Already there.

"India's economic growth pace halved to 6.3 percent in July-September, amid rising repo rates and contraction in manufacturing output." ET. "Real GDP or GDP at Constant (2011-12) Prices in Q2 2022-23 is estimated at Rs 38.17 lakh crore (Rs 38.17 trillion), as against Rs 35.89 lakh crore in Q2 2021-22, showing a growth of 6.3 percent." "The manufacturing sector contracted by 4.3 percent in the July-September quarter, compared to 5.6 percent growth in the previous quarter." GDP growth was in line with RBI prediction of 6.3%. Prescient. Like China. "It's both the most tantalizing and persistent question in economics: Is China cooking the gross domestic product (GDP) books?" Forbes. But, "Imagine the Herculean task of officials sitting a Beijing room endeavoring to capture with a single metric the activities of 1.4 billion people at epically different levels of prosperity, poverty and grey-economy existence over 90 or 365 days." India is no less difficult. A report by the State Bank of India (SBI) said, "Share of the informal economy has fallen drastically to 15-20 percent of the gross value added (GVA) or the formal gross domestic product (GDP) in 2020-21 from 52.4 percent in 2017-18." TOI. "India's informal economy was deliberately created by the late colonial and the newly independent state which needed to minimise regulative obligations to labor and small firms. Now India's informal economy is the biggest in the world, supporting possibly 400 million livelihoods, with no sector or region exempt," said Prof Barbara Harris-White. Just 15-20% or the largest in the world? "Gross domestic product expansion at about 6% is a sweet spot for Asia's third-largest economy to steer inflation back to the Reserve Bank of India's target, and also to narrow budget and current account deficits, said Rahul Bajoria of Barclays." HT. "The International Monetary Fund earlier this year said India's growth potential in the next five years has slipped to 6.2% from an earlier estimate of up to 7%." However, "Chief Economic Advisor, V Anantha Nageswaran stated...that the Indian economy is on track to achieve a 6.8-7% growth in the current fiscal year." ET. But wouldn't a 7% growth increase India's twin deficits? "India's fiscal deficit for the first seven months of this fiscal year through October stood at 7.58 lakh crore rupees (Rs 7.58 trillion), or 45.6% of annual estimates, government data showed." ET. "Strong domestic demand, higher public spending and a robust financial financial sector are expected to help India sustain the growth rate, with the economy poised to expand 6.8-7% this year, the government said." TOI. But, Indian expats ride to the rescue. "Remittance flows to India will rise 12% to reach $100 billion this year, according to a World Bank report published Wednesday (yesterday)." ET. That will help the current account. 6% is the sweet spot. Why try for higher growth?  

Beg, borrow and....

"India Inc has begun to feel the adverse impact of RBI's interest rate hikes of 190 basis points in the current financial year, industry body CII said..., as it urged the central bank to moderate the pace of its monetary tightening ahead of the forthcoming policy." NDTV. "With a yawning gap existing between credit and deposit growth, an additional rate hike will incentivise savers, thus providing impetus to deposit growth and help narrow the credit-deposit wedge, the Confederation of Indian Industry (CII) said." To really incentivise savers the RBI should stop financial repression of negative real interest rates, BI, and increase interest rate above the rate of inflation to lure savers into putting their hard earned savings into bank fixed deposits again. CII wants RBI to incentivise savers by increasing rates but to keep lending rates low to help businesses. Seems to be speaking with a forked tongue. idioms. Companies have the option of tapping the share markets. "Sensex closed at 62,681.84 points on Tuesday a record high." TOI. "Over the last 20 months, almost $22 billion of FPI (foreign portfolio investors) investment has flown out of equities, Over the same period, the BSE Sensex has risen 25%." Because assets under management of equity mutual funds saw an increase of 50% to Rs 15 trillion between April 2021 and October 2022. So why not raise money from markets? Because, "The Reserve Bank of India (RBI) has disclosed that Rs 10 lakh crore (Rs 10 trillion) in bad loans have been written off in the last five years. Worse, banks have only been able recover about 13% of the bad loans from defaulting corporates and other entities." The Wire. "Some time ago, a prominent Kolkata-based industrialist said exploiting the bankruptcy law was the new game in town and corporates were getting away with 90% haircut on average on defaults." Money for free. "India's banking sector is in a purple patch." ET. "The banking sector's weak loans (non-performing loans and performing restructured loans) is likely to decline to 4.5-5% of gross loans by March 31, 2024," which will be "significantly down from the peak of 12.5% level seen in fiscal 2008 and the 8% mark seen in FY 2021." We know why. "Indian lenders are expanding lending to local corporations at the fastest pace in more than eight years, a sign of a new private investment cycle starting in the world's fifth-largest economy even as growth in large developed economies and China slows." ET. But, they want more. Meanwhile, "The jobless rate in major developed economies, at 4.4% in September, is the lowest since the early 1980s, according to the Organisation for Economic Cooperation and Development (OECD)." Mint. "Two of the Fed's regional presidents, John Williams and James Bullard, warned...that the threat of inflation hasn't faded. The US central bank may have to lift rates higher and keep them there throughout next year to curb soaring prices, they said." BI. If the RBI does not follow suit the dollar will become stronger against the rupee and that will increase inflation. You must pay interest on loans even if you suffer losses. But dividends on shares only if there is profit. So why borrow?      

Lessons learnt.

This weekend will be highly exciting for some Indian politicians. There are elections for 250 councillors  for the Municipal Corporation of Delhi (MCD) on 4 December. wikipedia. Previously there were 3 MCDs with 272 wards but earlier this year the central government consolidated them into one MCD with 250 wards. India TV. Gujarat, the home state of Prime Minister Narendra Modi is also holding elections to its assembly from 1 to 5 December. wikipedia. These are must win battles for Modi's party, the Bharatiya Janata Party (BJP) and all the big guns have been deployed. "Union Home Minister Amit Shah on Friday said anti-social elements earlier indulged in violence in Gujarat as the Congress supported them, but after the perpetrators were 'taught a lesson' in 2002 , they stopped such activities and the Bharatiya Janata Party (BJP) established permanent peace in the state." TOI. He was referring to Muslims. In 2002, at Godhra station in Gujarat, 58 Hindu pilgrims returning from Ayodhya were killed when a train was set on fire by a Muslim mob. In the resultant violence, 1,044 people died, of which 790 were Muslims and 254 were Hindus, according to official figures. wikipedia. Unofficial figures put the deaths much higher. Responding to Shah's claims, All India Majlis-e-Ittehadul Muslimeen (AIMIM) Party chief Asadudddin Owaisi asked, "What lesson did Amit Shah teach in 2002? Lessons from Naroda Patiya ? Lessons from Gulbarg? Best bakery lesson? Lessons from Bilkis Bano?" "TOI. "Amit Shah, what kind of lesson did you teach that caused riots in Delhi?" 97 Muslims were killed in Naroda Patiya, Most of the houses at Gulbarg Society were burnt with 35 deaths and 31 missing. 11 Muslims and 3 Hindus died at Best Bakery. wikipedia. Pregnant Bilkis Bano was gang raped and 14 members of her family, including her 3 year old daughter, were murdered. All 11 men convicted of the crime were released on Independence Day to be greeted with garlands and sweets. BBC. "The Biden administration has cited the immunity granted to Prime Minister Narendra Modi in a lawsuit over his role in the Gujarat riots as one of the past precedents to justify the use of legal cover given to Saudi Crown Prince Mohammed bin Salman over a case filed on behalf of journalist Jamal Khashoggi." The Wire. "India has expressed its displeasure," with Ministry of External Affairs (MEA) spokesperson Arindam Bagchi saying, "Frankly, I fail to understand how the comment on PM Modi was either relevant, necessary or contextual." Times Now. However, BJP is most likely to win. "The BJP has garnered 94% of the political funding through electoral bonds in the last five years in  Gujarat", according to the Association for Democratic Reforms. ET. Of the total donations of Rs 1.74 billion, the BJP received Rs 1.63 billion. "The RBI, including the then Governor Urjit R Patel, had warned about the possibility of electoral bonds being used for money laundering in the run-up to the rolling out of the scheme but the Ministry of Finance did not find merit in it saying those who bought the financial instrument could be identified if required." DH. Has not been required so far. Modi imposed demonetisation to eliminate black money. TOI. Except for elections. 

SIP or luxury car.

"Nifty50 in the past six months has shown a solid up-move of ~14%. India has been amongst the best-performing markets globally." ET. "Being a domestically oriented economy, falling raw material prices and favorable high-frequency indicators are some of the factors that favor India." "Nifty currently trades at a P/E (price/earnings ratio) of 22.2x which is trading closer to its historical average P/E of 21.2x." This is similar to the P/E ratio of the Dow Jones Industrial Average in the US at 21.35 on 25th November. WSJ Markets. "Earlier this year, Jefferies' global head of equity strategy Christopher Wood had said that a target of Sensex at 1 lakh (100,000) is eminently achievable by FY27 and now Dalal Street's veteran fund manager Hiren Ved has said it is possible even earlier by 2025." ET. Not to be outdone, Raamdeo Agrawal of Motilal Oswal Finance predicts that if the Sensex keeps compounding at 15% annually it can reach 200,000 within a decade. The S&P BSE Sensex is at a record 62,456.02 this morning. The question is: can the Sensex just keep on growing? Can it reach 1 million, or even infinity? India is an exception because, "The price-earnings ratio of the benchmark MSCI Emerging Markets Index, based on trailing 12-month profits, has fallen below its price earnings ratio based on estimated earnings for the next 12 months, showing that analysts expect earnings to fall faster in the future." ET. "The MSCI EM Index has tumbled 31% so far this year." "The number of demat (dematerialised) accounts rose to 10.4 crore (100.4 million) in October, 41 percent higher from a year earlier, on attractive returns from the equity markets, even as incremental additions of such accounts have been on a declining trend for the past few months." ET. "Large numbers of newbie retail investors have taken to speculation in the stock market in hopes of becoming rich quickly." ET. "Retail investors now account for 52% of daily transactions in the market with DIIs (domestic institutional investors) and FIIs (foreign institutional investors) accounting for 29 percent and 19 percent respectively." Investing in shares in apparently hurting sales of luxury cars in India. "The luxury car industry has been booming post-Covid-19 pandemic but according to one Mercedes Benz India official, SIP are hindering the growth of the industry in the country which is home to the third largest number of billionaires globally." ET. SIP, or Systematic Investment Plan, "allows an investor to invest a fixed amount of money at a pre-defined interval in the selected mutual fund scheme." SBI Mutual Fund. In all the good news, "Strategists at Goldman Sachs Group Inc. expect Asia's equity leadership to shift from Southeast Asia and India to markets like China and Korea next year, while Societe Generale SA says Taiwan's tech-heavy market is also at an inflection point." ET. Even at 19.9% FIIs hold $582 worth of Indian stocks. BS. And thereby hangs a tale.

Pakistan is realising.

At the United Nations Climate Change Conference Cop27, "Set against a difficult geopolitical backdrop, COP27 resulted in countries delivering a package of decisions that reaffirmed their commitment to limit global temperature rise to 1.5 degrees Celsius above pre-industrial levels." United Nations. "Creating a specific fund for loss and damage marked an important point of progress, with the issue added to the official agenda and adopted for the first time at COP27." Nobody seems prepared to discuss overpopulation. "Roughly 83 million people are added to the world's population each year, according to the UN, with modern advances in medicine and nutrition to thank for their survival into adulthood and old age." WEF. "But it is very alarming at the rate we're going," said 92 year old naturalist Sir David Attenborough. "Population growth plays a role in environmental damage and climate change. But addressing climate change through either reducing or reversing growth in population raises difficult moral questions that most people would prefer to avoid having to answer," wrote Prof Michael P Cameron. Apparently not the Pakistani newspaper Dawn. "There are simply too many of us: the pace at which Pakistan's population is growing is fast outstripping our ability to provide for the millions that call this country home." wrote its Editorial. "Pakistan's alarming population growth rate at 2.4pc per annum, which translates to between 4m and 5m children being added to the total each year, is no less than an existential threat." "Iran and Bangladesh are just about the finest examples of countries that used sensible and rational methods to bring down their fertility rates from more than five (50 years ago) to 2.1 and 2.0 respectively. Pakistan stands crawling at an unenviable rate of 3.6," it wrote in 2020. The world reached a landmark population of 8 billion on 15 November 2022. UN. "Countries with the highest fertility levels tend to be those with the lowest income per capita." UN. "When the next billion is added, over 90 percent of it is expected to come from those same countries," wrote Mohamed Zeeshan. "That's great if governments in Asia, Africa and Latin America begin to create millions of jobs each year. But the likelier reality is that poorer countries will only have more mouths to feed, with already scarce and fast-depleting resources." "Europe saw a 14% drop in its birth rate in January 2021 compared to previous years - a decline probably triggered by the first wave of the Covid-19 pandemic, research suggests." BBC. In contrast, "India is likely to surpass China as the most populous country in 2023," but experts think that "can turn out to be an opportunity for India to become resource creator for the world". ET. Union Minister Piyush Goyal boasted that the government provides food assistance to 800 million people in India. ET. Does the world want this resource from India? Probably not. It now takes up to almost 3 years for Indians to get an interview for a tourist visa to the US. ET. Growing demand for food and resources will make our climate worse. Which, in turn, could reduce food production. Pakistan is at least talking about its population. Some Indians still believe in 'demographic dividend'. Until it's too late.   

Like the Chinese cat.

"India is capable of generating a 9 percent growth rate but in view of the geopolitical situation, we should be satisfied with a 6.5-7 percent economic expansion, says Sanjeev Sanyal, member of the Economic Advisory Council to the Prime Minister." NDTV. "He said India is getting inserted into the global supply chain." "Global growth is projected to slow from an estimated 6.1% in 2021 to 3.6% in 2022 to 2023," wrote Prof Bhaskar Dutta. But, "By all accounts India will be the world's fastest-growing large country." Because, "The services sector dominates the Indian economy by far, contributing over 50% of gross value added, while the manufacturing sector contributes less than 20%." So, "the partial decoupling of the Indian economy is a blessing," but "this also prevents us from capturing much of the benefit when the world economy is booming." "India's average annual growth could be between 6.5% and 7% rather than close to 6%," wrote V Anantha Nageswaran, Chief Economic Advisor to the Government of India. "If external demand turns favorable, at least in some years, the growth outcome could reach 8% and beyond." Higher interest rates in the US "leads to money moving from other parts of the world to the US," wrote Vivek Kaul. This leads to the rupee weakening against the dollar, which pushes up the price of imports thus adding to inflation, and there is less money for our startups and unicorns. "According to a recent report by market intelligence provider Tracxn, 14 Indian companies turned unicorns - companies valued over a billion dollars - between January and June 1, 2022." BI. "Forty four companies hit this milestone in 2021." "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 what fintechs or for that matter other startups sell," wrote Kaul. "One 97 Communications Ltd., the operator of India's largest digital-payments provider known as Paytm," "has seen its stock erase 75 percent of its market value one year after its $2.4 billion offering," "the steepest first-year slide globally among IPOs that raised at least the same amount since Spain's Bankia SA's 82 percent drop in 2012." NDTV. "In October, the number of economic transactions through the unified payments interface (UPI) touched 7.3 trillion, a record high," wrote Kaul. And yet, "The currency in circulation has been going up and stood at Rs 32.2 trillion as of October," and was 12.9% of GDP on 30 June, which is "higher than the level of 12% of the GDP that prevailed before domonetization happened in November 2016 and at the start of UPI in April 2016." "This means that the larger transactions (real estate, wholesale to retail distribution etc.) are still happening in cash, implying that the black money wealth in the system hasn't really reduced." Black money is the real reason for our spectacular growth. Doesn't matter if it's black or white, money is still money.

Inappropriate indignation.

"A visible trend in recent years has been the decline of India's scores and rankings on a number of global indices," raged Sanjeev Sanyal, Member of Economic Advisory Council to Prime Minister (EAC-PM) and Aakanksha Arora, Deputy Director of EAC-PM. The Indian response so far has been to ignore these perception indices, but the problem is" "these indices are inputs into the World Bank's World Governance Indicators (WGI) that, in turn, have approximately 20% weightage in sovereign ratings." "India's score for political culture declined from 6.25 to 5.0, and that for civil liberties from 9.41 to 6.18," and "the Freedom of Expression sub-index from 0.881 to 0.598". The authors think these agencies are biased. Are they? "According to the India Press Freedom Report 2021 released by Rights and Risks Analysis Group (RRAG) in February this year, at least six journalists were killed, and 108 journalists and 13 media houses were targeted in the country in 2021 alone." The Quint. "Of the total 121 targeted, at least 34 faced attacks from political parties," and "The highest number of journalists targeted (25) was in the erstwhile state of Jammu and Kashmir." "Also in 2021, at least 24 were physically attacked," and "Seventeen of the 24 were thrashed by the police, with J&K reporting the highest number of police beatings." On 4 December 2021, "Union Home Minister Amit Shah...said Kashmir was witnessing peace, good business investment and influx of tourists post the abrogation of Article 370 in 2019." In Kashmir, "Civilians lose their lives in encounters (with security forces) and, instead of justice, they are made to beg for the remains of their loved ones," wrote Mehbooba Mufti. Rajdeep Sardesai refers to three videos on social media. On 30 October 2022, a pedestrian bridge over the Machchhu River in the city of Morbi in Gujarat, India, collapsed killing at least 135 people and injuring 180 others. wikipedia. A video showed workmen hastily painting a rundown hospital in Morbi before the prime minister's visit. TOI. "But then, it is election season in Gujarat." Another video showed  VVIPs, Members of Legislative Assembly (MLAs) and ministers attending to Gurmeet Ram Rahim who was released on parole for 40 days, conveniently in time for Haryana by-election and Himachal assembly polls, while a third video showed "11 men convicted of rape and murder in the 2002 Bilkis Bano case being feted and garlanded by some Vishwa Hindu Parishad members in Gujarat after their life sentence was remitted", wrote Sardesai. "Collectively, these videos are a pointer to a deeper moral and political crises that engulfs are democratic set-up. First, there is a visible lack of accountability amongst those in authority." CNN reported on homes of protesters being demolished in UP and Delhi without any legal process. Babies are to be forced to obtain Aadhaar card which will be updated at the age of 5 years with biometric details. DNA. Which other country brands its children as crominals with identity numbers? "The Criminal Procedure (Identification) Act, 2022, empowers police or prison officers" to collect "fingerprints, photographs, iris and retina scan, biological samples and their analysis and behavioral attributes" from anyone arrested for an offence. PRS. We, the people, are terrified of the draconian police state. Except for government stooges perhaps. 

India going gangbusters.

"Reserve Bank of India (RBI) Governor Shaktikanta Das said a synchronised tightening of monetary policy globally has progressively increased the risk of a hard landing, which is a recession to tame inflation. India, however, is differently placed." ET. "The curious part of this 7% expected growth of ours in 2022-23 is that our economy will slow down in the year's second half," wrote Madan Sabnavis. "From 13.5% in the first quarter to 6.3% in the second, and then to 4.6% each in the third and fourth quarters. The last two quarters will be disturbing because in 2021-22, growth was just 5.4% and 4.6%, which should have ideally provided a statistical low base for higher growth this year." Corporate profits are down, household savings have dropped due to inflation, exports of textiles, engineering, jewelry, chemicals etc. are impacted because of slowdown in the West, which will also affect software exports which bring in $120 billion, and the private investment cycle is yet to pick up. On the other hand, "Indian lenders are expanding lending to local corporations at the fastest pace in more than eight years, a sign of a new private investment cycle starting in the world's fifth-largest economy." ET. "With the September quarter earnings season turning out to be better than Dalal Street's expectations, there were at least 13 BSE500 companies whose profits more than doubled and sales grew at least 50% on a year-on-year basis." ET. Exemption from the goods and services tax (GST) on exports has been withdrawn from 1 October and now outbound ocean and air freight will be taxed at 18% but exporters can claim input tax credit refund. ET. So exporters will actually gain. But won't the price of goods go up by 18% and hurt volumes? Confusing. India may be "differently placed" but a global slowdown will affect our exports, wrote Vivek Kaul. "In fact, India's non-oil goods exports have fallen from $34.7 billion in March to $28.2 billion in September." As interest rates have gone up in the US the dollar has strengthened against the rupee from Rs 78 to one dollar to around Rs 82 today. exchangerates.org.uk. This is making imports more expensive and pushing up inflation. The RBI has to increase interest rates to control inflation, thus increasing borrowing costs, which will hurt growth. "An entry-level or economy motorcycle is usually defined as one with a low engine displacement of less than or equal to 125 cc," wrote Alisha Sachdev. "As many as 10 million households have fallen off this two-wheeler market since 2018, according to the analysis by BNP Paribas. To be sure 95% of all two-wheeler sales in India come from models priced below Rs 1 lakh (Rs 100,000). These are alarming figures." Naturally, "India Inc.'s aggregate operating cash flows have fallen year-on-year for the half year ended 30 September," wrote Harsha Jethmalani. "India Inc. reported strong revenue growth of over 25% from a year earlier; however, profits have been weak, and operating cash flows contracted." This is because of inflation and companies will be reluctant to invest in new capacity until cash flows improve. So, is India going gangbusters? Or, are we flattering to deceive.

To be rich like us.

"Army chief general Qamar Javed Bajwa's family members became billionaires during his six-year tenure, amassing assets worth over Rs 13 billion, according to a report published on a Pakistani news website." TOI. "Assets of Gen Bajwa's wife, Ayesha Amjad, went from zero in 2016 to Rs 2.2 billion (declared and known) in six years. The amount does not include residential plots, commercial plots and houses given by the army to her husband." Actually, Bajwa's family has lost over half their wealth in these 6 years because, in 2016, the dollar ranged between 102-104 Pakistani rupees, finishing the year at 102.949 PKR to the dollar, PSL, whereas, one dollar buys 223.3 PKR this morning. xe.com. "Pakistan Army chief General Qamar Ahmed Bajwa's daughter-in-law Mahnoor Sabir became a billionaire just nine days before her marriage while the wealth of her other three sisters remained the same, reported Fact Focus." TN. Entirely appropriate. "In Islam, a mahr is the obligation, in the form of money or possession paid by the groom, at the time of Islamic marriage." wikipedia. Her sisters will get their own mahr when they marry, although the amount may vary. 'Mahnoor' means 'light or radiance of the moon', which surely demands a high obligation. Naturally, "Finance Minister Ishaq Dar...took notice of the 'illegal and unwarranted' leak of the tax records of Chief of Army Staff (COAS) General Qamar Javed Bajwa's family members." Dawn. SAPM on Revenue Tariq Mehmood Pasha has been entrusted to "personally lead an immediate investigation into the violation of tax law[s] and breach of Federal Board of Revenue (FBR) data, fix responsibility and submit a report within 24 hours". Inexplicable kerfuffle about legitimate business wealth in Pakistan. In India, we celebrate accumulation of wealth by rich families. "Gujarat's very own Gautam Adani, the chairman and founder of the Indian multinational conglomerate Adani Group, outdid all the world's top billionaires in terms of wealth creation in 2022 so far," wrote Rahul Oberoi." He is the "third richest individual in the world. His total net worth stood at $136 billion on November 11, 2022, according to the Bloomberg Billionaire Index." With one dollar buying Rs 81.77 this morning, xe.com, conversion to our currency will be vertigo inducing. His wealth doubled in just one year by growing at an eye-watering Rs 16.12 billion per day. ET. He seems to be able to borrow any amount he wants. "The recent acquisition by the Adani Group of cement maker Holcim's India businesses is expected to add another Rs 40,000 crore (Rs 400 billion) to the conglomerate's debt, taking it to approximately Rs 2.6 trillion, and analyst at Credit Suisse showed." TIE. Former cabinet minister Subramaniam Swamy tweeted, "Trapeze Artist Adani now owes Rs 4.5 lakh crores (Rs 4.5 trillion) as NPA (non-performing assets) to banks. Correct me if I am wrong." "May be like with the six airports he has bought he might soon buy out all the banks he owes." Twitter. What a compliment! Pakistanis should stop being jealous about wealth. Only then they will become rich like us. 

Each central bank for itself.

"The Volcker shock of 1979" "reverberated around the world, as capital flowed into the US, resulting in external debt crises and major economic downturns that led to a 'lost decade' in Latin America and other developing countries," wrote Prof Jayati Ghosh. "But, policymakers "appear to have no interest in alternative explanations or strategies" such as "mending broken supply chains, capping prices and profits in important sectors like food and fuel, and also reining in commodity-market speculation." It is possible that economists at central banks and IMF are not as stupid as Prof Ghosh thinks. "Once seen as the world's go-to-economic crisis fighters, central bankers are now desperately trying to contain a problem they allowed to happen: inflation." ET. "The first step for the newly humbled monetary policymakers is getting prices under control without creating economic havoc." "The higher inflation climbs, the harder it is to get rid of. So the Fed is taking drastic measures to shake it out of the system" and "would rather hike rates too high and risk a recession than lower them too early and watch inflation sick." Yahoo. However, the US economy is still strong as "Job growth is still solid: The US added 261,000 jobs in October", "Average hourly earnings rose by 4.7%, "Consumer spending has been holding up", "On the inflation side, supply chain snarls that cause prices to soar seem to be easing" and "private-sector finances were healthier". The central bank of every country must protect its own people and inflation hurts the poor the most. That should have been the aim of the RBI as well. However, "The Reserve Bank of India (RBI) is helping to fan a world-beating share market rally with record-low interest rates and huge injections of liquidity - even as inflation threatens to break back out of its target range," wrote Nupur Acharya, Ashutosh Joshi and Anirban Nag on 20 August 2021. Overseas funds poured $7.2 trillion into Indian equities last year as the RBI kept its repo rate at 4% and liquidity soared to a record Rs 8.6 trillion. The stock market index, the Sensex was trading at 22.6 times estimated 12-month earnings, almost double the MSCI Emerging Markets Index which was trading at a multiple of 12.3. The RBI should have increased interest rates at that time to rein in asset price bubbles but it did not. "The RBI had said at the time that withdrawal of liquidity would be a 'multi-year' process." Reuters. But the banking liquidity slipped into negative as "India's balance of payment was in deficit of $16 billion as of March 2022". "India's current account deficit (CAD) widened to $23.9 billion in April-June" while the current account had recorded a surplus of$6.6 billion in April-June 2021." moneycontrol.com. "The attempt to put pressure on the RBI governor in 2018 and 2019 through the central bank's board was an unwise development." TOI. Because, a high inflation reduces government debt by increasing indirect tax collections (GST revenue was Rs 1.68 trillion in Arpil, outlook) and the falling value of the currency decreases value of debt. Kahler. Seems as if the government has the RBI where it wants. Unlike in other countries.

Imperfect. Extremely.

"India, a large, imperfect democracy with its many ethnolinguistic and religious groups, separatist forces, occupied territories etc, is certainly not easier to govern than Pakistan. Up until the 1980s, Pakistan was ahead of India on most economic parameters." Dawn. Today, India is "well ahead of Pakistan in most human development indicators." In Pakistan, "of those who matriculate from government schools, most can't solve a simple sum involving percentages, or write a decent paragraph." No need to despair. India is not so far ahead. "The Annual Status of Education Report (ASER) 2018 by NGO Pratham found that "56% of students in Class VIII can't divide a 3-digit number with a single-digit one; 72% in Class V can't do a division at all and 70% of Class III students aren't able to do any subtraction." TOI. "The story is far worse than it was a decade ago." The closure of schools during lockdown due to Covid has been devastating. The National Coalition on the Education Emergency said that "the closure of schools since the beginning of the pandemic had caused 'devastating consequences for the nutrition, health and education' of many children. It said that instances of child labor, early marriages and domestic violence against children had also increased." "Pakistan has one of the fastest population growth rates globally." "India is likely to surpass China as the most populous country in 2023, predicted the experts." ET. "Consider security in Pakistan. Ours is a crime-ridden society where no one, especially women, feels safe." In India, no one is safe from the government which has total control of the investigating agencies - the Central Bureau of Investigation (CBI), the Enforcement Directorate (ED) and the National Investigation Agency (NIA). "As the NDA came to power in 2014," "Of the 121 political leaders probed by the ED since then, 115 (95 percent) belong to the opposition," but as many of these leaders joined the BJP "Intriguingly, the case against many of them was dropped or was put on the back burner and quite a few were rewarded with prime positions." The Wire. Since this government has come to power, "Journalists are routinely threatened, intimidated, arrested, booked - and silenced through gag orders and charges concocted by the state." The Nation. "The Delhi Union of Journalists (DUJ) has expressed 'serious concern' at reports that the Prime Minister's Office (PMO) and select ministries are trying to collect details of all institutions and clubs in Delhi, including press bodies and conference centers, to monitor the internal affairs of such bodies." The Wire. India has the Unlawful Activities (Prevention) Act (UAPA). Since the state cannot read minds, how can it prevent "unlawful activities". Under UAPA the police can search, seize and arrest anybody without a warrant and it is almost impossible to get bail. DH. Pakistan does not have Aadhaar which treats every citizen as a criminal. Children cannot get admission in school without surrendering their biometric details for Aadhaar. DH. Over 56 million Indians were pushed into poverty by Covid-19, according to the World Bank. NDTV. In addition to the millions of poor we already had. Perhaps, Pakistanis are not as badly off as they imagine. At least, compared to us.

Gujarat, the exception.

"India...raised windfall tax on domestic crude to Rs 10,200 per tonne from Rs 9,500 per tonne. It slashed special additional excise duty on export of diesel to Rs 10.50 per liter from Rs 13 per liter." ET. "The fortnightly revision in tax rates is based on prevailing international prices." The benchmark Brent crude has fallen to $87.62 per barrel, oilprice.com, from $122.71 per barrel in June 2022, countryeconomy.com. This should mean that windfall profits, if any, of oil companies have fallen substantially and yet the tax rate has gone up, though still lower than in July. Puzzling. "On July 1, the government had announced a windfall tax on upstream oil production of Rs 23,250 per tonne," which was reduced to Rs 17,000 per tonne on 20 July. rediff.com. Petroleum products from special economic zones (SEZs) were exempt from the tax. "According to analysts this move provided significant relief to Reliance Industries (RIL), 55 percent of whose refining production comes from its two refineries located in SEZs at Jamnagar in Gujarat, from where the majority of products are exported." ONGC also apparently benefited. "Oil and Natural Gas Corporation (ONGC) reported 30 percent fall in net profit for September quarter after the government levied windfall tax to take away gains arising from spurt in international oil and gas prices." NDTV. Oil producing companies are raking in profits. Shell earned $20 billion in 6 months, BP earned $16.6 billion while Total earned $29 billion over the same period. BT. Britain's Chancellor of the Exchequer Jeremy Hunt plans to raise $16.5 billion next year from windfall taxes on oil and gas companies and every European government has similar plans. However, critics say that "Lower profits could discourage suppliers from producing more energy, while lower prices will encourage consumers to use more." No chances of excess use in India. The price of petrol in Delhi remains constant at Rs 96.72 per liter. NDTV. This is done by changing taxes on fuel. Excise duty on petrol was Rs 9.2 per liter in November 2014, rose to Rs 32.98 per liter in June 2020, as international price of crude fell, and was Rs 19.98 per liter in May 2022. mycarhelpline.com. In May 2022, taxes constituted 36.7% of the retail price of petrol. The average price of petrol in the US on 14 November 2022 was about $4 per barrel, eia.com, which converts to around Rs 85.8 per liter, at Rs 81.52 to one dollar. Petrol is taxed at 20% in the US. Since transport is an essential cost of manufacturing and services, higher taxes add to prices. No wonder, India's merchandise exports declined 16.7% year-on-year in October to $29.8 billion, lowest since March 2021. Imports grew by 5.7% to $56.7 billion, so that the trade deficit increased to $26.9 billion in October from $25.7 billion in September. FE. So far 68.5 million people, out of a total population of 1,412 million (worldometer), have filed income tax returns for the financial year 2021-22. NDTV. Over Rs 2 trillion have been refunded. Taxes are exorbitant in India, reasonable in the US. The US is the richest country, India is poor. Is there a connection?

China apologists.

US President Joe Biden has launched "what Edward Luce of the Financial Times has appropriately called 'a full-blown war on China'," wrote Harvard Prof Dani Rodrik. "The US already controls the most critical nodes of the global semi-conductor supply chain, including 'chokepoints' such as advanced chip research and design." "The approach is motivated by the view that China poses a significant threat to the US." "America faces a two-front ideological battle: one at home and one abroad," wrote Rebeccah Heinrichs. "Across the battlefield abroad sits the Chinese Communist Party, waging information warfare dedicated to convincing the world that America is immoral and incompetent to the core." And, "Americans are fighting among themselves about whether this country and the global order it leads is worth defending." "Elites who hold to this revolutionary framework tell us that math is racist, that the natural family and gender binary are oppressive and bigoted." In the midterm elections this month, the Democrats retained control of the Senate, with one seat still to be decided, while the Republicans managed to reach majority figure of 218 in the House with 5 seats still to declare. Reuters. The results seem to be making the divisions between Democrats and Republicans even more bitter. "An independent lawyer has been appointed to oversee the US justice department's criminal investigations into former President Donald Trump. Jack Smith, a former war crimes prosecutor, was named special counsel by Attorney General Merrick Garland." Garland was nominated to the Supreme Court by former President Barack Obama but the Republican majority in the Senate refused to confirm his appointment. wikipedia. Eventually, Trump appointed Neil Gorsuch to the vacancy. It would be no surprise if he is bitter and vindictive. It was Trump who first broke US delusions on China. Trump started by applying tariffs on more than two-thirds of Chinese imports. CNBC. Gen HR McMaster, national security adviser under Donald Trump wrote, "The US and other liberal democracies were slow to let go of the hope that China, having been welcomed into the international system, would play by the rules. The Trump administration turned the assumptions that underpinned China policy on their head." Some feared that a Thucydides Trap may lead to war, "But we concluded this was a false choice: complacency would make conflict more likely; an emboldened China would become more aggressive and less cooperative." Trump's objectives all failed, but it "has had unparalleled success with tarnishing China's image in the US", rued Bloomberg. US policies "must be clearly linked to the damage inflicted by the other side's policies and intended solely to mitigate those policies' negative effects," wrote Rodrik. How will Rodrik mitigate the deaths of 20 Indian soldiers brutally murdered in an unprovoked attack by Chinese thugs in Galwan Valley in June 2020? BBC. In December 2021, a Harvard professor was convicted of taking money from China and filing false income tax returns. justice.gov. The US seems full of apologists for China. Maybe that is why the hounding of Trump.       

Too much credit.

"The Reserve Bank of India (RBI) discussed with banks the decade-high credit growth in wake of slower deposit mobilisation, in meetings with managing directors and chief executive officers (MD & CEOs) of public and private sector banks." BS. "According to the latest RBI data, bank credit has grown 17.9 percent year-on-year (YoY), a 10-year high, for the fortnight ended October 21. During the same period, deposit growth has grown 9.5 (percent) YoY, resulting in a credit deposit gap of 840 basis points." But, "The share of current and savings accounts (Casa) deposits of commercial banks has increased to 44.8 percent as of March 22-end from 41.7 percent three years ago." BS. "Casa are low-cost deposits of banks, which are margin accretive," and "accounted for 60.9 percent and 55.6 percent of incremental deposits during 2020-21 and 2021-22, respectively." These are very healthy numbers, so why is the RBI concerned? Is it because "Banks' personal loan outstanding stood at Rs 35.2 trillion as of June 17, higher by 18% YoY." FE. "The personal loans constitute close to 30% of the total non-food credit outsanding as of June 17." "In comparison, banks' loans outstanding to the services sector marginally moderated to 12.8% in June," and "As on June 17, total outstanding to the services sector stood at Rs 30.7 trillion." "The increase in household borrowing can be seen in the increase in credit card outstanding from a little under Rs 1.3 lakh crore (Rs 1.3 trillion) in end July 2021 to over Rs 1.6 lakh crore (Rs 1.6 trillion)." TOI. "In the personal loan segment, since end-March 2022, consumer loans and advances against fixed deposits have shown the fastest growth of 16.5% and 11.8%, respectively." Loans against fixed deposits are instantly available, and easy to repay since the money is already with the bank. The State Bank of India (SBI) will sanction a loan against fixed deposit online up to a maximum of 95% of the total invested in the deposit and charge just 1% interest over what it is paying on the deposit. But, surely the RBI is trying to be cute? The RBI held its interest rate at 4%, substantially below the rate of inflation, for 24 months, from May 2020 to May 2022, NDTV, which meant savers were losing money. It would, therefore, make great sense to borrow at low rates against fixed deposits and invest in government small savings schemes at higher rates. "In 2021-22, the interest rate on PPF (public provident fund) was 7.1% as against the 5.03% and investor got from fixed deposits," wrote Vivek Kaul. "In 2020-21, 17.3% of financial savings financial savings were invested in pension and provident funds (including PPF). This jumped to 22.7% in 2021-22." Or, the RBI may be worried because, "Reflecting the improvement in credit offtake, excess holdings of Statutory Liquidity Ratio (SLR) securities of Scheduled Commercial Banks (SCBs) moderated to 8.8 percent of their net demand and time liabilities (NDTL) as on August 26, 2022 from 10.4 percent at end-March 2022." Hindu. "Banks are required to invest 18 percent of their deposits in SLR securities, comprising central and state government securities," which means the government gets to borrow at cheaper rates. Banks also park excess funds in SLR which brings down yields. Any reduction in that may increase the amount the government needs to borrow at higher costs. The RBI looks to the interests of the government. 1.4 billion Indians try to circumvent its devious policies. Fear of loss is much greater than the joy of gain. Investopedia. 

Can we ignore the world?

"Economists at the Indian central bank expect consumer price inflation to come down to 5% by the middle of 2023, which means that the real policy interest rate is already 90 basis points above the inflation forecast," Niranjan Rajadhayksha. "Hence, "The monetary policy committee should slow its pace of tightening." The US has an inflation target of 2% while its inflation rate is at 8.1%, giving a difference of 6.1%, while India's inflation target is 4% and here current inflation is at 6.9%, giving a difference of just 2.9%. So, the US needs to tighten but India can go easy. Can it? "When the Fed (US Federal Reserve) began raising rates in March, markets were pricing in a terminal rate of just 2.8%. As of mid-November, that expectation has risen to 5% - matching the forecast Bloomberg Economics set out in July." ET. However, "If the Fed is underestimating the natural rate of unemployment, or if the pandemic has resulted in a deterioration in productivity, a terminal rate of 6% could come into view."  The US Fed has raised its funds rate from 0% to 3.75-4%. "During January-September 2022, the US dollar appreciated by almost 18% vis-a-vis six major currencies to reach its highest parity in decades." Mint. The result has been "far more devastating for the world outside the US, not only for emerging or developing economies, but also for industrialized economies." One dollar buys Rs 81.56 this morning. xe.com. If the US interest rate goes up to 6% the rupee will surely fall further which will increase the cost of imports, and consumer inflation. India's foreign exchange reserves have fallen from $645 billion in October 2021 to $529.994 billion in the week ended 4 November 2022, a decline of $115 billion, as the RBI sold dollars to support the rupee. ET. "We didn't pick up reserves just to keep it as a showpiece in the Reserve Bank of India," said Governor Shaktikanta Das. Higher prices due to inflation, a relatively stronger rupee because of RBI actions and falling global demand meant that exports fell sharply by 16.65% to $29.78 billion in October while trade deficit increased to $26.91 billion. The Wire. The RBI held interest rate at 4% for 24 months, from May 2020 to April 2022, NDTV, even though consumer price (CPI) inflation was at 6.27% in May 2020, fell to around 4% from December 2020 to April 2021, and has been above the RBI target of 4% since. HT. Which meant that savings in bank fixed deposits were losing money because of negative real interest rates. "In 2019-20, the weighted average interest rate on fixed deposits was 6.38%. In 2021-22, it had fallen to 5.03%," wrote Vivek Kaul. People switched to riskier assets to increase returns. "In 2020-21, of the total proportion of the incremental financial savings, only 2% went to mutual funds. Another 1.2% went into buying stocks directly. In 2021-22, these shot up to 6.3% and 1.9% respectively." What will the RBI do? Increase rates or hope for the best?

National interest in 30 minutes.

"With the benefit of hindsight, it has come to feel inevitable that Twitter would turn into a cesspit of abuse and misinformation," wrote Lydia Polgreen. "India's government had demanded that Twitter block tweets and accounts from a variety of journalists, activists and politicians." "Twitter is seeking to overturn some of the orders by the Indian government to take down content from its platform in a legal challenge that alleges abuse of power by officials, a source familiar with the matter said. The microblogging company's attempt to get a judicial review is part of a growing confrontation with the Indian government over content regulation." ET. "Independent journalism is increasingly under threat in India. Much of the mainstream press has been neutered by a mix of intimidation and conflicts of interest created by the sprawling conglomerates and powerful families that control much of Indian media." In a new diktat, "TV channels will have to broadcast 30 minutes of public content daily, including themes of national interest." BT. "The government will not provide the content for the channels. TV channels are free to create and broadcast their own content, I&B Secretary Apurva Chandra said." This means that private companies will have to spend their own cash to create content and, since people will have the freedom to switch channels to escape such boring waffle, channels will not get any commercials for these 30 minutes. Will the government force all channels to broadcast this tosh at the same time to prevent escape? Private channels started operating in India in 1992, wikipedia. Till then we had just the government-owned channel Doordarshan. It was mind-numbingly boring, showing Krishi Darshan (farmer show) at prime time. Firstpost. It used to show Hindi film songs once a week for 30 minutes on Chitrahar but even that would be interrupted by an infamous message "Vilamb ke liye khed hai" meaning 'delay is regretted'. "Autocracies force the media to carry content, but not respectable democracies," wrote Swaminathan S Anklesaria Aiyar. "India is ranked 150th out of 180 countries in media freedom by Reporters Without Borders." "All new rules give politicians and bureaucrats power over producers and recipients of content." "They facilitate the extraction of bribes and favors." That may be the whole idea. Themes of national interest will naturally feature government programs. And most carry pictures of the prime minister. Very handy for the general election in 2024. Finance Minister Nirmala Sitharaman scolded Collector of Kamreddy district in Telangana Jitesh Patil for not displaying the photo of Prime Minister Narendra Modi at fair price shops, ET, perhaps forgetting that these shops are supplied by taxpayer money and not by her party, the BJP. Anyone daring to protest could have their homes bulldozed. BBC. To broadcast this brutal practice to the world a yellow bulldozer was used as a float by people of Indian origin in a parade in the US town of New Jersey. Reuters. They can force television channels. But they can't stop us from switching off. After all, we are the nation.     

Tax dreams.

"Within a week of taking over the reins of (Rishi Sunak) administration, the UK Secretary of Trade for International Trade updated the parliament about the progress made in the Free Trade Agreement (FTA) negotiations with India. MPs were told that agreement had been reached on 16 of the identified 26 policy areas." DH. "Meanwhile, in India, all that we, the citizens, (tipplers included), get to know from unnamed government sources is the probable date by which this FTA might be signed, if at all." At the same time, the Indian government follows a policy of 'Make in India'. wikipedia. If we are to make everything within our borders what is the UK going to trade with us? "India doesn't have real industrial policy as such. What it has instead are multiple government schemes, costing about Rs 2 trillion, for 'production linked incentives' or PLIs. These are effectively subsidies or special treatment for large investments in particular sectors - 14 of them at last count," wrote Mihir Sharma. "Companies are supposed to be able to read an industrial policy and have faith that the government's commitment to a sector is firm." "Government assistance for lucky steel producers came with a built-in production and export targets. Yet, a few months after setting the targets, the same government unexpectedly introduced an export tax on the same steel products." Long term investment planning becomes difficult because of frequent changes in taxes for companies, as well as individuals. "The government is examining changes to the capital gains tax regime to make it simpler, including rationalisation of the multiple holding periods, officials said." ET. "Parity within asset classes will be a key consideration in the review that may even consider changes in tax rate." "Simpler", "rationalisation" and "changes" are just weasel words for increase. The Reserve Bank of India (RBI) has subjected savers, a large section of whom are retired senior citizens, to severe financial repression by keeping interest rates lower than the rate of inflation for years. Hindu. That, compounded by the fall in the value of the rupee, has severely reduced the value of savings. In a desperate bid to increase returns people have resorted to investing in shares and mutual funds. From 40.9 million in March 2020, the number of demat accounts (dematerialised accounts essential for investing in equities) have exploded to over 100 million by August 2022. TOI. Already there are taxes on transactions in stocks. The Securities Transaction Tax of 0.1% is collected at source on the sale of securities such as shares. cleartax. The Dividend Distribution Tax of at least 17.65% is deducted by the company at the time of distributing dividends to shareholders. cleartax. Now the government is contemplating hacking capital gains. When taxes become extortion money stays away. "As of October 2022, none of the top 50 Fortune 500 companies have chosen to locate the Asia-Pacific headquarters in the country," wrote Palakh Jain & Shreya Ganguly. India will be a $30 trillion economy by 2047, said Minister Piyush Goyal. Imagine how much tax that will fetch. Glorious dreams.  

It's only 15%.

At this time every year, the air quality (AQI) in the national capital Delhi becomes extremely polluted, with certain areas reaching dangerous levels. aqi.in. Analysis by the Centre for Science and Environment found that motor vehicles contributed half or more to pollution. "This is followed by household pollution that has ranged between 12.5 and 13.5 percent, industry (9.9-13.7 percent), construction (6.7-7.9 percent), waste burning and road dust (each varied between 4.6-4.9 percent and 3.6-4.1 percent, respectively." In 2015, New York Times journalist Gardiner Harris left Delhi after a 3-year stint because his eight-year-old son Brad's lung capacity had fallen by 50% due to the poisonous Delhi air. BuzzFeed. He wrote a stinking article on stinking Delhi. To which Padma Rao Sundarji's American friend commented, "There goes another bitch-slapper. Good riddance." HT. A study by Ummed Singh Saharan et al on "Drivers of air pollution variability during second wave of Covid-19 in Delhi, India" concluded that "air pollution control in Delhi should target the burning of fossil fuels, solid biofuels in households, solid waste dumping sites, and agriculture fields not only at the local level in Delhi but also in neighboring states." "PM2.5 levels have increased from 63 micrograms per cubic meter in 2012 to 141 in 2019. This dipped to 115 in 2020 due to Covid lockdowns," wrote Chandra Bhushan. Still dangerously high despite almost complete halt in all activities. Because, "In 2019, the country burnt 1,830 million tonnes (MT) of fossil fuels and biomass to meet its energy needs. In addition, about 100 MT of garbage were burnt in the open. In totality, we burnt at least 1,950 MT of materials of which 85% was coal and biomass, and petroleum products were less than 15%." "The high price of oil has led to renewed calls for the use of electric vehicles (EVs) to lower human dependence on fossil fuels which pollute the environment," wrote Vivek Kaul. EVs need electricity to charge their batteries. "In the Indian case, in 2010-11, 65% of our power generation capacity depended on fossil fuels. In 2020-21, this was down to 61.4%." "In absolute terms, coal-based power capacity jumped from 93,918 magawatts to 202,675 megawatts." Vaclav Smil wrote that a typical EV battery weighs 450 kg, consisting of "about 11 kg of lithium, nearly 14 kg of cobalt, 27 kg of nickel, more than 40 kg of copper, and 50 kg of graphite - as well as about 181 kg of steel, aluminium, and plastics." Extraction of all that will need vast amounts of fossil fuels. "Compared with traditional internal combustion engine (ICE) vehicles, greenhouse gases released while making battery-electric cars account for a higher portion of life-cycle emissions," wrote Anajani Trivedi. "The metals used both by ICE vehicles and battery-electric ones make up 53% and 47% of manufacturing carbon footprint, according to Greenpeace report." Thus, despite there being no evidence of benefit, all petrol-drive cars have to be scrapped at 15 years of age in Delhi. TOI. Because they will not stop stubble burning, biomass burning or construction. These affect the vote-bank.     

A showpiece island.

"The biggest challenge facing central bankers now is bringing inflation down, International Monetary Fund (IMF) Managing Director Kristalina Georgieva said." ET. "First Deputy Managing Director Gita Gopinath, speaking at the same conference, said the strengthening dollar, now at its highest level in more than 20 year, and concerns about financial fragility also posed big challenges in the current environment, and there was no scope for missteps." "The US dollar is strengthening because the Fed adopted a hawkish monetary policy stance in response to skyrocketing inflation. It has lifted the federal funds rate from near zero at the beginning of 2022 to a range of 3.75% to 4% at the November FOMC meeting." Forbes. In the US, consumer price inflation eased to 7.7% in October compared to 8.2% in September. NBC. In contrast, "The Central Bank of the Republic of Turkey lowered the benchmark rate by 1 percentage point, to 12 percent." Outlook. "Turkey has followed President Recep Tayyip Erdogan's unorthodox belief that high interest rates cause high inflation, cutting borrowing costs despite consumer prices rising by 80.21 percent in August from a year earlier." The Turkish lira has fallen from 1.7488 against the US dollar in February 2013, Exchange Rates, to 18.55 to $1 this morning, xe.com. Naturally, Turkey's inflation rate rose to 85.51% in October. Trading Economics. Inflation rate in the UK was 10.1% in October. "Britain's economy shrank in the third quarter," as "Output contracted 0.2 percent in the July-September period," and "The Bank of England last week said the UK economy was set to also contract in the current final quarter, meaning the economy was in a recession." ET. "The BoE also warned that Britain's economy could remain in recession until the middle of 2024." "Many countries are likely to enter a recession in the last three months of 2022, Paolo Gentiloni, the EU's commissioner for the economy said." ET. "Indeed, Gentiloni said he would expect the EU would end 2022 with better-than-expected 3.3% growth, although that total is likely to significantly weaken next year, to just 0.3%." "European countries are facing strikes and protests due to high energy prices and mounting costs of living." Reuters. "Workers in Greece and Belgium walked off the job this week as protests have unfolded all across Europe pushing back against soaring cost of living prices driven by inflation." Fox. "A slew of lacklustre indicators for October show strict and enduring Covid curbs as well as a global slowdown are dragging on China's economy, analysts told AFP, with prospects looking increasingly grim for 2023." ET. "In an ocean of high turbulence and uncertainty, (the) Indian economy is an island of macroeconomic and financial stability," Reserve Bank of India Governor Shaktikanta Das said." Because "We didn't pick up (foreign exchange) reserves just to keep it as a showpiece in the Reserve Bank of India." ET. Reserves dropped by $1.087 billion to $529.994 billion in the week ended 4 November. All central banks should learn from the RBI. How to be a showpiece island. 

Different points of view.

"India and the US...expressed concern over high inflation which is being driven by external factors and has become a challenge for both nations." ET. So good to know that India and the US are so similar. Like Siamese twins, as it were. "So while the number today is in a manageable range, the challenges are largely due to the import of crude. About 85 percent of all petro needs that we consume are imported," said Finance Minister Nirmala Sitharaman. "India's crude oil import bill nearly doubled to USD 119 billion in the fiscal year that ended March 31," as "India imported 212.2 million tonnes of crude oil in 2021-22, up from 196.5 million tonnes in the previous year." ET. On the other hand, the US produces almost 12 million barrels of crude oil every day, eia.gov, or 4380 million barrels every year. 1 metric tonne (MT) of crude oil is about 7.15 barrels of crude oil, Oges, which means the US is producing about 620 MT of crude oil every year, about 3 times our total import. On 3 November, "The Federal Reserve approved a fourth-straight rate hike of three-quarters of a percentage point" to the level of 3.75-4%. CNN. "That's the highest the fed funds rate has been since January 2008." "With interest rates rising in the US, money is likely to move from other parts of the world to the US," wrote Vivek Kaul. This makes the dollar stronger against other currencies such as the rupee. "In the process, as the US tries to control domestic inflation, it will continue exporting inflation to other parts of the world." "During January-September 2022, the US dollar has appreciated sharply, for example, by as much as 20%-30% against the euro, British pound, Japanese yen, and Korean won," wrote Prof Deepak Nayyar. But the dollar has appreciated by only 5%-15% against countries like Brazil, China and India because their central banks "have intervened in financial markets to support currencies, and have also raised their benchmark interest rates. The latter is bound to stifle investment and dampen consumption." That is not true for India where the RBI has stuck to its policy of negative real interest rates with the Governor Shaktikanta Das insisting that the central bank was committed to "supporting economic growth and said that the monetary authority had resisted many temptations to reverse policy". ET. In fact given the slowdown in private investment, "The government has set a capex target of Rs 7.5 lakh crore (Rs 7.5 trillion) for fiscal 2022-23, a 35% increase from the previous year." BQ. To boost the economy. "Measures of new investment remain weak. Rather, it is replacement capex spending - bundled up wear-and-tear of the pandemic period," wrote Pranjul Bhandari. Household savings have fallen to below pre-pandemic levels because of low bank deposits "contributing to the sharp widening of the current account deficit". The US Fed has a mandate to "promote effectively the goals of maximum employment, stable prices and moderate long term interest rates". Federal Reserve. It is free to do so. The RBI has a mandate to keep inflation around 4%, cleartax,  which it has failed to do. Presumably, because it is obeying orders. Inflation hurts consumers. The US cares for its people. Our rulers do not. We are totally different. 

Home from home.

"Initial midterm election results are rosier than expected for Democrats, who appear poised to buck historical trends and avoid major losses in Tuesday's races." CNBC. Final results are not yet in but, as of now, the Republicans are ahead in the House by 211 to 197 for Democrats, and it is 48 seats each in the Senate. Reuters. "Meanwhile, NBC's latest projections estimate Republicans could hold 221 House seats in the next Congress," just 3 seats above 218 required for a majority. The Republicans need to win 3 more seats to gain control of the Senate. The present Senate is split 50:50 which allowed the Democrats to control it because of the tiebreaking vote of Vice President Kamala Harris. Ballotpedia. Even though President Joe Biden's approval rating was down to 44%, the Democrats did well because of capping the price of insulin, Covid-19 relief funds, investing $1 trillion in infrastructure, appointment of the first Black woman to the Supreme Court, pardon for those convicted of 'simple marijuana possession, forgiveness of $10,000 of student loans and the overturning of Roe v Wade, which gave women the right to abortion, by the US Supreme Court in June. CBC. Just as women in Bihar state of India voted for Nitish Kumar for his promise to ban alcohol. HT. In August 2021, Indian Prime Minister Narendra Modi pledged to "spend more than $1 trillion on infrastructure to create jobs". CNN. The Twenty-sixth Amendment in the US lowered the voting age to 18 years, wikipedia, which means that all college students stand to benefit from the 'forgiveness' program, except for the few with very rich parents. A federal judge in Texas...ruled that President Joe Biden's plan to cancel hundreds of billions of dollars in student loan debt was unlawful and must be vacated, delivering a victory to conservative opponents of the program." Reuters. Opposition by Republicans would have been an enormous incentive for all college students, and their families, to vote for Democrats. One college student with two parents, four grandparents and two siblings could potentially amount to nine votes. At the very least Biden administration can further extend the payment pause if court cases are prolonged. CNBC. The US calls it 'loan forgiveness' while we in India call it 'loan waiver'. In April 2019, while campaigning for upcoming Lok Sabha elections, Modi "announced that the BJP government was planning to provide loan waivers to farmers of all categories after returning to power in Lok Sabha polls." DC. Handouts win elections in poor India and in the rich US. An elated Biden laughed when questioned about criminal charges against his son Hunter Biden and wished the Republicans "lots of luck". Fox. "Federal agents believe they have enough evidence to support charging Hunter Biden, the son of President Joe Biden, with tax crimes and making a false statement in connection with the purchase of a gun." CNBC. Somewhat like charges of money laundering against Kartik Chidambaram, son of previous Congress minister P Chidambaram. HT. Democrats are so alike Indians. No wonder, three-quarters of Indian Americans voted for Biden in 2020. Reuters. Like home from home.