Nothingburger can only lead to severe malnutrition.

"China's parliament has backed security legislation for Hong Kong which would make it a crime to undermine Beijing's authority in the territory." As expected, "The National People's Congress (NPC) -- meeting in Beijing after a two-month delay caused by the coronavirus pandemic -- backed the security bill resolution with 2,878 votes in favor, one against and six abstentions." The new law overrides Hong Kong Police and allows agents from the mainland to arrest and  charge any protester with treason and sedition which carry long prison sentences. A law which would have allowed Hong Kong citizens to be extradited to the mainland for trial had to be withdrawn last year after months of violent protests. China's stool pigeon, Hong Kong CEO Carrie Lam naturally supported the new law, saying it will not affect freedom of citizens of the territory. In response, US President Donald Trump has asked officials to end preferential status of Hong Kong and threatened sanctions on Chinese and Hong Kong officials who are "directly and indirectly involved in eroding Hong Kong's autonomy" and "smothering absolutely smothering Hong Kong's freedom". "China is dismissing threats of sanctions from the Trump administration over Beijing's proposed national security law in Hong Kong, calling it a 'nothingburger'." "It is only bluffing," said Global Times. "China's state media and the government of Hong Kong lashed out on Sunday at US President Donald Trump's vow to end Hong Kong's special status" while the Communist Party mouthpiece the People's Daily wrote, "The baton of sanctions that the United States is brandishing will not scare Hong Kong Kong and will not bring China down." Maybe not, but stab wounds from multiple sources may exsanguinate it to death. "The US government imposed new restrictions on Chinese tech giant Huawei on Friday, severely limiting its ability to use American technology to design and manufacture semiconductors produced for it abroad." UK Prime Minister Boris Johnson is to 'look again' at his decision to allow controversial Chinese tech giant Huawei to build more than a third of Britain's 5G broadband network, amid fresh concerns by spy agencies." "Your Aussie friends are baffled, Britain: Why escape from Brussels -- only to kowtow to Beijing," asked former Australian Prime Minister Tony Abbott. "A paradigm shift is taking place in relations between the European Union (EU) and China," wrote Mark Leonard, as "Europe has abandoned its previous ambition of a more closely integrated bilateral relationship with China." "China's factories are starting to hum again, but executives are worried that the rebound could falter on weak demand at home and abroad." India may not be as large a customer like the US and EU but is also trying to reduce its imports from China. China thinks it can bully other nations by cutting what it imports from them, but it has no friends so it is one against the world. China depends on trade and if other countries shift their trade away from it, its economy may collapse. A 'nothingburger' in trade could be the key to ending the Communist Party. And bring peace to the world.

Not many can shower in continuous love.

Prime Minister Narendra Modi completed one year of his second term yesterday. "In the first year of the Modi 2.0, the government has taken several key decisions including the abrogation of Article 370, criminalisation of triple talaq, anti-terror terrorism law, Citizenship Amendment Act and the Supreme Court verdict in the Ayodhya case as an incentive," wrote Abhinav Ranjan. "BJP president JP Nadda said on Saturday that the one year of the Modi government's second term had been a year of accomplishments, and unimaginable challenges that it faced with bold and timely decisions." Modi wrote an open letter to citizens on this anniversary saying, "Dear friends, in this journey of the last six years, you have continuously showered me with love and blessings. It is the strength of your blessings that has made the nation take historic decisions and progress rapidly in the last one year." Talking about Modi's six years in office, Minister Home Affairs, and a confidant from Modi's home state of Gujarat, Amit Shah wrote, "This time, in contrast to the anxiety, stagnation, and hollow promises of the pre-2014 era, the public has seen the ability to reach targets ahead of time with strong leadership, trust in people, their cooperation and self-confidence." Sadly, not everyone agrees with such eulogies. "When periodic labor surveys revealed rising unemployment, the government discontinued them. When the National Sample Survey warned of worsening poverty and malnutrition because rural Indians were cutting even their food expenditure, the government simply killed the survey citing technicalities," wrote former professor and Congress MP MV Rajeev Gowda. Modi is acknowledged as a master of jumla, wrote Ashok Swain. Modi's government is a dictatorship, wrote Siddharth Varadarajan. "Not since the emergency of Indira Gandhi have so many people across India spent so much time in custody for political reasons than in the past year, and never before has the sword of arrest and detention hung over more heads." "At the same time, never before in independent India has there been such impunity for those connected to the establishment." Apparently, Modi was able to evade arrest during emergency by disguising himself as a Sikh. He couldn't escape so easily now. Without any consultation or change of law, Delhi Police is using facial recognition technology against protesters. Facial recognition is widely used in China but is being banned in civilized countries. "Apologists for Indira Gandhi used to say, "at least the trains run on time'. Modi 2.0 is not even able to manage that, such is the shambles of six years of ideologically driven 'governance' have created." As the economy tanks and people die of hunger, will Modi declare an Emergency to hang on to power? Maybe, the fear of an exodus of foreign investors, a rating downgrade and a collapse of the rupee will stop him. We can only hope.

If 71% believe in our greatness, can they be wrong?

"Prime Minister Narendra Modi said India will set an example in economic revival before the world just like it has outperformed many developed countries in fighting the Covid-19 pandemic." "India reported 7,466 new novel coronavirus cases in the past 24 hours, Health Ministry data showed Friday morning. This is the first time more than 7,000 Covid-19 cases have been detected in a 24-hour period and follows seven straight days of more than 6,000 new cases per day." "In a shocking case of medical apathy, several dead bodies were kept at a passage inside the premises of Lok Nayak Jai Prakash Narayan Hospital (LNJP Hospital) in Delhi as the mortuary ran out of space. The LNJP hospital is one of Delhi's dedicated Covid-19 facilities." According to an epidemiologist, virus cases will peak around middle of July, though the surge will be lower because of early action. "Around 71 percent of Indians believe the government's over Rs 20 lakh crore (Rs 20 trillion) stimulus package will lead to economic recovery." "Over three-fourths of micro, small and medium enterprises (MSMEs) in the national capital region have cut employee salaries while nearly two-thirds are resorting to layoffs after seeing no rise in demand, a private survey showed. Forty four percent of respondents said the relief measures announced by the government earlier this week did not meet expectations and 86% wanted direct cash support from the government." "More people could die from hunger than the virus," said Ashwajit Singh, managing director of IPE Global. A study by the United Nations University estimated "104 million Indians could fall below the World Bank-determined poverty line of $3.2 a day for lower-middle-income countries", which will take "the proportion of people living in poverty from 60% -- or 812 million currently, to 68% or 920 million". "Indian banks may need to raise $20-50 billion capital in the next two years as bad loans and credit costs rise due to the Covid-19 induced slowdown in the economy, brokerages and rating agencies believe." "While the government has relaxed lockdown norms, as many as 8,917 projects worth over Rs 21.11 lakh crore across various sectors under execution in 108 red zone districts are at a standstill even now, a survey said." "Is it possible to survive on just boiled rice and rotis?" asked Sayantan Bera. "But most families are doing exactly that: consuming boiled rice and salt or wheat flatbread with chilly paste." "About five years ago, one curious metric in the US stood out as being significant. $1 and $5, both physical bills and digital amounts, were exchanged, on average, more than three times a day. By contrast, Rs 50 and Rs 100 currency were exchanged less than 80 times a year in India," wrote Ateesh Tankha. Shows how little Indians consume compared to Americans. However, in a great victory over Pakistan, after Balakot, India has captured a 'spy pigeon' from Pakistan. All hail Supreme Leader.    

If it is not a natural disaster what is it?

"The country's economy, which is likely to contract by 5 percent in the current fiscal, may expand by around 5 percent in the next financial year, former RBI governor Duvvuri Subbarao said". "The reason I say that is because this (Covid-19) is not a natural disaster. Our factories are still standing, our infrastructure and transport systems are still there." "Once the lockdown is lifted and the economy is given a green signal to restart, I am sure that we can ramp up pretty soon and reach at least 5 percent growth rate." One could argue that the coronavirus, being a living organism, is a natural disaster. And, our factories maybe standing but millions of workers have fled to their villages and the Reserve Bank (RBI) says that the economy will shrink this year, with consequent "collapse in demand since March 2020 across both urban and rural segments". The reconstruction of infrastructure destroyed due to World War II has been credited with reviving economies and making Europe the $18.8 trillion economy that it is today. Goldman Sachs predicted that the Indian economy will contract by 5-7% in this financial year so a 5% growth next year, as Subbarao predicts, will be purely base effect, the net result being zero. Actually, it would still be negative. If we started with a GDP of 100, a 5% fall will take it to 95, but a 5% rise on 95 will take it 99.75, and not back up to 100. "India has seen four instances of contraction in GDP since 1951-52," wrote Roshan Kishore, but, what is different this time, is that, "It is the non-farm sector which will see a contraction, while agriculture is likely to grow." "Even when GDP growth was positive, there was a significant section reporting a decline in incomes in the RBI survey." So the loss of over 120 million jobs because of the lockdown will surely result in a precipitous fall in incomes.  Household savings declined from 23.6% in 2011-12 to 18.2% in 2018-19, and is expected to fall sharply as people spend their savings to pay for essentials. "Analysis of income tax data shows that the top 5% tax payers paid almost 90% of income tax in AY 2018-19 (financial year 2017-18)," so if these people earn less, tax collections will fall. Because of the huge rise in taxes on fuel, prices are expected to rise by Rs 5 soon, as oil companies seek to make up their losses. "The Indian government's response to the economic and humanitarian crisis has been manifestly behind the curve, even though it was presciently early in enforcing a total lockdown," wrote Rajrishi Singhal. The GDP growth number for the quarter ending 31 March will be released today and is expected to be around 3.76%, although how they will calculate this figure, when travel restrictions started in early March and they could not give us the inflation data for April, is not known. How can we respond if we cannot see the disaster?

Will the economy trump the number of cases?

" We are about to see the best economic data we've seen in the history of this country," said Jason Furman, a top economist in the Obama administration and now a professor at Harvard, in early April when the economic carnage due to the coronavirus lockdown "seemed likely to doom President Donald Trump's chances at reelection". Although the economy will not return to the level before the pandemic, growth will soar once businesses start opening up and people return to their old jobs, giving Trump a bounce just before the November election. "The federal guidelines are taking a back seat in both Republican and Democratic states, as economic pain from the coronavirus lockdowns and the political pressure to lift them become too excruciating." "This is my big worry," said a former Obama White House official who is still close to the former president. He would prefer people to suffer than to see Trump winning. How mean is that? Protests against lockdowns have spread throughout the US, even in California which Hilary Clinton won with over 4 million more votes than Donald Trump in 2016. "More than 1,300 state and federal lawsuits have been filed over Covid-19 (lockdowns), including 240 dealing with civil rights, as of Friday, according to Hunton Andrews Kurth, a law firm tracking the cases." "Governors say strict rules save lives, but critics who are forced to stay home or shutter their businesses called the steps 'draconian' or compared them to 'house arrest'." "Within hours of President Trump's decision to restrict travel from China on Jan 3, top democrats and media figures immediately derided the move as unnecessary and xenophobic," "Nevertheless, this week, House Speaker Nancy Pelosi, D-Calif, accused Trump of endangering lives by wasting time," reported Fox News. "The United States was ranked the best-prepared country in the world to handle a pandemic in late 2019 by the Nuclear Threat Initiative (NTI) and the Johns Hopkins Center for Health Security (JHCHS) -- an assessment seemingly at odds with claims by Democrats that the Trump administration left the country vulnerable to the ongoing coronavirus outbreak." "Coronavirus lockdowns have failed to alter the course of the pandemic but have instead 'destroyed millions of livelihoods', a JP Morgan study has claimed." "In the new poll, 51% of registered voters nationwide back Biden, while 46% say they prefer Trump, while in the battlegrounds 52% favor Trump and 45% Biden." Presumptive Democratic candidate Joe Biden has a new nickname for Trump, which is "President Tweety". Which probably puns on Trump's habit of tweeting constantly as well as Tweety Bird, hoping to be Sylvester the Cat. He should remember that Tweety Bird always wins. In response, Trump said Biden "doesn't know he is alive". November is still far away, and a week, as Harold Wilson said, is a long time in politics.    

When they care in capital letters.

A poll conducted by the India office of YouGov reported that "urban India's middle-and upper-income classes overwhelmingly supported the lockdown," wrote Prof V Anantha Nageswaran. "Professor Sunetra Gupta of Oxford University told unheard.com in an interview that, "in reality, the lockdown was a luxury that the middle class was enjoying at the expense of the poor." The professor is not aware that the middle class was not consulted before the lockdown was announced with a notice of four hours and certainly never wanted the poor to suffer the way they did. When the word of suffering got round people rushed to provide food and water to migrants. This is not easy when local officials make their own interpretation of lockdown rules. The government apparently is unable to spend for fear of a rating downgrade if fiscal deficit goes out of control. Nageswaran recommends that rich people should donate a "tiny fraction of their of their wealth". Profs Devesh Kapur and Arvind Subramanian, who live in the US of A, recommend imposition of wealth tax and elimination of subsidies for the rich. Do they recommend similar taxes on their own incomes in the US where 38.6 million people have filed for unemployment benefits and there are long lines for packets of food? Middle class Indians are losing their jobs, finding it difficult to pay mortgages and school fees of children. Prime Minister Narendra Modi has set up a PM CARES fund, apparently to help the millions walking home to their villages from distant cities. If it is any consolation to these professors, industrialists, actors, sports people and citizens have been pouring billions of rupees into the fund. "Donations have been made tax exempt, and can be counted against a company's corporate social responsibility (CSR) obligations. It is also exempt from the Foreign Contribution (Regulation) Act, 2010, and accepts foreign contributions, although the Center has previously refused foreign aid to deal with disasters such as the Kerala floods," wrote Priscilla Jabaraj. "The PM CARES web page is opaque regarding the amount of money collected, names of donors, the expenditure of the fund so far, or names of beneficiaries," and queries under the Right to Information (RTI) Act have been ignored. Clearly the PM is contemptuous about any form of accountability. "In India, the government appears to have treated the lockdown as a policy end in itself," wrote Prof Shruti Rajagopalan. Instead of as a means to controlling spread of infection and improve healthcare. A complete paralysis of movement can have other uses, such as freedom to arrest anyone without photographs or interference. Or change labor laws to compel workers to work longer hours with less pay and no rights to form unions. "But over the past few decades labor laws have changed such that they are hardly among industry's top constraints," wrote Azim Premji. "Diluting these already lax laws will not boost economic activity, it will only exacerbate the conditions of low wage earners and the poor." Premji does not have to win elections by caring for the poor with taxpayer money. So much caring, but for what?

Is the RBI allowed to break its mandate?

"The RBI (Reserve Bank of India) Governor Shaktikanta Das announced a slew of measures aimed at further easing the liquidity conditions and providing relief to borrowers", by lowering interest rate by 40 basis points to 4%, to make it cheaper for borrowing, by deferring interest on working capital and by protecting defaulting companies from bankruptcy proceedings. Das announced similar measures in April apparently to mitigate the effects of the lockdown to tackle the coronavirus outbreak which had brought the economy to a standstill. However, it is not entirely the fault of the virus. Das carried out a Rupee/US Dollar swap worth $5 billion to inject Rs 350 billion into the economy in March last year when no one had heard of coronavirus. The economy has been sinking for two years and the lockdown just killed it off. "When snack makers start to lament that Indians can't afford to spend Rs 5 on biscuits, it's time to stop arguing over how much the nation's slowdown is cyclical and what part is structural," wrote Andy Mukherjee in August last year. "Apart from the rate cuts, the central bank has also announced Rs 8.04 lakh crore (Rs 8.04 trillion) worth of liquidity-boosting measures so far," wrote Deepthi Mary Matthew. "The idea behind liquidity is that people and businesses borrow more and then spend. As they do this, consumer demand will get revived, and businesses and overall economy will benefit," wrote Vivek Kaul. By putting extra money into commercial banks the RBI is trying to force banks to lend more. But this will not work. "Accept the reality that India's banks, burdened as they are by bad debt and hobbled as they are by the fear of incriminating investigations of credit decisions, are poor vehicles of financial intermediation," wrote an editorial in the Economic Times. Like the Federal Reserve in the US the RBI should set up a special facility to buy company bonds, says the editorial. But, does the RBI have the mandate to do that? "Two agreements were signed between the government and RBI in 1994 and 1997 to completely phase out funding through ad-hoc treasury bills. And later on, with the enactment of FRBM Act, 2003, RBI was completely barred from subscribing to the primary issuances of the government from April 1, 2006," wrote Matthew. This means that the RBI is forbidden from buying government bonds directly to prevent it from printing money to finance government spending, so how can it buy bonds from private companies, even through special vehicles? Despite injection of so much money into banks the amount of loans is shrinking, wrote Shayan Ghosh "Total outstanding non-food credit shrank by Rs 1.36 lakh crore, or 1.32%, to Rs 101.83 lakh crore on May 8 from March 27, data from the RBI showed." Banks are parking more than Rs 8 trillion in the RBI at 3.75% interest, rather than lend to businesses and consumers. If people could not afford biscuits at Rs 5 will they borrow money to buy air conditioners or cars? 

China asks for understanding from teacher India.

"Whatever else it may be, the current India-China stand-off/skirmish in Ladakh and Sikkim is not 'normal'. And we should not lull ourselves into thinking it is," wrote Indrani Bagchi. In direct interference in a sovereign nation, "China is making hectic efforts to protect Nepal Communist Party (NCP) led government in Kathmandu amid rifts within top leadership of the ruling dispensation." "On Friday morning, Ambassador Yanqi held an-hour-long talks with NCP Chairman Pushpa Kamal Dahal or Prachanda." As a result of malicious Chinese pressure Nepal has suddenly made claims on Indian territory near Uttarakhand. "Ever since KP Sharma Oli became Prime Minister of Nepal in 2015, Kathmandu has strengthened its ties with Beijing and the relationship has further strengthened after China made heavy investments in infrastructure development in Nepal. Nepal has also joined China's ambitious Belt and Road initiative." While engaging in open aggression against India how dare China ask for "support and understanding of India and other countries for its controversial decision to impose a new national security law on Hong Kong? Under the new law protesters could be charged with sedition and treason, resulting in long prison sentences. Because China thinks it is following India's example. Police in Delhi charged a protester with sedition "for his alleged role in instigating riots at Jamia Milia Islamia (JMI) by allegedly delivering a seditious speech during a protest against the Citizenship Amendment Act (CAA)" The Sedition Law or Section 124A of the Indian Penal Code (IPC) was drafted by Thomas Babington Macaulay in 1870 to keep Indian 'natives' under control. Another protester in second trimester of pregnancy was sent to prison on anti-terror charges. China actually takes India as an example. "An article in the People's Daily online has 'justified' internet shutdowns by citing India as an 'example'." "India recently ordered a shutdown of the internet in the states of Assam and Meghalaya to control protests over the controversial new Citizenship Amendment Bill. It means that shutting down the internet in a state of emergency should be standard practice for sovereign countries," the paper said. Who would have thought that China is following us? Hong Kong used to be a British territory and was handed back to the Chinese in 1997. China naturally feels that if India, which used to be a British colony, and boasts about its democracy, can still use a British law against its citizens, it is grossly unfair to criticise it for using a similar law in what used to be a British territory. In India, power has been seized by a bunch of callous, arrogant, self-serving autocrats eager to protect their privileges, rather than serving citizens, wrote Prof Ramesh Thakur. At the core is the Indian Administrative Service (IAS) with their "superior, arrogant and unwilling-to-change attitude", wrote Chetan Bhagat. China is eager to learn from India.

Losses are definite, benefits doubtful.

"The first two phases of the lockdown led to 14-29 lakh (1.4-2.9 million) COVID-19 cases to be averted while the number of lives saved in that period was between 37,000 and 78,000, the government said on Friday citing various studies, and asserted that the unprecedented shutdown has paid "rich dividends" in the fight against the pandemic." Possible, but that does not prove that such a stringent lockdown was necessary and other measures would not have worked just as well, or even better. When the lockdown was announced on 24 March the total number of confirmed infections stood at 564 and 10 people had died. According to a Stringency Index devised by Oxford University, India stood highest at 100. And yet, after 60 days of lockdown, number of new infections are rising by record levels, adding 6,767 confirmed cases in the last 24 hours. South Korea has been remarkably successful without a complete lockdown. "South Korea -- which in February had the largest outbreak outside of China -- used a combination of widespread testing, aggressive contact tracing, stern public health measures and digital technology to contain the coronavirus without having to impose widespread lockdown. It also maintained a strict quarantine regime." "India may witness Covid-19 cases peaking in mid-July if the current lockdown is lifted this month-end but expected to be a 'lower surge' due to strong containment measures in the past nearly two months, a noted public health expert and epidemiologist said on Thursday." To that extent, we can say that infections and consequent deaths have been postponed, and not prevented, as claimed by the government. According to the journal Lancet, "when we count the number of deaths from COVID-19 in each country 1 year from now, the figures will be similar, regardless of measures taken", wrote Ramanath Jha. Even without a lockdown, the South Korean economy is expected to contract this year. The effect on India has been disastrous, with Goldman Sachs predicting a 45% contraction in the July-September quarter and a 5% contraction for the entire financial year 2020-21. If we take India's nominal GDP as Rs 200 trillion then 5% loss comes to Rs 10 trillion. Even at Rs 4,500 per test, India could have tested over 20 million people. Mass testing should have been cheaper. This would have allowed confining only confirmed cases so that some economic activity could continue and loss to the nation reduced. More importantly, migrant laborers would not have to walk, cycle or pay exorbitant sums of money to try and get back to their villages to avoid starvation as they suddenly lost all income due to the lockdown. "Those who have lost everything and are still trying desperately to reach a place far away called home have been lathi charged, blocked at borders, cheated, sent to camps and generally treated as subhumans," wrote Manoj Joshi. This, by a prime minister who has been announcing one social scheme after another with taxpayer money, apparently to help the poor. Not surprising that the Prime Minister is hailed as the "jumla raja" or 'king of bluff'.

Long ago, men put a brake on toxic masculinity.

In dealing with the coronavirus pandemic "female leaders around the world, from (Chancellor Angela) Merkel to Jacinda Ardern of New Zealand to Tsai Ing-Wen of Taiwan, have won praise for their handling of the crisis", wrote Anna North. Women communicate better and "may feel less of a  need to live up to expectations of crisis management that are grounded in traditional -- even toxic -- masculinity". Psychological research has shown "conservatives are psychologically tuned to see threat, and so they fear change. Liberals are tuned to prize change, and so they downplay threat," wrote Ezra Klein. "But here we are, in the midst of a pandemic, and it's conservatives seemingly dismissing the danger, opening states and counties prematurely, refusing to wear masks," while it is "the liberals who're locked in their homes, who are warning the worst is yet to come". Political psychologists in the US think that it is because liberals are caring while conservatives are partisan and xenophobic. The Democratic Party, expected to be left-wing liberal, holds veto-proof super-majorities in both houses of California's assembly and imposed a lockdown early. "On March 20, when a statewide stay-at-home order was put into place across California (one had already gone into effect four days earlier in the Bay Area), about 1,000 cases had been detected in the state and about 20 people had died," wrote Kelsey Piper. "Now there have been more than 75,000 cases reported in California." Is it because Governor of California Gavin Newsom may be a Democrat but is a man? President Donald Trump has been blamed for the US having the highest number of cases with over 1.6 million infections and over 96,000 deaths. "A study has estimated there may have been 36,000 fewer coronavirus-related deaths had the US entered lockdown a week earlier in March." So was it toxic masculinity that stopped Trump from declaring a nationwide lockdown? According to constitutional experts the president does not have the authority to declare a national lockdown. "A national lockdown, I think, is pretty far out of bounds for the president," said Keith Whittington, William Nelson Cromwell professor of politics at Princeton University's Department of Politics and an expert in constitutional interpretation. The US Constitution was written in 1787 by men who were influenced by writings of men like John Locke and Baron de Montesquieu, at a time when married women were considered their husbands' properties and women were not allowed to vote. "The United States on Wednesday accused China of employing border clashes with India to try to shift the status quo, and encouraged New Delhi to resist." Donald Trump, Xi Jinping and Narendra Modi are all men. The combination is getting toxic.

Whatever the cause, the price is enormous.

"A bigger stimulus would have been the right way to address a crisis in aggregate demand. But that's not India's problem: Until we figure out the best way to reopen, the country needs less economic activity, not more," wrote Mihir Sharma. Prime Minister Narendra Modi announced a stimulus measure worth Rs 20 trillion on 14 May, but the package explained by Finance Minister Nirmala Sitharaman was all about trying to lower the cost of borrowing. "India's debt remains under control instead of exploding. Most importantly, Modi's government has not been foolish enough to reverse decades of painful institutional reforms and demand the central bank start monetizing its debt." Apparently, direct taxpayers are not pleased with reforms in agriculture because that may increase the cost of food, wrote Chairman of Economic Advisory Council to the Prime Minister (EAC-PM) Bibek Debroy. That seems counterfactual because the poor spend a higher proportion of their earnings on food, rural more than urban. A survey in 2017-18 showed that consumer spending declined for the first time in four decades, with people spending less on food. "In the case of the covid economic package, ironically, the government has displayed vision, kept the medium to long term in view and has used the crisis to usher in some long-pending and much needed reforms, instead of focusing too hard on short-term palliatives," wrote member of EAC-PM Prof VA Anantha Nageswaran. "A key element of Modi's approach to economics is a system of incentives and penalties where all economic actors -- rich or poor, small or big firms -- are made to embrace behavioral changes. If his methods deviate from traditional economic advice, which is obsessed with monetary and fiscal measures, it may be because he doesn't give these as much importance as his own instincts," wrote R Jagannathan. It is terrifying that the future of a nation of 1.3 billion citizens is dependent on one man's instinct and not on any science or knowledge. What these erudite men do not explain is why Modi imposed a total lockdown on 24 May when the total number of confirmed cases were an insignificant 519, and is lifting it now when the rate of infections is rising everyday, with 6,088 new cases in the last 24 hours. Was it really to control spread of the virus or to stop protests against the Citizenship Amendment Act (CAA) that Modi effectively destroyed the economy? Fiscal deficit is likely to rise much higher than predicted in the budget because tax collections will fall, wrote Aparna Iyer. The Reserve Bank (RBI) has been buying government securities in the open market. This may be called quantitative easing but is monetizing debt indirectly. Recently the RBI bought government bonds and treasury bills from the secondary market in another sign of taking government debt on to its books. Whatever the reason, the lockdown has extracted a heavy price. We will pay for a long time.

Will they accept our invitation?

"As several countries face supply distortion of many products due to the outbreak of the novel coronavirus in China, a report by HDFC Bank said that India can turn into an alternative global sourcing base for many items." "The report, however, observed that the regulatory mechanism in India, limited production capacity and competition from countries like Vietnam and Cambodia in manufacturing sector are the major constraints for India in becoming China's replacement." In fact, India imports 68% of active pharmaceutical ingredients and 40% of electrical machinery and equipment from China. "India needs to act proactively to create an environment that is favorable to global manufacturing so that once the COVID 19 crisis blows off, international organizations can look at us as trusted supply chain partner," wrote Pankaj M Munjal, Chairman & MD, HMC, a Hero Motors Company. "India is developing a land pool nearly double the size of Luxembourg to lure businesses moving out of China, according to people with the knowledge of the matter," wrote Shruti Srivastava. "Land has been one of the biggest impediments for companies looking to invest in India, with the plans of Saudi Aramco and Posco frustrated by delays in acquisition." "The government in April reached out to more than 1,000 companies in the US and through overseas missions to offer incentives for manufacturers seeking to move out of China, according to India officials who asked not to be identified, citing rules on speaking with the media," reported Bloomberg. "But apart from ensuring land, water and sewerage, the most important change India needs to make is to give a clear guarantee that the government will not introduce retrospective tax amendments," said Ajay Sahai, director general and chief executive officer of the Federation of Indian Exporters. The tendency of trying to extract taxes from businesses through coercive and unfair methods, as in the telecom sector, is a big disincentive to invest in India, wrote Andy Mukherjee. "In a recent address to the nation, Indian Prime Minister Narendra Modi made 'be vocal for local' his rallying cry," wrote Nikhil Inamdar. "As things stand, Vietnam, Bangladesh, South Korea and Taiwan seem to be favorites to benefit from the backlash against China." Business Standard columnist Debashish Basu noted "data released by the department of industrial policy and promotion shows that inward FDI (foreign direct investment) declined in fiscal year 2018-19 for the first time in six years", wrote Prof Vivek Dahejia. In addition to the huge cost of relocating from China, the collapse in demand due to the coronavirus lockdown will not tempt many companies. Services Purchasing Managers' Index (PMI) fell to 5.4 in April while manufacturing PMI fell to 27.4. "But unlike manufacturing, the output loss in services is permanent in nature. While we can buy more than one book or gadget later (after the lockdown), we cannot bunch up the use of services, such as, say, travel," wrote Aparna Iyer. We can invite companies, but will they accept. If they cannot make money.     

2008 was a fall, 2020 is deep coma.

"The government kept the lessons of the 2008-13 period in mind when designing its Rs 20 lakh crore stimulus package, Finance Minister Nirmala Sitharaman told ET, explaining why it had avoided spending recklessly to revive the economy." In 2008, there was no lockdown of the entire nation bringing economic activities to a near halt. In 2008, millions of daily-wage laborers were not forced to walk hundreds of miles back to there villages, driven by fear of starvation. In 2008, retail inflation was high and rising, while this time, "The real danger is that of a prolonged deflation rather than inflation," said Vice Chairman of Niti Aayog Rajiv Kumar. Not a single car was sold in April. India's biggest car company Maruti Suzuki reported zero sales. In 2008, all international and domestic flights did not come to a halt for two months. In 2008, the unemployment rate did not rise to 24% and back then over 20 million white collar workers did not lose their jobs. And, in 2008, the economy was still growing but this time Goldman Sachs predicts a 45% contraction in the second quarter and a contraction of 5% in the real GDP in the financial year 2020-21. The two situations are completely different and not comparable at all. Prime Minister Narendra Modi announced a stimulus package for the economy worth Rs 20 trillion on 12 May. "Alas, the package is a sedative to ease the pain, not a stimulus that will revive a crashing economy," wrote SA Aiyar. "Yet, the package might just go down in history as a turning point in economic reform," because the "dramatic embrace of privatisation is unambiguous and stunning". "In the case of the covid economic package, ironically the government has displayed, kept the medium to long term in view and has used the crisis to usher in some long-pending and much needed reforms, instead of focusing too hard on short-term palliatives," appreciated VA Anantha Nageswaran. "In the context of immediate support to the economy, the government has conserved some firepower, just in case the pandemic does not go away in six months or so." "In the US, the unemployment benefits announced in the wake of the pandemic are seen to be incentivizing the jobless to stay jobless." If the idea is to starve people back to work, then it is certainly revolting. "Factories and other establishments in some states may be allowed to cut salaries and initiate disciplinary action against workers who don't want to report back to work within a stipulated period once the Covid-19 lockdown is lifted." The Uttar Pradesh (UP) government has withdrawn a cruel order to force industrial workers to work 12 hour shifts in the middle of a blistering summer. The meager economic stimulus is a political move by Modi, said Aiyar. "At best, you could say it is a very cold calculation that if I take a bigger hit this year, I will have a bigger bounce next year and then there is no political damage because there are no elections to be lost." By next year the economy maybe dead. 2008 was a fall, 2020 is deep coma.    

Bat meets pangolin in Wuhan lab.

"Chinese President Xi Jinping said he supports calls for an investigation into the handling of the coronavirus pandemic at a key summit Monday, but insisted that any inquiry should wait until the virus is contained." Which makes it completely meaningless because that may take years and the virus may never go away, according to the WHO. "The wording of the resolution is weak compared to Australia's previous calls for a probe into China's role and responsibility in the origin of the pandemic." Even as Xi was lying to the world China was imposing 80% tariffs on import of Australian barley. "The tariffs, set to begin on Tuesday and continue for five years, are effectively to stop billions of dollars of trade between the nations, Reuters reported." Earlier, China "suspended beef imports from four of Australia's largest meat processors, as the trade of several key agricultural commodities suffers in the wake of souring ties stemming from a dispute over the Covid-19 pandemic." Why take revenge on Australia for calling for an investigation unless Xi has no intention of cooperating with one? The spat has been ongoing since April when the Daily Telegraph in Australia questioned China's handling of the virus leading to an angry response from the Chinese ambassador in Australia. In a point-by-point answer to the ambassador's letter the Telegraph brutally ridiculed him and China. A follow up complaint by the Chinese ambassador was answered with the same mockery. "China's claims that the pandemic emerged from a wild animal market in Wuhan last December have been challenged by a landmark scientific study. The Mail on Sunday can reveal that analysis of the coronavirus by specialist biologists suggests that all available data shows it was taken into the market by someone already carrying the disease. They also say they were 'surprised' the virus was already 'pre-adapted to human transmission', contrasting it to another coronavirus that evolved rapidly as it spread around the planet in a previous epidemic." Scientists are sure that the virus originated naturally and was not engineered by human beings. Bat coronaviruses need an intermediate host to become infective to human beings and this one is suspected to have passed through pangolins. Bats live in the air and pangolins on the ground so how did a bat virus go through pangolins. This is where the Wuhan Institute of Virology comes in. Earthquakes are natural phenomena but dams have been blamed for causing slippage of tectonic plates. Hydraulic fracking has also been linked to earthquakes. Scientists in the lab in Wuhan must have passed the bat coronavirus through different animals, including pangolins which are a delicacy in China. The bat virus picked up the S gene from the pangolin virus and then infected people working in the lab. That is why China destroyed all samples of the virus, to destroy mutations produced by passing through other animals. Thus, the virus appears natural. But is man-made. 

Stimulus is to make every citizen self-reliant.

The lockdown of India which started on 25 March to control spread of coronavirus is to continue till 31 May but shops and markets will be allowed to open with staggered timings and customers will have to maintain minimum distance. Hotels, restaurants and malls will remain closed. Metro and airlines will not function. Spread over 5 days, Finance Minister Nirmala Sitharaman has been explaining details of the Rs 20 trillion stimulus package announced by Prime Minister Narendra Modi. The package is designed to increase liquidity to ease borrowing and the actual spending by the Center will be a tad over Rs 2 trillion, wrote P Vaidyanathan Iyer. Apart from increase in support for MGNREGS, which provides employment for unemployed rural workers, and free food for migrant workers there is no increase in spending by the government. Deficit limit of states has been increased to 5% from 3%, even as the Center has not paid compensation for goods and services tax (GST) to the states for the period of December to March. Farmers will be encouraged to borrow on Kisan Credit Card which already has outstanding loans of over Rs 7 trillion. Goldman Sachs predicts, "Gross domestic product (GDP) will contract by an annualized 45% in the second quarter from the prior three months, compared with Goldman's previous forecast of a 20% slump." "Those estimates imply that the real GDP will fall by 5% in the 2021 fiscal year, which would be deeper than any other recession India has ever experienced." Real estate companies are allowed to cite Covid-19 as 'force majeure', which probably means 'unavoidable circumstances', to postpone completion of building projects. Which means buyers, mainly middle-class people, will be forced to live in rented accommodation while also paying interest on their mortgage. Seems that when Modi said that the stimulus package is about 'Atma Nirbhar', meaning 'self reliance', he meant every citizen for herself with no responsibility for the state, except to enforce his orders with brutal force. "In some sense, there is an attempt to try and construct something equivalent of a 'New Deal' that President Roosevelt came up with during the Great Depression (in the US)," appreciated Chief Economic Adviser KV Subramanian. The New Deal strengthened banks, ended prohibition and provided direct stimulus to agriculture. On the other hand, it probably extended the Depression to 10 years. Explain Modi's 'New Deal' to the family of the young man who died on the verge of a highway while on his way home to escape hunger. Or to those who are forcibly locked up in quarantine centers in "unhygienic rooms and toilets, being treated like untouchables, living in cramped rooms, fighting for food". "Some kind of lockdown was necessary to tackle the pandemic, but these deaths are unforgiveable tragedy," said businessman Azim Premji. "Those sixteen young men died because we have almost no social security and too little worker protection -- not because we have too much of it." He is a rich businessman. He does not make promises to win elections. 

A deluge of words.

"Unveiling the fourth tranche of government's mega stimulus, Finance Minister Nirmala Sitharaman laid emphasis on wide-ranging structural reforms across eight critical sectors - Coal, Minerals, Defence Production, Airspace management, Power Distribution companies, Social Infrastructure Projects, Space sectors and Atomic Energy." She said that commercial mining of coal will be allowed "on revenue sharing mechanism instead of the regime of fixed rupee/tonne".  Ominous words! The telecom industry also has to share its so-called Adjusted Gross Revenue (AGR) with the government. Telecom companies naturally expect AGR to mean revenue from their core business but the Department of Telecommunications (DOT) wanted a chunk of "dividend, interest, capital gains on sales of assets and securities and from foreign exchange fluctuations". DOT won in Supreme Court. "Exploring the earth for economically viable (high grade) mineral deposits is a high risk improbable activity," wrote Peter Nichols and Rahul Tongia. "Existing mining law provides that any discoveries (winnings) made by an explorer will be handed back to the government and the government will reimburse the explorer for the funds they expended." That is why, despite having a coastline of over 7,000 km, India imported crude oil worth $111.9 billion in 2018-19. As for privatising electricity distribution companies, or discoms, how are they to make any profit if electricity theft is rampant, if the local administration allows free consumption of electricity, and then will not allow the company to raise prices on other users. "Indian Space Research Organisation (ISRO) has over a dozen facilities that design and develop communication and earth observation satellites and rockets that can carry up to six tonnes of payload into space." It earned Rs 3.24 billion in 2018-19 and has contracts with at least 10 countries to launch their satellites. What if the startups sell out to foreign company of a hostile nation, like China or Pakistan, which will then get a foothold in India's space research. India loses to China because of low productivity, because our companies are small, electricity and transport costs are too high, a strangling bureaucracy and corruption which is why we cannot even make pictures of our own gods, wrote Prof Farok J Contractor. "Many say the government's stimulus lacks demand-side push and is more medium to long-term focussed, when the economy needs a more immediate dose of adrenaline booster."  Sitharaman "will unveil the fifth and final tranche of mega Covid stimulus today at 11 am". May we suggest that she concludes by singing, "It's only words and words are all I have." No tax on words. Pity.

We prefer a simple life on a dirt road.

The Finance Minister Nirmala Sitharaman required three sessions to explain the 'mother of all stimuli' of Rs 20 trillion announced by Prime Minister Narendra Modi. "Dubbed Atmanirbhar Bharat Abhiyan (Self-reliance campaign for India), this mother-of-all-incentives puts bold reforms at the heart of Modi's stated plan to make India self-reliant so that any other crisis that may emerge in the future could be efficiently tackled." "India as a country has maintained a trade deficit as it imports more goods than it exports," wrote Karan Bhasin. "There is a possibility of raising import duties on a wide range of final goods and services," to protect local industries. Unfortunately, others have the same idea. "President Donald Trump has threatened to slap new taxes on American companies like Apple to dissuade them from moving their manufacturing bases from China to countries like India and Ireland instead of the US amidst the Covid-19 pandemic." "I said we shouldn't have supply chains. We should have them all in the United States," said Trump. "Union Minister Nitin Gadkari on Tuesday said the government was considering introducing a policy on import substitution and urged India Inc to upgrade technologically and come with cost-effective substitutes to reduce the country's inward shipment." It is not clear why companies would want to waste money on upgrading when they are being urged to provide cheap products free from competition from foreign companies. "But the Indian economy needs to be wary of trying to gain domestic competitiveness in every sector of the economy," wrote Prof Amit Kapoor & Chirag Yadav. That would take us back to pre-1980 India. "Every political party, from the communists to the BJP, has always sworn by self-reliance," wrote Sanjaya Baru. "For India to be truly self-reliant and self-confident, public investment in education, human capability and research and development has to increase." Trouble is, there is no money. "We don't have money. Our people are poor. Our government is poor," wrote Chetan Bhagat. "Here's what we think is good: Living a simple life (and hence GDP contracting, consumption reducing behavior is great)," "letting the government regulate and take care of everything (particularly those business guys who are all bad and therefore sarkari babu needs to control them) and worshiping politicians like leaders of religious cults (and therefore not holding them accountable)." "Global smartphone, FMCG, electronics and apparel companies are confident that their customers in India will stay loyal to them even after Prime Minister Modi's call to support local businesses." What they are not saying is that Indians are willing to pay more to buy superior quality products. "Sadly, our current turn to import substitution threatens to return us from the turnpike on which we have been traveling all these years on to the dirt road," wrote Prof Arvind Panagariya in 2018. The poor cannot afford to complain, they bear every assault on them. Why change?

It is going to get very interesting.

The Republican Party won two special elections to the House of Representatives in the US this week. State Senator Tom Tiffany won in Wisconsin's 7th District which Trump had won by 20 points in 2016. In California, Republican Mike Garcia won in suburban Los Angeles, flipping a seat held by Democrats for more than two decades. What these results in the midst of a virus pandemic augur for the presidential election on 3 November 2020 no one can tell. As things stand at present, President Donald Trump will be taking on Democrat Joe Biden who was Vice President to President Barack Obama. "Nearly eight years after he was last on the ballot, Barack Obama is emerging as a central figure in the 2020 presidential election" and Democrats are eagerly embracing him to bring in votes. In a recent private conference call, Obama criticized Trump's handling of the coronavirus crisis as "an absolute chaotic disaster". Obama is the third Democrat president to speak against his successor, two Republicans have also done so. Obama made the 2016 presidential election a referendum on his legacy and was rejected by American voters. "My name may not be on the ballot, but our progress is on the ballot," Obama told a gathering of black leaders in September, in a formulation he would deliver repeatedly throughout the fall as he stumped for Clinton." Hilary Clinton lost at least four states that Obama won twice. "During President Obama's first year in office, Democrats held the vast majority of both state house and senate seats and had 28 sitting governors, compared to only 22 Republicans," wrote Newt Gingrich. By the end, the Republicans held "over 4,100 out of 7,383 state legislative seats, the most since the 1920s", controlled both legislative chambers in 32 states, and had 31 governors, compared to just 18 for Democrats. So, why does Biden need Obama? Because of Tara Reade. "Tara Reade, who worked for the former US vice-president nearly 30 years ago, says he sexually assaulted her in the halls of the Congress." Biden has denied the accusation "unequivocally". "Acquaintances of Ms Reade have said she confided in them after the alleged assault." She has recently asked Biden to step down from the race. "Several prominent Democratic women have voiced their support for former Vice President Joe Biden as he faces a sexual assault allegation by his former Senate staffer Tara Reade." An irked Fox News wrote how Christine Blasey Ford could not produce any witness to corroborate her accusation against Judge Brett Kavanaugh but the media and Democrats went berserk. They are silent now. All those named by Ford, including her friend Leyland Ingham Keyser, denied being at such a party. Virus, economy and Reade, it's going to be interesting.

Should our CEA doubt the US and UK?

"After repeated calls by experts and economists for more fiscal stimulus to kickstart India's stalled economy, PM Modi finally unveiled a Rs 20 lakh crore (Rs 20 trillion) mega package yesterday." "While the Rs 20 lakh crore stimulus package is being revealed in parts like the episodes of an intense television serial, and we today have seen only the first episode, we are in no position to present a review of the entire production," wrote an editorial in the Economic Times. "Not all of the Rs 20 trillion constitute extra fiscal expenditure," wrote Prof Arvind Panagariaya. "This is just as well. The medium to long-term impact of adding 10 percentage points to fiscal deficit would not have been pretty. The government would have had to print massive sums of money raising cash in circulation by a very large percentage -- perhaps by as much as 25-30%." "Of the Rs 20-lakh-crore package that Prime Minister Narendra Modi announced to defend the economy against Covid-10 disruptions, fresh support may be only around 60 percent of the offer as it counts the first financial stimulus and liquidity support that Reserve Bank (RBI) has given already, and will overburden bond market, says a report." For comparison, the US passed a $2 trillion stimulus package which would give $1,200 to every person with income of up to $75,000 per year. Those on unemployment benefit will receive an additional $600 per week for 4 months. There was another $484 billion to help small businesses so that they could continue to pay staff. The US economy is nearly 10 times that of India so we could compare with Britain which is of almost equal size. The budget presented by Chancellor of the Exchequer Rishi Sunak, son-in-law of Narayan Murthy, will pay 80% of wages, up to a maximum of 2,500 pounds per month, to all those who have lost their jobs due to the coronavirus lockdown. Employees of small industries who fall ill with coronavirus will get sick leave pay for two weeks. However, the Chief Economic Adviser (CEA) to the Indian Government Krishnamurthy Subramanian rubbished these numbers, saying that the UK package is not 15% of GDP but only 3.7%, because it includes loans, and the US package is worth just 6% of GDP and not 10%. Given that logic, the package announced by Finance Minister Nirmala Sitharaman yesterday consists almost entirely of loans and so is worth nothing. What is the point of earmarking Rs 3 trillion for collateral-free loans to micro, small and medium enterprises (MSMEs) if they cannot operate because they are in a red zone or because their suppliers are shut. Are they supposed to borrow just to pay employees? Red zones account for 43% of GDP while orange zones account for 38%, wrote SA Aiyar. Any district magistrate can shut down an area if she/he so wishes. Less tax is to be deducted at source (TDS), apparently to give more cash to taxpayers, but that tax will still have to be paid when filing tax return. Smoke and mirrors. Our lot are experts.

Will Rs 20 trillion get rid of the terror?

The Prime Minister has spoken. "The mega Rs 20 lakh crore (Rs 20 trillion) stimulus package announced on Tuesday by Prime Minister Narendra Modi includes previously announced measures to save the lockdown battered economy, and focuses on tax breaks for small businesses as well as incentives for domestic manufacturing." "A stimulus of Rs 20 lakh crore is awe-inspiringly large," wrote a skeptical TK Arun. "What was missing was any tangible announcement of concrete relief for the suffering mass of humanity fleeing lost jobs, penury and callous abandonment at their place of work, for the meagre but assured refuge of a distant home." India should ignore threats of credit rating downgrades because these agencies are biased, wrote Rajrishi Singhal. Total debt of the Center and states in India was 72% of gross domestic product (GDP) in 2019-20, whereas Italy will have a fiscal deficit of 10.5% and its public debt will "jump to over 155% of GDP" this year. Yet, it's rating of BBB/A-2, which is higher than that of India's, was confirmed. "The rating agencies are private entities incorporated in the US and march to different idiosyncratic tunes, free of regulatory oversight." On 31 December 2019, "Total market capitalisation of the Indian equity market stood around Rs 154 lakh crore, or $2.2 trillion, as of Monday's close. Foreign portfolio investors held around Rs 30 lakh crore, or 20 percent of that market cap.." "Foreigners hold just 3.7 percent of almost Rs 60 trillion ($835 billion) of sovereign bonds issued by India, and the government has set a 6 percent limit on foreign ownership." A substantial portion of foreign investments will be US firms and hence rating agencies have a duty to warn them of risks. Unlike ratings agencies in India, which were fined by the Securities and Exchange Board of India (SEBI), for rating IL&FS at the highest level of AAA before it defaulted on its debt in 2018 and caused an enormous financial crisis. "Overseas investors have begun to factor in a likely sovereign rating downgrade", because "Many of estimated 9,500 portfolio investors have the mandate to put cash only into investment grade countries." FPIs can see the inhuman suffering of migrant laborers as they walk along highways with children and their meager belongings. "Exhausted people sleep on the roadside. Children cry in hunger. Mother's cast anguished glances at vehicles that won't stop." With no protection against swarms of mosquitoes that have emerged due to recent rains. Over 8,000 auto-rickshaws loaded their belongings and fled Mumbai for their distant villages in UP and Bihar. "Center for Monitoring India Economy (CMIE) on Tuesday said 27 million youth in the age group of 20-30 years lost their jobs in April 2020 following nationwide lockdown to prevent the spread of the novel coronavirus. Terror of the virus, terror of hunger and terror of the future. Will Rs 20 trillion heal that terror?