Services, not goods.

"India-US Strategic Partnership Forum President and CEO Mukesh Aghi...emphasized that exports are going to be a major job creator for India as the country moves towards becoming a USD 5 trillion economy." "He said creating nearly 1.2 million jobs per month is going to be a challenge, highlighting the importance of job creation." ET. "The cumulative overall exports during April-August 2024 is estimated at USD 374.33 billion, as compared to USD 350.11 billion in April-August 2023, with an estimated growth of 5.35%." Merchandise exports grew 1.14%, from USD 176.67 billion to USD 178.68 billion. pib.gov.in. "India's industrial production dropped by 0.1% in August for the first time in two years, primarily due to lower output in the mining and power sectors, along with minimal growth in the manufacturing sector." The Index of Industrial Production (IIP) "was revised down to 4.7% for July, from an earlier estimate of 4.8%." "In the 1950s, manufacturing was about 10% of India's economy. Since 2010, it has averaged about 17.7%." "The share of manufacturing has never reached even 20%." From 2004-05 to 2021-22, Maharashtra, Gujarat, Tamil Nadu and Karnataka have contributed 48% of India's factory output. "For India's share of manufacturing to reach 25% of GDP, we need the sector to expand rapidly in other states such as UP, West Bengal and Haryana," wrote Prof Vidya Mahambare. "According to the IMF, India's real GDP growth rate is expected to outperform other emerging-market economies by about 67% in FY25." "On the other hand, India has a rising unemployment rate (9.2% in June 2024 vs 7% in May 2024), 50% of graduates are unfit to be hired, and the cost of education is increasing, while the monetary reward from the job market upon graduating is plummeting to multi-year lows," wrote Shahan Sud. "The trade imbalance between India and China has widened post-pandemic. In the first five months of FY25, India's exports were only 12.4% of imports from China, down from 15.4% in the same period last year." "As global companies seek to diversify away from China, India was expected to be a prime beneficiary, offering a growing economy of similar scale." "However, Southeast Asian nations have emerged as the main winners from China's declining appeal as a foreign investment destination," wrote Nandita Venkatesan. The good news is that, "In 2005, India accounted for around 1% of the world's goods exports. In 2023, it had risen, but was still less than 2%. Over the same period, India's share of the world services exports rose from 1.9% to around 4.6%. Goldman Sachs expects India's services exports to be around, $800 billion by 2030, up from $337 billion in 2023, amounting to 11% of India's GDP." Mint. The economy may reach $5 trillion but without jobs with good salaries Indians will remain poor. Jobs depend on education. But education does not buy votes. Catch 22. wikipedia.

Hunger for luxury.

"The Reserve Bank of India (RBI)-led Monetary Policy Committee (MPC)...retained repo rate, the key lending rate, at 6.5%, announced Governor Shaktikanta Das. The MPC also decided unanimously to change the 'withdrawal of accommodation' stance to 'neutral' to remain unambiguously focused on a durable alignment of inflation with the target." ET. The government asked the RBI "to maintain retail inflation at 4% with a margin of 2% on either side" till March 2026. ET. At its meeting, the RBI maintained its inflation forecast for 2024-25 at 4.5% while projecting a growth rate of 7.2% for the real Gross Domestic Product (GDP). "Nearly two years of elevated food inflation is leaving less in the lunch boxes of impoverished children, as government funded school meals suffer cutbacks because of rising prices of vegetables, fruits and pulses." ET. India has been ranked at 105 out of 127 countries in the Global Hunger Index 2024. "India is among 42 countries that fall within the 'serious' category, alongside Pakistan and Afghanistan." BS. The RBI cannot influence food production and hence cannot bring down food inflation but it is in charge of setting the cost of borrowing which controls consumer behavior. The nominal repo rate was at over 6% till December 2018, since when it fell sharply to 4% by June 2020, while the real repo rate fell from over 4% to minus 2% over the same period. Mr Shaktikanta Das was appointed for three years as the Governor of the RBI on 18 December 2018, which was extended by another three years in December 2021. wikipedia. "A nominal interest rate refers to the total of the real interest rate plus a projected rate of inflation." Investopedia. Thus, a negative real interest rate meant the RBI set its interest rate at below the rate of inflation. A low interest rate is supposed to benefit the economy by encouraging households to spend more on buying homes or on consumer durables like motor vehicles and helps to increase profits of banks which pay less interest to savers while charging relatively higher interest on loans. The cost of very low interest rate is that it transfers wealth from savers, usually retired people dependent on interest income from savings, to borrowers. It also results in asset price inflation as people rush to borrow at low cost to invest in real estate or equities. stlouisfed.org. "With a supply of affordable homes dwindling," "After growing 4.3% last year, national home prices in India are expected to rise 7.75% this year, an upgrade from the 6% predicted in May," and "Home prices are then expected to increase 6.0%-6.25% in the next two years." Reuters. Also, "Sales of super luxury cars in India are set to surpass previous records for the third consecutive year." BS. Not surprising that, "RBI Governor Shaktikanta Das received an A+ rating and was ranked the top central banker globally for the second consecutive year by US-based Global Finance Magazine." ET. Happy Dussehra. May the Universal Mother bless everyone with health, prosperity and peace.  

Appreciate the rupee.

"Commerce Minister Piyush Goyal said yesterday it is time for the Indian rupee to appreciate on the back of inflows in debt and equity markets." ET. India's foreign exchange reserves "were at $704.89 billion in the week through Sept 27 in their biggest weekly increase since mid-July 2023, Reserve Bank of India (RBI) data showed. India is only the fourth economy in the world to cross $700 billion in reserves after China, Japan and Switzerland." "The increase was spurred by $7.8 billion in dollar purchases by the RBI and $4.8 billion in valuation gains." Reuters. This gives us the ability to finance our imports for 11.9 months but Brazil has 17.8 months and Russia has 25.7 months of cover. A stronger rupee will bring down the cost of imports and inflation and that could spur the RBI to reduce policy rate. India's consumer price index (CPI) inflation dropped to 3.65% in August from 6.83% in August 2023. MoSPI. In its August meeting, the Monetary Policy Committee (MPC) of the RBI decided to hold its policy rate at 6.5% for the ninth time in a row, in a 4:2 majority decision. ET. A lower interest rate will hopefully encourage companies to increase their investments on lower borrowing costs and so create more jobs. "Royalty payments by Indian subsidiaries of multinationals to their overseas parents increased nearly 42% in the past five years," as "An ET study of 10 companies - including Hindustan Unilever  (HUL), Nestle, Maruti Suzuki, Bosch, Colgate-Palmolive, Bata, Whirlpool and 3M India - showed that their cumulative payout to their parents crossed the Rs 80 billion mark in 2023-24, up from Rs 56 billion in 2018-19." "A 'Buy China, Sell India' trade is getting played out in emerging markets as FIIs have sold Indian stocks worth around Rs 307.18 billion in the first 3 days of October." ET. Presumably, the rupees are being converted to Chinese yuan. "Chinese bazooka to revive its markets and economy is winning the hearts of foreign investors," and "Announcing that it is taking a fiscal leap of faith on China as it is now or never for policymakers to deliver, CLSA said it is raising China to 5% overweight by cutting India overweight to 10% from 20%." "On Indian equities, it said there are three witches - oil price, new issuance (IPO boom) and retail investor appetite." ET. "In cash, DIIs (domestic institutional investors) purchased a provisional Rs 132.4512 billion against FII (foreign institutional investors) sales of a provisional Rs 82.9341 billion yesterday, according to BSE data." Mint. Thus, domestic investors are providing higher profits to foreign investors. All very good. But, a stronger rupee may hit our exports by making our goods and services more expensive. As it is, exports of merchandise fell from $451.07 billion in 2022-23 to $437.06 billion in 2023-24, but services exports rose from $325.33 billion to $339.62 billion over the same period. pib.gov.in. A more muscular rupee could lower exports which will mean fewer jobs in India. When over 3000 Indian students queue up for waiter jobs in Canada (TOI), we should not be so complacent. We have accumulated over $704 billion of forex. Does that show we appreciate the rupee? 

Why the 'respect' from Canada?

"Canada said that 'India's territorial integrity must be respected' in a statement which would be the first such after allegations by Canadian Prime Minister Justin Trudeau that India was behind the murder of Khalistani separatist terrorist Hardeep Singh Nijjar which soured New Delhi-Ottawa relations." "He made the statement while appearing before the foreign interference commission in Ottawa." News18. "On 18 June 2023, Nijjar was shot and killed in the parking lot of a Sikh temple (Gurdwara) in British Columbia." On 18 September, Trudeau alleged that Indian agencies could be behind the assassination. wikipedia. The commission heard allegations of extensive Chinese interference in elections in Canada. "In 2021, the government of India had 'intent to interfere and likely conducted clandestine activities' including using an Indian government agent in Canada, according to an unclassified summary written by the Canadian Security Intelligence Service (CSIS), reported CBC." ET. So, why the semblance of an olive branch? Trudeau can afford to be statesman-like because, firstly, Canada does not need India. Canada exports 76.9% to the US, 11.4% to China and then to the UK, Japan, France and Germany. 49.2% of imports are from the US, 23% from China, 5.5% from Mexico and then from the UK, Japan and Germany. Tourism is big business and most tourists come from the US, the UK, Japan, France and Germany. Britannica. India does not figure. Secondly, the Indian government may not need Canada for trade but a lot of Indians dream of getting to Canada somehow. "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 the Canadian dream has been disrupted." ET. A video showing about 3,000 Indian students "standing in a queue outside Tandoori Flame restaurant to apply for the post of waiter and servant," has gone viral on social media. ET. "Everyone dreams of a better life, in terms of educational and economic opportunities, standard of living and infrastructural development. One of the ways, Indians think they can achieve all of this is by settling abroad and one country that is at the top of their list is Canada." India Today. It's easy to blame Canada, but the real reason is the enormous unemployment problem in India since the most stringent lockdown in India in March 2020 when there were only 500 cases of Covid (HT). Since then, manufacturing growth has been stagnant, poorly paid agricultural jobs have risen, self-employment, a sign of desperation, has risen to 58.4% of the workforce and unpaid family labor is also higher, wrote Prof Santosh Mehrotra. Finally, Trudeau is relaxed because big daddy US has now taken responsibility. "After Gurpatwant Singh Pannun, a Khalistani separatist, filed a civil lawsuit in US court alleging the Indian government of hatching a conspiracy to assassinate him, the District Court for the Southern District of New York issued a summons to the Indian government NDTV reported. The summons demands a response from the Indian government in 21 days." Mint. "Beware of Greeks bearing gifts," says the proverb. wikipedia. We should wonder about Trudeau's bonhomie.  

Lethal trade.

"China's sputtering economy has its worried leaders" "unveiled stimulus measures, offered rare cash handouts, held a surprise meeting to kickstart growth and tried to shake up an ailing property market with a raft of decisions - they did all of this in the last week." Two surveys show what people think. "The first ...found that people were growing pessimistic and disillusioned about their prospects. The second, is a record of protests, both physical and online, that noted a rise in incidents driven by economic grievances." BBC. Some people take drugs when depressed. But the Chinese sell fentanyl to kill Americans. According to US law, "Individual parcels of clothing, gadgets and other merchandise valued at up to $800 - one of the highest such limits in the world - now enter the country duty free and with minimal paperwork and inspections." One billion such parcels entered the US in 2023, 1.4 billion will do so in fiscal 2024 and narcos are smuggling fentanyl precursors from China in such packages. Just one courier "ferried about 7,000 kilos of fentanyl-making chemicals to an operative of the Sinaloa Cartel. That's 15,432 pounds sufficient to produce 5.3 billion pills - enough to kill every living soul in the United States several times over." Reuters. "Chinese chemical suppliers catering to the illicit drug trade conceal fentanyl-making ingredients known as precursors in small boxes that look like regular e-commerce packages. The idea is to hide these boxes in plain sight, making them disappear into the massive flow of cheap goods shipped legally from China to the US every day." Reuters. In China, "Public spaces are blanketed with CCTV cameras that record details like clothing, gender, age, and even ethnicity. Many of these cameras are powered by facial recognition technology to identify people on police blacklists, citizens' movements are monitored, dissidents are easily tracked and protests and strikes are stuffed out before they can gain momentum. qz.com. It's impossible, therefore, that the authorities are unaware of those smuggling fentanyl precursors into the US. The US cannot stop trade with China because "US consumers have benefited from lower prices," so that "increased trade with China boosted the annual purchasing power of the average US household by $1,500 between 2000 and 2007." President Donald Trump imposed billions of dollars of tariffs on Chinese goods while President Joe Biden has added to them by banning TikTok and imposing export controls on advanced technology to China. cfr.org. To evade US restrictions Chinese companies have moved production to Mexico which has a free trade agreement with the US. "Mexico surpassed China as the top exporter to the US in 2023." However, "The increase in Mexican exports to the US has been 'roughly matched by simultaneous and closely correlated growth in Mexican imports from China,' according to S&P Market Intelligence country risk analysts Jose Enrique Sevilla-Macip and John Raines. The US is imposing tariffs on goods from China. China is exporting fentanyl free of tariffs. Kill Americans and make money.   

A convict for support.

Remaining elections to state assemblies in 2024 are being held with Jammu & Kashmir from 18 September to 1 October, Haryana from 5 October, Maharashtra in November and Jharkhand at the end of November. wikipedia. By the time the last results are declared campaigning will start in Delhi where election to its assembly will be held by February 2025. wikipedia. In the Lok Sabha elections, Prime Minister Narendra Modi's party, the BJP, won 240 seats, well short of 272 required for absolute majority. wikipedia. The election results were announced on 4-5 June and by 08 June, President Draupadi Murmu appointed Mr Modi Prime-Minister designate. ET. After losing 63 seats in the Lok Sabha Elections, the BJP is unsure of how it will fare in the state elections. In a rape of India's democracy, "Dera Sacha Sauda chief and rape convict is set to walk out of jail ahead of yet another election after the Election Commission approved his parole." "The release of Ram Rahim Singh, who wields influence in Haryana and Punjab, comes days ahead of the October 5 Haryana Assembly elections." India Today. Such is the fear and tension in the BJP that they are depending on a convicted murderer and rapist to scrounge some votes in Haryana where the BJP has formed the government since 26 October 2014 (wikipedia). In the Lok Sabha elections, the BJP lost its seat in Faizabad constituency which includes the city of Ayodhya (Mint) where Mr Modi had inaugurated the newly constructed temple to Ram Lalla (5-year old Lord Ram) in January 2024 (BBC).  "The BJP won 53% of the seats where PM Modi gave speeches as part of his campaign," whereas in 2019, the BJP-NDA won 85% of the seats he campaigned in. "In 2019, he lost only 17 of 103 constituencies he made speeches in." In 2024. the NDA lost 15 of the 18 seats in Maharashtra where Mr Modi held rallies. The Wire. The 'Mood of the Nation Survey' (MOTN) by India Today showed that Mr Modi's performance rating has dropped from 78% in August 2020 to 59% in August 2024, "with 22% now viewing his performance unfavorably", while his popularity rating has dropped by six percentage points to 49%. BS. When people are not buying your bluff, blame the 'Foreign Hand'. "From Hindenburg and George Soros to international human rights organisations to an assortment of spooks and spies, the Foreign Hand is back in India." "Many political analysts have often remarked that Modi has borrowed much from the political toolkit of former Prime Minister Indira Gandhi." "Except, that Gandhi was operating in an era wherein heads of government were being bumped off by shadowy elements." The Wire. Yesterday, Bharatiya Janata Party (BJP) national spokesman said, "NGOs are sleeper cells of certain agencies sitting abroad." "Poonawalla further alleged that American billionaire George Soros had declared publicly that he has kept USD 1  billion to destabilize India." ET. George Soros is 94 years old and donates to Democratic presidential candidates. Britannica. The BJP has to be completely disorientated in its desperation to vilify Soros and NGOs while depending on a convicted murderer and rapist. A reminder: Mrs Gandhi was killed by her own bodyguards. wikipedia. Respect the citizens of India and work for their benefit. They will defend against foreigners.   

Depending on festivals.

 "Goods and services tax (GST) revenue growth rate declined to 6.5% in September at Rs 1.73 trillion as the rise in collections from domestic transactions as well as imports slowed. However, with the festival season ahead, collections are expected to be better in the coming months, tax experts said." HT. GST collections have been rising every year since its start in June 2017, reaching a high of Rs 2.1 trillion in April 2024, except for April to August 2020 (wikipedia), when people were dying in their millions due to Covid (BBC). The government portrays the rising collections as a sign of increasing consumption due to economic growth. However, "GST collections have been so robust over the past year or so that it has prompted the Ministry of Finance to discontinue issuing monthly press releases of the data. The reason? The high collections were breeding resentment among the public, who felt the government was collecting too much tax." The Print. Public anger is justified because GST, being a percentage of the retail prices of goods and services, has soared because of uncontrolled consumer price index (CPI) inflation. Average CPI inflation was 6.6% in 2020, 5.1% in 2021, 6.7% in 2022 and 5.7% in 2023. RI. High and rising prices will eventually erode household spending as income lags inflation. "India's economic pulse has slowed just as the festive season approaches," as "Manufacturing activity has dropped, GST collections have lost steam and domestic cars sales continue to skid." Non-performing assets (NPA) at SBI Card rose in the April-June quarter of 2024. "Provisions for write-offs rose by Rs 510 million from the previous quarter, while write-offs themselves rose by Rs 1.05 billion over the same period." Household debt has increased from 30% of GDP in March 2015 to 40.1% currently. Although this is not high per se, it is significant because India's per capita income is lower than South Africa, Mexico, Brazil and Poland. Household consumption accounts for 60% of GDP. "A household faced with an increasing burden of interest payments and no additional sources of income (or increases in income), will be forced to cut back on expenditure." Mint. As a result, "CEOs in India are confident of the recovery of the global economy over the next three years," but "confidence in their individual company's growth has declined to 68%, down from 71% last year, the KPMG CEO Outlook 2024 said." TOI. Layoffs across the tech sector continued into the second half of 2024, with several high profile companies slashing jobs as part of their restructuring efforts." ET. These are high earners. Lower down the scale, "Six migrants died after Mexican soldiers opened fire on a group of 33 migrants traveling in a pick-up truck that tried to evade a military patrol," and "Another 10 migrants were injured in the incident." "The group included people of Egyptian, Nepalese, Cuban, Indian and Pakistani nationality." Reuters. People will observe the festivals because of religious beliefs and the government will celebrate higher tax collections. But, will the festivals be joyous? For some, certainly.