We cannot change.

Former Reserve Bank of India (RBI) Governor C Rangarajan said that even if India becomes a $5 trillion economy it will remain a middle income country with a per capita income of $3472. ET. "Rangarajan further said in order to reach the level of an upper middle-income country, it will take another two years and to be classified as a developed country, the per capita income will have to be at a minimum of $13,205 and that will take more than two decades of strong growth of between 8 to 9% to achieve it." Our per capita income is so low because our national income has to be divided by our enormous population of 1.415 billion. worldometer. The good news is that "Two recent studies estimate the country's population to peak at 1.5-1.6 billion somewhere between 2040 and 2048. After that a rapid decline will lead to an end-of-the-century population of a billion or a little less." TOI. To increase income India has to become a manufacturing hub but, "Despite being the fastest-growing economy, with all previous governments, India was not able to attract investments in manufacturing due to ineffective policies and approaches." FE. Because, "Transporting raw materials and finished goods in India is still slow and expensive given the umpteen regulations and taxes, conditions of Indian roads, archaic labor laws and extreme weather conditions impacting road infrastructure." "Government levies have put vehicles beyond the reach of much of the Indian population, said Maruti Suzuki's chairman RC Bhargava." ET. "India's per capita income is about $2,300 a year, compared with $12,500 in China and $69,000 in the US, according to the World Bank." "Mahindra Group Chairman Anand Mahindra has shared a map of Indian states showing statewise care ownership per household percentage." Zee News. The average car ownership per household for India is a mere 7.5%. Many responded by tweeting that states with good public transport have lower car ownership. Which would mean Bihar with the lowest level of just 2% has the best public transport system in India. "We can't assume only the rich use what tax authorities consider a 'luxury'. Given Indian family sizes and road conditions, SUVs longer than 4,000 mm with engine capacities bigger than 1,500 cc and a ground clearance of at least 170 mm are not used exclusively by the wealthy, but must bear a 50% tax burden anyway." Mint. "In October 2022, Indian airlines carried 11.4 million fliers." Mint. "This is still 8% below pre-covid figures of October 2019." "Overtaxed petroleum products in India have always been revenue ploys rather than carbon-control measures. These have distorted the cost base of too many sectors, aviation included, and must end." India produced 102.5 million tonnes of fruit in 2020-21 but, "We hardly export any beverages." Because, "Australia, for example, has a standard 10% tax on all goods. In India, zero-sugar carbonated drinks and carbonated fruit-based drinks attract 40% tax (20% GST+12% compensation cess," wrote Arpita Mukherjee & Eshana Mukherjee. So, shall we drink to forget? Sadly, "High rates of taxation are crippling the alcoholic beverages (alcobev) sector and threatening the future of the liquor industry in the country, the International Spirits & Wines Association of India said." ET. Will anything change in 2023? Maybe, taxes will go up further. Still, Happy New Year to everyone.  

The wolf and the lamb.

Ukraine is at war with Russia and "the steady concentration of power in Vladimir Putin's hands over two decades of his rule is largely to blame," fulminates an editorial in the Mint. "The US has not shown much restraint either, sure, but this is aberrative: its top elected leader gets scandalous leeway under its democracy to act imperiously abroad." The use of military force by the US against other nations is not aberrative but is in its genes because the US was born from repeated attempts at genocide against native populations by means of war, exploitation and deliberate infection with diseases like small pox. cs.mcgill.ca. 2.5 million people died in the Korean war, Britannica, around 2 million civilians and 1.1 million North Vietnamese and Viet Cong fighters died in Vietnam, Britannica, from 151,000 to over 1 million deaths in the Iraq war, wikipedia, over 30,000 killed in Libya, cbsnews.com, and not to mention countless numbers killed through clandestine operations such as Operation Condor, wikipedia, and indiscriminate drone strikes on civilians, Reuters, with complete impunity. "NATO integrated Air and Missile Defence (NATO IAMD) is an essential and continuous mission in peacetime, crisis and conflict, safeguarding and protecting Alliance territory, populations and forces against any missile threat or attack." NATO. It is brilliant strategy. Threaten other nations by placing missiles on their borders and then accuse them of aggression, CSIS, as they increase their own defence systems to protect themselves. It's the classic story of the Wolf and the Lamb in the Library of the US Congress. "Pundits reviewing 2022 are heaving a sigh of relief," wrote Pankaj Mishra. The West may think it is winning but "a general discontent with the old order, exacerbated by the pandemic, is fueling a revival of the Left in South America, Europe and Australasia." Hegemony does not last forever and aggression almost always has consequences, as a direct result or as unintended consequences. China has been expanding its influence right to the doorstep of the US. "Beijing has signed free trade agreements with three countries, Chile, Costa Rica, and Peru and begun negotiations with Ecuador last February." Forbes. Almost 50 years after the US support for the coup that brought the brutal rule of Augusto Pinochet in Chile. wikipedia. Ironic. "Chinese enterprises have directly invested the equivalent of some $17 billion in projects, mostly in South America. With the equivalent of $137 billion in loans to Latin American governments, the Export-Import Bank of China has vaulted itself into the ranks of the region's lending leaders." "The Biden administration is accusing Russia of moving to provide advanced military assistance to Iran, including air defense systems, helicopters and fighter jets, part of the deepening cooperation between the two nations as Tehran provides drones to support Vladimir Putins' invasion of Ukraine." cbsnews.com. After all, NATO's excuse for installing missiles on Russia's borders was to stop Iranian missiles. Providing proof to "What goes around comes around". Is the lamb choking the wolf?   

Yields do not agree.

"Britain's economy is on course to shrink 0.4% next year as inflation remains high and companies put investment on hold, with gloomy implications for longer term growth, the Confederation of Business Industry forecast." Reuters. "The UK economy contracted by 0.2% in the third quarter of 2022, signalling what could be the start of a long recession." CNBC. "The country faces a historic cost of living crisis, fueled by a squeeze on real incomes from surging energy and tradable goods prices."  In the US, on the other hand, consumer spending increased to $14.179 trillion in the third quarter of 2022 from $14.099 trillion in the second. Trading Economics. But, while "The labor market has remained resilient, with unemployment rate at 3.7% in November, only slightly above the 50-year low," and "Wage growth, though not completely offsetting inflation, has been solid, at a 5-6% annual clip," "The personal savings rate, once boosted by fiscal stimulus relief, has plummeted from a peak of 33.8% in April 2020 to 2.3% in October 2022 - the lowest it's been since 2005," and "Credit card revolving debt has surged to an all-time high, at nearly $1.2 trillion." Morgan Stanley. "The downturn in the euro zone economy has deepened as high inflation and fears of an intensifying energy crisis hit demand, adding to evidence the bloc is heading for a winter recession." ET. The S&P Purchasing Managers' Index (PMI) fell to "a 23-month low of 47.3 in October from September's 48.1". India is unperturbed by what is happening in the developed economies. "Amid global shocks and challenges, the Indian economy presents a picture of resilience and the regulators are ready to take appropriate actions to preserve financial stability, RBI Governor Shaktikanta Das said." HT. But, "India's economic growth is now 'extremely fragile' and needs all the support that it can get, as private consumption and capital investment are yet to pick up, RBI Monetary Policy Committee (MPC) member Jayanth R Varma said." TOI. India's "private consumption expenditure typically tends to form 55-60% of GDP. It grew by 9.7% during July to September, after it had grown by close to 26% from April to June," wrote Vivek Kaul. In absolute terms, India's Private Final Consumption Expenditure grew to Rs 41.379 trillion in the third quarter (July-September) of 2022. St Louis Fed. And yet, despite the rosy economic picture for India compared to predictions of recession in the US, UK and EU, the yields on 10-year government bonds in India is 7.322%, in.investing.com, 3.845% in the US, CNBC, 3.6640% yesterday in the UK, Trading Economics, and 2.464% in Germany. The marked difference is because dealers want to hedge against high inflation continuing in India and a consequent drop in the exchange rates of the Indian rupee against the dollar, euro and sterling. Because rich countries control inflation and the RBI thinks that growth will come from high inflation. So, the Indian government's borrowing cost is double that of the US, UK and Germany. Very high price to pay. Could the RBI be a problem?

Revenue and spending.

"Raising interest rates is not advisable even for developed countries, as it leads to higher input costs for industries and compromises the competitiveness of their products in the global markets," wrote Rahul Prakash & Neeti Singh. "Addressing an inflationary environment through a fiscal retreat could help put economies on a sound footing in the long run." "Fiscal retreat" means lower government spending. But, "The US House of Representatives...passed 225 to 201 a $1.7 trillion bill to fund the government for the rest of the fiscal year," providing "$772.5 billion for nondefense discretionary programs, and $858 in defense spending." CNBC. "The figures represent around a 5% increase in nondefense spending, and an 8% hike for the Pentagon and national defense." "Consumer prices rose 7.1% in November from a year ago the government said." ET. So, government spending is keeping track of inflation. "Shrugging off rampant inflation and rising interest rates, the US economy grew at an unexpectedly strong 3.2% annual pace from July through September, the government reported." ET. The total US government debt has ballooned to $30.93 trillion, which is 124% of GDP. fiscaldata.treasury.gov. However, "As of November 2022, it costs $103 billion to maintain the debt, which is 11% of total federal spending." "In the fiscal year 2022, federal revenue was equal to 20% of gross domestic product (GDP), or economic activity, of the United Sates that year $4.90 trillion." fiscaldata.treasury.gov. Which means interest payment on the huge US government debt was a mere 2.10% of total revenue. The Indian government budget for 2022-23 projected borrowings of Rs 16.61 trillion, which will increase interest payments to 43% of revenue receipts in 2022-23. PRS. The total debt of the Government of India will be an estimated Rs 152 trillion on 31 March 2023, but if the external debt is priced at current exchange rates then the total debt will be Rs 155 trillion. indiabudget.gov.in. India's "Nominal GDP or GDP at Current Prices in the year 2021-22 is estimated to attain a level of Rs 236.65 lakh crore (Rs 236.65 trillion)." pib.gov.in. At Rs 152 trillion our total debt is about 64% of estimated GDP but if it is taken as Rs 155 trillion, then it rises to 65.4% of GDP. So, although India's total debt/GDP ratio is almost half of the debt/GDP ratio of the US, our interest payment/revenue ratio is 43% to just 11% for the US. No comparison really. Big chunks of US government spending, such as Social Security, National Defense, Medicare and Net Interest, amounting to 41% of total spending, fiscaldata.treasury, can hardly be reduced. "While the Centre has said it will tighten its fiscal deficit to 4.5% of GDP by 2025-26 (it is budgeted at 6.4% this year), anxiety has been aired over this being too big a target." Mint. "Last week's decision to extend free food handouts that began as a welfare measure after the virus struck India was a sign of its lasting effects. Social spending cutbacks are unlikely for other reasons, too, such as general elections in 2024." Exactly. Why advise the US? We should put our own house in order. But, will we? 

Theft of spectacles.

"In my investigation, I did not come across any material to indicate that the Elgar Parishad held on 31 December 2017 at Shaniwar Wada, Pune, had any connection with an outbreak of (the Bhima Koregaon) riots which took place on 1st January 2018." These were reportedly the words of retired police officer Ganesh More, uttered on 20 December, before a Commission of Inquiry investigating the Bhima Koregaon violence. The Quint. "The NIA (National Investigating Agency) claims that 16 people played an active role in 'provoking' the gathered crowd at Bhima Koregaon with their speeches and triggering violence on the 200th anniversary celebration of the battle of Bhima Koregaon. While three persons have been released on bail, and one person died in custody, the remaining 12 continue to languish in the prisons of Mumbai." The Wire. "A US-based forensic firm...claimed that digital evidence used to arrest Jesuit Priest Father Stan Swamy in the Bhima-Koregaon case was 'planted' on his computer's hard drive, similar to two other cases involving human rights defenders Rona Wilson and Surendra Gadling." DH. "The attacker was responsible for compromising Mr Wilson's computer for just over two months. The attacker had extensive resources (including time) and it is obvious that the primary goals of the attack were surveillance and incriminating document delivery," reported Arsenal Consulting. "It should be noted that this is one of the most serious cases involving evidence tampering that Arsenal has ever encountered." 83-year old Stan Swamy, who suffered from Parkinson's disease, was denied straws and sipper for drinking. Gautam Navlakha was denied replacement spectacles after his were stolen in prison. BBC. Patients suffering from Parkinson's Disease develop tremor of the hands which means they tend to spill liquids from open cups or glasses. Mayo Clinic. Denying them simple aids such as straws is cruel, inhumane torture of a fascist state, and not the largest mother of all democracies, as claimed. NDTV. While sunglasses are stolen instantly, spectacles are almost never stolen because every individual has unique correction of visual acuity and astigamtism. The theft of Navlakha's spectacles could have been staged. In July 2021, Stan Swamy died of Covid while still in prison. "Historian Ramachandra Guha called his death 'a case of judicial murder'." BBC. While people are rotting in Maharashtra prisons following unsabstantiated allegations, "The Association for Democratic Reforms said in its report that 75 percent of the ministers in Maharashtra have declared criminal cases against them." Naturally, "All the ministers are crorepatis (multimillionaires) and the average value of their assets is Rs 47.45 crore (Rs 474.5 million)." Meanwhile, convicted rapist and murderer Gurmeet Ram Rahim was released on parole for 40 days so that politicians in Haryana could fall at his feet for blessings before an election. DNA. All of us in India are getting branded as fascist torturers. Who will rid us of this taint?  

Really close.

" 'I'm sure I will kill you - if I get to fire first,' warns the father." BBC. "He's on the phone to his son, who is in the Myanmar military." How has Myanmar come to a stage where a father threatens to kill his own son, if he can? In November 2020, Aung San Suu Kyi's NLD party won the general election "with the party gaining 396 of the 498 contested seats in the bicameral parliament. That no only puts it well over the 322 it needs to govern alone but gives it nine more seats than it won in 2015, when it swept to power in Myanmar's democratic elections after decades of military rule." VOA. On 1 February 2021, the military staged a coup, declared a state of emergency and announced that "power had been transferred to Commander-in-Chief of Defence Services Min Aung Hlaing." wikipedia. Thousands of civilians, including children, have been killed, thousands more arrested and Suu Kyi sentenced to a lengthy prison term. "Before the civil war, a job in the Tatmadaw, as Myanmar's armed forces are known, would bring higher social and economic status for the family. But last year's coup changed everything." "More than 2,500 people have been confirmed killed by security forces since the coup, the Assistance Association for Political Prisoners says. Total casualty figures for both sides are estimated to be 10 times higher, according to data from conflict monitoring group Acled." "For Pakistan's army and its ruling establishment, the Tehreek-e-Taliban Pakistan (TTP) was a chapter closed six years ago, in 2016." News18. "2022: Not anymore. And they may be a bigger threat this time." "The two-day hostage crisis in Bannu in northwestern Pakistan ended...with the army killing all 33 TTP terrorists who had taken over a counter-terrorism detention center in the garrison city." TOI. The terrorists "took police and army officials hostage...after one of the inmates hit a cop's head with a brick during interrogation, snatched his gun and freed other terrorists." "Pakistan is probably the only country in the world that is not the permanent home of its leaders. They are all anchored abroad with their capital assets in off-shore havens and refuges in stable locations. It is also the only country that flies in leaders, has them elected from pliant constituencies, and anoints them as prime ministers," lamented the Dawn. "Around 300 terrorists are present in Jammu and Kashmir, while 160 others are waiting on the launch pads to sneak into this side from across the Line of Control (LoC) in Pakistan, a top army commander said." ET. "China's National Health Commission (NHC) stopped publishing daily Covid-19 data...amid doubts about their reliability as infections have exploded." ET. At the same time, "China will scrap quarantine for travelers from 8 January, officials said," "to effectively reopen the country to those with work and study visas, or seeking to visit family." BBC. Thereby spread the virus to the whole world as it did in 2019. All these are direct neighbors of India. Keep your enemies closer, they say. But this is ridiculous.    

It's very simple.

"The central economic challenge India continues to face is the creation of well-paid jobs for the masses," wrote Prof Arvind Panagariya. We need manufacturing. "It is in manufacturing that unskilled workers become semi-skilled, semi-skilled skilled and skilled yet more skilled." China dropped industrial tariffs to 8.9% by 2009 and to 6.2% by 2021. "At the start of the Covid-19 pandemic, Bonnie Glick, then the deputy administrator of the United States Agency for International Development" came to believe that the US "should focus on making products at home ('reshoring' or 'onshoring'), closer to home ('nearshoring') or in countries allied with the US interests - a concept that lacked an established term but that she called 'allied shoring'." NYT. As countries look to diversify their supply chains away from China, India could take advantage by "progressive liberalisation and, as a first step, end all tariff inversion by dropping input tariffs down to rates applying to corresponding final products in the forthcoming budget." The unequivocal difference between China and India is that India has to hold elections at central, state and municipal levels, wikipedia, while Xi Jinping is the Emperor of China for life with a handpicked seven-member Standing Committee to carry out his whims. Outlook. In a poor country like India, 'freebies' are essential to win elections. "The ruling BJP has offered free subsidised housing, gas cylinders, toilets and sanitation facilities to people." BBC. "From cash transfers, health insurance and food to color TVs, laptops, bicycles and gold; politicians have promised voters the world." The "Union Cabinet...approved extension of free food grain distribution scheme for 81.3 crore (813 million) poor people for a period of one year." ET. Whether they are called subsidies or freebies they need a vast sum of money which means the government needs to collect taxes by any means. Hence, the high tariffs. The fiscal deficit, another name for government borrowings, in this year's budget was estimated at Rs 16.61 trillion and interest payments as a percentage of revenue receipts is expected to increase from 36% in 2011-12 to 43% in 2022-23. PRS. The government needs to collect equivalent taxes to fund its expenses. "Gross GST revenue collection for the month of November accounted for Rs 1,45,867 crore (Rs 1.46 trillion)." ET. GST collection is based on nominal GDP which means the Reserve Bank (RBI) intentionally tolerates a high inflation by increasing interest rate by minute increments - 35 basis points on 7 December. ET. Also high interest rates will increase government's borrowing cost and interest payments on debt. That may be one reason why, member of the Monetary Policy Committee (MPC) Jayanth Varma thinks the 35 bps rate hike was "unwarranted". ET. India "must overcome our fascination with a strong rupee," wrote Panagariya. "India's crude oil import bill nearly doubled to USD 119 billion in the fiscal year that ended March 31." ET. A strong rupee reduces the domestic price of petrol and diesel, which then allows the government to collect trillions of rupees in taxes. India Today. Indian politicians have absolute power. To prolong that state of invincibility they need to win elections, which means freebies to taxes to inflation to the rupee. Seems complicated. Actually very simple.    

Savings and strikes.

"Border control workers were the latest to join a group of public employees in the United Kingdom who have walked off their jobs this year, in an effort to enforce higher pay rises amid a once-in-a-generation cost of living crisis." DW. "The UK government pumped in military personnel and civil employees to keep airports running." "The strike coincides with train strikes, as well as nurses, ambulances and paramedics strikes that have taken place or were planned for this week." "Strikes have disrupted everything from train services to postal deliveries and hospital care. More workers are expected to take industrial action, as demands grow for better working conditions and pay increases to keep up with rising prices." BBC. "The annual rate of consumer price inflation dropped to 10.7% in November from 11.1% in October, the Office of National Statistics (ONS) said." Reuters. High prices hurt people at the lower end of the earnings scale and especially those living on benefits provided by the state. "In February 2022, 22 million people were claiming some form of benefits, in England, Scotland and Wales." BBC. Retired people get state pension plus occupational pension, wikipedia. The National Health Service is free at the point of care, wikipedia, which means that in a medical emergency an ambulance will collect the person and take her to the nearest hospital where she will receive whatever care is necessary without having to pay anything. The UK government funds all the benefits by deducting National Insurance contributions from all working people earning above a threshold, known as the Lower Earnings Limit. wikipedia. This means that the British do not need to save and if prices rise they find it difficult to finance their lifestyle. The Bank of England has been increasing interest rates to bring down prices. "The benchmark rate has gone up to 3.5% from 3% following the latest meeting of the Monetary Policy Committee." BBC. "It is the ninth consecutive hike since December 2021." "The Bank of England says about four million households face a higher monthly mortgage bill next year." This could have several effects. Extra mortgage payments will immediately reduce other spending by the same amount. First time buyers will postpone their purchases and those who find it difficult to balance their budgets may try to sell and move to a smaller property. This could put downward pressure on real estate prices. "In November, the Office of Budget Responsibility (OBR), which advises the government on the health of the economy - predicted that house prices will drop by 9% over the next two years." BBC. On top of all the problems "Firms are 'banging their heads against the wall' two years after post-Brexit trading began," and the "Centre for European Reform suggests Brexit may have reduced UK trade by around 7%." BBC. Prime Minister Rishi Sunak blamed the unions for causing misery. ET. Sunak's grandparents emigrated from India which makes him a Person of Indian Origin (PIO). MEA. We wish him an easier 2023. 

It's not revri.

"The Union Cabinet on Friday (yesterday) approved the revision of the pension for family pensioners of armed forces under One Rank One Pension (OROP) from July 1, 2019." ET. This will give a nice lump sum as recipients get arrears for two years. In July, Prime Minister Narendra Modi "warned people against the revri culture under which votes are collected by promising freebies and said this could be 'very dangerous' for the development of the country." India Today. However, OROP is not revri because "The decision has been taken with the aim to attract youth to join armed forces." But, this government forced through the Agnipath scheme for the armed forces in July 2022. Under this scheme soldiers will be recruited for only 4 years and then sent home with a one-time bonus of Rs 1.171 million. wikipedia. 25% of the recruits may be selected for a career in the armed forces, the rest will not get any pension. Elections to assemblies in 10 states are to be held in 2023, including "Rajasthan, Chhattisgarh, Madhya Pradesh, Karnataka, Telangana along with the Northeast states - Tripura, Meghalaya, Nagaland and Mizoram. Elections may also be held in Jammu and Kashmir for the first time since the abrogation of Article 370 in August 2019. BBC. "Union Cabinet on Friday approved extension of free food grain distribution scheme for 81.3 crore (813 million) poor people for a period of one year." ET. That would be about 57.5% of India's total population of around 1.414 billion. worldometer. "It will cost Rs 2 lakh crore (Rs 2 trillion). Centre will bear the cost." Union Commerce Minister Piyush Goyal said at a press briefing held after the cabinet meeting. This will take us nicely to the next general elections in India to be held by May 2024. wikipedia. However, this is not the mother of all revris. But why is this necessary when "Next year's optimism for India is driven by strong corporate earnings, a post-pandemic retail boom and an economy set to grow by 6% in the next fiscal year - which will make it the world's fastest growing major economy in 2023." Reuters. Surely, such strong growth will create millions of jobs and should reduce the number of poor people. "The International Monetary Fund (IMF) expects India's real GDP growth to moderate to 6.8% and 6.1% in FY23 and FY24 respectively." TN. But the IMF also, "highlighted public debt sustainability risks. The Indian government differs from the IMF's position on the sustainability of its debt." Why such confidence? Nominal GDP or GDP at Current Prices in the first quarter (Q1) of 2022-23 was estimated at Rs 64.95 trillion while the Real GDP or GDP at Constant (2011-12) Prices was Rs 36.85 trillion. pib,gov.in. The enormous difference is because real gdp is calculated after making allowance for inflation. The government is so confident because it collects taxes on the nominal GDP and direct tax collections, after adjusting for refunds, have jumped by 26% to Rs 11.35 trillion, which is about 80% of its budget projection of Rs 14.20 trillion for the entire financial year. HT. Over 68.5 million have filed tax returns for 2021-22 so far this year. ET. This is just 8.3% of the beneficiaries of the free food scheme. And so, can be ignored safely. Why not add real revris with free grains?   

The cover of noise.

"India's Nifty 50 index (NSEI) struck a record high in December and is up 5% this year," "In contrast, MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJOOOPUS) shed 19%." Reuters. "Next year's optimism for India is driven by strong corporate earnings, a post-pandemic retail boom and an economy set to grow 6% in the next fiscal year - which will make it the world's fastest-growing major economy in 2013." "Importantly, conditions are better than not just the crippling slump during India's devastating Covid surge last year but also the anemic growth of the debt-saddled last decade." ET. "Overall, September quarter private consumption rose 7.8% from pre-Covid levels in 2019," "fixed capital formation, an indication of investment activity, 13.5% from 2019," "While unemployment remains elevated at an average of 7.4% over the last 12 months till November." Borrowing by Indian companies has risen sharply wrote Niti Kiran. "The aggregate debt of the sample of companies covered in the analysis jumped nearly 10% between 31 March and 30 September to Rs 25.2 trillion." Why are companies borrowing if not to invest in new projects? "Analysts say it's to fund their working capital needs, which increased sharply in the first half of 2022-23 due to the spike in commodity prices." Companies are also spending their cash balance. "The combined cash and bank balance of the sample of companies declined 2.4% in the first six months of 2022-23 to Rs 3.5 trillion." "Former Reserve Bank of India (RBI) Governor Raghuram Rajan...in a chat with Congress leader Rahul Gandhi claimed that India would be lucky if it achieves 5 percent growth next year." ET. "If you look at 2022 vis-a-vis 2019, it's about 2 percent per year. It's too low for us," he said. India's wholesale price index (WPI) inflation for November "was 5.85% year-on-year, government data showed", which was lowest since February 2021, when WPI rate touched 4.83%." Reuters. "India's consumer price (CPI) based inflation eased to an 11-month low of 5.88 percent in November on an annual basis from 6.77 percent in October, 2022." ET. If we leave out vegetables, oils and fats, CPI inflation in November would be 7.3%, wrote Vivek Kaul. Core inflation, which excludes volatile food and energy sectors, Investopedia, "was at 6.5% in November and has been higher than 6% in eight of the last nine months." Professional forecasters for the RBI predict CPI inflation to ease to 5.2% in 2023-24. "Given that most of these forecasters are corporate economists, they have a tendency to underestimate inflation." "Take the case of 2022-23. Initially, the median forecast was for inflation of 4.7%. This has since been revised to 6.7%." No professional integrity it seems. There could be other potential problems. The US Federal Open Market Committee (FOMC) targets an inflation rate of 2% "for maximum employment and price stability". Some economists advocate that the Fed should target a higher rate of 3-4%, as in developing countries, which will increase its nominal interest rate and give the Fed more room to lower rates if needed, wrote Prof Vidya Mahambare. "This would mean that nominal and real interest rates in the US and these developing countries would be similar should respective central banks achieve their inflation targets." Investment funds would flow into the US pushing down other currencies and increasing their inflation. Since economic predictions are most likely to be wrong why do they go on making them? To fool credit rating agencies, to fool international investors or to fool us? Create enough noise .Drown the truth.

Passports to cars.

"Seventy-five years after Independence, 7.2% of India's population owns a passport with a majority having availed one in the past decade. As of mid-December, 9.6 crore (96 million) Indians held passports, and the number is set to cross the 10-crore (100 million) mark in the next few months." This must be a sign of rising prosperity leading to aspirations of seeing the world and enjoying new adventures. Unfortunately, as Indians learn more about the outside world they develop a rising urge to escape. "The Sri Lakshmi Visa Ganapathy Temple is a few miles north of the airport in Chennai (formerly Madras)" and "This 'visa temple' has surged in popularity among US visa seekers over the past decade; they can be found in almost any Indian city with a US consulate." ET. There are temples in India where devotees offer toy aeroplanes to the deity in the hope that they would be able to travel abroad. India TV. Not as tourists, but as immigrants. "India is set to be the world's fastest growing major economy in the year ahead, as a post-pandemic retail boom and recent bank balance-sheet repairs lure new investment, fueling hot demand for everything from cars to televisions, coal to airliners." Reuters. "Air India, for example, is looking at landmark orders for as many as 500 jetliners worth tens of billions of dollars from both Airbus and Boeing," but, "Unemployment remains elevated at an average of 7.4% over the last 12 months till November compared with 6.3% in 2018-19 and 4.7% in 2017-18, the Centre for Monitoring Indian Economy estimates." "Banks have written off Rs 11.17 lakh crore (Rs 11.17 trillion) bad loans from their books in the last six years till financial year 2021-22, Parliament was informed." ET. Loan write-off is not a bonanza for borrowers, claimed the Finance Minister. "FM Nirmala Sitharaman...told Parliament that borrowers remain liable to repay loans despite a write-off by banks." TOI. But, surely limited liability means that shareholders and promoters of a company are not liable for its debts in case of bankruptcy? "While a shareholder can participate wholly in the growth of a company, their liability is restricted to the amount of investment in the company, even if it subsequently goes bankrupt and has remaining debt obligations." Investopedia. "The lady doth protest too much, methinks." wikipedia. Some Indians have surely made it. "Creating wealth at an unprecedented speed of Rs 1,612 crore (Rs 16.12 billion) per day, Gautam Adani has more than doubled his wealth in the last one year to beat Amazon founder Jeff Bezos as the world's second-richest man, according to IIFL Wealth Hurun India Rich List 2022." ET. Yah boo to Bezos. Blaming high taxation on cars and poor bureaucratic policy, Maruti Chairman RC Bhargava said, "We (India) are at around 30 cars per thousand people. This has been going up by one person per year in the last five years. If we have to reach China's level of 170 cars per thousand people, it will take us 140 years. Draw your conclusions." Why wrack your brain? Go to a visa temple. 

First Trump, now G20.

"In China, from 3 January 2020 to 4.54pm CET, 20 December 2022, there have been 10,088,555 cases of COVID-19 with 31,378 deaths, reported to WHO." "China reported 3,101 new symptomatic Covid-19 infections on Tuesday (yesterday) - as compared with 2,722 cases a day earlier." HT. "Currently, mainland China has confirmed a total of 386,276 cases with symptoms." "According to the National Health Commission, the country did not record any new Covid-19 related deaths." But, "Infectious disease expert Prof Wang Gui-qiang clarified that only pneumonia and respiratory failure caused by the coronavirus were counted as Covid deaths." BBC. "This has led to fears the numbers are an underestimate due to a recent reduction in Covid testing." What does it matter to us in India if the Chinese government is shamelessly and openly undercounting its Covid cases? After all, "The air travel (bird fly) shortest distance between China and India is 2,984 km = 1,854 miles." Because, the first ever case of coronavirus infection in India was when, "On January 27, 2020, a 20 yr old female presented to the Emergency Department in General Hospital, Thrissur, Kerala, with a one-day history of dry cough and sore throat." IJMR. "She disclosed that she had returned to Kerala from Wuhan City, China, on January 23, 2020 owing to the Covid-19 outbreak situation there." Coronavirus was confirmed by real time reverse transcription PCR (RTPCR) at the National Institute of Virology in Pune. On 2 and 3 February 2020, two more cases of Covid-19 were confirmed in Kerala, both of whom had returned from Wuhan in China. wikipedia. However, flights from foreign countries continued unchecked because the then President of the US Donald Trump and his family visited India on 24 and 25 February 2020. wikipedia. Over 100,000 people attended a rally in Motera Stadium in Gujarat. Mr Trump and First Lady Melania Trump visited the Taj Mahal in Agra where he received an "exuberant welcome" "which included dancers dressed as peacocks and horses". BBC. "On March 25, when India had reported only 500 cases, the country went into one of the strictest lockdowns in the world." HT. The lockdown was announced with just 4 hours notice, which led to massive panic buying with people packing into shops, thus creating the conditions which the lockdown was supposed to prevent. India Today. There was no lockdown in 2021 when so many people were dying that relatives were queuing with dead bodies and cremations being conducted in car parks of crematoriums. BI. The government "reported 481,000 Covid deaths between 1 January 2020 and 31 December 2021, but the WHO's estimates put the figure at nearly 10 times as many." BBC. There are 45-48,000 Indians living in China, as of 2015. wikipedia. We must stop all flights from China. Any Indians evacuated from there must be quarantined. Sadly, that will not happen. Because India holds presidency of the G20 from 1 December 2022 to 30 November 2023 and will host over 200 meetings. pib.gov.in. Politicians are not going to miss it before general elections in 2024. Will we count the cost in bodies?

Trapped in own maze.

"Indian and Chinese troops clashed along the Line of Actual Control (LAC) in the Tawang sector of Arunachal Pradesh on December 9 and the face-off resulted in 'minor injuries to a few personnel from both sides'. However, ANI reported that there were around 300 Chinese soldiers involved." HT. The Chinese government needs something to divert people's attention because, "After the easing of Covid-19 restrictions, China is experiencing a massive surge in Coronavirus cases. Hospitals are completely overwhelmed in China, reported Eric Feigl-Ding, an epidemiologist and health economist." NDTV. "Epidemiologist Wu Zunyou has said he believes the current spike in infections would run until mid-January, while the second wave would then be triggered by mass travel in January around the week-long Lunar New Year celebrations which begin on 21 January." BBC. "The third surge in cases would run from late February to mid-March as people return to work." This is not the only trouble for China. "The US is rapidly ramping up efforts to try to hobble China's progress in the semiconductor industry - vital for everything from smartphones to weapons of war." BBC. "Washington's measures also prevent US citizens and green card holders from working for certain Chinese chip companies." "The Biden administration has added 36 more Chinese companies, including  major chip maker YMTC to Washington's 'entity list'. It means American companies will need government permission to sell certain technologies to them, and that permission is difficult to secure." "Under the Biden restrictions, China is severely limited in its ability to buy those chipmaking machines from abroad." TOI. "Those US efforts gathered momentum this week with Japan and the Netherlands nearing an agreement to join Washington in tightening controls over the export of up-to-date chipmaking machinery to China." China could solve its chip problem by taking over Taiwan, which it claims as its own territory, because, "Taiwan's position in the world of semiconductor manufacturing is a bit like Saudi Arabia's status in OPEC." Just one company, the "TSMC (Taiwan Semiconductor Manufacturing Corporation) has a 53% market share of the global foundry market (factories contracted to make chips designed in other countries)." The Conversation. "It is up to the Chinese people to resolve the Taiwan issue and China will never renounce the right to use force," said Chinese President Xi Jinping. Reuters. That will surely result in a full scale war with the US which has a Mutual Defense Treaty with Taiwan to prevent such an attack. wikipedia. "China's plan of reviving its relationship and extracting benefits from the Afghan Taliban seems to be fading away, especially after the recent explosion of the 'Kabul Hotel', which is seen as an attack on Chinese tourists." ANI. Many countries are struggling to repay loans from China and may suffer if they default. China apparently canceled debts of a few African countries but that may not prevent some countries from defaulting. Reuters. China is trapped in a maze. Of its own making. Attacking India won't help.

Could be a sequel.

"In 2022, India has become global champion in an area none could have predicted -- the stock market," wrote Swaminathan S Anklesaria Aiyar. "In mid-December, the Sensex was up 7.5% since the start of 2022. But the MSCI index, the most comprehensive global index, had crashed 17%." US S&P 500 down 18%, Japan' Nikkei down 3% and Germany's DAX down 10%. "In the Great Recession of 2008-9, the Sensex slumped by a massive 64%." But this time the Sensex is soaring because "Systematic Investment Plans (SIPs) have boomed in India, providing a steady flow of savings into the stock market month after month?" But, stock market booms are nothing new in India. In 1992, Harshad Shantilal Mehta used "corrupt officials signing fake cheques, misusing market loopholes, and fabrication to drive the prices of stocks up to 40 times their original price." wikipedia.  "The scam featured an embezzlement of Rs 1439 crore (Rs 14.39 billion) [$3 billion] that led to a severe crunch and drastic loss of wealth in the life savings of many investors that amounted to Rs 3542 crores ($7 billion)." cleartax.in. "He owned shares of Associated Cement Company (ACC), which saw an inexplicable surge in price from a mere Rs 200 to a Rs 9,000." From 1998 to 2001, "Ketan Parekh purchased large stakes in less known small market capitalization companies, and jacked up their prices through circular trading with other traders, and collusion with these companies and large institutional investors. This resulted in steep hikes in share prices, for example: shares of Zee telefilms zoomed up from Rs 127 to a price of Rs 10,000." wikipedia. Parekh "siphoned off public funds to the tune of Rs 1200 crore (Rs 12 billion). Moreover, the damage he caused was so serious that The Serious Frauds Investigation Office (SFIO) estimated that the extent of the fraud could touch Rs 40,000 crore (Rs 400 billion)." HT. In February 2022, the National Stock Exchange (NSE) co-location scam was exposed. "Chitra Ramakrishna, a former Chairperson of India's largest bourse - the National Stock Exchange - was manipulated by a "Siddha Purusha/Yogi" (an unidentified spiritual guru) and allegedly provided him confidential company information including NSE's five year projections, financial data, dividend ratio, business plans." TOI. "According to Republic sources, the NSE system was rigged by placing a computer close to the NSE server. This offered the brokers a 10:1 speed advantage over their competitors." News18. These brokers made windfall profits. Maybe that is why, "The currency in circulation has been going up and stood at Rs 32.2 trillion as of October. In fact, the currency in circulation to the gross domestic product (GDP) ratio as of 30 June stood at 12.9%," wrote Vivek Kaul. That's higher than the 12% level before demonetization. Aiyar is happy it is all due to SIPs. We may be excused for thinking this could be RIP-OFF. 

They like when we accuse.

"The Bharatiya Janata Party (BJP) on Saturday (yesterday) held nationwide protests against Pakistan foreign minister Bilawal Bhutto Zardari's 'uncivilised remarks' against Prime Minister Narendra Modi. Across the country, BJP workers took to the streets and burnt effigies of Bhutto, and demanded an apology from Islamabad." "The Pakistan foreign minster's remark triggered widespread outrage with the BJP terming it 'highly derogatory, defamatory and full of cowardice'." Bhutto's remarks probably followed on from US State Department's position on immunity to the Saudi Crown Prince. In November, "India expressed its displeasure after US State Department official referred to PM Narendra Modi while talking about immunity to Saudi leader Mohammed bin Salman accused of ordering the killing of journalist Jamal Khashoggi in Turkey." TN. "In September, "Saudi Arabia's powerful Crown Prince Mohammed bin Salman has been appointed prime minister - a post that is traditionally held by the king." BBC. "A royal decree announcing his promotion from deputy PM and defence minister cited an exception to the basic law." Heads of state enjoy immunity from prosecution in the US. During his visit to the US, Bhutto said, "I would like to remind the Minister of External Affairs (EAM) of India that Osama bin Laden is dead but the butcher of Gujarat lives and he is the prime minister of India. He was banned from entering this country until he became prime minister." "This is the prime minister of the RSS" and "while India's EAM inaugurated a bust of Mahatma Gandhi at the UN, he would be knowing that the RSS does not believe in the ideology of Gandhi." The RSS, or Rashtriya Swayamsevak Sangh, "presents itself as a cultural, not a political, organization that nevertheless advocates a Hindu agenda under the banner of hindutva or 'Hinduness'." Britannica. Nathuram Godse, who shot Gandhi, was a volunteer in the RSS, but claimed to have left it to join the Hindu Mahasabha before he shot Gandhi. BBC. "However, Nathuram Godse's brother Gopal Godse stated that all the Godse brothers were members of the RSS at the time of the assassination and blamed the RSS for disowning them," wrote Pritika Chowdhry. Modi was chief minister of Gujarat during communal riots in 2002 when "According to official figures, the riots ended with 1,044 dead, 223 missing, and 2,500 injured. Of the dead, 790 were Muslim and 254 Hindu." wikipedia. "In Gujarat, campaigning for the BJP ahead of assembly polls, Union home minister Amit Shah on Friday, November 25, said perpetrators of violence were 'taught a lesson' in 2002." The Wire. Which perpetrators? "By 2014, Pakistan had nearly vanished from our public discourse. India had broken laps ahead in the race. Pakistan was, at worst, a nuisance state," wrote Shekhar Gupta in December 2019. "That hyphenation has been buried. Just that we have now dug it out again." If we keep talking about Pakistan just to win elections we make it important. Pakistan will love to be hyphenated with India again. Why make it possible?      

It's not the 'foreign hand'.

"Federal Reserve policymakers may need to lift US borrowing costs above the 5.1% they penciled just this week, and keep them there perhaps into 2024 to squeeze high inflation out of the economy, three of them signaled." ET. This, despite the fact that "Inflation in the United States slowed again last month" as "Consumer prices rose 7.1% in November from a year ago, the government said." CPI inflation was 7.7% in October and 9.1% in June. "US producer prices rose slightly more than expected in November" as "In the 12 months through November, the PPI increased 7.4%. That was the smallest gain since May 2021." Reuters. In response, "The Federal Open Market Committee raised its benchmark rate by 50 basis points to a 4.25% to 4.5% target range. Policymakers projected rates would end next year at 5.1%." ET. Why should it take till 2024 for the rate hikes to take effect? Because, "Inflation is largely self-fulfilling [in the US], so if people expect higher inflation, they ask for more money at work. raise prices on what they sell or on the rent they charge," wrote Allison Schrager. "The role of expectations is potentially even more powerful than raising rates." The problem is that, "Despite a slowdown in the US, job vacancies are still very high, with the unemployment rate at a 50-year low. This has been feeding into wage inflation," wrote Vivek Kaul. "Higher interest rates in the US encourage investors to move money from different parts of the world, including India, to the US. This puts pressure on other currencies, including the Indian rupee." "The US basically ends up exporting inflation to other parts of the world." The solution would seem simple - the Reserve Bank (RBI) just needs to keep pace with the Fed and raise rates in India. However, on 7 December, the RBI "expectedly raised the benchmark lending rate by 35 basis points (bps)" even though it "kept the inflation forecast unchanged at 6.7 percent for the current fiscal". DH. Which is surprising because, "Terming the Indian economy a bright spot in the otherwise gloomy world, the RBI lowered its estimate of GDP growth to 6.8 percent in the fiscal ending March 31, 2023." That should make India the fastest growing major economy in the world. "India is on track to become the world's third largest economy by 2027, surpassing Japan and Germany, and have the third largest stock market by 2030, thanks to global trend and key investments the country has made in technology and energy." Morgan Stanley. But, surely if so much wealth is created in India, consumer demand will soar and inflation may soar with it? Niggardly rate rises by the RBI means that, "Twelve-month implied rupee yields - typically a reflection of interest rate differentials with the US - fell to the lowest level since 2009 last week." Bloomberg. "With the RBI widely expected to end a rate-hike cycle early next year, and the Federal Reserve seen peaking toward the middle, the interest-rate differentials are expected to worsen, further pressuring the carry trade and ultimately the rupee." Why blame the 'foreign hand'? Serve the nation. Not self interest.

Selling lemons? Possible.

"Over the last 30 odd years, through ebbs and flows, the zeitgeist of globalization and now the unraveling of the same, through conflicts and wars, Indian stocks have been massive outliers to all its emerging market (EM) peers," wrote Somnath Mukherjee. "Over time, the correlation between growth and stock returns have come down significantly." Our population of 1.4 billion is apparently in our favor. "India today sells a total of 3 million cars every year. (South) Korea with a population of 50 million sells 1.5 million" That is why our companies give great shareholder values. "With an 8% year-to-date (YTD) rise, the sensex is currently the best performing index in the world in 2022. The increase is in sharp contrast to most global indices that are deep in the red." TOI. "Market players said that the growing SIP contributions and buying by domestic institutional investors amid a nearly Rs 1.3-lakh-crore (Rs 1.3 trillion) selloff by foreign funds in the year has boosted Indian stocks." "India is growing faster than what is captured by the country's official data, and it presents a case for an upgrade of equities outlook, Credit Suisse said." ET. Even "The World Bank...revised upwards its GDP growth forecast to 6.9% for FY23, saying the economy was showing higher resilience to global shocks." TOI. If our economy is so strong why "India has proposed curbing the import of private jets and helicopters as the South Asian nation seeks to plug the widening trade deficit, according to a document from the country's aviation ministry seen by Bloomberg." ET. Any plane weighing over 15,000 kg (33,100 pounds) and turbo jets should be banned. "The government is working on ways to contain surge in imports of non-essential goods with an aim to boost the country's exports and reduce trade deficit an official said." ET. In the Budget in 2020, Finance Minister Nirmala Sitharaman "announced Customs duty hike on a range of items, including toys, furniture, electronic goods, and footwear." BS. In addition, "As many as 350 customs duty exemptions have been withdrawn in the Budget 2022-23 to boost domestic manufacturing." ET. The aim is to force people to buy goods manufactured in India by increasing the prices of imported goods, thus increasing investments and creating jobs. A virtuous cycle, as it were. Strangely, the government is also working on a series of free trade agreements (FTAs). "Earlier this year, the country brought into force a comprehensive economic partnership with the UAE and signed an ambitious trade pact with Australia, committing to reduce tariffs by 85%. Advanced negotiations are also under way to sign FTAs with the UK and the EU." BBC. The EU meanwhile is slyly erecting barriers to imports. "In November 2021, the European Commission proposed legislation to check EU consumption and production of agricultural produce cultivated on deforested land," wrote Sakshi Abrol. "The problem is that Europe cleared most of its primary forests decades ago." If cheap products come from abroad how will our companies profit? In which case, shares of such companies should plummet. Are they selling lemons? 

Our poor friendly neighbor.

"Lambasting New Delhi for its 'nefarious terror activities in Pakistan', State Minister for Foreign Affairs Hina Rabbani Khar has termed India a 'rogue state', saying that though it projects itself as the 'greatest victim' of terrorism, it is the 'perpetrator of it'." Geo TV. "She reminded New Delhi that it cannot have islands of excellence in a sea of depravity." "She said India continues to divert attention from state-sponsored terrorism and human right violations in IIOJK (Jammu & Kashmir)." Ouch! We, in India, have not forgotten Khar's fashion terrorism on her visit to India in 2011. "Her oversized Hermes black Birkin bag was among the top trending items on Twitter on Wednesday as India's Khar-ites contemplated the purported Rs 17 lakh (Rs 1.7 million) price tag. She alighted on Tuesday in a blue-tunic pants ensemble teamed up with pricey South Sea pearls at her neck and ears and Roberto Cavalli shades covering half her face." TOI. This was clearly designed to create heartburn in Indian women and marital discord as they blamed their husbands for being cheapskates. Sadly for Pakistan, it's not just India. "At least seven people lost their lives and 16 others suffered injuries on Sunday in Chaman, which came under heavy gunfire and artillery shelling by Afghan border forces, the military media wing said." Dawn. Earlier, "As the number of cross-border attacks targeting security forces from Afghanistan increases, Foreign Office...said Pakistan was holding discussions to sort out the issue." Dawn. Double ouch! "Mullah Omar, the founder of the Taliban, was trained by the ISI," and "As he created the Taliban, the Pakistan army gave him support for the drive on Kabul in 1996 that gave the Taliban control of most of the country." Brookings. The ISI helped the Taliban to attack NATO and US forces in Afghanistan, forcing them to flee in disarray by 30 August 2021. wikipedia. Biting the hand, as it were. Worse, "Approximately $7 billion of military equipment the US transferred to the Afghan government over the course of 16 years was left behind in Afghanistan after the US completed its withdrawal from the country in August." CNN. Actually, fled in blind panic. Alarmingly, "The foreign exchange reserves held by the State Bank of Pakistan (SBP) plunged $784 million to a nearly four-year low of $6.72 billion during the week that ended on Dec 2." Dawn. SBP is the central bank of Pakistan. India is forcing Pakistan to make difficult choices for survival. Dawn. Gen Zubair Hayat "reminded that over the past five years there were 'phantom and fake' surgical strikes claim, the 2019 Balakot incident - the first attack on the mainland, and the so-called 'accidental' launch of missile into the country's heartland." Pakistan is a victim of "full scale war to insurgencies and terrorism and more recently hybrid warfare", he said. Poor Pakistan. India is forcing it "to maintain robust nuclear and conventional capabilities". When all they want is South Sea pearls in Birkin bags.     

Who wants to be Pappu?

"India's consumer price based (CPI)  inflation eased to a 11-month low of 5.88 percent in November on an annual basis from 6.77 percent in October 2022." ET. The number has dropped within RBI's tolerance band of 2-6 percent after 10 months." It is mainly because food inflation dropped to 4.67% in November from 7.01% in October. This rise in prices is on top of the 4.91% rise in CPI in November 2021. NDTV. It may be within the tolerance band of the RBI but it means a compounding price rise for Indian consumers. Core inflation reflects change in prices of goods and services but excludes volatile food and fuel inflation. Investopedia. "Data from the CMIE (Centre for Monitoring Indian Economy) shows that core inflation increased five basis points to 6.19% in November," wrote Pavitra Kanagaraj. No wonder, "The Index of Industrial Production (IIP), a measure of industrial activity, contracted by 4% in October after expanding by 3.1% in November." Because, "The consumer goods subcategory contracted for the fourth consecutive month" despite the festive season. The Goods and Services Tax (GST) collection jumped by 11% to 1.46 trillion (Rs 1,45,867 crore), ET, showing the compounding effects of inflation rate rises. That explains the tolerance of the RBI even though Indian consumers are suffering. The RBI raised its interest rate by a cute 35 basis points to 6.25%. ET. "The RBI net sold $33.4 billion in the foreign exchange market in the first six months of the current fiscal to defend the rupee from excess volatility, FM Nirmala Sitharaman said." TOI. As a result, "The Indian Rupee has been strong against every currency," said the Finance Minister in Parliament. Since India imports more than it exports, a relatively strong rupee brings down the cost of imports and thus helps to keep inflation slightly under check. But a strong rupee makes exports more expensive. Hence, India's merchandise exports contracted to $29.78 billion in October from $35.45 billion in November, while the trade deficit widened to $26.91 billion. ET. "The merchandise trade deficit for April-October 2022 was estimated at USD 173.46 billion as against USD 94.16 billion in April-October 2021." A strong rupee and low interest rate is great for the rich. "This year has seen the highest-ever growth for such super-luxury cars in India (with a minimum price tag of Rs 2 crore [Rs 20 million] and more) as sales grew by 50% in 2022, breaking the previous record." ET. The trade deficit with China alone was $51.5 billion during April-October this year. BS. We cannot blame oil imports for this. Using percentages, Commerce Minister Piyush Goyal sought to disguise the fact that the trade deficit with China increased by about $35 billion in the 10 years from 2004-2014 but has jumped by $37 billion in the 7 years since. TOI. Who is the 'Pappu' (meaning incompetent) now, asked Trinamool Congress MP Mahua Moitra. TOI. Did anyone claim that sobriquet? We doubt it.

Endogeous negotiations.

"UK Trade Secretary Kemi Badenoch is visiting New Delhi for the sixth round of Free Trade Agreement (FTA) negotiations between the UK and India, first formal round since July." ET. "Strong growth in the Indian economy is expected to boost UK exports to India by over 9 billion pounds by the middle of the next decade." "Big-hitting UK brands such as Pret A Manger, Revolut and Tide announce expansion in India." Gov. UK. "Visit enforces UK's strategic tilt to Indo-Pacific, home to some of the fastest-growing economies in the world." Badenoch's visit to Delhi was necessitated by Brexit, when "The UK voted to leave the EU (European Union) in 2016 and officially left the trading bloc - its nearest and biggest trading partner - on 31 January 2020." BBC. The EU was a $17 trillion economy in 2021, World Bank, while India was at $3.173 trillion in the same year. Former Prime Minister Boris Johnson, a vociferous campaigner for Brexit,  predicted  it will save 350 million pounds a week which can be used for the National Health Service (NHS). Reuters. But, "Overall, Britain's net payment to the EU worked out at 181 pounds a week." "According to one study, UK exports fell by more than 20%, compared to a projection of what they would otherwise have been, in the first 15 months following the post-Brexit trade deal with the EU. Imports from Europe have bounced back, but exports haven't," wrote Clive Crook. The UK relied on new FTAs. "The first such deal was with Australia last year. Completed incompetently and in haste, it's now derided by officials, at least one former minister and UK businesses for surrendering more than it gained." "Former environment secretary George Eustice savaged the UK's free trade deal with Australia and criticised Liz Truss's role in negotiating it." BBC. "This includes giving Australia or New Zealand full access to the UK market to sell beef and sheep, while Australia still bans the import of British beef, he added." "London's Brexit options are limited and unappealing," wrote Crook. "It would need to start by acknowledging - even if tacitly - Brexit's two great tactical errors." "First, London would be negotiating with the EU from a position of weakness; second, the EU would be pleased to see Brexit fail, and conspicuously, to discourage other rebellions." "Mainstream economics tells us that people's goals ambitions are 'exogenously' given, meaning they are hardwired into us," wrote Prof Kaushik Basu. But, like the FIFA World Cup has shown "many of our ambitions are endogenously created. Rather than being born with them, we acquire and cultivate them along the way." Brexit was created by Johnson's fictitious claim of 350 million pounds. The Indian government treats us like children , wrote Manu Joseph. "They bully us in many ways, and there is a presumption visible in every public policy - that we are not smart or mature." "On their part, Indian adults do behave like children." The UK Trade Secretary is here. We are both endogenous. Should be in agrement.

Galloping Sensex.

The S&P Bombay Stock Exchange (BSE) Sensitive Index, or Sensex, is an index of 30 financially sound, well-established companies listed on the BSE. wikipedia. The index was taken as 100 on 1 April 1979 and had grown by 10 times to 1000 by 25 July 1990. On 1 December 2022. it opened on 63357.99, hit an intra-day high of 63583.07 before closing on 63284.19. wsj.com. Which means that it had grown 63 times in 32 years and 5 months. It is trading at 62,068.98 this morning. BSE. In the US, the Dow Jones Industrial Average (DJIA) is also an index of stocks of 30 prominent US companies listed on stock exchanges and is maintained by S&P Dow Jones Indices. wikipedia. Its end-of -year closing value was 40.45 in 1896, reached 107.23 in 1919, closed at 300 in 1928, fell to 59.93 in 1932 and did not reach 300 till 1954. Just before the great crash of 1929 the DJIA had grown 10 times in 9 years, peaking at 381.17 on 3 September 1929. wikipedia. This was the start of the Great Depression  and after several ups and downs the DJIA  reached its lowest level of 41.22 on 8 July 1932. It took over 25 years, till 23 November 1954 for the DJIA to return to its peak of 3 September 1929. It breached the 1000 level briefly in 1980 but did not close above 1000 consistently till 1983. macrotrends. It reached a peak of 36,934.84 on 4 January 2022 before closing down at 36,799.65. Yahoo. It closed at 33,476.46 on Friday, 9 December 2022. So, in the 39 years since 1983 the DJIA has grown by around 33 times, while the Sensex has grown by almost twice the rate in 32 years. In 1990, India's GDP was about $321 billion and has grown to $3.2 trillion in 2021, macrotrends. So India's GDP grew by 10 times while the Sensex multiplied by 63 times in the same period. In 1983, the US GDP was about $3.6 trillion and grew to nearly $23 trillion in 2021. macrotrends. So the US economy grew by 7 times while the DJIA multiplied by 33 times. The Organization for Economic Cooperation and Development (OECD) consists of 30 developed economies, wrote Karan Mehrishi. The characteristics of these countries are that they have large multinational companies, spend a lot on research. have very rich banks, powerful central banks and active citizens groups. India's largest company Reliance Industries had a revenue of $102 billion in the whole of the last financial year of April 2021 to March 2022, HT, while the US company Apple posted revenues of $123.9 billion in the last quarter of 2021 alone. Variety. Market capitalization of Reliance Industries is $214.22 billion, companiesmarketcap.com, while currently that of Apple is $2.6 trillion. Why then is the Sensex galloping so far ahead of US markets? "Today, we are facing the worst aspects of the 1970s (stagflationary shocks) alongside the worst aspects of the global financial crisis," wrote Prof Nouriel Roubini. So, "The mother of all stagflationary debt crises can be postponed but not averted." Do we have the mother of all bubbles? Will it burst?