In a sweet spot.

"India Inc is in a sweet spot. The country's economy is growing at a solid clip, helping propel fortunes and prospects of Indian companies operating in a range of sectors, from telecoms, airports and ports to commodities, utilities and chemicals." "This is despite several companies, across sectors, spending more on capital expenditure and energy-transition initiatives," wrote Ashok Dhingra & Neel Gopalakrishnan. "India's gross domestic product (GDP) slipped to a 15-month low of 6.7% on an annual basis in the April-June quarter of the current financial year, the government data showed." Moody's expects GDP growth at 7.2% in FY25 and 6.6% in FY26. Fitch projects 7.2% and 6.5%. ET. "India remains the fastest growing major economy despite the pace of growth slowing to a five-quarter low of 6.7% during April-June." "In the medium term. the Indian economy can grow at a rate of 7% plus on a sustained basis if we can build on the structural reforms undertaken over the last decade," said Chief Economic Advisor V Anantha Nageswaran. ET. "Growth in India's eight core sector industries slowed to 6.1% in July compared to 8.5% in the same month last year, according to government data. It picked up compared to 5.1% last month, helped by business activity and road construction." BS. However, is it possible that this sizzling growth is being fanned by easy money due to forced lending by banks? "MSME (medium, small, micro enterprises) credit by scheduled commercial banks under priority sector lending in July stood at Rs 25.10 trillion, growing by 15% from Rs 21.82 trillion deployed during the year-ago period," according to RBI data. FE. Naturally, "Liquidity in the Indian banking system steeply declined to Rs 0.95 trillion from a high of Rs 2.86 trillion, according to a research report by the Union Bank of India," "despite repeated calls by the Finance Minister and the RBI Governor for banks to take steps to increase liquidity in the system." TOI. Banks are having to borrow to lend. "Banks' borrowing through market instruments has climbed to its highest levels, jumping past the Rs 9 trillion mark, as persistently faster pace of credit growth than deposit growth compels lenders to rely on other routes to raise funds." "As on July 26, bank credit growth was at 15.1% year-on-year, while deposit growth was at 11.0%, RBI data showed." ET. "While banks have been struggling to attract deposits, customers have been borrowing heavily to buy homes and for other purposes." Also, people are investing more in mutual funds, insurance funds and pension funds instead of bank savings. Mint. People are pouring money into stock markets, attracted by the relentless rise in both the indices. On 30 August, the Nifty 50 closed at a record high of 25,235.90 while the Sensex also closed at a record high of 82,365.77. "Year-to-date, the Nifty 50 is up 16%, while the Sensex has gained 14%." Mint. Rising markets attract more investors and more investments raise the markets even higher. Ominously, "SBI (State Bank of India) managing director Ashwini Tewari...said a correction in the equity markets 'over time' can help banks get back deposits it has ceded." TOI. However, a 1-2% correction will not divert money to banks. It will only encourage investors to 'buy the dips' (Investopedia). The markets have to fall by significantly and keep falling to stop people from buying more shares. But then, investors will incur heavy losses and will probably not have the funds to save in banks. India is in a sweet spot. Will we stay there?  

It would be nice to know.

"The 2024 Hurun India Rich List reveals that India now has 334 billionaires, an increase of 75 compared to the previous year," with one billionaire added every 5 days. TOI. "The cumulative wealth of Hurun India rich listers has surged to Rs 159 trillion, surpassing the combined GDP of Saudi Arabia and Switzerland and more than half of India's GDP." So, 334 individuals now own more than half of India's GDP while we, the rest of 1.450 billion people (worldometer), live on less than half. India's GDP per capita in 2023 was $2,484.8. World Bank. One billion is 1 followed by 9 zeros, that is $1,000,000,000. amnh.org. Some of these people have, not one, but, tens of billions of dollars. We should be so proud. But, "Asia's fastest-growing economies are hiding a dirty secret: Their youngest workers are battling stubbornly high rates of unemployment." "The figures are worse than in rich countries such as the US, Japan and Germany." India has "developed a well-known information technology industry," but "More than 40% of the country's college graduates under the age of 25 are unemployed, compared with 11% of those of the same age group who are literate but haven't completed primary school, according to a 2023 report from Azim Premji University." Mint. Meanwhile, "Jay Shah will take over as the ICC chairman from December 1, 2024." At 35, he will be the youngest chairman of the ICC. NDTV. "Jay Amitbhai Shah, born on 22 September 1988, is the son of Amit Shah, India's Minister of Home Affairs, and Sonal shah." He has a Bachelor of Technology degree from Nirma University, is worth Rs 1.24 billion and, "As the Secretary of the BCCI, he earns Rs 84,000 daily for international meetings, in addition to travel and stay allowances." TOI. "It has been pointed out that Jay Shah has had no achievement or experience that would qualify or prepare him for a global role. Not much is known of his educational qualifications nor of any substantive assignment in public or private sectors." "But, again, he is in the influential position only because of the power and influence of his father - a quintessential political boss, and someone to be feared by friends and foes alike," wrote Harish Khare. "Gautam Adani and his family have secured the top spot in the 2024 Hurun India Rich List, with a wealth of Rs 11.6 trillion, surpassing Mukesh Ambani." NDTV. "But fraud, right from siphoning funds offshore and market manipulation of share prices of the group in India, are nothing new to the group." "However, in 2015, soon after the Modi government came to power, the Customs Excise and Service Tax Appellate Tribunal (CESTAT) dismissed the findings of investigations that spanned several years." Telangana Today. "This is not an Adani issue, this is a 'Modani' issue. The real issue is the relationship between PM Modi and Adani," said Congress MP Jairam Ramesh. India Today. "India's nominal GDP in 2024 is estimated at $3.94 trillion. IMF. More than half of it belongs to the 334 on the Hurun list. The Crony Capitalist Index 2023 by The Economist ranks India at number 10, which is an improvement from number 7 earlier. Quartz. It would be interesting to match the Hurun list with the Crony list. We, the people, should know who is getting our money. Not that we can do anything. Still.    

Preying on the weak.

In Africa, "The continent's foreign debt reached more than $1 trillion at the end of last year." "And roughly 900 million people live in countries that spend more on interest payments than on health care or education." This along with "government corruption and mismanagement has left many African countries more vulnerable to brutal wars, military coups and antigovernment riots." "China now accounts for 73% bilateral borrowing in Kenya, 83% in Nigeria and 72% in Uganda." BS. "In 2002, Africa seemed poised to rise. Wealthy creditor nations were wiping billions of dollars of unsustainable debt off the books of sub-Saharan countries, and global demand was surging for the commodities the region exports." To improve their credit ratings from 'junk' status, "more than a dozen sub-Saharan countries borrowed nearly $200 billion from overseas bond investors" which they cannot repay, so that "The region today has the highest rate of extreme poverty in the world." Reuters. "Foreign capital, which made a beeline for China for a long time to ride its exceptional growth story, is now avoiding the country." "China's stock exchanges have stopped releasing daily data on overseas fund flows" "Private equity firms that amassed more than $1.5 trillion of assets in China in just two decades are now struggling to offload once-promising investments they were counting on for hefty returns, Bloomberg reported." ET. And, "Previously, when property prices sagged, households would buy stocks; when shares sold off, people would pile into real estate; when both looked shaky, more money would end up in bank accounts." "This year, lenders are offering low savings rates, stocks are moribund, and house prices are still falling. That has made Chinese government bonds an obvious refuge." "In May, the price of a new debt issue spiked 25%." Yields have fallen below those of US Treasuries. Now the government is putting brakes on public bond buying. Reuters. China is trying to export out of the crisis. "China's factories will keep chugging along, regardless of what overseas officials like Janet Yellen say." "That's largely due to Beijing's industrial push to prop up economic growth amid sluggish consumption and a protracted property crisis. Manufacturing loans at the country's four big state-owned banks jumped 25% last year to $1.2 trillion." Reuters. Retaliation is coming. In July," The European Union...slapped extra provisional duties of up to 38% on Chinese electric car imports because of 'unfair' state subsidies, despite Beijing's warnings the move would unleash a trade war." ET. Also, "Canada says it will impose 100% tariff on imports of China-made electric vehicles (EV) after similar announcements by the US and European Union. The country also plans to impose a 25% duty on Chinese steel and aluminium." BBC. While the rich economies can resist Chinese depredations, weaker African nations are easy prey. China feeds on the weak.       

Dreams of markets and Canada.

"The proportion of emerging economies in which per capita GDP is likely to grow faster than US is on course to surge from 48% over the last five years to 88% in the next five." "Global stock market investors, mesmerized by mega-cap American tech companies, have yet to respond." But, "America's growing reputation as the world's most irresponsible deficit spender - a financial empire that takes its reserve currency status for granted - threatens to undermine the dollar." Now markets in a select group of emerging nations will attract higher investments, wrote Ruchir Sharma. Indian markets are already soaring. "Nifty 50, the benchmark index of the Indian stock market, reached a new all-time high of 25,129.60 on Wednesday (yesterday)," and then "The Nifty 50 closed 0.14% up at 25,052.35, while the Sensex ended with a gain of 0.09% at 81,785.56." Mint. Individual investors are responsible for this explosion in our markets, as "the number of registered investors has gone from 40 to 100 million in a span of under four-and-a-half years," which means that "about 60% of our investors have very little memory of anything that happened in the stock market before 2020." Seizing this opportunity, in 2024, "promoters of over 250 companies have sold shares worth Rs 970 billion," wrote Vivek Kaul. As an example of this frenzy, the initial public offering (IPO) of "The Rs 120 million issue of Resourceful Automobile, which operates two Yamaha showrooms in New Delhi, received investor bids of over Rs 47 billion. The company has only eight employees, three in finance and legal, two in sales and marketing, one in HR and two in operations." ET. In addition, "Foreign portfolio investors (FPI) have infused Rs 113.66 billion in the Indian debt market so far in August," and a total of Rs 1.02354 trillion in 2024 so far. "Meanwhile, FPIs have pulled out Rs 163.05 billion from Indian equities this month so far on the back of unwinding of the yen carry trade, recession fears in the US and ongoing geopolitical conflicts in the Middle East." Mint. However, Indian stock markets are at record highs while yields on the benchmark 10-year Indian government bonds are at 6.983%, down from 7.327% in 2022. World Government Bonds. These figures show that India must be booming. Strangely, "Just a few years ago, getting admitted to a college in Canada would create a smooth pathway to a work permit and then permanent residency." "That smooth path to a Canadian dream has been disrupted," and Indian students are protesting to be allowed to stay there. ET. Why do young Indian students "dream" of Canada as a paradise when our External Affairs Minister S Jaishankar has said that Canada is a cesspit of "organised crime from India mixed with trafficking in people, secessionism, violence, terrorism"? Just invest in the stock market and paradise will be here. Or, will it?      

Basements flooded, space is free.

"This monsoon, several houses across Delhi-NCR have seen massive basement flooding," and "three IAS aspirants lost their lives when the basement library was flooded because of faulty sewerage systems," wrote E Jayashree Kurup. "Nearly 20 people have died in the past two months due to waterlogging in Delhi." "At least six of the victims were children aged between 3 and 10. As many as 11 people died due to drowning in waterlogged regions, while seven were electrocuted, data showed." India Today. However, Delhi gets rains for about 3 months in the year and public memory is short. So, "the need for housing overtakes the apprehension of flooding and eventually most houses find buyers or tenants. Prices do not drop substantially as there is a huge influx of dwellers from smaller to bigger cities," wrote Kurup. A 'Mood of the Nation Poll' revealed that 50.6% of respondents felt that "the economy will remain stagnant or things will worsen" "even as the country's economy cruised at a strikingly high growth rate of 8.2% in FY24." Inflation is a serious concern as 63% of respondents feel that "managing their current expenses has become difficult," and 78.3% "consider the unemployment situation in India to be serious." India Today. "To a question about who is best suited to be the next prime minister of India, Narendra Modi's ratings have dropped below 50% for the first time, and are at 49%." The Wire. "As consumers struggle to keep up with rising household expenses, they have reduced their discretionary spending and purchases of premium products. The impact has so far been more pronounced in rural India, where consumers spend more on food compared to the urban areas. The demand slowdown has hit the sales of companies across consumer segments." The Print. "The household (HH) situation in India has continued to deteriorate in recent months, with real income levels declining, highlighted a report by 'Systematix Institutional Equities." ET. "Goldman Sachs Group Inc has lowered India's growth forecast by 20 basis points each for this year and the next, citing a contraction in central government expenditure. The bank now expects the nation's economy at 6.7% in calendar 2024, and 6.4% in 2025." HT. However, while Indians are earning less, the nation is gaining from outer space. "India has invested nearly USD 13 billion in the space sector over the past decade which has contributed USD 60 billion to the GDP through direct, indirect and induced benefits, a report by global consulting firm Novaspace said." Affiliate Executive Adviser at Navaspace, Steve Bochinger said, "the estimated revenues of India's space sector have increased from USD 3.8 billion in 2014 to USD 6.3 billion in 2023." ET. It's no use trying to complain because we can't get through. "Indians spent over $15 billion hours on hold in 2023 leading to a staggering economic loss output of $55 billion, according to a report by AI platform ServiceNow." DH. "Space the final frontier". esahubleorg. If we can get there. Before others.

Oil for weapons.

"The ongoing Russia-Ukraine war shows no sign of ending soon," as "A recent video has surfaced, capturing footage of a Ukrainian drone striking a residential building in Saratov. The attack bears a chilling resemblance to the way planes collided with the World Trade Center during the 9/11 attacks." NDTV. "Russia has launched one of its biggest air attacks on Ukraine of the war so far, the head of the Ukrainian air force has said." "Power infrastructure was hit, causing widespread blackouts," and "Russia confirmed it had launched attacks on Ukraine's energy infrastructure - one of its long term tactics - and said all its targets were hit." BBC. "Despite sanctions by Western countries against Russia due to the Ukraine war," "In its latest rankings, the World Bank has promoted the Russian economy to the top income category." "Along with Algeria, Iran and Mongolia, Ukraine has moved up from the lower-middle-income to the upper-middle-income category this year." ET. The war seems to have been good for both Russian and Ukrainian economies. "Indian Prime Minister Narendra Modi has paid a historic visit to Ukraine, telling President Volodymyr Zelenskyy he is prepared to play a personal role to bring peace." As is usual, Mr Modi hugged Zelenskyy. "Mr Zelenskyy appeared to frown, but equally it may have been the sun in his eyes. Smiles were few and far between." BBC. Zelenskyy described Mr Modi's visit as "historic". "If we will change India's attitude to this war and to Russia, we will stop the war, because Putin will want to stop it," Zelenskyy said." NDTV. "Experts say Zelenskyy issued 'curt' messages to India in a key press conference after Modi's departure from Kyiv, in which he made a veiled reference to India's border standoff with China." The Print. Zelenskyy's career as a successful actor and comedian (wikipedia) may make him believe that other nations must take his side because the US is egging him on, but other nations have their own interests to consider. Under cover of martial law Zelenskyy did not submit to re-election which was due on 31 March 2024. CNN. The Indian government has earned in excess of Rs 25 trillion from excise duty on petroleum products. since 2014-15. ppac.gov.in. In addition to excise duty, "In 2022-23, the government collected Rs 1.47 trillion from SAED (Special Additional Excise Duty), a large part of which is WPT (Windfall Profit Tax) revenue. Collections are expected to rise to Rs 1.52 trillion in the current fiscal." DH. This is possible only because of cheaper oil from Russia. "India overtook China as biggest importer of Russian oil in July as Chinese refiners bought less because of lower profit margins from producing fuels," and "Russian crude made up a record 44% of India's overall imports last month, rising to a record 2.07 million barrels per day (bpd), 4.2% higher than in June and 12% more than a year ago." Reuters. Mr Modi is not going to give up this enormous source of revenue which is useful for winning elections. The US is giving weapons to Ukraine to prolong the war and weaken Russia. In the process destroying the country. Russia is giving us oil. Zelenskyy should bargain for cheap Russian oil for giving up US weapons. The war will end.   

Unintended consequences.

"Chair Jerome Powell said the time had come for the Federal Reserve to cut its policy rate, affirming expectations that officials will begin lowering borrowing costs next month and making clear his intention to prevent further cooling in the labor market." ET. Lower interest rates in the US will result in more money coming into Indian markets looking for higher returns. This will strengthen the rupee against the dollar and, since India imports 80% of its oil, a stronger rupee will reduce our import bill. ET. The US was India's largest trading partner during January-June 2024 while our trade deficit was the highest with China at $41.6 billion. BS. Our exports to the US was $44.715 billion and imports from the US was $21.008 billion, giving us a trade surplus of $23.707 billion. Our trade surplus with the US was $43.311 billion in calendar year 2023. census.gov. "After remaining in the positive zone for three months, India's exports contracted 1.2% to USD 33.98 billion in July, while trade deficit widened to USD 23.5 billion." ET. A stronger rupee could hurt our exports by making our goods more expensive. In FY 2023-24, India's merchandise exports fell by about $14 billion and imports fell by $38 billion compared to FY 2022-23. Service exports rose by $14 billion and imports fell by $5 billion. Total exports stayed the same at $776 billion but imports fell by $44 billion, so that combined trade deficit fell from $121.62 billion in 2022-23 to $78.12 billion. pib.gov.in. "India, despite being one of few developing countries self-sufficient in food, still shipped in $33 billion of farm products in 2023 with more than half of it just accounted for by vegetable oils." "The imports in 2023 were 10% lower than last year's $36.7 billion as vegetable oil prices eased during the year." FE. "The household (HH) situation in India has continued to deteriorate in recent months, with real income levels persistently declining, highlighted a report by 'Systematix Institutional Equities'." "The report added that for now, however, the decline in real HH income, which accounts for 78% of GDP, suggests that any recovery will be gradual at best." ET. A report by the World Health Organisation showed that, "Hunger in India declined from 21.4% of the population in 2004-06 to 13.7% in 2021-23." But, "One major problem that limits access to nutrition is lack of affordability. The cost of a healthy diet has consistently increased in the country. About 56% of the population could not afford a healthy diet." Proportion of obese children has risen from 2.2% to 2.8%. DH. What the US Fed does is thus very important for us. Who knows what the consequences will be?   

Namaste is our culture.

In 2016, "Our dear Prime Minister, Narendra Modi, is a hugger. Not just any hugger. He is a serial, compulsive hugger. In the last one year, he has moved at such speed and hugged with so much force that the 'Modi-impact' has a different meaning altogether." The Quint. In response to questions about Mr Modi hugging Ukranian President Volodymyr Zelenskyy just six weeks after hugging Russian President Vladimir Putin, Minister of External Affairs S Jaishankar said, "In our part of the world, when people meet people, they are given to embracing each other, it may not be part of your culture but I can assure you it is part of our's." ET. Not sure which world the exalted minister is talking about. It may be common in his rarefied circle, but it is certainly not "part of our culture" for us, poor, humble citizens of India. The universal greeting in India is to place both palms together in front of the chest, as in prayer, to bend the head slightly forward and to say namaste or namaskar which is "more than just a casual greeting. It's a gesture, deeply ingrained in the rich tapestry of Indian culture, with profound spiritual significance." TOI. 'Namaste' is the common greeting, meaning 'my respectful salutations to you' and 'Namaskar' is more formal, meaning 'I bow to you with reverence'. yogapedia. It is also hygienic and was universally adopted by world leaders during the Covid pandemic. ET. It is not just about hugging Putin and Zelenskyy for the equal length of time and with equal pressure, "Bangladesh's interim government has revoked ousted prime minister Sheikh Hasina's diplomatic passport," and so, "The cancellation of her diplomatic passport and its associated privileges may put her at risk of extradition." ET. This is the second time she has sought refuge in India. "On August 15, 1975, Sheikh Hasina's father, Bangabandhu Sheikh Mujibur Rahman, the founding father of Bangladesh was brutally assassinated along with 18 members of her family," and at that time Prime Minister Indira Gandhi protected her in Delhi in secret. HT. Mrs Gandhi had guts an gumption. The new government in Bangladesh will examine all the deals signed between India and the previous government. Pakistan is bankrupt and begging from China. In February, "China has rolled over a $2 billion loan to Pakistan." Reuters. Sri Lanka leased the Hambantota Port to China for 99 years in exchange for $1.12 billion. the Diplomat. Maldives elected Mohammed Muizu, as President and he "has perceptibly increased the distance between Male and New Delhi" and KP Sharma Oli is back as Prime Minister of Nepal for the fourth time. "Oli is seen as more favorable to Beijing than to New Delhi," wrote Rajrishi Singhal. India has the worst neighbors in the world, China being the most dangerous. "Speak softly and carry a big stick; you will go far," advised US President Theodore Roosevelt. wikipedia. We could try "Hug tightly and carry a 'Bagh Nakh' (wikipedia)." Very messy. Better to stick to Namaste or Namaskar. Polite and hygienic.     

Only two bull markets - India and the US.

"There are only two bull markets in the world today - US and India." "The US economy today is about 26% of the global economy, but its stock market capitalization is more than 50% of the world market," Ruchir Sharma said in an interview. "The total number of demat (dematerialised) accounts in India crossed the 150 million mark for the first time ever in March on the back of sustained bullish momentum in the Indian market." Mint. 'Demat accounts' are like bank accounts in which shares are held in electronic form. HDFC Bank. India's population is around 1,450 million (worldometer), so about 9% of Indians dabble in stocks. India's GDP in FY 24 was $3.9 trillion (Forbes), but "The market capitalization of companies listed on the National Stock Exchange exceeded $5 trillion (in May), coinciding with the Nifty 50 index reaching a record high of 22,993.60 (Mint). Central banks focus on consumer price inflation but not on asset price inflation. And, "One of the fundamental concepts of capitalism in the market is mean reversion, which is that excess profits should get competed away and you should keep getting churn. But this whole concept has been undermined now because of this extensive involvement, whether it is easy money, bailouts or regulations which benefit the big businesses enormously," said Sharma. On 29 June, "BSE Sensex and Nifty50, India's benchmark stock indices, reached record intra-day highs...before closing nearly unchanged due to profit taking." "The BSE Sensex closed slightly higher at 81,355.84, its all-time closing high." TOI. Also, "According to data from the National Housing Bank, residential property prices in India have risen by an average of 10-12% per annum over the past decade, outpacing income growth and inflation." ET. During Covid, the US Federal Reserve cut its Funds rate to 0-0.25%, started a bond-buying program of $120 billion per month, labeled quantitative easing, and provided cheap loans to businesses and municipal councils. The Congress provided direct payments of $1200, then $600 and finally $1400 to families. Investopedia. The difference between the US and India is that the US Federal Reserve targets CPI inflation rate of 2% "as most consistent with the Federal Reserve's mandate of maximum employment and price stability." Fed. The Reserve Bank of India (RBI), on the other hand, seems comfortable with 6% inflation rate. So it held its policy rate at 4% for 24 months from May 2020 to May 2022 (NDTV), while the CPI inflation was averaging over 6% (RI). Since inflation hurts the poor the Central and state governments run various welfare schemes which are announced before elections. "In the 2022 Union Budget of India, there are 740 central sector (CS) schemes and 65 centrally sponsored schemes (CSS). wikipedia. Prime Minster Narendra Modi announced that 813.5 million people will be provided with free food grains for 5 years, starting from 1 January 2024, at a cost of Rs 11.80 trillion. pib,gov,in. "In fact,, the Economic Survey of 2022-23 had pointed out that as of December 2022, there were more than 2,000 such schemes run by state governments." "The total expenditure of state governments has increased from 17.7% of gross domestic product (GDP) in 2018-19 to 19.6% in 2023-24." India may be moving towards a universal basic income "in this quick and disguised way", wrote Vivek Kaul. With such stimulus being provided by both the US and Indian governments, it is not surprising that their stock and real estate markets are booming. But, whereas the US is trying to reverse some of that stimulus, India has to carry on. Any reduction would be electoral suicide. Will the bubble burst? If it does, will it lead to more stimulus? Suspense.   

Rotten tail Indians.

"Rising unemployment in China is pushing millions of college graduates into a tough bargain, with some forced to accept low-paying work or even subsist on their parents' pensions, a plight that has created a new working class of 'rotten-tail kids'.' "The phrase has become a social media buzzword this year," as "The jobless rate for roughly 100 million Chinese youth aged 16-24 crept above 20% for the first time in April last year." Reuters. In India, "Unpaid family workers have contributed to 37% of growth in India's workforce since 2017-18." "Women account for most of the growth in unpaid work, 34 million of the 42 million growth in unpaid workers has come from women." "Those with a graduate or higher degree contributed 3 million or 8.3% to the overall growth of unpaid workers from 2017-18 to 2022-23," wrote Abhishek Jha. "Since the shift to a three-child policy in 2021, Beijing has been running national campaigns to foster a 'pro-birth culture' as China's population shrinks and grays at an alarming rate." "Last year, the country's total fertility rate (TFR) - meaning the average number of children a woman delivers during her reproductive years - stood at around 1.0, according to the 2024 China birth report." In India, "In 1971, the country's fertility rate was at 5.2." "By 1991, this had come down to 3.6." "In 1971, total bank deposits in India amounted to just 12.6% of gross domestic product (GDP)" By 1991 this had increased to 33.4%, peaking at 70.6% in 2010. Rising deposits allowed banks to lend to businesses and economic growth jumped to 6.2% from 4.3% per year. In 2011, India's TFR fell to 2.1 and is currently at 2.0%. Wrote Vivek Kaul. In Maharashtra, "Educated and jobless men with family farms their only source of income are unable to find suitable brides for themselves." TOI. No marriage means no children. "High-income economies have a per capita Gross National Income...of $13,846 or more, according to the World Bank. With a per capita income of around $2,400, India is among the lower middle-income countries." Indian firms take 40 years to double in size, "while in the US, they grow seven-fold in the same period." BBC. "India's population is expected to peak at 1.7 billion," and then start declining from 1962. "A decade before the overall population starts declining the working-age population will stop increasing at a faster rate than the general population. This means that there will be more children and elderly people dependent on a shrinking working age population. Per capita income will start falling and per capita spending will rise." DH. But what if India's TFR falls even faster. Multinational companies are leaving Pakistan for Dubai because of internet interruptions. Dawn. We are much worse. "India had the longest internet shutdown in 2023 in terms of user hours, according to a report by virtual network tracker Top 10VPN." ET. Ex-Google engineer Debarghya Das wrote on X, "Young citizens are losing faith in the country as police, government, infrastructure and judiciary constantly fail." msn. Hence, there are about 725,000 Indians living in the US illegally, third highest after Mexico and El Salvadore. The Hindu. Not just young citizens. All of us are losing faith. Except for Bhakts (DH). 

All about respect.

"Noel Tata, Chairman of the CII Africa Committee and Chairman of Tata International Ltd emphasized the growing need for innovative financial strategies to overcome challenges in India-Africa trade," and "highlighted the concept of Rupee trade as a potential solution." ET. In 2023, "The Reserve Bank (RBI) has permitted 20 banks operating in the country to open 92 Special Rupee Vostro accounts (SRVAs) of partner banks from 22 countries as part of efforts to promote bilateral trade in local currencies," which would enable "exporters and importers to invoice and pay in their respective domestic currencies enabling the development of a bilateral foreign exchange market." ET. This would work so long as bilateral trade between the two countries is roughly equal and their currencies are relatively stable. This was exposed almost immediately in June 2023 as, "A lopsided trade relationship with India is forcing Russia to accumulate up to $1 billion each month in rupee assets that remain stranded outside the country" as "Russia has emerged as a top supplier of oil to India over the past year," "But with imports from India stagnating, Russia is ending up with an excess of rupees, which its companies have trouble repatriating because of local currency restrictions." TOI. So,  "Russia has used the rupees in SRVAs to make investments in stocks, government securities, infrastructure schemes and other areas." HT. It is possible that by converting its rupee stockpile from SRVA accounts to foreign portfolio investments, Russian companies may be able to repatriate their money in dollars (India Briefing) even though the process is pretty onerous. On 20 April 2024, "The Indian Rupee (INR) has fallen sharply against the US dollar (USD) in the last one month," wrote Jimeet Modi. Apparently, SRVAs will enable the rupee to become a reserve currency and make it stable. One reason for rupee depreciation is that India runs consumer price index (CPI) inflation at an average of over 6% (RI), while the US targets an inflation rate of 2%. Average inflation in the US went up to 4.7% 2021, 8.0% in 2022 and to 4.1% in 2023  (usinflationcalculator.com). It has been coming down sharply. Another reason is that India consistently runs a trade deficit with most nations. "According the latest data from the Ministry of Commerce and Industry, India's trade deficit in FY 2023-24 is estimated to be $78.12 billion, an improvement of 35.77% compared to FY 2022-23, when it was $121.62 billion." Forbes. To make the rupee a reserve currency they must allow Indian citizens to invest in foreign markets in rupees. But, "Indian regulators have stopped allowing local family offices to set up investment funds in its new finance hub, as they are concerned these arrangements may be used to evade taxes and capital controls, according to people familiar with the matter." ET. Treating citizens like thieves and propping up the rupee with splints do not inspire confidence. That's why India holds USD 241.9 billion worth of US government securities. ET. Hence, "Around 4,300 millionaires are projected to leave India in 2024," and "in 2023 around 5,100 millionaires relocated abroad." Mint. Why would foreigners use the Indian rupee if citizens are prevented from using it? And, uncontrolled inflation keeps debasing the currency. Bring down inflation and treat citizens with respect. Everything else is just hot air. Very polluting. 

Food is expensive. Cut it down.

"India's monetary policy framework should consider targeting inflation that excludes food, the prices of which are influenced more by supply than demand, the government's 2023-24 Economic Survey said." "Volatile vegetable prices have caused frequent inflation spikes in recent years." ET. In 2021, the government "asked the Reserve Bank (RBI) to maintain retail inflation at 4% with a margin of 2% on either side for another five-year period ending March 2026." ET. Problem for the RBI is that prices of food are dependent on supply, which is largely dependent on the weather, and tinkering with interest rates is not going to increase supplies. "India's framework of agricultural subsidies, for example, was designed in the 1960s to boost domestic grain production." "But it isn't right for an industrializing, food surplus nation that needs stable vegetable prices instead." "Core inflation - excluding food and fuel - has been well below the 4% rate for some time. But the central bank hasn't cut rates, because Indian food prices have been higher than global peers," wrote Mihir Sharma. "India's retail inflation eased to 3.54% on an annual basis in July, data released by the government showed." ET. But no one is celebrating because "it's the base effect, stupid!" "Retail inflation based on the Consumer Price Index (CPI) in July 2023 was 7.44%, a 15-month high at the time." "In fact,...the core inflation has gone up to 3.4% in July, as against analyst expectations of a 3.1% increase and from 3.1% in June." ET. "Although the main source of food price rises - supply shocks - is outside the ambit of monetary policy, a disinflationary policy is required to curb price pressures, RBI Deputy governor Michael Patra and others said in an article." "According to the article, if the disinflationary policy retreats, price pressures on core and headline inflation could get aggravated and 'run out of control'. This, it said, is a risk especially with aggregate demand picking up and a possibility of rising input costs on the back of geo-political tensions." Mint. In addition, "When food inflation is high for a prolonged period, wages go up, ultimately leading to higher prices. At this point, inflation becomes generalized, rather than being restricted to food. Unanchored inflation expectations also push up future inflation," wrote Deepa Vasudevan. A paper by think-tank National Council of Applied Research argues that targeting core inflation by ignoring food prices "is not feasible in a country like India, where food makes up nearly half of the consumer price basket." "Instead the authors suggest that reducing the weight of food in the consumer price basket is more suitable. They estimate that this weight could reduce to 30% within a decade due to projected increase in per capita incomes, from the current 45.8%. In the short term, they recommend cutting it to 40%." ET. Anticipating resistance to its idea of shifting to a core inflation target the Economic Survey recommended Indians should eat less. "India's achievement of its long-term goal to become a developed economy also hinges on its population losing weight, the Economic Survey 2023-24 has indicated." ET. If 1.453 billion Indians (worldometer) eat less, food prices will fall, bringing down retail inflation, enabling the RBI to reduce interest rates, helping businesses to expand by borrowing cheaply, increasing employment, which will increase demand, stimulating even more investment and, hey presto, India will become a developed country in no time. Absolutely brilliant. Ban fatties. Cut off food. Float up the rankings. 

A taste for markets.

"Bank borrowing through market instruments has climbed to its highest levels," as "Data the Reserve Bank (RBI) publishes on a fortnightly basis showed that as of July 26, bank's borrowings were at Rs 9.32 trillion, 20% higher than the borrowing figure on April 5." ET. "While banks have been struggling to attract deposits, customers have been borrowing heavily to buy homes and for other purposes." "As on 28 June, bank deposits had grown 11.1% year-on-year, lagging credit growth of 17.4%." Mint. "Loan-to-deposit or credit-deposit ratio indicates how much of a bank's deposit base is utilized for loans. This was at 80% in FY24, at its highest since 2005, when this ratio became available." Since the RBI cannot dictate the rate of interest on deposits, there is not much it can do. pressreader. "Indian banks are facing a daunting dilemma as urban savers increasingly flock to higher-yielding instruments like mutual funds and stocks, undermining banks' traditional advantage of low cost deposits." "Deposit growth is crucial for banks as it provides a stable and low-cost source of funds, essential for financing loans and maintaining liquidity. High deposit levels enable banks to offer competitive interest rates on loans, support their operational needs, and meet regulatory requirements." ET. In other words, when lots of people save their money in banks, they get a lower rate of interest, which allows banks to lend at comparatively lower rates and make handsome profits. So, where are people investing? "According to the Association of Mutual Funds in India (AMFI), the monthly SIP (Systematic Investment Plan) contribution in July stood at Rs 233.32 billion against Rs 212.62 billion in June." "The number of SIP accounts stood at the highest ever at 9,33,96,174 in July," the total assets under management of SIP was Rs 13.09 trillion, "The Mutual Fund folios were at an all-time high at 19,84,06,294 and "The average assets under management (AAUM) for July 2024 was recorded at Rs 64.70 trillion." ET. On 08 August, "RBI Governor Shaktikanta Das...once again flagged the issue of rising retail money finding its way into alternative investment routes and said it could pose structural issues for Indian banks." ET. That is disingenuous and an attempt to evade his own responsibility. The RBI stubbornly held its interest rate 11 times at 4% over 24 months, from May 2020 to May 2022 (NDTV) when consumer price index (CPI) inflation was averaging over 6%, reaching a high of 7.8% in April 2022 (RI). This imposed a severe financial repression on people as they were getting a negative return of at least -2.5% on their savings and they started looking for alternative routes of investment to protect themselves from the RBI's onslaught. The RBI increased its repo rate by 40 basis point in an emergency meeting of the Monetary Policy Committee (MPC) on 2-4 May (ET), panicked by a possible jump in US interest rate by the Federal Reserve which was meeting the next day. The Fed increased its Funds rate by 50 basis points on 05 May 2022. Forbes. Had the RBI not acted in haste the rupee may have fallen precipitously against the dollar and inflation may have become out of control. People have got a taste of the stock market as the BSE Sensex has rocketed from below 30,000 in 2020 to over 80,000 today (tradingeconomics.com). No use trying to blame commercial banks. We are not fooled.

Lipstick index and stupid radishes.

In the US, "The consumer price index (CPI) rose 2.9% last month from a year ago, the Labor Department said in a statement." "So called 'core inflation', excluding volatile food and energy prices also eased last month to 3.2% - its lowest since 2021.The July CPI data are good news for US Federal Reserve as it weighs the right time to start bringing interest rates down from a 23-year high." ET. "US stocks ended higher on Friday (16 Aug), extending their biggest weekly percentage gains of the year as worries of an economic downturn eased." "All three indexes recorded their biggest weekly percentage gains since late October, with the S&P 500 and the Nasdaq posting their first weekly gain in five." Reuters. Not so fast. "Although (Warren) Buffett has been skeptical of the valuations in the equities market and has been publicly lamenting about the absurd prices, he has done something that should worry investors - buying stakes in a cosmetic company called Ulta Beauty Inc." "Juliet Schor, a professor of sociology and economics propounded the theory that during tough economic times, women spend money on affordable luxury than other expensive consumption. She described it as a 'hope in a bottle'." ET. "Retail sales in the United States soared past analyst expectations in July," as overall retail sales came in at $709.7 billion, up 1.0% from the June figure, said the Department of Commerce." ET. On the other hand, "China's Economy grew much slower than expected in the second quarter," as "The world's second-largest economy grew 4.7% in April-June, official data showed, its slowest since the first quarter of 2023 and missing a 5.1% forecast in a Reuters poll." "Smart money, as the saying goes, is bailing out of China. The country's millionaires and billionaires are emigrating in record numbers, with 2024 likely to see an out migration of 15,200 such people." Forbes. In another big irritation, "China's 7 million ride-hailing drivers are facing the threat of job loss from artificial intelligence as robotaxis begin to proliferate." "Drivers in Wuhan have a unique nickname for Aollo Go vehicles, calling them 'stupid radishes' due to their tendency to cause traffic jams." ET. In Pakistan, financial difficulties have soared by 14% in the last one year, so that "74% of urban population in the country being unable to meet their monthly expenses with their current income." BS. To make matters worse, "The Senate Standing Committee on Overseas Pakistanis was informed about deplorable standard of Pakistani workforce, mainly in the Gulf region, has led to the shifting of preferences by Gulf employers to hire workforce from other regional countries, such as Bangladesh, instead of Pakistan." "He said that 50% of the crime rate among the UAE labor force is reportedly attributed to Pakistanis." Dawn. A recession in the US would hurt exports from China. A recession in China would reduce support for 'iron brother' Pakistan (Tribune). India is already dealing with trouble in Myanmar and Bangladesh. We don't need a massive social disruption in Pakistan as well. Sadly, bad things come in threes (wiktionary).

Formal CEOs, informal children.

"Infosys founder NR Narayan Murthy has previously indicated that a fair CEO remuneration would be about 25 to 40 times that of the lowest level employee. But in his own company now, CEO Salil Parekh's compensation is nearly 700 times the median remuneration in the company (compared to the lowest level employee, it would be significantly more)." "Former Wipro CEO Thiery Delaporte's was $20 million, which meant his salary was 1,702 times more than that of the median remuneration of Rs 980,000 in 2023-24." TOI. Talking about India's growth rate, International Monetary Fund's (IMF) deputy managing director Gita Gopinath said, "This year we have (projected) 7%, medium term growth (will be) 6.5-7%; it's contribution to global growth is 17%." But, employment is not keeping up, private investment is strong in the "household sector and construction", but not in machinery and equipment, and "A continued focus on improving the ease of doing business in the regulatory environment, in terms of red tape, will be super helpful." "Development economist Ajit Ghose's critical 2023 paper highlights a pattern of 'exclusive growth' in India's economy since the early 1990s, benefiting primarily the urban rich." Skilled employment continued to grow "while low-skilled workers faced increasing exclusion from the job market." "Under the Narendra Modi government, the employment rate among semi-skilled workers declined even more rapidly," and "The decline was compounded by deeply exploitative worker contracts," wrote Prof Deepanshu Mohan. "Quality of employment has been a bigger challenge," such that "the earnings of the bottom quintile of regular workers is no different from the bottom quintile of casual workers. In 2022, both received average monthly earning of about Rs 3,000 per month or Rs 100 per day," wrote Prof Himanshu. Barely subsistence level. "India's informal sector consists of a vast network of small businesses, street vendors, and independent workers, operating outside the formal legal framework." The informal sector had grown 7.4% per year in real terms between 2010-2015-16." Employment in the sector grew from 108 million to 111.3 million in that period, but has fallen to 109.6 million since, wrote Payal Bhattacharya. Higher competition for jobs due to unemployment leads to workers accepting lower remuneration. This leads to surging profits in large companies and indecent salaries for the CEOs. "India's largest listed companies were able to generate steady cash flows from their operations in 2023-24, with the aggregate figure for a sample of 416 BSE 500 firms surging 26.4% and crossing Rs 10 trillion, likely for the first time, a Mint analysis showed." As a consequence, "Gujarat, one of the economically developed states in the country" "ranks 25th among Indian states on hunger index says the 2023-24 Sustainable Development Goal (SDG) report released by NITI Aayog earlier this month." It says that 39.7% of children under 5 in Gujarat are underweight. TNIE. GDP growth over 7%, leading to listed companies banking Rs 10 trillion, leading to CEOs earning 1,000 times their workers, while the informal earn Rs 100 per day and 40% of children are hungry. Simple, really.

Fool's gold or gangbusters?

"In the last 17 days since Budget was presented on July 23, Sensex is weaker by around 1,400 points or 1.7% as FIIs have been incessantly pressing the sell button almost everyday." "Foreign institutional investors (FIIs) have sold Indian stocks worth at least Rs 300 billion since Budget." However, "The impact of the FII sell-off would have been much wider had it not been for the trust shown by retail and other domestic investors who have absorbed almost all of the selling." ET. "The Indian economy is at the threshold of a major structural shift, moving towards an 8% growth rate on a sustained basis, Reserve Bank of India Governor Shaktikanta Das said." "The Indian economy expanded by 8.2% in FY24, and the RBI expects the country's GDP to grow by 7.2% in the current financial year." Mint. And yet, the Indian rupee fell to a low of 83.98 to the dollar on 12 August before ending the day at 83.97 to one dollar. Zee. It has jumped to 83.86 to the dollar this morning. xe.com. Probably because, "India's forex reserves fell by $4.8 billion to $670.119 billion in the week ended on August 9." HT. RBI selling supported the rupee. However, "India's foreign exchange reserves rose by $7.53 billion to a new record high of $674.91 billion for the week ended August 2." BS. By its transactions on the currency markets the RBI made so much profits that it was able to transfer an eye-watering Rs 2.11 trillion to the government (BT) this year. "After remaining in the positive zone for three months, India's exports contracted 1.2% to Rs 2.85 trillion ($33.98 billion) in July, while the trade deficit widened to Rs 1.98 trillion ($23.5 billion)." DH. "India's exports to China dipped by 9.44% to $1.05 billion, while imports rose by 13.05% to $10.28 billion." From April-July, exports fell 4.54% to $4.8 billion, while imports grew by 9.66% to $35.85 billion, resulting in a trade deficit of $31.31 billion. ET. So much for 'Atmanirbhar Bharat' (wikipedia). "The problem is that China has achieved its stupendous, world-beating export capacity through active industrial policy," so that, "In 2019, such support totaled 1.79% of GDP or $407 billion in PPP terms." It was 1.89% of GDP in 2017 and 1.79% of GDP in 2018, wrote TK Arun.  The government has stopped the release of data on goods and services tax (GST) collections from last month. BT. In July, "Nearly 46.7 million new jobs were created in India during the financial year 2023-24 taking the total number of employed persons in the country to 643.3 million, RBI data showed." DH. Li Keqiang was the Prime Minister of China from 2013 to 2023. wikipedia. "In 2010, The Economist created a 'Li Keqiang index' for the Chinese economy." "Li Keqiang liked looking at indicators like railway cargo volume, electricity consumption and loans disbursed by banks in order to get an indication of which way the Chinese economy was really headed. These numbers were real numbers and not theoretical constructs like gross domestic product (GDP)." India needs a its own Li Keqiang index, wrote Vivek Kaul. So, are the zooming share prices in India merely 'Fool's Gold' (Investopedia)? Or is the economy really growing gangbusters (Britannica)? Finding out could be painful. Very. 

Cover up started immediately.

India is famous all over the world. In the night of 8 August, a post graduate doctor at RG Kar Medical College was raped and murdered in a seminar hall where she was resting. DH. Within hours Kolkata Police had arrested 31 year old civic volunteer Sanjoy Roy and he apparently confessed to the crime. It is too early to tell whether he is actually guilty or whether he is being used as a red herring (wikipedia). Retraction of confession is common in India (legal Service India) because it takes so long for any case to come to court that all evidence has been destroyed by then and witnesses threatened into silence. According to the National Crime Records Bureau (NCRB), attacks of rape "peaked at nearly 39,000 in 2016." "There were more than 31,000 reported rapes in 2022." "Conviction rates for rape ranged between 27%-28% from 2018-2022." The Print. According to the autopsy report, the doctor in Kolkata was raped by more than one person, "subjected to genital torture due to 'perverted sexuality', and died due to suffocation. HT. Cover up started immediately. Next morning the family was informed by telephone that the doctor had died by suicide and was made to wait for over three hours before being allowed to see the body. Mint. The Indian Medical Association has announced a withdrawal of medical services for 24 hours on 17 August to protest against the rape. HT. "Tens of thousands of women in West Bengal state marched through the streets on Wednesday (14 August) night." "The Reclaim the Night March was the culmination of nearly a week of frenzied protests ignited by the brutal killing of the 31-year-old at the RG Kar Medical College." BBC. In an act of brazen defiance around 5,000 goons entered RG Kar in the night of 14 August to threaten the protesters and vandalize the site of the incident in an attempt to destroy all evidence. Police stood by as observers. Quint. This was a response to the High Court order, transferring the case to the Criminal Bureau of Investigation (CBI) immediately, thus overriding Chief Minister Mamata Banerjee's six-day deadline to Kolkata Police to solve the case. NDTV. In July, Ms Banerjee said that she will "give shelter" to all Bangladeshis in her state although immigration and border security are the Center's responsibility. ET. Total breakdown of law and order, mobs terrorizing people with impunity and blatant disregard for national security should be valid reasons for imposing President's Rule in West Bengal. Legal Service India. The problem is that the Union government is in the hands of the BJP. As is the state of Uttar Pradesh where a 19 year old Dalit woman was raped and murdered by four upper caste men in Hathras on 14 September 2020. The police actively destroyed evidence including burning the victim's body in the middle of the night while forcibly preventing the family from attending. Three of the four villains have walked free while the fourth has been convicted of a lesser charge of manslaughter. wikipedia. Haryana is also ruled by the BJP where Dera Sacha Sauda chief Ram Rahim, convicted of rape and murder, has been released from prison for the eighth time for a 21-day furlough. BT. In 2022, the Union government of Prime Minister Narendra Modi released the eleven men, convicted of gang rape of Bilkis Bano and the murder of 14 members of her family including her 3 year old daughter, on Independence Day. BBC. Politicians are expert at 'jumla', meaning an empty promise (Mint), but this would be a case of a jet black pot calling the kettle black (wikipedia). Hence the paralysis.

Limited land, soaring population.

In the US, "The consumer price index (CPI) rose 2.9% last month from a year ago, the Labor Department said in a statement, while a measure that strips out volatile food and energy costs cooled to an annual rate of 3.2%." Core inflation is calculated by stripping food and fuel inflation out of the CPI, because they are very volatile. Investopedia. At 3.2%, the core inflation is at "its lowest level since April 2021". Even with all the good news, "US inflation remains 'uncomfortably' above the Federal Reserve's target despite the progress it has made in recent months, a senior bank official said." In its July meeting the Fed held its Funds rate at 5.25 -5.50%. usbank.com. Fed Chair Jerome Powell suggested that the Fed could start easing interest rates from its September meeting. "India's July retail inflation slowed to 3.54%, its lowest in nearly five years, on the back of a sharp decline in food inflation." Food inflation dropped from 9.36% in June to 5.42% in July, the lowest in 13 months. However, this could largely be due to base effect because CPI inflation was 7.44% in July 2023 and 5.08% in June 2024.  ET. "India's wholesale inflation, measured using the Wholesale Price Index (WPI), eased to a 3-month low of 2.04% on an annual basis in July as against a 16-month high of 3.36% in June. ET. "India's inflation targeting framework should consider excluding food inflation, the 2023 -24 Economic Survey said.., suggesting that the difficulties faced by the poor because of high food prices can be eased through direct benefit transfers or coupons." Mint. "Higher food prices are, more often, not demand-induced but supply induced," the Survey said. "Short-run monetary tools are meant to counteract price pressures arising out of excess aggregate demand growth." Is the Survey suggesting that the cost of borrowing should be brought down so that the government can borrow at lower rates to distribute cash to the poor? Won't that increase government debt? In 2023, "Prime Minister Narendra Modi, on 6 February, rolled out petrol blended with 20% ethanol across 11 states and Union territories in the country." The whole country will be covered by 2025. "The current ethanol production capacity in India at 4.26 billion liters from molasses-based distilleries and 2.58 billion liters from grain-based distilleries is proposed to be expanded to 7.60 billion liters and 7.40 billion liters respectively." Ethanol for India. Which means that vast quantities of sugar cane and food grains are going to be diverted to ethanol production. "According to the United Nations' World Population Prospects-2022, India's population by 2050 is expected to rise to 1.668 billion. NDTV. To increase employment prospects "the country needs to ramp up its manufacturing sector", said Finance Minister Nirmala Sitharaman. ET. The Economic Survey trivializes food inflation as a lack of supply, but with increasing land being diverted to ethanol production, land being used for building factories, a massively rising population and the total area of land remaining constant at about 3.3 million sq km (knowindia.india.gov.in), how do our eminent economists propose increasing our food supply? Increasing handouts helps politicians win elections. Economists should focus on the welfare of the nation. Even if they are being paid by the government. It's taxpayer money.

Precision bomb and toxic toothpaste.

"Iran or its proxies are 'increasingly likely' to launch an attack on Israel in the upcoming days, the White House warned, citing intelligence." "The US, UK, France, Germany and Italy are working to de-escalate tensions and prevent further violence." NDTV. On 31 July, "Israel says it killed a top Hezbollah commander after carrying out an airstrike on a southern suburb of the Lebanese capital Beirut. The Israel military says Fuad Shukr was the target of an 'intelligence-based' elimination." BBC. On 3 July, An Israeli strike in the southern coastal city of Tyre in Lebanon killed another Hezbollah commander. "A Hezbollah statement identified the killed commander as Mohammad Naameh Nasser, who went by the name 'Abu Naameh' his nom de guerre." AP. On 31 July, "Hamas leader Ismail Haniyeh was assassinated in the Iranian capital Tehran early on Wednesday morning, an attack that drew threats of revenge on Israel and fueled further concern that the conflict in Gaza is turning into a wider Middle East war." Reuters. "Top Hamas leader Ismail Haniyeh was assassinated by an explosive device covertly smuggled into the Tehran guesthouse where he was staying." "The bomb had been hidden around two months before his stay." "Officials told NYT the bomb was detonated remotely once it was confirmed that he was inside his room at the guesthouse, killing him and a bodyguard." India Today. "The US has sent a guided missile submarine to the Middle East," and "Defence Secretary Lloyd Austin also said an aircraft carrier which was already heading to the area would sail there more quickly." "This move comes in response to fears of wider regional conflict." BBC. Regardless of all the warnings and efforts to calm the situation, "Iran has dismissed calls from the UK and other Western countries to refrain from retaliation against Israel for the killing of Hamas leader Ismail Haniyeh in Tehran last month." BBC. Iran is compelled to retaliate against Israel because, if Israel can carry out a precision killing in its capital city, then it can take out any Iranian leader, anywhere in Iran, any time it likes. They must be getting the heebie jeebies. "Wadie Haddad, head of the Popular Front for the Liberation of Palestine (PFLP), was implicated in several high-profile attacks, including the 1976 hijacking of Air France Flight 139, known as the Entebbe Hijacking." "Israel's response, Operation Thunderbolt, was a successful rescue mission led by Lt Col Yonatan Netanyahu, who tragically lost his life in the operation." On 10 January 1978, Haddad's toothpaste was replaced by a toxic one, specially prepared by Israel Institute for Biological Research, which was designed to enter into the bloodstream through mucous membranes and kill slowly. Haddad fell ill. "He endured ten days of agony before dying on 29 March 1978." ET. Lt Col Yonatan Netanyahu was the brother of the present Prime Minister of Israel Benjamin Netanyahu. wikipedia. Will Iran launch a full scale attack along with its proxies, Hezbollah, Hamas and Houthis, bringing in the US? Or, will this tit-for-tat game continue indefinitely? India can only watch from here. and continue to buy oil from Russia (Reuters). Quietly, of course.      

Safety or risk?

On 11 August, "A week that started off with a $6.4 trillion global stock rout and a broad rally in bonds ended relatively quietly, calming from historic volatility triggered in part by the prior week's disappointing US jobs report." ET. "Equities suffered heavy losses around the globe on Monday (5 August) as Wall Street added to a rout that started in Japan, while the dollar tumbled against the yen and nervous investors looked for signs of a recession in the US." "Earlier Japan's benchmark Nikkei average had closed down 12.40% for its largest one-day fall since October 1987" Reuters. "The Bank of Japan (BOJ) raised interest rates to levels unseen in 15 years and unveiled a detailed plan to slow its massive bond buying, taking another step towards phasing out a decade of huge stimulus." Rates were raised to a mere 0.25% from 0-0.1% but "the hawkish comments pushed the dollar below 151 yen for the first time since March." Reuters. In the US, "The unemployment rate rose 4.3% in July, and nonfarm payroll employment edged up by 114,000." bls.gov. This was seen as "an unexpected setback" because hiring was 35% lower than expected and the unemployment rate was "the highest since October 2021"." AP. "The massive sell-offs had come after a higher-than-expected US unemployment rate...sparked worries the US economy was heading for a recession." This was exacerbated by a winding down of the yen carry trade. "The so-called 'carry trade' is commonly used in currency markets where investors borrow money from economies with low interest rates such as Japan or Switzerland, to fund investments in higher-yielding assets - this time stocks - elsewhere." Reuters. According to the Bank of International Settlements (BIS) cross-border yen borrowing has "increased by $742 billion since the end of 2021". "Brokers said it would be safe to assume some carry trades would have happened involving Indian equities," and "According to NSDL data, the assets under custody of Japanese foreign portfolio investors in domestic equities till 30 June was Rs 2.05 trillion. The highest was by US FPIs at Rs 30 trillion." ET. "The reason I have a lot of cash is because I expect the next sell-off to be the worst in my lifetime, because the debt has gone up everywhere. Even India has debt now," said American investor Jim Rogers. Warren Buffett's Berkshire Hathaway has cash holdings of $276.9 billion as "It was the seventh straight quarter Berkshire sold more stocks than it bought." ET. Retail investors in India now hold 40% of floating stocks on the National Stock Exchange (NSE). New investors are attracted by the rising prices and prices keep rising as more investors buy into the story. This is a 'naturally occurring Ponzi scheme', wrote Vivek Kaul. Americans are shifting to the safety of cash. Indians are gambling on shares. Safety first, or no risk no gain?   

Money cannot be controlled.

"Switzerland boasts the highest percentage of millionaires globally, with 14.9% of its adults holding millionaire status." They achieve this by renting homes rather than buying, a thrifty lifestyle and saving 20-30% of earnings regularly. "They utilize local banks for daily transactions, private banks for wealth management, and international banks for foreign investments and global investments." "Swiss investors diversify their portfolios and secure residences and citizenships in other countries to enhance financial opportunities and optimize tax benefits." TN. India does not allow dual citizenship. Persons of Indian Origin, who are citizens of another country, may be granted Overseas Citizen of India (OCI) status, which is a visa for life, with certain extra privileges. cgisf.gov.in. In this year's Budget presented on 23 July, inflation indexation in long term capital gains from sale of residential properties was removed while the rate of tax was reduced from 20% to 12.5%. pib.gov.in. This would have substantially raised the amount of tax from the sale of properties (icicidirect.com). Reacting to the anger among the middle class, people have now been given the option of choosing between the new rule and the old one. ET. In 2019, in Switzerland, "On May 19, after more than four years since the first effort to reform the Swiss tax system, voters accepted proposed changes to their tax system." "Taxes on dividends will be increased and cantons will receive a higher share of federal tax collections." taxfoundation.org. While the Swiss can invest anywhere the Reserve Bank of India (RBI) lays down stringent restrictions for Indian citizens wishing to invest abroad (ET) and also mentions the Foreign Exchange Management Act (FEMA) which gives unlimited power to the government to arrest any Indian citizen at will while providing complete immunity to the government and officials from claims of compensation for wrongful arrest and victimization (India code.nic.in). The government may want total control on currency and investments while wanting to profit from global trade. However, foreigners, naturally, are unwilling to play along. "Maintaining stability of the exchange is among the most important goals of the RBI." "This task however has become progressively more challenging for the Central Bank owing to the steady rise of the off-shore non-deliverable forward (NDF) market in the rupee (INR)." "In fact, the INR-NDF market is almost thrice as large as the onshore deliverable forward market." Afraid of losing control, the RBI is offering registration to foreign entities, wrote Pratik Datta & Rajeswari Sengupta.  We shall see if the foreigners want to be controlled. To get rid of cash transactions, which reduces the cost of printing currency and increases the ease of surveillance of citizens, the government has introduced the Unified Payments Interface (UPI). UPI is an application which facilitates immediate money transfer, bill payments and access of several bank accounts using a mobile phone. npci.org.in. So successful is the UPI that the RBI is now concerned that "in times of a crisis at a particular financial institution, or even the rumor of one, depositors can vacuum out their money too quickly for regulators to respond to." The Print. In other words, people can save their money from confiscation. Switzerland is a democracy which asks its citizens while India is a police state which issues diktats. The Swiss are millionaires while Indians are dirt poor. Can control citizens, not money.