What will be the third?

"India's Gross Domestic Product (GDP) surged to a four-quarter high of 7.8 percent on an annual basis in the June quarter of FY24, in-line with expectations, data released by the National Statistical Office (NSO) showed." ET. "The growth can be attributed to central and state governments opening up their wallets for capex, stronger consumption demand and higher activities in the services sector." "While there can be no argument that the Indian economy is doing reasonably well, there is merit in arguments made by some economists that today's GDP numbers will overstate the economic momentum due to some methodological issues," wrote Roshan Kishore. First, there is the base effect. In the financial year 2020-21, "India's GDP fell by 23.9% in April-June period quarter, official data released by the Union ministry of statistics and programme implementation (Mospi) showed." HT. "India's economy had grown at 3.1% in the January-March quarter (2020), its slowest pace in at least eight years." Second, there is the manufacturing GVA. "At the heart of the issue is the practice of using single - the same index to deflate input and output prices to smoothen out the impact of inflation." And third, "A large component of India's services GVA is deflated using Wholesale Price Index (WPI) which does not have any services component in it." Fiction. "What is clear, however, is that the hoped-for pick-up in growth due to higher government expenditure and improvement in the services sector - especially service exports - has not materialised. On a sequential basis, Q1 GDP (real terms, 2011-12 base) is substantially lower (7.4%) than in Q4 (January-March 2023) of the previous year," wrote Mythili Bhusnurmath. "Remember, growth may be overstated, both on account of the sticky base effect and the single deflation methodology favored by the NSO to calculate real GDP." Because of rising food prices, "The government has stepped up sales of subsidised vegetables, particularly onions and tomatoes, through its distribution network, while releasing stocks of wheat and sugar into the market to cool prices. The measures could cumulatively cost the government over $12 billion, the government sources said." Reuters. "Food subsidies are estimated to cost the government Rs 1.97 trillion ($23.83 billion) in 2023-24 and an expansion of the free food scheme could raise the bill." India has banned exports of non-basmati rice and levied 20% duty on exports of parboiled rice. "More than three billion people worldwide rely on rice as a staple food and India contributed to about 40% of global rice exports." CNN. This will particularly affect the poorer nations of the Global South. Also, in addition to El Nino this year, "There is another problem boy, another weather phenomenon called, MJO, or Madden Julian Oscillation," whose unfavorable phase "is known to reduce convection in the Bay of Bengal and the Arabian Sea". ET. Trouble, they say, comes in threes. We know two, what will be the third one? Jerome Powell?
 

Bus conductor commits suicide.

"An Uttar Pradesh State Road Transport Corporation (UPSRTC) bus conductor who lost his job over allegedly halting a Delhi-bound bus to allow two Muslim passengers to offer namaz in Bareilly nearly three months back was found dead on the railway tracks near his native village in Mainpuri district in the wee hours of Monday. The body of Mohit Yadav (32), was found in a mutilated condition, it is learnt." TIE. Mohit's cousin, Tinku said that the bus was stopped because some other passengers wanted to relieve themselves and the two Muslims offered namaz during the toilet stop. So, a 32-year old Hindu man, with a family to feed, is forced to take is own life because of Muslim hatred. Ironic, isn't it? Demolition of private houses in Nuh district in Haryana following communal disturbances a few days back. "One district. 11 towns and hamlets. Five days, 1,208 buildings and other structures - overwhelmingly Muslim-owned. 37 sites. 72.1 acres." HT. Almost every building was owned by Muslims. The number "would likely have been higher if not for the Punjab & Haryana high court's intervention on August 7. The court asked the state if it was indulging in 'ethnic cleansing' given the one-sidedness of the demolitions before staying them." "In a video shared and watched by millions of people in India, a man is seen attacking a person who is wearing a black burka and holding a child. He then forcibly removes the burka to reveal a man." BBC. It was watched 29 million times before it was deleted. "But it did not show real events. It was a dramatisation - a scripted performance with amateur actors." In 2021, "dozens of Muslim women in India found they have been put up for sale online." BBC. "The app pretended to offer users the chance to buy a 'Sulli' - a derogatory slang term used by right-wing Hindu trolls for Muslim women. There was no real sale of any kind - the purpose of the app was just to degrade and humiliate." In 2022, a fake website created on GitHub posted photos of 100 Muslim women for sale. "It was called 'Bulli Bai', a phrase that combines vulgar slang for the word 'penis' in southern India with a word common in northern India meaning 'maid', according to Mohammed Zubair." CNN. Not just Muslims. "A Dalit man attacked by six persons in Maharashtra's Ahmednagar, has told reporters that he and three others were urinated on and told to lick shoes on which their assailants had spat." NDTV. He was hung upside down and the three children with him were also beaten up. In January, "A 10-year-old Dalit boy was allegedly killed by a group of upper caste men over a property dispute in Badaun district (UP)." His body was found hanging from a tree. TOI. What does a little boy know about properties and what kind of perverts would commit such a crime? In August 2022. a nine-year-old Dalit boy was beaten to death by his teacher at a school in Rajasthan because he had touched the pot containing drinking water meant for upper castes. Government ministers keep harping on delivering "Amrit Kaal", meaning an epoch of divine nectar, for citizens of India. DH. If this is their idea of divinity, we want no part of it. Not in my name. Please.     

Chandrayaan and Kohinoor.

"In a surprising turn of events, the recent success of India's Chandrayaan-3 mission to the Moon's south pole has sparked a heated debate over foreign aid between the UK and India." ET. It seems that Britain has provided 2.3 billion pounds in foreign aid to India between 2016 and 2021 and will provide a further 57 million pounds in the coming year. Journalist Sophie Corcoran and news presenter Patrick Christys hinted that India should repay the money. That provoked a ferocious reaction from the army of nitwits who argued that Britain should return the Kohinoor diamond and the estimated $45 trillion they looted from India during colonial conquest. That totally misses the point. The point is: Why are we taking financial aid from a country poorer than us? "Seventy-five years after it attained freedom at midnight, India now has an economy larger than that of its erstwhile colonial master. India has now overtaken the UK to emerge as the fifth-largest economy in the world and is set to become the third largest by 2029, reports said." TOI. This is just the beginning. India's economy is set to zoom straight up like Chandrayaan-3 which has successfully landed its rover on the moon (BBC) and has set off this furore. "Reserve Bank of India (RBI) deputy governor Michael Patra has said India will match Germany's GDP (just more than $4 trillion as of 2021) and become the fourth largest economy by 2025-26 and by 2027, India will overtake Japan (approximately $5 trillion GDP) to become the third-largest economy." TN. Perhaps, every Indian will then receive the Rs 15 lakhs (Rs 1.5 million) promised by Prime Minister Narendra Modi in 2014. NDTV. By that time the value of Rs 1.5 million will have become half because of rocketing inflation, but, still, something is better than nothing. Unless it's all jumla, of course. "Nearly 36% Indians in the 15-34 age group believe unemployment is the biggest problem in the country, a recent survey by Lokniti-CSDS has found." The Wire. "When compared to a similar survey conducted in 2016, the proportion of Indians who identify unemployment as the biggest problem increased by 18 percentage points while those who believe price rise is the primary concern increased by 7 percentage points, the report said." According to the "income data from Periodic Labour Force Survey (PLFS) 2019-20 showed that a monthly salary of Rs 25,000 (roughly $300) is already amongst the top 10 percent of total incomes earned." TOI. According to a report by rating agency Crisil in August, food forms 53% of the consumption basket of low-income rural and 51% of low-income urban population. Food constitutes 38% of consumption in the upper 20% income bracket in rural and 25% in urban India, wrote Vivek Kaul. That is why we still accept aid from Britain. Rest is all jumla. 

Time to be really different.

"The inevitable has happened. On August 24, the Pakistani rupee (PKR) fell below 300 to a US dollar in the interbank market." Dawn. "On August 24, the rupee was seen trading in the band of 315-317 in the open market." "The rupee has shed 32.5 percent of its value against the dollar in less than eight months of this calendar year." If the currency falls in value it will buy less than before and prices will go up. So, "average prices of wheat flour (ata) shot up 131.3pc, followed by tea (95.2pc)...sugar (74.7pc) and chicken (58.6pc." By contrast the Indian rupee is trading at 82.60 to one dollar. xe.com. Pakistan's foreign exchange reserves fell by $32 million to $8.154 billion in the week ended 27 July 2023. Tribune. Also," India's forex reserves declined to near two-month low and was the biggest weekly fall in over six months for the week ending August 18," as it "dipped by $7.28 billion to $594.90 billion." ET. In October 2021, it reached its highest level of $645 billion. "Typically, the RBI, from time to time, intervenes in the market through liquidity management, including through selling of dollars, with a view to preventing a steep depreciation of the rupee." Despite RBI's efforts the Indian rupee (INR) has dropped from 58.3956 to one dollar in May 2014, when this government was first elected, to near 83 to the dollar today. Exchange Rates. While the PKR has dropped 32.5% this year the INR has dropped 41.38% in 9 years. Just a matter of downward velocity. "India's foreign exchange reserves stood at $5.8 billion at the start of 1991," "It had a foreign debt of over $70 billion and a fiscal deficit of over 10 percent." Dawn. Given a free hand by then Prime Minister PV Narasimha Rao, Finance Minister Manmohan Singh liberalised the economy and "By the end of 1991, India was able to repurchase, as per a clause in the leasing/sale agreement, all the gold bullion it had shipped out as foreign investment started to flow in." Pakistan should follow India's example, and fast. Physicist Pervez Hoodbhoy is incensed with checkposts in Balochistan and Gilgit-Baltistan in Pakistan. "Security is a fake excuse for the ubiquitous khaki presence." "Unnecessary checkpoints suggest a ruler mentality," he wrote. Exactly. We Indians share in that mentality. The Delhi Police put up metal barricades at whim causing traffic jams and enormous hardship for citizens. Attacks on religious minorities are common in Pakistan, including on Christians and Hindus. Dawn. A video on social media shows schoolchildren slapping a 7-year old Muslim boy, their classmate, after being asked to do so by their teacher in UP in India. CNN. India and Pakistan were born from a bloody partition of one nation (The Quint), because of the differences between Hindus and Muslims, but, even after 76 years, similarities persist. We can't tell Pakistan what to do but we Indians should become different. Really different. And fast.

Fat cats and fatter cat.

"US economic growth, still racing at a potentially inflationary pace as other key parts of the world slow, could pose global risks if it forces Federal Reserve officials to raise interest rates higher than currently expected." Reuters. Between March and December 2022, the Fed raised its Funds rate by 4.25%, or 425 basis points, and has raised it by another 1%, or 100 basis points, since February this year. Forbes. The impact of the Fed's aggressive rate hikes last year was muted by largely synchronized rate hikes by other central banks but, "Now Brazil, Chile and China have begun cutting interest rates, with others expected to follow," so any substantial hikes by the Fed will cause problems for other central banks as the dollar becomes stronger against their currencies. In the US, "The overnight interest rate at 5.25%-5.50% now stands at its highest level in 22 years, prompting the European Central Bank to follow suit with its 9th consecutive rate hikes, reaching levels not seen since 2001." ET. As a result, "India finds itself at a critical point as its interest rate differential with the US has notably narrowed." As the dollar becomes stronger against the rupee it will make imports costlier and add to consumer inflation. "The rupee closed at a record closing low of 83.1475 to the dollar on Thursday (17 August)." ET. "India, an import-dependent country, could feel the heat of a falling Rupee in an inflationary environment as it stands to further impact the spending decisions of households." Why is the Reserve Bank of India (RBI) reluctant to raise interest rates in tandem with the Fed, even if by smaller amounts? Because the RBI wants to reduce the borrowing cost of the government as it borrows from the market to finance its fiscal deficit. The Monetary Policy Committee (MPC) of the RBI kept its repo rate unchanged at 6.5% for the third time in a row in its August meeting. ET. However, the market isn't impressed. The yields on two year government bonds, or gilts, in India was 7.006 on 27 August compared to 4.937 on 2-year US Treasuries, while the yields on 10-year bonds in India was 7.096 compared to 4.007 in the US. So the US government borrows at a rate lower than the interest rate set by the Fed while the Indian government has to pay a rate higher than that set by the RBI. The reason is that the Fed is resolute in its determination to bring inflation down to its target level of 2% while the RBI uses the excuse of growth to do nothing. Something has definitely grown. "In absolute terms, net profits of listed corporates in FY22 stood at Rs 9.5 trillion, against Rs 5.6 trillion in FY21, a jump of more than 69%," wrote Vivek Kaul. This is because, "Primarily, the overall expenditure went up by 21.7%, at a rate lower than the overall growth in sales." What caused the cut in expenditure? "The biggest cut in expenditure was on interest expenses on debt." Which was because of the RBI. So, money was transferred from poor savers to super rich fat cats. Which is shown by the soaring sales of luxury cars in India. ET. The RBI may be happy creating fat cats in India but it should remember that the US Fed is a fatter cat than it is. Much fatter.     

A tough balancing act.

In July 2022, "India is likely to tread cautiously on the expansion of BRICS as it apprehends that China may try to use the process of admitting new members into the five-nation bloc to widen its ambit of geopolitical influence. Though Russia has thrown its weight behind China and supported the move, India is reluctant to be seen as an active participant in the bid by the two to project the bloc as an alternative to G20." DH. "India does not want to disturb the strategic balance in its ties with Russia on the one hand and with the US and other Western nations on the other." In July 2023, "India and Brazil are pushing back against a Chinese attempt aimed at swiftly expanding the BRICS group of emerging markets, with intention of bolstering its political influence and countering the US, officials with knowledge of the matter said." Firstpost. "When Brazil, Russia, India, China and South Africa get together for their annual summit in Johannesburg next month (August), a top issue for discussion will be whether to expand the club. Emerging economies might be better off if it disbands." Reuters. "The fault line between India and China, which fought a small war in the Himalayas in 2020, is one reason the BRICS club has done so little. India sees the Peoples' Republic as its most dangerous threat." A group of non-aligned countries would be more beneficial. So what happened at the summit last week? "The BRICS bloc of developing nations agreed on Thursday (24 August) to admit Saudi Arabia, Iran, Ethiopia, Egypt, Argentina and the United Arab Emirates in a move aimed at accelerating its push to reshuffle a world order it sees as outdated." Reuters. And, "BRICS leaders left the door open to future enlargement as dozens more countries voiced interest in joining a grouping they hope can level the global playing field." Why would nations want to join a bloc which is practically of little use? Maybe because they are fed up of being terrorised by a group of white nations, plus Japan, with a history of colonial conquest and slavery - the G7. The G7 is a gang comprised of Canada, France, Germany, the UK, Japan, Italy and the US, with the European Union as a 'non-enumerated member'. wikipedia. In 2020, the G7 accounted for over half the global net wealth (at over $200 trillion), and 30-43% of global GDP. They use their economic strength to bully any nation not willing to kowtow to their diktats by levying sanctions. In a malicious act of spite, the US pressured Russia not to supply cryogenic engines to India which held back our peaceful satellite research by two decades. Will the BRICS be able to unshackle the world from the stranglehold of the G7? Not as long as China is the dominant member. Because China has its own ambitions of replacing the US as the world's bully. India needs the US to keep China down. But, not say so. Tough.  

Friedman and Keynes.

"During the Great Depression, as people spent less, businesses saw a drop in revenue, leading to people being fired and prices being cut. An increase in unemployment led to a further cut in spending," wrote Vivek Kaul. Milton Friedman pointed out that "Between 1929 and 1933, more than 7,500 banks went bust," and so, "if the (US) Fed had printed and pumped money into the banking system, enough confidence would have been created among the depositors and the depression could have been avoided." "Between 1985 and 2009, the retail inflation in the US averaged 3.1% (simple average) per year." Central bankers believed they had beaten inflation but still feared deflation. That is why central banks in the West cut interest rates to near 0% and print money at any sign of financial trouble. "The great focus on deflation is the major reason why we live in a boom-and-bust world." However, the inflation rate in the US jumped from 2.6% in February 2021 to 4.2% in March. It climbed steadily thereafter to reach a high of 9.1% in June 2022. US Inflation Calculator. The US Federal Reserve hesitated to act at first, perhaps fearful of acting too soon and precipitating deflation, and kept saying that inflation was transient as it was due to restricted supplies because of the Ukraine war and will subside automatically once supplies were restored. However, when it realised that inflation was also because of increased demand as people were flush with cash it started raising rates, tentatively with 25 basis points in March 2022, followed by a rise of 50 basis points in May, and then went ballistic with 75 basis points rises in June, July, September and November 2022. Forbes. The enormous demand in the US economy was created when "Stimulus bills approved by Congress beginning in 2020 unleashed the largest flood of federal money into the United States economy in recorded history. Roughly $5 trillion went into households, mom-and-pop stores, restaurants, airlines, hospitals, local governments, schools and other institutions around the country grappling with the blow inflicted by Covid-19." NYT. This was in line with John Maynard Keynes who said that governments should increase spending and deficit when growth is weak. The consumer price index (CPI) inflation "Over the last 12 months, the all items index increased 3.2 percent before seasonal adjustment." BLS. Accordingly, the Fed increased its Funds rate by 25 basis points on 26 July, after holding off in June to see the effect of the previous 10 rate rises. As for India, "The country's real GDP growth in the first quarter will be better than the Reserve Bank's (RBI) estimate 8 percent, economists said." ET. The RBI estimates GDP growth of 6.5% for the full financial year. "The real issue is inflation in cereals and pulses at 13% and 13.3%, respectively," wrote Prof Himanshu. Prices of edible oils may also rise as, "Edible oil prices are largely determined by international prices, as India imports more than 60% of its needs." The US is hoping for a soft landing for its economy. India doesn't need one. 

Unhappy with huge collections.

"Economic Advisory Council to the Prime Minister Chairman Bibek Debroy...said the government was losing revenue due to the GST, which should be revenue neutral with a single rate." ET. "According to calculations by the finance ministry when GST was first introduced, the average rate should be at least 17 percent. But, the existing rate is 11.4 percent," he said. "The main culprit is the proliferation of slabs," wrote Ajit Ranade. ""If you want to reduce the 28% rate, then you have to move items from the 3% rate to 12%." The problem is that "The poor bear a greater burden of GST as a proportion of their incomes." So, there is a demand for more items at 0-3%. The second culprit is the concept of revenue neutral rate (RNR). "Remember the Laffer curve?" American economist Arthur Laffer suggested that "taxes could be too low or too high to produce maximum revenue and both a 0% income tax rate and a 100% income tax rate generate $0 in receipts." Investopedia. "The RNR approach has done more damage, because it has caused the median rate to drift up. It also aggravates the inequity inherent in indirect taxes." GST collection in July was up 11% to Rs 1.65 trillion. ET "The Indian government has collected Rs 6.53 lakh crore (Rs 6.53 trillion) as gross direct tax in the ongoing financial year up to August 10, showing a growth of 15.7 percent year-on-year, data showed." ET. "Direct tax collection, net of refunds, till August 10 stood at Rs 5.84 lakh crore, 17.33 percent higher than the net collections than the corresponding period of last year." Eye-watering numbers. "There were around 76,000 more so-called crorepatis (those earning over Rs 1 crore or Rs 10 million) by income tax returns (ITR) in 2022-23 when compared to 2021-22," wrote Roshan Kishore. Between 2011-12 and 2020-21, ITR data show there were more salary earners than businessmen in income up to Rs 10 million and even in the Rs 10-100 million bracket the ratio of earnings from salaries to that of business has increased from 0.34 to 0.57. Which means "Unless one is a really rich businessman, and there are few of them in India, it probably makes more sense to aspire to be in the elite salaried workforce than try and be an entrepreneur in India." "In absolute terms, net profits of listed corporates in FY 22 stood at Rs 9.5 trillion against Rs 5.6 trillion in FY 21, a jump of 69%," wrote Vivek Kaul. Which means gross profits would also have soared by a similar amount and the government must have collected enormous taxes. Profits soared as expenditure fell and "The biggest cut in expenditure was on interest payment on debt," which was due to the RBI cutting interest rate and printing money to drive down lending rates, making savers bear the cost of this low interest rate on their savings. Salaries and profits skyrocket, the government rakes in huge direct and indirect taxes, while the RBI actively helps in transfer of wealth from the poor to the rich. Learn to live on less. But, Mr Debroy is unhappy. Wants even higher taxes. 

Let them make millions.

"India is expected to ban mills from exporting sugar in the next season beginning October, halting shipments for the first time in seven years, as a lack of rain has cut cane yields, three government sources said. India's absence from the world market would be likely to increase benchmark prices in New York and London that are already trading at multi-year highs, triggering further inflation on global food markets." Reuters. A few days back, "India will impose with immediate effect a 40% export duty on onions up to Dec 31 in an attempt to improve domestic availability of the vegetable, the ministry of finance said." Reuters. "India's onion exports in the first half of 2023 jumped 63% from a year ago to 1.46 million metric tons." "The onion-potato section of the wholesale market at APMC Vashi will observe a one-day strike on Thursday, August 24, demanding that the Central government repeal the new 40 percent duty imposed on onion exports." TOI. "Trading in onions has come to an indefinite halt in Nashik APMC." It must be especially infuriating for onion farmers as they have heard about tomato farmers earning tens of millions of rupees when prices of tomatoes skyrocketed. In July, "Retail prices of tomatoes have reached a record of Rs 200 per kg in Mumbai over the weekend." ET. As a result "a farmer from Maharashtra's Pune district has made headlines. The reason? He is claiming to have earned more than Rs 2.8 crore (Rs 28 million) through tomato sales, which makes him a crorepati." India Times. Tomato farmers in Andhra Pradesh and Karnataka are celebrating as, "The otherwise Rs 300 per box (each contains about 20 to 21 kg of tomatoes) was selling at anywhere between Rs 2,500 and Rs 3,000. It even touched Rs 4,000 on some days." TOI. "Not only are tomato farmers paying back their long-standing debts, but they are also seeing their social status rise." That is how markets should operate. But rising food prices is a negative for winning elections. So, "India has imported unspecified quantities of tomatoes from Nepal to boost supplies of the vegetable, an official has said, amid a decline in prices." HT. On the other hand there is a 40% duty on import of wheat since 2019. On 27 April 2019, "India has raised import duty on wheat to 40 percent from 30 percent," "The step comes as Prime Minister Narendra Modi's party looks to contain rural discontent due to lower crop prices amid voting in a general election that began on April 11."BT. "India, the world's largest rice exporter, banned the exports of non-basmati white rice on Jul. 20," "and millions are expected to be impacted, with Asian and African consumers set to bear the biggest brunt." CNBC. "Low food inflation has traditionally been a crucial determinant of election success in India," but banning rice exports "dramatically undermines Indian leaders' recent claims that this country is the natural and responsible leader of the developing world," wrote Mihir Sharma. Care about winning elections or care about human hunger. Can't do both. Election wins.
   

India's Proposition 47.

"India's latest inflation number at 7.4% comes as a shocker, with doom speak all around," wrote Madan Sabnavis. "This is so because we have been talking of getting to 4%, which is axiomatically taken to be the ideal mark." The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) was formed in 2016 and held its first meeting in October. It was given a mandate to target a consumer price index (CPI)  inflation rate of 4% with a margin of 2% on either side till March 2021, which was extended to March 2026. ET. The MPC has been successful in keeping inflation at or below 4% in only 23% of months, while it has exceeded 5% in 52%, over 6% in 35% of months and between 5 and 6% in 16% of months. Which means that the MPC has failed to honor its mandate 77% of the time. So what does Sabnavis recommend? "Therefore, there exists a practical argument for revising the central target to 5%, up 1 percentage point." Since the MPC seems to be targeting 6% why not increase the target to 6%? Or better still, set the target at 10%, in which case the MPC will be spectacularly successful. It is like Proposition 47 in California, USA which has reduced the crime rate by redefining shoplifting, forgery, car theft and burglary as a misdemeanor, a minor offence, and not a felony, if the value of stolen goods is below $950. wikipedia. This has apparently reduced the prison population by 13,000 and saved the state $150 million in one year. "President of the California Retailers Association Rachel Michelin stated that the thieves will bring in calculators to ensure that they do not go over the $950 limit and that 'one person will go into a store, fill up their backpack, come out, dump it out and go right back in and do it all over again'." So, why has the RBI failed in its duty to control inflation? It is a department under the Ministry of Finance, Government of India. wikipedia. And, "because governments are the biggest beneficiaries of inflation. They collect more receipts from indirect taxes and their soaring debt is slowly eroded by inflation." mises.org. In 2016, then RBI Governor "Raghuram Rajan has often been accused of not cutting the repo rate fast enough and in the process hurting economic growth," wrote Vivek Kaul. "In June 2016, the rate of inflation as measured by consumer price index was at 5.7 percent. The repo rate at 6.5 percent is hardly enough." Today, the repo rate is also at 6.5%, and the MPC made no change in its August meeting, for the third time running. BT. While CPI inflation was at 7.44% in July. BT. "India collected Rs 1.65 lakh crore Goods and Services Tax (GST) for the month of July, registering a growth of 11% from a year earlier." ET. At Rs 155.6 trillion, central government debt has fallen from 61.5% of GDP to 57.1% because nominal GDP has soared due to inflation. ET. At some point it will probably catch up but as long as it is not before May 2024. Just a matter of timing.

Give them data. Not bull.

"India's economy shines as a beacon of hope in these challenging times. With robust growth and resilient spirit, the future looks promising," Prime Minister Narendra Modi said. "While affirming a 'BAA3' rating on India, Moody's said that despite growing at a high rate, India's potential growth has come down in the last 7-10 years. Further, it flagged that India continues to suffer from a high debt burden and weak debt affordability." ET. "The Baa3 rating and stable outlook also take into account a curtailment of civil society and political dissent, compounded by rising domestic political risk," Moody's said. "India called the credit rating as unfair and the Economic Survey charged the global credit rating agencies with prejudice against emerging economies such as of India." Outlook. "Countries like Indonesia have been rated higher than India." "India's dissatisfaction with lower sovereign ratings is not a fresh development." ET. "India even pressed for an independent BRICS nations rating agency, aimed at creating appropriate ratings standard for the emerging market economies, to provide an alternate view to the three Western rating agencies that hold over 90 percent of the market." It is not the function of rating agencies to increase the election popularity of the Indian government. They provide guidance to foreign funds that invest into India. According to a Morningstar report, "the value of FPIs' (foreign portfolio investors) in Indian equities rose from $523 billion as of June 2022 to $626 billion at the end of June 2023." news.abplive. That is more than our forex reserves. "India's foreign exchange reserves jumped $708 million to $602.161 for the week ended August 11, the Reserve Bank of India (RBI) said." News18. If government officials are to persuade rating agencies of India's galloping economy they have to provide credible data to back up their claims. They can't. "Behind India's record-setting growth lies a glaring caveat: the world's most populous country has a serious data problem." Bloomberg. "The issue is not limited to outdated numbers. Frequent revisions to existing data have added to frustrations. making it difficult to predict where one of the world's fastest-growing economies is headed." "The infusion of politics into data-collection has frustrated many of India's top statisticians, who've emphasized that the nation can't reach its growth goals if nobody knows what's happening on the ground." India's first census was held in 1881. "For the next 130 years, after independence and through wars and other crises, India kept its date with the census - once a decade, hundreds of thousands of enumerators visited every household in the country to gather information." BBC. Rating agencies are actually very considerate. They have not lowered us to junk. As yet.

Delhi lockdown.

"Schools and offices in Delhi may remain closed or go online for the four days of the G20 Leaders' Summit in New Delhi scheduled in September." India.com. "According to reports, schools and colleges may be advised to move to online mode and offices could be asked to be on work from home between September 8 and 11 in view of the mega event." And there is a possibility that residents of the city "will be issued an advisory to stay at home and only step out for essential services for three days in a row." TNIE." The heads of government of all the 20 nations that comprise the G20 are expected to attend. wikpedia. In September 2022, 157 heads of state attended the UN General Assembly meeting in New York in the US of A. Vladimir Putin, Xi Jinping, Prime Minister Abiy Ahmed of Ethiopia and Indian Prime Minister Narendra Modi did not attend. NYT. China actively supports Russia's actions in Ukraine so the absence of the two leaders is understandable. Modi probably did not want any discussion about the bonanza of cheap oil from Russia. "From a market share of less than 1 percent in India's import basket before the start of the Russia-Ukraine conflict, Russia's share of India's oil imports rose to over 40 percent." NDTV. As a result, "India's imports from Russia doubled to $20.45 billion during the April-July period of this fiscal due increasing inbound shipments of crude oil and fertiliser from that country." After receiving a Nobel Peace Prize in 2019, Abiy probably stayed away because of the war with Tigray fighters and bloody ethnic clashes between Oromo and Amhara tribes. Reuters. Did New York shut down with 157 self-important leaders gathering to blow off hot air which will be news in their home countries and ignored by others? Detailed timetables of the closure of sections of certain streets were announced by New York police, designed to cause least disruptions of life in the city. NBC. Xi Jinping has made 42 international trips to 69 countries in the 11 years since he became President of China on 15 November 2012. wikipedia. Whereas, Modi has visited 65 countries in 70 foreign trips since he captured power in May 2014. wikipedia. So, Modi has made nearly twice as many foreign trips than Xi Jinping in 9 years. Naturally, it cost the Indian taxpayer Rs 254.87 crore (Rs 2.5487 billion) in the last five years. DH. Meanwhile, "The engineers who built the mobile launch pad and other important components for the Chandrayaan-3, have reportedly not received their salaries for more than a year." CNBC. And, "Banks have written off bad loans worth Rs 14.56 lakh crore (Rs 14.56 trillion) in the last nine financial years starting 2014-15, Parliament was informed." ET. The rich have done well. And Modi is off to South Africa, Greece and Indonesia (HT), before lockdown in Delhi. Who cares about Engineers? And us.

SBI is a government bank.

"Breaking news: According to an SBI (State Bank of India) research report, there has been a massive rise in middle-class income in India. The report is based on income tax returns filed for FY11 to FY22," and shows that "The mean weighted income has risen nearly three times form Rs 4.4 lakh (Rs 440,000) to Rs 13 lakh (Rs 1.3 million) in assessment year 2023-24 (corresponds to financial year 2022-23)." "When calculating a weighted average, before the final calculation is completed, each number in the data set is multiplied by a predetermined weight." Thus, "the weighted average assigns weights which decide the relative importance of each data point in advance." cleartax.in. In 2011, the exchange rate of the rupee rose from 44 to 56 to the dollar. Thomas Cook. If we take an average of 50, Rs 440,000 in 2011 would have bought $8,800. In 2022-23, the rupee rose from 75 to 80 to the dollar. Taking an average of Rs 78 to one dollar, Rs 1.3 million converts to $16,667. It is double, not triple of $8,800, but respectable nonetheless. The average annual inflation rate in the US varied from 3.2 in 2011 to 8.0 in 2022. usinflationcalculator.com. Taking an average inflation rate of 2.5 per year from 2011 to 2023, a basket of goods costing $8,800 in 2011 would cost $11,546 in 2022. Therefore, accounting for the value of the rupee against the dollar and inflation rate in the US, the increase in income for middle-class Indians rose by about 58%, not by 300%, from 2011 to 2023. Promptly, "Prime Minister Narendra Modi...citing an SBI report said income tax return data suggests the weighted mean income has witnessed a remarkable leap over the past nine years," resulting in "a widening tax base across different income brackets, with a minimum threefold increase in tax filings and nearly fourfold surge in some brackets." TNIE. Why such elation? Because income tax is collected on nominal income without accounting for inflation, which has ranged from 10.02% in 2013 to 3.33% in 2017. macrotrends. net. "The Indian government has collected Rs 6.53 lakh crore (Rs 6.53 trillion) as gross direct tax in the ongoing financial year (starting 1 April) up to August 10, showing a growth of 15.7 percent year-on-year, data showed." ET. Modi "highlighted India's progress towards equitable and collective prosperity". Collective it may be, equitable it definitely is not. The median salary of CEOs in India rose from Rs 115.1 million in FY19 to Rs 118.1 million in 2021, whereas the median salary for workers fell from Rs 644,000 in 2019 to Rs 640,000 in 2021. A "Business Standard analysis revealed that a typical Indian CEOs salary in FY 21 was 184 times the median employee salary." BS. "The Government of India has postponed the decadal census, which was due in 2021, indefinitely," wrote Yamini Aiyar. "The only conclusion to draw from the Government of India's stubborn refusal to fill the statistical vacuum is that it fears the political consequences of acknowledging the reality that poverty may well have increased." That's why the government is building food stockpiles which it will use to bring down prices before the general election. Bloomberg. The SBI gives just one set of figures without analysing what it means. SBI is a government bank. And, Brutus was an honorable man.      

Why can't they see it?

"Headline inflation is expected to average well above 6 percent in the second quarter, said the Reserve Bank of India's (RBI) monthly bulletin." "Beating analyst's expectations, India's retail inflation surged to 7.44 percent in July on an annual basis as against 4.81 percent in June, showed data released by the ministry of statistics." ET. "The sharp rise can be attributed to a steeper-than-expected surge in the prices of vegetables, especially tomatoes, over the past month." "In its meeting last week, the Monetary Policy Committee (MPC) had kept the policy rate unchanged at 6.5% for the third consecutive time." "The MPC remains resolute in its commitment to aligning inflation to the 4 percent target and anchoring inflation expectations," said (Governor) Das in the bulletin. By doing nothing? What Das probably means is that we are lucky that the RBI did not reduce the policy rate. "Risk of stagflation currently in India remains very low, with a probability of only 3 percent, notwithstanding a sharp pick-up in inflation, said the RBI's bulletin." DH. If the RBI is trying to allay our fears, the risk must be real. "Stagflation is the phrase when an economy faces moderation in GDP growth and high inflation." "Evidence from 22 economies, particularly those heavily reliant on non-commodity exports, indicates that higher commodity prices and the US dollar appreciation are key factors contributing to the risk of weak economic growth and high inflation, particularly in emerging market economies." "On 26 July, the US Federal Reserve raised rates for the eleventh time in its current round of increases. on 27 July, the European Central Bank (ECB) raised rates for the ninth time in a row. This was followed by the Bank of England raising rates for the fourteenth time on 2 August," wrote Vivek Kaul. India was in a Goldilocks situation with a GDP growth rate of 6.5% in the financial year 2023-24, according to the RBI, and a cooling core inflation which was down from 5.1% in June to 4.9% in July, wrote Sonal Varma & Aurodeep Nandi. But the three bears of higher headline inflation in July along with falling growth rate in the US and China and a K-shaped recovery in India could result in a stagflation -like environment. However, "In our view, with core inflation showing signs of deflation and inflation expectations well contained, the RBI is right to be looking through the current food price shock." Is it? Inflation means prices higher than before which, in turn, means that the rupees in our wallets is buying less than before. Whatever the cause. In July, the consumer price index (CPI) in the US rose by 3.2% year-on-year. bls.gov. The minutes of the July 25-26 meeting of the US Federal Reserve showed that participants are still concerned over inflation rates and may raise the Funds Rate further. ET. That may strengthen the dollar against the rupee and push up cost of imports in India, leading to higher prices. "India, an import dependent country, could feel the heat of a falling Rupee in an inflationary environment as it stands to further the spending decisions of households. Exactly. Don't need a PhD in economics to see that. Why can't they?

Babies before apartments.

While the rest of the world is battling inflation, China's prices fell in July. "Retail prices in the country fell by 0.3% in the 12 month period ending July," wrote Vivek Kaul. Producer prices have fallen for 10 months in a row. "In July, the fall was 4.4%, implying that wholesale prices at the factory level have been falling for 10 months now." "China's goods exports in US dollar terms fell by 14.5% from July 2022. At the same time goods imports fell by 12.4%." To add to its problems, "China's fertility rate is estimated to have dropped to a record low of 1.09 in 2022, the National Business Daily said." Reuters. The replacement level of total fertility rate is 2.1, below which the population will start to shrink. wikipedia. "Hong Kong's Family Planning Association said in a separate release...that the number of childless women in the special Chinese administrative region more than doubled from five years ago to 43.2% last year," and "the average number of children per woman dropped from 1.3 in 2017 to a record low of 0.9 last year." China is now a middle-income country with a current per capita income at $12,500, one-fifth that of the US, wrote Ruchir Sharma. "The original Asian miracles, Japan, South Korea and Taiwan, had positive population growth at China's stage of development. Only two (Lithuania and Latvia) had a shrinking workforce." "Before the 2008 crisis, China's debts held steady at around 150% of GDP," but now "Total debt is up to 275% of GDP, and much of it funded investment in the property bubble, where all too much of it went to waste." "Country Garden, a Chinese real estate giant, has lost billions of dollars and racked up $200 billion in unpaid bills. It's on the hook to deliver, by one estimate, nearly 1 million apartments across hundreds of cities in China." ET. "A default by Country Garden would be the latest in a string of collapses in the housing market," and has led to worries that it will end up like China Evergrande which collapsed in 2021. In addition, "Zhongrong International Trust Co, which traditionally had sizable real estate exposure, missed payments on dozens of investment products since late last month, a senior officer told angry investors." Reuters. "China's $3 trillion shadow banking sector is roughly the size of Britain's economy, and concerns about its outsized exposure to property and risks to the wider economy have grown over the past year." "China's major state-owned banks were seen selling US dollars to buy yuan in both onshore and offshore spot foreign exchange markets this week...in an attempt to slow the yuan's depreciation." Reuters. Trouble is, minutes of the Federal Open Market Committee (FOMC) show, "Most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy." ET. Which means more pressure on the yuan. So bad is the situation that China has stopped releasing the youth unemployment figures. "The age 16 to 24 category has seen unemployment far above the overall jobless rate, reaching a record high of 21.3% in June." CNBC. If the population starts falling who will live in all this real estate? Xi Jinping has to increase pregnancies. Can he?

Rs 25,000 vs Rs 84.66 trillion.

In a surge of extreme jingoism, Zee News asked, "Is Indian Rupee in the race to take over the American Dollar? More than 18 countries have agreed to use Rupee for international trade with India. After this more than 35 countries have shown their interest to trade in Indian Rupee." "After the efforts of the RBI, rupee has become like a reserve currency in South Asia." "Whether you travel to China, Europe, Argentina or Cuba, Dollars have an advantage of being accepted while shopping or renting hotels. Indian Rupee has to reach the pocket of foreign travelers and investors." That would mean the government will have to allow Indian rupees to be freely taken out of India and to be able to exchange any amount of rupees into any foreign currency. "As of December 21, 2020, there was $2,040.7 billion in circulation totaling 50.3 billion notes in volume." "As much as one-half of the value of US currency is estimated to be circulating abroad." uscurrency.gov. Which means a total of US$1.020 trillion, equivalent to Rs 84.66 trillion, is in foreign hands. Whereas, an Indian citizen can carry a paltry Rs 25,000, equivalent to $301.20, when traveling abroad. nriguides.com. We are not even allowed to bring more than Rs 25,000 in currency when returning from abroad. The problem is, what will other countries buy from India with Indian rupees? "In July, goods exports fell by around 16% to $32.3 billion," wrote Vivek Kaul. "Along similar lines. goods imports fell by 17% to $52.9 billion." "India's overall exports (merchandise and services combined) in June 2023 is estimated to be $60.09 billion, which is -13.16% over June 2022, according to PIB release in July. Overall imports in June 2023 is estimated to be $68.98 billion which is -13.91% over June 2022." ET. India buys more than it sells. "India and the United Arab Emirates have started settling bilateral trade in local currencies with India's top refiner making payment in rupees for purchase of a million barrels of oil from the Middle Eastern nation, the Indian government said." ET.  "The transaction comes after one involving the sale of 25 kg gold from a UAE gold exporter to a buyer in India at about 128.4 million rupees ($1.54 million)." Indian exports to the UAE came in at $31.3 billion while imports were at $53.2 billion during the financial year April 2022-March 2023. india.briefing.com. Perhaps, the UAE can utilise the extra rupees it accumulates in financing remittances by Indian nationals working in the country. "The number of resident Indian Nationals is estimated to be 3.5 million in 2021 as per UAE records." Embassy of India, UAE. An added problem is the erosion in the value of the rupee against the dollar. "The rupee was pegged at 4.79 against a dollar between 1948 and 1966." ET. Today one dollar buys over Rs 83. xe.com. The reason is that high inflation in India erodes the value of the rupee. "Inflation, without accounting for food and energy prices, known as core inflation, stood at 4.9% in July, as against 5.1% in June." Mint. However, consumer price (CPI) inflation jumped to 7.4% in July. Rupee replacing the dollar? The RBI smiled.

Claiming credit for the inevitable.

"India will be a developed country by 2047, Prime Minister Narendra Modi said in his 10th Independence Day speech, juxtaposing that long term goal with the more short-term objective of the country's economy becoming the world's third largest - it is currently fifth - which he said would happen during his third term." HT. "Well, I am confident" "And it is because of that confidence we are able to say, yes, we will see India as a developed country by 2047. Now third-largest, it is certainly something that PM (Modi) has mentioned as a guarantee that in his third term, we will achieve it," echoed Finance Minister Nirmala Sitharaman. "For starters, the country would have to make its per capita income grow more than five-fold in 24 years, which calls for annual growth of 7 percent. Since the country's population will continue to grow, GDP would have to grow faster than that," wrote TN Ninan. According to the UN's present classification, "A country with GNI (gross national income) per capita of up to $1,085 is low income economy, up to $4,255 in the next bracket of lower middle-income, up to $13,205 as upper middle-income and above that high-income economy," wrote Darpan Singh. "In a special report titled India@100, the Reserve Bank of India (RBI) has projected that the country's real GDP will have to grow 7.6% per annum for the next 25 years, raising its current per capita GDP of $2,500 to $22,000, to join the developed economy club," wrote Pragya Srivastava. India has never grown at that rate for that long. However, a nominal GDP growth rate of 8.3% will take the nominal GDP to $5 trillion in 2027 and to $10 trillion by 2036. Real GDP is derived by adjusting the nominal GDP for inflation. Investopedia. India's annual GDP deflator was 8.3% in 2022. World Bank. To calculate a country's GDP properly needs accurate data. "Given the weaknesses in India's statistical system, annual data on many sectors is unavailable. India's national accountants use outdated data, heroic assumptions and rough proxies to fill these gaps in the national accounting database," wrote Pramit Bhattacharya. Modi may not win the next election, "But India will grow to become the third-largest economy in the next few years almost regardless of who is in the prime minister's seat, because India's growth trajectory was set long before Modi became PM, and it has been on course despite the shocks he has himself administered to it," wrote S Raghotham. "Population and economic growth will ensure a larger economy," wrote Congress leader Salman Anees Soz. "If GDP rankings were a measure of well-being, our first Prime Minister Jawaharlal Nehru would have celebrated India's 8th largest economy rank in 1960 when much of the country lived in extreme poverty." For comparison, GDP in rupees is converted to US dollars at current prices. From 4.79 to a dollar the Indian rupee has fallen to 83 to a dollar today because India has much higher inflation than the US. ET. According to the World Bank, at constant prices in 2015 US dollars the Indian GDP stood at $2.95 trillion in 2022 (the IMF calculated it at $3.39 trillion in current prices), while Japan's economy was $4.51 trillion at constant prices in US dollars," wrote Vivek Kaul. India will have to maintain a much higher rate of growth than Japan consistently to become the third largest in the next few years. Growth is inevitable. As long as it is not spoiled by bad policies.    

Very bad or only a little bit?

"India became a free land on August 15, 1947, and was relieved from the reigns of 200-year old British rule." BQ. "If we estimate excess mortality from 1891 to 1920, with the average death rates of the 1880s as normal mortality, we find some 50  million (5 crore) people lost their lives under the aegis of British capitalism," wrote Dylan Sullivan and Jason Hickel on British rule in India. But, "If we measure excess mortality over England's 16th- and 17th-century average death rate, we find 165 million (16.5 crore) excess deaths in India between 1880 and 1920. This figure is larger than the combined number of deaths from both World Wars, including Nazi holocaust." "India's mortality rate from 1921 to 1950 was higher than England's in the 16th and 17th centuries," and "In fact, it was higher even than the average mortality rate that afflicted China during the Great Famine of 1959-61." Regarding the British Empire, "To the majority of Britons even today, it is something to be proud of, a force of progress, decency and rule of law around the world, despite the occasional excesses of a 'few bad apples'," wrote Caroline Elkins. "The natives were 'half-devil and half-child' in Rudyard Kipling's conception, John Stuart Mill advocated 'paternal despotism' to deal with them." "At every point the ideological agenda was to reconcile the logic of necessary violence with its civilising mission." "Much of India's trade in the 19th century, over two-thirds of imports and a third of exports, was with the UK. The imports were largely manufactured goods and exports were raw materials going into the making of these goods," wrote Vivek Kaul. "This ultimately had an impact on education levels." Even now, "The overall literacy rate as per our last census in 2011 was around 73%, with only 65% of women being literate." So, the British are devils? Not so, wrote Swaminathan S Anklesaria Aiyar. "India's GDP stagnated at $33.75 billion from 1 AD to 1000 AD, the Hindu-ruled period. Per capita income also stagnated at $450 as the population remained steady at around 75 million." The population stayed at the same level for 1000 years "Because drought, disease, and wars meant that merely staying alive was a challenge." "Between 1700 and 1950, India's GDP  went up from $50 billion to $222 billion, the fastest growth ever. India's share of world GDP fell not because it was impoverished but because the Industrial Revolution helped other countries grow much faster," wrote Aiyar. No matter what the figures say, conquering a nation with military force and subjugating its population is a criminal act. No excuses. And yet, even today a lot of Indians would prefer living in Britain than in India. "The latest UK Home Office statistics show that the number of Indians crossing the English Channel on small boats has shot up in the first three months of this year, making them the second-biggest cohort after Afghans." TOI. Afghans are escaping from the Taliban. What are Indians escaping from? Back to the evil colonial masters.  

Two bumbling nations.

"News that a Chinese coast guard ship fired water canon on a smaller Philippine counterpart in a disputed area of the South China Sea should be worrying enough," but videos show, "Most of the Chinese ships involved are marked 'China Coast Guard', but among the flotilla are also at least two blue-hulled vessels that resemble fishing boats." CNN. Experts believe that "those boats belong to a Beijing-controlled maritime militia that experts say is hundreds of vessels strong - and officially deniable - force that China uses to push its territorial claims both in the South China Sea and beyond." "The economic woes that China is currently facing, prompted fears that Beijing in turn could become more aggressive, and compensate by escalating the risk of a war with the US over Taiwan, Voice of America (VOA) reported." TOI. "Also, China's economic slowdown...is further expected to worsen if other nations follow the US lead in restricting investments in China." China may gamble that US help to Ukraine has left it short of weapons. "President Biden sat down for a recent interview in which he said the United States is low on 155 mm artillery ammunition rounds, sparking outrage and questions of competency from conservatives on social media." New York Post. What else is it low on? The US is certainly not low on debt. For the first time, the US Government debt reached $32.6 trillion or 122.8% of its nominal GDP in June 2023. CEIC. "Credit card balances rose by $45 billion to $1.03 trillion in the second quarter", the New York Federal Reserve Bank said. Reuters. "Household debt ticked up 0.1% to $17.06 trillion" but "credit card delinquencies are at an 11-year high, as measured using a four-quarter average, the data showed." Meanwhile, "Fitch downgraded the United States to AA+ from AAA, citing fiscal deterioration over the next three years and repeated down-the-wire debt ceiling negotiations that threaten the government's ability to pay its bills." Reuters. Biden seems to be borrowing the 'revdi culture' from India, possibly to increase his vote tally in next year's re-election bid. "In total, the Biden- Harris administration has approved more than $116.6 billion in student loan forgiveness for more than 3.4 million borrowers." US Department of Education. Just as PM Modi announced cash transfers of Rs 6000 per year to small and marginal farmers at an annual cost of Rs 750 billion just before the 2019 general election, Outlook, which he won handsomely. Farmers here, students there, revdi culture as default option. "Lean times faced by many US and European companies last longer than expected as they try to sell off their bulging inventories in an economic climate where demand is stalling." Reuters. "The fight against the steep price rises unleashed by the pandemic and war in Ukraine has been long and painful, with central banks hiking interest rates at a scorching pace to cool inflation." CNN. But, "Oil and food prices have jumped in recent weeks, and wages are growing strongly in some of the world's biggest economies." With the US election on 5 November 2024, it may be the best time for China to attack Taiwan. Will the US accept the challenge? Can it?

No humility. No sympathy or compassion either.

"Prime Minister Narendra Modi on Saturday (yesterday) addressed G20 Anti-Corruption Ministerial Meeting in Kolkata virtually, stating that India has a strict policy of zero tolerance against corruption." NDTV. But, only against the opposition. "The renewed hullaballoo about corruption - which as you know happens only among those in the political opposition; the clever ones who switch to the ruling party are at once washed clean with an unfailing saffron detergent - is, crucially, sought to be peddled with the stamp and seal of the Dear Leader," wrote Badri Raina. "One reason that the BJP won a landslide in 2014 was because it promised to eradicate corruption and create an India based on clean governance. After nine years of BJP rule, there should have been no corruption in India," wrote Vir Sanghvi. "Even if that is a sincere intention, upon assuming office, the winner will quickly realize  that it is best to focus  on critics of the government and opposition political parties, since going after one's own allies for corruption will erode one's political base. Hence, an unintended consequence of the original plan is to plant seeds of cronyism. Even while targeting corruption, protecting friends and doling out favors to allies strengthens the leaders hold on power, and the country slides towards authoritarianism. In the end, corruption, too, could end up rising rather than falling," wrote Prof Kaushik Basu. An exact description of India under BJP in 3 sentences. "Humility does not come naturally to the Bharatiya Janata Party (BJP) and Prime Minister Narendra Modi," wrote Nilanjan Mukhopadhyay. "Pragmatism bordering on unprincipled pursuit of power is clearly the party's mantra now." So, Modi has not uttered a word on Manipur for over two months even as, "Deadly violence has plunged Manipur, a scenic Indian state bordering Myanmar, into turmoil for more than two months." BBC. "The violence has left more than 130 people dead, nearly 60,000 have become refugees in their own land." Eventually, Modi was forced to answer a no-confidence motion in Parliament. "However, in his speech that lasted 2 hours 20 minutes, Modi spoke about the violence hit-state for barely ten minutes in which he said his government was working towards peace." The Wire. Instead, "Modi devoted the entire duration to recall the alleged wrongdoings of the Congress governments of the past" until "The opposition eventually walked out of the House in protest after Modi hadn't touched upon the Manipur issue nearly two hours into his speech." The Wire. Not just humility, Modi doesn't do sympathy or compassion either. Just as he has no sympathy for the people of Manipur he uttered not one word of sympathy for the thousands of migrant laborers forced to walk hundreds of kilometers with little children (TOI) when he imposed one of the strictest lockdowns in the world on 24 May 2020 with just 4 hours notice. NYT. And no help. Modi is beyond the point of no return. He cannot lose the next election in 2024. Will he impose martial law if he is losing? Will our generals obey? India is facing its greatest danger since Independence. Not from China or Pakistan, but from inside. 

Statist to billionaires.

"The Directorate General of Foreign Trade (DGFT)...restricted imports of certain laptops and computers under HSN8471 with immediate effect."ET. Restrictions imposed on "import of laptops, tablets, all-in-one personal computers and ultra small form factor computers and servers. These electronics can be imported only against a valid license meant for restricted imports." "The Indian 'big state' has lately been striking back. As it did this week by announcing drastic controls on the import of personal computers, laptops, tablets and so on," wrote Shekhar Gupta. "The objective, we were told officially first, was to promote domestic manufacturing. By the very next day, the discourse had moved on. National security had taken precedence." "When national security is invoked, Indians usually trust their government and go silent." But, "Every now and then, pictures of VIP tours through India's top scientific facilities, especially the laboratories of the Defence Research and Development Organisation (DRDO), pop up on social media (mostly Twitter), where sharp eyed observers note the presence of Chinese CCTV cameras, Hikvision being the most prominent brand." "The biggest reform of 1991 was industrial delicensing. In one swoop, it took away the power of bureaucrats to decide who would produce what, how much, where and for whom," wrote Ajit Ranade. Most importantly, "We need to import low-cost tablets in large volumes simply to remedy a covid-induced education deficit," and "As digital devices have a high rate of obsolescence, free and instant access to the latest products are imperative." Our $500 billion exports of software needs high-tech hardware. "This move to suddenly label items as restricted doesn't ban them, it merely adds to the red tape for businesses," wrote Tim Culpan. "The earlier import-tax policy - part of the 'Make in India' program - was likely a far bigger driver of manufacturing than the later incentives." "But a restrictive regime that is based on licensing amounts to neither carrot (incentives) nor stick (tariffs)." By combing the annual Forbes list of billionaires, Ruchir Sharma found, "There were 500 billionaires worth a total of less than $1tn in 2000; now there are 2,500 worth over $12tn." "Ironically, these include most prominently nations with deep socialist roots, including France, Sweden, Russia and India." "Among emerging markets, the 2023 analysis highlights two more nations with strong statist tendencies, India and Russia. In both, total billionaire wealth exceeds 20% of GDP - nearly double the average of other developing nations on my list." The state has a 'monopoly on violence' because of its control of the police and military. "Thus the words 'statism' and 'statist' describe institutions and political practices in which executive authority gathers increasing levels and varieties of power into its hands." pages.uoregon. As a result, "With the wealth of the crony-capitalist sector going up from 5 percent to almost 8 percent of its Gross Domestic Product (GDP) in the past decade, India ranks at 10th position in the British magazine The Economist's 2023 'Crony-Capitalism Index'." The Print. Since laptops and tablets are essential today we can expect more billionaires among those that hold licenses and those that grant them. Statist to crony capitalism to billionaires. Up the index.        

Simply compounding.

"Monetary Policy Committee of the Reserve Bank of India (RBI) on Thursday (yesterday) unanimously decided to keep policy repo rate unchanged at 6.5 percent for the third time in a row but revised retail inflation projection for the current fiscal to 5.4 percent from its earlier estimate of 5.1 percent, citing upturn in food inflation and uncertainties in global oil prices." DH. "The Indian economy is likely to grow at 6.5 percent in the financial year 2023-24, said RBI Governor Shaktikanta Das." ET. "The RBI will withdraw nearly one trillion rupees ($12.07 billion) from the banking system through a temporary increase in the amount of funds lenders set aside with the central bank, as it tries to keep a lid on inflation." Reuters. "Liquidity surplus in India's banking system has averaged around 2.5 trillion rupees in August, up from 1.6 trillion rupees in July, pushing down overnight borrowing and lending rates." "To control the price rise, the government in 2016 gave a mandate to the RBI to keep retail inflation at 4 percent with a margin of 2 percent on either side for a five-year period ending March 2021." ET. This mandate was extended to 31 March 2026. Though the mandate is to target a retail inflation of 4% the RBI seems to be targeting the upper limit of 6%. Inflation means rising prices and higher prices mean higher tax in government pockets. "India collected Rs 1.65 lakh crore (Rs 1.65 trillion) Goods and Services Tax (GST) for the month of July, registering a growth of 11% from a year earlier." ET. India's consumer price index (CPI) increased by 4.6% in October 2019 and has been consistently higher than 4% since then, reaching a high of 7.8% in April 2022. rateinflation.com. Inflation is compounding. Politicians lie when they claim that CPI inflation of 4.81% in June 2023, BT, means that prices are coming down because this rise was on top of a 7% rise in prices in June 2022, which was on top of a 6.3% rise in June 2021 and another 6.3% rise in June 2020. Which means that an article which cost Rs 100 in May 2020 now costs Rs 126.72. If GST on that article is levied at 12%, the government would have got Rs 12 in May 2020 but, with the cost having risen to Rs 126.72, the government will now pocket Rs 15.20 in GST on the same article. No wonder then that the government's debt has fallen. "The Central Government's debt was Rs 155.6 lakh crore (Rs 155.6 trillion) as on March 31, 2023. It has reduced from 61.5 percent of GDP in 2020-21 to 57.1 percent of GDP in FY 2022-23," Minister of State for Finance Pankaj Chaudhary said." ET. That is because Nominal GDP, or GDP at current prices, grew at 16.1% to Rs 272.41 trillion in 2022-23, because of inflation, while Real GDP, or GDP at constant prices, is estimated to have grown by 7.2% to Rs 160.06 trillion. pib.gov.in. High prices mean that ordinary Indians are having to reduce their consumption, according to the RBI, ET, while government employees are to see a 3% rise in Dearness Allowance to 45%. BT. Compounding inflation and compounding Dearness Allowance. No wonder they can afford to smile.