When winning the throne is the prize.

Today, the BJP government of Narendra Modi is to present its last budget before general elections. Yesterday, the Ministry of Finance announced that this will be an interim budget, as opposed to a full budget. There has been enormous anxiety as to whether the government will present a full budget instead of a vote on account, defying convention. A vote on account seeks parliamentary approval for spending till elections are over and a new government has been installed. An interim budget will allow the Finance Minister to announce some new policies, possibly freebies and handouts, to try to maximize its chances. Why is it necessary? A report on the economy by the Mint showed that "the economic momentum is slowing in India, with weak aggregate demand, tepid wage growth, and relatively low price pressures in the economy", wrote N Kwatra. "Core sector growth (which captures trends in eight key industries -- electricity, steel, refinery products, crude oil, coal, cement, natural gas and fertilizers) slid to a 16-month low of 3.5% in its last reading in December." The Centre for Monitoring Indian Economy (CMIE) reported that, "The number of employed recorded in December 2018 was at 397 million, which is 10.9 million less than the figure of 407.9 million seen a year ago in December 2017." "An estimated 9.1 million jobs were lost in rural India while the loss in urban India was 1.8 million jobs." At best the picture is mixed. The government received a bonanza from a dramatic fall in the price of crude oil towards the end of 2014, the year it came to power. "The average crude price under UPA II was $96/barrel. This figure is $61/barrel under the present government if one were to take figures until 2018 for the current fiscal year," wrote R Kishore. The low retail inflation is because of a collapse in the prices of food products which is hurting the rural population. Outside farming, "construction and trade, hotel, transport, storage and communication, have seen lower growth under the present government than what was achieved under UPA II". While Modi's popularity has fallen from 44% to 34%, the worrying thing is that Rahul Gandhi has jumped from 9% to 24%. In recent assembly elections, Modi failed to lift vote share of his party in areas where he campaigned while Gandhi had a beneficial effect. To mask its failure the government has resorted to subterfuge. Two members of the National Statistical Commission resigned because the government is suppressing the Commission's report on employment. The back series data on the growth of GDP was massaged to make it seem that growth under Modi has been higher than under the previous government. "In the past few years, the Modi government has faced severe criticism for either withholding reports or releasing data that is not rigorous," wrote an editorial in the Mint. Anything to win the elections. With it comes the throne.

Will it be patience before panic?

The Federal Open Market Committee (FOMC) of the Federal Reserve in the US left its Funds rate unchanged at 2.25-2.5% yesterday, while maintaining its commitment to economic growth and keeping inflation at 2%. "The central bank called US economic activity, 'solid', a change from 'strong' in the December statement. That might speak to the Fed detecting signs of slowing in the economy. It noted that its inflation gauges 'have moved lower in recent months," wrote JJ Kinahan. The Fed promised to remain "patient". The Fed's decision was also influenced by global factors. "With the latest eurozone inflation reading clocking in at a less-than-robust 1.6%, and with the ECB having just pushed its next expected rate hike out to mid-2020 (from late 2019), it seems the 'pause-and-patience) approach is occurring on both sides of the Atlantic." This time, the Fed was operating without real time data on unemployment, jobs growth, inflation, and consumer spending because of the long government shutdown which lasted 35 days. "The labor market and consumer spending look strong, but slowing global growth, the protracted trade war and the shutdown itself has darkened the picture. In addition, the housing market is struggling amid elevated borrowing costs and price gains," wrote Chandra and Condon. "The American economy is nearing ten years of expansion," wrote VA Nageswaran. "Excessive risk-taking is evident in the demand for high-yield or speculative bonds and in the record issuance of leveraged loans ( loans made to companies that already have a high debt to equity ratio). In other words, overheating is far more readily apparent in the financial economy than in the real economy. That has been the case with developed economies since the 1990s, if not earlier." "Central banks may be about to face one of their biggest challenges yet: Global economic growth is slowing, but they have struggled to build up their policy arsenals since the last crisis to effectively deal with one another," wrote J Cable. The World Bank warned of "darkening skies" for the global economy. The predicted slowdown is focused on the rich countries, particularly the US, although it will continue to expand more rapidly than either the Eurozone or Japan according to the bank's forecasts." The Japanese Yen has been strengthening recently. "Historically, outsized yen gains in short periods, such as the Russian default in 1998 and the global market meltdown in 2008, are a harbinger of stress for global markets." A poll of 134 CEOs in the US showed that they believe that there will be a recession in the US at the end of this year. Despite that growth in US is predicted to be highest. Scary.

A deficit in fulfilling promises.

In this year's budget the Finance Minister had projected a fiscal deficit of Rs 6.24,276 trillion, or 3.3% of GDP, but,  "Between April and November 2018, the government had already run a fiscal deficit of Rs 7.16,625 trillion or 114.8% of the fiscal deficit target that the government had hoped to achieve," wrote V Kaul. The government had hoped to collect Rs 6.03,900 trillion from the Goods and Services Tax (GST) but in the nine months, from April to December 2018, it has got Rs 3.41,146 trillion, just 56.5%. At this rate there will be shortfall of Rs 1.49,000 trillion. A Mukherjee found 5 reasons why the government is responsible for failing to control the fiscal deficit. "GST was a long-delayed attempt to replace a bewildering array of sub-national taxation with a unified levy. But it wasn't the only fiscal design marred by weak design and poor implementation." Rising debts in electricity distribution companies, farmer loan waivers, failure to privatize public sector companies and a failure to stimulate the private sector have contributed to the rising fiscal deficit. Despite earning in excess of Rs 10 trillion from high excise duties on petroleum products during its term, the government has borrowed an extra Rs 29 trillion which has increased its debt by 49%, from Rs 54.90,763 trillion to Rs 82.03,253 trillion. "India's general government debt of about 70 percent of GDP in 2017 isn't much different from China's, based on IMF estimates. But China, for all its overcapacity issues, at least has used public debt to create assets; India hasn't." The Prime Minister Modi's party the BJP expects more handouts in the hope of persuading people to vote for it. Markets are apprehensively expecting increased spending on social schemes in the budget on 1 February. The government has already resorted to 'creative accounting' to make the deficit look healthier. It forced public sector ONGC to borrow money to buy public sector HPCL and showed that as disinvestment, thus transferring its borrowing on to ONGC. It has also postponed paying for its expenses till after the elections. To increase revenue it appointed a retired civil servant as Governor of the Reserve Bank who will transfer an extraordinary dividend of Rs 400 billion to it. Modi was elected on a promise to end 'tax terrorism' but soaring disputes on unjust tax demands show how empty that was. Thousands of taxpayers are being persecuted for minor defaults in depositing taxes. Multinational companies have been threatened with backup tax demands in case they win cases against taxes on transfer pricing. With so little time before the elections Modi should refrain from making too many promises, wrote M Sharma. When you talk so much you have to find something to say. Fulfilling is impossible.

Will India become richer by reducing the middle class?

 "If the Indian middle class was doing much thinking it would realise that our challenges are climate change, water scarcity, pollution (of air soil and water), rural distress, drought and famine, primary education and primary health care," wrote Prof K Bajpai. "We in the Indian middle class are very influential. We manage the affairs of the upper class, and we employ and direct the lower classes. We are the country's executive arm in all walks of life." "What we think matters." Does it? It is fashionable to blame the middle class for all the ills of India. S Srivastava is incensed that the middle class has retreated into gated communities where they use their Resident Welfare Associations to influence policy. "This new form of activism, enacted through lycra-clad bicycle enthusiasts, leisure activists, environmentalists, bird watchers and 'ordinary mums and dads' who want a better life in the city," is his offensive description. Taunting the middle class M Joseph wrote, "What they think is austerity is still vulgar in their impoverished nation. Also, to the poor, it is the upper middle class that is the most visible section of the rich, because the ionosphere of the super-rich is beyond what their eyes can see." While every other nation on earth wants to expand its middle class the chattering class in India wants to drag it down. Consumption of meat and eggs is rising among the poorest and the lowest castes in India, showing that the poor aspire to a higher life style. "The low-income segment group has a high fertility rate of 3.2, compared to the high-income level at 1.5," found the National Family Health Survey of 2015-16. On the other hand, many in the middle class are choosing not to have any children, known as DINK or double-income-no-kids, and about 13 million people are choosing to stay single to enjoy a higher life style. The middle class receives very poor services for all the taxes it pays, because there are no official standards for services, as there are for goods, wrote Kher and Gupta. "PM Narendra Modi's decision to cancel the tender of 85 percent of currency in circulation was greeted with delight in some quarters and anger in others", wrote R Sriram, but "The political and intellectual class, the same class that could not read the political tea leaves in favor of demonetisation .... is now telling you that the exercise is a failure." Exactly. The BJP won elections in UP and Uttarakhand because the poor thought that demonetization would harm the middle class but two years later farmers are still suffering because of low prices for their produce and a collapse in rural wages, wrote R Kishore. This constant vilification of the middle class by bleeding hearts allows politicians to use taxpayer money on handouts, even if bad for the economy. They start misusing taxpayer money 'to help the poor' and then use our money on themselves. Pulling the middle class down will not help the poor. It will only increase poverty.

We don't need knowledge. It is magic.

"The prices that consumers pay for food have been falling for three moths in a row. Wholesale food prices have fallen for six months in a row," wrote N Rajadhyaksha. The previous Congress-led UPA government engineered high food prices by paying higher Minimum Support prices and starting the MGNREGA scheme for unemployed rural workers. High food prices fed into general consumer price inflation and hurt the poor and the middle-class, resulting in a trouncing of the Congress in the general elections in 2014. "It is one thing to raise minimum support prices (MSP) for foodgrains, but you need to release the food stock into the market to control price rise, which was unfortunately not done," said Pronab Sen, Chairman of National Statistical Commission. The problem with low prices of food is that, "Low nominal growth in rural India -- if not an actual decline -- also hurts demand for various industrial goods." Profits of companies that make up Nifty 500 index have fallen to 2.8% of GDP in 2018 from 5.5% in 2008. "Profits of companies on the Nifty-500 have remained stagnant at Rs 4-4.8 trillion over the last five years, even as nominal GDP has continued to grow steadily, according to Motilal Oswal study." While food prices have fallen core inflation remains high. "What is important is the fact that India could be facing its own variant of the scissors crisis -- core inflation and food inflation are moving in different directions," named after a similar crisis in the Soviet Union 100 years ago. The solution is simple. A study by Gulati and Cahill over two years found that "the producer support estimate (PSE) for India was minus (-) 14 percent of gross farm receipts, on an average for the years 2000-01 to 2016-17". This amounted to an 'implicit taxation' to the tune of Rs 2.65 trillion per year for a total of Rs 45 trillion over 17 years. The solution is to create jobs in other sectors of the economy which will allow rural people to exit agriculture for more secure income. Unfortunately, India lost 11 million jobs in 2018, according to the Centre for Monitoring Indian Economy (CMIE). "An estimated 9.1 million jobs were lost in rural India while the loss in urban India was 1.8 million jobs." Keen to create jobs before the elections the government recently amended the GST rules so that enterprises with income up to Rs 4 million do not have to register, which will be detrimental to the economy, wrote R Jagannathan. Why so much confusion? Because you can be appointed finance minister even if completely ignorant of economics. "If you can accept your ignorance your life will have the quality of magic," said Osho. India has been running on magic. If only we knew.

The paradox of democracy.

Are we seeing the end-play time in Venezuela? A nation with a population of 30 million, with the largest oil reserves in the world, its economy is in shambles, with hyperinflation, lack of food and medicines, and over 3 million people fleeing the country. Oil accounts for 96% of revenues but production has slumped to 1.4 million barrels per day, compared to 3.2 million barrels a decade ago. Fiscal deficit is at 20% of GDP and external debt is $150 billion. The petro was introduced to get round US sanctions. "Juan Guaido, a 35 year-old legislator from a coastal town in Venezuela," "assumed the presidency of Venezuela as constitutionally mandated", wrote FS Perera. Guaido was elected to the National Assembly in December 2015 but President Nicolas Maduro tried to bypass it by creating a Constituent Assembly through fraudulent elections, boycotted by the opposition. 16,900 soldiers have been promoted for their loyalty, while hundreds have been arrested for allegedly plotting a coup. The army has been rewarded by frequent pay rises and officers have been placed in key posts in government and industries. Inflation has reached 1.3 million% which the government has tried to control by introducing a new currency called the sovereign bolivar and has created a virtual currency called the petro. Maduro offered to hold talks with Guaido which was swiftly rejected. The army has come out in support of Maduro, more out of fear than loyalty. "Some senior officers have gotten rich off shady deals, including drug trafficking, illegal gold mining, currency scams and contraband smuggling, says R Evan Ellis, a research professor at the US Army War College." Officers are terrified of being extradited to the US if Guaido comes to power. "Officers have been thoroughly compromised, and with the Cubans watching, there is not fertile soil for a coup to gain momentum." Guaido has called on the military to support him and offered amnesty to officers. "Come to the side of the Venezuelan people," he said. President Donald Trump recognized Guaido as the legitimate president of Venezuela and was followed by 11 countries, including those surrounding Venezuela. Allies, led by Russia, Turkey and China, are supporting Maduro. In December, two Russian nuclear-capable TU-160 "White Swan" bombers landed at Caracas Airport, annoying the US. "Russian military contractors who do secret missions for the Kremlin" are said to be guarding Maduro. Putting up an alternate president by the opposition on 10 January, supported by the international community, was the solution to the Venezuelan crisis proposed by Prof R Hausmann last month. "In Venezuela, democracy is there for the many, and what's fair is what's good for all the people," wrote Maduro in an op-ed in May 2018. Most dictators today are spawned by 'democracy'. The ultimate paradox.  

Will Priyanka prove to be Rahul's trump card?

Priyanka Gandhi, sister of Congress President Rahul Gandhi, has been appointed Congress General Secretary for UP East and will be in charge of campaigning for the general elections in May. She closely resembles her grandmother Indira Gandhi, apparently is very good at campaigning and is said to be popular with voters. Although, "the BJP has criticised Rahul as a failure reaching out to his sister for help", the timing appears to be perfect because Rahul is credited with wins in assembly elections in Madhya Pradesh, Rajasthan and Chhattisgarh at the end of last year, giving a fitting reply to BJP's taunts of "Pappu" and "Rahul Baba", implying an infantile fool. Rahul is sending a message. "The message in loud and clear. Eastern UP means Varanasi and Varanasi equals Narendra Modi. Giving Priyanka charge of Eastern UP is tantamount to taking on the opponent on his own turf." It is shaping up to be a three-way fight in UP, with SP, BSP and the RLD forming a 'Mahagathbandhan' which means a 'grand alliance'. The Congress is not expected to win many seats in UP but Priyanka is expected to increase its vote share, which means who wins between the BJP and the alliance will depend on whose votes are taken away by the Congress. It is easy to sneer at Rahul but Modi will find it difficult to bad-mouth Priyanka in these days of the 'Me Too' movement. Modi will almost definitely win from Varanasi but it will be sweet revenge for Priyanka if she can reduce BJP's tally of seats from UP and thus prevent Modi from becoming prime minister for a second time, because it is almost impossible to form a government in India without winning a majority of the 80 seats in UP. Last December the Enforcement Directorate (ED) raided offices of Sunlight Hospitality in Delhi and Bengaluru on charges of a land scam. The company is owned by Priyanka's husband Robert Vadra and ED's actions were condemned as "hooliganism" by Congress leader Kapil Sibal. "I am an Indian citizen and I am not running away anywhere," said Vadra, probably alluding to all those who have fled from India after being accused of financial scams. Modi has been accused of using the Central Bureau of Investigation (CBI) to launch fictitious cases against opponents and, unfortunately for him, his tweeted messages before elections in 2014 have been dug up by the opposition. The CBI is so badly discredited under Modi that families of murder victims do not want it to investigate their killings. Modi is undoubtedly a formidable orator but his claims to moral superiority over the previous Congress government have been shattered. May will show how many still believe in him. 

Anything out of control is unsafe.

Fifty years ago it was assumed that "by the early part of this millennium, space travel would be routine; machines would be terrifyingly intelligent; and computers and humans would have intelligent conversation," wrote S Chitnis. "By that yardstick, the present is decidedly underwhelming. Our phones have become smarter, interfaces slicker, and communications faster. But other predictions haven't come to pass." Though robots are used extensively in manufacturing, social media companies are the biggest users of technology as they seek to increase viewer numbers to increase their revenue through advertising. "A generation of our best engineers are spending their productive output on building behavioral nudges that manipulate users to stay on their platforms." Artificial Intelligence (AI) will be beneficial to human beings by increasing efficiency, improve productivity by eliminating mistakes and enrich our lives through Internet of Things (IoT), as our dumb gadgets communicate with each other to carry out mundane tasks, relieving us from having to remember them. But just as it is useful IoT offers hackers easy opportunities to take control of all the gadgets and inflict enormous damage. Facebook shut down an AI language learning program because it developed its own language. Although their language appears to be gibberish it terrified people because it appeared that machines were trying to develop their own communication which would bypass human control. "The difficulties we're wrestling with today with narrow AI don't come from the system turning on us or wanting revenge or considering us inferior. Rather, they come from the disconnect between what we tell our systems to do and what we actually want them to do," said Rosie Campbell at UC Berkeley's Center for Human-compatible AI. "Scientists have developed an artificial intelligence tool that can synthesize fake human fingerprints and potentially fool biometric authentication systems." Scientists are creating neural nets based on the human brain which are like "black boxes". Once an algorithm is fed in there is no way of knowing how it arrives at conclusions. Cyber warfare is already a reality, as the Chinese hacked into the US government's Office of Personnel Management in 2014 and stole highly sensitive data on "the most important people in the American security and intelligence community", wrote S Deb. "AI is a big fat lie. Artificial Intelligence is a fraudulent hoax -- or in the best cases it is a hyped-up buzzword that confuses and deceives," wrote E Siegel. AI can digest vast amounts of data but cannot create its own ideas. A human will understand the command, "Get rid of him" as "show the man out", but a robot may kill him. That is the real danger.

When stagnation is likely to be permanent.

Every year a NGO Pratham brings out the Annual State of Education Report (ASER) of the level of learning in schools in India. An analysis for 2016 shows that, "Among children in standard III-V, an overwhelming majority from highly privileged families could read a standard I text while an overwhelming majority from underprivileged families could not," wrote Bansal and Bhattacharya. "Underprivileged children born to parents with a high school or college degree tend to do as well as highly privileged children born to parents with secondary schooling." Why the surprise? Children whose parents read to them and encourage them to learn other activities, like music, are much ahead in learning and earn more as adults. Richer parents have the means to invest in various activities for their children, including visiting museums, hobbies and music. Just talking to toddlers tends to make them smarter. A study in Britain showed that richer parents create a "glass floor" to help their children achieve higher status in life, compared to equally able children from lower income status. But, surely it is the duty of every parent to transfer their knowledge to their children and use the help of relatives and friends, without doing anything illegal? The good news is that levels of learning have improved in 2018, compared to 2012, but the bad news is that they are yet to reach the levels attained in 2008. Quality of education is extremely important to improve economic mobility across generations and a higher economic status improves education levels. "Thus, we see that 63% of the sons born in the 1980s to fathers in any of the three occupations  -- farmer, agricultural labourer or construction worker -- continued to remain in the same occupation," wrote T Kundu. For them, a job in a factory would be higher up the scale. India has practiced a system of discrimination in which 50% of government jobs and seats in institutes of higher education are reserved for people from lower castes, certain tribes and so-called other backward classes. Recently, the government announced 10% reservation for poorer sections of upper castes. India has fallen behind as "China's success owes much to emphasis on meritocracy. It's high-quality education system has driven relentlessly to catch up with the West, and now produces high class academic output", wrote SA Aiyar. Reservation of 10% for upper castes is like farm loan waiver because "both have a huge political appeal despite minuscule actual benefits", wrote R Kishore. We may dance about overtaking a tiny country like Britain but we have no hope of ever reaching China, let alone the US. Still, as long as politicians win elections. 

Shouldn't the system be changed if it is bad?

"Poorly managed globalization has led to nationalist 'take-back-control' movement and a rising wave of protectionism that is undermining the 70-year-old US-led international order," wrote former Prime Minister of Britain Gordon Brown. At the height of the global financial crisis "North America and Europe comprised around 15% of the world's population, but accounted for 57% of total economic activity, 61% of investment, around 50% of manufacturing, and 61% of global consumer spending." Now, "Some analysts predict that Asia will account for 50% of global economic output by 2050." Still very far. The real fear is "The future of technological dominance and global economic power." "The year 2018 marked the return of the import tariff," wrote Prof PK Goldberg. "Until 2018, global trade seemed like an unstoppable and irreversible force" but there were "behind the border" restrictions, along with "frustrations with the current trading system that the World Trade Organization (WTO) has failed to resolve". As a result, in the last few years, "populism has gone global, upending the politics of countries as diverse as Hungary, Italy, the Philippines, and the US," wrote Prof S Edwards. "Venezuela offers a textbook example of how populism can take hold." Venezuela is in an economic crisis forcing millions of people to flee the country, wrote E Melimopoulos. "There are people dying because we don't have the right medicines in the country, or food, or we don't have security in the streets," said Venezuelan citizen Rosina Estrada. "There are many similarities between Latin America's experience with populism and that of advanced economies today," but "Unlike in Latin America, the Fed and the ECB cannot be forced to finance governments' fiscal expenditures." "US President Donald Trump's 'America First' trade policy came into full bloom in 2018, and it was an ugly sight to behold," wrote Prof D Rodrik. "Existing rules are not up to the challenge of accommodating countries like China, where economic practices are very different from those of the US or Europe," but "Trump's unilateralism and mercantilism are bad for the world economy". So, let China break all the rules but Trump is bad if he responds. Extraordinary.`Naturally, the Chinese are happy to echo this view. "By actively reducing its external surplus, China has demonstrated that it is not a mercantilist power, but rather a responsible global stakeholder pursuing balanced and sustainable long-term growth," wrote Min and Yanliang. "Nationalism, populism, nativism and protectionism exploit people's sense of being left behind and excluded from the system," wrote  M Froman. By accusing Trump and other leaders all these experts are accusing the people for electing them. Why not talk about changing the system?

From farmer to billionaire, everyone needs support.

Although they appear different, there are similarities between farm loan waivers and corporate loan defaults, wrote Prof R Prasad. "A farm loan waiver is a sector-wide extinguishing of loans mandated by the government, usually before an election, with the exchequer compensating banks." On the other hand, "A key underpinning of bankruptcy procedures is the limited liability clause that protects assets of promoters unless explicitly pledged. Corporate bankruptcy, therefore, is a simultaneous process of cleansing bank balance sheets and a mechanism allowing optimal risk-taking by entrepreneurs." The problem with both is that they create non-performing assets (NPAs) in banks which keep increasing as new bad debts are discovered by the Reserve Bank (RBI). Another Rs 5.24 trillion could be added to bad debts at banks in the next financial year, according to the RBI. The electricity production and distribution companies may contribute Rs 1.8 trillion to bad loans. This is because politicians promise free electricity to win elections. 10% of Punjab government budget goes in providing free electricity to farmers. The Central government wants Punjab to stop such practices and transfer handouts to bank accounts of farmers instead. However, Gujarat, Prime Minister Modi's home state, wrote off Rs 6.25 billion in unpaid electricity bills of the rural population last month. When bad loans pile up banks become reluctant to lend. According to the RBI, personal loans, "which include home, vehicle and education loans", accounted for 96% of bank credit in 2017-18 financial year. The Centre for Monitoring Indians Economy reported that India lost 11 million jobs, mainly among women and uneducated laborers last year. If jobs are scarce it becomes harder to repay education loans which rose to 8.97% in March 2018. However, last month the RBI said that non-food bank credit jumped by 13%, or Rs 9.44 trillion, between October 2017 and October 2018. "Out of "every Rs 100 of new bank loans added, it was services which bagged Rs 50, while industry received just Rs 10. Out of Rs 10 advanced to industry, large firms cornered Rs 8.30, while medium and small enterprises had to make do with just Rs 1.70". To create more jobs before the coming elections Modi desperately wants to increase lending to businesses. So, he has asked public sector banks to lend to medium and small enterprises up to Rs 10 million in less than one hour. He appointed a civil servant as governor of the RBI to dilute provisions for clearing up bad loans, who immediately obliged by allowing banks to restructure bad loans up to Rs 250 million to small businesses. The Bankruptcy Code which was passed with such fanfare in 2016 is being bypassed to oblige a certain business family. "In short, the problem of the spendthrift farmer and that of the flagrant corporate firm are two sides of the same coin," wrote Prasad. Handouts equal crony capitalism. Very true.

Are they fit to govern when they are so stupid?

Four days back Speaker of the House of Representatives in the US Nancy Pelosi wrote to President Donald Trump to postpone his State of the Union address, give it in writing to the Congress or deliver it from the White House because his security cannot be guaranteed in view of the partial government shutdown. The speech is currently scheduled for 29 January. "Both the US Secret Service and the Department of Homeland Security have not been funded for 26 days now -- with critical departments hamstrung by furloughs," she wrote. "The Department of Homeland Security are fully prepared to support and secure the State of the Union," tweeted Homeland Security Secretary Kirstjen Nielsen. The State of the Union, starting in 1913, is delivered by the president in front of joint houses of the Congress outlining the work undertaken by his government and what he hopes to achieve in the coming year. It gets full coverage by news media and is seen on television all over the world. In his first State of the Union address Trump received 75 standing ovations, mainly from Republicans, while Democrats sat stony-faced. Even when Trump said something sensible, such as reducing cost of prescription drugs, Democrats sat silent, not willing to be seen to be giving him any support in case it added to his popularity. The address is followed by hours of analysis by media pundits and politicians, praising or criticizing, depending on their personal beliefs. A written speech or one delivered from the Oval Office will certainly not have that kind of exposure or appeal to the base. The address highlights how disunited the Congress is and perhaps it is time to end it, wrote Ron Elving. While Trump's job approval rating is over 40, the job approval rating of the Congress was 22 on 16 January and a dismal 9 on 2nd January. Between December 2017 and December 2018 the approval rating of the Congress was 15-21% while the disapproval rating was 73-81%. When you are already naked, having a haircut makes no difference. In response to Pelosi's canceling of his address, Trump canceled Pelosi's planned trip Afghanistan by military aircraft. In view of the shutdown Trump canceled the US delegation's, as well as his own, trip to Davos in Switzerland to attend the annual jamboree at the World Economic Forum. The confrontation is because the Democrats refuse to fund a border wall between the US and Mexico to stop illegal immigrants from entering. The wall is expected to cost $5.7 billion out of the total federal budget of over $4 trillion, which is around 0.001%. Hard to imagine that politicians in the richest country in the world are engaged in such a stupid, puerile fight. Almost makes our lot look rational.

It is a question of what is worse, not what is good.

With seats in the present Lok Sabha divided among 36 parties, S Chakrabarti has calculated that, "A terrifying prospect awaits India if general election results go a certain way." To have a stable government, the BJP, which is Prime Minister Narendra Modi's party, and the Congress together must get over 300 seats. This is what happened in 1991, 1999, 2004, 2009 and 2014. In each case one of the two main parties had the largest number of seats in the Lok Sabha and was able to form a stable coalition with the support of regional parties. However, when the BJP or the Congress did not have enough seats, one of them gave outside support to a motley collection of smaller parties. Why is it terrifying? Because, "A government such as this will be inherently unstable, permanently squabbling, it will be comprised mostly of parties that can be brutally transactional, every constituent party will try to push its regional, caste/voter base special interests, .... since parties in power will know their government may not last five years, they will have major incentives for, shall we say, using the system to enhance their capital base." In short, a completely unstable corrupt government. Leaders of opposition parties are gathering in Kolkata to support Chief Minister Mamata Banerjee's rally against the BJP. Old enemies, Akhilesh Yadav of SP and Mayawati of BSP have formed an alliance to jointly fight the BJP in UP, which has the largest number of seats in the Lok Sabha. In 2014, the SP and BSP got a total of 42.1% of votes in UP (SP 22.3% and BSP 19.8%) but because each of them "went it alone SP got 5 seats, BSP and RLD drew a blank, and BJP managed to score a whopping 71," wrote N Chowdhury. They refused to include the Congress in the alliance because Mayawati was afraid of losing Dalit votes, while disillusioned upper castes could switch to the Congress from the BJP. "Mayawati is famous for her political treachery and all this is done with a design to strengthen the party," wrote B Banerjee. The BJP depends on the personal popularity of Modi and has a formidable organisation in rural areas. The BJP is driven by its ideology but people will be voting on whether they are better off than 5 years ago. Unfortunately, politicians are motivated by self interest which means that they align their party along castes or linguistic lines and are less interested in reforms, wrote Prof S Rajagopalan. If disillusioned voters do not give the BJP/Congress combined more than 300 seats a third front could grab power, in which case "Markets will likely tank, India as a foreign investment destination will lose much of its lustre ... and, of course, it will be the middle and low income Indians who will bear the brunt". They are the people who vote these politicians to power. Everyone suffers.

Why Indians are so suspicious.

"Nobody will feel sorry for the Central Bureau of Investigation (CBI) even if the Narendra Modi government seems bent on flushing it down the chute," wrote S Gupta. "Trouble is, the CBI is now threatening to take the judiciary down with it. The question is, must the judiciary allow this to happen?" "The CBI has been a rogue organisation for years. It has played hitman for the government of the day. It has merrily misused its powers, vastly expanded by the courts, and exploited the special protection granted to it." The CBI has been in the news because of a fight between Director Alok Verma and his deputy Rakesh Asthana, which has seen each accuse the other of corruption. Verma was appointed director by the present government in January 2017. Asthana was appointed additional director in December 2016 and promoted to the rank of special director in October 2017 over the objections of Verma, who accused him of being corrupt. "On October 4, 2018, Lawyer Prashant Bhushan and former Union minister Arun Shourie met CBI director Alok Verma, demanding a probe into alleged corruption in the Rafale aircraft deal and offset contract." Although a minister in a previous BJP government under Prime Minister Vajpayee, Shourie has been highly critical of the present Prime Minister Modi, while Bhushan is well known for his activism, prompting the former Chief Justice of the Supreme Court Dipak Misra to remark, "He is not worth contempt." Not taking any chances the government transferred both Verma and Asthana out of the CBI as well as two aides of Verma. Verma, who was superannuated in July 2017, refused to join his new post and resigned. Justice Sikri, who sided with the government in removing Verma, refused an offer by the government for a post-retirement assignment at the Commonwealth Secretariat Arbitral Tribunal, to counter rumors of a quid pro quo. Why does the CBI chief matter so much? Because, "while the CBI can rarely get evidence to pass judicial scrutiny, its institutional genius lies in destroying lives and reputations through leaks and insinuations." "This is why the Modi government was so frightened of risking the CBI with an unfriendly boss like Alok Verma even for a day." Three CBI chiefs were apparently corrupted by meat exporter Moin Qureshi, accused of money laundering and bribing politicians and officials. Judges are rewarded with lucrative sinecures after retirement and, since the government is the biggest litigant, creates doubt in their impartiality, wrote Prof S Rajagopalan.. No wonder, India's red-corner notices to the Interpol are treated with suspicion. Politicians, police, judges, who do we trust?

The faster you grow, the more the attention.

"Well before election dates have been announced, the PM has embarked on a 100 day campaign that is expected to touch 20 states. If Modi was a primary reason BJP won a majority in 2014, the question is how effective will he be this time around?" asked R Sen. Although opinion polls are not reliable they show a general trend. "The respected Pew Global Attitudes Survey in early 2017" found that "Nearly 90% of respondents held a favorable view of Modi". However, Modi's popularity has slipped from 44% as the voters' choice as prime minister in mid-2017, to 34% in mid-2018, while Rahul Gandhi has risen from "an abysmal 9% in 2017 to 24% in 2018". Prof M Rangarajan draws on history to show how popularity of leaders and parties change with time. "More central is the question of questions. Are you better off than five years ago, and if not, why not?" he asks. What is alarming for Modi is that in the recent elections in Rajasthan, Madhya Pradesh and Chhattisgarh, "Of the 29 constituencies where Modi held rallies in the three states BJP won in only a third." In fact, there was an erosion of votes in the areas where Modi campaigned. On the other hand, "Of the 42 constituencies where Rahul (Gandhi) held rallies, Congress won nearly in half," with a "significant vote swing in favour of Congress and away from BJP". The same trend is visible on the internet. While Modi was far ahead of Gandhi in 2014 the gap has narrowed significantly, although he is still far ahead on social media. In an attempt to mollify his base Modi enacted a new law reserving 10% of government jobs and seats in higher education for upper caste Hindus. Reservation may soon be extended to the private sector. According to the criteria of the new law 99% of the rural population qualify for reservation, which makes it meaningless. "India's new foreign investment restrictions for its e-commerce sector, which includes giants such as Amazon.com and Walmart-owned Flipkart could reduce online sales by $46 billion by 2022, according to a draft analysis from global consultants PwC seen by Reuters." Jobs will be fewer by 1.1 million and tax collection will be short by $6 billion. The BJP wants the government to increase handouts, even if the fiscal deficit breaches its budget target of 3.3%. "And what's the so sacrosanct issue about keeping the fiscal deficit at less than 3.5 percent?" asked a BJP spokesperson. Fiscal deficit is already 114% of budget forecast. The Reserve Bank has relaxed borrowing restrictions from abroad, which means in dollars. While trying to win by whatever means necessary, Modi should remember that credit rating agencies are also watching. A downgrade will cause the rupee to fall and interest on foreign loans to rise, causing mayhem. The faster the economy grows the more attention it attracts. Problem.

Will aggression cover its weakness?

"China's exports slumped in December as a rush of orders to beat expected tariffs showed signs of fading and as domestic buyers succumbed to a worsening economic outlook," wrote Xiaoqing Pi and E Curran. Exports fell 4.4% compared to a year earlier, while imports fell by 7.6%, a sign of "softening demand at home". "At the same time, China's overall trade surplus with the US hit a record in 2018, underscoring the political imperative to cut a deal ahead of a 1 March deadline after which US President Donald Trump has threatened to impose additional tariffs on Chinese goods." The global economy is weakening, reducing demand for its exports. "The headwinds from trade comes at a time when policy makers are already grappling with decelerating consumption, falling factory sentiment, fears of producer deflation and worsening employment outlook." On 1 December, Meng Wanzhou of Huawei was arrested in Canada on a request by the US. China immediately arrested two Canadian citizens working there, one of whom has been sentenced to death for drug related charges. On 19 December, Trump signed a law that bans US visas for Chinese officials who do not permit Americans to visit Tibet," wrote S Deb. "On 31 December, Trump signed another law, the Asia Reassurance Initiative Act, which goes after China's quasi-imperial ambitions in the Indo-Pacific region." China always responds with threats. "We do not renounce the use of force and reserve the option to use all necessary measures" to reunite Taiwan with the mainland, Jinping said in a speech. Yesterday, a senior Chinese military official warned the US Navy that China will defend its claim on Taiwan "at any cost". Last month, the deputy head of a Chinese military academy told an audience that sinking a couple of US aircraft carriers will make the US run away because, "What the US fears most is taking casualties." China's aggression abroad and repression at home shows the limits of the autocratic one-party system, wrote Prof B Chellaney. "Its overriding focus on domestic order explains one unusual but ominous fact: China's budget for internal security -- now officially at $196 billion -- is larger than even its official military budget, which has grown rapidly to eclipse the defence spending of all other powers except the US." China needs rapid economic growth to escape the 'middle income trap' but "China's president has persistently downplayed the benefits of the private sector and favored sclerotic state-owned national champions instead", wrote D Fickling. The trade war is totally Trump's fault and US consumers will suffer, wrote two Chinese economists. Foreigners monitor every word of Xi Jinping. So, bromides are unlikely to help.

Why is consumption dropping if economy is growing?

"Stage set for RBI rate cut as retail inflation falls to 2.19%," is a bold headline today. Consumer price inflation (CPI) is at an 18-month low, falling from 2.33% in November. Wholesale price inflation (WPI) has fallen from 4.64% in November to 3.58% in December, lowest for 8 months. The price of India's basket of crude oil has declined from $65 per barrel to $57.8 per barrel, while the rupee has strengthened from 71.79 to 70.72 to the dollar. Excellent news, but worry for the government. Because food prices continue to decline, although at a slower rate. Food prices declined 0.07% in December, as against 3.31% in November, while vegetable prices fell by 17.55% in December, compared to 26.98% in November. With agriculture providing employment to 45% of workers, it provided just 15.2% of GDP in 2016-17, wrote Prof A Panagariya. Not surprising then, that 76% of 5,000 farm households across 18 states said that they wanted to quit farming in favor of other jobs. With general elections in May a sharp decline in income for half the population is very bad news for the ruling party. The Reserve Bank could reduce interest rate a little, said Prof K Basu. That is almost a certainty with the appointment of a retired IAS officer, with no knowledge of macroeconomics, as the Governor of the Reserve Bank. The problem is that core inflation, which ignores volatile food and fuel prices, is still around 5.5%, while healthcare inflation was at 9% and education inflation was 8.3%. "A fast-growing emerging economy like India can ill-afford such a low inflation rate. If high inflation acts as a threat to growth, ultra low inflation does the same," wrote A Iyer. With the repo rate at 6.5% low inflation means that the real interest rate is at 4.31%, while compared to yields of 6.83% on one year Treasury bills it stands at 4.64%. So scope for cutting interest rate. But will it help? Purchasing Managers' Index for manufacturing fell to 53.2 in December from 54 in November. New investments fell to a 14-year low in the December quarter, with private sector investments falling by 64%, compared to the same quarter in 2017. Growth in services sector was slightly softer with increasing employment. So, if the economy is growing at over 7% why are prices falling? Is it because consumption is falling? If private expenditure is falling the government cannot take up the slack because the government has already spent 114.8% of the full year fiscal deficit and collections under the Goods and Services Tax are falling, which could be because of reduce private consumption. The government has to declare handouts in the interim budget so the only solution is to raid the RBI. Appointing a civil servant as governor of RBI might turn out to be a masterstroke. Loot and spend.

The strong have taken advantage of globalization.

"Consider the Trump administration's reporting on poverty in the US. It seems that the baseline numbers produced by the US Census Bureau are (so far) intact, but there has been a flurry of misinterpretations that go beyond the usual partisan spin," wrote Prof Angus Deaton. The problem, according to Deaton, is that "traditional metrics, which measure income," have been abandoned in favor of consumption. "Consumption is arguably (but only arguably) superior to income as a welfare measure, but it is unclear how many of the very poor participate in a burdensome and intrusive survey that has a 40% non-response rate." A report by the United Nations Special Rapporteur, at the invitation of the US government, "includes tent camps on the streets of Los Angeles, yards awash in untreated sewage because local authorities refuse to supply services, and the widespread use of fines and confiscations levied on poor people that many towns and cities are using to finance themselves." According to the Census Bureau 39.7 million were poor in the US in 2017, which is 12.3% of the population, wrote Prof S Pressman. "In the US, child poverty rates surpassed 20 percent for several decades", when $1 spent on reducing child poverty yields $7 in the future. This is all the more galling because, "In the most unequal of all advanced economies, millions of struggling American families and future generations are paying for tax cuts for billionaires," wrote Prof J Stiglitz. A real definition of poverty should not depend only on wealth but also include "how secure people feel -- in their homes, their health, and their jobs", wrote N Smith. By this measure poverty level will be much higher. With a nominal GDP of $20.658 trillion and per capita GDP of $56,824 how can there be so much poverty in the US? Because, according to the United Nations Conference on Trade and Development (UNCTAD), decades of globalization have made the global economy resemble that before World War I, with "unrestrained monopoly power, and financial speculation, leading to obscene inequality and frequent booms and busts". So, not Trump's fault after all. Prof Thomas Piketty became famous for his book "Capital in the Twenty-first Century" which highlighted concentration of wealth in the top 1%, which is then passed down as inheritance. Returns on capital are much greater than returns on education because wages are not increasing, so there should be higher taxes on profits, wrote Prof P Krugman. Increasing productivity with higher rewards is more inclusive than redistribution by higher taxes on the rich, wrote Prof R Hausmann. If globalization is responsible then Trump is surely right to be protectionist. That will be completely unacceptable to liberals.

What is the point of reserving no jobs?

"Today, we give farmers 2.2 trillion rupees in subsidies, fertilisers, power, crop insurance, seeds, credit, irrigation and a myriad other items," wrote Prof A Panagariya. "We have a massive programme of procurement of grains at above market prices; we give highly subsidised food grains to 75% of rural population; and we offer guaranteed employment for 100 days to one adult in each rural household." Farmers have been demanding waiver of loans from banks. According to their rough calculations "it will cost anywhere between Rs 4 to 5 lakh crore", wrote Prof A Gulati and P Terway. If this is added to credit from scheduled commercial banks and Primary Agricultural Societies then "the total outstanding credit to agricultural currently is likely to be around Rs 12 -13 lakh crore". "We run schemes that provide houses and LPG connections to rural poor and free primary education and free primary health care to rural households. Finally, substantial resources have been invested in bringing roads, digital connectivity and electricity to rural areas." "Yet, after seven decades of development effort, stories of widespread farmer distress remain a daily feature of our television programmes." Why? Because, "the share of agriculture in employment in India remains stubbornly high at around 45%" whereas "employment share of agriculture stands at 5% in South Korea and Taiwan, 3.5% in Japan, 3% in France, 2% in the United States, and 1% in the United Kingdom". The only solution is to create jobs away from agriculture to give farmers a steady source of income. But, how? Chinese mobile phones have taken over the Indian smartphone market because they offer more features at lower prices. While our pharmaceutical companies are experts are reverse engineering newer drugs and selling them at much lower costs we import 60% of all raw ingredients from China. The government is pressurizing automobile companies to stop importing high-grade steel from Japan and South Korea for use in the manufacture of auto components. Since such quality steel is not produced in India auto companies may stop production in India and start importing entire components from abroad. Auto components are one of the few manufactured products that we export. It is too late to create jobs so the government has passed a law reserving 10% of jobs and seats in higher education for poorer sections of upper castes. This has been done to get votes of upper caste Hindus in the coming general elections in May. However, this law is a bluff because total number of government jobs is shrinking and number of institutions offering high quality education is small. If all jobs are reserved for different sections of society what jobs will farmers get? Dish handouts with taxpayer money. Why get a headache?

How can peace advance unless the inertia is broken?

"It is no surprise that the Middle East has been particularly vulnerable to the unsettling effects of the Trump doctrine," wrote Shlomo Ben-Ami. "After all, the timid policies of Trump's immediate predecessor, Barack Obama, significantly exacerbated the region's dysfunction, opening the way for Trump to introduce what can only be described as mayhem." Like what? Trump recognized Jerusalem as the capital of Israel and shifted the US embassy from Tel Aviv to that city. Previous US presidents, including Clinton and Obama, supported the idea of an undivided Jerusalem but no one followed through on his talk. Trump did. People expected the Arab world to explode in fury, but nothing happened. Possibly because Arab nations are worried about Iran's expansion into Iraq and Syria and its support for Houthi rebels in Yemen. The largest Arab nations, Egypt and Saudi Arabia, have been talking to Israel secretly. After the US move Guatemala and Australia have also recognized Jerusalem as the capital of Israel. Trump also stopped US funding of United Nations Relief and Works Agency (UNRWA), "which supports five million registered Palestinian refugees". "One must be extraordinarily ignorant to believe Trump's claims that these actions amount to taking two of the thorniest issues in the Israeli-Palestinian conflict 'off the table'." Israel declared independence on 14 May 1948, more than 70 years ago. This was followed by an invasion by the Arab states of Egypt, Syria and Jordan, along with forces from Iraq. 750,000 Palestinians fled or were driven from their homes, which is stilled mourned as 'Al Nakba', which means 'the Catastrophe'. The number has increased to over 5 million, recognized as refugees by the UN, one third of which still live in refugee camps. They claim the right to return to their ancestral properties. That is completely unacceptable to the Israelis because Israel has a population of around 9 million, of which nearly 21% are Arabs. Add another 5 million Palestinians and the Jews will be outnumbered. In 1967, Israel trounced Egypt, Syria and Jordan in the Six Day War, occupying the West Bank, the Golan Heights and the Sinai. In 1978, US President Jimmy Carter brokered a peace treaty between Anwar el-Sadat and Menachem Begin at Camp David, which resulted in the return of Sinai to Egypt. In 1981, Sadat was assassinated by the Muslim Brotherhood. In 1993, Yitzhak Rabin and Yasser Arafat signed an accord, for which they awarded the Nobel Peace Prize. Rabin was shot dead by a right wing Israeli law student in 1995. Arafat died in 2004. Palestinians suspect he was murdered. "Under Trump, the US has established itself as a deeply disruptive force ....," says Ben-Ami. That's exactly what the Middle East needs. Break the inertia.

Children are the rats in rat hole mines. The state gets taxes.

"It's nearly a month since 15 workers were trapped by the flooding of a rathole coal mine in Meghalaya on 13 December. To find any of them alive now would be miraculous," wrote S Chakravarti. What is rathole mining? It is system of mining coal wherein narrow tunnels, usually 3-4 feet wide, are dug into the side of the mountain to reach the coal seam. In Meghalaya the coal seam is not more than 2 meters wide which makes open-cast mining or digging of larger tunnels, with support for the roof, unprofitable. The locals have developed this system of mining coal to increase their income. Children are more suitable to access such narrow tunnels and regularly die if the mines flood. The practice was banned in 2014 by the National Green Tribunal but the state government appealed to the Supreme Court against the ban because it "sustains several of Maghalaya's millionaires -- and the state's economy and politics". In June 2018, 12 boys and their football coach went missing inside a cave in Thailand when heavy rains flooded the opening of the cave. Thailand mounted an enormous rescue operation with huge pumps pumping water round the clock, while experienced divers went searching inside. The boys were found 4 km inside the cave and after 2 weeks of effort all of them were rescued unharmed. One Thai Navy diver died when his oxygen ran out. Here, "Meghalaya's government came to a standstill for 11 days after 22 December over Christmas and New Year Holidays". On 24 December  pumps were shut down. "As everyone in the government celebrated Christmas, we stared at the shafts and at each other waiting for better pumps to arrive," said an official of the National Disaster Response Force (NDRF). "Additional Chief Secretary PW Ingty, the official in charge of the mission, went on leave." In 2012, the National Commission for Protection of Child Rights (NCPCR) visited the area and submitted a report on how to improve safety, but in the present disaster an appeal has been filed in the Supreme Court to order a rescue operation. "The regulation must be such that the economic condition should not be affected," said Chief Minister Conrad Sangma, an alumnus of Wharton and London's Imperial College. One manual scavenger dies every 15 days. If 15 have died in flooding of a mine in Meghalaya, nearly 500 people died in floods in Kerala in August last year. Floods were caused by deforestation of the Western Ghats, ignoring a report on the dangers in 2011, and because water in reservoirs were not released until dams were about to overflow. Human life is cheap in India. Only the VIPs matter, as Prof R Thakur discovered. The state collects taxes on illegal activities and then distributes handouts to the poor. The grateful poor vote for them.

Is fascism natural to Europe?

"Throughout 2018, analogies between today and the 1930s became commonplace," wrote M Burleigh. He thinks that fascism is gaining a foothold as "there certainly does seem to be a menacing odour of racism, violence, and despotic intrigue in the air". "The biggest danger that we face is not a straightforward revival of fascism, but a gradual shift in traditional conservatism toward the extreme nationalist/populist right." There has been a great metamorphosis in Central Europe as "Hungary and Poland have changed from promising models of liberal democracies into illiberal, conspiracy-minded majoritarian regimes," wrote I Krastev. Under communism these countries wanted to "imitate the West" but when they joined the EU these "post-communist countries were compelled to adopt 20,000 new laws and regulations -- none of which were really debated in their parliaments -- to meet the requirements for accession to the EU". This gave them a feeling of inferiority, which was compounded by depopulation, as young people migrated to richer countries, looking for a better life. "Between 1989 and 2017, for example, Latvia, Lithuania, and Bulgaria haemorrhaged 27%, 23%, and 21% of their populations respectively. Similarly, 3.4 million Romanians -- the vast majority of them younger than 40 -- have left their country since 2007." "We Europeans have a rich tradition of ignoring premonitions of ruin at our own peril," wrote President of the European Commission Jean-Claude Juncker. "By 2060, no single European country will have more than 1% of the world's population." With a total fertility rate of 1.6, Europe's population is ageing and will decline. Italy and Spain have a fertility rate of 1.34, well below 2.31, which is taken to be the rate at which population growth is neutral. So European nations must "continue to to pool and share their national sovereignty, with the goal of establishing a stronger common sovereignty for all. Cooperation, after all, is in our DNA." Is it? Fact is, Europeans have been fighting each other for thousands of years, still justify the barbaric practice of colonialism, and grew wealthy by looting every penny they could find, including historical artifacts. "First of all, we must guarantee the highest standards inside our Union, to keep our own societies open," said High Representative for Foreign Affairs and Vice President of the European Commission Frederica Mogherini. On Ukraine, "We have mobilized the biggest-ever assistance package from the EU to any country -- almost 14 billion Euros ($16 billion) since 2014." Pity, Europe's generosity did not extend to Greece, which will pay for enforced austerity for decades of come. "It is time for liberals to stop twittering away about fascism and tyranny, and start exposing the con artists and hucksters who have captured our politics,"fulminated Burleigh. Perhaps, liberals will be responsible if Europe falls apart. After all, they have been in control since World War II. And, Fascism, Nazism and Marxism, all originated in Europe.

The Gujarat Model will be returned to Gujarat, we hope.

"Close relations between a robust business community and the state politicians, as well as the bureaucracy, crystallized at an early date in Gujarat," wrote Prof C Jaffrelot. "Modi's economic policy in 2000s gave a new dimension to this business friendliness. What has been publicized by the longest-serving chief minister (2001-14) as the 'Gujarat model' benefited first the large corporate houses." "It targeted not only the 'prestigious units' (Rs 3 billion and more since 1991), but even more the 'megaprojects' that implied Rs 10 billion and more investment in projects, and direct employment of two thousand persons -- hence a ratio of Rs 500,000 per job." So, how successful was this model? In 2017, only 53.8% of households had a TV, only 8.8% of people had a computer, 44.6% of children under 5 were suffering from malnutrition and a poor sex ratio of 886 girls to 1000 boys at birth, wrote R Nair. "Gujarat spends less than 2% of its income on education (the norm is 5-6%) with the result that 45% workers in Gujarat are illiterate or studied up to the fifth standard with the quality of education very poor. The quality of higher education is also resulting in the rising number of unemployed engineers and science graduates," wrote Prof I Hirway. High level of rural poverty was confirmed when the present Chief Minister waived Rs 6.25 billion of electricity bills of rural users. Modi organized 'Vibrant Gujarat' meetings to draw investment to the state. "While Modi had not attracted many foreign investors (only 4.5% of FDI went to the state from 2000 to 2012, as against 32.8% in Maharashtra, 19% in Delhi, 5.6% in Karnataka, 5.2% in Tamil Nadu, and 4% Andhra Pradesh), he has been very popular among Indian businessmen." Because he allotted land, forcibly acquired from farmers, for industries at throwaway prices. Those who benefited from his friendship became billionaires, and were naturally grateful. Concentrating on mega projects drew funds away from micro, small, and medium enterprises (MSMEs) with the result that "Between 2004 and 2014, 60,000 MSMEs shut down in Gujarat." "According to the report of the National Sample Survey of 2011, Gujarat has some of the lowest average daily wages for casual labourers in the urban area." Modi's policies have brought the 'Gujarat Model' to the nation. Although the economy is growing at over 7% India is not creating enough jobs, said former Governor of the Reserve Bank Raghuram Rajan. Modi's desperation to win general elections in May is going to prove too costly for the country, wrote M Sharma. Prescient, because the RBI is to pay a ransom of Rs 400 billion to spend on handouts to the vote bank. The Gujarat Model is a one way ticket to bankruptcy.