Who was Mahalanobis?

At independence India had no data, so the National Sample Survey was established in 1950. "Nehru handed the responsibility of running the survey to scientist PC Mahalanobis - now called the father of Indian statistics - and the organisation he founded, the Indian Statistical Institute," BBC. "The methods pioneered by it are now used by the World Bank and the United Nations. As Nobel Prize-winning economist Angus Deaton and co-author Valerie Kozel wrote in 2005: 'Where Mahalanobis and India led, the rest of the world has followed, so that today, most countries have a recent household income or expenditure survey'." Not any longer. In 2019, "The only two non-government members of Indian National Statistical Commission (NSS) have resigned," The Wire, because "The new survey data called the 'periodic labor force survey' has not been made public even though it was approved by the NSC in December'." "Three days later, some of those jobs numbers were leaked to the Business Standard newspaper, which reported that India's unemployment rate in the year ending June 2018 rose to 6.1 percent, its highest level in 45 years," NDTV. "The 2017-18 NSS consumer expenditure survey showed that the share of food in overall consumption went up 1.6 percentage points to 47.5% between 2011-12 and 2017-18. The survey results were junked by the government because they showed a dip in rural consumption," wrote Pramit Bhattacharya. The GDP back series data released by the Central Statistical Office (CSO) and Niti Aayog lowered the rate of growth during the previous United Progressive Alliance (UPA) government to 6.7% from 8.1% and 7%, while increasing the growth rate to 7.4% during the first four years of the present government, TIE. Prime Minister Narendra Modi blames our first prime minister Jawaharlal Nehru for all of India's ills today. "Check out all of Narendra Modi's statements, whether casual, delivered in the campaign heat or set-piece as in Parliament. Nehru is a recurrent theme," wrote Shekhar Gupta. At Independence, "From the integration of the country to fulfilling the needs of the common man, the situation seemed impossible. But Nehru managed to revive all hopes. In five years, the growth rate rose from 0.72% to 3.6%. Soon, the princely states became a thing of the past; the dream of one India, from Kashmir to Kanyakumari finally took a permanent shape," Mint. In addition to a new constitution, after more than 1,000 years of slavery under the Moguls and the British, Nehru held the first national elections and had the foresight to establish 5 Indian Institutes of Technology (IIT), the All India Institute of Medical Science (AIIMS), and built the Bhakra Nangal dam, among many other achievements, wrote Karan Thapar. Mahalanobis may be praised by foreigners but he is inconvenient in India. After all, statistics show up the failures.        

Status quo will be good.

"In the 2010s the US comeback was striking. Its share of the global economy rose from a low of 21 - 25%, and its share of global stock markets rose from 42% to 58%," wrote Ruchir Sharma. "Easy money gushed from the US Federal Reserve and into financial markets, widening wealth inequality, deepening the national addiction to debt, further fueling the rise of monopolies and a new generation of 'zombie' companies." While developed economies are stagnating, "In the coming decade the world's fastest growing economies will still be found in the emerging world." During the pandemic, "Emerging markets which stimulated most aggressively got no payoff in a faster recovery, owing in part to the downsides of overindulging. India was not among the biggest spenders, which tended to suffer higher inflation, higher interest rates and currency depreciation, at least partly canceling out the sugar high of stimulus," Sharma wrote in October. "India is currently what the World Bank describes as a lower middle income country. The average income of an India was $1,935 in 2020," wrote Niranjan Rajadhyaksha. "The International Monetary Fund (IMF) now estimates that number will go up to $3,769 in 2027," and "is expected to cross $4,000 towards the end of the decade". "India will thus be on the cusp of becoming an upper middle income country." "About a decade ago, Larry Summers and fellow Harvard economist Lant Prtichard pooh-poohed what they called 'Asiaphoria'. They predicted that it was more likely that Chinese and Indian growth rates would over the years revert close to the global mean," wrote Rahul Jacob. "Since 2017-18, the absolute number of farm workers in India has risen by more than 40 million, though economic emergence should have meant a decline. Instead of the world's largest middle class, we have the world's largest number of subsistence laborers with few other options." "All's well on the economic front. Or so the 8.7% real gross domestic product growth for 2021-22 seems to say," wrote Vivek Kaul. But, "GDP contracted by 6.6% in 2020-21." So, "the size of the economy in 2021-22 was just 1.5% bigger than in 2019-20, the pre-pandemic year." Indian startups are floundering. "The Indian growth story that has been sold to us over the years can be summarized in one line: There are lots of Indians and we can sell them something. The trouble is that many Indians are not in a position to buy fintechs or for that matter other startups sell," wrote Kaul. India cannot export processed foods because of very high taxes, wrote Arpita Mukerjee & Eshana Mukherjee. "India is one of the largest producers of horticultural products: production was 334.6 million tonnes in 2020-21, an increase of 4.4% from 2019-20." But, "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)." Taxes make goods too expensive to export so farmers stay poor. We will be lucky if we reach the cusp of upper middle income by 2030. As long as we don't go down.

Not possible to be both.

"Central banks should try to minimize an economic downturn if possible, but must prioritize taming inflation above any other goal, the Bank for International Settlements has urged," BI. "In May, inflation hit a four-decade high of 8.6% in the US and reached a record of 8.1% in the eurozone." "Failing to act now would mean that rising prices become a permanent feature of developed economies, which would likely necessitate aggressive interest rate rises in the future, the BIS added." India has different priorities. "The Indian economy has barely recovered from the impact of the coronavirus pandemic and it should be ensured that there is 'no intolerable growth sacrifice' in attempts to tame inflation 'too abruptly', according to RBI's Monetary Policy Committee (MPC) member Jayanth R Varma," ET. Varma, an external member of the MPC, is a professor of finance and accounting at IIM Ahmedabad. IIM stands for Indian Institutes of Management, which are business schools owned by the central government, wikipedia, and Ahmedabad is the capital of Gujarat state, the home state of Prime Minister Narendra Modi. Reserve Bank of India's (RBI) Deputy Governor Michael Patra recently warned that tighter monetary policy "is not likely to be painless" for the stock markets, moneycontrol. "An increasing proportion of direct equity investors become vulnerable, as consumers, to the vagaries of the stock market and can become a threat to financial stability given that many such individuals have some form of debt on their balance sheets, not to mention the daredevils who have left their salaried jobs to embrace the market full-time." "Sebi's cash market data shows that FPIs (foreign portfolio investors) have sold stocks worth over Rs 4.1 lakh crore (Rs 4.1 trillion) in the primary market," while, "On the other hand, domestic investors have bought stocks worth about Rs 3.3 lakh crore in the last 15 months," ET. Authorities seem more worried about markets than about Indians who may lose all their wealth. While the present chief economic advisor Anantha Nageswaran praised the government and the RBI for the recovery from the pandemic, "a former chief economic advisor to the same government , Arvind Subramanian, raised questions about the autonomy and integrity of the RBI as an institution as it has been converted into a 'mere extension' of the government," The Wire. "While the mandate of the RBI is to keep inflation rate at around 4%, since 2019, it has been above the 6% ceiling for 56% of the time." "This, he says, has been in part to do with the RBI's efforts to act as the government's face-saver instead of being true to its mandate." The RBI may kowtow to the government, but foreigners don't care. They show their contempt by selling out, resulting in the rupee falling to a record low of 78.51 to the US dollar yesterday, News18. It was down to 78.90 against the dollar a little while back, xe.com. A weak rupee will push up prices even further. The RBI can be a central bank or a sycophant. Can't be both.

Gas without a fig leaf.

"In a move that may have an impact on the terms of the growing Russia-India energy partnership - India has enhanced import of Russian energy since the war in Ukraine began as energy prices spiral - the G7  countries are considering imposing 'price caps' on Russia's oil to dilute revenue inflows to Moscow," HT. "The Guardian reported that G7 countries were considering twin caps on Russian oil and pipeline gas - based on the calculation that Russia would have no choice but to sell it." This is reminiscent of the infamous "Oil For Food" program which allowed Western countries to plunder Iraq's natural resource freely while Iraqis and their children died in their thousands for lack of food and medicines. "Back in 1995, the UN created the Oil-for-Food program to alleviate the Iraqi people's profound misery and famine caused by the tough economic sanctions imposed on the nation after Saddam Hussein's 1990 invasion of Kuwait," NYU Law. First create famine through sanctions and then let them beg for food in return for free oil. "But by 2003, the program was scuttled after allegations of deep and widespread corruption that rose to the highest levels of UN administration, even (UN Secretary General Kofi) Annan's son." No mention of how much the US, which was occupying Iraq at the time, and its companies looted. "Between 1 million and 1.5 million Iraqis have died from malnutrition or inadequate health care resulting from economic sanctions," said former UN official Denis Halliday. "We are now in there responsible for killing people, destroying their families, their children, allowing their older parents to die for lack of basic medicines." Russia is not Iraq and Western countries cannot occupy it so they intend to loot it brazenly by trying to force Russia to sell its oil and gas for pennies. Exactly like the protection racket by organised crime, using Ukrainians as 'button men' to carry out the knee-capping. They are resorting to open plunder without any fig leaf to cover their naked aggression because, "German energy official Klaus Muller, the head of the Federal Network Agency, or Bundesnet-zagentur, warned...that consumers may see their gas bills increase by two or even three times as Germany faces the prospect of Russian gas supplies being cut," DW. Faced by the rising cost of fuel, Asian countries are switching to coal for electricity, which has severe implications for global warming, CNN. Retribution may be coming. "On 22 June, Putin announced that the five BRICS countries - Brazil, Russia, India, China and south Africa - are considering the creation of a new international reserve currency," wrote Sandipan Deb. Other countries will surely join. "BRICS countries are also working on developing an international payment network that will cut reliance on the Western financial (SWIFT) system." Let us bury predatory colonialism forever. Amen.    

A strong rupee.

"Commerce and industry minister Piyush Goyal on Sunday said that India wants to capture the world markets in all sectors and the country would 'very soon' become a $30 trillion economy from the level of $3 trillion at present," ET. "According to the data, the growth in GDP at constant prices (2011-12), also known as real GDP, during FY 22 (1 April 2021-31 March 2022), is estimated to attain a level of INR 147.36 trillion (US $1.90 trillion), as against First Revised estimate of INR 135.58 trillion (US $1.75 trillion) for FY 21," India Briefing. However, nominal GDP, which is not adjusted for inflation, "is estimated to attain a level of INR 236.65 trillion (US $3.05 trillion)". "Goyal said that if India grows at 8% every year on a Compounded Annual Growth (CAGR) basis," "In 27 years from now, the economy growth can be calculated as $26 trillion and after 30 years, it can confidently be put that India will be a $30 trillion economy." How smoothly the minister goes from "if" to "confidently" is commendable. "In 2022, the IMF projects India's $3.53 trillion economy to overtake Britain's $3.38 trillion," NIE. By 2027, India will be in fourth place with $5.53 trillion, higher than Britain's $4.55 and Germany's $5.36 trillion. "The impending growth slowdown in the United States is set to hamper the growth trajectory of India in the medium term, analysts say," ET. "The US constitutes around 18% of India's merchandise export market and over 60% of India's IT-ITeS exports." "Nomura expects India's GDP growth to average 7.2% on an annual basis in 2022 and moderate to 5.4% in 2023, with risks to the downside." "India faces near-term challenges which need to be managed carefully without sacrificing hard-earned macro-economic stability, the finance ministry said in its monthly economic report. It asserted that the country faces a low risk of stagflation," ET. "Almost a year back, the trading index for the US dollar was near 92. However, today, it is trading at 105, which is a 14 percent YoY growth," ET. The rupee has fallen from 73-74 to the dollar, to about 79 today, "a depreciation of 7 percent on a YoY basis". Which means that the US dollar has appreciated 14% against other currencies but only 7% against the rupee. "India's real effective exchange rate, measured by the 40-currency basket favoured by the RBI, is overvalued by 4%," agreed SSA Aiyar. "Most developing countries are conserving their reserves to meet the coming crisis. But the RBI has run down its foreign exchange reserves from a peak of $640 billion in 2021 to $596 billion today. By selling dollars, the RBI has checked the rupee from sliding faster." The RBI is trying to control inflation by lowering the cost of imports through a stronger rupee. RBI's Monetary Policy Committee (MPC) member Jayanth R Varma said that "it should be ensured that there is no 'intolerable growth sacrifice' in attempts to tame inflation 'too abruptly'," ET. "One hopes the RBI is not under political pressure," wrote Aiyar. No pressure. Just obeying orders.       

An oasis of wealth.

"Rising fuel costs, soaring fuel bills and wages that are not keeping pace. Inflation is plundering people's wallets, sparking a wave of protests around the world," ET. "This week alone saw protests by the political opposition in Pakistan, nurses in Zimbabwe, unionised workers in Belgium, railway workers in Britain, indigenous people in Ecuador, hundreds of US pilots and some European airline workers. Sri Lanka's prime minister declared an economic collapse on Wednesday after weeks of political turmoil." In the US, "Pick your poison. Inflation sits at the highest level in more than four decades, and every feasible solution for fighting it comes with serious drawbacks," wrote Ben Wincke. "Skyrocketing food and gasoline prices lead the way," but, "Practically every fix for the inflation problem is either too slow, too risky, or too divisive." "Much of the inflation problem boils down to gas prices." "The rally intensified in March when the US, UK, and the European Union slapped Russia's energy sector with severe embargoes. The measures aimed to cripple one of Kremlin's biggest sources of revenue, but it left the West paying sharply higher energy prices." "German energy official Klaus Muller, the head of the Federal Network Agency, or Bundesnetzagentur, warned on Friday that consumers may see their gas bills increase by two or even three times as Germany faces the prospect of Russian gas supplies being cut," DW. "Russia has already reduced gas supply through the pipeline to just 40% of its capacity." "In a breakthrough, Pakistan and the International Monetary Fund (IMF)...reached an understanding on the federal budget for 2022-23, leading to revival of the extended fund facility (EFF) after authorities committed to generate Rs 436 billion more taxes and increase petroleum levy gradually up to Rs 50 per liter," Dawn. In a terrifying prospect for India, "Chairman of Karakoram National Movement, Mumtaz Nagri has expressed fear that Pakistan may cede Gilgit Baltistan, Pakistan-occupied Kashmir region, to China on lease to pay off its mounting debt," HT. Unable to pay its debts to China, Sri Lanka handed over Hambantota Port to China on a 99-year lease, HT. "Interestingly, there was no change in Sri Lanka's debt obligations for this project following acquisition by Chinese entities," and "Therefore, Sri Lanka continues to repay the debt despite restructuring the port itself and handing it over to China." "Runs on small Chinese banks have become more frequent in recent years and some have been accused of financial improprieties or corruption," CNN. "The trouble began in April, when four banks in Henan suspended cash withdrawals." "In an annual assessment of US economic policies, the IMF said it now expects US Gross Domestic Product to grow 2.9% in 2022, less than its most recent forecast of 3.7% in April. For 2023, the IMF cut its US growth forecast to 1.7% from 2.3% and it now expects growth to trough at 0.8% in 2024," ET. Amidst all this mayhem, India remains an oasis of wealth. On 8 June, "The Reserve Bank of India (RBI) has retained the GDP forecast at 7.2%," while the World Bank predicted 7.5% and the IMF predicted an eye-popping growth rate of 8.2%, ET. Are we going to become very rich? The suspense is killing.   

Unbeatable combination.

"Approval ratings of Prime Minister Narendra Modi's government have risen to their highest since the start of the pandemic" and "his government has met or exceeded expectations in the second term, according to 67% of 64,000 people polled by LocalCircles," TOI. But, "A 2018 bank survey found that 23,000 Indian millionaires had left the country since 2014. More recently, a Global Wealth Migration Review report revealed that nearly 5,000 millionaires, or 2% of the total number of high net-worth individuals in India, left the country in 2020 alone," ET. Around 8,000 are predicted to leave this year. Modi became prime minister for the first time by winning general elections in 2014, wikipedia. Not just rich Indians, "A total of 2,783 foreign companies with registered offices or subsidiaries in India closed their operations in the country between 2014 and November 2021, Commerce and Industry Minister Piyush Goyal told Parliament," DH. "VPN services such as ExpressVPN, NordVPN and SurfShark have announced shutting down India servers," TIE. This was because they disagreed with a government diktat compelling them to store personal details of customers for five years. The government says that it is to fight cybercrime. Is it? This government is going all out to make India a cashless country by pushing digital transactions and linking cards with Aadhaar, digitalindia.gov.in. Despite the fact that, "There were 61,000 complaints of financial frauds involving digital payments received by the government in the last month,'" of which, "At 33,712, more than half these complaints related to the United Payments Interface (UPI)," HT. Following expulsion of Russian banks from the SWIFT system of international money transfer, some in India believe that our Central Bank Digital Currency (CBDC) based on the UPI system could replace SWIFT, News18. "UPI has the ability to scale up rapidly and has been able to keep the hackers away so far." 33,712 people say otherwise. The Congress Party started a direct cash transfer system "inspired by the former Brazilian President Lula da Silva's popular Bolsa Familia program. Modi took the modest $1 billion start and turned it into a $300 billion vote magnet: And he did it with the help of 12-digit numbers," wrote Andy Mukherjee. This is Aadhaar. "It's a biometrics-based system through which everyone in the second-most-populous nation can prove who they are." "Aadhaar is being very successfully used - by fraudsters." "The government's response has been to brush it all away. Anything that casts doubt on the integrity of the system is ignored." "The head of Sri Lanka's electricity authority has testified before a parliamentary panel that he was told by Sri Lankan President Gotabaya Rajapaksa that Prime Minister Narendra Modi had insisted a 500-megawatt wind power project is directly given to the Adani group," The Wire. MMC Ferdinando has since resigned after withdrawing his statement, BS. "The Adani family has announced its commitment to donate Rs 60,000 crore (Rs 600 billion) for a range of social works," ET. Total surveillance, handouts and some cronies, unbeatable. For he is a jolly good fellow, wikipedia.  

Stop playing games.

"Retail inflation in the US in May stood at 8.6%, the highest since December 1981. In the euro area which consists of countries using the euro as their currency, retail inflation in May was 8.1%," wrote Vivek Kaul. "UK inflation hit 9.1% year-on-year in May as soaring food and energy prices continue to deepen the country's cost-of-living crisis," CNBC. "The main bank rate currently sits at a 13-year high of 1.25% and the Bank (of England) expects CPI inflation to exceed 11% by October." If 1.25% is the highest interest rate in 13 years in the UK it shows that inflation has been subdued for all this time. With rare exceptions, inflation in India has been consistently higher than in the US and the world, worlddata.info. This is clearly shown in the value of the rupee against the dollar. At Independence in 1947, one dollar bought Rs 3.30, since when the buying power of the rupee has been falling relentlessly, except in 2007 when it appreciated to 39.42 to the dollar, before resuming its downward march, Thomas Cook. "India's retail inflation came down to 7.04% on an annual basis in May from 7.79% in April owing to easing food prices in the month of May," ET. The relatively higher inflation in the US hasn't halted the fall of the rupee against the dollar which is trading at 78.243 to the dollar, up from 77.382 on 02 June, in.investing.com. The reason is that the US Federal Reserve has been raising interest rates aggressively -- by 25 basis points (bps) in March, by 50 (bps) in May and by a whopping 75 bps in June, CNBC. Whereas, the Reserve Bank of India (RBI) raised its interest rate by 50 basis points in June, HT, after raising it by an inexplicable 40 basis points in an emergency meeting of the Monetary Policy Committee (MPC) in May, ET. Calling it an "off-cycle meeting" doesn't hide the panic reaction. Why it was playing games by hiking rates by 40 bps in an emergency is baffling. "Between June and August, the US Fed plans to suck out $47.5 billion per month. Post that, the plan is to suck out $95 billion per month," Kaul. As the US Fed tightens monetary policy the dollar will continue to appreciate against the rupee as foreign portfolio investors (FPIs) sell out of India. Since October 2021 FPIs have sold Indian stocks worth Rs 2.4 trillion, while domestic institutional investors (DIIs) have bought stocks worth Rs 2.8 trillion, thereby giving foreigners a profitable exit, ET. India's foreign exchange reserves fell by $4.599 billion to $596.458 billion, FE. As dollars leave, the rupee will fall. To support the rupee the RBI "appears to have ramped up intervention in the forwards market to slow the rupee's decline and preserve its hard-earned reserves". It "has run down its forward-dollar by $12 billion to $15 billion from about $64 billion in April", ET. Instead of selling today's reserves, it is selling tomorrow's reserves. "At the current spot levels, Bank of America expects the rupee to touch 81, revised from 79 earlier, by the end of the calendar year," ET. As the rupee falls prices will rise, and the rupee will fall further. Unless the RBI stops playing games. 

A path of fire.

In Pakistan, "Last week, Federal Minister for Planning and Development Ahsan Iqbal stirred up a storm in a tea cup (pun intended) when he urged the nation to cut down on tea consumption as part of measures to help overcome the foreign exchange glut (sic)," Dawn. Glut means excess, whereas "Pakistan's foreign exchange reserves fell to their lowest levels since November 2019, reaching $14,943 million, data from the central bank showed," Geo News. Apparently, "Pakistan is the largest importer of tea in the world, racking up an import bill of a whopping $589.8 million in 2020 alone." "According to the Forex Association of Pakistan (FAP), the rupee depreciated sharply by Rs 2.45 to close to an all-time low of Rs 210.2 against the dollar," Dawn. "In the open market the greenback was trading at Rs 214." "The free fall of the rupee against the dollar continues as inflation marks a new high. The government's hopes of sealing the IMF deal and the promise of bailout from friendly countries have yet to be realised. The spectre of default stares us in the face," Dawn. "Is the country becoming ungovernable?" Dawn. "The current political polarisation is the obvious new factor." "Never before have people, society and families been so divided by their partisan preferences as they are today and resistant to accepting any view other than their own." Pakistan's Foreign Minister Bilawal Bhutto-Zardari "said that disengagement -- specifically after India unilaterally made changes to occupied Kashmir's special status in 2019 -- had not helped the Kashmir cause, or addressed Islamophobia in India, while arguing that better ties could have aided Pakistan in tackling these issues with that country." On 24 October 1947, Maharaja Hari Singh "signed the 'Instrument of Accession' and handed over three subjects i.e. control of defense, external affairs and communications to the Government of India," jagranjosh. Pakistan retained control of a part of the state which is now called 'Azad Kashmir'. India is much better off than Pakistan. But, "India's raging unemployment epidemic makes itself felt once again -- in torched trains and young men sloganeering and protesting in the streets," ET. "The railways' recruitment drive indicated a glaring mismatch between the demand and supply of jobs -- a staggering 1.25 crore (12.5 million) candidates appeared for 35,281 vacancies. In April, data threw up a bigger worry. A growing number of people, more than half the working population, are no longer even looking for work." "The Yogi Adityanath administration has left nobody in any doubt what the bulldozer demolitions in the state are really about," DH. "The cover of municipal planning laws allows the ideological state to thus 'normalise' the use of bulldozers for the demolition of homes of a targeted class of citizens -- mostly Muslim." "There is logic. And then there is 'mogic' -- a special kind of logic patented by our Prime Minister," wrote Yogendra Yadav. "It could be overnight demonetisation, complete national lockdown or the farm laws. Before you have had time to absorb what has just been presented, you are rushed into the final step: Let's do it. Let's not waste time." 'Agnipath' means a 'path of fire'. Hope we are not following Pakistan.

Only half naked.

"On 13 June, the rupee hit an all-time low of 78.29 to the dollar. Market participants expect it to trade in the range of 79-80 to a dollar going ahead, and touching 80 by the end of December," wrote Gopika Gopakumar. The RBI predicted the rupee will be at 76 to the dollar in 2022-23 and a 5% fall will raise inflation by 20 basis points. A weaker rupee will also increase interest payments on $226.4 billion of commercial borrowing. The RBI has been selling dollars to defend the rupee so that our foreign exchange reserves have fallen to $596.45 billion as of 10 June. "India's foreign exchange reserves grew $8.895 billion to reach a new record high of $642.453 billion in the week ended September 3, 2021," Mint. One reason for the fall is that, "Foreign portfolio investors (FPIs) have pulled out $39 billion (about Rs 3 trillion) from Indian equities through the stock exchange route in the nine months to June, data from NSDL show. Their assets under management fell by 18.6% to $531 billion at the end of the first fortnight of June, compared to $653 billion at the beginning of the year," moneycontrol. The dollar is trading at Rs 78.16 this morning, xe.com. In April-May 2022, "Although India's exports rose by 25%, imports surged even higher, by 45%, when compared to April-May FY22. The deficit thus more than doubled $45 billion, although it is much less at $27 billion if both goods and services are taken into account. Even the latter marks a five-fold increase from a year earlier," FE. Current Account Deficit could double to 3.1% of GDP according to Fitch Ratings. "Current Account Deficit (CAD) is the shortfall between money received by selling products to other countries and the money spent to buy goods and services from other nations," BS. India has increased import of discounted oil from Russia to $2.3 billion in a year to April, BS. "In April, India's crude oil imports from Russia were valued at $1.3 billion, 57 percent of India's total inbound shipments from Russia. Other major imported items during the month included coal, soybean and sunflower oil, fertilisers and non-industrial diamonds." The basket of crude oil that India buys touched $121.28 on 9 June "matching levels last seen in February/March 2012, according to data available from the oil ministry's Petroleum Planning and Analysis Cell (PPAC)", BS. Brent crude is down 3% to $111.1 per barrel this morning, oilprice.com. "Eight years after Prime Minister Narendra Modi first urged international companies to 'Make in India' Asia's third-largest economy is seeing many foreign firms give up on the country," DH. "A total of 2,783 foreign companies with registered offices or subsidiaries in India closed their operations in the country between 2014 and November 2021, Commerce and Industry Minister Piyush Goyal told Parliament." The monthly economic report from the Finance Ministry stated that "India faces near term challenges in managing its fiscal deficit, sustaining economic growth, reining in inflation and containing current account deficit. This while maintaining a fair value of the Indian currency," TOI. But the risk of stagflation is low. Whew, what a relief. We are only half naked. As was the Father of the Nation, HT.    

Solution in numbers.

"In a major success against terrorism in Jammu and Kashmir, as many as 100 terrorists have been gunned down in the region this year, said a police official," HT. That is good news provided all of them are verified terrorists and none is collateral damage. The worrying thing is that, "While 'categorised' terrorists are those who have a criminal record, 'hybrid' terrorists are those who have no prior history of having committed a crime, which makes it harder to track them down. The latter have become a major challenge for the police, and, in most cases, they are local residents, sources said," The Print. But why do ordinary people resort to terrorism? "The controversy sparked by the vile, hurtful comments made about the Holy Prophet (PBUH) by a BJP leader refuses to die down, with the Indian state cracking down on protesters with immense brutality," Dawn. "One particularly shocking episode occurred in Allahabad, where police detained the mother, sister and father of student activist Afreen Fatima and surrounded her house to force her to surrender." Pakistani newspaper Dawn persists in calling the city Allahabad, a name given to the city by Mogul emperor Akbar, and changed to Prayagraj by the BJP government of Uttar Pradesh (UP), ET. The Tribune goes further. "After establishing Tehreek-e-Taliban (TTP), India's notorious spy agency Research and Analysis (RAW) is working on a new 'project': Tehreek-e-Taliban India, The Express Tribune learnt. Sources privy to the development said that RAW seeks to ease pressure on Prime Minister Narendra Modi-led government. 'The plan is to give cover to Modi's state terrorism' they revealed." This is not social media, this is a news channel, and will be accepted as truth, however unfounded its claims. Unfortunately, "Prominent representatives of Kashmiri Pandits (Hindus) ...alleged that the bureaucracy in Jammu and Kashmir is unable to resolve the ongoing crisis. They alleged that the civil society and political stakeholders who could have played a role in resolving these issues have been rendered defunct by the government over the past three years," ET. "The Yogi Adityanath administration (in UP) has left nobody in any doubt about the bulldozer demolitions in the state are really about," DH. "This has been a successful strategy in Yogi Adityanath winning a second term in office." "A recent survey published in newspapers, for example, found that 35 percent of a sample of buildings surveyed in Gujarat - Ahmedabad, Surat, Rajkot and Vadodara - were illegal. Not one of them has been demolished." Absolute surveillance is necessary to track troublemakers. So, "New born infants will soon receive a temporary Aadhaar number to be renewed with biometric data on attaining maturity, top officials told ET, as the Unique Identification Authority of India (UIDAI) prepares to launch two ambitious pilot programmes." India will be the only nation in the world where every citizen will be known by a number. Sequence of Hindu numbers should be distinct from others. That will help bulldozers to distinguish the illegals. That'll teach them.  

Not so black.

"Capital outflows to the tune of $100 billion (around Rs 7,80,000 crore or Rs 7.8 trillion) are likely to take place from India in a major global risk scenario or a black swan event, says a Reserve Bank of India (RBI) study," TIE. "A black swan event is an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences," Investopedia. "The term was popularized by Nassim Nicholas Taleb, a finance professor, writer, and former Wall Street trader." Who "argued that because black swan events are impossible to predict because of their extreme rarity, yet have catastrophic consequences, it is important for people to always assume a black swan event is a possibility, whatever it may be, and plan accordingly." Which means insurance, which is a "hedge against the risk of a contingent or uncertain loss", wikipedia. The RBI feels that there is a 5% chance "of portfolio outflows from India of the order of 3.2 percent of GDP or $100.6 billion in a year in response to a Covid-type contraction in real GDP growth or a GFC (global financial crisis) type decline in interest rate differential vis-a-vis the US or a GFC type surge in the volatility index (VIX)." On 15 June, the US Federal Reserve raised interest rate by 75 basis points, a total of 150 basis points since March, CNBC. The RBI on the other hand has hiked its interest rate by a total of 90 basis points, BT, thus reducing the interest rate differential with the US deliberately. If necessary, burn foreign exchange reserves, advised Sanjeev Sanyal, member of the Economic Advisory Council to the Prime Minister. Excellent advice. Will that be in addition to the $100 billion waiting to flee? "Crisis-hit Sri Lankan government has announced a shut-down of public sector offices from next week, beginning Monday, due to severe fuel shortages as the island nation continues to reel under its worst economic crisis," ET. Government approved schools are also shut because of prolonged power cuts. In Pakistan, Utility Stores sell subsidised ghee at Rs 300 per kg. "Each customer was to be allowed two pouches of one kilogram each, along with some other items - sugar, toothpaste, soap bars, detergent, etc - on subsidised rates," Dawn. Instead of a full-scale invasion of Taiwan, "China could choose to invade some, or all, of Taiwan's outlying islands," ET. "Beijing could also choose to implement a full blockade of the Taiwan Strait, preventing anything from getting in or out." "The head of the UN's nuclear watchdog agency said...that Iran is removing 27 surveillance cameras from nuclear sites in the country," ET. Iran is also building a network of tunnels at its Natanz nuclear site "immune to cyberattacks and all but the most powerful bunker-busting American bombs", Haaretz. Those are known black swans. "Federal Reserve policymakers are less confident than at any time since the height of the pandemic about what will happen with the economy," Reuters. This is VIX. It's all black and white, really. The RBI should just do its job. Instead of excuses.

Not yours to burn.

"Sanjeev Sanyal, member of the economic advisory council to the prime minister, Saturday (yesterday) said that the country's internal market is in a good position and its macroeconomic stability is in a comfortable zone despite the ravage by the pandemic," and "the Indian economy has emerged stronger after that," ET. "India's fiscal and monetary sides currently have 'spaces' to be able to absorb a lot of shocks, and the country can easily allow its large foreign exchange reserves to 'burn' if necessary in order to cushion the system amid 'global difficulties'," Sanyal said. Whence comes this arrogance? If the Indian economy is stronger why the need to burn foreign currency? In July 2021, "The Reserve Bank of India (RBI) has reportedly bought up to even a billion dollars a day lately, four top foreign-exchange dealers at large financial institutions told ET, potentially risking paltry returns on its already record stash of foreign exchange. But the central bank's move is aimed at ensuring the rupee's competitiveness against a basket of emerging-market currencies that are also seeking a bigger share in global trade." In August 2020, the RBI was buying dollars because this releases more rupees into the banking system, allowing banks to lend more money, and to make the rupee weaker against the dollar, which helps exports by making our goods cheaper, CNBC. The rupee was getting stronger because of foreign investors. From 1998-1999 to the present financial year, foreign institutional investors (FIIs) have invested a net Rs 13 trillion in Indian shares, CDSL. This is because "the financial crisis of 2008 happened and the ensuing Great Recession, which slammed the brakes on the economy. The Fed (US Federal Reserve) then did the unthinkable: It slashed interest rates by 100 basis points (1%) to near zero," bankrate.com. Looking for higher returns, US funds poured money into Indian markets. "Ripple effects of public stock listings, such as those of Zomato, GR Infraprojects and Clean Science and Technology, are already being felt beyond Dalal Street (Bombay Stock Exchange), with Mint Road (RBI) intervening frequently in the currency market to mitigate the impact of surging overseas cash inflows and ensure a stable trading peg for the India rupee against the dollar." India needs foreign currency to pay for recurrent trade deficits. "India's trade deficit rose 87.5 percent to $192.41 billion in 2021-22 as against $102.63 billion in the previous year, the government data showed," NDTV. The foreign exchange reserves were built on carry trade which "is a trading strategy that involves borrowing at a low-interest rate and investing in an asset that provides a higher rate of return," Investopedia. "The US Federal Reserve's larger-than-expected 75 basis point interest rate hike...will likely push the RBI to step up its tightening cycle to maintain the differential between the two countries, traders and bankers said," ET. Excellent advice. Burning will only reduce the economy to ash.  

Can we afford to wait?

"For its sake and that of both the US and global economy, the Fed must regain control of the inflation narrative. Its failure to do so in the past 12 months is turning the perception of the Fed from the world's most powerful bank, long respected for its ability to anchor global financial stability, to an institution that too closely resembles an emerging-market bank that lacks credibility and inadvertently contributes to undue volatility," wrote Mohamed A El-Erian. In March, "The Federal Reserve raised interest rates by a quarter percentage point and signaled hikes at all six remaining meetings this year," ET. El-Erian was unimpressed. "This unfortunate sequence is painfully familiar to some developing countries," he wrote. "First, through a misdiagnosis of the economic situation or policy inertia, or a combination of both, the central bank falls behind inflation realities and erodes its inflation-fighting credibility." Then, the central bank tightens its monetary policy, markets fall and the bank "finds itself in a dilemma of either risking a recession by validating the ever-more hawkish market pricing or seeking to minimize such damage, often unsuccessfully, by enabling high and potentially more destabilizing inflation to persist even longer." El-Erian is not hinting at the Reserve Bank of India (RBI). India is a lower middle income country, World Population Review. "Having realized that its inflation forecast was out of line with emerging reality, RBI wasted no time in raising (interest rate) it. That shows intellectual openness," wrote Chief Economic Adviser to Government of India V Anantha Nageswaran. "Monetary policy is a short -run aggregate demand management tool, as per textbooks." "In addressing supply-side inflation, central banks have an unenviable task." "India is in a better position than many competing economies and is likely to avoid stagflation as the rebound has gathered momentum, the RBI said in its monthly state of economy report," ET. If we are unable to afford the basic necessities of life because of exorbitant prices, is it any consolation that 22% of people in Sri Lanka are in danger of starvation? UN. While India's Covid stimulus measures were deemed to be less than 1% of GDP by experts, ET, in the US, "Beginning under then-President Donald Trump and continuing through President Joe Biden's administration, Congress has approved some $4.5 trillion in total aid spending, according to Treasury Department data," CNBC. Which means that demand compression through higher rates will work in the US. High rates in the US leads to a stronger dollar. "Bar a handful of outliers, including the Brazilian real and the Peruvian sol, the dollar is omnipotent versus pretty much every currency in both the developed and developing world. That's putting the squeeze on policy makers everywhere to defend their currencies or risk importing yet more inflation into their already beleaguered economies," ET. "The country's foreign currency reserves declined by USD 4.599 billion to USD 596.458 billion in the week ended June 10," FE. If the Fed is trying to reduce $8.93 trillion in assets, FRED, does the RBI think it can defend the rupee with less than $600 billion? El Erian vs Nageswaran, who wins? Can we afford to find out?

Just pick up the phone.

"Already, two discussions are occurring: one about financing economic reconstruction, and the other about affirming Ukraine's security," Prof Barry Eichengreen. For us in India, it seems incomprehensible that the US can imagine and spend many billions of dollars on the concept of "mutual assured destruction (MAD), principle of deterrence founded on the notion that a nuclear attack by one superpower would be met with an overwhelming  nuclear counterattack such that both the attacker and the defender would be annihilated," Britannica. US Secretary of Defense Robert McNamara had proposed a counterforce or "no cities" strategy, But "In 1965 McNamara instead proposed a countervalue doctrine that expressly targeted Soviet cities." Why can they think of MAD and not of mutual assured peace, or MAP? In an interview with the BBC, Russian Foreign Minister Sergei Lavrov said, "We didn't invade Ukraine. We declared a special military operation because we had absolutely no other way of explaining to the West that dragging Ukraine into Nato was a criminal act." Absolutely. "Security guarantees are as vital for economic recovery as they are for the safety of Ukraine's population," wrote Eichengreen. Guarantees must work both ways. "Comments from Russian President Vladimir Putin and other officials signaled that the truly intolerable development was Ukraine becoming a NATO military asset and an arena for deployment of US and NATO forces," Cato Institute. In an article, Yahoo national security correspondent Zach Dorfman wrote that the CIA "made a series of covert moves that have helped prepare the Ukrainian security services for the current crisis," and "Current and former intelligence officials clearly thought that those programs were especially clever initiatives, insisting that they 'helped teach forces loyal to Kyiv the skills that have helped it to mount an unexpectedly fierce resistance to the Russian onslaught'." In short, Ukraine is being sacrificed by the US to weaken Russia. Having provoked an unnecessary war, the West then compounded the stupidity with vicious sanctions on Russia, wikipedia. Russia said the West has "shot itself in the head" by imposing sanctions which have sent prices of grains, fertilizer and energy soaring, ET. In an effort to control relentless inflation the US Federal Reserve increased its Funds Rate by 75 basis point, ET. Wall Street plunged, with the Dow Jones Industrial Average down below 30,000 and the S&P 500 in bear market territory, ET, prompting President Joe Biden to insist that recession is "not inevitable" in the US, PBS. Not inevitable, but increasingly likely. To prevent annihilation in November's mid-term elections Biden may visit Saudi Arabia cap in hand in July, msn. Saudi can't help the world, Joe. Only Putin can. Just pick up the phone. The world will be right in minutes.

Shame on us.

"An impatient Indian investor class, largely driven by millennials, is leaping into riskier investments from peer-to-peer lending to cryptocurrencies in the hope of boosting returns rocked by one of the worst inflation rates in Asia," BS. "As inflation pushed past 6%, bank deposits have steadily become less attractive because the real returns on fixed deposits turned negative." "The sheer number of individuals pouring money into new and lightly controlled assets sets India apart, after the pandemic fueled the rise of retail investors globally and left many exposed to the potential for large losses." "Net foreign fund outflow from India in 2022 has crossed the Rs 2-lakh-crore (Rs 2 trillion) mark, the biggest annual figure ever and more than double the previous high of Rs 80,917 (Rs 809.17 billion) recorded in 2018. Of the total, over 90%, or about Rs 1.9 lakh crore (Rs 1.9 trillion), was because of selling by foreign portfolio investors (FPIs) in the Indian stock market, data from CDSL showed," TOI. "If FPIs are going and giving us the feeling that funds are going out of India, retail investors have come in a big way, they seem to act like shock absorbers," cheered Finance Minister Nirmala Sitharaman. No concern that the vulnerable will lose money. In May, the government sold 3.5% of its stake, or 221.3 million shares of the Life Insurance Corporation (LIC) at the maximum offer price of Rs 949 per share, raking in Rs 205.57 billion, BS. The issue was oversubscribed nearly three times, TOI. FPIs, wisely, mostly stayed away, putting in bids for "merely 2% of the shares set aside for all institutional buyers", ET. When the stock listed on the market, it fell to Rs 860 before closing at Rs 873. Retail investors, who were allotted shares at Rs 905, could have earned a small profit at the day's high of Rs 920. Shares collapsed further by 5.85% on 13 June to Rs 668.20 per share, down 29.59% from its issue price of Rs 949, BS. "This company has come to the market when its business is completely matured. It is constantly losing market share to the likes of HDFC and ICICI," said Rajat Sharma. So did our government intentionally sell a dud to citizens? "Since October, FIIs have sold stocks worth Rs 2.2trillion, whereas domestic institutional investors (DIIs) have bought stocks worth Rs 2.65 trillion. DIIs are institutions like insurance companies, mutual funds, provident funds, banks etc., which primarily collect from retail investors in India," wrote Vivek Kaul. They buy when FIIs sell and sell when FIIs are buying. "What this means is that when shares get expensive, FIIs sell stocks or don't invest much in them; but DIIs buy stocks when they are expensive and sell when they are cheap. In that sense, they provide a profitable exit path to FIIs and do exactly the opposite of what stock-market investing is all about." Perhaps, that is why, "The love of gold unites Indians of all classes, languages, regions, castes, and religions," wrote Pramit Bhattacharya. India imported gold worth $46.14 billion in the 2021-22 financial year, BS. Since this affects India's current account deficit (CAD) it is hated by the government. "But Sane and Singh's research suggests that high inflation, a currency depreciation bias, and limited venues for asset diversification make gold a 'rational' investment for Indian households." Fool me once, shame on you; fool me twice, shame on me, dictionary. We are being fooled by everyone. Shame on us. 

What are they afraid of?

"SBI Ecowrap has said that CPI (consumer price index) may have already peaked and RBI is the Fed of yester-years. Moreover, it said that Fed can borrow RBI template to control rampaging US inflation," Zee. Every school kid knows the song "God Bless America", The Kennedy Center. "In recent times there have been commentaries that have questioned whether RBI has been behind the curve in controlling inflation. We believe RBI is much ahead of the curve in controlling inflation and the Fed can borrow a template from RBI to control US inflation that is all pervasive and threatens to rip apart global financial stability." What template is that? In the April meeting of its Monetary Policy Committee (MPC), the "Reserve Bank of India (RBI)...kept the repo rate unchanged at 4 percent for the 11th time in a row," NDTV. "RBI has held the key repo rate at record lows since May 2020," that is a total of 23 months. Is the SBI asking the US Federal Reserve to do nothing like India's central bank? "In India, the share of energy in weighted contribution of CPI inflation is 9.2% while in the US it is 29.2%. For transport it is 36.6% in the US compared to 103% in India." In 2018, "In India, 22 people out of a thousand own car, while in the US and UK, 980 and 850 per 1000 individuals have cars respectively, Niti Aayog chief executive Amitabh Kant said," ET. In 1980, 63% of homes in the US had air conditioning (AC), which is "now present in a whopping 95% of homes in the US according to the most recent US Census", Fixr.com. In November 2021, "Currently, just about 13 percent of Indian households have air-conditioning, which would increase to 69 percent by 2020," DH. Shows how different the '"templates" are. "Earnings of listed corporates touched 4% of gross domestic product (GDP) in FY22," wrote Vivek Kaul. "In absolute terms, net profits of listed corporates in FY22 stood at Rs 9.5 trillion, against Rs 5.6 trillion in FY21, a jump of 69%," while, "After staying flat between FY20 and FY21, companies' net sales jumped by around 25.6% as post-covid demand picked up." Profits increased much more than sales because salaries grew by only 11%, use of contract labor and spare capacity utilization. "The biggest cut in expenditure was on interest expenses on debt," which fell by Rs one trillion, "because of RBI cutting the repo rate during the pandemic", which means "savers had to bear this cost in the form of lower interest rates on their savings". In an off-cycle, meaning emergency, meeting from 2-4 May, the MPC raised interest rate by 40 basis points, ET. Why an emergency if the RBI was not behind the curve? This was followed one month later by another increase of 50 basis points, ET. CPI inflation came in at 7.04% in May, well above the upper limit of 6% tolerance level of the RBI, MC, while the wholesale price index (WPI) inflation "surged to 15.88% in May as against 15.08% in April", ET. Although the RBI has seriously underestimated inflation "there has not been a single dissent in MPC on the policy rate for several months", wrote Prof Rajeswari Sengupta. The MPC is an echo chamber while the SBI writes a cringing report. Have they been ordered to do so? What are they afraid of?      

They realised it in 1961.

In the 1980s, "The US could not let Japan dominate key industries and had to respond with its own industrial and trade policies. Not just because these might help the US economy, but also because the US simply could not be No 2," wrote Prof Dani Rodrik. In a meeting between France, Germany, the US, the UK and Japan at the Plaza Hotel in New York, the US forced Germany and Japan to revalue their currencies in relation to the US dollar. "The Plaza Accord led to the yen and Deutsch mark dramatically increasing in value relative to the dollar -- the dollar depreciated by as much as 25.8% in the two years that followed," Investopedia. This resulted in Japanese exports becoming too expensive so the Bank of Japan adopted "cheap money policies, such as a lower interest rate, a credit expansion". "But cheap money policies would later create a slower consumption rate at home, rising land prices, and the creation of an asset price bubble that would burst years later, leading to the period known as the lost decade," Investopedia. The US is now uncomfortable with China's rise. "The view that US foreign-policy goals are fundamentally benign underpins the myth of American exceptionalism: what is good for the US is good for the world." But, the rest of the world is not playing. "If anyone dares to split Taiwan from China, the Chinese army will definitely not hesitate to start a war no matter the cost," said Defense Minister Wei Fenghe. The US has imposed savage sanctions on Russia, BBC, for daring to stop NATO missiles across its border in Ukraine. "But almost no countries in the Global South have signed onto them," Vox. "Analysts looking at these responses see a reinvigorated non-aligned movement."  "The Non-Aligned Movement was founded and held its first conference (the Belgrade Conference) in 1961 under the leadership of Josip Broz Tito of Yugoslavia, Gamal Abdel Nasser of Egypt, Jawaharlal Nehru of India, Kwameh Nkrumah of Ghana and Sukarno of Indonesia," Britannica, and called for the "abstention from the use of arrangements of collective defense to serve the collective interests of any of the big powers". How prescient! The Soviet Union collapsed in 1991, Britannica, and with it the Comecon alliance of nations, Britannica. But the malignant NATO still remains. "Russia earned 93 billion euros ($98) from fossil fuel exports during the first 100 days of its war in Ukraine, with most sent to the European Union, NDTV. "President Joe Biden said he could drop some of the tariffs imposed against Chinese imports to help control rising consumer prices in the US," CNBC. "The US wants companies to ramp up purchases of Russian fertilizer as global food costs rise and shortages loom, according to a Monday Bloomberg report," BI. What if Russia refuses to sell? Would that be reverse sanction?

Looking in the wrong direction.

"Over 400 people have been arrested so far in a clampdown on those involved in the violent protests on Friday in several states against controversial remarks on Prophet Mohammad by two now-sacked BJP functionaries, with authorities in Uttar Pradesh razing 'illegal' houses for the second day," ET. "Family members of Mohammad Mudassir Alam and Mohammad Sahil, who were fatally shot during Friday's clashes, claimed they were not part of the protest procession." "A week after summoning Indian envoy to convey concerns over remarks against Prophet Mohammad by erstwhile BJP spokespersons Nupur Sharma and Naveen Jindal, Kuwait in a significant move has decided to arrest and deport protesters including Asians who had hit streets on the issue last Friday," ET. Kuwait is a small emirate bordering the Persian Gulf, with a population of just 4.5 million, one-third of whom are Kuwaiti nationals while the rest are outsiders, nations-online.org. The government gets nervous with protests. India received $87 billion in remittances from abroad in 2021 and is projected to receive $89.6 billion in 2022, BS. If Indians are deported home their incomes will disappear and we will have unemployed angry citizens thirsting for revenge. Not good. "UP CM (chief minister) has become the Chief Justice of Allahabad High Court. He'll convict anyone and demolish their houses? The house which was demolished is in the name of the wife of the accused who is a Muslim woman," said chief of the All India Majlis-e-Ittehadul Muslimeen (AIMIM)Asaduddin Owaisi, India TV. Meanwhile, "Jammu and Kashmir has seen a steep rise in terrorism in 2022 compared to the corresponding period of last year. According to the official data, 62 incidents of terrorists activities were recorded this year, as compared to 31 till May 23 last year," while "The number of militants killed by security forces has increased to 80 so far in 2022, from 54 in the year ago period," ET. A Hindu woman schoolteacher was shot dead in Kashmir a few days back, HT. In a series of targeted attacks "13 people have been killed and 10 injured in the attacks by suspected militants in the past five months. The slain include four security personnel, three Hindus, and six local Muslims -- panchs, sarpanchs (head of village council) and a TV artiste." "Notwithstanding government assurances of secure accommodations and postings, Kashmiri Pandits (Hindus) continue to leave the Valley in the backdrop of rise in targeted killings of civilians in recent weeks," DH. Three of the killed were "victims of local men recruited by the Lashkar-e-Taiba less than 10-15 days before the killings", The Print. "While 'categorised' terrorists are those who have a criminal record, 'hybrid' terrorists are those who have no prior history of having committed a crime which makes it harder to track them down. The latter have become a major challenge for the police, and, in most cases, they are local residents." "Our borders are more secure than before," said Prime Minister Narendra Modi. The rot is inside.  

Who is winning?

"The cost of gas, food and other necessities jumped in May, raising US inflation to a new four-decade high and giving American households no respite from rising costs. Consumer prices surged 8.6% last month from 12 months earlier, faster than April's year-over-year surge of 8.3 percent, the Department of Labor said on Friday. On a month-to-month basis, prices jumped one percent in the month of May alone, a steep rise from 0.3 percent from March to April." "The price of US gasoline averaged more than $5 a gallon for the first time on Saturday," Reuters. "The national average price for regular unleaded gas rose to $5.004 a gallon on June 11 from a day earlier, AAA data showed." One US gallon is equal to about 3.8 liters, unitconverters. One US dollar buys INR 78.14 this morning, xe.com. That means that petrol is selling at Rs 102.63 per liter, which is higher than the price of petrol in Delhi at Rs 96.72 per liter, ET. This, despite the fact, that the US produced 11.9 million barrels of crude oil per day in April and May, eia.gov, while India imported a record over 4.8 million barrels per day in April, Mint. In the UK, "The average price of petrol is now 1.823 pounds per liter, BBC, which, at Rs 96.24 per British pound, xe com, converts to around Rs 175 per liter. "Chevron CEO Mike Wirth says he does not expect another oil refinery to be built in the US ever again, pointing to decades of federal government policies as the reason why," Fox. "There hasn't been a refinery built in this country since the 1970s," Wirth said. "The Euro-zone inflation accelerated to an all-time high," ET. "The scale ranges from Malta -- where consumer prices advanced 5.6% last month, to Estonia -- where inflation hit 20.1%." "The US economy continued to see healthy job growth in May, indicating the labor market is still strong despite growing fears of a recession amid sky-high inflation and an increasingly aggressive Federal Reserve," Fox. "Employers added 390,000 jobs in May." "Real gross domestic product (GDP) contracted in the first quarter of 2022, faster than previously expected, according to the second estimate from the Bureau of Economic Analysis, (BEA)," Fox. "GDP decreased at an annual rate of 1.5% in the first quarter of this year." "The war in Ukraine is only benefiting a small sliver of Americans in the defense industry while the Biden administration appears to be prolonging the conflict, independent journalist Glenn Greenweld told 'The Ingraham Angle'," Fox. "Obviously, it serves the interest of a tiny sliver of people in Washington, weapons manufacturers, people in the security state who get money and power from these sorts of things." "The US and NATO have led unprecedented sanctions against Russia. But almost no countries in the Global South have signed onto them. Analysts looking at these responses see a reinvigorated non-aligned movement," Vox. In the US, "By the end of 2019 there were 419 mass shootings, by the end of 2020, there had been 611, and by the end of 2021, 693," FE. "Put your sword back in its place," Jesus said to him, "for all those who draw the sword will die by the sword," Bible Hub. That was then. Now, only the innocent. 

The dollar or the rupee?

"In 2008, the cost of Brent oil surged to an all time high of $147.50 per barrel, straining the finances of many nations. But the same year, the US dollar plunged to record low against the currencies of America's major trading partners, easing some of the pain of expensive oil," wrote Javier Blas. In 2008, one dollar bought Rs 48.88, falling to Rs 46.37 in 2009, to Rs 46.21 in 2010, and to Rs 44.17 in 2011, Thomas Cook. "For many oil importing nations, crude oil imports became expensive, but not quite as exorbitantly costly in their local currencies as they might otherwise have been." This morning the US dollar is trading at Rs 77.77, ET, about 80% higher than in 2008. "Crude oil has risen 70% in the past year, and currently trades at about $120 a barrel. At the same time, the dollar has gained 10% since mid-2021. That's creating balance-of-payments crises in many oil-importing nations, particularly in Africa, Latin America and Asia." The price of India's basket of crude oil hit a decade-high of $121.28 on 9 June, "matching levels seen in February/March 2012, according to data available from the oil ministry's Petroleum Planning and Analysis Cell (PPAC)," ET. "Retail fuel rates, however, continue to be on a freeze in India." "The sources said the industry was selling petrol at a loss of about Rs 18 per liter and diesel at Rs 21 per liter." In May, the price of jet fuel was hiked by 5.29% to Rs 1,23,039.71 per kl (Rs 123 per liter) in the national capital, Mint. "This is the 10th straight increase in jet fuel prices this year." "The higher cost of air travel has already started affecting demand," ET. "Daily traffic had crossed 400,000 in April and May, but fell to 320,000-350,000 later in May and so far in June," said an unnamed airline executive. "The revenue foregone on duty reductions on petrol and diesel is expected to be in excess of Rs 1 lakh crore (Rs 1 trillion) for the fiscal year. Add to this an extra Rs 1.1 lakh crore for fertiliser subsidy and Rs 80,000 crore (Rs 800 billion) for an extension of food security, and the bill runs up to an additional percentage point to the 6.4% fiscal deficit budgeted for 2022-23," ET. "The central bank...raised the inflation forecast by 100 basis points, up 220 basis points in a matter of two months" to 6.7% for FY23, while retaining its growth forecast at 7.2%, ET. The Reserve Bank's (RBI's) priority at this juncture is inflation control, editorial in the Mint. "Its war chest of reserves, which has lately fluctuated around $600 billion, remains large enough to keep an external crisis at bay." "Selling dollars would reduce domestic liquidity and also ease swelling oil bills." "After rising for two consecutive weeks, the country's foreign exchange reserves declined by $306 million to $601.057 billion in the week ended June 3, according to RBI data," ET. "The central bank's annual report for 2021-22, its first for a reconfigured financial year (April-March, changed from July to June), was released recently," wrote Rajrishi Singhal. "Unfortunately, the report seems to have become an official commendation of government performance rather than a document providing a critical review of economic developments." Instead of being the nation's bank the RBI seems to have become the government's piggy bank. Can it be trusted with our money?

The makeup of GDP growth.

"Finance Minister Nirmala Sitharaman on Wednesday said India's fundamentals are sound due to several steps taken by the government," Mint. On 5 June 2021, she said, "India's macroeconomic fundamentals remain sound, which is reflected in the robust investment flows into the country," BS. On 7 June, she said that "retail investors have been acting like 'shock absorbers' in countering the impact of withdrawal of foreign portfolio investors (FPIs) from the Indian market. FPIs have pulled out around $24 billion so far 2022," TOI. "The lady doth protest too much, methinks," William Shakespeare. "It is possible for the size of the Indian economy to be $20 trillion by 2040," "with a per capita income of $15,000", Chief Economic Adviser (CEA) Anantha Nageswaran said. "According to the World Bank, India's per capita income in 2020 was $1,927.70," TOI. In 2022, India's GDP is estimated at $2.66 trillion, Global Peo Services. The government and the Reserve bank (RBI) only talk about the rate of growth, Scroll, and don't publish absolute numbers in rupees and dollars, to confuse us. Assuming a GDP of $3 trillion, a growth rate of 7% will take it to just over $10 trillion by 2040 (18 years), investor. gov, and a growth rate of 8% will take it to just shy of $12 trillion. On 8 June, the RBI "raised the benchmark repo rate by 50 basis points to 4.90% to tamp down inflation", HT. "Markets have welcomed the policy, with yields declining after its announcement," wrote Soumya Kanti Ghosh, group chief economic advisor, State Bank of India, a government bank. RBI could have been forced by the bond market. "India's bond yields are rising at the fastest pace since the 2008 global financial crisis as investors bake in the likelihood of stubborn inflation and higher-than-budgeted federal borrowing," ET. The benchmark bond yield touched 7.52% on 7 June. It is slightly lower at 7.496%, with a normal yield curve, this morning, World Government Bonds. "The good thing is that" "Capacity utilization rates have now moved up to 74.5%, with new investment announcements at a record high of Rs 20 trillion in 2021-22 and India manufacturing sector leading from the front," wrote Ghosh. "The country's current account deficit is likely to hit a three-year-high of 1.8% or USD 43.81 billion in FY22," ET. "India's investment to GDP ratio (in nominal terms, not adjusting for inflation) has been falling for years, having peaked at 35.8% in 2007-08," wrote Vivek Kaul. "For the period between 2015-16 to 2019-20, it stagnated between 28% and 29%." 'It crashed to 26.6% in 2020-21 due to the covid pandemic. In 2021-22 it recovered to 28.6% which is where it was back in 2019-20 as well." Investment by households, which is a measure of small firms, has fallen from 15.9% of GDP in 2011-12 to 10.3% in 2020-21. Labor force participation rate, which shows people working or looking for work, fell from 53% in 2011 to 46% in 2021, and the number of households looking for work under the MGNREGS scheme, a backstop for unemployed rural residents, was "34.4% more than the work demanded in the pre-pandemic year of 2019-20". GDP growth is like makeup. Hides all the pimples, TOI.