquired for as little a Rs 500," revealed an article in the Tribune. Edward Snowden, a US whistleblower, warned against misuse of Aadhaar information. A study by a think tank affiliated to the Reserve Bank of India suggested that Aadhaar is open to abuse. "A primary challenge is to protect the data from prying and excessive profit seeking excess of the business world. It is well known that businesses are increasingly operating in a highly competitive world in which ethical boundaries are rapidly being pulled down," it said. "Thanks to Aadhaar, for the first time in history of India, there is now a readily available single target for cyber criminals as well as India's external enemies." While compromising security and privacy of the whole nation the government has demanded details of breach of data from Facebook to Cambridge Analytica. People can supply false information to Facebook, and many do to protect their privacy, but you cannot fake your fingerprints and iris scans. Sneaked in through the Money Bill without any debate Aadhaar is the means to a most perfect police state. Facebook and Donald Trump can do nothing to us but our government can. That is the fear. 

Can Trump and Kim pull it off?

Pictures of an armored train from North Korea, which has been used by Kim Jong-il, father of the present President Kim Jong Un, pulling into Beijing station, were on news channels for the last few days. Police motorcade with no flags led to speculation that Kim Jong Un was visiting China for his first foreign visit since he became leader of North Korea in 2011. China confirmed his visit only after his train had left Chinese territory and was back within North Korea. Why this sudden visit? It all started earlier this year when North Korea was invited to attend the Winter Olympics in Pyeongchang by the South Korean President Moon Jae-in. This was followed by a South Korean delegation to Pyongyang which met Kim and arranged a meeting with US President Donald Trump sometime in May. Naturally Kim could not meet with Trump without consulting Beijing which is its only ally and economic lifeline. Donald Trump has been very aggressive against North Korea and imposed tough sanctions which must be beginning to bite. It is in Kim's interest to make friends with the US, but the meeting is fraught with danger, wrote Prof WPS Sidhu. If the meeting fails it could result in a dangerous escalation, with North Korea resuming its nuclear tests and a possibility of US military action. "They know the meeting is very important but also very risky, there are a lot of uncertainties," said Tong Zhao, an expert on North Korea. "If the meeting fails the US could declare that diplomacy has failed and shift to a more coercive approach or even a military strike. A stable and positive relationship with China would prevent the US from launching a military strike." After Kim's visit China said that he has promised denuclearization. When China says denuclearization it means that the Korean peninsula should become a nuclear free zone, which means a withdrawal of US arms. That would give China complete control of the Sea of Japan because South Korea, Japan and Taiwan do not possess nuclear weapons, but China does. What if Kim Jong Un is looking for a way to unite with South Korea with guarantees for his family and regime? asked Prof K Bajpai. In that case he would be afraid of an attack by China because China would not want US forces sitting right across its border. It is not as fanciful as it sounds. No one ever thought that West Germany would reunite with the East, until it happened, and members of the former Comecon would go on to become members of NATO. Can Kim Jong Un pull it off in secret during his meeting with Trump? We hope so. Will China attack if that happens? May they live in interesting times. 

You can fool all of the people, but not the bond market.

The government is to borrow less in the first half of the next financial year in response to falling prices of its bonds. Fall in prices means the government has to pay higher interest to get dealers to buy its bonds, which means higher yields. The government is to offer more short term bonds and floating rate bonds, or FRBs, where interest is set every six months and hence have lower risks. The government will raise Rs 2.88 trillion, or 48% of borrowing, in the first six months and will reduce its total borrowing by Rs 500 billion. Normally it borrows 60% in the first half of the financial year and was planning to borrow a total of Rs 6.05 trillion. Bond yields fell by 25 basis points and the rupee strengthened against the dollar on the news. Problem is that banks are refusing to help the government by buying its bonds. Banks are required to hold a portion of their total deposits in government securities, known as the Statutory Liquidity Ratio, or SLR. The present rate for SLR fixed by the Reserve Bank is 19.5% but most banks are holding in excess of 30%, wrote T Bandopadhyay. That is because banks are unwilling to lend to industry until their bad loan problems are solved so they have invested in government securities which are totally safe and provide them with some interest income. However, banks are required to value their holdings at market price, known as mark to market, and not the buying price so when the prices of bonds fall they have to show that as a loss, which adds to their non-performing assets bill. Besides, the quantity of bonds has risen because state governments have increased their borrowing from Rs 2.59 trillion in 2016 to Rs 3.43 trillion in 2017 to Rs 3.58 trillion in 2018. Which means that the banks are unable to absorb an increase in central government borrowing. So a decrease in total government borrowing and a slower pace is good news. The Reserve Bank may increase the limit for foreign investors, to bring new money to the market. Equity and bond markets have been diverging for sometime. Whereas equities are looking at corporate profits bond dealers are factoring in global risks to the Indian economy and the possibility of inflation. "The higher fiscal deficit and rising global commodity prices may stoke the fires of inflation, prompting the central bank to raise rates in coming months, bond markets fear," wrote T Kundu, warning the government of annoying the "bond vigilantes". The Prime Minister is spending more on subsidies with an eye on elections next year. Taxes have been increased stealthily in the form of cess and this money has been used for revenue expenditure. The people maybe fooled but not the bond market. It is showing its displeasure.

Just waiting for a spark.

Jared Kushner, son-in-law of President Donald Trump, presided over a White House conference on the humanitarian crisis in Gaza, wrote Prof N Feldman. "Who participated was noteworthy: Israel was there, alongside Arab states with which it does not have diplomatic relations, such as Bahrain, Qatar and Saudi Arabia. Who didn't participate was noteworthy too: The Palestinians, who have been boycotting Trump since his announcement that the US will have an embassy in Jerusalem." The idea is to develop a front combining Sunni Arab states and Israel against Iran, but the Arab people will not tolerate that unless the Palestinian situation is resolved. The Palestinian President Mahmoud Abbas is scared of Arabs making a deal with Israel without consulting him, but he cannot be seen to be weak, which would result in a takeover by Hamas. So, he is compelled to refuse to cooperate in the hope of Israeli Prime Minister Benjamin Netanyahu being forced to resign on charges of corruption. In a further sign of thaw the Saudis allowed Air India to fly across its airspace to Israel for the first time in history. In a meeting with the Saudi Crown Prince Mohammed bin Salman last October Kushner may have given  him names of Saudis opposed to the prince who were subsequently arrested on corruption charges. These names were in reports seen by Trump and his advisers only. The Saudis denied that Kushner is in their pockets. Turkey's President Recep Tayyip Erdogan is gradually converting his nation into another Pakistan. He is using religion to expand his powers, locked up tens of thousands of people on flimsy charges and has supported terrorists against the Syrian regime of Bashar al Assad. He has emasculated the army with false charges against generals as opposed to Pakistan where the army controls the civilian government. Recently Turkish forces took over the Syrian town of Afrin and expelled Kurds who had won against ISIS. Kurds thought they had the support of the US after being the only boots on the ground against ISIS but the US did not protect them because Turkey is a member of NATO. Much like the US has been protecting Pakistan all these years. Pakistan has been playing a double game of pretending to help the US in its fight against the Taliban in Afghanistan while helping the Taliban with training and arms to attack US and NATO soldiers. However, time maybe running out for this failed state as its foreign exchange reserves dwindle to $12.1 billion, less than that of Bangladesh, and it was forced to devalue its currency for the second time in four months, raising fears of inflation. Will Pakistan sell nuclear weapons to Saudi Arabia in desperation? With so many jokers anything can happen. Probably will.

At least we know what to expect.

What happens to India if there is an all out trade war? "India is such a minuscule part of the global trade. I do not know any amount of trade war can harm it. It may harm a few sectors here or there, but I do not think anybody is looking at a really bad scenario of Indian exporters. I do not even think we are on the radar of most companies barring the US for IT executives," said A Srivastava. Ouch. China had a trade surplus with the US of $375 billion, Mexico had a surplus of $71 billion, Japan $68.8 billion and Germany $64.2 billion, while India had a surplus of only $22.9 billion. It is only 1.9% of US trade making it the ninth largest trading partner of the US. So, what is our fear? "Our concern is withdrawal from equity markets by global investors." "If liquidity is not good our poor fundamentals depress it further." Poor fundamentals? Only a few days back everyone was celebrating a growth of 7.2% in the third quarter, making India the fastest growing economy in the world. Gross value added was up, core sector growth was up, gross fixed capital formation was up, and manufacturing was still positive. "The next bear market is going to be the worst in my lifetime -- just because of the debt -- but if we also have a trade war, it's going to be worse than a disaster." said J Rogers. "China's a huge buyer of American agriculture, so of course that is the obvious place to hit back because that hurts Mr Trump the worst." If China stops buying the US may dump agricultural products on world markets depressing commodity prices. Indian farmers are already suffering from low commodity prices and rising costs of production, wrote Prof Himanshu. Farmers are calling for free markets so that they can sell the produce where the price is highest, as well as export them if they get higher prices internationally. The government faces an impossible fiscal trinity. It cannot allow high food prices as that will cause inflation and it cannot keep food prices low by paying farmers directly because that will increase its fiscal deficit. Farmers are forced to sell to middlemen, who buy low and sell high, and agricultural land cannot be used for other purposes so farmers cannot sell out, wrote Prof S Rajagopalan. If global prices fall farmers will be hit very hard. India faces risks similar to 2013, wrote VA Nageswaran. Our trade deficit is high, fiscal deficit cannot be contained and bond yields have risen over 100 basis points. Banks are still revealing the extent of bad loans. Risks will get multiplied because general elections must be held by May 2019 and there are elections to key state assemblies before that, wrote M Chakravarty. So, even though we will not be affected directly by a trade war between China and the US we will be cooked anyway. That is so reassuring.

The dollar is making us nervous.

"On 24 January, Team Trump made official its plan to end the 23-year-old strong dollar policy," wrote W Pesek. Treasury Secretary Steven Mnuchin rocked the currency world when he said: 'A weaker dollar is good for us as it relates to trade and opportunities'." That is surely not true. In December 2008 the Federal Funds rate was reduced to  zero to 0.25%  and, at the same time, the Federal Reserve resorted to a bond buying program, known as quantitative easing, to massively increase liquidity in the market, expanding its balance sheet to $4.44 trillion. The dollar fell against the Euro, reaching nearly 1.60 at one point before strengthening to near parity by 2016. Zero interest rate, or ZIRP, was criticised because it failed to stimulate inflation, but increased asset prices instead. The reason the dollar became stronger maybe because other central banks resorted to negative interest rate policy, or NIRP, so that by 2016 Switzerland, Denmark, Sweden, Japan, and the 19 countries of the Eurozone all had negative interest rates. On the other hand, Trump appointed Lawrence Kudlow as his top economic adviser. "Kudlow is a supply-side ideologue, a cheerleader for the dogma of low taxes, less regulation, free trade and a strong currency." So all is not lost. When central banks compete to go lower than each other they cancel out any benefits that may have occurred. Since ZIRP and NIRP are not working maybe it is time for RIRP, or Restrictive Interest Rate Policy, mocked VA Nageswaran. The Federal Open Market Committee, under new Chairman Jerome Powell, just increased the funds rate by 25 basis points to 1.5-1.75%. Although, inflation is still low in the US some members of the FOMC favor an extra rate hike this year which may cause problems in Asia as fund managers transfer money from Asian bonds to the US. That will make the dollar stronger relative to other currencies. A strong growth in the US will pull other economies higher, but higher interest rates will put severe strain on companies which have borrowed in dollars. Asian countries hold huge amounts of dollar reserves. China added $127 billion in US treasuries, while India added $27 billion recently. If the dollar falls the value of their holdings will also drop. Foreign portfolio investors have pulled half a billion dollars out of Indian bonds in the last three weeks. If US interest rate goes up faster more money could leave which would make the rupee weaker and increase inflation. Bond yields have surged by 100 basis points in the last six months, wrote A Iyer. This will raise the government's borrowing costs. A weak dollar hurts Asian trade, while a strong dollar hurts currencies. How to stay in balance?

Foreigners are welcome to take over.

"The Lok Sabha has passed without debate, a bill that will exempt political parties from scrutiny of funds they have received from abroad since 1976," was a news report on 19 March 2018. Any company with less than 50% foreign share holding will no longer be seen as a foreign company. The most important point about this shameful legislation is that all politicians were in agreement. "With the Finance Bill retrospective amendment, even foreigners may be able to fund politics in India, who knows," wrote A Ranade. "Just when the US is grappling with allegations of foreigners 'hacking' their presidential elections, India seems to have enabled this." This amendment was necessary because, "In 2014, the Delhi high court found both the Bharatiya Janata Party (BJP) and the Congress guilty of having accepted donations from a foreign company, in breach of FCRA 2010."  FCRA stands for the Foreign Contribution (Regulation) Act 2010, which states, "Any organisation of a political nature and any association or company engaged in the production and broadcast of audio visual news or current affairs programme have been placed in the category prohibited to accept foreign contribution." The act is meaningless because foreign news channels are freely available on television and now political parties have been exempted. The real purpose of the act is to stop NGOs from receiving funding from abroad, which has come down from Rs 178 billion to Rs 65 billion. Registrations of 18,868 NGOs have been cancelled. Even the NGO of Mary Kom and Rajiv Gandhi Charitable Trust are under suspicion. Political parties are exempt from paying income tax and are outside the Right to Information Act. India's enemies can now form political parties through local agents and channel money from abroad. It also facilitates money laundering by the hawala route by politicians. Earlier this month the government informed the Supreme Court that 1,765 out of a total of 4,896 members of parliament and state assemblies, that is 36%, are facing 3,045 criminal cases. No wonder they need immunity to launder their money. To avoid any question they accuse honest taxpayers as thieves and keep increasing tax burden on them, wrote Pai and Krishnan. Tax terrorism is worse under the present government, wrote the same authors. Disputes regarding corporate tax has increased by 44%, from Rs 1.44 trillion in 2014-15 to Rs 2.08 trillion in 2016-17, and disputes in individual income tax has increased from Rs 0.63 trillion to Rs 1.79 trillion over the same period. Criminals love to become politicians in India and we Indians love criminal politicians, found M Vashnav. India was under foreign rule for over 1,000 years and foreign powers can now take over the country once more. Quietly and peacefully.

Could it be a disadvantage to have no opponents?

As expected, the Federal Reserve raised its Funds Rate by 25 basis points to 1.5-1.75% yesterday. Minutes of the Federal Open Market Committee meeting showed a split between those who want three rate rises this year against those who want four. The puzzle is that both core and headline inflation is predicted to remain at 1.9%, below the Fed's benchmark rate of 2%, even though growth is expected to remain strong and unemployment rate to drop from 4.1% at present to 3.8% this year and 3.6% in 2019. Members expressed concern about a trade war which raises a doubt about future interest rate rises. US stocks finished slightly lower but Asian markets are mixed this morning with Japan and India rising. Surprisingly, the dollar dropped sharply, presumably because traders expected a more hawkish tone from the FOMC. After having increased tariffs on steel and aluminium imports, Trump is about to announce $60 billion worth of tariffs on Chinese products, in retaliation for China flouting intellectual property rights of US companies. The US controlled nearly three quarters of global steel output at the end of World War II, wrote Prof S Mihm, but lost that advantage for not adopting new technologies, like basic-oxygen or electric-arc methods. There are many supporters of China in the US. A new book claims that Obama changed rules to help friends make a lot of money from China trade. Trade wars are a definite possibility, wrote R Singhal, because the US is subverting the World Trade Organization by holding up appointment of judges to its appellate committee and walking away from trade deals. Economists are divided on whether there is a winner in tariff wars and what an optimum tariff should be, but Trump could gain by gaining concessions from trading partners, wrote Prof V Dahejia. The Communist Party in China amended its constitution to allow Xi Jinping to remain president for life. He probably has to, having used the excuse of corruption to jail anyone who could challenge his power. He used very tough language against other nations at the party Congress. Whether he will accede to Trump or precipitate a trade war remains to be seen, but having thumped his chest he probably has to be seen to be tough. European banks are still hampered by 760 billion Euros in bad loans, wrote F Giugliano, so Europe has a lot to lose from trade wars. Will China encourage its rogue friends, Pakistan and North Korea, to make trouble? The present Cold War is much more dangerous than the previous one between the US and the Soviet Union, wrote Prof WPS Sidhu. A Cold War plus a trade war could become a real war. Trump has a lot of opponents at home, Xi has none. But, Xi has a lot more to lose.

Why would they give up the golden goose?

Bad loans in Indian banks will peak at Rs 12-14 trillion, third only to Greece and Italy, said U Kotak, CEO of Kotak Mahindra Bank. That is about 20% of all loans disbursed by banks. Most of the bad loans are in public sector banks. Most frauds apparently take place during economic booms when asset prices soar. India's economy boomed from 2003-08, followed by prolonged fiscal and monetary stimulus to mitigate effects of the subprime crisis, wrote M Chakravarty. In 2007 the economic growth touched 9.8% of GDP. In 1991, when economic liberalisation began, bank lending was 19.2% of GDP, went up to 25% in 2001-02, and then doubled to 51.64% by 2016-17. The growth was in public sector banks, with loans to infrastructure increasing from 1.1% of non-food credit in 1998 to 12.8% in 2017. When the growth rate fell government banks were left holding 68.3% of all bad loans. Managers of public sector banks know that they will not be sacked and that the government will not allow these banks to fail, so they follow government orders to finance large projects, wrote Prof N Kaushal. Bad loans at Indian banks are among the worst in G20 nations and worse than other emerging nations, because of low capital adequacy ratio, wrote T Kundu. Why do frauds happen at public sector banks? Because officials are appointed by other officials of the government, have no incentive to succeed or fear of being punished for failure, and politicians force them to give loans to dodgy businessmen in exchange for campaign finance, wrote Prof S Rajagopalan. The only solution is to privatize them. R Singhal gave a list of failing private banks which were rescued by the government by forcing public sector banks to merge with them to protect depositors from losing their savings. No matter which party comes to power, politicians will never give up control of public sector banks because they can use bank deposits to please their vote bank. The Congress spent Rs 600 billion in farm loans waiver in 2008, to win general elections in 2009, the present BJP government may end up spending up to Rs 3.1 trillion, or $49.1 billion, to try and win state elections this year and general elections next year. Public sector banks are having to support the government's affordable housing scheme by lending money to the poor. Small loans up to Rs 200,000 could turn out to be India's own subprime crisis. Better salaries and proper evaluation of officers before promotion would be a good start to root out corruption in banks, wrote T Bandopadhyay. "Even as the state provides violent support to those who benefit from such predatory capitalism, often violating the human rights of its citizens, particularly its poor, the market begins to function like a bureaucratic machine dominated by big business, and the state begins to function like the market, where everything is available for sale at a price," said the Supreme Court in 2011. Banks are the goose that lay golden eggs. Why would politicians give them up?

They are escaping because they can.

According to a report by Morgan Stanley, 23,000 dollar millionaires have left India since 2014. In absolute terms India is second to China which lost 38,000 dollar millionaires since 2014 but in percentage terms India is the highest with 2.1%, with France at 1.3% and China at 1.1%. "While some of the millionaires leaving may be desirable given the corruption drive, we have to be careful we do not throw the baby out with the bathwater," said R Sharma, author of the report. "Which is collateral damage of the regulatory overkill." He could be referring to Vijay Mallya, who was allowed to fly out of Delhi in first class, and Sanjay Bhandari who left India without his passport and has disappeared since. UK is a favorite destination of those charged with financial crimes fleeing India. Other destinations are Dubai, which has no income tax, and Singapore, which has low direct taxes for individuals and companies. It maybe a good that corrupt people are leaving India, "but there is a major side effect of this because at the end of the day you need your own domestic people to invest in your country, which is very important. Foreign investment is important but domestic participation, domestic investors make a nation going forward." "....if you go to Dubai today you are likely to meet more Indians out there than in a restaurant in Bombay, Delhi....so you can see where the capital is fleeing, what the magnets for capital are Dubai, Singapore, US and UK," said Sharma in an interview. All these countries have tough laws which they enforce vigorously. If these people are so corrupt why are they choosing these places? Because taxes are collected under false pretenses in India, wrote R Saran. Indians have to pay privately for basic services like clean water, education, and security for which we have already paid taxes. The government has collected Rs 2.5 trillion in education cess since 2004 but our education system is one of the worst in the world. Parents have to pay over Rs 250,000 for nursery education for one child. Taxpayers get no pension, healthcare or care for the elderly. Politicians and civil servants do. Lack of water supply led to one death recently, with the Meteorology department predicting a hotter than usual summer. Perhaps, the worst thing is that rules keep changing as the government reacts to circumstances rather than enacting long term policies which can create a stable environment for business, wrote VA Nageswaran. Singapore has announced plans to raise GST by 2% after 2021, giving enough time for everyone to adjust. That is why Singapore is voted the best place for expats, while India is one of the worst. Those who can are escaping. We are trapped.

Economist see the bigger picture, people see themselves.

Increased tariffs on steel and aluminium imports into the US by President Donald Trump has unleashed a storm of condemnation and derision. High current account deficit is because Americans are saving too little, so raising tariffs will only make goods more expensive for them, without much effect on the deficit, wrote SA Aiyer. "Globalization wasn't supposed to end like this," wrote M Chakravarty, wistfully. "Globalization had shifted production en masse to the poorer countries, where goods were manufactured and tradable services provided at rock bottom rates. Many poor countries benefited and millions were lifted out of poverty. The low cost of production kept inflation down in the developed economies, in turn enabling central banks to keep interest rates low. The expansion of global supply chains to the Third World reduced wage pressure in developed countries, pushing up profits." Workers in the US lost out because of this shift to low wage countries and Trump tapped into this anger, wrote Prof D Gupta. The US should refrain from 'neo-protectionism' because loss of manufacturing jobs is because of automation, wrote Prof K Basu. Instead those who lose jobs should be educated in new technologies so that they can adapt to the new working environment. If everyone had the brains to be a professor of economics they would not be doing manual jobs, would they? Writing about increasing inequality, Prof Basu criticises recent tax cuts by Trump and suggests a kind of universal basic income for everyone. This can be done by giving everyone a share in profits of the economy. How are these profits to be calculated? The US runs a trade deficit with the rest of the world which amounted to $566 billion in 2017. The national debt of the United States exceeds $21 trillion. Although most of the debt is within the US, and the US can print dollars, the interest payment on such a humongous debt is substantial. Where are the profits? Companies have been taking advantage of free movement of capital by holding cash offshore and avoiding taxes in the US. Following tax cuts, criticised by Prof Basu, US companies have been paying cash bonuses to their workers, and will have to pay billions in taxes on cash held overseas. Ronald Reagan's policies were much more protectionist than Trump's, wrote Prof D Rodrik, but Reagan consulted with allies while Trump is unilateral. Low wages and low inflation encouraged central banks to keep interest rates low, leading to a massive asset price bubble, wrote VA Nageswaran. It is not about numbers but about how people feel. Perhaps economists are too clever to understand.

You cannot be poor and rich at the same time, can you?

Prime Minister Narendra Modi listed achievements of his government as inclusive development and steps to revive stalled projects. Inauguration of gas cracker project in Assam in 2016 and revival of sick fertilizer units in Gorakhpur in UP, Sindri in Jharkhand, Barauni in Bihar and Talcher in Odisha will stimulate infrastructure activity in allied sectors. These units were sick because they were making losses so whether they will become profitable or waste taxpayer money is not clear. Under his Ujjwala scheme 34.8 million households have been provided cooking gas connections and is to cover 80 million households in this year's budget. He forgot to mention that many of those provided with free gas connections cannot afford to refill their cylinders and so are back to cooking with wood. Under Saubhagya scheme the government is to spend Rs 160 billion to provide electricity to all households. The Uday project was supposed to rescue electricity distribution companies, which are controlled by state governments, from huge piles of debt, but reduced demand for electricity is causing debts to increase. Toilets may have been provided to 80 million houses but people still prefer to defecate outdoors. Toilets are seen as dirty and therefore should not be part of the living space. And, toilets can function only if there is a reliable water supply. The latest wheeze is to provide health insurance to 500 million Indians for inpatient treatment costing up to Rs 500,000 each. Trouble is, although talk maybe cheap schemes cost money, and fiscal deficit is already predicted to be 3.5% of GDP, instead of 3.3%, as promised earlier. So where is the money going to come from to finance all these schemes? From taxes. The Goods and Services Tax was supposed to combine all indirect taxes to make it easy for businesses and make goods cheaper by removing cascading central and state taxes. In reality, it has too many slabs, with added cess, which makes it too complicated, said a World Bank report. With a system is so complicated collections have fallen by Rs 340 billion. Target for direct taxes has been raised from Rs 9.80 trillion to Rs 10.05 trillion, so we can expect extreme tax terrorism. Customs duty has been increased across a wide range of products, with the excuse of protecting Indian industries. Since we import almost everything we use this will increase costs. Exporters are suffering because the government is unwilling, or unable, to refund their money. And yet the economy grew by 7.2% in the third quarter. Does that mean we are getting richer? Index of Industrial Production grew by 7.47% but retail inflation fell to 4.44%. Private final consumption expenditure fell from 6.6% to 5.5% and Service PMI fell to 47.8 in February, which shows a contraction. So people are getting poorer while the government is spending more on the poor.

Why is elite bad for India, and not China?

"It is no hyperbole to say that the well-intentioned Right to Education (RTE) Act, 2009, has been a disastrous experiment. Contrary to its avowed intent, its effect has been to deprive millions of children of their right to education by closing down schools," wrote Prof GG Kingdon. Why? The RTE Act lays down stringent infrastructure requirements for unaided private schools, while exempting government schools. Small private schools used by poor children were forced to close. The Act forces private schools to reserve 25% of their seats for poor children which has emptied government schools. "In 2015-16, Rajasthan, Maharashtra and Chhattisgarh alone closed 24,000 government schools where total school enrolment had fallen below 10 students." So these states face double expense of paying for the reserved seats in private schools as well as salaries for government teachers. Hence they close small private schools to push children back to government schools. But, was the RTE Act well-intentioned? The Act promises "free and compulsory" education for all children between the ages of 6 and 14 years, but in reality the cost was a tax on the middle class who saw fees for their children sky-rocketing, to compensate for reserved seats. Without help at home children of illiterate parents would find it difficult to compete so exams were stopped and promotion was guaranteed. Since there was no requirement to learn there was no requirement to teach. The Annual Status of Education Report, or ASER, for 2017 states that 25% of children between 14 and 18 years of age cannot read basic text and 57% are unable to do basic division, wrote Prof K Basu. States want to bring back exams and detention for students who fail. Why are politicians against private schools? Because they are seen to be profiteering from education and serving only the elite. To solve this problem could we learn from China which is wealthy and communist at the same time? China has set up "key schools" which are "elite schools with much better quality teachers, infrastructure and other facilities compared to normal schools," wrote Prof S Mundle. "A second category of elite schools, called 'choice schools', are preferred schools where, again, rich children can get admitted by paying hefty fees." "The ring-fenced supply chain of the most capable students has been established all the way from primary and secondary school education to graduate studies in colleges and universities." So, while democratic India is dumbing down education communist China is creating elites. The difference in wealth can only grow.

Is free trade really free?

Earlier this month President Donald Trump announced higher tariffs on steel and aluminium imports into the US, igniting a storm of criticism. "When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win," he tweeted. "Example, when we are down $100 billion with a certain country and they get cute, they don't trade anymore -- we win big. It's easy." At over $375 billion, the US had the biggest trade deficit with China in 2017. Trump has asked China to reduce the imbalance by $100 billion or face higher tariffs. China lovers predict that the US will lose in a face off with China. China can stop soya bean and corn beef imports hitting farmers in Mississippi, Missourie and other US states. "Xi could impose exit taxes on goods manufactured in China in ways that savage Apple, General Motors and Wal-Mart. Canceling Boeing orders could cost more than 180,000 American jobs overnight. Beijing could dump its $1.2 trillion of US government bonds, sending yields skyrocketing," wrote W Pesek. Indeed, China could do all those things and more but can it withstand the effects of its actions. Canceling food imports from the US will reduce choice of suppliers, increasing prices. Canceling Boeing planes leaves just Airbus which will surely try to maximize profits. Dumping US securities may weaken the dollar but what will China buy instead? If it buys yuan, its currency will become very strong, increasing the prices of its goods and decimating exports. Xi Jinping has crowned himself emperor which has surely multiplied the number of people who would like to have his head. "The main reason for the big US CAD (current account deficit) is not unfair trade," wrote SA Aiyer. "It lies in the relatively low savings rate of the US." Apparently, CAD is the difference investment and savings in an economy and in the case of the US savings rate has fallen to a low of 2.6% of disposable income. Higher tariffs will increase prices of goods, taking retail inflation, which is too low at present, to 2% and allowing the Federal Reserve to increase interest rate. Higher returns will tempt people to save more and thus reduce CAD. Trump could actually win according to the theory of 'optimum tariff' which is "defined as tariff that maximizes national welfare", wrote Prof V Dahejia. Even if there is a trade war the US most likely will come out ahead. Rich countries have been erecting barriers to free trade by bringing up labor laws and Justin Trudeau is using women's rights and minorities because they are fashionable, wrote Prof Dahejia. India has lost heavily from trade agreements which reduced tariffs on goods but did not allow free movement of people. Free trade is not really free. It is a myth by vested interests.

We hope, but we can't be sure.

"All is well when economic growth is high and inflation is low," wrote A Iyer. "The Index of Industrial Production grew by 7.47% in January, with manufacturing maintaining its impressive pace of expansion at 8.69%." Retail inflation fell to 4.44% in February from 5.07% in January. Wholesale inflation fell to 2.48% in February, the lowest in 7 months. Stock market indices in India have been brought down by public sector banks which are yet to clear bad loans from their books. Bad loans may amount to Rs 9.5 trillion, or more, as banks are forced to write them down by the Reserve Bank. Unwilling to lend to industry, banks have resorted to lending to individuals. Most of the retail loans are unsecured which makes them highly risky, wrote A Iyer. Out of "every Rs 100 worth of retail loan that banks lent between April and January of 2017-18, nearly Rs 50 went towards unsecured personal loans. Add credit card outstandings and it swells to Rs 80." The GDP grew by 7.2% in the third quarter and core Gross Value Added grew by 7.4%. Consumer spending is getting weaker but investment is increasing, though most of it is brown field and not green field investment. Why is investment increasing when consumer spending is not growing as strongly? It can only be due to increasing exports. But, India's exports of goods and services are stagnant, even though other Asian nations have picked up smartly as growth has quickened in the global economy. As a share of GDP exports are at the same level as they were in the September quarter in 2005. "If the relationship between between India's exports and world growth returns to that in the boom phase, and if world growth in 2018 is as projected by the IMF, then it could add another 0.5 percentage point to growth," said the last Economic Survey. True, but the Services Purchasing Managers' Index fell to 47.8 in February from 51.7 in January. Anything below 50 shows a contraction. Imports of electronic goods, especially mobile phones, are rising inexorably. The cost of such imports has risen to nearly $50 billion in the first 9 months of the financial year, coming close to the cost of our oil imports. The figures, especially the increase in sales of consumer durables, indicate that the economy is beginning to grow again, wrote AR Mishra. Maybe not, wrote SP Mampatta. The asset turnover ratio, which is the ratio of net sales for every Rs 100 worth of fixed assets, has dropped to 1.95 from 2.94 between 2006 to 2016. Which means that Rs 100 worth of fixed assets now generate net sales worth Rs 195, compared to Rs 294 in the previous decade. Something is growing, but we don't know what it is. So, we hope.

If they are happy they won't mind paying.

In terms of earnings India ranks 7th in the world in tourism, making Rs 14.1 trillion, or $208.9 billion in 2016. Tourism constitutes 9.6% of GDP and creates 40.3 million jobs, which is 9.3% of total jobs in India. However, in terms of numbers India comes 40th in the world, with only 9 million tourists, which is one-tenth of what France receives. Prof N Kaushal analyses why India receives so few tourists. Turkey received 3 times as many international tourists as India in 2016, despite increasingly despotic rule by Recep Tayyip Erdogan, repeated terrorist attacks and the war next door in Syria. "Taj Mahal had half-a-million tourists, the Statue of Liberty in NY received four times as many, and the Great Wall of China received six times as many." The government has been improving infrastructure and access to tourist sites for foreigners. E-visas are available to citizens of a large number of countries. The new expressway from Delhi to Agra is wide and has much less traffic, for a smooth drive to the Taj Mahal. The problem is that the official site for the Taj Mahal does not warn Indians that they must carry proof of identity to prove they are Indian. Which creates arguments and anger at the entry point when people are stopped from entering. Obviously, they cannot go back to their villages to get their identity proofs. Nor does the site tell you that the ticket for foreigners, which costs Rs 1000, includes entry to Agra Fort as well. A visit to the Taj Mahal is not complete without a visit to the Fort because Shah Jahan, the man who built the Taj, was imprisoned there for the last 8 years of his life and would spend his time gazing at the monument in memory of his wife. The Red Fort in Delhi is undergoing reconstruction so that all the palaces inside are blocked to visitors. There is no warning and people are being charged full amounts for tickets. Delhi zoo is beautiful inside. Extremely clean with beautiful lawns and electric vehicles to take people around. But, you have to pay Rs 70 to take a camera inside and nothing for mobile phones, all of which have cameras. Sadly, animals do not look happy. There is one tiger, one jaguar, one gharial and just one wolf. Wolves are pack animals so it must be especially lonely for it. Then there are the people. Foreigners, especially women with blond hair, are requested for photos by locals. Although security is very impressive at the entrance there is no one inside to stop this harassment. The infrastructure has definitely improved. Emphasis should now be on making tourists feel happy so that they come back. Tourists mean money.  

Dictators have an advantage over democracies.

Italians have voted for anti-establishment parties, with the Five Star Movement emerging as the largest party with about 32.6% of the vote. The right wing coalition of former Prime Minister Silvio Berlusconi's Forza Italia and the anti-immigrant Northern League is set to get 37%, with 99% of votes counted. The left wing coalition of the present Prime Minister Matteo Renzi, who used extreme violence to try and stop a referendum for independence in Catalonia last year, received only 22.8% of votes. Renzi has resigned. The Five Star Movement was set up by a comedian, Beppe Grillo who is a Eurosceptic and alter-globalist. The result is a reflection of anger of ordinary Italians against the main parties and against Europe for the state of the economy. Just like an angry "basket of deplorables" was instrumental in Donald Trump's upset over Hillary Clinton, so angry Italians have shown the door to mainstream parties. In Germany, Angela Merkel has succeeded in forming a coalition 5 months after general elections because voters showed their anger by giving 12.6% of votes to the anti-immigrant AfD party, which will have 94 seats in the Bundestag. Merkel's open door policy towards migrants has created areas where half the population is foreign, dependent on social security, and where police are afraid to go. While people democratic countries can vent their anger they are helpless in autocracies. Xi Jinping is set to be crowned the undisputed emperor of China by the Communist Party's annual National People's Congress. All other nations are trying to work out the medium to long term implications of this event. Since Mao Zedong no one has accumulated so much power. Mao's Great Leap Forward resulted in the death of 20-30 million people from starvation and forced some people to resort to cannibalism. The more power Xi has the more desirable his head becomes. Censors have banned the children's character Winnie the Pooh, because people compare Xi to it, and the letter 'N' because scientists write 'N>2', referring to the scrapping of the two-term limit. Naturally, Animal Farm has also been banned. Meanwhile, Turkey is gradually becoming like Pakistan, with President Recep Tayyip Erdogan arresting opponents by the thousands and bombing Kurds in Syria. Just as it had shot down a Russian plane over Syrian territory on 2015, so Turkey bombed 36 Syrian troops to death 3 days back. Turkey is part of NATO and is using US supplied planes for its attacks. Weak governments in the West and ruthless dictators, not a good combination.  

Prominent, but not powerful.

India must stay neutral if an economic war breaks out between the US and China, wrote SA Aiyer. This is after Donald Trump announced tariffs of 25% on steel and 10% on aluminium imports into the US. China was critical of the US decision but has not retaliated so far. Maybe because metals account for only 5.1% of US imports from China, while electronics and machinery made up 48%. Furniture and toys account for 16.5% of imports from China, while textiles and clothes make up 8.6%. The European Union's response was more muscular, threatening tariffs on US exports to Europe. To that Trump threatened higher tariffs on European cars. Europe imposes a tax of 10% on US cars while the US taxes European cars at only 2.5%. The fear is that tit-for-tat tariffs may lead to a trade war. Trump tweeted that "trade wars are good, and easy to win". India enjoys a trade surplus of $30 billion with the US. Our trade with Europe is roughly balanced, with Europe having a slight edge in goods while India has an equal edge in services. India had a trade deficit with China of $52 billion. It makes no sense for India to take sides in this fight between heavyweights. "If, however, an anti-US coalition gathers force, especially in multilateral forums like the WTO, India could unobtrusively join that crowd, making sure it does not stand out," wrote Aiyar. Is it possible to take a contrary stance and remain unobserved? India is too big for that. Last year India voted against the US decision to recognize Jerusalem as the capital of Israel at the UN General Assembly. Although we were one of 128 countries who voted against the US, Israel protested to our government. The problem is that although we are big enough to be unobtrusive we are not big enough to throw our weight around, like China does. India has already raised customs duty across the board and increased cess to 10% from 3%, in next year's budget. Then we stopped providing data to foreign exchanges to stop derivatives trading outside our borders. Why we need to protect our businesses and markets from foreign competition when our economy is booming at 7.2% is a mystery. The global investment index provider, MSCI immediately condemned our decision and warned of reduced weightage for our markets, while looking to increase weightage of China whose markets are controlled by the government, inviting scathing criticism by N Shah. Our exports have been declining while imports have increased, leading to widening trade deficit. We are therefore in the unique position of being weak, but unable to hide. We should never take sides.

What have they been promised, reward or threat?

The architect of the Indian biometric identification card Aadhaar, N Nilekani wrote that it is a "universal digital infrastructure, not just a scheme". Why is he making this distinction? Because he thinks that the government should make money from it by allowing private players to use it. Just because the government builds highways does not mean that "only State-owned vehicles will drive on it". When the state cannot deliver services the private sector steps in but their services are available only to the elite. Allowing private players to use Aadhaar will increase "universal oversight". "The Aadhaar system does not collect the specific purpose of your authentication, or the location of your transaction so there is no way the system can construct where you were and what you were doing," wrote S Nadhamuni, also associated with setting up this system. Therefore, Aadhaar can never be used to spy on us, these two try to convince us. But, "Aadhaar is not so dumb," wrote Prof I Rajaraman. "To use Nilekani's phrasing, it does indeed offer a deep profile on a person because it has now been linked to the permanent account number (PAN) and through that to the entire direct tax record of the person, to mobile numbers and therefore to the entire telephone records of the person, to all bank accounts, and all financial instruments, debit and credit cards." Online service providers have records of our "likes, browsing patterns and desires", wrote Nilekani. According to some surveys over 75% of people lie on social media. Nothing Google or Facebook can do about it. Fingerprints and iris scans cannot lie and we will be arrested if we lied to the government. "Apps from Google, Facebook, Apple and thousands of other companies are also able to track smartphone user location using GPS sensors," wrote Nadhamuni. We can switch off smartphones or use a Nokia 3310, but the government has made Aadhaar mandatory for everything from buying train tickets to using a credit card in a restaurant. "I would much rather trust the State's institutions" wrote Nilekani. He is one of the 85% of Indians who trust the government. But that is not the point. Zuckerberg or Sergey Brin, or indeed Donald Trump can do nothing to us but the government can and does. The Supreme Court described the CBI as a "caged parrot" which harasses opponents while protecting the government. Anyone traveling to the US or to Europe need to provide fingerprints and photograph, but only a tiny minority travel abroad. If Amazon or HSBC are allowed to use the Aadhaar infrastructure biometric details of every Indian will be available to the US and European governments. So why are Nilekani and Nadhamuni betraying fellow citizens by defending this pernicious system? What have they been promised? 

Chances of getting trumped.

The Indian economy grew by 7.2% in the last quarter ending on 31 December, wrote R Nair. Consumer demand fell to 5.6% of GDP but investment demand went up to 12%. The 3 sectors which lagged were mining, utilities, comprising of electricity, gas and water, and trade, which includes hotels, transport and communication services. Although Gross Value Added for the full year is expect to increase, agriculture and manufacturing are expected to weaken. Most of the growth was due to government spending which rose to 6.1%. "In fact, the biggest engine of growth continues to be government spending, which is supposed to grow by 11 per cent in real terms this year," wrote M Sharma. "Put that together with India's troubling fiscal deficit -- which is pushing seven per cent of GDP when both the federal and state governments are included, one of the worst figures in the G-20 -- and this revival starts to look a bit unsustainable." The central government's fiscal deficit reached 113.7% of GDP till the end of January. That may not be the final figure because advance tax collections from companies tend to jump in March. However, the government cannot increase spending to protect against a fall in growth, without making the deficit significantly worse. This is where Donald Trump comes in. Prime Minister Modi criticised Trump for protectionism at the World Economic Forum in Davos in January. "The result of this is that we are seeing new types of tariffs and non-tariff-based barriers being imposed," he said. Indeed. Following that speech the Finance Minister massively hiked customs duty on almost all imported goods, in next year's budget. Not just that, sly taxes, camouflaged as Education Cess and Social Welfare Surcharge, went up from 3% to 10%. The Prime Minister would surely have known about this while he was serving bromide at Davos. Trump is complaining that India taxes Harley-Davidson motorcycles at 50% while the US levies no taxes on exports of motorcycles from India. India exports few motorbikes to the US but that is not the worry. Trump has just announced a 25% tariff on imports of steel and 10% on aluminium. Other countries have threatened retaliation but Trump tweeted, "When a country (USA) is losing billions of dollars on trade with virtually every other country it does business with, trade wars are good, and easy to win." India has a positive trade balance of $30 billion with the US and Trump could levy taxes on anything he wants. The Federal Reserve is expected to raise the Federal Funds Rate more aggressively this year which could hit the rupee and Indian share prices. General elections by May of next year. Trump could trump Modi.