Disparate but together.

Congress leader Rahul Gandhi's speech at Cambridge University, Khalistani preacher Amritpal Singh playing hide and seek with Punjab Police, the BBC documentary on Prime Minister Narendra Modi, caste discrimination ban in California and the accusation of fraud by the Adani Group in a report by US-based Hindenburg, have all taken place in 2023. "Put these seemingly disparate developments together," and "All of India's social cleavages - caste, region, religion - are manifesting themselves outside Indian territory," wrote Prashant Jha. This is because of the size of the Indian diaspora, information technology, financial flows and, as India's economy grows, it attracts the attention of both States and non-State actors. Jha does not mention one of the main reasons why national issues are being debated in foreign countries. The reason is fear. Because any criticism of the government, however legitimate, is met with extreme prejudice. "According to the India Press Freedom Report 2021 released by Rights and Risks Analysis Group (RRAG) in February 2022, at least six journalists were killed, and 108 journalists and 13 media houses were targeted in the country in 2021 alone." The Quint. Since Adityanath (of the BJP) assumed office as Chief Minister of Uttar Pradesh in 2017, 48 journalists have been physically assaulted in the state and 66 have been booked or arrested, a report published by the Committee Against Assault on Journalists has found." The Wire. "Concerned by a 'PR problem', the Narendra Modi government is reported to be looking to spend up to $120 million (over Rs 9.86 billion) on new spyware sold by firms less exposed than Israel's NSO Group which sells Pegasus, says a report by the Financial Times." The Wire. Pegasus was used to spy on opposition leaders, journalists, activists and others but a committee appointed by the Supreme Court was helpless because the government refused to cooperate with it. wikipedia. Nearly four years after the revocation of Article 370, which gave a special status to Jammu and Kashmir, wikipedia, "This abnormal normalcy continues to extract a heavy price from the inhabitants of Jammu and Kashmir," wrote former chief minister of J&K Mehbooba Mufti. "Investigative agencies have been given the task of hounding every section of J&K society - be it journalists, businessmen, public employees, contractors, politicians or activists." "India experienced significant human rights issues in 2022, including unlawful and arbitrary killings, freedom of press and violence targeting religious and ethnic minorities, a US report claimed." DH.    "Fresh posters questioning the educational qualifications of Prime Minister Narendra Modi surfaced in the national capital on Thursday (27 March)." ET. "It comes a day after the Aam Aadmi Party released 'Modi Hatao Desh Bachao' (remove Modi, save the nation) posters in 11 languages in the national capital." Too many will be looking for justice if Modi loses power. He has to stay in power any which way. But, at what cost?  

Bragging rights?

The banking crisis in the US is "the outcome of two effects that themselves originate from the profligate fiscal spending during Covid," wrote Krishnamurthy Subramanian, Executive Director, IMF. Because, "Unlike India's Covid stimulus, which was carefully targeted at the poor and vulnerable sections of society, the US made no attempt to target its Covid stimulus." This resulted in, first, an increase in deposits of $5 trillion in banks, of which $1.3 trillion was invested in securities, and, second, increased spending resulted in inflation. Strangely, although the Indian government did not resort to fiscal stimulus, retail inflation rose to 7.4% in December 2019 and has been above 4% every single month ever since. rateinflation.com. High and rising prices mean that, "Consumer demand is expected to stay low over the coming quarters, as inflation continues to rise, creating a further slowdown phase for the startups in the country, states a new research by firm Redseer Strategy Consultants." ET. And so, "India's GDP growth for the quarter ended December 2022 moderated to 4.4 percent, as per government data." Even more strangely, "The US Federal Reserve has reiterated that a US slowdown has not led to higher unemployment. It is at a low of 3.4% while the natural rate is considered 4.6%. Yet, GDP growth is down, at 2.1% in 2022. Contrast this to India, where GDP growth is expected to be 7%, the world's highest. Yet, joblessness is at around 7.5%, having varied from 6.4% to 8.3% on a monthly basis during the past year," wrote Madan Sabnavis. "The other challenge is that our labor participation rate has been coming down, which is a serious issue. It is down from around 46% in 2016-17 to 40% in 2021-22." Consequently, "the mean household income for the lowest earning households fell sharply to an annual Rs 65,000 in 2020-21 from Rs 1.37 lakh ( Rs 137,000) five years earlier. In contrast, the richest of those surveyed saw theirs rise to Rs 7.31 lakh (Rs 731,000) from Rs 5.26 lakh." Mint. "This means we must expand job prospects, which painfully languish, and also do what it takes to cool inflation, which is an unseen tax imposed on the poor." "Financial services company JP Morgan has predicted that the United States will enter a recession later this year despite improving signs for inflation and the global economy." Zee. This will lead to risk aversion and a "flight to safety", wrote Rajeswari Sengupta. "There will be a surge in demand for 'safe' assets such as gold, while currencies of emerging economies like the Indian rupee will come under pressure as foreign investors flee these markets." A recession in the US will also mean weaker exports for India. "Recession in the US and Europe mean that India's slowdown has further to run. Uncertainty is likely to further delay private capital expenditure. Consumer discretionary demand is likely to moderate," wrote Sonal Varma. Perhaps, Subramanian shouldn't brag. It's too soon.

Confidence in rescue.

"The last few decades of easy money created markets so large - nearing five times larger than the world economy - and so deeply intertwined, that the failure of even a midsize bank risks global contagion," wrote Ruchir Sharma. "More than low interest rates, however, the easy money era was shaped by an increasingly automatic state reflex to rescue everyone from pain," so that "The rescues have led to a massive mis-allocation of capital and a surge in the number of zombie firms," as a result of which, "In the US, total factor productivity growth fell to just 0.5% after 2008, down from around 2% between 1870 and the early 1970s." Sharma is writing about the bank rescue underway in the US. About 3 weeks back Silicon Valley Bank collapsed into receivership after panicked depositors started withdrawing their money leading to a run on the bank. ET. Two crypto banks, Silvergate and Signature Bank shut down, quickly followed by, "as well as vowing to protect depositors' cash, the Fed announced an emergency lending program to give cash-squeezed banks easier terms on short-term loans." ET.  The reason for the recent crisis is that, "The US economy has had low inflation since the early 1980s. In fact, retail inflation between February 2012 and December 2020 had never crossed 3%," wrote Vivek Kaul. In fact, inflation first rose above the US Federal Reserve target of 2% in March 2021, and kept on rising to a high of 9.1% in June 2022. usinflationcalculator.com. At first, everyone believed that the rise in inflation would be transient but, when it kept on rising, the Fed increased its Funds rate by 25 basis points in March 2022, followed by 50 basis points in May and then by 75 basis points four times before beginning to slow down its hikes. Forbes. It increased its interest rate by 25 basis points earlier this month to 4.75%-5%, despite the collapse of banks. BBC. The problem was that, "As of December 2020, commercial banks in the US had around $3 trillion invested in treasury bonds and agency securities," wrote Kaul. "Now interest rates and bond prices are inversely proportional. So, if interest rates go up bond prices fall." "As of December 2022, the unrealized losses of these investments were at $620 billion." As a result, "gold prices have been on fire. Between 9 March and 24 March, they rose by 8.2% to Rs 59,545 per 10 grams." A crisis had been predicted by Mohamed A El-Erian in October 2022. "The faster the rate hike cycle. the greater the risk of financial accidents with nasty spillovers." He felt "The weakest links are in leverage." But, it was investments in long-dated US Treasuries, considered to be the safest, with short-term deposits that felled the banks. And yet, "Consumer confidence inched up in March after two straight monthly declines, even as persistent inflation, bank collapses and anxiety over a possible recession weighed on American households." ET. Americans have confidence in their authorities. Do Indians?

Opaque shadows.

"Corruption primarily involves selfish exercise of powers, which operates in shadows, aided by opaque systems. Transparency is key to breaking this shadowy nexus and forms the basis for effective vigilance mechanism," wrote Secretary, Central Vigilance Commission P Daniel (cvc.gov.in). "Corruption directly vitiates the relationship of the citizen with the state." Now is the time for Mr Daniel to get his teeth into the goings on within the Adani Group, the shadowy Mr Vinod Adani, who is and is not a part of the group, and the opaque systems aiding and abetting Mr Gautam Adani's dizzying rise to the position of the second richest man in the world by earning no less than Rs 1.6 billion every single day for over one year (ET). Perhaps, Mr Daniel can start with this sentence by Yogendra Yadav: "Modani has entered India's political lexicon. Rahul Gandhi's latest tweet adopts this expression, already in vogue in his party's social media campaign, 'Hum Adani ke Hain Kaun', and in parliamentary chorus by the opposition demanding a JPC (Joint Parliamentary Committee) probe in the Gautam Adani imbroglio." The Print. "Our research, which included downloading and cataloguing the entire Mauritius corporate registry, has uncovered that Vinod Adani, through several associates, manages a vast labyrinth of offshore shell entities," said the Hindenburg report. "We have identified entities that are also surreptitiously controlled by Vinod Adani in Cyprus, the UAE, Singapore, and several Caribbean islands." "Adani's defense: Vinod Adani, brother to the chairman, is not a related party to the group, and there are no disclosable conflicts related to this web of opaque transactions." wrote Hindenburg. Suddenly, the Adani Group discovered Vinod Adani. "Vinod Adani, the little known elder brother of Adani group founder Gautam Adani, is part of the promoter group, the conglomerate has said." Mint. Hindenburg has shed some light on opaque systems, now it is up to our investigators. "The Indian government has now told parliament that it has no data on offshore accounts held by Indians." The Wire. How opaque can it get? Apparently, there is no definition of 'shell companies', so the government is totally hamstrung. But, "In an Independence Day speech on Aug. 15, Modi claimed the move (demonetisation) had unearthed 300,000 shell companies. Following his speech, the ministry of corporate affairs struck off names of 217,239 companies for failing to comply with regulatory requirements." ET. Without definition? In September 2022, "Union Finance Minister Nirmala Sitharaman...found fault with the Telangana government for not displaying picture of Prime Minister Narendra Modi at the fair price shops where rice is distributed to the people below poverty line free of cost." HT. Could it be because people prefer to display pictures of gods? Opaque systems, shadowy characters lurking offshore and official flimflam. Definitely worth looking into.      

Iran and Russia allowed, not Indians.

"India will be looking to push the rupee trade agenda in the G20 meetings it is organising as part of its ongoing presidency of the forum, a senior bureaucrat said." ET. "Commerce Secretary Sunil Barthwal said rupee trade will be of help, especially with those countries whose currencies are under pressure." That is what the European Union suggested "During the third round of India-eu FTA (free trade agreement) talks held between 28 November and 9 December, the EU proposed a chapter on capital movements, payments and transfers; however, the Indian side sought views on its purpose and scope, given that it would exceed India's World Trade Organization commitments." pressreader. We are asking for countries to trade in rupees but recoil in horror if they want to convert it to other currencies. Indian citizens within India cannot lend or borrow more than Rs 20,000 in cash and cannot withdraw more than Rs 200,000 of their own money from banks. DNA. Spending more than Rs 100,000 on a credit card can trigger an investigation. Indians cannot carry more than Rs 25,000 or $3,000 in cash when traveling abroad. TOI. Strangely, those traveling to Iraq and Syria can carry up to $5,000 per visit, and, even more strangely, those traveling to "Islamic Republic of Iran, Russian Federation and other Republics of Commonwealth of Independent States can draw entire foreign exchange (up-to USD 250,000) in the form of foreign currency notes or coins." The US has imposed sanctions on both Iran and Russia, and USD stands for US dollars. In 2017, economist Ruth Judson estimated that about $900 billion or 60% of US currency notes and 70% of all $100 bills are held overseas. bullionstar.com. "Economists are lowering their forecasts for India's current account shortfall." ET. "Barclays Plc expects the gap in current account - the broadest measure of trade in goods and services - to be 1.9% of gross domestic product in the year starting April 1, down from 2.3% it had estimated earlier. Citigroup Inc slashed its forecast even further to 1.4% of GDP from 2.2% previously, reflecting a steady drop in goods shipments and strength in services exports." "Services exports touched nearly $30 billion in both January and February, an increase of about 40% on-year." "India's foreign exchange reserves rose $12.8 billion to $572.8 billion as on March 17,2023, Reserve Bank of India (RBI) data showed." ET. "India's foreign currency assets (FCA), the biggest component of the forex reserves, saw a rise of $10.49 billion to $505.34 billion." However, "India's engineering exports to 17 out of 25 key markets such as the US and China declined in the month of February 2023 primarily driven by the global economic slowdown and low demand for metals and metal products." ET. We, Indians, cannot withdraw Rs 200,000 or spend Rs 100,000 of our own money. Yet we want others to accept rupees. Can anyone explain?     

Lawn and Toshakhana.

"Are women still buying lawn the way they used to about five years ago?" asked Pakistani lady Maliha Rehman. "There were women who would have buckets full of water in their cars so that the minute they bought their lawn suits, they could shrink the fabric and rush it off to the tailor." Sadly, "they are buying less than they used to." Because, the economy is so bad. "This will be perhaps the toughest Ramazan that most of our young citizenry has experienced in their entire lives: food prices skyrocketing due to increased demand, energy prices at unbearable levels, and new taxes carving out a large slice from household incomes." editorial in Dawn. "Consider the news: short-term inflation had surged to an eye-watering 46.7pc year-over-year in the week that ended on March 22, with onion, wheat, gas, petrol and diesel, tea, rice and egg prices almost double or more of what they were last year." Then there is Imran Khan. In April 2022, "Pakistan's Prime Minister Imran Khan has been ousted from power after losing a no-confidence vote in his leadership." BBC. "No prime minister has ever completed a full five-year parliamentary tenure in Pakistan, and Imran Khan looked as though he could be the first." But, no. In October 2022, he "won six of eight national assembly seats he stood for in a weekend by-election...a vote he has called a referendum on his popularity. NDTV. Since then Khan has been demanding early general elections. Following his by-election victory, "Ousted Pakistani prime minister Imran Khan launched a 'long march'...in Islamabad to demand early elections, mounting pressure on the Shehbaz Sharif government, which is already in crisis." HT. A couple of weeks back, a non-bailable arrest warrant was issued against Khan for allegedly threatening Khatoon Judge Zeba Chaudhry. India Today. Following this, "Protests broke out in several cities across Pakistan...after Imran Khan asked his supporters to 'come out' for real freedom even if he is killed or arrested." ET. The arrest warrant was dropped after Khan attended court. NDTV. The economy is in crisis and the government has been negotiating with the International Monetary Fund (IMF) for an urgently needed loan. But, "Days have turned into weeks and weeks into months, yet Finance Minister Ishaq Dar continues to insist on the imminency of a deal despite having nothing to show for six months of efforts." Dawn. As if all this chaos wasn't enough, Pakistan's Toshakhana has been robbed by all previous prime ministers. Toshakhana is the government department which is supposed to store gifts received by ministers and the president in their official capacity. wikipedia. Two weeks back, "The Pakistan's government has made public the record of gifts retained by important public office holders - presidents, prime ministers, politicians, bureaucrats, retired generals, judges and journalists - from foreign dignitaries in the past 21 years." TOI. Including Imran Khan. What a neighbor to have. Bad luck.

Revenge toilets.

"The United Kingdom government has opposed a decision of the local authorities in New Delhi to construct a public toilet near the British High Commissioner's residence while mentioning it is a security issue. "A group of Khalistani supporters attacked the Indian High Commission in London on Sunday (19 March) night taking down the tricolour and replacing it with Khalistani flags." India TV. In response, "India summoned the British deputy high commissioner and demanded an explanation over the complete 'absence of security' when Khalistani sympathisers attacked the High Commission." "The extra barricades and security set-up deployed outside the British High Commission as well as the residence of Alex Ellis, the UK's high commissioner to India were removed." TOI. In December 2013, "Indian police removed concrete security barriers outside the US Embassy in New Delhi...in apparent retaliation for the treatment of an Indian diplomat who was strip-searched after her arrest in New York" the week before. Reuters. It worked. She was released. Following the attack in London, "The United States...strongly condemns the attack on the Indian consulate in San Francisco by a group of separatist Sikhs, terming it absolutely unacceptable." NDTV. Will the government build a toilet next to the US Ambassador's residence? "The Honorary Consulate of India in Brisbane was forced to close down on Wednesday, March 17, due to safety concerns after Khalistani supporters organised an unauthorised gathering and blocked the entry of the office." CNBC. Another toilet? Several Hindu temples in Australia have been vandalised by Khalistani supporters and anti-Hindu graffiti sprayed on the walls. NDTV. Another toilet, but where? Australian cricketer Usman Khwaja "was initially refused a visa by the Indian government and couldn't travel with the Aussie cricket team on February 1." The Wire. "The fact that PM Modi was planning a triumphal chariot show may have helped Usman Khwaja get his visa after a delay." While asking other countries to catch culprits who are attacking Indian diplomatic premises and Hindu temples, authorities in India are unable to catch Amritpal Singh accused of plotting terrorist attacks inside India, despite a massive manhunt. TOI. Several people have been arrested for helping him give the police a runaround. "The Punjab and Haryana high court...criticised the Punjab government for its failure to arrest Waris Punjab De chief Amritpal Singh asking, how the pro-Khalistani radical preacher managed to escape despite the administration having 80,000 police personnel at its disposal." HT. So, what now? Will the government construct toilets next to Khalistani supporters? That's what Swachh Bharat Abhiyan or Clean India Mission (wikipedia) was meant to do. That may raise a stink.    

It's not due to global.

India's trade-to-GDP-ratio (TGR), "as an indicator of the openness of the economy, has been rising since 1990-91, peaking in a period from 2011 to 2014 at around 54-56%," wrote V Anantha Nageswaran & Anuradha Guru. However, "The combined value of exports and imports of goods and services for FY23 will likely exceed $1.6 trillion. With the likely size of India's nominal GDP at the end of FY23 around $3.4 trillion, India's overall TGR is likely to be around 47%." But, this is only because oil prices have fallen, reducing the cost of imports. With energy prices falling dramatically our exports should have risen. Not so. Between FY04 and FY12, "The annual growth rate of goods exports was 21%, and that of services was 23.2%. Since FY14, growth in merchandise exports has fallen to 11-14%. Mr Modi was elected for his first term in 2014 and for his second term in 2019. wikipedia. Does that explain the fall in trade? Of course not. It was because of weakness in the global economy following the Great Recession (Britannica). If the global economy was so weak why were China's exports rising continuously to $3.553 trillion (more than India's GDP) in 2021? macrotrends. China's exports to the US have been rising since 2008 with a dip in 2019 and 2020, presumably because of Covid, to a high of $536.754 billion in 2022. census.gov. "Latest numbers released by the commerce department estimated that in February, goods exports fell 8.9% to $33.9 billion, the steepest decline since October, while imports were 8.2% lower at $51.3 billion. TOI. "The government is optimistic, however, optimistic due to buoyant services exports, which jumped almost 37% to $36.9 billion in February, while imports rose 12% to $14.6 billion." New investment announcements as a share of GDP has fallen from a high of 56.8% in 2006-07 to 5.0% on 2020-21, rising to 9.2% in 2021-22, wrote Roshan Kishore. "The situation now, as seen in sharp fall in share of new investment announcements, is the opposite of 'irrational exuberance'. Simply speaking, the private sector has a pessimistic view about the economy's future and thus is unwilling to commit to new investments (much of the investment has been coming from the government)." "The needle on a dial measuring the so-called animal spirits was unchanged from January when it moved left after picking up speed for the last month of 2022, signaling weakening in domestic demand is becoming a concern.Eight high frequency indicators tracked by Bloomberg showed moderating credit growth, weak tax revenues and a rising unemployment rate. ET. Perhaps, weakness of exports, consumption and the economy is because, "There has been a rise of 133 percent in collection of major cess and surcharges levied by the Central government on various products during the five year period between 2017-18 and 2022-23, as it went up from Rs 2,18,552 crore (Rs 2.186 trillion) in 2017-18 to Rs 5,10,549 crore (Rs 5.105 trillion) in 2022-23 according to Finance Ministry data." Huge tax increase causes high prices, hitting consumers and making exports too expensive. Why blame others when the disease is here? The cure is obvious. No one dares mention it.  

The fear of eternal life.

"A lower court in India sentenced opposition leader Rahul Gandhi on Thursday (yesterday) to two years in jail on charges of defamation for a 2019 speech in which he referred to thieves having the surname Modi." Reuters. Very timely. The next general election must be held before 16 June 2024. wikipedia. Of course, Mr Modi has been targeting, not just Rahul, but his mother Sonia Gandhi as well for many years. abp live. In 2009, Sujata Anandan wrote in the Hindustan Times that she heard "Narendra Modi uttering the foulest of abuses for Sonia Gandhi. The more mentionable of these was his description of Sonia as a 'Jersey Cow' and Rahul Gandhi as her 'hybrid' bachhada (calf)." How civilised is that? Mr Modi's party the BJP has been disrupting the present session of the parliament, "demanding an apology from (Rahul) Gandhi for his recent remarks on democracy being under threat in India". TIE. For the BJP "democracy is reduced to merely the electoral process. Once that is mastered, then democracy is about 'doing good for the people' with the elected leadership deciding what is good for the people. In other words, a 'man-of-action' elected with a sizeable majority, built up as a larger-than-life figure, must be allowed to do his job without let or hindrance," wrote Bharat Bhushan. "With the folding of the Indian state into the persona of Modi as someone akin to a Chakravarty (King), questioning the state of Indian democracy is seen as lese-majeste, an offense against his dignity being an offense against the State itself." "But why did it take two full months for Narendra Modi to react in his storm-trooping Modi way to throttle public discussion at the highest legitimate forum of the land, the parliament?" asked Jawhar Sircar. Because, "Modi and finance minister Nirmala Sitharman required a workable parliament to present their last full budget and hold, at least, minimal discussion." Now, "Modi must ensure his Teflon lasts and the narrative just has to be steered away from the Modi-Adani nexus. An excellent deflector was found in a statement made somewhere far away, and the Goebbelsian gang claims that it hurts the nation's image." The Congress reminded us of the many times Modi has insulted the nation and the citizens of India on trips abroad. In South Korea he said, "There was a time when Indians would say, 'I wonder what we did in our previous life to be punished with a life in India now. Is this a country? Is this a government? Are these a people? Let's leave'." The Wire. "Over 16 lakh (1.6 million) Indians renounced their Indian citizenship since 2011 including 2,25,620 last year, the highest during the period, while the lowest of 80,256 was in 2020, according to government data." ET. Just last year, after 8 years of Modi's reign, "A 32-year-old man from Gandhinagar district (in Gujarat) fell to his death...while trying to scale the 'Trump Wall' at the US-Mexico border." ET. "Yadav and his family were among 40 people, mainly from north Gujarat, who were supposed to cross from Tijuana in Mexico to San Diego in US." Yadav had his son in his arms, who fortunately escaped with minor injuries. Another Gujarati family of four froze to death in February 2022 trying to cross on foot from Canada into the US. NBC. Why are people dying to escape from Modi's home state of Gujarat when Modi declared "Amrit Kaal" in 2021. BS. 'Amrit' is the 'nectar for eternal life' and 'kaal' is 'age'. Who wants eternal life in a fascist country? Terrifying.    

Trickle up, not down.

"Mumbai is home to 66 billionaires followed by New Delhi with 39 billionaires and Bengaluru with 21 billionaires, as per 2023 Hurun Global Rich List. India continues to be the third largest billionaire producing nation in the world with 187 billionaires residing in India and 16 new additions." TN. We are talking US dollars here. "In 2022, so far 8,000 high-networth individuals (HNI) have migrated out of India." BI on 28 November 2022. However, there is nothing to worry about because, "The report expects the India HNI population to rise by 80% by 2031, which will make it one of the world's fastest-growing wealth markets during this period." With billionaires and millionaires sprouting like Mung beans (wikipedia), lots of dollars must be fluttering down to middle and poorer classes, who number in the hundreds of millions. "Trickle- down economics and its policies employ the theory that tax breaks and benefits for corporations and the wealthy will trickle down and eventually benefit everyone. Investopedia. No such luck. "In a major decision, the government...decided to provide free ration (food grains) to 81.35 crore (813.5 million) poor people under the National Food Security Act (NFSA) for one year," TOI on 23 December 2022. Perhaps, the middle class will grab the dollars first and then some will trickle down to the poor. No sign of that either. "The number of middle-income taxpayers in India has declined dramatically after 2018-19, falling 17% in the subsequent two years, from 49.8 million to 41.1 million. In the same period, the number of high taxpayers rose 15%." Mint. "The pandemic made things worse, the income share of taxpayers in the lowest tax bracket (up to Rs 5 lakh, Rs 500,000) was falling even before the pandemic, from 44% in 2013-14 to 33% in 2018-19." "This defies the usual pattern of emergence from poverty, by which we would expect the under Rs 5 lakh group to swell." Mint. "All products and services must sell in increasing volumes over the years, not flag off once the privileged are sated. This means we must expand job prospects, which painfully languish, and also do what it takes to cool inflation, which is an unseen tax imposed on the poor." Controlling inflation is the duty of the RBI. "Flagging concerns around sticky retail inflation, the Reserve Bank of India (RBI)...in its monthly bulletin said that the consumer price inflation in India remains high and the core inflation is continuing to defy the softening of input costs." ET. Instead of telling us what even the most illiterate know the RBI should be doing what it's paid to do. It has been selling dollars to strengthen the rupee which, it hopes, will control inflation by making imports cheaper. "India's foreign exchange reserves saw a dip of $2.397 billion, dragging the position to a three-month low of $560 billion as on March 10, 2023." ET. Our foreign exchange reserves had risen to a high of $642.09 billion in October 2021. Mint. A strong rupee helps billionaires to accumulate dollars, high inflation kills the poor. It's not trickle down. It's trickle up.

It's in the eyes of the beholder.

"A 58 million increase in jobs between calendar year 2019 and calendar year 2022. Jobs for women increased by 28 million or by 25% over 2019 level; jobs for men increased by 30 million,...or 8.4%," wrote Surjit S Bhalla & Tirthatanmoy Das. These figures are from the Periodic Labour Force Survey (PLFS) Annual Report (July 2021-June 2022) by the National Sample Survey Office (NSSO), released by the Ministry of Statistics and Programme Implementation (MOSPI). The survey reports its results in percentages so Bhalla & Das have probably calculated the absolute numbers they provide. The report provides three ratios: the Labor Force Participation Rate (LFPR), which is the percentage of people working or looking for work, the Worker Population Ratio (WPR), which is the percentage actually working, and the Unemployment Rate (UR). On each of these parameters there is a difference of about 1-2% between 2019-20 and 2021-22. For example, the LFPR for rural women has gone up from 33.0 to 36.6% and WPR from 32.2 to 35.8%, but the LFPR for urban women went up from 23.2 to 23.8% and WPR from 21.3 to 21.9% (less than 1%). The increase in low paying agricultural jobs is not good. "The agricultural sector witnessed a return of 36 million workers between 2017-18 and 2021-22. So pronounced was it that the absolute count of workers in agriculture stood higher in 2021-22 than in 2011-12, a decade ago," wrote Prof Himanshu. If a total of 58 million Indians have found paid employment, consumer spending should be shooting skywards. "Online and offline sales during the Hindu festival period starting in the last week of September and lasting until early November are estimated to cross $27 billion, almost double the amount in the same pre-Covid period in 2019, and nearly 25% higher than last year, according to industry estimates." ET. But, "Consumer perception of the general economic condition continues to be pessimistic as per the Reserve Bank of India's Consumer Confidence Survey of January 2023, where more than 50% of consumers reported it to have worsened." ET. Hence consumer demand is expected to stay low over the coming quarters." And, "Listed manufacturing companies recorded lower sales growth of 10.6 percent in December quarter of the current fiscal compared to 20.9 percent in the previous quarter, according to data released by the RBI. The moderation in manufacturing companies was broad-based across the industries, except for cement." ET. Not much evidence of festival boost. "Indians purchased an estimated 2.6 billion pairs of footwear in 2019-20," "But in the ongoing financial year (2022-23), sales of low-priced open footwear have stuttered. Relaxo Footwears, a leading mass market brand, reported an 8% drop in sales volumes and revenues in the third quarter (October-December)," wrote Sayantan Bera. So, why are Bhalla & Das so excited? Because, according to NSSO data, between 2004-05 and 2011-12, employment increased by just 13.3 million which is a compound annual growth rate of 0.4%. This was before Mr Modi became prime minister for the first time in 2019, wikipedia. Mr Modi the Messiah, Mr Bhalla the acolyte. Amen.

What's in a name.

Congress Leader Rahul Gandhi criticised the government of Prime Minister Narendra Modi in a speech at Cambridge University in the UK. HT. "In my view, Mr Narendra Modi is destroying the architecture of India. I am not bothered about the two-three good things he is doing if he is blowing our country to smithereens. And I think that's what he is doing," he said. He has every right to object if he thinks the prime minister is wrong because it affects us all, but we cannot speak out for fear of being arrested under false charges. One of the agencies, "The Enforcement Directorate (ED) has said that only 2.98 percent of its overall ECIRs or complaints have been filed against serving or former MPs and MLAs even as its conviction rate under the anti-money laundering law is at a high of 96 percent." ET. That only a minuscule number of cases have been filed against politicians is not the point, what is important is how many, if any, members of the BJP have been charged. If not, why not? As for the claim of 96% conviction rate, "Since 2005, the ED, one of the premier investigating agencies in India handling economic offences, has registered 5,906 cases. Of them, the agency has managed to dispose only of 25 cases, a mere 0.42% of the total cases." The Wire. This, surely, has to be a classic example of 'terminological inexactitude' (wikipedia). The BJP instantly mounted a ferocious attack on Rahul Gandhi, TOI, with members competing to show their loyalty to their Messiah Mr Modi. Union Minister Hardeep Singh Puri called Mr Gandhi an "ass", The Print. Why is it alright to abuse Gandhi in vulgar language? Then there is the fairy tale of Mr Gautam Adani, once the second richest man in the world with a net worth of $156.3 billion, according to the Forbes list. HT. "Gautam Adani's elder brother, Vinod Adani, has been described by the media as 'an elusive figure'," said the Hindenburg report. "We have identified 38 Mauritius shell entities controlled by Vinod Adani or close associates. We have identified entities that are surreptitiously controlled by Vinod Adani in Cyprus, the UAE, Singapore, and several Caribbean Islands." A very serious charge of money laundering, to which an Adani group spokesperson said, "Vinod Adani does not hold any managerial position in any Adani listed entities or their subsidiaries and has no role in their day-to-day affairs." TOI. But, having categorically denied any association, "Vinod Adani, the elder brother of Adani group founder Gautam Adani, is part of the Adani promoter group, the group's flagship Adani Enterprises said." TIE. The ED should be galloping to investigate Adani's web of companies, seizing their accounts, arresting various officials and questioning them for hours, as they are doing to Delhi Deputy Chief Minister Manish Sisodia of the AAP party. ET. Mr Sisodia is apparently charged for an Excise policy scam in which alcohol was being sold at cheap rates in Delhi. How selling something cheaper can be a scam escapes us, but is clear to ED. Hence, "Modani has entered India's political lexicon," wrote Yogendra Yadav. "Clubbing Modi and Adani in the same word is a brilliant rhetorical device to establish the proximity that both of them evidently enjoy." The Messiah may have feet of clay, after all. That's why the obscene cacophony by sycophants.     

Banks once again.

The US Federal Reserve's Federal Open Market Committee (FOMC) is to meet tomorrow and day after to decide on whether to increase its Funds Rate and by how much. "Even with turmoil in the banking industry and uncertainty ahead, the Federal Reserve likely will approve a quarter-percentage-point interest rate increase..., according to market pricing and many Wall Street experts." CNBC. Great uncertainty was created by Fed chair Jerome Powell in his testimony to Congress earlier this month, when he said, "The latest economic data have come in stronger than expected," and so, "If the totality of data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes." CNN. Then the Silicon Valley Bank failed because it had parked excess funds in long dated US Treasuries which dropped in value as interest rates have risen, causing mark to market losses, and resulting in a run on the bank. TOI. Two days later, the New York-based Signature bank collapsed and was taken over by the Federal Deposit Insurance Corporation (FDIC) which had rescued SVB as well. Reuters. On 16 March, the biggest US banks, including JP Morgan Chase, Citigroup, Bank of America, Wells Fargo, Goldman Sachs and Morgan Stanley, put together a $30 billion rescue package for the First Republic Bank. ET. Yesterday, "Troubled bank Credit Suisse has been rescued by its Swiss rival UBS in a government-backed deal." BBC. "Credit Suisse shareholders were deprived of a vote and will receive one share of UBS for every 22.48 shares they own, valuing the bank at $3.15bn." "Soon after the announcement late on Sunday (yesterday), the US Federal Reserve, European Central Bank and other major central banks came out with statements to reassure markets that have been walloped by a banking crisis that started with the collapse of two regional US banks earlier this month." Reuters. Despite all this mayhem, "Policymakers at the European Central Bank (ECB) announced on Thursday (16 March) that they would go through with a planned 0.5% interest rate hike as the institution juggles both inflation and financial uncertainty amid turmoil that has gripped financial markets." DW. This is because prices increased at 8.5% in February in the 20-member euro zone countries. "Headline inflation stood as high as 10.6% in October, but reached a revised 8.6% in January." CNBC. The ECB has got itself into this mess because it had a negative interest rate for 8 years and raised it to 0% from minus 0.5% only in July 2022. DW. There was the ridiculous situation of Denmark's Jyske Bank "offering home buyers 10-year mortgages at an interest rate of -0.5%. That means borrowers over a decade will pay back less than the amount borrowed, not including one-time fees." Washington Post. That is because Denmark became the first country to impose negative interest rates, which meant savers had to pay for keeping money in banks. Reuters. This was to recover from the Great Recession caused by the collapse of Lehman Brothers due to the US 2007-08 subprime crisis (Investopedia). Seems that the treatment is creating the same problem. Too much of a good thing.

Dangers of increasing wealth.

"Inflation concerns do not warrant any additional interest rate increases, Bibek Debroy, chairperson of the Economic Advisory Council to the Prime Minister (EAC-PM), said, adding that businesses are contending with high interest rates due to the inefficiencies of the banking sector, resulting in a wide gap between borrowing and deposit rates." Mint. Twin balance sheet problem of banks have been sorted, "Non-performing assets are not what they used to be," "there has been empowerment in rural areas", which should increase consumption, and government has increased capital spending "in a big way". In January, Debroy predicted that "India's GDP will be close to USD 20 trillion by 2047 and per capita income may reach USD 10,000 (at current value of USD)." ET. "With prices on a steady rise across the world over the past few years, there may be a need to rethink long-term inflation targets, Monetary Policy Committee (MPC) member Ashima Goyal said at a CII event." ET. "Goyal also said that the distribution of weights in the inflation basket needs to be revised, joining others seeking urgent changes to the way the nation collects and uses data." Globally, interest rates remained low and stable for 25 years, wrote Surjit S Bhalla. "Until a series of supply shocks starting with Covid in 2020 and continuing with the Russian misadventure in Ukraine." Higher interest rates will not increase supplies. Hence, the "US Fed needs to answer as to how and why its policy of confronting supply shocks is any different than the failed RBI policy of many decades of raising rates as a response to droughts and consequent food inflation." Sounds very reasonable. "Food and beverages constitute 45.9% of the CPI (consumer price index) basket and within that, the consumer food price index (CFPI) constitutes 39.06%. This is in contrast to many advanced economies where food weights are much lower, for instance, UK (9.3%), US (13.2%), Canada (15.94%) and Germany (8.5%)," noted a report by Indian Council for Research on International Economic Relations." TOI. But then, Indians spend more on food. "The average Indian household will spend 35.3 percent of total household budget on food in 2025, increasing by 2.1 percentage points from 33.2 percent in 2005, Fitch Solutions said." The Print. Whereas, "In 2021, US consumers spent an average of 10.3 percent of their disposable income on food." ers.usda.gov. India's population is already over 1.4 billion and is expected to peak at 1.7 billion in 2064. Pew Research. And, "Food supply in India and across the globe will go down by at least 6 percent by 2050 as water crisis and heat stress caused by climate change will hit productivity, the Global Commission on Economics of Water (GCEW) has warned." DH. India will be a developed country in per capita income measured by purchasing power parity (PPP) by 2047, predicted Bhalla. TOI. A larger population with higher per capita income and falling production, what is Bhalla's predicted rate of inflation? At present RBI's mandate is to target CPI inflation rate of 4%, +/- 2%, that is 2-6%. ET. Debroy wants RBI to freeze. Prof Goyal recommends a higher target. How much? 10%, 20%, 100%? Pakistan's inflation rate has hit 45.64%. ANI. Do Debroy, Bhalla and Goyal want to emulate Pakistan? Or, perhaps, Argentina where it zoomed to 102.5% in February. They are eminent economists. All.  

Unfriendly incentives.

"There is no skilled talent available to handle chip manufacturing plants in India, and there will be a requirement of 10,000-13,000 human resources to meet industry requirements by 2027, a Meity (Ministry of Electronics and Information Technology) official said..., citing an internal report." ET. In April 2022, "Prime Minister Narendra Modi...urged industry to make India a global hub for semiconductors, asserting that the government had 'put the odds in your favor as far as possible through supportive policy environment'." BS. "Multinational companies and long term foreign investors like private equity giant Blackstone have their sights on India," wrote Anjani Trivedi. And yet, "For most firms, big projects that are tendered out end up relying on overseas entities because many of the products and supplies aren't available domestically or in some cases, don't meet global standards." "For new companies entering now, the runway is far longer. Despite the so-called production-linked incentives, the threshold for sales and upfront capital is too high for medium-sized businesses to actually take advantage of subsidies." Earlier this month, "Taiwanese tech giant Foxconn confirmed...that its chairman had visited India, but denied it had 'entered into any binding, definitive agreements' after reports saying it was planning new investments in the country." ET. "China's decision to open its market to the foreign investment has helped the country to become a global superpower, said renowned author and China expert Michael Pillsbury." BT. "For instance, China built infrastructure for companies that wanted to sell smartphones in their country, made them tax-free for 10 years, added Pillsbury. China unleashed this strategy in almost every sector and it succeeded. In comparison to China, India is not very friendly to foreign investment." India is unfriendly not just for foreign companies, but for domestic ones as well. "Regulatory Technology (Regtech) solutions company Teamlease Regtech...released its report titled 'Simplifying Compliance Management for The Logistics and Supply Chain Industry'." ET. It revealed that, "Companies operating in a single state with just one warehouse and a corporate office are required to comply with 648 regulations." And, "In a staggering revelation, around 91% of surveyed logistics and supply-chain companies agreed that they have paid fines and penalties in the last twelve-month period." "Paper in the form of files, circulars, government orders are at the heart of India's bureaucratic tradition. Its roots trace back to the colonial origins of the modern Indian state," wrote Yamini Aiyar. Naturally," They command, they mandate, they threaten, they order officers to get the job done." They, in turn, treat us hapless citizens, the same way. And so, "India's government will not permit social media platforms to host any information that it identifies as false, according to a draft proposal of the country's IT rules." Reuters. Which will give them sole rights say whatever. Even pants on fire stuff. 

Vostro means yours, not ours.

In January, the Governor of the Reserve Bank of India (RBI), Shaktikanta Das said, "Crypto is a form of gambling without any underlying value and is nothing but a 100 percent speculation world." And so "crypto should be banned, given its no underlying value in the market". Investors may disagree. They may see it as a store of wealth given that high inflation and negative real interest rate in India mean that the rupee is sure to drop in value against other major currencies. "US-led international sanctions on Russia have begun to erode the dollar's decades-old dominance of international oil trade as most deals with India - Russia's top outlet for seaborne crude - have been settled in other currencies." Reuters. Are we paying in rupees? Not really, as "Indian customers have paid for most Russian oil in non-dollar currencies, including United Arab Emirates dirham and more recently the Russian rouble, multiple oil trading and banking sources said." "In what is clearly an indication of India's rising prominence on the global stage, the Indian Rupee (INR) has now been accepted by 18 countries from across the globe for transactions." TN. "According to the details shared by the government, the full list of countries that accept payments in INR include - Botswana, Fiji, Germany, Guyana, Israel, Kenya, Malaysia, Mauritius, Myanmar, New Zealand, Oman, Russia, Seychelles, Sri Lanka, Singapore, Tanzania, Uganda and the United Kingdom." Does this mean that the rupee is now a free and international currency? Not really. Capital account convertibility "is the ease with which a country's currency can be converted into gold or another currency through global exchanges." Investopedia. In October 2021, RBI Deputy Governor T Rabi Sankar said that, "India is on the verge of achieving its long standing target of capital account convertibility." NDTV. The fear is that, "When we embrace full convertibility, as canvassed by the RBI deputy governor, anyone can do pretty much what she pleases," wrote S Murlidharan. "The worry could be that Indian residents might dump the INR in favor of the greenback." So, how are countries like the United Kingdom and Germany accepting payments in Indian rupees? And why only 18 countries if the rupee is free to trade? Actually, "Several banks, including HDFC Bank and UCO Bank, have opened as many as 30 special vostro (meaning yours) accounts as of date to facilitate overseas trade in the rupee, a top government official said." BS. To simplify the jargon, vostro accounts are special arrangements between Indian banks and banks in these 18 countries in which Indian companies pay for imports in INR which are then converted to the receiving country's currency at market rates and India exporters receive payment in INR through that account. TOI. In effect, it bypasses the dollar, thus reducing the effect of sanctions, preserves foreign currency reserves and saves on costs of currency exchanges. As for gambling, there are two casinos in Sikkim and ten in Goa. wikipedia. And there are no laws against online gambling in India. India Legal. Perhaps, Governor Das is not worried about Indians losing money through gambling. Perhaps, he is worried about Indians converting their rupees into dollars through cryptocurrencies. Which will reduce his control of the exchange rate. Why dissemble?    

Women in the lead.

"Amid a spate of attacks on Hindu temples in Australia, Prime Minister Narendra Modi strongly raised the issue with his visiting counterpart Anthony Albanese saying that such attacks are disturbing and had naturally caused anxiety in India." TOI. "Albanese assured him that the safety of the Indian community was a special priority for his government." Wonder if Albanese asked Mr Modi about late visa for one particular Australian cricket player. In February, "Australian opener Usman Khwaja was granted the visa late on Wednesday to travel to India for the test series after the Pakistan-born cricketer was forced to miss the morning flight due to delay in the issuance of travel documents." HT. Pretty bland. But not in Australia. "Cricket columnist Malcolm Conn of the Sydney Morning Herald has brought out the rich irony of Usman Khawaja's brilliant century on day one of the fourth Test match...which started after the well-choreographed chariot ride around the stadium by PM Narendra Modi, accompanied by his Australian counterpart." The Wire. For those, who have never seen a chariot in the age of the motor car, these pictures from the movie 'Ben Hur' will clarify. google. It's not just a Pakistan-born foreigner, however, India has lots of people who do not practice, or believe in, Hinduism. But, as citizens, they have the right to vote. And, elections bring power. So, "Narendra Modi sat poker-faced as the choir sang Hallelujah, a popular Christian hymn extolling Jesus as the 'King of kings and Lord of lords' during the swearing-in ceremony of the new NDPP-BJP coalition government in Kohima, Nagaland." DH. Modi is already our emperor. Far away in the US, "Seattle has become the first US city to ban discrimination based on caste after a vote by the city council." BBC. Because of Councilwoman Kahama Sawant. "The caste system in India dates back over 3,000 years and divides Hindu society into rigid hierarchical groups." The media in India will not dare to report that, "Washington: After a recent screening of a BBC documentary, India: The Modi Question, panellists urged the US media to hold Indian Prime Minister Narendra Modi accountable for the 2002 massacre in Gujarat." Pakistan newspaper Dawn. "Aakashi Bhatt, daughter of jailed whistleblower (Sanjiv) Bhatt, told the participants that many of India's institutions, including the media and judiciary, 'are subverted from top to bottom' and 'used by the regime to do its dirty work'." "A video has gone viral on social media where several posters, claiming that women and minorities are treated like slaves in India among other hateful things, were seen outside the United Nations building in Switzerland's Geneva." News18. "One of the posters read , 'Indian Christians face state-sponsored terrorism'." Not just Christians. "A Muslim man in Bihar's Siwan district died...at a hospital after a mob brutally thrashed him on the suspicion that he was carrying beef." NDTV. "In an interview where she reveals the disquieting state of journalism in Kashmir, and the disturbing treatment of Kashmiri journalists by the government, Anuradha Bhasin, the executive editor of the Kashmir Times, refuted minster of Information and Broadcasting Anurag Thakur's criticism of her recent essay in the New York Times," wrote Karan Thapar. Modi has immunity as the head of state, said a US spokesperson. TN. That does not apply to his underlings. If western countries start denying them visas for their taxpayer-funded jaunts overseas, the rats might start fleeing the ship. That's when the dung will hit the fan. Holy Cow.        

Law of percentages.

"India's retail inflation declined marginally to 6.44 percent year-on-year in February as against 6.52 percent in January, data released by the Ministry of Statistics and Programme Implementation (MoSPI) showed." ET. "The high inflation level can be attributed to rising food prices, which account for nearly 40 percent of the Consumer Price Index (CPI) basket." "India's wholesale price index (WPI)-based inflation eased to 3.85 percent in February on an annual basis from 4.73 percent in January, stated provisional data from the Commerce Ministry." ET. The WPI inflation was at 13.11% in February 2022, TIE, so the drop this year is largely due to base effect. "In its February meeting, the Monetary Policy Committee (MPC) of the RBI projected annual inflation for 2022-23 at 6.5%," but "The Centre for Monitoring Indian Economy (CMIE) that cumulative annual inflation between April 2022 to February 2023 stands at 6.97% right now," PressReader. Also, core inflation, which excludes food and fuel, has been around 6% for a very long time and came in at 6.22% in February. "A year-on-year comparison shows that the inflation adjusted profits (net) of non-financial companies shrank by 22.9% in the December 2022 quarter," wrote Pavitra Kanagaraj. Companies with sales growth of less than Rs 250 million did not see any growth in wages and wage growth fell even in large companies with sales above Rs 5 billion. "The number of middle-income taxpayers in India has declined dramatically after 2018-19, falling 17% in the subsequent two years, from 49.8 million to 41.1 million. In the same period, the number of high-income taxpayers rose 15%, underscoring how the pandemic has accentuated inequities." Mint. Naturally, "India's gross domestic product (GDP) for the October-December quarter moderated to 4.4 percent, the data from MoSPI showed." ET. As households struggle to pay for their expenses, net financial savings have declined to a three-decade low of 4% of GDP in the first half of FY23 from 7.3% of GDP in FY22 and 12.0% in FY 21. The decline of financial savings was broad-based, said a report. ET. Even so, "Companies in sectors such as consumer durables, paints, jewelry, quick service restaurants (QSRs), apparel and footwear have seen a slowdown post the festive season last quarter." wrote Jethmalani, Pengonda & Sampath. "Even as people ate less pizzas and fried chicken, they bought less clothes and lipsticks, too." One reason why the rich got richer while the poor and middle-class suffered is because central banks kept interest rates low which allowed the rich to accumulate assets by borrowing. The Adani Group had a gross debt of Rs 2.26 trillion or $27.3 billion as of September. TOI. More than the nominal GDP of 115 countries in the world, as estimated by the IMF. wikipedia. Lack of jobs for the unskilled labor has forced many to return to low-paying agricultural jobs. "The agricultural sector witnessed a return of 36 million workers between 2017-18 and 2021-22. So pronounced was it that the absolute count of workers in agriculture stood higher in 2021-22 than in 2011-12, a decade ago," wrote Prof Himanshu. So huge has been the rise in the income of the rich that, "India's per capita income has doubled to Rs 1,72,000 in nominal terms since the Narendra Modi-led government came to power in 2014-15, according to the National Statistical Office (NSO)." TOI. The average is getting richer. Obviously, some are more equal.

War games. Not funny.

"The 2023 Budget will see China's defence spending during the year rise to 1.55 trillion yuan or roughly  $225 billion. This is 7.2 percent higher than the 2022 budget." ET. "However,... the US Department of Defense noted that China's real military spending might now be around 1.1 to 2 times higher than stated in its official budget." "In 2023, the PLA is expected to commission more advanced warplanes including J-20 stealth fighter jets and J-16 multirole fighter jets," and "conduct sea trial for the country's third aircraft carrier, the electromagnetic catapults-equipped Fujian." India's defence budget is expected to be $72.6 billion in 2023-24. "When Saudi Arabia and Iran buried the hatchet in Beijing..., it was a game changing moment both for a Middle East shaped by their decades-old rivalry, and for China's growing influence in the oil-rich region." CNN. "In retrospect, Beijing  has been poised to broker the conflict-ridden Middle East's latest diplomatic breakthrough for years, simultaneously underscoring the US' diminishing regional influence." The US is being seen as a bully and a coward by the world. "A former US Marine badly injured in Afghanistan has described the withdrawal in 2021 as a 'catastrophe' in testimony before Congress." BBC. On 26 August 2021, two suicide bombers killed 13 US soldiers and 170 Afghan civilians at Kabul airport. "Sgt Vargas-Andrews testified that he and another US Marine had received intelligence about the bombing before it occurred, and that he had spotted the suspect in the crowd. He said he had alerted his supervisors and requested permission to act but had never received it." The dollar's dominance in international trade may diminish. "After a coalition opposed to the war imposed an oil price cap on Russia on Dec 5, Indian customers have paid for most Russian oil in non-dollar currencies, including the United Arab Emirates dirham and more recently in Russian rouble, multiple oil trading and banking sources said." However, it is not one way for China. "With a combination of militant attacks and economic instability forcing China to limit its activities in Pakistan, the United States (US) is trying to step into the vacuum with a big financial package." Firstpost. The Tehrik-e-Taliban Pakistan (TTP) and Baloch freedom fighters have attacked Chinese nationals working on the China-Pakistan Economic Corridor project in Balochistan and Khyber Pakhtunkhwa. To counter China's influence in the Indo-Pacific, "The leaders of US, UK and Australia have unveiled new details of their plan to create a fleet of next generation nuclear-powered submarines. Under the Aukus agreement, Australia will first receive at least three nuclear-powered submarines from the US." BBC. That may neutralize the threat of the new aircraft carrier. China and the US are playing games with lethal weapons. One mistake and war could break out. Behaving like criminal gangs is dangerous. For everyone.         

Decoupled already.

"The RBI (Reserve Bank of India) should 'pause and think' if it can continue mirroring the US Federal Reserve 'stroke-by-stroke' in terms of rate hikes or decouple from the American central bank, SBI (State Bank of India) group chief economic adviser Soumya Kanti Ghosh said." TOI. "Ghosh said he does not see an end to the rate hike cycle of the Fed in the short term, which makes a case for the RBI to contemplate about decoupling." In fact, "The Federal Reserve will likely need to raise interest rates more than expected in response to recent strong data and is prepared to move in larger steps if the 'totality' of incoming information suggests tougher measures are needed to control inflation, Fed Chair Jerome Powell told lawmakers." Reuters. "The three-month London interbank offered rate (Libor) for dollars, a major global lending benchmark, surpassed 5% for the first time in more than 15 years on 5 March." ET. The surge "has been driven by expectations for Fed policy tightening. Traders not only expect a higher terminal rate, but the Fed to stay at that level for a longer period than previously expected." "India Inc, which is already facing margin pressures, could be hurt if (US) interest rate stays higher, says UBS." ET. "According to the UBS, markets are more than fully pricing in three further Fed rate hikes to 5.5%, from the current level of 4.50% to 4.75%." "The dollar is at its highest level since 2000, having appreciated 22 percent against the yen, 13 percent against the Euro and 6 percent against emerging market currencies since the start of this year," wrote Gita Gopinath, Pierre-Olivier Gourinchas on October 14, 2022. One US dollar bought Rs 74.5133 on 1 January 2022, exchangerates. org.uk. The dollar is trading at Rs 81.91 this morning. xe.com. That is a fall of just over 10%. "On average, the estimated pass-through of a 10 percent dollar appreciation into inflation is 1 percent." Hence the more the rupee falls against the dollar in response to higher US interest rates the higher will be the inflation rate in India. "Indians are feeling the pinch of rocketing prices, passed on by companies across industries to save their margins from high input costs. As the low-to-mid income generating population largely feels the heat, consumption is seeing a sharp downturn, and household savings have slumped to a three-decade low." ET. That will hurt growth of the economy. "Specifically, foreign exchange intervention should not substitute for warranted adjustment to macroeconomic policies." That is IMF-speak for not trying to control inflation by trying to strengthen local currency by selling dollars, but by raising interest rates. "India's foreign exchange reserves rose for the first time in five weeks and stood at $562.40 billion as of the week ended March 3." ET. It had reached a record high of $642.453 billion in the week ended September 3, 2021. BS. So, RBI is selling dollars to support the rupee. Why is Ghosh asking RBI not to raise interest rate, against IMF advice? Because as bond prices fall and yields rise the SBI makes mark-to-market (MTM) losses on its investment in government and other bonds. Reuters. SBI is a government bank. So. the RBI and the SBI care more for the government than the nation or its people. This is India.

Too much sugar?

"Global banking and financial stocks took a massive hit...after US-based commercial lender SVB Financial Group was shuttered by US regulators, following an aggressive decline in its stock that led to a market loss of over $80 billion. With this, Silicon Valley Bank became the largest US bank to fail since the 2008 financial crisis." "The Federal Reserve has been raising interest rates from their record-low levels since last year in its bid to fight inflation." ET. "As higher interest rates cause the market for initial public offerings to shut down for many startups and made private fundraising more costly, some Silicon Valley clients started pulling money out to meet their liquidity needs." "SVB's collapse into Federal Deposit Insurance Corp (FDIC) came suddenly..., following a frenetic 44 hours in which its long-established customer base of tech startups yanked deposits." ET. "The bank's total deposits exploded higher over the prior twelve months, to about $124 billion from $62 billion, according to data compiled by Bloomberg." "Still, the FDIC only insures bank deposits of up to $250,000 - and SVB's clients had much more. That meant a large amount of money stashed at SVB was uninsured: more than 93% of domestic deposits as of Dec 31, according to a regulatory filing." Panicked depositors tried to get their money out, creating a run on the bank, which occurs when a large number of customers try to withdraw their money, increasing the probability of default and prompting more depositors to withdraw their deposits. Investopedia. "QE (quantitative easing) involves central banks printing money and pumping it into the financial system by buying bonds," wrote Vivek Kaul. "QT (quantitative tightening) is the opposite," in which "Between June and August 2022, the US Fed plans to suck out $47.5 billion per month. Post that the plan is to suck out $95 billion per month." "Commercial banks, which typically hold the reserves supplied by central banks during QE, finance their own assets with short-term demand deposits that represent potent claims on their liquidity in tough times," wrote Profs Raghuram Rajan and Viral Acharya. "In sum, during periods of QE, the financial sector generates substantial potential claims on liquidity, eating up much of the issued reserves. The quantity of spare liquidity is thus much smaller than that of issued reserves, which can become a big problem in the event of a shock, such as a government-induced scare." The scare came as, "Federal Reserve Chair Jerome Powell... reaffirmed his message of higher and potentially faster interest rate hikes." Reuters. "The faster the rate hike cycle, the greater the risk of financial accidents with nasty spillovers. After all, the financial system did what it was incentivized to do," wrote Mohamed A El-Erian. Is our Reserve Bank (RBI) concerned at all? Too much sugar kills.