Will 2022 be any less chaotic?

On July 08, 2021 US President Joe Biden said, "When I announced our drawdown in April, I said we would be out by September, and we are on track to meet that target. Our military mission in Afghanistan will conclude on August 31st." "And in this context, speed is safety." "Together, with our NATO Allies and partners we have trained and equipped over three hu- -- nearly 300,000 current and serving members of the military -- of the Afghan National Security Force, and many beyond that who are no longer serving." "We have provided our Afghan partners with all the tools -- let me emphasize: all the tools, training, and equipment of any modern military. We have provided advanced weaponry." The US withdrew all its troops on 30 August, wikipedia, but even before US soldiers had left, Afghan President Ashraf Ghani fled on 15 August and the Taliban had entered Kabul, wikipedia. The head of the British armed forces "Gen Sir Nick Carter told the BBC: It was the pace (of Taliban victory) that surprised us and I don't think we realised quite what the Taliban were up to." Nincompoops. The biggest diplomatic and security loss was for India which had invested $3 billion in development projects and "helped construct the parliament building at a cost of $90 million", Al Jazeera. So chaotic was the US withdrawal that the Taliban paraded in Kabul in US-made M117 armored security vehicles, carrying American-made M4 assault rifles, CNN. The other chaos was caused by the coronavirus. "A report by US Republicans claims that the novel coronavirus was indeed leaked from a Wuhan laboratory in China and pushes for proper investigation into the origins of the deadly pathogen that has so far caused millions of fatalities across the globe in the past two years," News18. A Canadian molecular biologist Dr Alina Chan told a cross-party committee of the British House of Commons that "a leak from a laboratory in Wuhan region of China is now the 'more likely' origin of the COVID-19 global pandemic, NDTV. "Documents obtained by The Intercept contain new evidence that the Wuhan Institute of Virology and the nearby Wuhan University Center for Animal Experiment, along with their collaborator, the US-based non-profit EcoHealth Alliance, have engaged in what the US government defines as 'gain-of- function research of concern', intentionally making viruses more pathogenic or transmissible in order to study them." "Grant money for the controversial experiment came from the National Institutes of Health's National Institute of Allergy and Infectious Diseases, which is headed by Anthony Fauci." Not just the scientists, Silicon Valley companies also worked hard to protect China's government and its nefarious designs, BI. And executives of tech companies donated liberally to get Donald Trump out of office, CNBC. Billionaires selling themselves for thirty pieces of silver, wikipedia. Can they sink any lower? Happy New Year.

Will risks go away by themselves?

"IMF believes fast growth in 2021 is not a one-off recovery from Covid, and India is bouncing back to miracle growth status after having gone downhill from 8.3% in 2016-17 to 4.2% in 2019-20 before Covid struck," wrote Swaminathan A Anklesaria Aiyar. However, major challenges will be the Omicron variant of Covid, high inflation, rate of the goods and services tax (GST) maybe hiked by 1.5% and central banks may start to increase interest rates. "Barely 40% of Indians seek work, and just 38.2% are employed according to the Periodic Labor Force Survey," "Education remains a black hole," and "political risks to economic reform have soared with the success of farmers' agitation." "India's central bank will likely go slow on normalizing its monetary policy settings, breaking step with hawkish global peers to ensure a durable recovery in Asia's third largest economy, according to economists," ET. The RBI projects liquidity to remain elevated at Rs 6 trillion in 2022-23 and 2023-24, down from Rs 10 trillion today. "India's big manufacturing and consumer goods companies are considering another price increase in the next few months, having already made at least two-three hikes earlier this year," and "Fast-moving consumer goods (FMCG) said they may raise prices 4-10% in the next three months," ET. "Looking back, 2021 was a bad year for consumers as they grappled with high prices and many also saw decline in incomes, job as well as business losses," ET. "However, the gradual pick-up in the economic growth and good crop prospects due to normal monsoon will help soothe the prices going forward." Does it mean prices will fall or that the rise in prices will be less than this year's? If the price of pakoras went up from Rs 100 to Rs 200 per plate in 2021, it is a rise of 100%. If the price goes up by another Rs 100 to Rs 300 in 2022 it will be an increase of only 50%. Economists may cheer a lower percentage rise but for consumers the rise is the same in absolute terms. This is called base effect and is useful for politicians. While there are high risks for the economy in 2022, the same applies to individual investors. "While fixed deposits gave negative returns after adjusting for inflation and gold was a losing investment (all returns as of 17 December), stock prices surged and cryptos went through the roof," wrote Vivek Kaul. The BSE Sensex jumped from 25,981 on 23 March 2020 to 61,766 on 18 October 2021. "Foreign Institutional Investors have unloaded nearly $7 billion worth of shares in the last two months and since the beginning of the financial year , FIIs have sold nearly $13 billion worth of shares," BI. Which means that "stock prices have been driven primarily by domestic Indian investors". Indian investors have also been piling into Initial Public Offerings (IPOs) even though returns are poor in the long run, wrote Diva Jain. "With their expectations tinted by the rosy extrapolations of recent returns, investors rush into IPOs ignoring the weight of evidence that would contradict their expectations." The risks are known and may possibly be averted by preventive action by the RBI. But, there are a lot of state elections coming up, wikipedia. Not a good time to rock the boat. Even if it sinks later.

The goats of India, but there is no alternative.

"Even as the wheels are coming off the Republic of India, conversations in polite and not-so-polite circles now have a refrain that is the surest sign of an impoverished democracy. Whenever the topic of BJP and Narendra Modi's future comes up, the refrain is: 'There is no alternative'," wrote Pratap Bhanu Mehta. Youth unemployment is rising, inequality is rising, there is still repression in Kashmir two years after Articles 370 and 35a were repealed, and "The state makes everyone feel so secure: It can snoop on anyone, threaten anyone, and control the information order. 'But But But', the chorus still rings out, 'There is no alternative'." Under Article 370 the state of Jammu and Kashmir was an autonomous region with its own flag and laws, except in defence, foreign affairs, finance and communication, and Article 35a reserved government jobs  and services and the right to buy property for permanent residents of the state, BS. Earlier this year Mehta resigned from his professor's post at Ashoka because, "After a meeting with the founders, it has become abundantly clear to me that my association with the university may be considered a political liability," TOI. Following him Arvind Subramanian also resigned his post in support. Ashoka University was set up as a liberal institution with private donations but, "By bending when asked, they may have inaugurated a slide, and surrendered the possibilities of the university's rise," TIE. The craven surrender by everyone has been noticed thousands of miles away. US President Joe Biden complained that the Indian press is "better behaved" than the US media, TOI. One American reporter said, "The Indian press is ranked 142nd in the world, according to Reporters Without Borders (RSF), for press freedoms." Modi imposed a severe lockdown on the whole nation in March 2020 with just 4 hours notice when there were only 500 cases in the entire country, India.com. But earlier this year Indians were "sickened by him addressing tens of thousands of people at state election rallies and letting Hindu devotees congregate for a festival (Kumbh Mela)", even "as bodies piled up in mortuaries and crematoriums, and desperate cries for hospital beds, medical oxygen and coronavirus tests flooded social media", Reuters. Thousands of Hindus died. However, amidst all the carnage the Central Vista projects in the capital Delhi was proceeding at full speed with an "opulent mansion for the 70-year-old premier, which was quietly slipped into the plans after they had been approved", Daily Mail. The Unlawful Activities (Prevention) Act (UAPA) is being used vindictively and the Act denies bail to accused so that they have to spend years in prison despite being innocent. "Indeed a 2% conviction rate shows how, in an overwhelming number of UAPA cases, it is the process that is the punishment," wrote Gautam Bhatia. "Jobs have been lost, incomes have shrunk, fuel prices have risen, but the dominant narrative on the campaign trail is about religion and the Hindu-Muslim divide," wrote Rajdeep Sardesai. And yet, Hindus are dying and being beaten up in the name of Hinduism. No wonder the Moguls and the British ruled us for over 1500 years. Whoever rules, Hindus are sacrificial goats. Jai Shree Ram.      

Are they expecting or just praying?

After four quarters of consecutive growth, the Indian economy will grow robustly at 9.5% or more in 2021-22, opined Chandrajit Banerjee, Director General, Confederation of Indian Industry. Reasons are "the continuing export boom, surge in tax revenues (notably of GST), improvement in manufacturing growth (as indicated by the purchasing managers' index), shrinking pile of bad debts with banks, booming corporate profits, sustained growth in the country's tally of unicorns and impressive inflows of foreign investment." Economic growth may have returned but unemployment is the biggest worry, wrote Udit Misra. Compared to August 2016, the number of employed people is lower by 14 million in August 2021, labor force participation (LFPR) for women is abysmally low, inflation is running consistently higher, and poverty and inequality have increased. "We are counting on better-balanced growth in India's gross domestic product (GDP), led by a combination of demand recovery owing to high vaccination rate, normal mobility, and sectoral output broadly back at pre-pandemic levels," wrote Radhika Rao. "We project 2022-23 growth to stay firm at 7% year-on-year, after an estimated 9.5% in 2021-22, which is among the fastest in our Asia-10 universe." "Reserve Bank of India (RBI) Governor Shaktikanta Das...said the country's economy has recovered stronger than expected from the initial impact of the Covid-19 pandemic, but there is need to be watchful of demand sustainability after the end of festivities," HT. From a high of 15.27 units from April-November 2018, two-wheeler sales have dropped by 40% in 3 years to 9.11 million units, wrote Vivek Kaul. Purchase of a two-wheeler is usually the first sign of increasing prosperity. "More recently, there have been news of people down-trading their purchases by buying smaller packs or substitutes of products." If the RBI continues to tolerate high inflation the rupee will weaken. "A weaker rupee will feed into inflation further, given that India is a net importer of goods." "India's startup ecosystem has notched up record investment of nearly $36 billion in privately held companies this year as demand for digitisation grew manifold amid the Covid-19 pandemic," ET. "Indian companies have mopped up more than Rs 9 trillion through debt and equity routes in 2021 to meet their renewed thirst for business expansion in a buoyant stock market brimming with liquidity and helped by recovering macroeconomic indicators after pandemic ravaged first few months," BS. Of this Rs 5.53 trillion was raised through debt and Rs 1.06 trillion from overseas. We do not know if the new debt is to be utilised for new projects or to pay off previous debt at higher interest rates, a process known as 'restructuring', Cleartax. With the Federal Funds Rate at near 0% in the US, TE, and with negative interest rates in Europe and Japan, Reuters, it seems logical to borrow in foreign currencies. The danger is the rupee. The exchange rate of the rupee was at 61 to the US dollar in 2014-15, wikipedia. Today one dollar buys Rs 74.7, Xe. If the rupee drops significantly it will become more expensive, and hence difficult, to service borrowings in foreign currencies. The pundits are predicting happier times. Should we expect, hope or pray?     

Is escape the only solution?

What do India's young people want? Lokniti-CSDS in collaboration with Konrad Adenauer Stiftung interviewed 6,277 youth aged 15-34 across 18 states in July-August 20-21, TIE. 39% of young men are working compared to 11% of young women, while 42% of women are studying compared to 36% of men. Unfortunately in India, unemployment rises with the level of education, the highest being among those with post-graduate degrees, TNIE. Unemployment was lowest in rural women with only primary education while it was highest in those with post-graduate degrees, TIE. In the survey, "More than half (55%) said they would prefer a government job; a quarter (24%) would prefer to start their own business." A higher proportion of young people want to get married later, 56% worried about their jobs, 54% worried about their physical appearance, and "More than 50% of youth reported becoming angry over small matters." Showing a high level of stress. "In 2022, the median age in India will be 28, well below 37 in China and the United States," BEN. "Since India's rapid growth was derailed by the 2008 recession, it has struggled to get back on track." "Of the 13 million young people who enter the labor market each year, only one in four management professionals, one in five engineers and one in ten graduates are considered suitable for employment. Among the broad bands of university graduates, most are considered unfit for work." In 2018, in an interview with a television channel, Prime Minister Narendra Modi asked, "If a person selling pakodas earns Rs 200 at the end of the day, will it be considered employment or not?" FPJ. A pakoda (pakora) is a spicy snack of vegetables fried in batter, wikipedia. Children must first go through school education to become graduates. "Shutting down schools to prevent the spread of the coronavirus has led to increased dropouts and huge gaps in learning levels," News18. "An Azim Premji Foundation survey of over 16,000 students in primary schools found an alarming dip in language skills and math skills -- 92 percent of the children have lost at least one language ability, while 82 percent have lost math skills." According to a report by a parliamentary committee on education, "Some 24 crore (240 million) children have missed school for over a year; 77% of children have no access to online education; In any case 'Online education is not real education'; and, Dropouts have increased at secondary level," wrote Sukanta Chaudhuri. "Over 120 million children in India are served by the midday meal scheme, just over half of whom get it in anganwadi centers," Scroll. "These meals are crucial both for child nutrition and cognitive development." As schools have remained closed children have missed out. "School lockdowns have robbed a generation of upward mobility in India," wrote Andy Mukherjee. "A total of 8,81,254 Indians have given up their citizenship since 2015, the Ministry of Home Affairs informed the Lok Sabha last week," moneycontrol. Is that the only solution?   

The inequality of financial inclusion.

"The country's monetary policy is, by design, financially inclusive and this strategy will result in policy effectiveness and welfare maximization going ahead, Reserve Bank of India (RBI) Deputy Governor Michael D Patra said," ET. The RBI's financial inclusion index (FI-index) rose from 49.9 in March 2019 to 53.1 in March 2020 and to 53.9 in March 2021. RBI's goal is 100%. "This, he said, is achieved by enabling people to draw down financial savings in difficult times for everyday needs." What happens when savings finish? The RBI has kept interest rate at 4% since May 2020 even while projecting consumer price index (CPI) inflation at 5.3%, ET. "A real interest rate is an interest rate that has been adjusted to remove the effects of inflation to reflect the real cost of funds to the borrower and the real yield to the lender or to an investor," Investopedia. "Real interest rates have turned negative in India (which means the interest rate is lower than inflation), as has happened in the US and Europe some years back. This has created problem for savers, especially senior citizens, many of whom kept most of their money safely with banks," Moneylife. "Economists call this financial repression." Financial repression are methods for governments to increase tax income and domestically-held debt. This is done by keeping interest rate levels below that of inflation, effectively taxing the country's savers," Forbes. "Actual GTR (gross tax revenue) collections in FY22 (financial year 2021-22) is Rs 13.64 lakh crore (Rs 13.64 trillion), compared to Rs 8.76 lakh crore in in FY21 and Rs 10.52 lakh crore in FY 20 in the same period," FE. "With net direct tax collection till October closing in on Rs 6 lakh crore and average monthly GST mop-up likely around Rs 1.15 lakh crore this fiscal," TOI, GTR will be far higher than budget estimates. Highly successful financial repression. No wonder, "As per the 'World Inequality report 2022', India is among the most unequal countries in the world," where the top 10% and the top 1% "hold 57% and 22% of the total national income respectively while the bottom 50% share has gone down to 13%", ET. While the wealth of Gautam Adani and family has grown at Rs 10.02 billion per day, from Rs 1.402 trillion to Rs 5.059 trillion, in the last one year, ET, wealth of many business families has grown by 3-4 times in the last year, according to the IIFL Wealth Hurun India Rich List, ET. "Income inequality in India is as high as it was under British colonial rule," emphasized Abhishek Jha. India has a tradition of not listening to economists and making huge mistakes, wrote Ashok V Desai. The IMF asked the government to increase tax collections by 1.5-3% pf GDP, which it will probably surpass. "At least the IMF did not encourage the Center to continue spending money printed by RBI or generated by bank credit. Not that the government needed encouragement; it is likely to carry on." "So, central banks do care about inequality," said Patra. Do they, by Jove? By calling it financial inclusion?

Markets are linked to the rupee, and the rupee to the economy.

"Arguably the bull market of 2021 is the same one that started in 2009, with one big change. Retail investors, who sat on the sidelines for so many years, rushed in after the pandemic induced flash crash last year and have been buying every dip with mounting enthusiasm," wrote Ruchir Sharma. "All told, US investors alone have poured more than $1 trillion into equities worldwide in 2021, three times the previous record and more than the prior 20 years combined." "Retail investors are just as amped up in India, one of the hottest stock markets in the world this year." In India, "The total number of retail investors increased by an astonishing 14.2 million in FY21", so that "The National Stock Exchange (NSE) alone saw retail investors share grow from 33% in 2016 to 45% in 2021," wrote Dhiraj Relli. Over 105 million Indians have invested in cryptocurrencies. "Indians' investment in cryptocurrencies has increased to over Rs 75,000 crore (Rs 750 billion) or $10 billion from $923 million in April last year with market at an all-time high, according to crypto research and intelligence business CREBACO," TN. "Sebi data show that individuals with income up to Rs 5 lakh (Rs 500,000) account for 1.3 crore investor accounts, or 70.01% of individual investors across the country, and 28.54% of the total assets under management (AUM) of the mutual fund industry," TIE. As a result, "The benchmark Sensex jumped from 29,648 in March 2020 to a high of over 62,000 in October 2021." That is just the secondary market. "Fundraising through initial public offerings (IPOs) touched a record high in the year 2021. According to data, 63 companies have floated an initial share sale this year, raising Rs 1.19 lakh crore (Rs 1.19 trillion) from public investors," ET. Prices of shares in many of these companies fell below issue price on listing and even those that gained have settled at lower levels, moneycontrol. "The currency (rupee) declined 1.9% this quarter as global funds pulled $4.2 billion of capital out of the country's stock market, the most among regional markets where data is available," ET. "Foreigners sold Indian stock as Goldman Sach's Group Inc and Nomura Holdings Inc recently lowered their outlook for equities, citing lofty valuations." "The total value of investments by foreign portfolio investors (FPIs) in India crossed the Rs 50-lakh-crore (Rs 50 trillion) mark as of September this year," because of the recent rally in the stock market and investment in 1,370 companies, which is an all-time high, TOI. "The Indian rupee is set for a more than 4% drop this year, its fourth straight annual loss, with losses accelerating towards the end of the year as the country's red-hot equity markets start to cool and trade deficit balloons," ET. But things could get really awkward if the US Federal Reserve increases interest rate as it promised. That would result in foreign funds selling out of Indian equities and bonds, CNBC, resulting in a sharp drop in the rupee, which would raise prices by increasing cost of imports, especially oil. Once the RBI starts raising rates to try and control inflation, share prices will fall even more, and the rupee with it. Why allow Americans to control our economy? 

Can India win if Indians lose?

 "India got a breather for just one year post demonetisation, during which there were very few reports of circulation of fake Indian currency notes (FICN). But after a year's halt, India's western neighbor continued with its nefarious designs to destabilise the country's economy by pumping in fake currency," daijiworld. "As India's western border is heavily guarded, Pakistan is now using other routes to infiltrate counterfeit money," and "it has been strongly suspected that big consignments of FICN are first brought to Nepal and Bangladesh from Pakistan through Gulf countries by air". Demonetisation refers to the sudden withdrawal of Rs 1000 and Rs 500 notes from circulation with just 4 hours notice on 8 November 2016 by Prime Minister Narendra Modi, wikipedia. That led to long queues of desperate people trying to exchange old notes for new ones, with banks running out of cash and people dying of the unbearable stress, TIE. Pakistan wins, Indians lost. "Thousands of farmers in Haryana have been booked for several 'criminal offences', ranging from sedition and attempt to murder, during the course of the year long agitation against the three contentious farm laws -- which now stand repealed -- that began from Kurukshetra's Pipli town on September 10, 2020," TIE. "Farm leaders estimate that FIRs (first information reports) have been lodged against 48,000 farmers during the agitation in Haryana." In October, a video appeared to show a vehicle belonging to Ashish Mishra, son of Union Minister Ajay Mishra, deliberately running over farmers from behind, killing 4 men and injuring many others, Scroll. A Special Investigation Team (SIT) has "pointed out that the incident was well-planned and a deliberate act, and not of negligence or callousness", ET. The minister has not resigned nor asked to go. Two weeks back the Chief of Defence Staff Gen Bipin Rawat was killed in a helicopter accident, along with his wife and 11 other armed forces personnel, BS. Tragic as his death is, Gen Rawat joined UP Chief Minister Adityanath on a visit to the Gorakhnath Temple in Gorakhpur, skipping the wreath laying ceremony in Delhi for Navy Day in the bargain," and it is believed that he was to be a candidate for the ruling party in the next general election, The Wire. Retired four star General VK Singh is a Minister of State in the Ministery of Road Transport and in the Ministry of Civil Aviation, wikipedia. Former Chief Justice of India is a member of the Rajya Sabha for the BJP, wikipedia. As a result of the politicisation of the armed forces, "Defence services leadership would be walking down a slippery slope in seeking to please the political masters of the day. That is how the police service has devalued itself," wrote Sanjaya Baru. Apparently, the government is considering promotion of armed forces officers based solely on merit. That would be dangerous because officers will take decisions to please politicians and lose respect, wrote Retd Chief of Indian Navy, Arun Prakash. "Law enforcement having metamorphosed into the dreaded 'coercive arm of the state', means that the thought comes from the state, which, in turn, is executed by the muscle of law enforcement," wrote Retd IPS Officer Dr NC Asthana. We, the people, always lose. But, who wins? Merry Christmas.

The Ides of March is not far away.

Time for astrologers and soothsayers. "We project 2022-23 growth to stay firm at 7% year-on-year after an estimated 9.5% in 2021-22, which is among the fastest in our Asia-10 universe," wrote Radhika Rao. She expects, "A mix of catalysts are likely to to spur a multi-year capex push," first by the public and then by the private sector, led by the National Infrastructure Pipeline, investment in renewable energy because, "India has committed to meet 50% of its energy requirements from renewable energy by 2030," and "a boost to high-value manufacturing exports in sectors such as machinery and electronics". Dangers are lurking in 2022, wrote Rajrishi Singhal. Russia is building up its troops at its border with Ukraine and wants a guarantee that Ukraine will never join Nato, BBC.  "Are Russian forces getting ready for war in Ukraine? That is certainly the fear among Western leaders and in Ukraine." "When Russian president Vladimir Putin seized Crimea from Ukraine in 2014, his approval ratings were at record lows and the world was watching the Sochi Olympics. When he went to war with Georgia in 2008, the world was consumed by the Beijing Olympics," Quartz. The XXIV Olympic Winter Games are scheduled to be held in Beijing from 4 to 20 February 2022 in Beijing, wikipedia. "The White House said no official delegation would be sent to the Games because of concerns about China's human rights record," BBC. US-China tension, the Taliban in Afghanistan and "Inflation concerns are forcing central banks in advanced economies to start retreating from their accommodative policies", will all have effect on our economy, thinks Singhal. 2022 is going to be very uncertain, according to Prof V Anantha Nageswaran. "The European Central Bank has gone in for unprecedented monetary accommodation, which has pushed the inflation rate in Germany to over 5%, the highest since 1992." On 15 December the US Federal Reserve said that it will end its bond buying program by March 2022 and hinted it may increase interest rate three times next year, Reuters. US rate hikes could propel other central banks to take similar measures, which could hurt Indian market sentiments," CNBC. "India is relatively better off" and the Reserve Bank (RBI) was "right to have left its monetary policy in accommodative mode", wrote Nageswaran. "Almost Rs 6-8 trillion of surplus liquidity resides in RBI's reverse repo window (both overnight and short term variable rate reverse repo of V3R," wrote Madan Sabnavis. This is excess liquidity that banks have no use for. This seems to be a 'liquidity trap' which is a situation when expansionary monetary policy (increase in money supply) does not increase the interest rate, income and hence does not stimulate economic growth," ET. Not so, said the RBI. "The aggregate demand in the economy is improving and overall monetary and credit conditions are conducive for a durable recovery to take root, while the quality of government expenditure has seen an improvement in the second half, said the RBI," BS. Really? We will see in March what the US Fed does. The 'Ides of March', as the soothsayer warned.  

Are we trying to emulate our neighbor.

"Shattering the previous record of 10.45 billion US dollars, Pakistan took out 15.32 billion US dollars in new foreign loans in fiscal year 2020-21, according to a new government report," ET. "According to The Express Tribune, the report shows that the incumbent government has almost doubled Pakistan's external debt in just three years, adding 35.1 billion US dollars to take the figure to an astonishing 85.6 billion US dollars." "The Gross Domestic Product (GDP) in Pakistan was worth 263.69 billion US dollars in 2020, according to official data from the World Bank," TE. It has actually shrunk from a height of $314.57 billion in 2018. In line with economic contraction, "the Pakistani rupee has fallen from Rs 123 against the USD in August 2018 to Rs 177 against the USD in December 2021," a fall of 30.5% in the last 40 months. The last time the Pakistani rupee collapsed was when it fell 58%, from Rs 4.60 to Rs 11 against the USD, after Bangladesh became independent in 1971. Devaluation of the rupee makes imports more expensive so the consumer price index rose by 11.5% in November from 9.2% in October," TE. Pakistan has been negotiating a $6 billion loan from the IMF but has trouble agreeing to the pre-conditions set by the Fund, ET.  In a preemptive move its central bank, the State Bank of Pakistan, raised interest rate by 1.5% on 3 December, HT, and then by another 100 basis points (1%) to 9.75% on 14 December, TE. "Unprecedented inflation and a sharp uptick in the unemployment rate in the illegally occupied Gilgit Baltistan have triggered massive protests across different districts of the region," TOI. "The unemployment rate is especially high among the graduates, postgraduates and doctorates who do not have enough opportunities." Since Pakistan is our enemy we should be pleased with its economic troubles. Or, should we? India's GDP was $2.66 trillion, 10 times that of Pakistan, in 2020, World Bank. Of course, India's population is a colossal 1,380 million people, compared to Pakistan's population of 208.57 million, Country Economy. Which means that our GDP per capita is $1,928, a shade higher than Pakistan's per capita GDP of $1,255. The top rate of individual income tax, including surcharge, is 42.7% in India, to just 20%, including surcharge, in Pakistan and standard VAT (GST) in India is at 18% compared to 17% in Pakistan. While CPI inflation in India was much lower than Pakistan, at 4.91%, core CPI inflation was at 6.1%, ET, while wholesale price inflation surged to 14.23% in November. Even so, the RBI has held on to interest rate at 4%, ET. The Indian rupee has fallen from 64.80 to the dollar in May 2018, One India, to 75.63 to the dollar today, Xe, a fall of over 15%. In India too, unemployment among graduates and postgraduates was many times higher than those with only primary school education, BT. Unemployment is lowest (at 0.6%) among rural females who have studied only up to primary school level. The similarities are amazing. Only a matter of degree.

We know we are exceptional, but so does Erdogan.

"Turkish laborer Hasan Sarikaya says he has no job, no money and no hope for a better future while President Tayyip Erdogan - the leader he supported for years - remains in power," Reuters. "Other Konya residents who spoke to Reuters, including industrial workers, farmers and students, echoed Sarikaya's lament over rising prices and fewer jobs," "Turkey's currency crisis accelerated...as the lira plunged 8%, gripped by fears of an inflationary spiral brought on by President Tayyip Erdogan's unorthodox plan to slash interest rates in the face of soaring prices," Reuters. "The devalued lira is driving prices higher, making imports, fuel and everyday goods more expensive in Turkey, which relies on imported raw materiel," TIE. "The independent Inflation Research Group, made up of academics and former government officials, puts the inflation at a stunning 58%." Just as a weakening currency increases prices and inflation, so does inflation cause a fall in the value of the currency, which creates a cycle. "Hyperinflation is when the prices of goods and services rise more than 50% per month," The Balance. Consumers buy and hoard goods to avoid higher prices later, leading shortages and even higher prices. After staying below 2% till March 2021, inflation in the US has been rising steadily since March to a height of 6.81% in November 2021, YCharts. "The return of higher and less stable inflation across major economies would cause a spike in exchange rate volatility, and ultimately the depreciation of currencies in countries experiencing the highest inflation prints, according to Jonas Goltermann, senior market economist at Capital Economics," CNBC. Looking forward to 2022, Rajrishi Singhal wrote, "In the balance of risks that could come knocking on India's doors in 2022, economic risks -- both domestic and geo-economic -- seem to top the list. And many of these risks seem to converge to a single point: inflationary pressures." Although high, retail inflation has stayed between 4-6% but wholesale price inflation has risen to 14.23% in November, ET. The danger is that higher input costs will be passed onto retail prices. Central banks in western economies have started tightening. The Bank of England hiked interest rate from a historic low of 0.1% to 0.25%, CNBC. It is not much but it shows the bank's intention. The US Federal Reserve will end its bond purchases in March 2022, setting the stage for at least three rate hikes next year, Reuters. "Rising US interest rates would result in US financial markets being a more attractive investment option, leading to net foreign investment outflows from India and rupee depreciation," wrote Jagadish Shettigar & Pooja Misra. "A weakened rupee would result in increased landed price of crude oil leading to higher supply side inflation." The International Monetary Fund (IMF) predicts a much weaker rupee by 2026-27. "From 70.9 in 2020-21, the Fund sees the rupee depreciating to 89.4 against the US dollar by 2026-27. In April, the implied exchange rate forecast for 2026-27 was 85.8," wrote an angry Prof V Anantha Nageswaran. Because of the Reserve Bank of India (RBI). "Faced with a choice between rising prices and growth, RBI and the MPC opted for the latter, ignoring warning signals," wrote Mythili Bhusnurmath. "Never mind that India cannot hope to be an outlier in a world where inflation is the overriding concern. And most important, forgetting that inflation is a regressive tax. The unkindest cut of all." We Indians may believe we are exceptional but, as we found in April this year, we fall harder, Scroll. Are the government and RBI aware?      

Everything seems to have gone up.

"Data from the Controller General of Accounts indicate that FY22 (Financial Year 2021-22) tax collections are on track to beat not just the pandemic-struck FY21's but also FY20's, a regular growth year," wrote TV Mohandas Pai & Nisha Holla. "Actual GTR (gross tax collection) collections in FY22 is Rs 13.64 lakh crore (Rs 13.64 trillion), compared to Rs 8.76 lakh crore in FY21 and Rs 10.52 lakh crore in FR20 in the same period." Increased tax collections will enable the government to spend more to stimulate the economy without having to borrow more, thus keeping fiscal deficit under control. "Advance tax collections in the third quarter of the fiscal year almost doubled from the year earlier period, underscoring hopes of a sustained economic recovery amid the threat from the Omicron Covid-19 variant," ET. Rs 941.07 billion was collected in the December quarter, of which personal income tax was Rs 396.62 billion, a rise of 115%. "The Centre earned nearly Rs 8.02 lakh crore (Rs 8.02 trillion) from taxes on petrol and diesel during the last three fiscal years, of which Rs 3.71 lakh crore was collected in FY21 alone, Finance Minister Nirmala Sitharaman informed Parliament," ET. FY21 denotes the period between 1 April 2020 and 31 March 2021. A complete lockdown for 21 days was declared by Prime Minister Narendra Modi on 24 March 2021, which brought all life to a standstill, wikipedia. As transport also stopped millions of migrant workers were forced to walk hundreds of miles back to their villages from cities where they were working, BBC. The lockdown was lifted in phases by 30 November. And yet, tax collection on fuel has soared. Deaths by suicide rose by 10% to 153,052 in 2020, the highest since 1967, while restricted travel reduced deaths due to road accidents by 11.1%, HT. "Death by suicide increased 30% nationwide among small business owners in 2020, the first year of the Covid-19 pandemic, as compared to 2019, according to the National Crime Records Bureau (NCRB)," TOI. According to data released by the NCRB "22,372 housewives took their own lives last year - that's an average of 61 suicides every day or one every 25 minutes," BBC. "Mental health experts say a major reason is rampant domestic violence". "According to the NCW (National Commission for Women) data, 25,886 complaints of crime against women have been received from April, 2020 till now which includes 5,865 complaints of domestic violence," HT. Surely severe under-report. Growth in small savings accounts, which offer higher interest than banks, has slowed in the last 3 years while there has been a spurt in demat (dematerialized) accounts, which are electronic accounts for investing in shares, wikipedia. "During April-October 2021, a little less than 1.9 crore (19 million) demat accounts were opened, translating into an average of 26.7 lakh (2.67 million) every month," HT. "The growing low-income investor fraternity has been investing in stocks directly and through mutual fund systematic investment funds," TIE. "Reserve Bank of India (RBI) Governor Shaktikanta Das...cautioned depositors to be careful while chasing high returns as it comes with higher risks," ET. People are taking risks because of exorbitant taxes, high inflation and negative real interest rates. Wait till markets crash. 

All because of Newton's First Law of Motion.

"The new Omicron variant -- which early evidence suggests is far more transmissible than earlier versions but might cause milder cases of infection that will not require hospitalisation -- has set alarm bells ringing afresh across the world, with several of the economically developed nations mandating booster shots as a precautionary measure for their eligible populations," wrote Jug Suraiya. "UK researchers have analysed the likely impact that a Covid booster shot will have on Omicron and say it could provide around 85% protection against severe illness," BBC. "The protection is a bit less than vaccines gave against earlier versions of Covid. But it means the top-up dose should still keep many people out of hospital. It comes as a record 861,306 booster jabs and third doses were given in the UK on Thursday." "White House chief medical advisor Dr Anthony Fauci said Wednesday that currently available booster shots work against the omicron variant of Covid-19," CNBC. Strangely, even while western countries are going ahead with booster doses for everyone, here in India, "All India Institute of Medical Sciences (AIIMS) Director Randeep Guleria on Tuesday said India does not need booster dose at this time," TOI. In complete contradiction to western scientific opinion, Indian Council of Medical Research (ICMR) Director General Dr Balram Bhargava, said, "There is no scientific evidence so far to support the need for booster vaccine dose against COVID-19," India Today. It's not because of any shortage of vaccine because, "The world's largest vaccine maker will halve the production of its Covid-19 vaccine because it has no fresh orders, its top-ranking executive has said," BBC. "The economist Thorstein Veblen coined the term 'conspicuous consumption'," wrote Suraiya, but this is a case of "conspicuous non-consumption". "At the institutional level, conspicuous non-consumption could be stored stockpiles of something that is in such demand that it creates an innate inertia on the part of the controlling agency to allow that which is so coveted to go out of its proud ownership." It is Newton's first law of motion, the law of inertia, Britannica. The reason for not allowing booster maybe that the government does not want to spend on free vaccines for the poor and will not allow paid vaccines because it does not want to be accused of pandering to the rich just before elections in UP. "Politicians did no good before, and they are getting worse" wrote Vani S Kulkarni & Raghav Gaiha from the safety of the US. Their study shows that since this government was elected, "hate speech against religious minorities tend to be aired with impunity", "There are signs that corruption flourishes and crony capitalism has hit a new high," and "Criminality among politicians has risen sharply in the last decade." "A BJP leader in Kerala's Alappuzha was allegedly hacked to death at his home on Sunday by unidentified assailants. This comes a day after a Social Democratic Party of India (SDPI) leader was allegedly attacked and later killed in the same district," msn. No vaccine against politicians, is there?   

Turkey or China, which one to follow.

"The Turkish lira on Thursday hit fresh lows after the central bank fired the latest salvo in President Recep Tayyip Erdogan's 'economic war of independence' by cutting interest rates for the fourth successive month," TOI. "The reduction of the main rate to 14 from 15 percent comes in the face of an annual inflation rate that has surged past 20 percent and is expected to climb even higher over the next few weeks." "A dollar could buy three liras in 2016 and 7.43 liras on January 1. It was worth 15.60 liras on Thursday after opening the week at around the 13.80 mark." "I have never defended raising interest rates, I don't now and will not defend it," Erdogan told reporters. "I will never compromise on this issue." "Our purchasing power dropped -- our money has no value anymore," said 80-year-old retired bank employee Necla Sazak. Erdogan said that "Turkey will reduce inflation and exchange rate volatility through low interest rates", Reuters. In 2018, he was re-elected as president by putting opponents in prison and banning all protests, BBC. To offset people's anger, "Turkey's minimum wage will be 4,250 Turkish liras ($272) in 2022", which will be a 50% increase, BS. Can a man do whatever he likes just because he won an election? "In Belarus, Bolivia, Myanmar, Hong Kong and elsewhere, citizens are arrested, imprisoned, beaten and executed. Elsewhere, democrats are on the back foot, gripped by feelings that our times are weirdly unhinged, and troubled by worries that big-league democracies such as India, the United States, Britain, South Africa and Brazil are sliding towards a precipice, dragged down by widening social inequality, citizen disaffection and the rot of unresponsive governing institutions," wrote Prof John Keene. This is 'despotism'. "Despotism is rather a new type of strong state, a form of 'phantom democracy' led by rulers skilled at manipulating and meddling with people's lives, marshalling their support and winning their conformity. Despotisms craft top-to-bottom relations of dependency oiled by wealth, money, law, elections and by talk of defending 'the people' and 'the nation' (the phrases are often interchangeable in local languages) against 'domestic subversives' and 'foreign enemies'," This is ultimate corruption. "Roy and Keane invoke Periyar's worldview, of the essence of democracy being equality and freedom for each of its members. It is not limited to elections where 'bread and fish' secure votes and sap the system of its essence," wrote Seema Chishti. Like Erdogan's devaluing of the Turkish lira, we experienced demonetization of Rs 500 and Rs 1,000 notes, which formed 86% of currency in circulation,BS, based on one man's whim on 8 November 2016. Did it decrease corruption? "Ask this question now to the Karnataka State Contractors Association, which has written to the Prime Minister's Office last month claiming that they have to cough up around 25-30% of tender amounts to elected representatives before even starting any public works in Bengaluru, with a further 5% being paid to get their bills cleared," wrote Rajdeep Sardesai. Phones of opponents and journalists have been bugged with Pegasus software, The Wire. Israeli Ambassador to India Naor Gilon said that the Pegasus software can be sold only to governments, NDTV. Despotism is about power. And power corrupts.      

Lagging behind the US not a good idea.

US Federal Reserve has bowed. "Federal Reserve officials intensified their battle against the hottest inflation in a generation by shifting to end their asset-buying program earlier and signaling they favor raising interest rates in 2022 at a faster pace than expected," ET. The Fed will reduce its bond buying program by $30 billion every month and intends to increase interest rate by 25 basis points (0.25%) three times in 2022. In January, the Fed committed to keeping interest rate at near zero and continuing with its program of buying $120 billion worth of bonds every month, of which at least $80 billion would be Treasury securities and $40 billion would be mortgage-backed securities, Barron's. Reducing bond buying by $30 billion per month means that the program will end in April and the Fed could start tightening its Funds rate from May. Why the panic? Because, "US consumer prices soared 6.8% in the past year, most since 1982," ET. And, "Wholesale prices measure rose 9.6% in November from a year ago, the fastest pace on record," CNBC. On the other hand, "India's retail inflation in November firms up to 4.91%," ET. The rise seems muted since prices are in comparison to November 2020 when retail inflation was 6.93%. Wholesale price index (WPI) inflation was a record 14.23% and this will surely be passed onto consumer prices, ET. As opposed to the Fed, the Reserve Bank of India (RBI) not only held interest rate at 4% but maintained its "accommodative stance", which means it is ready to cut rates even lower if it feels like, ET. Naturally, "The rupee weakened past the psychologically significant 76 per US dollar level on Wednesday, shedding as much as 0.3 percent in early trade as fear of foreign fund outflows intensified following the global strengthening of the US dollar, dealers said," ET. "Foreign portfolio investors have embarked on a vicious selling spree in domestic equities and debt, with net sales of around Rs 80,000 crore (Rs 800 billion) since October." Small change. The total value of foreign portfolio investors' (FPI) investment in the Indian stock and bond markets stood at Rs 54.7 trillion in September, which is because of a phenomenal rise in share prices, TOI, caused by a flood of liquidity from the RBI. "Large doses of liquidity have been provided by the RBI starting in 2020 even before covid, when it used its LTRO (long term repo operations) and OMO (open market operations) as tools. This was later topped with TLTRO (targeted long term repo operations) and its GSAP (government securities acquisition programme," wrote Madan Sabnavis. Since demand for credit is low, banks have been parking Rs 6-8 trillion in the RBI's reverse repo window for returns of 3.35-3.75%. Normally, inflation reduces the value of the currency, the rupee, and influx of foreign currency will increase the value of the rupee, explained Pritam P Hans. Curiously, " while RBI has accumulated an additional $61 billion since the start of the current financial year, the rupee has lost value", wrote Karan Mehrishi. "During the financial year 2020-21, the RBI net purchased USD 68.315 from the spot market," FE. However, in October 2021, the RBI was net seller of USD 100 million. Was it trying to prevent a precipitous fall in the value of the rupee? Might need a lot more next year.  

It's all because of the way we see light.

There is widespread use of topical corticosteroid creams in India in an effort to look fair, reported CNN. Cortisol is a steroid hormone normally produced by the adrenal glands in our body. "Corticosteroids are man-made drugs that closely resemble cortisol," Cleveland Clinic. Steroids are used in a wide range of life-saving situations and one preparation, dexamethasone, was found to save lives of one in three patients critically ill with coronavirus, HT. "Betamethasone is a potent topical corticosteroid medication habitually used to treat a wide range of skin conditions, including psoriasis and eczema, but one of the potential side effects is lightening of the skin," CNN. Other side effects include dryness of skin, itching, acne and hirsutism, which means excessive hair on face and body in women, Mayo Clinic. These creams are widely available without prescription in India and, once dependent, women find it difficult to stop. In India, "According to experts, a fair skinned person is considered attractive regardless of whether that person has a symmetrical face or a healthy figure," TOI. According to Dr Anup Dhir this is a "legacy from the British era. As our rulers were fair skinned, we also run after fair complexion." That seems a bit glib. Our eyes observe sunlight as white even though it is a combination of 7 colors - violet, indigo, blue, green, yellow, orange, red, or VIBGYOR, each with a different wavelength, Elprocus. We see objects because they reflect light. Black absorbs all the colors of visible light and hence black is an absence of light, wrote Venkata Bhamidipati. "Prehistorically, people would have been more at risk of being attacked by predators or by enemies when in the dark," said Prof Martin Antony. "And we know from the beginning of time, black is the color of night, and it's the color that could hide any nefarious deeds that might be perpetrated under the cover of darkness," said Leatrice Eiseman. There is a campaign to persuade people that dark-skinned, also described as dusky, women are equally attractive as fair ones. Fair and Lovely was "India's largest selling skin lightening cream, with 24bn rupees ($317 million) in annual revenue", BBC. But, consumer giant Hindustan Unilever decided to drop the word "Fair" from the name of the cream and re-branded it as "Glow and Lovely", TOI. Whether this will change attitudes remains to be seen. One reason for the obsession with fairness maybe that most marriages are still arranged. "From watching Indian movies, it would seem as if no issue preoccupies young Indians more than romantic love. While that might well be true, the vast majority of Indians still have arranged marriages," BBC. "In a 2018 survey of more than 160,000 households, 93 percent of married Indians said that theirs was an arranged marriage." Attitudes might change with increased education and well paid jobs for women but strangely female participation in the labor force falls when the economy is growing and increases during economic recession, CPPR. This means that women only work when forced by falling incomes of their male relatives. Color maybe only skin deep, but "the skin is the largest organ of the body and one of the most complicated", as Dr Cara McDonald explains. After all, "You never get a second chance to make a good first impression," Forbes. That mostly depends on eyes. And eyes see light as white. No one's fault, really.      

Is India so different from the rest of the world?

In the US, "Annual inflation rose to 6.8% from 6.2%, a level not seen since 1982 in the midst of the Paul Volcker era at the central bank," wrote Mohamed a El-Erian. Core inflation has risen to 4.9% from 4.6%. Consumer inflation in the US hit double digits in the 1973 and then again in 1979 and continued to 1982, after which it began to cool, US Inflation Calculator. US oil production peaked by 1970, resulting in shortages and a spike in energy prices, and in 1979, the Iranian revolution resulted in a sudden drop in Iran's oil exports, again causing a jump in the price of oil and inflation, wikipedia. Wholesale prices, as measured by the producer price index (PPI), rose by a record 9.6% over the previous 12 months, CNBC. Core PPI rose at 6.9%. "Fed officials for months had been insisting that inflation was 'transitory' and closely tied to Covid pandemic-related factors that eventually would fade." "First, the question is not whether some of the more powerful drivers of inflation will lose their potency; they certainly will," wrote El-Erian. The supply chain crisis that is causing shortages will gradually resolve as, "On the busy Shanghai-to-Los Angeles route, the spot rate for a 40-foot container sank 3.8%...to $9,698, according to the Drewry World Container Index," ET. "Second, the question is not whether this broader inflation dynamic will eventually reverse; they certainly will." The danger is. "As inflation rises higher and more durable than it would have been otherwise, the danger increases not just of an unnecessary economic slowdown but also an outright recession." "The new coronavirus variant Omicron is spreading at an unprecedented rate, the WHO said Tuesday, urging countries to act swiftly to rein in transmissions and protect their health systems," TOI. This fear and uncertainty will keep central banks in easing mode, wrote Prof V Anantha Nageswaran. "The European Central Bank has gone for unprecedented monetary accommodation, which has pushed the inflation in Germany to over 5%, the highest since 1992." In the US, "The real Federal Funds rate has not been this low in the 67 years of data that is available in the FRED database." In China, party inspectors lectured central bank officials about obeying Party orders. Europe, the US and China are wrong but, "India looks relatively better off," as "The fiscal policy is not loose and the current account deficit is low". Earlier, Prof Nageswaran wrote that Omicron would be good for the Reserve Bank (RBI) to continue with its loose monetary policy as global growth and oil prices would cool down. He predicted India's GDP to grow at 9-10% and inflation to remain at around 5-5.5%. Economist Mythili Bhusnurmath is mystified by the Monetary Policy Committee (MPC) of the RBI's decision to stimulate growth by voting 5:1 to keep interest rate at 4% despite high inflation (ET). While the "BRIC economies like Brazil, Russia and South Africa (the latter for the first time in three years and with Omicron raging), have done a course correction, " Faced with a choice between rising prices and growth, the RBI and the MPC opted for the latter, ignoring warning signals," she wrote. The RBI is probably just obeying orders. But what is Prof Nageswran afraid of?         

A difficult choice between now and the future.

"In Sitapur (in Uttar Pradesh), the daily wage currently hovers between Rs 200 and Rs 250 per day, not very different from nominal wages five years back. Even then, most have to scrounge to find work for 15 days in a month," wrote Sayantan Bera. "Rural demand has collapsed due to a prolonged period of declining real wages and a hit to farm incomes from rising input prices of fertilizer and diesel, said Himanshu, associate professor at Delhi's Jawaharlal Nehru University. The rising prices of food items when wages are falling and casual work is hard to find is also impacting the nutrition status of poor households." "Real income is how much money an individual or entity makes after accounting for inflation and is sometimes called real wage when referring to an individual's income," Investopedia. Adjusting income against inflation provides the real purchasing power of an individual. "The gap between work demanded and work provided under the rural employment guarantee scheme widened to an all-time high in November with only 11.66 crore (116.6 million) persondays work generated as on November 30, 2021 against 22.23 persondays in October even as the demand for work was higher in November than in October. Year-on-year, the personday work generated under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) fell by 50.5% against 23.58 crore in November 220," ET. The objective of the MGNREGS Act was "to provide at least 100 days of guaranteed wage employment in a financial year to every rural household whose adult members volunteer to do unskilled manual work", Government of India. The scheme is supposed to be demand-driven and provides a legal guarantee for wage employment. "People in India are in 'extreme pain' and the economy is still below the 2019 levels, with 'small aspirations' of people becoming even smaller now, Nobel laureate economist Abhijit Banerjee has said," ET. "The death of a breadwinner is one of the most serious emergencies that poor households have to face," wrote Prof Jean Dreze and Jasmin Naur Hafiz. "The National Family Benefit Scheme (NFBS), launched in 1995 under the National Social Assistance Programme (NSAP), is meant to help the survivors in these circumstances." But the budget for NFBS has been cut from Rs 8.62 billion in 2014-15 to just Rs 4.81 billion in 2020-21. "In effect, the scheme is being quietly phased out." "Over 33 lakh (3.3million) children in India are malnourished and more than half of them fall in the severely malnourished category with Maharashtra, Bihar and Gujarat topping the list, the WCD ministry has said in response to a RTI query," TOI. "Again, in a relatively poor country like India -- our per capita income is roughly one-fifth of China and one-thirtieth of US -- the income or consumption levels chosen as the cut-off point for poverty (also called the poverty line) are often quite similar to 'starvation' levels (or lines)," wrote Udit Misra. Even as budgets for MGNREGS and NFBS are being cut, "Public sector banks have lost nearly Rs 2.85 lakh crore (Rs 2.85 trillion) on account of loan dues of 13 corporates," FE. Spend on subsidies or on supporting companies to create jobs - an impossible choice.         

We are not as demanding as Americans.

"Prices for US consumers jumped 6.8% in November compared with a year earlier as surging costs for food, energy, housing and other items left Americans enduring their highest annual inflation since 1982," ET. "Fueling the inflation has been a mix of factors resulting from the swift rebound in pandemic recession: A flood of government stimulus, ultra-low rates engineered by the Fed and supply shortages at factories in the US and abroad." "Employers struggling with worker shortages, have also been raising pay, and many of them have boosted prices to offset their higher labor costs, thereby adding to inflation." "The cost of shipping a 40-foot container (FEU) unit has eased some 15% from record highs above $11,000 touched in September, according to the Freightos FBX index. But before the pandemic, the same container cost just $1,300," ET. "A United Nations report said last month that high freight rates were threatening the global recovery, suggesting they could boost global import prices by 11% and consumer prices by 1.5% between now and 2023." "A flood of government spending - including President Joe Biden's $1.9 trillion coronavirus relief package, with its $1,400 checks to most households in March - overstimulated the economy, Prof Jason Furman said. Biden has acknowledged that inflation hurts Americans, "But he said his $1 trillion infrastructure package, including spending on roads, bridges and ports, will help ease supply bottlenecks and therefore inflationary pressures." He did not say who will drive the trucks on wider roads. "The American Trucking Associations (ATA) estimates that the US is short 80,000 truckers - an all time high for the industry. And if nothing changes, the shortfall could reach 160,000 over the next decade," BBC. "Despite the incentives, not enough people want to become truckers." The turnover rate is 90% in large firms. "Drivers burnout because the job is stressful and comes with big personal sacrifices - such as long periods away from the family." "A line of more than 80 container ships waiting to dock at ports of Los Angeles and Long Beach, California, was cut in half in late November -- or so it seemed. Turns out the vessels disappearing from the queue were merely hiding from it, loitering in the Pacific out of reach of the official count," ET. "The actual bottlenecks at midweek stood at 96 ships." The US is far away but all this is having an effect on India as well. "India's merchandise exports rose to $29.88 billion for the month from $23.62 billion in the same period last year, while imports rose to $53.15 billion in November from $33.81 billion last year," ET. Consequently, trade deficit was a record $23.27 billion. "Trade deficit between India and China stood at USD 30.07 billion during April-September 2021," ET, signifying a transfer of our money to our greatest enemy. Luckily, consumer demand in India, as measured by growth in the private final consumption expenditure (PFCE), has dropped from 8.2% in financial year 2005 (FY05) to 3.2% from FY17 to FY22, Udit Misra. Or else, the trade deficit would have soared. Good thing we can't spend as much as Americans.        

Cause or effect, that is the question.

"Data from the Controller General of Accounts indicate that FY22 (1 April 2021-31 March 2022) tax collections are on track to beat not just the pandemic-struck FY21's but also FY20's, a regular growth year," wrote TV Mohandas Pai and Nisha Holla. "Actual GTR (gross tax revenue) collections in FY22 (2021-22) is Rs 13.64 lakh crore (Rs 13.64 trillion), compared to Rs 8.76 lakh crore in FY21 and Rs 10.52 lakh crore in FY20 in the same period." Corporation tax collection is Rs 3.3 trillion between April-October and could reach Rs 6.15 trillion, that is Rs 683.30 billion higher than budget estimate in this financial year. This despite the fact that, according to the National Restaurant Association of India around 25% of restaurants may have shut down permanently with the loss of 230,000 jobs, wrote Vivek Kaul. Many businesses in the informal sector are shutting down. Income tax collections from April-October are Rs 3.11 trillion and can be Rs 164.00 billion higher than budget estimate. The Finance Ministry revealed that over 30 million people have filed income tax returns for 2020-21 and over 400,000 are filing everyday, ET. That means another 8-10 million till the last date of 31 December. If only 40 million people are filing tax returns for last year, there must have been an explosion of high paying jobs this year for tax collections to jump. Goods and Services Tax (GST) may reach Rs 6.5 trillion. "Gross GST revenue collected in November came in at Rs 1,31,526 crore (Rs 1.32 trillion), more than Rs 1.30 trillion in October, ET. "The central government's mop-up from excise duty levied on petrol and diesel more than doubled to Rs 3.72 lakh crore (Rs 3.72 trillion) in the pandemic year 2020-21, out of which states were given less than Rs 20,000 crore (Rs 200 billion), according to a reply by the government in the Rajya Sabha," TOI. The Reserve Bank (RBI) has transferred Rs 991.22 billion for 9 months till 31 March from its surplus to the government, BS, much higher than the Budget Estimate of Rs 535 billion. GST and excise duties add to prices for the consumer. Naturally, a survey by the RBI found, "Households' median inflation perceptions for November 2021 increased by 20 basis points (0.20%), reaching 10.4 percent, while three months and one year ahead median inflation expectations increased by 150 to 170 basis points, respectively, from the previous survey round," ET. Consumer confidence as measured by "The current situation index (CSI) increased to 62.3 in November 2021 from 57.7 in the previous survey round," ET. Below 100 indicates negative sentiment. The RBI published 2 papers in September. The first paper shows that growth of bank credit to industries has declined from 19.6% annually in 2007-2014 to 1.6% annually in 2014-2021, wrote Rajrishi Singhal. The second paper shows "a sharp fall in new private-sector projects being taken up every year and a sharper fall in the number of projects getting completed each year". Because demand is weak. How is the government collecting more tax when consumers are spending less? Because of higher prices. As a result the rupee fell to 75.68 against the US dollar on 10 December, Hans India. Which means higher import prices. Tax or growth. Choose.          

Why help the strong?

"India's gross domestic product (GDP) grew by 8.4 percent during the July-September quarter of 2021-22," NDTV. This is based on a contraction of 7.4% in the same quarter of 2020-21. But, has every citizen of India seem 8.4% growth in earnings? "As per the 'World Inequality Report 2022', India is among the most unequal countries in the world, with rising poverty and an 'affluent elite'," ET. "Here, the bottom 50% earns Rs 53,610 while the top 10% earns Rs 11,66,520, over 20 times more. In India, the top 10% and top 1% hold 57% and 22% of the total national income respectively while the share of the bottom 50% has gone down to 13%." "In 2021, this concentration became more pronounced. The top 10% had a share of 64.64% in total household wealth, the highest since 1995, the earliest year for which this data is available. The share of bottom 50% decreased to its lowest level since 1995 to 5.9%," wrote Abhishek Jha. "India Inc resorted to salary cuts to protect their profits in the June quarter, as revenues came under pressure due to the second pandemic wave that affected nearly the entire country, a report said," Mint. "In 2020-21, Nifty 100 CEOs earned a median Rs 7 crore (Rs 70 million), around 100 times the median pay of their employees," wrote Niti Kiran. "An Indian farmer earned Rs 27 per day on average from cultivation in 2018-19," wrote Roshan Kishore and Abhishek Jha. However, the Union agriculture secretary Sanjay Agrawal said, "At the all-India level, an average monthly income per agricultural household during agricultural year 2018-19 is Rs 10,218. Out of the total average, income from wages is Rs 4,063, followed by cultivation/net receipt from crop production (Rs 3,798), net receipt from farming of animals (Rs 1,582), net receipt from non-farm business (Rs 641) and income from leasing out land (Rs 134)," HT. The report said that, "India's middle class is relatively poor with an average wealth Rs 7,23,930, of 29.5% of the total national income, compared with the top 10% and 1% who own 65% (Rs 63,54,070) and 33% (Rs 3,24,49,360) respectively," TIE. Compare these figures with, "Gautam Adani & family earned Rs 1,002 crore (Rs 10.02 billion) a day in the last one year to quadruple their wealth to Rs 5,05,900 crore (Rs 5.059 trillion) from Rs 1,40,200 (Rs 1.402 trillion) a year ago," ET. The massive rally in stocks has seen small business families "growing their wealth three-four folds in a year", ET. One of the main reasons behind this rally in stocks and rise in income inequality is the negative real interest rate in India. The Reserve Bank (RBI) has callously held interest rate at 4% since May last year, ET, while retail inflation was 6.6% in 2020, World Bank. Low interest rate allows the rich to borrow money to buy assets and high inflation reduces value of their debt. Even billionaire Uday Kotak tweeted, "Central banks and sovereigns globally have 1 medicine for all problems: print money," "Like climate change it is the future generation's problem. We need to solve it not kick the can." The rich and strong don't need help. The nation does.