How can you defend egregious violence?

 The two basic principles of taxes are, "that governments should never make tax changes with retrospective effect", and two, "tax regimes must be stable in order to attract foreign (or even domestic) investment", wrote R Jagannathan. Acknowledging that "the Indian taxman has a tendency to harass taxpayers and is known to make large demands on flimsy grounds", he defends the government's $2 billion tax demand in the Vodafone case which India lost in the Permanent Court of Arbitration in the Hague recently. Vodafone took advantage of a loophole in the law to avoid paying a withholding tax on its purchase of Hutchison Essar telecom company in 2007. Tax laws should be simple and clear and not made complex intentionally to harass taxpayers. For example telecom companies in India have to pay tax on Adjusted Gross Revenue, which means income even from sources not related to telecom. Vodafone idea owes Rs 574.54 billion. Even prospective taxes have retrospective effect. For example, "if a government decides to impose a wealth tax from the current year, the tax will not be on wealth accumulated prospectively. It will apply retrospectively." In India rules are changed suddenly to catch people and businesses unawares and turn legitimate activities illegal. Walmart bought Flipkart for $16 billion in May 2018, on which it paid withholding tax of Rs 74.39 billion initially, and then a further Rs 100 billion in September. Soon after, the government suddenly changed rules on ecommerce putting the company at a disadvantage. When tax laws are changed people and businesses should be given time to make changes in their investments so as to minimise their losses but the government tries wring as much as possible out of taxpayers by catching them unawares. When taxes were increased on long term capital gains in 2018, people were not given time to book profits at the old rates. This makes the government look guilty of sleazy extortion. Not just taxes. Law enforcement agencies are used to settle scores and stifle any criticism, however legitimate. "How did an investigation of an apparent suicide by a star morph into a hunt for all drug users in Bollywood, after taking a brief detour into a cloddish probe into nepotism in the Hindi film industry?" asked The Indian Express. "The state uses investigations, evidence, chargesheets as pretexts for establishing a narrative dominance and to intimidate. It is not interested in guilt or innocence. It is interested in demonstrating that it can destroy your life with impunity," wrote Pratap Bhany Mehta. False cases are being brought against those accused of riots in Delhi in February. "In such cases the normal language of a chargesheet under UAPA is replaced by storytelling, innuendo, presumption, extrapolation, stretching of the narrative and downright lying," wrote Colin Gonsalves. Jagannathan tries to defend the government. We know better.      

Is it likely to be an embarrassment of riches?

 "Foreign institutional investors (FIIs) have turned net buyers of government debt after six months of selling, anticipating that the central bank will try to soften long term bond yields to support the government's massive borrowing program," wrote Ghosh and Sonavane. "Experts attributed the buying to the Reserve Bank's recent moves to keep long term bond yields from spiking ahead of the coming borrowing calendar, which is likely to increase significantly from the preceding years given the current economic scenario." Since yields are inversely related to prices of bonds, FIIs maybe expecting prices to rise as the Reserve Bank (RBI) pushes yields down by refusing to sell if bids price the bonds below certain price. In a recent auction the RBI accepted bids for only Rs 1.25 billion at yields of 6%. At the same time the rupee is becoming stronger which means FIIs will gain in exchange rate if they sell. "Dollar buying intervention by the RBI in recent months has made the rupee one of the worst-performing Asian currencies in 2020, despite massive dollar inflows into stock markets and for corporate fundraising," wrote Reuters. India's foreign exchange reserves climbed to a record high of $544.038 billion during the week ended 18 September. "Reserves will provide a level of confidence to markets that a country can meet its external obligations, demonstrate the backing of domestic currency by external assets, assist the government in meeting its foreign exchange needs and external debt obligations and maintain a reserve for national disasters or emergencies."  The rupee is rising because of inflows of dollars and the RBI has been buying dollars to try and stop the rupee from appreciating too high and too quickly. However, buying dollars releases a flood of rupees into the market which the RBI has to neutralize by selling bonds in open market operations (OMO). Selling too many bonds lowers their price and raises yields so the RBI resorted to 'operation twist,  buying long-term bonds, which increases their price and brings down yields, while selling short-term bonds. Due to the coronavirus, emerging market economies will incur heavy fiscal load, will see a rise in public debt and interest burden and some will have to repair their banks, wrote Andy Mukherjee. India will suffer all three problems, plus a shambolic goods and services tax (GST) problem, but the bond market loves it. "The market is pleased because it is getting concessions from panicky authorities." Foreigners pouring money into India. Could it be embarrassing?

We may not see it, but we can feel the cosh.

 Finance Minister Nirmala Sitharaman told state governments to borrow to make up a shortfall of Rs 2.35 trillion in goods and services tax (GST) compensation. States ruled by opposition parties want the Center to borrow and pay them their dues. Not only has the Central government refused to honor its commitment to compensate states for any shortfall in GST collections, it has imposed conditions under which states will be allowed to borrow, perhaps forgetting that governments in the states in India are elected by people who live in those states. "It is not the first time, and neither will it be the last time that the Center and states have differed," wrote Anil Padmanabhan. "Over the last few weeks, it (Center) has set in motion a fundamental reset in the existing paradigm for education, harvest, sale and storage of agriculture produce, the public distribution system and the bureaucracy. All these subjects also fall under the purview of the states." "Following the furor in the upper house of Parliament on September 20, eight opposition MPs were suspended from the house, during which period the Center pushed through seven bills." So there are seven new laws to govern citizens without any debate, discussion or amendment on how they will affect our lives. While blaming an "Act of God" for its inability to pay its dues, "The government wrongly retained Rs 47,272 crore of goods and services tax (GST) compensation in the Consolidated Fund of India in 2017-18 and 2018-19 and used it for other purposes, the Comptroller Auditor General (CAG) said in its audit report of government accounts." The government can ride roughshod over citizens and states but foreigners are another matter. The tax department has just lost its claim of Rs 200 billion in taxes against Vodafone at the Permanent Court of Arbitration in the Hague. India will also have to pay penalties and costs. The Income Tax department is to seek the Attorney General's opinion on whether it should appeal to the Singapore based appellate tribunal. If they do and lose again they should be made to pay all costs and penalties, not the taxpayer, from their own pockets for their obstinacy. Using a retroactive tax demand law enacted by the previous government, the present government demanded $4.3 billion from Cairn Energy in 2016. "After Cairn disputed the levy, New Delhi expropriated its shares in Indian billionaire Anil Agarwal's Vedanta Ltd, into which Cairn had merged the India unit. The government pocketed the dividend and then sold the stock," wrote Andy Mukherjee. "Transparency is a cornerstone of democracy, today's India is cultivating secrecy. Paradoxically, this culture of secrecy is sometimes justified in the name of transparency," wrote Christophe Jaffrelot. We can see. But, can do nothing. That's transparent.   

Victory before election. Why should he miss the chance?

 US Supreme Court Justice Ruth Bader Ginsberg died on 18 September from metastatic pancreatic cancer at the age of 87 years. She was diagnosed with colon cancer in 1999. Doctors discovered pancreatic cancer at follow up examination a decade later. In 2018, she underwent lobectomy for lung cancer which was discovered during treatment for broken ribs after a fall in her chambers in 2018. She is famous for being a feminist and consistently dissenting with other judges over rights of women, so that she became a liberal icon. Till now the US Supreme Court has been deemed to have a 5-4 majority in favor of conservatives over liberals, depending on who was appointed by Republican or Democrat president. Though Chief Justice John Roberts was appointed by President George W Bush he has voted with liberals on Obamacare, deportation of DREAMers and on abortion, tilting the balance in favor of liberals. With US presidential election on 3 November, President Donald Trump has nominated another conservative, 48-year old Amy Coney Barrett  who, if confirmed by the Senate, will change the balance of the Court to 6-3 in favor of conservatives. Liberals are enraged that Republicans plan to go ahead with confirmation of Barrett when they blocked appointment of Merrick Garland who was nominated by Barack Obama when conservative Justice Antonin Scalia died suddenly in 2016. Before her death Ginsberg is supposed to have told her granddaughter, "It is my most fervent wish that I will not be replaced until a new president is installed." This is breathtaking in its arrogance, a blatant interference in politics and an attempt to reduce the power of the Senate. Especially since she supported Obama's right to appoint Garland in 2016, saying, "The president is elected for four years not three years, so the power he has in year three continues into year four." The last time the Senate confirmed a Supreme Court judge in election year was in 1940, and before that in 1932 and in 1916, wrote Chad Pergram, who thinks the Republicans have the numbers to confirm Barrett. Democrats are incensed at, what they see as, Republican hypocrisy when they refused to confirm Garland in an election year in 2016. The difference is that Obama was a lame duck in 2016, because he could not stand again, whereas Trump is up for re-election. Opinion polls are already giving the election to Democrat candidate Joe Biden, but "There is growing suspicion that Trump supporters are not divulging their preferences to pollsters." Just wearing a hat saying Make America Great Again (MAGA) can get one killed. The memory of 2000 when the Supreme Court divided 5-4 to decide the State of Florida, and the election, in favor of George W Bush, by just 537 votes, the infamous 'hanging chads', out of 6 million cast, must be seared in the minds of Democrats. A 6-3 Supreme Court provides insurance for Republicans and a nightmare for Democrats. Even if Trump loses he will have left a Supreme Court in his image. As judges are for life, as Ginsberg proved, this could be for a generation. Trump wins even if he loses. The irony. 

Hysteresis of recession of self-reliance.

 "The International Monetary Fund (IMF) said on Thursday that Prime Minister Narendra Modi's call for a self-reliant India, i.e. 'Atmanirbhar Bharat' is an important initiative." According to director-communications department at the IMF Gerry Rice "the economic package announced under this self-reliant initiative" "has supported Indian economy", but to integrate India in the global value chain, "improving the efficiency and competitiveness of the economy is critical". But, self reliance and "efficiency and competitiveness" are mutually contradictory. "For starters, import substitution industrialisation (ISI), which entails progressive replacement of imports by domestic production, is precisely the strategy we pursued until 1991," wrote Prof Arvind Panagariya. In 1991, India faced a balance of payment crisis and survived by pledging 67 tons of gold as collateral to raise $600 million. ISI "encourages domestic production through tariffs and output subsidies", resulting in growth of "small-scale firms focused on making quick profits with no plans to become exporters." "Five of the eight high-frequency indicators compiled by Bloomberg News gained last month, while two were unchanged and one deteriorated. This kept the needle on a dial measuring so-called animal spirits steady at four," wrote Anirban Nag. The rate of coronavirus infection in India is the same as that in Brazil, but market analysts have continued to upgrade Brazil's growth prospects while continuing to downgrade that of India, said Jehangir Aziz. Because Brazil provided income support to poor families. "The economic impact of Covid-19 outbreak is progressing from a supply shock, to a demand shock as incomes and jobs shrink according to a survey by BofA Securities and it expects demand boosting measures from the government." Which means more spending. Will the government have Rs 800 billion to buy and distribute coronavirus vaccine to all the people, asked CEO of Serum Institute Adar Poonawalla. "British telco Vodafone Grouup Plc won a decade-long battle against the Indian tax department's demand of Rs 20,000 crore (Rs 200 billion) from its entry into the country in 2007, said people with knowledge of the matter." "The World Bank expects remittances to South Asia will drop 22% this year", because of global economic contraction due to the virus. Money is so tight that"The government wrongly retained Rs 47,272 crore (Rs 472.72 billion) of goods and services tax (GST) compensation in the Consolidated Fund of India in 2017-18 and 2018-19 and used it for other purposes, the Comptroller Auditor General (CAG) said in its report of government accounts." Without government spending and reforms there is a danger of "strong and pervasive 'hysteresis' effects", wrote Prof Vivek Dahejia. Hysteresis means a persistence of the present economic recession well into the future. Time to get hysterical?  

Does X Jinping really want to meet his old pals?

 "Xi (Jinping) is attempting to implement a modern version of the tributary system that Chinese emperors used to establish authority over vassal states: submit to the emperor, and reap the benefits of peace and trade with the empire," wrote Prof Brahma Chellaney. Xi would probably love to sit on a throne and wear a crown. "Hailing 'mighty uncle Xi', Chinese people have taken to social media using an old imperial term to welcome President Xi Jinping's naming by the Communist Party as its 'core', despite party efforts to limit his cult of personality," reported Reuters.  Using a fictitious nine-dash line China has claimed sovereignty over the entire South China Sea. The US has rejected China's claims, but the other nations bordering the South China Sea, such as Vietnam and Philippines, are too small to challenge the naval strength of China. In June, 20 Indian soldiers were killed in hand-to-hand fighting with Chinese troops in Ladakh. Many Chinese soldiers were killed by Indians. "Xi was so embarrassed by this outcome that, whereas India honored its 20 fallen as martyrs, China refuses to admit the precise death toll." In a surprise move, "Indian Army has occupied heights overlooking Chinese Army positions at Finger 4 along Pangong Lake." Despite peace talks India has consolidated its positions and has deployed fighter jets along the border. "If that were not humiliating enough, India eagerly noted that the Special Frontier Force (SFF) that spearheaded the operation comprises Tibetan refugees." Xi Jinping's aggressive attack on India 'unexpectedly flopped', wrote US magazine Newsweek. "China is pushing growing numbers of Tibetan rural laborers off the land and into recently built military-style training centers where they are turned into factory workers, mirroring a program in the Western Xinjiang region that rights group have branded coercive labor," reported Reuters. The China Aerospace Studies Institute (CASI) in the US reported that "between 2012 and 2018, China carried out multiple cyber attacks" on Indian satellite communications, "even as the Indian Space Research Organisation maintains that its systems have not been compromised so far". An investigation by The Indian Express revealed that Zhenhua Data Information Technology Co based in Shenzhen in China was monitoring Indian  politicians, officials, judges and leading personalities using Artificial Intelligence and stored data on Overseas Key Information Database. The same company was also tracking at least 35,000 Australians and 50,000 Americans. Perhaps, in a sign of growing opposition, Xi carried our another purge of Communist Party and government officials. Xi must know how a former president Liu Shaoqi was humiliated and tortured after losing power. Former pal Bo Xilai is waiting for him. What a reunion it will be.

Can they fall any lower?

In a comparison between slums in Patna in Bihar, and in Bengaluru in Karnataka, Downs-Tipper and Rains found that, while there were no cases in Patna, "There are contrasting livelihood situations, with an uptrend in Bengaluru and creeping hopelessness in Patna." "The average slum household has 4.4 members in Bengaluru and 6.4 members in Patna, and has, respectively, 1.9 and 1.7 earning members." That maybe because, at 26.8%, Bihar has the highest rate of illiteracy in women and the highest fertility rate in India at 3.2%. Naturally, "The average monthly income of a slum household was more than Rs 23,000 in Bengaluru and just about Rs 17,000 in Patna." "Less well off to begin with, Patna's slum residents were hit harder economically." "Because of unrelenting hardship they have faced, an overwhelming majority in Patna's slums expect that three months, or even six months, from now things will still be worse than before the pandemic." That is bad news because assembly elections are expected to be held in Bihar by the middle of October. At present the government in Bihar is formed by Janata Dal (United) of Chief Minister Nitish Kumar and Bharatiya Janata Party (BJP) of Prime Minister Narendra Modi. Why don't they dish out largesse as politicians do before elections? The Bihar government has no money, partly because Kumar promised prohibition of alcohol to get votes in 2015 election. Whenever there is prohibition it is an invitation to smugglers to make money. Men die from drinking locally brewed alcohol from dubious sources. Following the lockdown in March at least 1.5 million migrants returned home to Bihar. "The state government has been losing in upward of Rs 4,000 crore (Rs 40 billion) annually since the alcohol ban in the state since 2016," wrote Prof Guru Prakash. That is over Rs 200 billion in lost revenue in 5 years. "The already burdened judiciary in the state has to deal with the additional 200,000 prohibition related matters. The crime rate has grown manifold contrary to the popular narrative that the ban has contributed towards peace and stability." So, less tax collection and greater spending on policing and prison population. Of course, Modi did announce a fisheries scheme over the next 4-5 years but how they will cultivate fish in the middle of slums is not clear. If there is no money you have to divert people's attention. A young actor from Bihar committed suicide in his flat in Mumbai in June. Two of his friends were sharing the flat and they did not notice anything untoward and his room was locked from inside. Despite that, first the Enforcement Directorate (ED), then the Central Bureau of Investigation (CBI) and now the Narcotics Control Bureau (NCB) have been hounding a young Bengali actress called Rhea Chakraborty for over two months. Congress Party activists in Bengal have been protesting against this intimidation of Rhea. Assembly election in Bengal is to be held by April-May 2021. Will the harassment of Rhea on frivolous charges be a reason for assaults on Biharis in Bengal remains to be seen. Win election but lose the nation. We can only mourn. 

Can they stop interfering and leave them alone?

Four days back the parliament passed two bills to reform agriculture, which will allow farmers to sell their produce directly to customers and to enter into long term contracts with large companies which manufacture processed food products. The government hopes that these changes will encourage private investment in agriculture which will increase farmers' incomes and reduce wastage by setting up cold chains. At present farmers are forced to sell their produce through Agriculture Produce Market Committees (APMC), known mandis in Hindi, at prices fixed by middlemen. Reforms are essential because, "One, Indian agriculture is highly unremunerative. Two, it has been heavily regulated by the government and protected from the free play of market forces," wrote Misra and Iqbal. The result is that about 55% of Indians are dependent on agriculture but it accounts for only 17% of gross value added (GVA) and 86% of farms are between 1-2 hectares, which is too small to sustain a family, so most farmers are heavily indebted. So why are farmers in Punjab and Haryana protesting when they should be happy to be rid of the shackles? Because of government guarantee of minimum support price (MSP) which is a minimum floor price on 22 crops, but mainly on wheat and rice, over 80% of which goes to just two states, Punjab and Haryana. Former Union Agriculture Secretary Siraj Hussein said, "Punjab and Haryana have been major procuring states where 80-90% of farmers can realise MSP." Prime Minister Narendra Modi said it is a '"watershed moment", while the opposition says they will be "death warrant" for farmers. "The government procurement system acts as a safety cushion, and adds to the bargaining power of the farmer," wrote Ajit Ranade. "Only when government procurement is done, that too through the mandi, does the farmer get full price." Punjab levies mandi tax at 8.5% of total value and "crucially depends on mandi tax revenue, which is above and outside the GST". The government "blatantly crafted" these bills without consulting farmers "to fill the pockets of capitalist cronies of the BJP at the cost of the poor farmers", wrote Chief Minister of Punjab Amarinder Singh. These are "transformative reforms" and "opposition parties are resorting to misinformation and fear- mongering to score political points", wrote Union Minister Hardeep S Puri. "The repercussions will reverberate across the world's second-most populous country" wrote Andy Mukherjee. "Narendra Modi has gambled big before, with some disastrous results. It's asking a lot of people in rural India to trust him again." Can the government stop itself from interfering if prices shoot up due to drought or flood? When onion prices rose recently the government banned exports and released buffer stocks to bring down prices, wrote Roshan Kishore. Which means farmers are prevented from making windfall profits but not from windfall losses. A private market can operate only if politicians stop interfering. Will they? Especially, if an election is coming?  

If it works for them, why should they change?

"India has the potential to achieve a high GDP growth rate of around 10 percent and be a $10 trillion economy in the next 12 to 15 years, HUL CMD Sanjiv Mehta said on Monday." "There is very clear anecdotal evidence of growth rate in staples in urban India slowing down, which could be a very clear pointer that the urban poor are feeling the stress." "We should not let that happen -- we should definitely take the risk of being aggressive with spending." Hindustan Unilever is a large consumer goods company with sales of around Rs 350 billion. "In the last three decades, we have achieved about 6 to 6.5 percent on an average GDP growth rate", so we have to "dream big, think big and act big". Mehta is talking about real GDP growth which was 3.1% in the January to March quarter of 2020 and 4.2% in financial year 2019-20. Real GDP is calculated by adjusting nominal GDP for inflation according to prices in a base year. Since nominal GDP is at current prices it is larger and its growth rate is higher. Real GDP in India is calculated at 2011-12 prices and grew at 4.18% in 2019-20 while nominal GDP grew at 7.21%. India's GDP was about $2.9 trillion in 2019 according to World Bank data. Unfortunately, it contracted by 23.9% in the April to June quarter, which is the first quarter of financial year 2019-20 and is predicted to shrink by 14.8% in the entire year by Goldman Sachs, which will take it to around $2.5 trillion. Assuming a real GDP of $3 trillion it will take a compound annual growth rate (CAGR) of 8% to take it to $9.5 trillion in 15 years. Taking average inflation rate of 4%, the nominal GDP will have to grow at over 12% CAGR. Consumer price inflation (CPI) came in at 6.69% in August. Ruchir Sharma does not agree with Mehta that the government should be "aggressive with spending". Because, "we entered this crisis with one of the highest public debts and fiscal deficits in the world, especially in the emerging world", and "we've got to keep in mind that India's inflation is still more sticky compared to other countries in the world, even other developing countries in the world". Ir we try to print (notes) our way out of the crisis we will end up like Turkey, whose economy is in a real mess. "Our big business tycoons are a bigger threat to the growth of a liberal economy than politicians, because they want to do away with competition, harking back to our 'licence raj' days of Ambassador cars," wrote GR Gopinath. Foreign investors are tempted by politicians to invest in India but if rules are changed after they invest they will lose confidence. Crony capitalism is a cozy club of politicians, civil servants and business leaders. Why should they change? 

A fritters economy. If we are lucky.

 "The Nomura India Business Resumption Index (NIBRI) came in at 82.3 for the week ending September 20 from 81.2 a week earlier, recording the second consecutive week of a fresh lockdown high." This was because of a rise in "Google retail and recreation mobility index and the Apple driving index even as workplace mobility worsened". India created 4 million jobs per year before the coronavirus epidemic and the economy is to contract between 3% and 9% this year. So India must grow at 8% to 8.5% and create 90 million non-farm jobs in the next decade, said Shirish Sankhe, Partner at McKinsey and Company. Growth in manufacturing, construction and agriculture have to be substantial. Ruchir Sharma has selected Germany, Finland, Switzerland, Vietnam and Taiwan which fulfill his criteria for emerging the strongest from the pandemic, with Russia as a dark horse. India came a low 13th in 25 of the largest emerging countries in its ability to withstand the effects of the epidemic except that it "is less vulnerable to the forces of deglobalisation". "Narendra Modi says, 'Make in India.' Toyota Motor Corp says, stop treating cars as though they were drugs or alcohol," wrote Andy Mukherjee. "India must break out of this vicious cycle in which taxes are high, consumer demand is low, investment and job creation are constrained, and wage incomes are insufficient to boost purchasing power at the bottom of the pyramid." Auto analyst Govind Chellappa suggests stop constant tinkering with taxes and leave the same high taxes for 15 years. That will bring stability to the auto sector and allow companies to develop new products and plan their investments. Advance tax collection jumped to over Rs 1.59 trillion, 25.5% lower than the same period last year, in the second quarter of this financial year, compared to a paltry Rs 117.14 billion in the first quarter which was down 76%. As evidence of widespread tax evasion, the Prime Minister said that 30 million Indians travel abroad every year but only 15 million pay income tax. "Is it possible that India's per capita income is artificially low because millions hide their income," asked Praveen Chakravarty. "No. Even if millions of people hide their incomes from tax authorities, it will be accounted for in India's GDP and per capita income data since they will use this hidden income to eventually spend on goods, real estate, gold and so on." Meanwhile the Modi government is refusing to pay compensation for a fall in goods and services tax collection to the states. "For a government that has otherwise poured money into schemes with considerable largesse, the fiscal response to the crisis was remarkably muted," wrote Prof Vivek Dahejia. Toyota or pakora (fried Indian fritters), asked Andy Mukherjee. Definitely pakora. Maybe half of one.        

Since we are masters, why stop?

 "Aiming to woo the influential Indian-American voters numbering over 2 million, the Trump campaign has released its first video commercial that has short clips from Prime Minister Narendra Modi's speeches and US President Donald Trump's historic address in Ahmedabad." According to the US Census Bureau there were 2.65 million Indians living in the US in 2018, up from 1.78 million in 2010. There are also over 500,000 unauthorised Indians estimated to be living in the US illegally. These Indians are an important vote bank in the US, so we should not extrapolate the bonhomie to Indians living here in India. Newly declassified White House tapes reveal President Richard Nixon saying, "They are repulsive it's just easy to be tough with them." National Security Adviser Henry Kissinger's hatred was even more  savage. "They are a scavenging people," "They are superb flatterers Mr President. They are masters at flattery." "They suck up -- their great skill is to suck up to people in key positions," he said omnisciently. Indira Gandhi was the prime minister during Nixon's time and is still remembered for declaring an Emergency in 1975, to suppress opposition to her rule. However, this was only possible because President Fakhruddin Ali Ahmed signed the order without question and "Mrs Gandhi's cabinet fell in line without a murmur," wrote Coomi Kapoor. "Mrs Gandhi demonstrated her contempt for parliament by doing away with Question Hour." Using the coronavirus epidemic as an excuse, Modi scrapped Question Hour in the monsoon session of parliament. During the Emergency, "Nine High Courts had the courage to strike down the draconian Maintenance of Internal Security Act (MISA), as being ultra vires the constitution." Now we have an alphabet soup of tyrannical laws. Under the Unlawful Activities Prevention Act (UAPA) and National Security Act (NSA) "bail can be denied almost indefinitely", wrote Pankaj Butalia. "Such is the fascination with these 'extraordinary' laws that even the judiciary no longer questions their misuse." Financial institutions are predicting a double digit fall in GDP this financial year as the virus rages uncontrolled despite the severe lockdown which decimated the economy, wrote Anirban Nag. Yet, "A resounding 78 percent of the people surveyed found the performance of PM Modi outstanding/good." Why? "The most adept populist leaders don't only detach the electorate's perception from inconvenient facts, providing an alternative narrative in which they, and they alone, are the stars," wrote Mihir Sharma. It is the politics of 'vishwas', which means 'faith', wrote Pratap Bhanu Mehta. "The elites. including India's most powerful, are latching on to this vishwas because it disguises their own failures." The sucking up is still continuing. We are back to Nixon's time.   

Why not do it directly?

Graeme Wheeler, then Governor of the Reserve Bank of New Zealand, the first to adopt inflation targeting, said in October 2015 that monetary policy cannot influence long term economic decisions, cannot stimulate increased spending by households or industry and has little effect on long term real interest rate. At best it can influence actual inflation and inflation expectation over the medium term. VA Nageswaran does not agree. "Central banks do not influence almost anything," he wrote. All developed countries target an inflation rate of 2% but the consumer price index rose 1.3% in the year to August in the US, despite promising to keep interest rate near zero till 2023, while in the European Union, inflation rose to a high of 1.7% in January but fell to 0.8% in July 2020, despite a negative interest rate of  - 0.5%. So, central banks cannot push inflation up in developed countries and are ineffective in pushing it down in developing countries because inflation is caused by restrictions in supplies. The first Monetary Policy Committee (MPC) was set up in the Reserve Bank of India (RBI) with a mandate to keep retail inflation between 2 and 6%, with a target of 4%. Although GDP growth was robust for most of its term, other indicators such as credit growth, corporate investments, industrial output, household consumption and real wages were weak, wrote Kwatra and Devulapalli. "There was also growing frustration in the government, especially in the Finance Ministry that was led by Arun Jaitley at that time, about the RBI not bringing down interest rates in the economy." Two independent governors of the RBI were forced to resign over differences with the government and Shaktikanta Das, a retired civil servant who had worked in the Finance Ministry, was appointed governor in 2018. He has slashed interest rate by 250 basis points since last year, though minutes of the MPC showed that it was persistently worried about retail inflation. The consumer price index (CPI) came in at 6.69% in August. The RBI could not stop demonetization despite its reservations, it cannot solve problems of a badly planned and badly implemented goods and services tax (GST), or the sudden imposition of total lockdown with just 4 hours notice when coronavirus cases were just 500. "Throughout history, the Union government has deployed three levers to control the RBI," wrote Bhattacharya, Bhatia and Devulapalli. The RBI needs sanction of the government, can be told what to do and the government appoints the governor and board members. If its only function is to reduce interest rate as told, why waste so much money on the RBI. A toothless RBI is useless. The Finance Ministry should directly manage monetary and currency policies. It's doing so anyway. By proxy.      

The worst of locking and unlocking.

 "New Zealand is in its deepest recession in decades, following strict measures in response to the Covid-19 pandemic which were widely praised. The country's GDP shrank by 12.2% between April and June as the lockdown and border closures hit." Prime Minister Jacinda Ardern suggested a quick recovery in the economy, "However Treasury forecasts released yesterday suggested massive debt and continuing disruptions are likely to delay a full recovery." A study by the Center for Economic Policy Research and the World Economic Forum suggested that female leaders have done much better than men in controlling coronavirus infections and deaths. The paper suggested that it was because of "the proactive and coordinated policy responses" by female leaders. So confident was Ardern in her popularity that she called for general elections on 19 September. However, early shutdown to prevent infections leaves a large naive population with no herd immunity. New infections broke out in Auckland resulting in another strict lockdown, forcing Ardern to postpone elections to 17 October under pressure. Sweden, with a male prime minister, refused to lockdown the country with the result that infection rate has fallen to 1.3%, lower than Norway and Denmark which enforced strict lockdowns. India has the worst of both worlds. "On March 25, when India had reported only 500 cases, the country went into what was one of the strictest lockdowns in the world," wrote Jha and Mullick, which brought the entire economy to a standstill. Forced by rising hunger the government started unlocking the economy in June while cases were rising. The Union Home Ministry announced unlock 4.0 on 30 August. With 93,337 new cases yesterday the total number has now climbed beyond 5.3 million. However, even with these astronomical numbers there is suspicion of under-reporting of the number of cases and the number of deaths. Non-communicable diseases (NCD), such as diabetes, hypertension and cardio-vascular diseases, "account for 63% of all deaths in India and these are expected to rise further", wrote Kukarni and Galha. But now, "Not only are they denied medical attention, they also have to bear the brunt of hospitals going all out to accommodate covid patients." Outpatient cancer care, immunization of children and hospital child births have all dropped which portend a horrific healthcare crisis, wrote Ragini Saxena. However, optimists hope that punishment for spitting in streets and mandatory face masks to control covid spread may eliminate tuberculosis from the country. Life, death, infection, jobs, hunger, everything is unknown for us in India. "In God we trust," say Americans, we shrug "Ram Bharose."  

Friendship born of fear.

 "US President Donald Trump on Tuesday hosted Israeli Prime Minister Benjamin Netanyahu and foreign ministers of the United Arab Emirates and Bahrain for the signing of the historic Abraham Accord, which is the first Arab-Israeli peace deal in 26 years." "As per the agreements, the UAE and Bahrain will establish embassies, exchange ambassadors, cooperate and work together with Israel across a wide range of sectors, including tourism, trade, healthcare and security." Agreement with the UAE was reached last month. "The agreement is called the 'Abraham Accord' after the father of monotheistic religions founded in the Middle East -- Christianity, Islam and Judaism." The first peace treaty with an Arab state was between Israel and Egypt in 1979 and the second one was between Israel and Jordan in 1994, both of which border Israel and fought wars with it. Hence, many people have dismissed the importance of this agreement because Israel does not share borders with either the UAE or Bahrain and has never been at war with them. "It's a geopolitical earthquake," wrote Thomas L Friedman after the deal with the UAE. "The deal will certainly encourage the other gulf sheikhdoms -- Bahrain, Oman Qatar, Kuwait and Saudi Arabia -- all of which have had covert and overt business and intelligence dealings with Israel, to follow the Emirates' lead." Perhaps, the agreement with Bahrain is more important because the majority of its population are  Shia Muslims but the rulers are Sunnis. The overwhelming majority of Muslims in Iran are Shia. Bahrain is connected to the Al Khobar region of Saudi Arabia by the King Fahd Causeway. Saudi Arabia is predominantly Sunnis with a minority Shia population, who live in the Eastern region, which is also the oil producing region of the kingdom. Iran and Saudi Arabia are bitter enemies because Iran is Persian while Saudi is Arab, difference in religion, and Saudi Arabia is home to Mecca and Medina, the holiest shrines in Islam, which the Ayatollahs of Iran would dearly love to control. In April last year, "Saudi Arabia quietly beheaded 37 people, mostly Shia men from the country's Eastern Province", on a charge of spying for Iran. In 2011, the Saudis sent troops into Bahrain "to help calm weeks of protests by the Shi'ite Muslim majority", and help maintain the Sunni control of the island. Shia Houthis in Yemen have been firing missiles and drones into Saudi Arabia on a regular basis. Thus, Israel and Saudi Arabia have an incentive in common enemy Iran to normalise relations. Could they jointly bomb Iran if there is strong evidence that Iran is close to building a nuclear device? Definitely possible. 

If only it was an investment instead of being mugged.

 "In ET Online's recently conducted Mood of the Nation Survey, nearly half of the respondents said that a sentiment boost to the Indian middle class would be Modi government's best bet to mitigate the economic impact of the pandemic." "Consumption, the pillar that normally accounts for over 60% of India's GDP, is majorly reliant on spending by middle class consumers, both urban and rural," people "who bear a disproportionate tax burden only to find themselves at the receiving end of policymaking again and again". "A Pew Research Center study had shown in 2015 that according to global standards of middle income -- per capita income between $10 to $20 a day -- up o 95 percent of India still qualifies as poor or low income," wrote Amritesh Malhan. The middle class has been hit hard by negative real interest rates so that their savings are losing value, even as taxes are deducted by the bank if total interest is in excess of Rs 50,000 per year. "The truth is that this scheme is designed to stealthily steal from the productive classes in order to enrich the unproductive financial class and the counterproductive political classes. It is a con game," wrote Mark Thornton. If you combine negative real interest rate with 'bail-in' provisions for banks, as in the FRDI Bill, then it causes "economic harm throughout the productive sectors of the economy including workers, savers, entrepreneurs, retirees, and pensions". "It is based on cruelty, deceit, fraud, rage, division, war, greed, arrogance, and excessive pride." So how to help the middle class, 21 million of whom have lost their jobs till August, according to the Center for Monitoring Indian Economy? "At a minimum, the Center should return sums paid as income tax by those who have suddenly been deprived of their income," wrote an editorial in the Mint. Is the Mint asking for unemployment benefit, as in Europe? Never. It will be an interest-free loan to be paid back over 5 years when the person finds employment again. The chalice could not be more poisoned. "GDP growth declined continuously for eight quarters except an 8 basis point blip between December 2018 and March 2019. It was 8.2% in March 2018 and fell to 3.1% in March 2020," wrote Roshan Kishore. Because of a virtuous government, thinks R Jagannathan. "We are missing the elephant in the room: the Narendra Modi government's excessive aggression in its effort to reduce black money and enforce tax compliance, of which demonetization was only a political gambit." Modi thinks all taxpayers are thieves, and so has forced income tax returns to be linked with the intrusive Aadhaar. And yet has absolutely no qualms in selecting criminals to represent his party the BJP in elections. The truth is that per capita in India is a paltry Rs 140,000 which is much lower than the income tax threshold, wrot Praveen Chakravarty. Perhaps, if a portion of income tax is invested by the government for unemployment benefits, pensions and health insurance for taxpayers people would pay taxes in excess of what they should. As it stands, income tax is pure extortion. No one likes to be mugged.   

Firing blanks on all fronts?

 "Economic activity accelerated further in the week ended September 13, returning almost to pre-lockdown levels, a private tracker released on Monday showed." Nomura India Business Resumption Index rose to 81.6 from 79 in the preceding week. As the number of coronavirus cases rises above 5 million, with over 82,000 deaths, "Crisil estimates that India will suffer a 'permanent' loss of 13% of real GDP over the medium term", wrote Udit Misra. "Permanent loss implies that the economy will not be able to recover this GDP value." "In everyday cash terms, this loss is going to be around Rs 30 lakh crore (Rs 30 trillion)." "This sharp economic contraction will show up in massive unemployment and disguised employment." According to the CEO of the Center for Monitoring Indian Economy (CMIE) Mahesh Vyas, "These is an existing pool of over 35 million unemployed people in India," and "as many as 21 million salaried jobs have been lost and these are not likely to be recovered in a hurry". "McKinsey Global Institute estimates India will need to create at least 90 million non-farm jobs by 2030, if it is to absorb all the young workers that enter its labor market." "Today we must worry about 'stagflation', a term that signifies the odd rise of prices amid economic stagnancy," wrote an editorial in the Mint. Supply constraints due to local lockdowns, increased money supply by the Reserve Bank (RBI) and an inflow of dollars are adding to price pressures. The economic stimulus package announced by the government in May was just 1% of GDP, according to experts. However, "So long as inflation stays above 6%, RBI would be wary of easing money any further. But if rate cuts stoke prices, so could a fiscal stimulus by the Center." In a policy reversal, the US Federal Reserve has announced that it will tolerate a higher level of inflation to help create jobs, which means its Funds rate will remain low for the foreseeable future. This means that the dollar will remain weak for a prolonged period, wrote VA Nageswaran. The RBI has been buying dollars to stop the rupee from strengthening which would be bad for exports. Exports were down for six straight months, falling 12.7% in August compared to the same period last year. The RBI has decided to let the rupee appreciate to bring prices down. The RBI earns nothing from its dollar holdings with the Fed Funds rate at near 0 percent and a weaker dollar reduces the value of its reserves, so buying dollars to weaken the rupee is a big loss. On the other hand, a strong rupee will only make imports cheaper and will be against Atmanirbhar Bharat announced by Prime Minister Narendra Modi, wrote Nageswaran. The RBI seems to have exhausted its ammunition. Does the government have any? Or is everybody firing blanks.

We get less no matter what the reason.

 "India's retail inflation cooled marginally to 6.69% in August but stayed well above the 6% outer band of the central bank's inflation target, likely ruling out the possibility of a near term rate cut." Consumer price index (CPI) was 6.73% in July, and 3.28% in August 2019. "Food inflation, led by vegetables, pulses, oils and meat & fish, was 9.05% last month, lower than 9.27% in July." "Most large Asian economies have far lower inflation rates" than India, "based on macroeconomic data from 42 countries published every week by The Economist", wrote N Rajadhyaksha. "The second inconvenient fact is that India is one of the few large economies where inflation has actually gone up since the start of the pandemic." On the other hand, "India's wholesale inflation turned positive in August for the first time since March reflecting a recovery in producers' pricing power." Wholesale price index (WPI) was negative from April-July, even as the CPI was consistently higher than the Reserve Bank's (RBI) target of 4%. Even as CPI has stayed higher than its mandate, the RBI, under stewardship of Governor Shaktikanta Das, has been relentlessly cutting interest rate for a total of 115 basis points, down to 4%, this year. Why this wide discrepancy between WPI and CPI? WPI fell because consumer demand collapsed following the lockdown in March and retail sales were dependent on rural demand, financed by government social schemes. Also, international crude oil prices fell sharply because of a fall in global economic activity. The World Bank predicted that "the global economy will shrink by 5.2% this year", representing "the deepest recession since the Second World War". High CPI is due to disruption in supply, high taxes, low interest rate and an enormous infusion of liquidity by the RBI, and higher import prices, wrote Rajadhyaksha. Taxes on oil have been increased so much that up to 70% of the retail price of fuel constitutes of central and state taxes. Custom duties were raised on hundreds of imported products in this year's budget, apparently to help local industry by stopping dumping by Chinese companies. The effect is to increase prices people pay for these products and allows local companies to sell inferior quality products at high prices. Toyota Motor Corp has announced a halt in any further investment in India because high taxes take its cars out of reach for most Indians. There is an almost messianic belief in low interest rate in India because a large constituent of CPI is food inflation and this depends on supplies and is not directly influenced by interest rate. However, high food prices increase rural income and demand and is sure to result in higher wage demands, especially from labor. At best, we get much less for our buck.  

How to spend what doesn't exist?

The incidence of coronavirus infection in Mumbai slums is 57% with low mortality, showing slums are reaching herd immunity, wrote SA Aiyar. India had one of the most stringent lockdowns, its gross domestic product (GDP) contracted by the highest rate of 23.9% among major economies in the April-June quarter, the fiscal stimulus declared by the government is only about 1% of GDP, according to analysts, and our caseload is now the highest in the world at 100,000 per day, but could be more than twice that number. "That strengthens the case for phasing out lockdowns quickly, while encouraging masks, social distancing and isolation of the infected to the extent possible," wrote Aiyar. "Meanwhile the government should greatly increase cash handouts to the masses through MNREGA and Jan Dhan Accounts. The poor are worst-hit and most likely to spend additional cash, boosting the economy. Richer folk are more cautious and less likely to spend." "GoI's (government of India) reluctance to do more today seems partly because it wants to conserve resources for a possible future stimulus. This strategy is self-defeating," wrote Prof Raghuram Rajan. He also recommends increase in MNREGA, cash transfers to the poor and relief in goods and services tax (GST) for small and medium enterprises (SME). Prime Minister Narendra Modi announced a scheme at a cost of Rs 200.50 billion "to boost production and exports in the fisheries sector" and "also launched several other initiatives in the fisheries and animal husbandry sectors in Bihar, a state which is heading for the assembly polls in October-November". According to the Finance Ministry, more than 420 million people have received a total of Rs 688.20 billion in financial assistance. The government is to infuse Rs 1.2 trillion into power distribution companies (Discoms) so that they can pay their outstanding dues till June. The "total outstanding dues of Discoms payable to generators/creditors as of February 2019 stood at an alarming Rs 418.81 billion", wrote Ajai Nirula. The government is considering extending the MNREGA program to cities to help the urban poor. The program will be rolled out in smaller cities initially at a cost of Rs 350 billion. "For April-July, the Center's fiscal deficit stood at Rs 8,21 trillion, or 103 percent of 2020-21 budget estimates of 7.96 trillion, compared to 77.8% for the same period last year, official data showed." Because of economic contraction tax collections have fallen off a cliff which is "likely to force the government to borrow more, but it will consider monetising its deficit as a last resort". Easy to advise to spend more. Can't spend what's not there. Quandary.

Detailed dossiers will not cure illnesses.

 "With the possibility of a shortage in ICU beds and rise in active Covid cases, the Delhi health department Saturday issued an order asking 28 private hospitals to reserve 80% of their total ICU and HDU beds for Covid patients." What happens to other medical emergencies like heart attacks, strokes and accidents? Should they just die without treatment? "Further, the circular stated that the hospitals listed are allowed to increase their total bed capacity by up to 30% and are to be used for Covid patients only." Where are the hospitals going to find doctors and nurses for those extra beds? "As many as 264 doctors have died of Covid -19 so far across the country, according to Indian Medical Association (IMA)." A report by the American Heart Association said that "deaths are increasing from causes such as heart disease, stroke and diabetes" because "people with other ailments may not be seeking help". "New York City experienced the biggest jumps, including 398% rise in heart disease deaths and a 356% increase in diabetes deaths." The arbitrary order is all the more surprising because, "India's Covid-19 mortality rate stands at 1.7%. For context, the same rate is about 3% in the US, 11.7% in the UK, and 12.6% in Italy, according to Johns Hopkins University." India has 2.7 million patients with tuberculosis (Tb) and 421,000 die of it every year. Concentrating only on the coronavirus could raise the incidence of Tb to 6.3 million cases with 1.4 million deaths by 2025, wrote Ragini Saxena. "More than a million children have missed crucial immunizations and hospital births have shown a sharp decline, indicating many women have gone through unsafe childbirth at home. Outpatient critical care for cancer plunged 80% from February levels, government data show." "In 2019, at least one student died by suicide every hour in India. The year recorded the highest number of student suicides, 10,335, in the past 25 years for which data is available." "As high as one in seven Indians suffered from mental disorders of varying severity in 2017," a study showed. Of a total 197.3 million with mental health problems, 45.7 million suffered from depression and 44.9 million from anxiety. So, apart from arrogant orders, what is the solution to healthcare disaster? "Every Indian will be issued a health ID that will act like a healthcare account, storing details of all the tests done, existing diseases, diagnoses, medicines prescribed," announced Prime Minister Narendra Modi. Taking advantage of the coronavirus epidemic the government quickly tried to force Indians to download Aarogya Setu app which would allow it to track people's movements. Connect all this to Aadhaar and the government has a complete dossier on every citizen. The KGB and the Gestapo would drool. 

It's all in the eyes of beholders.

 "Despite the mounting criticism on several fronts, including the slowing economy and the nationwide protests against the amended citizenship law, Prime Minister Narendra Modi's personal popularity has remained as high as 68 percent, the India Today Group-Karvy Insights Mood of the Nation (MOTN) results show." That was in January. Then came the total lockdown with just 4 hours notice, which brought the economy to a standstill and forced millions of poor migrant laborers to walk hundreds of miles back to their villages, with families and little children. A repeat MOTN survey in August showed that, "A resounding 78 percent of the people surveyed found the performance of PM Modi to be outstanding/good." Magic. "The economy has been struggling even before the Covid-19 outbreak", the goods and services tax (GST) "is causing compliance nightmares for SMEs (small and medium enterprises)", demonetization "ruined the prospects of agriculture and SMEs", the government has "empowered tax officials with sweeping powers", it has embraced the "failed Congress policy" of trade protectionism and "Headline corruption seems to be under control, but retail corruption which actually determines ease of doing business on the ground, remains unabated," wrote Ritesh Singh. So why doesn't the government institute bold reforms despite a comfortable majority in parliament? Because, Modi "is confident of holding on to office irrespective of how the economy performs". The economy has been slowing down from "8.2% in the fourth quarter of 2017-18 to 3.1% in the same quarter of 2019-20", not because of any exogenous shock, but because of "government's policy adventurism", wrote Prof Himanshu. "Last year's tax waiver for India's corporate sector of around Rs 1.5 trillion was another example of policy adventurism", which did not benefit the unorganized sector, while "the organized sector used the largesse not to increase investments, but to balance their accounts". "As the BJP has journeyed from being a party of opposition to a party of power, its idealism and ideology lie compromised in the quest for total supremacy," wrote Rajdeep Sardesai. "In the process, the BJP's once highly-disciplined party structure now risks ideological incoherence". "How does Modi do it?" asked Mihir Sharma. "The most adept populist leaders don't only detach the electorate's perception from inconvenient facts, providing an alternate narrative in which they, and they alone, are the stars." "All that matters is that people believe that you did something big, something that only you would dare to do, and that you did it for the best reasons." It also shows a total disregard for suffering, an ability to coldly ignore starving children and a cheerful indifference to a collapse in the nation's economy, only to stay on in power. And a nation of goats.

Claims to be super, but behaves like a savage.

 "Indian army has occupied heights overlooking the Chinese Army positions at Finger 4 along Pangong Lake. The operations to occupy the heights were carried out along with the preemptive actions to occupy heights near the Southern bank of Pangong Tso around August-end, source said on Thursday." "As China started fresh build up at Finger area north of Pangong Lake", "top government sources told NDTV that India will retaliate if its defences on heights are breached by the Chinese provocations at the Line of Actual Control." The Chinese Communist Party mouthpiece, the Global Times warned, "If a border war starts, India will have no chance of winning." "Chinese fighter jets approached Taiwan on Thursday for a second day in a row, the island's defence ministry said," while China held large scale naval and air force drills "in Taiwan's air defence identification zone, between mainland Taiwan and the Taiwan controlled Pratas Islands". Taiwan Vice President Lai Ching-te warned China on Twitter, "Don't cross the line," saying, "make no mistake, Taiwan wants peace, but we will defend out people". "Two Australian foreign correspondents were flown out of China for their safety, helped by Australian consular officials after being questioned by China's state security ministry, the Australian government said on Tuesday," reported Reuters. "Australia is standing up to China," wrote Kirsty Needham. "Australia has voiced concern in recent weeks about what it sees as Chinese disinformation campaigns that seek to undermine democracies; suspended its extradition treaty with Hong Kong over China's imposition of a draconian security law in the city; and filed a declaration with the United Nations rejecting China's maritime claims in the South China Sea." Making allegations of raids on Chinese journalists by Australian intelligence, "The Global Times reported the journalists were questioned and their computers and phones seized," while the "Chinese News Service said the homes of four journalists from three Chinese media outlets were raided by Australian police on June 26, who eventually found they did nothing wrong". Revealing China's uncivilized barbaric nature, Wang Xining, China's deputy head of mission in Canberra, told the National Press Club in the Australian capital, "I don't see any reason for whining about your constitutional fragility and intellectual vulnerability." In a warning to the US, "China launched a series of ballistic missiles into the South China Sea this week." It claims to be a superpower but behaves like North Korea. Brothers in savagery.     

Action or inaction, the government is in headlights.

 "India will see a sharp V-shaped recovery in the third and fourth quarter of the current fiscal," predicted 15th Finance Commission Chairman NK Singh. India's gross domestic product (GDP) shrank by 23.9% in the first quarter of the current financial year, ending on 30 June. "This means that approximately Rs 8.5 trillion of national income, or about $115 billion at the current exchange rate, has gone up in smoke," wrote Prof Vivek Dahejia. Just as after demonetization, this crisis will have a strong 'hysteresis' effect which means that "it will take a very long time for economic activity to return to normal if it ever does". "We need a broad set of structural reforms that address long-term challenges. For an instant uptick, however, the country needs a demand boost of a sizable fiscal stimulus," wrote an editorial in the Mint. But, reforms are not possible at this time. "No economy in the midst of a major crisis -- anything from a war to a public safety emergency, as at present -- has succeeded in pushing reforms at a time when people are simply too sick, poor or scared to respond to revised incentives to work, save, invest or innovate," wrote Dahejia. Among economists a D-word "is shorthand for depression (continuous contraction of economic growth), or for deflation, a state of falling prices", wrote Rajrishi Singhal. "At the Reserve Bank of India (RBI), the mention of a particular D-word is studiously avoided in conversations or discussions about the economy." Which is 'demonetization', whose "malign shadow continues to darken India's growth prospects". Because, "First, the deeply embedded fear of sudden and random government decisions has already jinxed investment activity in the economy." "Interventions must focus on sectors that employ large numbers and whose multiplier impacts are substantial," wrote Gowda and Satyawali of the opposition Congress party, such as manufacturing, construction and services like hotels. "The conventional Keynesian wisdom is for governments to reverse course through significant fiscal interventions." Easily said. But, the Congress was in power between 2004 and 2014, so what were the effects of its actions after the 2008 crisis. Economic growth was 9.3% in 2007-08, consumer inflation (CPI) was 6.2% in august 2008 and current account deficit (CAD) was just 1.29% of GDP in 2007-08, wrote N Rajadhyaksha. However, economic growth had fallen to 5.46% in 2012-13, CPI had jumped to 9.63% in June 2013, and CAD was a massive 4.82% of GDP in 2012-13, despite a slowing economy. Having committed one D-word in demonetization the government is petrified about another D-word, that is 'deficit' which is already set to rise to Rs 12 trillion. Hence the government is paralyzed into inactivity. Like a deer in headlights.