Race to the finish.

"The attacks on crucial shipping traffic in the Red Sea straits by a determined band of militants in Yemen, a spillover from the Israeli-Hamas war in the Gaza Strip." In addition, "The risk of escalating conflict in the Middle East is the latest in a string of unpredictable crises, including the Covid-19 pandemic and the war in Ukraine." Also, "More than 2 billion people in roughly 50 countries, including India, Indonesia, Mexico, South Africa, the United States and the 27 nations of the European Parliament, will head to the polls." "The biggest election next year is in India." DH. Yesterday, "The US Navy has destroyed Houthi 'small boats' whose crew attempted to board a container ship in the Red Sea." Helicopters from nearby US warships responded to a distress call - and, after being fired upon, sank three boats 'in self-defence'." "The crews were killed and the fourth boat fled the area." "An American destroyer shot down two anti-ship ballistic missiles fired from Yemen Saturday (30 December) as it responded to a call for help from a container ship that was hit in a separate strike, the US military said." The Houthis, Hamas, Hezbollah are all proxies for Iran. "A drone attack by an Iran-affiliated terrorist group on a military base in Iraq...left three service members wounded...and prompted President Biden to order retaliatory strikes. The attack on the Erbil Air Base in northern Iraq was conducted by Ketaib Hezbollah militants." CBS. In April, "Iran's army said it had seized a Marshall Islands-flagged oil tanker in the Gulf of Oman after it had collided with an Iranian boat, injuring several crewmen, Iranian state media reported." Reuters. In July, "Iran tried to seize two oil tankers near the strategic Strait of Hormuz...opening fire on one of them," but, "the Iranian vessels backed off after the US Navy dispatched a guided-missile destroyer to the scene." AP. The US is trying to avoid a direct conflict with Iran but how long can it protect the Red Sea and the Persian Gulf and support Israel's war against Hamas, which is causing large numbers of civilian casualties, without going for the source of the problems? But the US is stretched already. "The White House recently approved another tranche of US military aid to Ukraine worth some $250 million. The latest package includes air defence, artillery and small arms ammunition, and anti-tank weapons, US officials say." BBC. Will Xi Jinping attack Taiwan to divert attention from "Deflation in China accelerated in November," as "The consumer price index, the main gauge of inflation, fell 0.5% year-on-year, according to the National Bureau of Statistics." TNIE. Although Chinese President Xi Jinping bluntly warned President Joe Biden that China will reunify Taiwan with the mainland, possibly implying force (NBC), except that, "A sweeping purge of Chinese generals has weakened the People's Liberation Army, exposing deep-rooted corruption," (Reuters) or perhaps an attempted coup against Xi. The coronavirus came from China in  2019. Boston University. China is racing to build killer robots. As if there are not enough dangers already. 2024 may decide who wins.     

The bubble and the elephant.

"Domestic equity markets on Thursday (28 December) scaled fresh record highs for another trading session amid the expiry of monthly F&O contracts for the December series. Strong buying action across all major sectors helped the benchmark indices to scale new higher for the day." BT. "India's benchmark Sensex Index, which tracks 30 large companies, has climbed over 16% this year, while the broader Nifty 50 index has jumped over 17% in that time." "The ascent of India's stock market value means it ranks behind only those in the United States, China and Japan, according to Refinitiv." CNN. "Foreign institutional investors (FIIs) had net sold stocks worth Rs 39,316 crore (Rs 393.16 billion) in September and October, but have net bought stocks worth Rs 40,372 crore (Rs 403.72 billion) from 1 November to 12 December." "Now, FIIs typically invest in large-cap and mid-cap stocks," but the "BSE SmallCap Index has risen by around 12% since end-October." "In fact, as of 8 December, there were 75 companies with a PE (price/earnings) ratio higher than 100 and 233  companies with a PE ratio higher than 50." This is because of domestic investors who are new to the markets, wrote Vivek Kaul. Surely, the RBI should be worried about asset price bubbles? "Our high fiscal deficit, high debt-to-GDP ratio, both higher than most of our peers, signs of overheating in key asset markets (stocks, gold and real estate have all run up dramatically in recent weeks) and ever-present geo-political tensions - not to forget the elephant in the room, general elections less than six months away - should all serve to induce caution." Mint. "In a memorable year for the equity market, Dalal Street investors added a whopping Rs 80.62 lakh crore (Rs 80.62 billion) to their wealth in 2023 as a raft of positive factors powered a stellar rally in stocks." ET. It is precisely because of the elephant that the RBI is frozen.  A large correction in stock prices will result in losses for domestic investors, who may cut spending, which will result in lower profits and lower tax collections. Suicidal before an election. "The central government's fiscal deficit stood comfortably at Rs 9 trillion in April to November period, about half of the estimated full-year target, as tax revenue grew in twin digits." Mint. If every bet on dud companies is winning, why not go for the real McCoy? "The count of those who trade in stocks directly is falling in favor of derivatives, despite the market regulator issuing warnings about the risks in futures and options (F&O) and the markets yielding attractive double-digit returns." Mint. "The frenzy to trade in futures and options among newbie investors has landed up drilling deep holes in their pockets," and "55% of the new traders have ended up buying more to average out their losses in trade." According to the Securities and Exchange Board of India (SEBI), 9 out of 10 individual investors incurred an average loss of Rs 110,000 in FY22. ET. Rs 80.62 billion in 2023. Will the bubble burst in 2024? Will the elephant panic? Happy New Year.  

If you can't prevent it, take a selfie.

In a humiliating capitulation to China, "The Indian army has been forced to dismantle a memorial to one of its greatest war heroes of the 1962 war because the area where it was built has become part of the newly established buffer zone between India and China." Is this because we lost a battle with the Chinese? Absolutely not. In June 2020, at least 20 Indian soldiers were killed at Galwan Valley in Ladakh in hand-to-hand fighting after a savage unprovoked attack by Chinese soldiers. BBC. In a clear victory for India, "China has not revealed its casualties in the Galwan Valley clash but the Russian news agency, TASS has reported that 45 Chinese soldiers died in the free-style fight." India Today. "At the famous Battle of Rezang La, a pass in the Kailash Ranges, Major Shaitan Singh and 113 men fought to 'the last bullet, last man' against an overwhelming force of thousands of Chinese troops." "The buffer zone was created as part of the disengagement process with China along the Line of Actual Control (LAC) following the deadly Galwan Valley clash in June 2020." So, we dishonor the 20 soldiers who defended Galwan by dishonoring Major Shaitan Singh and his 113 men at Rezang La. Makes us so proud. This government has also helped China to assert control in the Maldives. In 2018, China's friend President Abdulla Yameen lost the election and Ibrahim Mohamed Solih became president. In June 2022, "the Indian High Commission in Male, on the basis of routine instructions from the Indian Ministry of External Affairs, decided to celebrate International Yoga Day in a massive way." "On June 21, 2022, Reuters reported that 'a crowd stormed the stadium' where the event was on" with placards saying yoga was against Islam. Frontline. Meanwhile, Apple warned opposition leaders through an SMS and email that "State-sponsored attackers may be targeting your iPhone." ET. Apple did not identify the state. "Apple's warnings in October to Indian opposition politicians that government hackers may have hacked their phones prompted Narendra Modi's administration to quickly demand the US firm soften its message, the Washington Post reported." Reuters. An admission? "The Indian government has been allegedly using Pegasus spyware to target prominent journalists, as per a joint investigation released...by Amnesty International and The Washington Post." ET. "The Narendra Modi-led government is refusing to cooperate with French judges who have requested India's assistance in their investigation into alleged corruption in the sale of 36 Dassault-built Rafale fighter jets to India in 2016 for 7.8 billion euros." The Wire. But we are lucky. We can take selfies with the great man. Indian Railways has installed selfie booths at Rs 625 thousand each to take selfies with life-size 3D models of Mr Modi with smartphones. The cheaper booths have two-dimension life-size cutouts. The Wire. The phones are most likely Chinese anyway. After all, if you can't prevent it...       

Neck and neck with America and China.

"The Reserve Bank of India (RBI) remains alert and committed to act early and decisively to prevent any build-up of risks, said governor Shaktikanta Das," and "the governor said that the health of the Indian financial system is steadily improving on the back of multi-year high earnings, low level of stressed assets, and strong capital and liquidity buffers with financial institutions." FE. Wonderful. "India's current account deficit declined sharply to 1% of the GDP or $8.3 billion in the second quarter of this financial year, mainly due to lower merchandise deficit and growth in services exports, according to RBI data." DH. The RBI has directed banks and non-banking financial companies (NBFCs) to not make any investments in any Alternative Investment Funds (AIFs) that has downstream investments either directly or indirectly in a debtor company. The notice aims to address concerns relating to possible evergreening through this route." BT. "Evergreening of loans is a practice where banks revive a loan by a borrower who is on the verge of default by granting more loans to the same borrower." MC. The borrower takes a new loan from the bank to pay back the old loan. This way the borrower avoids being labeled as a defaulter, which has serious consequences, and the bank avoids showing the loan as a non-performing asset, or bad loan, on its books. As per RBI rules, "A non-performing asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days." ET. "The top seven shadow lenders in the country had invested around $1.35 billion in these so-called AIFs, according to their most recent annual reports. Shares of these firms dived after the new rules," and the actions were called "draconian" by one analyst. ET.  "The RBI is in talks with banks and the government for more stringent measures to ensure that banking channels are not misused for illegal forex trading." ET. "Indian banks and non-bank lenders need to further fortify their balance sheets by following stronger governance and risk-management practices. Mint. NPAs of banks "fell to a decadal low of 3.9% as of March-end 2023 and further to 3.2% at the end of September," the RBI said. Why is the RBI suddenly in a frenzy? "This is not the first time that authorities have become conscious, just before elections, of elevated risks spilling from one market to another." "But it does point to an uncomfortable fact that authorities and regulators seem comfortable with excessive speculation during normal times but acquire jitters just before elections," wrote Rajrishi Singhal. Crony capitalism? "The wealth of crony capitalists around the world has grown exponentially by 850% in the past 25 years to $3 trillion," and "Some 65% of the increase has come from America, China, India and Russia," The Economist reported. Quartz. We are up there with the leaders. The RBI aims to keep us there. Three cheers.

An inexplicable riddle.

"The charter flight detained by French authorities last Thursday (21 December) for carrying Indian passengers who were suspected to be victims of human trafficking landed in Mumbai on Tuesday, with 276 out of the original flyers on board." "A number of passengers sought asylum and stayed back. Among those who remained in France were unaccompanied minors, including a 21 month old child." Asylum from what? India is not at war and all communities are living in peace and harmony. "People belonging to various religious communities heaped praise on Prime Minister Narendra Modi at an event in Australia for his 'ability to respect all communities'." HT. "Union Home Minister Amit Shah reiterated...that the lesson taught to the inciters of riots by the Narendra Modi government, which was in power in 2002, has led to enduring peace in the state (Gujarat)." TOI. "According to official figures, the riots ended with 1,044 dead, 233 missing, and 2,500 injured. Of the dead, 790 were Muslim and 254 Hindu." wikipedia. Which community was the lesson for? "Most of the passengers were young men from the state of Punjab, carrying a single piece of luggage," who covered their faces and refused to answer questions from the media. TOI. Two days before the French incident, "six youths were brought back from Russia to India after surviving nine days in a jungle, getting thrashed by border security forces of different countries twice and spending time in a Russian jail." First, they were flown to Oman, then to Moscow and then, "Through taxis, we were taken to Belarus, where a group of 22 men were kept in two rooms. The group included a few Pakistanis and Afghans while those from India were from Punjab, Haryana and Gujarat," said Lakhbir Singh from Punjab. Afghans may be fleeing from Taliban rule and Pakistan suffered devastating floods in 2022 which killed 1,839 people and caused $15.2 billion of economic damage. wikipedia. "Overall, real gross domestic product (GDP) is estimated to have declined by 0.6 percent in FY23," and "With 44 percent of poor workers relying on agriculture, weak agricultural performance had significant poverty impacts." World Bank. But the Indian economy is booming. "The Indian economy is likely to grow 6.7% in FY24, according to median forecast by 11 economists," as "Growth in the first half of this fiscal year was 7.7%," and "The Indian economy registered 7.2% growth in FY23." ET. If India is the fastest growing major economy, as they say, it should be creating numerous well-paid jobs. Why then, must we "also consider the likelihood that they were not being trafficked as human cargo for exploitation, but were headed for America - with Nicaragua as a transit point - on their own volition for a better life?" Mint. And, why are Gujaratis fleeing when it has "enduring peace" and "The entire world talks about the Gujarat model of development." "Under Narendra Modi, the farmers of Gujarat witnessed unprecedented prosperity?" "Industrial development scaled new heights in Gujarat since 2001." And, "Governance in Gujarat has reached the very last person in the queue." The Gujarat Model.  Difficult to digest so much "unprecedented prosperity", new heights of industrial development and governance. So that, a family of four from the Dingucha village in Gujarat froze to death in Canada just yards from the US border. NBC. Is it a case of too much of a good thing (Grammarist) or are Gujaratis most ungrateful? It really is a riddle wrapped in an enigma. wikipedia.

King of democracy.

"Defence Minister Rajnath Singh...said work is being done for the upliftment and prosperity of India's cultural heritage under the leadership of Prime Minister Narendra Modi." "Only saints and sages have the right to review the work of a king," Singh said. DH. And we were under the delusion that India is a democratic federal republic. "India is the mother of democracy," claimed Mr Modi at the joint sitting of the US Congress. "Democracy is the idea that welcomes debate and discourse," said His Majesty. One of his devoted courtiers, "Madhya Pradesh chief minister Shivraj Singh Chauhan...equated the meeting of opposition parties in Patna with 'animals' perching on a tree to save themselves from the flood of PM Modi's popularity." ET. "Opposition parties in Assam...claimed that 95% of cases registered by CBI and ED in the last four years are against leaders of political parties that are rivals of the ruling BJP." TNIE. The rest 5% were probably against genuine criminals because, "Not a single case named any leader of the saffron party, they said." Saints and sages all. "Then Jesus said unto him, Put up again thy sword into his place: for all they that take the sword shall perish with the sword." wikipedia. "The Madurai city police have registered a case against Enforcement Directorate (ED) officials on a complaint by the Directorate of Vigilance and Anti-Corruption (DVAC) that officials from the federal agency prevented them from discharging their duties in the case where ED officer Ankit Tiwari has been booked on charges of bribery. DVAC arrested Tiwari on December 1 for allegedly accepting a bribe of Rs 20 lakh (Rs 2 million). Later in the day, they carried out a raid at ED's sub-zonal office in Madurai." HT. "As the war between the Tamil Nadu government and the ED escalates,"  "the central agency has shifted its probe against its own officer, who is the accused in the case, as well as official's of the state's DVAC to its New Delhi headquarters." TOI. This is not just a tussle between the DMK government of Tamil Nadu and the central government of the BJP, but also between a southern state and the Hindi-speaking north. Tiwari is a Hindi name. "DMK MP Dayanidhi Maran came under fire...for his derogatory remarks about people from the Hindi heartland undertaking menial jobs in Tamil Nadu, sparking a new north-south debate." TOI. These menials from the Hindi heartland are planning to take total control of parliament through delimitation in 2026 (pib,gov.in), because of their higher birthrates. The government projects that delimitation will increase Lok Sabha seats from 543 to about 753. Vaishnav and Hintson calculate that the 5 southern states will see the total number of their seats rise by 11%, from 129 to 143, while the 4 Hindi states of UP, Bihar, MP and Rajasthan will see the share of their seats rise by 63% from 174 to 284 seats. Since the BJP won 90% of the seats in those states in 2019 Mr Modi will remain king forever. Wrote Neelanjan Sircar. How did the "mother of democracy" give birth to a king? Through the Hindi-speaking North. The rest of us are irrelevant. 

From revdi to guarantee.

"India has moved to a higher growth trajectory" as "India's gross fixed capital formation has consistently grown at 8% of more year-on-year in each of the past six quarters. When more capital is deployed, it naturally boosts productivity." "Between 2003-04 and 2007-08, real GDP grew at an average annual pace of 7.9%." "In the 15 years to 2018-19, India's average annual real GDP growth thus averaged exactly 7%." So, 7.5% growth is now the new normal, wrote Prasenjit K Basu. Real GDP is derived by adjusting nominal GDP for the rise in prices relative to a base year. It is also called GDP at constant prices. Investopedia. "While Morgan Stanley revised India's GDP growth forecast target by 50 basis points to 6.9% for FY24," "Citi said the economy could grow 50 basis points higher than its earlier forecast to 6.7% on-year in FY24." A2Z Taxcorp. "During the 10 years of the Narendra Modi government at the Centre, the share of actual capital expenditure in total government spending has risen to historic heights, while the share of subsidies has fallen to decadal lows." The government's actual capital expenditure will be 18.6% of its total spending in 2023-24, the highest in 20 years. The Print. According to the Periodic Labour Force Survey (PLFS), India's workforce is 567 million in 2022-23 while it was 455 million in 2017-18, which means that 112 million jobs have been added in the last 5 years, wrote Abhishek Jha. However, since 2019-20, which was affected by Covid, "the proportion of salaried workers has decreased and that of unpaid workers has increased. 52% of the 112 million were in agriculture. "91.2% of unpaid family workers in 2022-23 were from rural areas." "The number of such workers has increased from an estimated 62 million in 2017-18 to 104 million in 2022-23." "34 million of the 42-million growth in unpaid workers has come from women." The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) 2005 guarantees 100 days' employment for the rural poor. wikipedia. "The number of persons seeking work under the scheme were 171 mn in April-August of the current financial year, 19% higher than 144 mn in the corresponding period of 2019-20, the immediate pre-pandemic year, as per the official data dashboard." FE. "Sources in the finance ministry have said additional funds of Rs 28,000 crore (Rs 280 billion) have been sanctioned for the MGNREGA," in addition to the Rs 600 billion allocated in the 2022-23 Budget. Where there is poverty there are handouts to win elections. "The political debate on freebies has had a quiet death. The recent, high- stakes assembly election in Madhya Pradesh, Chhattisgarh, Rajasthan and Telangana saw the mainstreaming of freebies as political parties competed with each other in making a slew of promises in the manifestos - from free electricity and free bus travel for women to cash benefits and subsidised (cooking gas) cylinders." ET. From slamming the "revdi culture" or the culture of freebies on 23 October 2022 by PM Modi (TIE) to a 180-degree transformation to guaranteed 'revdis' in "Modi ki guarantee' in November 2023 to win elections (TOI). If 7.5% economic growth is the new normal why are freebies growing in tandem? Is it jobless growth or complete fiction? Who will tell us?   

Enjoy now; expect Annus Horribilis.

"As 2024 comes into view, investors, economists, business leaders and everyday consumers from London to Lyons to Los Angeles share a common hope: Let the interest rate cuts begin!" "After starting the year with annual inflation rates that were on average 3.7 times the 2% target,..the pace is now down to 1.5 times that target." "A major game of chicken is now underway" as "projections from Fed officials themselves indicated they expect 75 basis points rate reductions over the course of 2024, bond and rate futures markets are now positioned for twice that amount." Reuters. "Central banks cannot solve all that ails our economies." So they should be humble. "Crucially, embracing a humble approach requires central banks to keep their focus on the inflation anchor." "Now is not the time to question or lose sight of the goal." "As governments confront  hard fiscal policy decisions, the danger to central bank independence rises. We know what a lack of it is like; ask residents of Argentina and Turkey about sky-high inflation," wrote Frenkel, Rajan & Weber. "The decade of secular stagnation after the global financial crisis" "led to low inflation-adjusted interest rates, while near-zero or even negative policy rates, combined with quantitative and credit easing, kept nominal and real rates very low - and often negative both on the short and long end of the yield curve. But that easy money environment is gone," wrote Prof Nouriel Roubini. There are other unknown dangers. In Ukraine, "More than 21 months into the biggest conflict in Europe since World War Two, fighting rages with no end in sight and neither side has landed a telling blow on the battlefield." Reuters. In Gaza, the war drags on as the world and the United Nations keep wringing their hands about a looming famine (BBC) without making any effort to stop the fighting by forcing Hamas to release all hostages immediately. "We're facing monsters, monsters who murdered children in front of their parents and parents in front of their children, who raped and beheaded women, who burnt babies alive, who took babies hostages," said Israeli Prime Minister Benjamin Netanyahu in his Christmas message to Christians. Mint. Today is apparently Jesus' birthday, who forgave his enemies, (biblehub) but Christians blame Jews for his crucifixion and hide their hatred in an outpouring of sympathy for Hamas. This emboldens Iran and its proxies, like Hamas. "Attacks launched by Yemen's Houthi group on commercial ships at the southern end of the Red Sea have prompted several shipping companies to divert vessels, avoiding a route that would take them through Egypt's Suez Canal in the north and its link to the Red Sea." Reuters. Could cause inflation again. "A chemical tanker in the Indian Ocean was hit by a drone launched from Iran on Saturday (23 December), the US military says." Security firm Ambrey said "the vessel was heading from Saudi Arabia to India, and was linked to Israel." BBC. Enjoy Christmas. 2024 could be an annus horibilis (wikipedia). A real one.

Anywhere will do.

"A plane carrying 303 Indian passengers has been grounded at an airport in north-eastern France on suspicion of human trafficking, French media report. The Airbus A340 was flying from the United Arab Emirates to the Nicaraguan capital Managua. It was grounded during a technical stopover at the small Vatry airport in Marne department...after an 'anonymous tip-off', prosecutors say." BBC. Police have sealed off the airport. "Eleven unaccompanied minors were among the 303 passengers on a plane grounded in France." Reuters. Nicaragua is the largest country in Central America with a population estimated at 6.4 million and nominal GDP estimated at $17.4 billion (wikipedia), ruled by a brutal communist dictator Daniel Ortega who is a friend of another dictator Nicolas Maduro of Venezuela (Britannica). "Diplomatic relations between India and Nicaragua were established in March 1983." Total bilateral trade was $69.12 million in 2019-20, exports from India were $3.60 million and imports were $65.52 million. MEA. 39 non-resident Indians (NRIs), 1 person of Indian origin (PIO) and 40 Overseas Indians, for a total of 80, live in Nicaragua. MEA. It is, therefore, extremely strange that 303 Indian citizens are flying to Nicaragua in the same flight. "Indians constitute the third-largest group of illegal immigrants in the US. There are over 725,000 Indians living illegally in the US, according to a recent study by Pew Research Center." They are taken through tortuous routes, known as 'Donkey routes', walking through miles of jungles, by people smugglers known as 'Donkers'. It costs Rs 1.5 million to be smuggled into Portugal, Rs 2.5 million for Germany and Rs 4.5 million for the US. India Today. Why pay huge sums of money and risk their lives for jobs as almost slave labor in countries where they do not know the language when "India is a mother of democracy and a model of diversity, Prime Minister Narendra Modi said on the occasion of India's 77th Independence Day, with two lawmakers from the United States in the audience," (DH) and that "We are fortunate to live in the 'Amrit Kaal' (age of eternal life) of independence," PM Modi said. DH. Even a dirt-poor country like Sudan seems preferable to India. "I was born poor, but I didn't want to die poor. I wanted to provide a better life for my children, which is why I came to Sudan," said Prabhu. India Weekly. Although a total of 60% of seats in government jobs and in higher education are reserved for lower castes (Legal Service India), thousands of Dalits still live lives of utter misery (BBC). Ten of the 303 passengers on the grounded plane have applied for asylum in France. India Today. Clever. If not the US, anywhere will do. But, please God, not India. Not even for Amrit (divine nectar).   

Talking about the best. Ignoring advice.

 "The International Monetary Fund (IMF) warned...that India's general government debt could exceed 100 percent of gross domestic product (GDP) in the medium term. It also cautioned that long-term debt sustainability risks are high due to the significant investment required to meet India's climate change mitigation levels." BS. "The country's total debt, or total outstanding bonds which are being traded in the market, rose to $2.47 trillion (Rs 205 trillion) in the September quarter according to a report." "The central government's debt stood at $1.34 trillion, or Rs 161.1 trillion." India's "Real GDP or GDP at Constant (2011-12) Prices in the year 2022-23 is estimated to attain a level of Rs 160.06 trillion" while "Nominal GDP or GDP at Current Prices in the year 2022-23 is estimated to attain a level of Rs 272.41 trillion." pib. gov.in. So, India's total debt is about 75% of nominal GDP. "The finance ministry...said that any interpretation that the IMF report implies that general government debt would exceed 100% of GDP in the medium term is misconstrued." The IMF is taking the worst-case scenario and since most of the debt is in Indian rupees it is not a problem. First, even if the debt is in rupees it's not free. The higher the debt, the higher the total interest payment. Second, the government should "Expect the best. Prepare for the worst. Capitalize on what comes." Zig Ziglar. "The IMF noted the rupee-dollar exchange rate moved within a narrow range during December 2022 and October 2023, suggesting that foreign exchange intervention (FXI) by the central bank likely exceeded levels necessary to address disorderly market conditions. The Fund reclassified India's de facto exchange rate regime to 'stabilised arrangement' from 'floating'." BS. "Rebutting the IMF's observation the RBI said that India's exchange rate remained 'market determined' and it did not target a particular value for the currency," as "a sharp depreciation will fuel inflation as imports, including edible oil and petroleum, become more expensive. On the other hand, a sharp appreciation will hurt exports." TOI. India's trade deficit came down to $20 billion per month from $22.1 billion, trade deficit in the three quarters to June 2023 was $27.3 billion from $53.5 billion in the previous year and foreign portfolio investment was around $45 billion though foreign direct investment (FDI) fell by $22 billion, wrote Madan Sabnavis. Therefore, the IMF is wrong. Perhaps, the IMF is politely hinting that the US interest rate has gone up from 0% to 5.25%-5.50% (Frobes), while the RBI has hiked its policy rate from 4% to 6.50%  (Forbes), thus narrowing the gap with the US, but the rupee has barely budged against the dollar from 81.62 in 2022 to 83.38 (Forbes). It is at 83.33 this morning. xe.com. The foreign exchange reserves have been up and down. Forbes. Whereas the inflation rate in the US in 2022 rose to a high of 9.1% in June and average inflation to 8.0% (USIC), it has been consistently lower than the average inflation in India (RI) except for 2022 when the average inflation in India was a tad lower at 6.7%. The US inflation slowed to 3.1% in November (ET), whereas India's CPI inflation rose to 5.5% (ET). The IMF probably feels that tolerating a high inflation rate to inflate the nominal GDP while using hot money FPI flows to support the rupee is unwise. But, hey, the general election is in April-May 2024. wikipedia. After that, who cares?       

An old debate.

"In an interview with The Financial Times, PM Modi responded to allegations of India's plot to assassinate Khalistani extremist Gurpatwant Singh Pannun in the United States, saying that he will 'look into any evidence' pertaining to the incident," while raising "concerns of extremists engaging in violence and intimidation overseas under the guise of freedom of expression while saying that the country is committed to the rule of law." ET. If he had given the same bland assurance to Canadian Prime Minister Justin Trudeau instead of his government responding with extreme force (BBC), perhaps the US would not have filed charges of a conspiracy to kill Pannun, involving a government employee in Delhi and thus directly linking the Indian government to the case (NBC). "US President Joe Biden will not be attending the Republic Day celebrations in New Delhi on January 26 next year." However, "The aborted assassination of Khalistani terrorist Pannun is just a minor crinkle in the vast Indo-US bilateral canvas." HT. "The Pannun issue is doubtless serious" but it is just a "niggling political and diplomatic irritant between India and the US," and "Both countries wish the Pannun issue would just vaporise." Therefore, Biden's no-show is "No big deal," wrote Indrani Bagchi. May not be so simple. "In a joint statement, all five Indian-American legislators in the US Congress - Ami Bera, Pramila Jayapal, Ro Khanna, Raja Krishanmoorthy and Shri Thanedar - said that relations between India and the United States could face 'significant damage' if India did not fully investigate and hold people, including officials of the government of India, responsible." News18. Could "officials" include ministers? All 5 are Democrats, Biden's party. "New Delhi should take note." "In the past when the White House has been standoff-ish, the state department hostile and the defence department tired of trying, the Congress has come to the rescue to keep India on the radar," wrote Seema Sirohi. If the Congress can help, it can also hinder. "Union home minister Amit Shah asked what terrorists wanted by India were doing on Canadian land." TOI. Why can't they understand that asking for independence is not a crime in Canada or in the US? The Canadian province of Quebec has held two referendums on independence. "Quebec has twice voted against independence, but the question has never been settled or gone away." BBC. Canada has not killed anyone in Quebec nor has it labeled them as "terrorists". Canada may have only 39 million people (worldometer), compared to India's 1,400 million, but it is a member of NATO (nato.int), and cannot be attacked without retaliation from all NATO countries (nato.int), and is also a member of the G7 group of nations  (Government of Canada) because it has a GDP per capita of $54,917 (World Bank), compared to a meager $2,410 for India. Hence, Canada is not insignificant, as they seem to think. Trudeau mocked India by saying that India's ties with Canada may have undergone a "tonal shift" following the indictment in the US. The Telegraph. It's the old debate between terrorists and freedom fighters. Ask Benoy Badal Dinesh. amritmahotsav.nic.in.  

Destination abroad is better.

"Prime Minister Narendra Modi...said India needs a movement like 'Wed in India' on the lines of 'Made in India' and asked affluent industrialists to hold at least one destination wedding in their families each year in Uttarakhand saying it will help the hill state to emerge as a wedding destination." ET. "But the big fat Indian wedding isn't just a cash cow; it's one of the country's biggest soft power exports." "The last six posts on Vogue's Weddings Instagram page are of an Indian wedding that took place in Malibu. 'Indian weddings are always glamorous,' reads a comment." "From a land of snake charmers and sages to one where the average family can spend big on Maharaja-sized weddings. Who cares if this isn't the reality, it's all about perception anyway." The Print. "A 2020 British Council report delves into the sources of soft power in seven focus countries: the UK, Germany, Japan, the US, China, Russia and India." "India ranks the lowest in terms of all four metrics used to measure soft power: overall attractiveness (51%), trust in people (36%), trust in government (28%), and trust in institutions (28%)." Weddings abroad may reveal the enormous inequality in India and "such weddings can potentially hurt the Indian economy through outflow of foreign exchange," wrote Prof Tulsi Jayakumar. The government wants to milk weddings for money, so the people have no trust in the government or its institutions. At a wedding in Jalna, "The officials of the Income Tax Department had come as groomsmen so that no one would get the news that they were coming to raid. Income Tax officials arrived in Jalna in wedding cars bearing 'Dulhan Hum Le Jayenge' (we will transport the bride) stickers and uncovered Rs 390 crore (Rs 3.9 billion) illegal assets in eight days of raids." Most people get married only once and for the couple the day was spoilt forever by official bullying. Then, a special licence must be obtained for serving alcohol even if all of it is bought locally. excise.delhi.gov.in. "India saw the highest amount of remittance inflows in the world in 2023 at USD 125 billion, driven by several factors, including the country's agreement with the UAE, for promoting the use of dirhams and rupees for bilateral trade, the World bank said." ET. "NRIs (non-resident Indians) from across the globe will visit their embassies and consular offices later this month and file a memorandum to urge the authorities in India to evolve systems to ensure their properties and assets in India are safe." TNIE. Remittances come from NRIs. The government does not protect Indians, it uses investigative agencies to target opposition, media, activists and anyone who would dare to criticise. The Wire. Go abroad, like 6,500 high net worth individuals will do this year. ET. Marry abroad. No hassles, no licences, no raids. Pure soft power. 

Scrambled statistics.

"Unemployment rate among graduates in the age group of 15 years and above has declined to 13.4% in 2022-23 from 14.9% a year ago, according to a government survey." "Joblessness or unemployment rate is defined as the percentage of employed persons in the labor force." "The reference period here is from July 2022 to June 2023." ET. "According to the National Sample Survey Office (NSSO), the unemployment rate for individuals aged 15 years and above in urban areas decreased to 6.8% during January to March 2023 from 8.2% a year ago." But, "According to a recent Bloomberg report that references data from the Centre for Monitoring Indian Economy (CMIE),.. the unemployment rate in India is 7.95% as of July 2023." According to the Periodic Labor Force Survey (PLFS) , "It stands at 6.6% in April-June 2023, which was 7.6% earlier." Forbes. So, 6.8%, 7.95% or 6.6%, which is it? "The PLFS definition of weekly status is whether you were employed for at least one hour in the previous week. This is a standard ILO definition." According to the PLFS data India's LFPR (labor force participation rate) "increased from about 47% to 54%" and the female LFPR rate has increased from 20.7% in 2027-18 to 31.3%, wrote economist Surjit S Bhalla. LFPR also counts people who are looking for work and so does not count the true unemployment rate and working one hour per week is meaningless because it will not buy breakfast, let alone lunch and dinner. "Just 10% of the 15 lakh (1.5 million) engineers graduating this fiscal year will be able to find a job, a new report by Teamlease has shown, reflecting the impact of the global economic downturn." Actually, "PLFS presents a picture of employment distress." "Those who are self-employed have gone up sharply - by as much as 13 percentage points in the case of women." "India's consumer price index has risen 29.4% from 2017 to 23, while earnings of self-employed rose 8.3% over this period," "The earnings of casual wage workers declined 16% while those on regular wages saw their inflation-adjusted incomes fall by more than a quarter." Mint. Higher unemployment levels among educated workers is because "educated workers would be unwilling to settle for unskilled work" and "The government has increased the distribution - in both quantity and coverage - of cheap food under National Food Security Act. This reduces the pressure on an individual to take up work," wrote TCA Anand. So, the poor are lazy and happy with food and have no desire for the finer things of life. "More than 80% of India's non-agricultural workers work in enterprises which have fewer than 20 workers," but, in 2020-21, just 0.05% of 961 thousand companies "boasted at least Rs 500 crore (Rs 5 billion) profits before tax - had a share of 62% in profits before taxes and 48% in total income," wrote Roshan Kishore & Abhishek Jha. From long commuting time to unsanitary bathrooms and birth of children there are many hurdles for women to work, but, in a family, where the mother in law is working there is a greater chance of the daughter in law working as well. TOI. Mr Modi is already claiming victory in the 2024 general election HT. He has devotees who try to hoodwink us by scrambling statistics. The rest are irrelevant.

Could be a serious bluff.

Analysts are wrong when they think that India-US ties are under severe strain" because "Washington has no intention of weakening India-US ties. It still needs India to counter China in the Indo-Pacific. "India must call America's bluff." "Under Prime Minister Narendra Modi, India as carved out an independent foreign policy that challenges US hegemonic interests." FP. First, despite US sanctions, "India saved roughly $2.7 billion by importing discounted Russian oil in the first nine months of this year," "a total of 69.06 million metric tons of Russian oil, equivalent to 1.85 million barrels per day." Reuters. That's because of US sanctions on Russia. home.treasury.gov. Secondly, "India's leadership of the Global South has diluted Western sanctions on Russia." Why then did Pakistan trounce India by 38 votes to 18, with two abstentions, for "the post of vice-chair of the United Nations, Educational, Scientific and Cultural Organisation (UNESCO) executive board," which suggests that "these Global South countries largely sided with Pakistan, since they formed the majority of board members." The Print. And third, "Rapid indigenisation of military hardware that in the long term will greatly reduce New Delhi's dependence on US weaponry." Indo-Pacific means naval contest. The Indian Navy has ordered a second aircraft carrier at a cost of Rs 400 billion, which will be similar to "INS Vikrant, India's first indigenous aircraft carrier, commissioned in September 2022." These are 'light' 40,000-tonne carriers, whereas the Navy wanted a 'big' 60,000-tonne plus flattop. "In wartime conditions, a small carrier is constrained in its operations, particularly when faced with the adversary's anti-access, anti-denial systems. In the absence, of a catapult system to enable the launch of heavy long-range multi-function aircraft, the ship is forced to operate within the engagement envelope of the adversary's shore-based missile and air defence systems," wrote Abhijit Singh. China is building an 80,000 tonne carrier. Although the India-made Light Combat Aircraft (LCA) Tejas is superior to the Chinese-made JF-17 used by Pakistan, "The LAC Navy was found to have flaws with a weak under fuselage and landing gear, a low thrust-to-weight ratio to take off with a full fuel and weapons payload, and being a single-engine aircraft when the force principally desires a strong twin-engine jet." The Eurasian Times. Perhaps, the US would like China to be occupied in a land war with India across our northern border which will automatically reduce pressure on the Indo-Pacific. The US has many friends. "The United States welcomes the commitments by Australia, the European Union, Japan, and the United Kingdom that they will also take similarly forceful actions to hold Russia accountable - demonstrating the strength of our partnerships." The White House. Who can India count on? Better not to call America's bluff. It could be a serious bluff.

Free phytates.

"One in five girls and about one in six boys in India are married, with the progress made towards ending the practice of child marriage entirely stagnating in recent years, according to a study published in The Lancet Global Health journal. Between 2016 and 2021, the practice of child marriage also became more common in some states and Union territories." DH. The Annual Status of Education Report, 2022, or the ASER 2022 report,..as per which the basic reading comprehension of school students in all classes has fallen to the levels of before 2012. On the other hand, the fundamental mathematics skills have fallen to the levels of the previous year. This fall in learning levels applies to both boys and girls from both government schools and public schools in the majority of states in India." India Today. Early marriage means early pregnancy. So, a combination of poor education levels with increased financial demands leads to poverty. Naturally, "According to the 2023 report on food security and nutrition by five UN agencies, 74.1% of Indians, approximately 1.043 billion people, were unable to afford a healthy diet in 2021. The report also estimated India's proportion of undernourished population at 16.6% during 2020-2022." The Wire. Poor quality of nutrition along with pregnancy results in anemia. "Among healthy human beings, pregnant women and rapidly growing infants are most vulnerable to iron deficiency." "Total iron requirements during pregnancy (excluding blood loss at delivery) average about 1,040 mg." "Iron deficiency is common among pregnant women in industrialized countries." NIH. "The Ministry of Health and Family Welfare, Government of India (GOI), has decided to exclude anemia as an indicator of women's and children's health from the National Family Health Survey, 2023-24," because "the prevalence of anemia among women and children has risen," as "It currently affects 57% of women and 67% of children." DH. "India is planning to extend its free food grains program by five years, Prime Minister Narendra Modi said,...as the government tries to shield consumers from rising prices of cereals ahead of a general election next year." Reuters. "Iron absorption tends to be poor from meals in which whole-grain cereals and legumes predominate." NIH. "A pulse is the edible seed from a legume plant. Pulses include beans, lentils, and peas." Harvard. Although not cheap, pulses, known as dals in India, are the cheapest source of protein because animal proteins are at least twice as expensive. Perhaps, the idea is that if people do not have to pay for basic cereals they can use their earnings to supplement their diets with meat, fruits and vegetables. Problem is that poorly educated people have to engage in manual labor and need enormous amounts of calories. So, cereals with some dal may be all they can afford and these interfere with absorption of nutrients. "Phytates (phytic acid) in whole grains, seeds, legumes, some nuts - can decrease the absorption of iron, zinc, magnesium and calcium. Saponins in legumes, whole grains - can interfere with normal nutrient absorption." Harvard. Free cereals may win elections but will not improve the health of mothers and babies. So, stop testing for anemia.          

Nourishing GDP.

In the next 25 years "we will be at our demographic peak. Between now and then, the proportion of the population of working age will rapidly rise and then fall. This is the phase where we will first go past Germany in the next 18 months and the next 18 months we will go past Japan to become the world's third largest economy." said Sanjeev Sanyal, member of the Economic Advisory Council of the Prime Minister (PM-EAC). As for our GDP growth rate, "Almost all series are based on the base year of 2011-12. We need to update the base year, and when we do it, our growth rate will be higher." "India has the potential to become a $5 trillion economy and the world's third largest, ahead of most predictions," according to Prof Arvind Panagariya. Union Home Minister Amit Shah said that "under the leadership of Modi, India will become a 5 trillion dollar economy by the end of 2025." HT. We sincerely hope India will not be charged under UAPA (PRS) if it fails to obey this order. For the economy to grow we need higher consumer spending. "If you correct for inflation, then consumer spending is rising only at around 3%, and this makes up 60% of GDP." "Consumer spending momentum can be maintained if there is commensurate growth in employment, wages, and in retail loans." "High inflation can adversely affect consumer sentiment, as people cut down spending on discretionary items," wrote Ajit Ranade. By 10 December, "More than a week into the final placements at the Indian Institutes of Technology," "Placement team members at several old IITs told ET that the number of students who have landed job offers till now is down by between 15% and 30% compared with a year earlier," and "For the first time, even some computer science engineering students - the most coveted of the lot - are yet to be placed in over a week." ET. According to Prof Raghuram Rajan, "while certain regions, such as Noida and Gurgaon, mirror a 'first world' economy, others lag behind, comparable to conditions seen in the third-world or sub-Saharan African nations." ET. Not just Noida and Gurgaon, "For years, China's rich have dominated global wealth flows but Dubai now offers one of the earliest signs yet of the potential impact India's new millionaires and affluent families can have overseas." "Dubai brokerage Betterhomes says Indians are the top buyers of real estate in the city." DH. Conversely, "According to the 2023 report on food security and nutrition by five UN agencies, 74.1% of Indians, approximately 1.043 billion people, were unable to afford a healthy diet in 2021. The report also estimated India's proportion of undernourished population at 16.6% during 2020-22." The Wire. India's total population is around 1.43 billion. worldometer. This means about 400 million people in India get a healthy diet. If, even half that number, that is 200 million, have a high disposable income that would be more than the combined populations of Germany (83.3 million), France (65 million) and Britain (68 million). Does it mean India is richer than all of them? Perhaps, the remaining 1.2 billion can frame the GDP figure. Should be nourishing. 

Conspiring democracies.

"Nikhil Gupta, the Indian national accused by the US of being party to a plot to kill Khalistani terrorist Gurpatwant Singh Pannun, has given extraordinary details about how he was accosted by American agents at Prague airport and illegally interrogated for over 3 hours inside a moving black van before being handed over to the Czech authorities." TOI. He was given pork and beef to eat which was torture for a "devout Hindu and vegetarian". Pork and beef are not cheap. "According to court documents, earlier this year, an Indian government employee (CC-1), working together with others, including Gupta, in India and elsewhere, directed a plot to assassinate on US soil an attorney and a political activist who is a US citizen of Indian origin residing in New York city (the Victim)." justice.gov. A report by the US online media outlet The Intercept "claimed that the Indian government issued instructions on a 'crackdown scheme' against certain Sikh entities in western countries." DH. "A report published in The Washington Post...details the clandestine operations of an organisation called the Disinfo Lab, allegedly orchestrated by an officer of the Research and Analysis Wing (R&AW) to target critics of Prime Minister Narendra Modi." DH. The officer has been named as 39-year old Lt Col Dibya Satpathy. Ms Sagorika Sinha finds a vast international conspiracy against Mr Modi, India, and Hindus. "George Soros has no qualms in admitting on a global level his disapproval, and to vowing to take all possible measures to oust Modi, while attacking India's billionaire philanthropist Gautam Adani to hurt the Indian economy." The attack on Disinfo Lab is coordinated by "a sprawling 'nexus' of conspirators funded by Pakistani intelligence, Muslim Brotherhood and Soros". Philanthropist Adani was accused by Hindenburg Research of "brazen stock manipulation and accounting fraud scheme over the course of decades". "More publications will likely follow The Intercept. It's been a trend in American policy. Washington begins, the US media carries it on. So New Delhi should be ready for that." FP. The US government is neck-deep in the conspiracy! "The Narendra Modi-led government is refusing to cooperate with French judges who have requested India's assistance in their ongoing investigation into alleged corruption in the sale of 36 Dassault-built Rafale fighter jets to India in 2016." The Wire. French judges as well. Et tu, Brute? wikipedia. "Union home minister Amit Shah asked what terrorists wanted by India were doing on Canadian land." TOI. "Shiv Sena (UBT) leader Sanjay Raut has been booked on the charge of sedition and other offences for writing an objectionable article against Prime Minister Narendra Modi." DH. Therein lies the misunderstanding. Anyone criticising Dear Leader is labeled a "terrorist". Pesky foreigners do not agree. Freedom of speech is the very First Amendment. Constitution Annotated. It is indeed a vast conspiracy. Of democracy. Incomprehensible.         

A humble central bank.

"Economist Nouriel Roubini said he would short US stocks through the remainder of this year, reaffirming his prediction that a 10% decline is a likely scenario." yahoo. "Roubini, known for his alarm-ringing forecasts that earned him the nickname 'Dr Doom', pointed to a slower global growth and a high inflation environment as the current threats to watch out for." He has added debts to the mix. He had warned that "high and rising private and public debt ratios, which reached 330% of GDP globally in 2022 (420% in advanced economies and over 300% in China), mark a dramatic shift from the pre-2021 period, when debt ratios were high, but debt servicing ratios were low." Hence, central banks "are caught in a 'debt trap', facing not only a dilemma - how to achieve 2% inflation without causing an economic hard landing - but a trilemma: how to achieve price stability while also avoiding a recession and a financial crisis." "The world's major central banks have converged on a 2% target. Now is not the time to question or lose sight of that goal." "Governments may put political pressure on central banks to keep interest rates low or lower than needed." But "Central banks should resolve to adopt a more humble approach," wrote Frenkel, Rajan & Weber. "The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) unanimously opted to maintain the repo rate at 6.5% for the fifth consecutive time, RBI Governor Shaktikanta Das said." ET. Despite its mandate to keep consumer price (CPI) inflation at 4%, with a rare deviation of 2% up or down (ET), the RBI has not once achieved that target since September 2019, the closest being 4.1% in January 2021 (RI). That is very humble, indeed. CPI inflation rose by 5.6% year-on-year in November from 4.9% in October (TOI), even as "India's economy expanded 7.6% in the September quarter from a year earlier as manufacturing posted strong growth and investments gathered pace." ET. The real interest rate is calculated by subtracting inflation from the nominal interest rate. Investopedia. Negative real rates transfer wealth from savers, as their savings lose value, to the rich and the government because they can borrow cheaply. After remaining negative till November 2022, real rates have been positive in 9 out of 12 months to November 2023. Forbes. Given the present repo rate at 6.5%, the real rate will reach 2.5% in the September quarter of 2024 if the RBI's projection of CPI inflation at 4% in the same quarter (Mint) actually comes true. "That is exactly why analysts are expecting RBI to begin cutting interest rates in the second half of the next fiscal," wrote Roshan Kishore. No matter what happens to the rest of the world, India is "in a unique position of being optimistic and positive about its future growth," said Finance Minister Nirmala Sitharaman. It's as if India is a hot air balloon. Hope we don't float away.

Forget PM, go for agencies.

"The Bharatiya Janata Party (BJP)...won big in the Hindi heartland, wresting Rajasthan and Chhatttisgarh from the Congress while comprehensively beating anti-incumbency in Madhya Pradesh." " However, the grand old party achieved significant success in southern India, wresting Telangana from K Chandrashekar Rao's Bharat Rashtra Samiti." HT. "Prime Minister Narendra Modi hailed the BJP's victories in three heartland states as an endorsement of his policies and a sign of a hat-trick win in the 2024 general elections." HT. The next general election in India must be held by May 2024. wikipedia. Mr Modi is already claiming victory. Why such confidence? Because the central government controls the Enforcement Directorate (ED), the Central Bureau of Investigation (CBI) and the Income Tax Department (IT), and the BJP is the central government. "In a bid to disrupt the opposition's election work, the ED, CBI and income tax intensified raids on its leaders, including candidates. They were harassed and put under strain while not a single BJP leader was subjected to similar treatment," wrote P Raman. Then, there are the shady Electoral Bonds. "As per the Association for Democratic Reform, the BJP was the biggest beneficiary of the Electoral Bonds Scheme. It bagged Rs 5,272 crore (Rs 52.72 billion) out of a total of Rs 9,188 crore (Rs 91.88 billion)." The present Lok Sabha consists of some 40 parties, 17 of them with just one seat. wikipedia. The BJP has absolute majority with 290 seats and the Congress is second with just 48 seats. In July, "More than two dozen Indian opposition parties said...that they had formed an alliance called 'INDIA' to challenge Prime Minister Narendra Modi's BJP in parliamentary elections next year." Reuters. The problem is that each regional satrap wants to be the prime minister. Problem for them is that most parties are restricted to just one state - the DMK in Tamil Nadu and the TMC in West Bengal. Only the Congress is recognised all over India as shown by its victory in Telangana, with absolute majority of 64/119 seats while the BJP trailed in with just 8." Zee. Every opposition leader must realise that the most important thing is to get control of the ED and CBI and investigate who was buying Electoral Bonds and smash the crony capitalism. If they want a true federal republic they must merge all taxes and then divide the total between the Centre and the states. In December 2022, "The finance minister informed the share of surcharges and cesses in the Centre's gross revenue has gone up from 8.6% in 2010-11 to 28% in 2021-22." TNIE. This is not shared so the states are being robbed. Just as candidates have to reveal the source of their own income as well as those of spouse and children (ET), they must show the original certificates of degrees they claim to have earned (TOI). The opposition must run a concerted campaign from abroad, preferably the US. An investigation by the Washington Post has disclosed that an organisation called Disinfo Lab has been targeting critics of Mr Modi  and was set up by 39-year old Dibya Satpathy, an officer of the Research and Analysis Wing (RAW). The Hindu. However, two senior officers of the RAW were asked to leave and "RAW was also blocked from replacing its station head in Washington DC." The Print. Now they cannot take out anyone in the US. As they tried with Pannun. Forget prime minister. Get control of the agencies. There's no time.

Gold or dollar? Choose.

"India remains a bright spot in an otherwise grim world economic scenario and internationalization of rupee is the natural step forward, Reserve Bank of India (RBI) Executive Director Radha Shyam Ratho said." "Such a move of internationalization of rupee can deepen our financial markets, allowing domestic firms to transact in their own currency internationally, besides mitigating exchange risks for our exporters and importers, Ratho said." DH. He is joking, we hope. Why? In the US, "In November, the Consumer Price Index (CPI) for all urban consumers increased 0.1 percent, seasonally adjusted, and rose 3.1 percent over the last 12 months, not seasonally adjusted. The index for all items less food and energy (core inflation) increased 0.3 percent in November (SA); up 4.0 percent over the year (NSA)." bls.gov. In India, CPI in October came in at 5.6% in November from 4.9% in October. TOI. Food prices increased by 8.7%. Thus, India's CPI inflation was 2.5% higher than in the US in November. Put another way, the Indian rupee bought 2.5% less than the US dollar, meaning the rupee was 2.5% weaker than the dollar. This is exemplified by consumer expectations in the US and India. "Consumers expect inflation to be at 3.4% a year from now, down from an expectation of 3.6% in October and the lowest reading since April 2021," a New York Federal Reserve Survey showed. Reuters. In India, "Median inflation expectation increased for one year horizon by 20 bps (one basis point is 0.01 percent) to 10.1% in November." One year from now, that is in the third quarter of 2024-25, the RBI predicts CPI inflation at 4.7%. ET. Consumers in the US believe that the Fed is serious about controlling rising prices while Indians have absolutely no trust in the RBI. In fact, most officials of the Federal Reserve were expecting one more rate hike in their September meeting. CNN. If that happens, the US dollar will become stronger against the rupee, making our imports more expensive and pushing inflation rate higher. At present Indians are not allowed to buy dollars so they invest in gold. "On sequential basis, gold imports surged to $7.23 billion (in October), as compared to $4.1 billion in the previous month." "According to data by the World Gold Council, gold demand in India rose 10% to 210.2 tonnes during the third quarter of the current calendar year." CNBC. Perhaps, the RBI does not trust itself. India had 800.78 tonnes of gold reserves in the third (July-September) quarter of 2023. gold.org. Buying gold ornaments is not a rational financial investment because it does not generate any return, bank lockers charge rent, the international price of gold may fall, purity, as shown by hallmarking, is dodgy (Mint), and labor costs are deducted when selling. If the rupee is internationalized Indians will rush to buy dollars, which can be held in a bank account, will pay interest and the dollar will hold its exchange value. We hope that Mr Ratho was indulging in wishful thinking. Or, was he bluffing?   

Rational or irrational?

India's benchmark stock market index the S&P BSE Sensex is at a record 70,020.68 this morning. bseindia. com. On 31 October 2023, "Renowned global investor Mark Mobius has expressed his optimism and ultra-bullishness about India's growth potential, stating that the benchmark Sensex could reach the 1,00,000 milestone in the next five years." ET. Mobius could be embarrassed. The blistering pace at which it is rising, it could hit the milestone before the New Year. "Amid record-breaking run in the Indian stock markets, Securities and Exchange Board of India (SEBI) chairperson Madhabi Puri Bach...said the Indian equities are no longer vulnerable to foreign investments as mutual funds and retail investors have become major players." DH. "She said the asset under management of mutual funds in India has surged to Rs 50 lakh crore (Rs 50 trillion) from just around Rs 8 lakh crore (Rs 8 trillion) 10 years back." Mutual funds also collect money from individuals. Perhaps, Ms Bach should remember this 1996 speech by the then Chair of the US Federal Reserve Alan Greenspan, "But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan in the past decade? And how do we factor that assessment into monetary policy?" Investopedia. To share in the exuberance, "Foreign portfolio investors (FPIs) injected Rs 26,505 crore (Rs 265.05 billion) into the Indian equity markets in the first six trading sessions of this month on expectation of political stability after the BJP stormed to power in three major states and robust economic growth. This came following a net investment of Rs 9,000 crore (Rs 90 billion) in October." ET. Also, "Globally, the US Federal Reserve signalled potential rate cuts starting from the first quarter of next year, indicating a shift away from the high-interest rate environment." Has it? "US job growth accelerated in November while the unemployment rate fell to 3.7%, signs of underlying labor market strength that suggested financial market expectations of an interest rate cut early next year were probably immature." "Financial markets lowered their bets of a rate cut in March." Reuters. "Policymakers from fully half of the Group of 10 jurisdictions of most traded currencies are scheduled to meet in the coming days, and interest rates for 60% of the world economy will be set in a whirlwind 60-hour window." As for the US and Europe, "After starting the year with renewed vigor to aggressively ramp up borrowing costs, they're ending 2023 with more hesitation - setting the scene for what could become a prolonged standoff with investors." Mint. India's market capitalization is now over $4 trillion (BS), while the GDP in current prices was around $3.4 trillion in 2022 (World Bank). So, should we celebrate that Indians have staked their shirts on stocks? Will it have a happy ending?