What is China hiding by its lockdown?

In December, China reported the first cases of humans infected with a new type of coronavirus in Wuhan  city, which has since been named Novel coronavirus or 2019-nCoV. Till today, about 10,000 cases and 213 deaths have been confirmed. Coronaviruses cause potentially deadly diseases in mammals and birds and infect humans when they mutate. Previous epidemics were called severe acute respiratory syndrome, or SARS, and Middle East respiratory syndrome, or MERS. Although the source has never been confirmed the SARS virus was thought to originate in civets which are sold in China's exotic animal markets to satisfy Chinese inclination to eat every living thing on the planet. China banned sale of live animals at Wuhan. "The move comes after the Huanan Seafood Market in Wuhan was shuttered on January 1, after it was believed to be the starting point for the outbreak of 2019-nCoV, also known as the Wuhan virus. Before its closure, the market was selling an array of unusual animals for food, including young wolves and civet cats, which experts believe could play a part in the spread of disease." Live baby mice are considered a delicacy in China and the dish is called 'Three Squeaks' because the mouse squeaks three times before dying. It is speculated that this particular virus originated in bats, which are immune to a large number of viruses, or in snakes which eat bats, because the Chinese eat both bats and snakes. China moved swiftly to contain the outbreak by putting Wuhan in quarantine and then extended the lockdown to at least 16 other cities. China is also constructing prefabricated hospitals within days at Wuhan to house thousands of patients. The World Health Organisation (WHO) praised China's response to the outbreak and did not declare a global emergency for as long as possible, to please China. It has since declared an international health emergency almost apologetically while lauding China's "extraordinary measures".  Chinese President Xi Jinping called it a "devil" virus and expressed confidence in defeating it. But Communists do not believe in religion, or the devil. To stop celebration of Christmas Chinese police go around breaking churches and arresting priests. Over a million Muslim Uyghurs are in prison camps where they are being indoctrinated to forget their religion and their language. Half a million Uyghur children have been forcibly separated from parents and held in state-run schools to teach them a new identity. Except Pakistan, China is feared and hated by its neighbors. Former Philippines President Aquino compared China to Nazi Germany and China is India's mortal enemy. So are the "extraordinary measure" adopted by China to protect the rest of the world by containing it within the country's borders? Knowing China's conduct in the recent past that is impossible to believe. The lockdown is to hide the true extent of the epidemic. The epidemic must have infected millions within China and killed tens of thousands prompting Xi to call it a "devil" virus. The lockdown is to prevent foreign journalists from entering the affected areas and recording the truth. It is time the world accepts that new epidemics will continue to originate in China because of their eating habits and shun the country completely. There will be no profits if people are wiped out. Greed for food, greed for money. Bad.

It's a game of numbers.

An editorial in the Mint feels that "income tax payers are a hapless minority in India. Within this class is a sub-class of the salaried, the most oppressed." Within this sub-class is the sub-sub-class of officers of the Indian Administrative Service (IAS) who enjoy royal perks and power in addition to enormous salaries. They get free healthcare for life and their families receive pensions after lifelong pensions for officers. In the 2018-19 budget speech the then Finance Minister revealed that "salary earners shelled out an average income tax of Rs 76,306 in 2017-19, three times the non-salaried taxpayer's mean outgo of Rs 25,753". Average figures mean nothing. Salaries are fixed and paid even when the employee is off sick or on vacation whereas the self-employed earn nothing when they are not working. The number of people filing income tax returns in 2018-19 increased 16% to 6.33 crore (63.3 million) but the number of income tax payers jumped 14% to 84.5 million. This is because of tax deduction at source (TDS), which is tax deducted by banks on interest earned on term deposits and taxes on dividends deducted before payment.  Many did not file tax returns possibly because these are old or sick people unable to claim refund on their taxes. Less than 3% of Indians paid income tax in assessment year (AY) 2018-19, wrote Bhaskaran and Sharma. They make the same lazy assumption that, "The government, therefore, needs to focus on bringing more high income earners into the tax net." Meaning that a large number of Indians are managing to hide large incomes. How is that possible when tax officials resort to extreme intimidation and harassment to meet targets? A target of 17.5% growth in collection of taxes has been set on tax officials despite nominal GDP growth expected to be 7.53%. Not only are tax officials ordered to meet targets but "Appellate commissioners are also involved in the effort to meet tax collection targets," wrote Gautam Nayak. "The worst part is that targets are set for each commissioner to launch prosecution against taxpayers and then being encouraged to opt for compounding of offences." Extortion and blackmail of taxpayers. Farmers pay no income tax even if they earn in millions, wrote Rohit Saran. Private sector taxpayers get no services for the taxes they pay. Indirect taxes are no better. The government has blocked Rs 400 billion on GST refunds for mismatch with filed returns. This apparently is proof of fraud. Small and medium industries in Coimbatore are dying because they have to pay GST as soon as they bill customers but receive payments after 90 days because of the slow economy. They borrow to pay tax. "Businessmen will never be sure what the next meeting of the GST council will unleash," N Rajadhyaksha. Keep taxes stable, stop tax terrorism and a portion of income tax should go to a national insurance scheme which will pay pensions and healthcare costs of income tax payers. Sadly, taxpayers are too few. They don't matter. 

Compare our average with their average.

Prime Minister Narendra Modi was elected for the first time in 2014 on a slogan of "minimum government, maximum governance", which he explained as taking quick decisions and trying to sell off some businesses. The government has earmarked 23 public sector units (PSUs) for sale but so far its record has been anemic. It raised a total of Rs 180 billion in 2019-20, when the target was Rs 1.05 trillion in the 2019 Budget. But many of the so-called sales have been pure subterfuge. For example, ONGC, a PSU, was forced to buy the government's entire stake in HPCL, another PSU, for nearly Rs 400 billion, which was shown as revenue for the government but landed ONGC with an enormous debt. The government has become a tad smaller in that the Council of Ministers has shrunk from a total of 75, including the Prime Minister, in 2017 to a total of just 63 today. The United States with an economy 10 times the size of India has 23 cabinet members, plus President Donald Trump. Salaries of ministers maybe less than those in the US but the perks, with no questions asked, would make even Trump envious. In addition, even the minister with the most insignificant portfolio gets a bungalow in the center of Delhi, called Lutyens Delhi, where one bungalow sold for Rs 4.77 billion in 2018. The area is, therefore, also known locally as 'Lootyens Delhi'. Each minister has an office with civil servants, who also have enormous salaries and perks, especially after the Seventh Pay Commission, with Dearness Allowance at 17% of basic salary and power, with permanent jobs, pensions and healthcare, for life. Compared to countries in the Organisation for Economic Co-operation and Development (OECD) and other large countries, our government is apparently very small, wrote Ajit Ranade. India has about 7 taxpayers for every 100 voters. Which is about right because 92% of Indians have wealth less than $10,000, and 92% of women and 82% of men earn less than Rs 10,000 per month. The threshold for paying income tax is Rs 250,000, which is 400% of India's per capita income, among the highest in the world. That is because Indians earn so little. About 50 million Indians still live in extreme poverty defined as earning less than $1.9 per day, about $700 in a year. In Britain, with a comparable GDP at $2.8 trillion, income tax starts at 12,500 pounds (GBP) per year, which converts to Rs 1.1 million per year, for a single person. This is 50% of average salary of full time workers at 35,423 GBP. India has a "bloated bureaucracy" which costs over Rs 2.7 trillion in wages, pensions and establishment expenditure, wrote Omkar Goswami. Add in subsidies and interest payment on previous debt and revenue expenditure will be 74% of entire government spending. The government appears small to Ranade because the pot is small. Because people have nothing. It is all relative.

Depends on the point of view.

A very strong supporter of Prime Minister Narendra Modi, SS Bhalla has written how his own study of nights lights in India, consumption of cereals and meat and sale of 75% of consumer goods shows that the gross domestic product grew strongly during Modi's tenure since 2014. He blames the sharp slowdown of growth since 2018 "to the ultra-tight monetary policy followed by Urjit Patel-Viral Acharya duo and the NBFC (non-banking financial companies)". Easy to blame the previous Governor of the Reserve Bank (RBI) who resigned, but Bhalla does not blame Patel's successor, who cut interest rate by 5.15% in 2019, for retail inflation jumping to 7.35% in December. Bhalla was a member of the Prime Minister's Economic Advisory Council and could be embarrassed by his own advice. The NBFC crisis started when IL&FS, which had central and state government officials on its board, collapsed, wrote G Haldea. This led to a severe liquidity crisis for the entire NBFC sector as banks refused to lend money to them. "It is easy for armchair analysts, many of whom seem to be dexterous to hold forth on any topic, leave alone the Union budget," wrote another supporter A Padmanabhan. He then decides to "hold forth" himself when he advises the Finance Minister to come clean on the economy and announce that "there is no magic bullet and the country has to dig in for the long haul". This apparently will improve the government's credibility which was eroded completely when two non-official members of the National Statistical Commission resigned because the government suppressed its report on unemployment. Trouble is that the truth will collapse the stock market which is in record territory in expectation of good news in the budget. With market capitalization wiped out, lucrative electoral bonds may also dry up. The GDP cannot grow unless productivity of agriculture, which employs 44% of the workforce but accounts for only 14-15% of GDP, is improved, said Prof Ashok Gulati. Money for rural development "is going in terms of subsidies, in terms of more of unproductive subsidies or even distorting subsidies like fertilizer subsidy or MGNREGA which is a fall-back arrangement, not a sort of business model on which sustainable income can be generated". He wants subsidies, including food subsidy, to be rationalized and an increase in agricultural research which is "peanuts" at Rs 70 billion. Incendiary stuff. It is easy to throw taxpayer money on subsidies but stopping them could be electoral suicide. Meanwhile, farmers are not getting insurance money owed to them after paying premiums. "In India, there is no evidence that good economics can win you elections," wrote Shankar Sharma. Hence, Modi is right to focus on politics. Unemployment is rising with the labor force participation rate (LFPR) falling among young people, wrote Vivek Kaul. The demographic dividend is turning into a nightmare. That could lose the next election.  

The Budget itch needs a cure.

With the annual budget to be presented at the end of the week speculation on its contents has reached feverish levels. "Tax collections in the current fiscal may fall short of targets by Rs 2 lakh crore (Rs 2 trillion) on a faltering economy, leaving very little room for Finance Minister Nirmala Sitharaman for offering any meaningful reduction in personal income tax rates." Direct tax collection will be short by Rs 1.5 trillion and indirect taxes by Rs 500 billion, so taxpayers can forget any reduction in tax rates. But, already an increase in handouts is being predicted. "The Center is proposing a major revamp of the National Social Assistance Programme (NSAP) that could raise pension payouts for senior citizens, widows and those with disabilities." Pensions will be raised to Rs 1,000 from Rs 500 per month for those older than 80 years of age and to Rs 500 for those up to 79 years of age. This only applies to those below the poverty line (BPL) but even then these paltry amounts will barely pay for food or medicines, but not both, but it will add to spending. Revenue expenditure, which is comprised of interest payments on previous debt, salaries and pensions of central government employees and subsidies, will be Rs 3.80 trillion more than revenue receipts, wrote Omkar Goswami. Rs 2.70 trillion will go on salaries and pensions and at Rs 8.29 billion "the cost of maintaining our Cabinet Secretariat in 2019-20 will be only 4% less than running Dadra and Nagar Haveli". To raise money, "India plans to increase import duties on more than 50 items, including electronics, electrical goods, chemicals and handicrafts, targeting $56 billion worth of imports from China and elsewhere, officials and industry sources said." The government might be gambling that since we export so little, it will not lose much if our trading partners levy retaliatory tariffs on our exports. Our trade deficit was an eye-watering $176 billion in 2018-19 so a fall in imports could be more than the fall in exports. In the last budget personal income taxes were increased so expecting a reduction makes little sense. A 10% long term capital gains tax on the sale of shares was added to securities transaction tax (STT) in 2018, now there maybe a reduction in that tax. The government needs to find more revenue, but with the nominal growth of the gross domestic product (GDP) falling to 7%, tax collections are bound to fall. If the Finance Minister predicts growth in nominal GDP at higher than 10% "it can only mean that either she is misleading us, or that the government is looking to increase tax rates substantially in the course of the year. or that the tax harassment of business and individuals is only going to intensify in an effort to increase tax collections, or a combination of these," wrote Praveen Chakravarty. Constant changes in tax laws, along with tax terrorism, means that companies and individuals cannot plan for the long term. If the government really wants the economy to improve, with increased consumer spending and higher private sector investments, tax rates and rules have to remain constant, wrote Lubna Kably. Get rid of the itch to change things. It creates confusion, not wealth.

Senator Warren could do with Section 124A.

"US Sen. Elizabeth Warren (D-MA), a 2020 presidential candidate, wants to cancel student loan debt for more than 95% of borrowers, and would entirely cancel student loan debt for more than 75% of Americans with student loan debt," wrote Zack Friedman. "Now, she says she would institute student loan forgiveness without Congress." Warren argues that under the Higher Education Act of 1965 she does not need approval of the Congress to forgive student loans worth $1.6 trillion. Strange a candidate of the Democratic Party proposes to spend $1.6 trillion to win her election when her party would not approve a paltry $5 billion to keep out illegal immigrants and drug smugglers. Warren was confronted by a man who had financed his daughter's education and wanted to know if he will get his money back. "My daughter is getting out of school. I've saved all my money. She doesn't have any student loans. Am I going to get my money back?" he asked. "Of course, not," Warren answered without hesitation. "So you are going to pay for people who didn't save any money and those of us who did the right thing get screwed?" the father pressed. Warren is accused of buying votes of debtors. In India, the ruling party thinks it has a right to distribute handouts to win elections with no accountability. No Indian will dare to question a politician like the American man questioned Sen Warren. He will be immediately arrested under the law of Sedition. "Sedition was made an offence under the Indian Penal Code of 1860 which was drafted by (British Whig politician) Thomas Macaulay," said lawyer and writer Suhrith Pathasarathy. "It was unquestionably a weapon in the hands of the colonial government." Macaulay thought Indians are uneducated idiots. "I am quite ready to take the Oriental learning at the valuation of the Orientalists themselves. I have never found one among them who could deny that a single shelf of a good European library was worth the whole native literature of India and Arabia," he said. Since the British were a superior race they could treat Indians ruthlessly for the crime of sedition. "There is no proposal to scrap the provision under the IPC dealing with the offence of sedition. There is a need to retain the provision to combat anti-national, secessionist and terrorist elements," Minister of State for Home Affairs Nityanand Rai. BJP won the general election in 2019 by making sure handouts reached their intended targets, wrote Prof Ila Patnaik. When politicians can do whatever they like people think that corruption is increasing. Today is Republic Day when politicians and their families, dressed in their fineries, will be seated on VIP seats while the armed forces and assorted citizens entertain them by marching past while paying homage. Seventy two years after so-called independence we are policed by a 149 year law. Happy Republic Day.

When the roots are rotten.

Poverty has risen during the first term of Prime Minister Narendra Modi's administration "based largely on reduction in average per capita expenditure", wrote Kukarni and Gaiha. However, since this is an average figure, it does not give a true picture of the depth of poverty which is provided by income inequality. "India's richest 1 percent hold more than four times the wealth held by 953 million people who make up for the bottom 70 percent of the country's population, while the total wealth of all Indian billionaires is more than the full year budget, a new sturdy said on Saturday." "According to Global Wealth Report 2018, since 2000, wealth in India has grown at 9.2% a year, faster than the global average of 6% even after taking into account population growth of 2.2% annually." But, this rise in wealth is because "market capitalisation rose by close to 30%, house prices by about 10%, and the rupee 4% against the dollar", while "92% of India's adult population has wealth below $10,000". Wealth in stocks and real estate do not create jobs for the poor. Jeff Bezos is the richest man in the world because he owns 16% of Amazon whose stock price has increased 97,000% since its initial public offering (IPO) on 15 May 1997. Amazon employs near 700,000 employees and its cloud business is worth $18 billion. "Last fiscal, average annual remuneration of a CEO of a Nifty 50 company stood at 249 times more than the median remuneration of the company's employees according to data from nseinfobase.com." Figures are misleading. This government has jacked up fees of IITs to Rs 200,000 per year, a jump of 900%, and fees for IIM have skyrocketed to Rs 2.2 million per year, as a kind of advance tax because these people are expected to earn big salaries. On the other hand, unemployment among ordinary graduates has risen to over 13%, so many will be thankful to work for any salary. The answer is "inclusive and environmentally sustainable growth" which is a picture of "bottom-up growth and mass entrepreneurship", wrote Arun Maira. The government has a multitude of schemes from rural employment to right to education, skill development to loans for setting up new business and health insurance to pensions. Modi has added 25 schemes to pre-existing ones. The whole population, apart from taxpayers, have been included already. The answer is education. "Net primary enrolment is now over 92% and secondary enrolment is also around 75%. However, scant attention was paid to learning outcomes," wrote Sudipto Mundle. "At least 25% of school children in the four-eight age group do not have age appropriate cognitive and numeracy skills," according to a report by ASER. Children are given excessive marks. "Marks are inflated via setting easy exams, asking factual recall questions, liberal marking schemes which give 100% marks for pre-specified keywords and wholesale raising of marks in the name of 'moderation'," wrote Geeta Kingdon. When the roots are rotten the tree will fall.

It's going to be more of the same.

"Calls for ramping up the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) are growing louder ahead of the upcoming budget, with rural distress deepening across India and private consumption growing anemically," wrote Alexander and Kwatra. "In theory, MGNREGS should boost wages by directly providing paid rural employment to rural households and by providing greater competition for rural wage-earning activities." Which means that the scheme acts as a minimum wage, thus pushing up wages and increasing consumption across rural areas. "Between 2011-12 and 2017-18, earnings of regular workers declined in both rural and urban areas," wrote Prof Himanshu. No action to improve the economy will succeed "in the absence of public expenditure-led demand injection, which must be undertaken even if it means breaching the Center's fiscal deficit target". The government finances fiscal deficit by borrowing from the market by issuing bonds, on which it pays interest. The higher the borrowing the higher the interest the government has to pay so the Reserve Bank (RBI) has resorted to 'Operation Twist', buying long-term bonds while selling short-term ones, to bring down bond yields. Unfortunately, the jump in retail inflation in December has raised bond yields despite Operation Twist, wrote Aparna Iyer. Since borrowing cost for private companies have not come down the RBI needs to continue with Twist, thinks Iyer, as increased borrowing by the government raises the cost of borrowing for everyone, "The key to macro-economic stability, therefore, is to keep the fiscal deficit of government borrowing within prudent limits," wrote M Bhusnurmath. But, "People are not spending as much money on buying things as they used to, given the lack of confidence they have in their economic future," wrote Vivek Kaul. Which means that economic growth is solely dependent on government spending. "For all these reasons, and more, now is the time for the FM (finance minister) to take courage in her hands and use the only tool at her command - fiscal easing - to provide the much-needed counter-cyclical stimulus to the economy," thinks Bhusnurmath. India has a large informal economy which "accounts for nearly half of the GDP and employs 85 percent of the labor force," wrote M Ghatak. The government should increase spending without worrying about fiscal deficit because stimulating the informal sector will increase spending, which will increase earnings of the formal sector and bring down the deficit by increasing tax collection. In addition to global problems, "India faces several structural problems that a tweak of tax rates or budgetary allocations cannot address," wrote TK Arun. With experts so confused we can expect more handouts and higher taxes. In other words, more of the same. 

The taxpayer had no more money.

"If the government's off-budget liabilities (or withheld payments) are taken into account, the central government's real fiscal deficit could end up being as high as 5.5% of gross domestic product (GDP) in the current financial year, a Mint analysis of public accounts suggests," wrote Nikita Kwatra. India's GDP is around $2.8 trillion, which is around Rs 199 trillion at Rs 71 to the dollar. At 5.5% of GDP, the fiscal deficit comes to around Rs 11 trillion. The total expenditure proposed for the Budget of 2019-20 was Rs 27,86,349 crore, or Rs 27.86 trillion, which means fiscal deficit is 39% of our budget. In the last financial year the government proposed to borrow Rs 6.24 trillion, "More than 92% of this amount would be spent on paying interest on the already running loans on the government." Interest payment is about 40% of government revenue. Increasing fiscal deficit is only going to add to interest outgo. Analysis of revenue data shows that 53% of total revenue is collected by November, so "Going by that trend, total revenue receipts this year should at best be close to Rs 18.4 trillion, falling short of budgeted Rs 19.6 trillion by Rs 1.2 trillion," wrote Kwatra. Disinvestment, or sale of assets, will fall short by "40% or about Rs 42,000 crore (Rs 420 billion)". "There are eight regional economies that are growing faster than India is at this point in time, including China, Cambodia, Indonesia, Myanmar, the Philippines, Vietnam, Bangladesh and Nepal," wrote N Rajadhyaksha. Couple of days back the International Monetary Fund (IMF) cut India's GDP growth rate further to 4.8% for this year. "There is no country that has slowed down as sharply as India since 2017, by 2.2 percentage points." "India's domestic air passenger traffic growth traffic growth slowed to 3.74% in 2019, from 18.60% in 2018, amid a subdued economy and the grounding of Jet Airways (India) Ltd." If people cannot afford to fly they cannot afford to buy new cars either. "The number of registrations of vehicles at regional transport offices (RTOs), which is a proxy for retail sales, slid 15% in December from a year ago. The decline was on already low base since the ongoing sales slowdown had already started showing its effects by December 2018." Air travel and cars attract humongous taxes, so if people are not buying these tax collections are bound to drop. Only China has a fiscal deficit higher than the 5% rate of India. "China aside, most of the other regional Asian economies that have been considered in this analysis run relatively tight budgets, ranging from the Philippines (1.1%) and Cambodia (1.3%) to Vietnam (4.4%) and Bangladesh (4.8%)," wrote Rajadhyaksha. They have more space to increase spending to stimulate growth if needed. Politicians think taxpayer money belongs to them. The taxpayer has no more. 

Forget fairy tale figures. People can't afford GST.

The government proposes to spend Rs 19.5 trillion in FY21 (financial year 2020-21) on a National Infrastructure Pipeline (NIP), even though people believe it has "no money", wrote Rajrishi Singhal. "The NIP document estimates gross domestic product (GDP) for FY20 at Rs 205.37 trillion and, yet, the government's own first advance estimates do not put it beyond Rs 147.79 trillion, short by 28%." The NIP estimates the FY21 GDP at Rs 227 trillion, "an incredible 53.6% growth over the government's own advance estimates". Right on cue, has come the report, "The government may be losing Rs 5 trillion in indirect tax revenue a year, amounting to 40% of its goods and services tax (GST) collection target, because of defaults and evasion, according to the Fifteenth Finance Commission (FFC), confirming policymakers' fears that businesses are not paying their fair share of taxes." How is that possible when the government's own site says that GST will "make compliance easy and transparent" "due to a robust IT infrastructure" and impossible to cheat because of "the seamless transfer of input tax credit from one stage to another in the chain of value addition". In the explanation provided by Cleartax, a company will get a tax refund when the next company in the chain of manufacture pays its tax. It is, therefore, in the interest of companies in early stages of manufacture to ensure that others further down the line pay their taxes so that they get their money back, failing which they should complain to tax authorities. Which makes GST foolproof, prompting Prime Minister Narendra Modi to describe it as the "Good and Simple Tax". So how did the pundits of the FFC conjure up the figure of Rs 5 trillion of tax evasion to support the government's brutal tax terrorism? Along with the FFC's fairy tale figure the International Monetary Fund (IMF) predicted India's GDP to grow by only 4.8% in 2019-20, dragging global growth down with it. "The growth of the Indian economy had been predominated by consumption inclusive of both - Private Final Consumption Expenditure (PFCE) as well as the Government Final Consumption Expenditure (GFCE)," wrote Amit Varma. PFCE growth fell to 3.1% in the June quarter compared to 7.2% in the March quarter of 2019. "Rural household consumption slumped to a seven-year low in the September quarter, in a sign that the prolonged agrarian distress and near-stagnant rural incomes have eroded demand for consumer goods, market researcher Nielsen said." Although 94% of all households now have domestic gas connections for cooking, 48% of rural households still do not use gas for cooking because of the cost of refills, which are subsidised. Businesses are not paying GST because people are not buying. They can't afford to.

Don't go to Davos. They know everything anyway.

"This year, we have chosen the theme, Power of India. We believe India reflects the power of democracy, the power of demography, leadership, opportunity and talent," said Commerce and Industry Minister Piyush Goyal when asked about attending the annual jamboree of the World Economic Forum (WEF) at Davos in Switzerland. The minister has over "50 engagements" with other leaders where he will have "several dialogues around the investment opportunity, sustainability, industry and manufacturing potential". Foreigners will of course listen politely but will they believe? "Now, stagflation looms as the economy grinds towards its slowest expansion in more than a decade and inflation spikes above the central bank target, driven by higher food prices," wrote Anirban Nag for Bloomberg. US company Walmart bought online retailer Flipkart for $16 billion last year and paid nearly Rs 80 billion in taxes to the government following which the government changed the rules of e-commerce, apparently to protect bricks-and-mortar retail stores, known as 'kirana stores'. Naturally, Walmart was most unhappy and complained to the US government, which under President Donald Trump, wants to "Make America Great Again" (MAGA). The minister snubbed Amazon CEO Jeff Bezos who offered to invest $1 billion in India. "They may have put in a billion dollars," said the minister. "But then if they make a loss of a billion dollars every year then they jolly well have to finance that billion dollars. So it's not as if they are doing a great favor to India when they invest a billion dollars." "Top executives at several multinational and Indian companies on Thursday took umbrage at commerce minister Piyush Goyal's comment..." The minister wants to know why e-commerce giants are making such huge losses. "Clearly there is an element of pricing control or predatory pricing," he feels. Strange he did not use such strong words, or any words at all, on the predatory pricing by Reliance Jio which has driven Vodfone Idea to the brink of collapse. Call charges have soared in recent months as telecom companies look to survive. "When Amazon gives you these incredible sales, it is doing you a favor, not preying on you," wrote Amit Varma. If the government stops Amazon from doing that, it is the government that is predatory. The real reason is that Washington Post, also owned by Bezos, has been critical of Prime Minister Narendra Modi and the minster feels obliged to defend the Supreme Leader. French economist Guy Sorman said that currently, both local and foreign investors are frightened and do not want to invest in India. The minister is to cut the amount of duty free goods that people can bring in when they return from foreign trips, in an effort to conserve foreign exchange. Surely, the minister can save an awful lot of foreign currency by canceling his enormously expensive trip to Davos? It's of no use anyway. They know.

Getting rid of old men may not be easy.

"India has 50% of its population below the age of 25. So there are more than 700 million Indians alive today who should expect to be alive 50 years from now," wrote Biju Dominic. On the other hand, "The average age of the Indian cabinet is around 60 years. It is very difficult to get people who are in their 70s to think of a future that is even 10 years ahead. Their common response is: 'I don't expect to be alive then, so I don't think about it.'" Even if these old men are conscious of their mortality most of them have children so they should not have to be told by 16 year old Greta Thunberg that climate change will be disaster for everyone. Getting elected is an easy way to amass enormous wealth without having to account for it. Since elected politicians control the police and investigating agencies, such as the Criminal Bureau of Investigation (CBI) which was described as a "caged parrot" by the Supreme Court, winning an election gives impunity from serious crimes. Not surprising that the highest number of criminals are in the ruling party the BJP. The BJP also has the highest number of elected politicians with charges of crimes against women. "Every politician knows that losing an election is equivalent of death," because you may end up in prison, as former Home Minister P Chidambaram discovered. India has some seriously rich people but even they cannot match the power wielded by politicians, which is why over 5,000 dollar millionaires fled from India in 2018. Those who have businesses in India are busy safeguarding their wealth by transferring it to trusts in other countries. Prime Minister Narendra Modi is unhappy about not being able to win the respect of the Lutyens Delhi crowd, but that maybe because his party the BJP is not significantly different from the Congress, which it replaced. Not only has he taken ownership of almost all policies of the Congress by changing their names, the BJP has also adopted the same corrupt tactics he accused the Congress of, wrote SA Aiyer. "At times, age imparts decay, dementia and derangement," wrote S Shanghvi, which is why Young India is protesting. Not just in India. In the US, older people are put off contemptuously by the young with the phrase "OK, Boomer", referring to the baby boomer generation. The older generation thinks that the young live in a smartphone world and are unable to socialise with people. "Roughly a quarter of Japanese between 20 and 49 are single, according to government data." Europe has got rid of old men and selected women in top jobs. Finland has gone a step further. Prime Minister Sanna Marin is a 34 year old woman and she has formed a coalition with 5 parties, all led by women. "But a study reveals queens have been 39 percentage points more likely than kings to wage war over the centuries." God help us.

We know the answers, but don't want to know them.

"If we assume that World Bank thresholds and India's income per capita grow at the same pace as they have in the past 30 years, it will take India until 2038 to reach the lower end of the upper middle-income threshold. Similar data crunching reveals that even in 2050, India would be well below Brazil, and South Africa. Korea and China would be in a different league altogether," wrote Salman Anees Soz. Member of the Prime Minister's Economic Advisory Council (PMEAC) Rathin Roy said that India is facing a middle income trap. "Since 1991, the economy has been growing not on the basis of exports but on the basis of what the top 100 million of the Indian population wants to consume," he said. They are maxed out now. "Prime Minister Narendra Modi's clarion call for reaching a $5 trillion economy by 2024 may or may not be realised, but a $10 trillion economy in the early 2030s is a near certainty," thinks R Jagannathan. Why is China so much richer? "The difference was the one big thing despotic China got right before 1980 -- much better literacy and health." "At least 25% of school children in the four-eight age group do not have age-appropriate cognitive and numeracy skills, making for a massive learning deficit at a very early stage, according to the Annual Status of Education Report (ASER) released on Thursday." 43.2% of girls were enrolled in private preschools or schools compared to 49.6% of boys, when studies have shown that educated mothers have better educated children. A survey by the National Statistical Organisation showed that "only 10.6% of the Indian population aged above 15 years has successfully completed a graduate degree. The proportion is only 5.7% in rural India and is 8.3% among women," wrote Ishan Anand. "India needs very deep reforms and steady growth to even get into the upper middle-income category, which is where the middle-income trap problem typically arises," wrote Ajay Chhibber. Even if we become a $5 trillion economy we will still be low-income. The present drop in the growth rate of the GDP is nothing unusual, wrote Prof A Panagariya. "Since 1991, when systematic economic reforms were launched, the economy has oscillated between periods of high and low growth with the latter lasting two to three years." Our growth rate is never going to reach 7% and above, thinks Ruchir Sharma. "Like every country in the world, India needs to lower its expectations, and to recognise that for low income nations a 5% growth rte is the new benchmark of success." History would agree growth over 5% will be difficult, agreed Vivek Kaul. "That is how brutal life can be in the field of development," wrote Soz. Especially with this lot.

Know your onions before pontificating.

"India's retail inflation accelerated to 7.35% in December on the back of rising food prices." It was 5.54% in November and 4.62% in October. However, core inflation, which takes out volatile food and fuel prices, increased slightly to 3.7%. Wholesale prices rose 2.59% in December compared to just 0.58% in November, again due to a jump in food prices. India is overestimating inflation because households are spending less on food, wrote S Shukla. "This is reflected in a sharp fall in the share of food items by about 10.8 and 9.6 percentile points (pp) to 48.6% and 38.5% in rural and urban areas, respectively, over the last decade." This is based on Consumer Expenditure Survey (CES) of 1999-2000 and 2011-12. The government hid the result of the 2018-19 CES probably because, "India's grocery consumption basket shrank by an average of 5 kg per household in the 12 months ended September from the year earlier, although they spent slightly more overall." "In the current bout of inflation, it is the food prices, especially onions, that have caused the trouble and it is not spread across the spectrum and there is unlikely to be second order effect like a spillover," wrote MCG Rangan. Which means that the Monetary Policy Committee (MPC) of the Reserve Bank (RBI) was wrong not to cut interest rate in its meeting in December, after having cut it by 135 basis points in 2019. Not just onions, wrote Prof Himanshu. There has been a sharp rise in prices of "almost all vegetables along with cereals (along with wheat and coarse cereals), pulses and personal care items". Onions "have a weight of only 0.64% in the CPI and 0.16% in the WPI". Why are wheat prices so high despite record production? Because, "Government policy has created an artificial scarcity in the market." To give higher returns to farmers in the run up to the general election in May the government bought up 34 million tonnes of wheat. "As of January, total stocks with Food Corporation of India (FCI) stand at 75 million tonnes, 33 million tonnes of it wheat..." when it is required to maintain a buffer stock of 21.4 million tonnes. Because of lack of storage space thousands of tonnes of grains rot every year. Purchasing Managers' Index (PMI) for manufacturing rose to 52.7 in December, the highest in 10 months, while the PMI for services reached a 5-month high of 53.3 in December. Exports fell by 1.8 while imports fell by 8.8% in December, so that the trade deficit fell to $11.3 billion. "India's eight infrastructure sectors shrank for the fourth straight month in November at 1.5%, though the magnitude of contraction slowed from 5.8% the previous month." Prices rising despite fall in demand and a slowing economy. Clearly, economists don't know their onions. Or they have been told.

Not macro or micro, we have muddled economics.

"Successive monetary policy rate cuts may have relaxed short-term bond yields, but the long-term yields have surged, widening the term premium," wrote Surbhi Bhatia. Since yields are the interest the government pays on its bonds, "Interest payments have gone up in recent years, and now account for more than 90% of the fiscal deficit." "Prior to RBI (Reserve Bank) resorting to 'Operation Twist' measures in December 2019, the term premium reached 129 bps (basis points), the highest on record since the global financial crisis." "Operation Twist first came about in 1961 when the Federal Open Market Committee (FOMC) sought to strengthen the US dollar and stimulate inflows of cash into the economy." Normally, yields on long-term bonds are higher than on short-term ones. By selling long-term bonds, while buying short-term ones, the central bank twists long-term yields downwards. The RBI conducted its own version of Operation Twist through open market operations (OMO) because, "The RBI slashed key interest rate - repo rate - by 135 basis points to 5.15 percent but banks passed on only a part of it." The lending rate declined by only 49 bps. "The benchmark 10-year government bond yield has dropped to 6.5%, nearly 100 basis points lower than a year ago," wrote Aparna Iyer. This despite the fiscal deficit expected to rise to 3.8% of GDP compared to 3.4% last year. So, the borrowing cost of the government is falling even as it is borrowing more. This does not increase investments because private companies cannot borrow at these rates. The RBI may have twisted the yield curve for the government, "But nothing prepared it and bond investors for the rude shock of inflation," wrote Iyer. Retail inflation for December came in at 7.35%, which led to a rise of 10 basis points on 10-year bonds before settling down to 6 points higher. "Companies must repay an unprecedented 5.9 trillion rupees ($83 billion) of local notes this year, just as corporate defaults spike," wrote Divya Patil. "India's public debt also appears worrying when compared with other emerging economies," and "fiscal deficit levels are among the worst, even without accounting for delayed government payments that have kept the fiscal deficit figures lower than what they otherwise would have been." Faced with a revenue shortfall of Rs 2.5 trillion, "The government is likely to reduce spending for the current fiscal year by as much as Rs 2 lakh crore ($27.82 billion) as it faces one of the biggest tax shortfalls in recent years, three government sources said." What was the point of Operation Twist to bring down borrowing cost if the government dare not borrow any more? Copy the Americans and keep your fingers crossed. Marvelous.

Taxing losses, instead of profits.

"The aviation sector in India suddenly looks a lot like the spooked telecom sector," wrote R Kundu and B Mukherji. Partly it is their fault and partly bad luck. IndiGo and GoAir are struggling to replace faulty Pratt and Whitney (P&W) engines on their Airbus 320neo aircraft while SpiceJet is unable to fly its Boeing 737 Max aircraft which were grounded after two crashes, killing a total of 346 people, due to the faulty MCAS software. When Jet Airways failed, airlines added capacity and decreased prices to capture Jet passengers but, "For the first time since 2008, India's busiest airports - Delhi and Mumbai - have seen a year-on-year dip in passengers in 2019 compared with 2018." Delhi received 19 million international passengers compared to 18 million in 2018 but domestic passenger number fell from 52 million in 2018 to 49 million in 2019, while in Mumbai, domestic passenger number fell from 35 million in 2018 to 33.8 million in 2019 and international passengers fell from 14 million in 2018 to 13 million in 2019. Price of oil has gone up to around $65 per barrel and the weak rupee, which has fallen from 69 to the dollar in July 2019 to around 71 today, have both increased cost. Then there are taxes. "The central government currently charges 14 percent excise duty on ATF (airline turbine fuel). On top of this, states charge up to 30 percent sales tax or VAT..." Plus the taxes on airline tickets and we can understand why passenger numbers are going down. The government could help airlines by reducing taxes and by refraining from arbitrary changes in rules, wrote Amit Kapoor. Unlikely, as the government is nearly bankrupt and is using strong arm tactics to wring as much money out of companies as it can. Telecom companies, struggling to survive, have to pay Rs 1.47 trillion in licence fees, taxes and penalties. They can represent their cases but "in no case the self-assessment and payment of dues are to be delayed", was the threat from the Department of Telecommunications (DoT). Public sector oil companies have been ordered to shell out Rs 190 billion in dividend, 5% more than last year. This is more ransom than dividend. The government is pressuring the Reserve Bank (RBI) to pay Rs 350-450 billion on top of the Rs 1.76 trillion it has already extracted. Naturally, citizens are easy prey. "Every year, the disclosure requirements in the ITR (income tax returns) forms, besides your income and taxes thereon, keep increasing," wrote Gautam Nayak. "In the last five years, income tax return (ITR) forms have started asking for more details to ensure that your spending patterns match your tax return profile," wrote AK Sharma. When the government is the predator people are too scared to spend or invest. "All this clearly tells us that corporate India is clearly not interested in investing at this point in time. Like consumers, they have very little confidence in the economic future," wrote Vivek Kaul. Taxes pay for politicians and civil servants. Rest of us need to pay up.

The simple logic of gold.

"In FY19 (financial year 2019), India imported 983,000 kg of gold, the highest since FY14," wrote Vivek Kaul. Buying gold doesn't make sense because it is taxed at over 15% and there is 5% GST on the cost of making ornaments. Sovereign gold bonds pay 2.5% interest per year, which is taxable, but most people prefer to buy jewellery. The price of gold varies depending on demand, mainly by central banks, falling from $1921 per ounce in 2011 to $1538 today. Also, the hallmarking of gold jewellery is mostly fake in India. So are people idiots to buy gold? After the Asian tsunami in 2004 people in Aceh province in Indonesia "rebuilt their lives using gold they had on their bodies", found Richard Davies. "Gold also acts as a kind of informal insurance mechanism." Presently, India is seeing widespread protests against the government of Prime Minister Narendra Modi where people are chanting the preamble of the Constitution. "What is the role of an ongoing popular protest movement in the context of a well-functioning representative democracy such as India?" asked Prof Vivek Dehejia. If the definition of democracy is winning elections by distributing handouts on taxpayer money, then surely India is a democracy. People are protesting against a series of repressive measures against citizens unleashed by this government. "In today's social media world, it is relatively easy to organize a protest, and those who believe in the cause, or those who have nothing better to do (or perhaps some students who prefer bunking classes instead of studying), may well show up," writes Dahejia. That is so arrogant, sanctimonious and contemptuous. "Nonviolent protests are twice as likely to succeed as armed conflicts -- and those engaging a threshold of 3.5% of the population have never failed to bring about change," wrote David Robson. It was precisely such leaderless protests, despite attacks by the regime, that brought about the fall of Hosni Mubarak in Egypt. The revolution failed because it was hijacked by the Muslim Brotherhood which moved toward an Islamic dictatorship. Dahejia thinks that the India Against Corruption movement failed because the Aam Aadmi Party (AAP) won the subsequent assembly election in Delhi. He forgets that AAP has failed to make any gains outside Delhi and is hanging on here by making extravagant promises. This government has made India a world leader in shutting down the internet to control protests. In its recent judgement the Supreme Court ruled that "freedom of speech and access to information on the Internet on the one hand, and the freedom of trade and commerce on the Internet on the other, are both 'constitutionally protected'," wrote Gautam Bhatia. Internet shutdowns cost $3 billion between 2012 and 2017, and the shutdown in Kashmir since 5 August has cost the local economy $2.4 billion, wrote Neelanjan Sircar. This, together with the cost of police repression, will hurt the economy which is already slowing down. The Congress won just 44 seats in 2014 because of the economy. It's Modi's turn. India is no democracy. That is why Indians buy gold.  

Do only white deaths matter?

After vehemently denying any involvement for a few days, Iran admitted that its armed forces shot down Ukraine International Airlines Flight 752, killing all 176 people on board, 63 of whom were Canadian citizens. A theatrically somber Prime Minister Justin Trudeau of Canada said, "Shooting down a civilian aircraft is horrific. Iran must take full responsibility." He claimed to be "outraged" and "furious" at the loss of Canadian lives. Trudeau is trying to claim the moral high ground to increase his popularity after losing his majority in last year's election. He is not the first, nor will he be the last, politician to milk some photo-op from a tragedy. "A second-generation political dynast, with little or no training in, nor understanding of, economics, foreign policy or defence, what Trudeau offered the Canadian public in 2015, and what they lapped up until recently, was a political brand high on style and low on substance," was the scathing assessment of Prof Vivek Dahejia. But what about 346 civilians sacrificed by Boeing in its greed for profits? On 29 October 2018, 189 passengers and crew died when Lion Air Flight 610 crashed into the Java Sea 13 minutes after takeoff from Soekarno-Hatta International Airport in Jakarta, Indonesia. The main reason was a faulty software, called MCAS, installed by Boeing in its 737 Max airplanes to push the nose of the aircraft down. This caused the aircraft to go into a steep dive which the pilots could not override. Boeing did not ground the faulty planes. On 10 March 2019, Ethiopian Airlines Flight 302 crashed 6 minutes after takeoff from Addis Ababa Bole International Airport in Ethiopia, killing all 157 people on board. Again the plane was a 737 Max and the MCAS was responsible. Following this crash all 737 Max aircraft have been grounded and Boeing has suspended production of the aircraft. In 2011, "American Airlines, an exclusive Boeing customer for more than a decade, was ready to place an order for hundreds of new, fuel efficient jets from the world's other major aircraft manufacturer, Airbus." To design a new plane would take too long so Boeing re-engineered its workhorse 737, which could be delivered in 6 years. The 737 Max was born 3 months later. A report by Bloomberg claimed that Boeing "increasingly relied on temporary workers making as little as $9 an hour to develop and test software, often from countries lacking a deep background in aerospace". Boeing's own pilot thought that the software was "running rampant" in 2016 and lied to regulators to get airworthy certification for the aircraft. Internal emails show that one employee thought that the aircraft was "designed by clowns". Boeing faces a $5.4 million fine. The CEO Dennis Muilenberg received $62 million in compensation and pension benefits and will receive additional severance pay. For killing 346 people. Do only white deaths matter?

Numbers don't show human faces.

"The poorest, but not the most uneducated, are most likely to commit suicide in India. Data from the National Crime Records Bureau (NCRB) shows that daily wage workers, those earning less than Rs 1 lakh (Rs 100,000) per annum but educated up to the secondary level have the highest share in number of suicides in India in 2018." "66% of the 134516 suicides committed in 2018 were by those who had an annual income of Rs 1 lakh or less." "A total of 10,349 farmers and agricultural laborers committed suicide in 2018, a marginal dip from the 10,655 cases in the year before, home ministry data showed." "Experts also pointed to problems in the data, including efforts by states to downplay suicides and tinkering with the definition of farmers that tends to present a watered down version of the picture." "The incidence of farmers taking their own lives has been declining over the years", "Yet, farm suicides serve to draw attention to the sorry state of Indian agriculture, which has lagged industry and services in productivity gains for decades." Data from the Center for Monitoring Indian Economy's (CMIE)  database that when the price of onions went up the state government banned exports and released stocks to bring down prices, thereby reducing profits for farmers, wrote Roshan Kishore. When prices fall due to abundant production the benefits are not passed on to the consumer. "Not only are vegetable prices more volatile, their producers are also susceptible to predatory behavior by buyers." As in other parts of the world, the rate of suicide is higher in men than in women, but the total number of suicides among women constituted 37% of all female suicides in the world. Which is high even if we consider that India has one sixth of the entire population of the world. However, women are not only killing themselves, they are being killed by men as well. "More women were killed after being raped in 2018 than in 2017." According to NCRB data, "there was a 31% spurt of cases of rape with murder in 2018 as compared to 2017." "Just nine countries around the world, including Syria and Iraq, now have a fewer proportion of working women than India, new official data confirms. And if Bihar were a country, it would have the lowest share of working women in the world," wrote Rukmini S. Since India is a poor country, those who are poor by Indian standards lead wretched lives. "India was ranked 102nd on the Global Hunger Index, an index of 117 countries." For every 100 jobs lost to Artificial Intelligence only 10 new ones will be created and that also not at the same speed. For some the misery is just too much to bear.

All of it was so unnecessary.

Two days back Ukrainian Airlines flight PS752 crashed minutes after take off from Imam Khomeini International Airport at Tehran in Iran just after 6 o'clock in the morning, killing all 167 passengers and 9 crew on board the aircraft. There were 82 Iranians, 63 Canadians, 11 Ukrainians, 10 Swedes, 4 Afghans, 3 Germans and 3 Britons among the passengers. Captain Volodymyr Gaponenko had 11,600 hours of experience flying the Boeing 737. This particular plane was a 737-800, which has a very good safety record, and was delivered in 2016, making it relatively recent. However, "The most recent audit by the International Civil Aviation Organisation, in 2017, found Ukraine to be below average for licensing, legislation, airworthiness, accident investigation and operations." The entire world took notice of the crash of this plane was because Iran had launched ballistic missiles against two bases in Iraq, with US troops, just hours earlier. Iran claimed it had killed 80 US troops in the strike but the US denied any of its soldiers had been hurt. "The United States had three hours warning of the missile strikes after Iran tipped them off via a European embassy and ensured their plans of an attack were easily detectable, US officials claim." "Army General Mark Milley, the chairman of the Joint Chiefs of Staff, said earlier that Iran's missile attack intended to kill US personnel at Iraq'a al-Asad airbase," but "Iraqi Prime Minister Adel Abdul Mahdi had earlier revealed that Iran had given him a tip-off about the missile strikes, which they were able to pass on and give troops time to seek shelter in bunkers." Now, "Evidence suggests an Iranian missile brought down a Ukrainian passenger plane that crashed near Tehran, possibly in error, Western leaders say." "Video obtained by the New York Times appeared to show a missile streaking across the night sky over Tehran and then exploding on contact with a plane. About ten seconds later a loud explosion is heard on the ground." "The evidence indicates the plane was shot down by an Iranian surface-to-air missile," Canadian Prime Minister Justin Trudeau said during a news conference Thursday. "This may well have been intentional." "The thing that is clear to us and that we can say with certainty is that this plane was not hit by a missile," said Chief of Iran's Civil Aviation Organisation Ali Abedzadeh. However, the government admitted its guilt by hastily bulldozing the crash site clear of all debris. In the last few hours Iranian officials have admitted to shooting down the aircraft in error, which western governments have already accepted, probably in a bid to avoid all out war. That does not mean the Iranian government will not have to pay a price. We can expect a spate of class action suits asking for compensation and damages in hundreds of millions of dollars, that Iran does not have. They won't be able to blame the US for that.

We are losers. Don't make it worse.

With the Union Budget to be presented on 1 February 2020, Prof Arvind Panagariya, who was Vice Chairman at Niti Aayog from January 2015 to August 2017, has some advice on how to make the Indian economy grow faster. "After growing at 5% in FY20 (fiscal year 20), the slowest pace in a decade, India's gross domestic product (GDP) growth will start increasing from the next fiscal year", but "the recovery is likely to be slow and GDP growth will be just above 6% until FY23", said the World Bank. "Even these estimates are optimistic projections and they do not capture ground reality. This is evident from the fact private estimates are already projecting a less than 5% growth in this year too," said Prof Himanshu. Some recommend that "India should allow fiscal deficit to rise 1 percentage point or more", but this would be unwise because "once we add up fiscal deficits of the Center and States and off budget borrowing, public sector deficit turns out to be as high as 8% of GDP". "Outstanding debt of states has risen over the last five years to 25% of GDP, posing medium-term challenges to its sustainability, according to the RBI (Reserve Bank) study," wrote Nag and Dormido. "With the center's finances already under acute stress, we may see cut backs in pace of spending by some of the states," said Garima Kapoor. "The government is likely to reduce spending for the current fiscal year by as much as Rs 2 lakh crore ($27.82 billion) as it faces one of the biggest tax shortfalls in recent years, three government sources said." This year's budget hoped to raise Rs 24.61 trillion from taxes, but it has collected just Rs 11.74 trillion so far, and it hoped to raise Rs 1.05 trillion from sale of public assets, but it has manged to collect only Rs 181 billion till November 2019, wrote Vivek Kaul. No hope of containing the fiscal deficit. Panagariya recommends allowing retail inflation to rise above the 4%, +/- 2%, target set by the government in 2016. "A 2% higher inflation than currently will also help boost tax revenues on the one hand and lower the real lending rate on the other." The government collects tax on the nominal GDP, which grew at 7.53%, the lowest since 1975-76. Increasing inflation will give more money to the government while we get less from our savings. Kill the ordinary family. The government should give up control of public sector banks (PSBs). That is never going to happen. The government uses our savings in PSBs to distribute loans in the hope of stimulating consumption and announce waivers of loans to farmers to win elections. Foreign investors watch spending of tax revenues but they don't care if we lose our deposits. That is why the government is so keen to pass a law to limit deposit insurance to Rs 100,000. Chicken feed. Professors should think before writing irresponsible advice. They are encouraging plunder of citizens.