Wouldn't it be better to let them keep what they have?

In May 2020, Prime Minister Narendra Modi said, "The Covid-19 pandemic has brought an opportunity for India to be self-reliant for which we have announced a Rs 20 lakh crore (Rs 20 trillion) package which is 10% of India's GDP." Despite this, "total expenditure till October this year increased by only Rs 6,550 crore (Rs 65.50 billion) when compared to the same period last year", wrote Avani Kapur and Sharad Pandey. Ministry data show "a staggering  41 out of a total 55 ministries spent less this year till October, compared to last year", and though distribution of free food through the public distribution system (PDS) was increased to cover 80 million migrants, the responsible department of consumer affairs and public distribution "spent 9% less this year than in the same period last year". This can only mean that the government has not paid the Food Corporation of India or state governments their due. Naturally, capital expenditure also declined. The government sanctioned Rs 3 trillion as loans to small businesses but till October disbursed only Rs 1.20 trillion, an inquiry under the Right to Information (RTI) Act discovered. According to the findings of the fifth National Family Health Survey (NFHS 5), "The share of children who were stunted (low height for their age) increased in 13 states, while the share of children who had low weight for their height increased in 12 states. "In other words, children born between 2014 and 2019 (that is, 0 to 5 years of age) are more malnourished than the previous generation." It is irrelevant that Modi was elected prime minister with absolute majority in 2014. When asked, "If you had $75 billion for worthwhile causes, where should you start," a group of scientists and economists answered the same way in 2004, 2008 and 2012, and that was, "Interventions to Reduce Chronic Undernutrition in Preschoolers," wrote Udit Misra. "According to 2012 results, each dollar spent towards reducing child stunting results in benefits of 30 dollar." "In India, the benefits ranged from anywhere between $45 and $139." Poor children are missing out on schooling. A study by Azim Premji Foundation found, "Almost 60% of children were unable to access online learning methods, and 70% of parents found online classes to be ineffective for learning," wrote Sayantan Bera. "With classrooms shut and parents losing their jobs in the pandemic, thousands of families are putting their children to work to get by," reported Associated Press. Demonetization hit the poor very hard because they work for daily wages and are the most dependent on cash transactions. Now an expert advised the government to raid people's gold investments. Even the poorest Indian buys gold because she does not trust the government for support. At least the poor can borrow against their gold when all doors are closed. What is the point of taking money away from the poor to pay for helping them? Let them keep what they have.      

Who will bear the cost of the emperor's new clothes?

In an effusive article Sunil Sanghai lauds the two years in office of Reserve bank (RBI) Governor Shaktikanta Das. When Das came into office the non-banking finance company (NBFC) IL&FS had collapsed with losses of Rs 8.48 trillion. The Yes Bank crisis was beginning to emerge. Interest rates were too high though inflation was under control, depressing credit growth. "In contrast, we are in a happy space today with robust post-Covid economic recovery, lowest interest rates in 20 years, a system plush with liquidity, a stable currency, a higher foreign exchange reserve, a more stable banking system with resolution of some of the financially stressed institutions, a relieved non-banking financial sector and credit and economic growth taking the centerstage for the central bank." Retail inflation has never been under control in India. Except in 2016 when average inflation rate was 2.23% and in 2017 when it was at 4%, because of sudden demonetization of high value banknotes on 8 November 2016, retail inflation has always been higher than the government target of 4% set in 2015, although there is a range of 2-6%. The Monetary Policy Committee (MPC) which sets interest rates warned of financial instability if real interest rates fall too low. Former Governor Prof Raghuram Rajan recently put operative real interest rate at -4% in India . "If this results in persistence of negative real interest rates for too long, it can adversely affect savings, lend support to mispricing of financial asset prices and encourage excessive leveraging," said Mridul K Saggar. High prices and low interest on their savings have hit middle class Indians very hard, yet no one is talking about them, wrote Shayan Ghosh. On the other hand, "India's billionaires reported a rise in their combined net worth by more than a third during the first four months of the coronavirus-induced nationwide lockdown, i.e. between April and July, defying the impact of the global economic fallout of the pandemic. According to the Billionaires Insight Report 2020 published by UBS and PwC, the net worth of Indian billionaires between April and July increased by 35% to $423 billion." Naturally, super-luxury real estate, costing in excess of Rs 250 million (Rs 25 crore) are selling fast. "What is encouraging is that nearly 40 percent of the inventory that we sold was priced between 25 crore and 40 crore," said Akash Ohri. "Insolvency cases in India are expected to spike in the coming days, as they did world over after the 2008 financial crisis," according to MS Sahoo, chairman of the Insolvency and Bankruptcy Board of India (IBBI). Gross non-performing assets (NPAs) stood at 8.5% in March 2020 and is expected to rise to 14% by March 2021, wrote Sushil Prasad. "In India, the net profits of listed companies grew 25 percent (in real terms) last quarter. This despite revenues shrinking because firms aggressively cut costs, including employee compensation," wrote Sjjid Z Chinoy. The government owns the RBI so the governor is doing its bidding as he was appointed to do. But, serving the government is not the same as serving the taxpaying citizens of India. At some point accounts will have to be settled. The governor has stitched some new clothes for the emperor.         

Farmers may not be as foolish as made out to be.

Taking aim at Profs Kaushik Basu and Raghuram Rajan, Prof Arvind Panagariya wrote, "Both CEAs had thus endorsed the entry of not just private companies but also foreign multi-brand retailers in agricultural marketing. Yet, both have now argued that the new laws open the door to the exploitation of farmers by private companies." New farm laws allow farmers to sell their produce to private companies bypassing government controlled wholesale markets, known as Agricultural Produce Market Committee (APMC), Since the government procures produce at a minimum support price (MSP) only through APMCs the farmers fear they will lose this assured price. "Government figures show that Food Corporation of India procurement has far exceeded the buffer stock limit and by January 1, 2021, India will have foodgrain reserves 2.7 times more than what is required, reflecting sustained procurement but also a massive problem of plenty." According to former Union Minister for Consumer Affairs, Ram Vilas Paswan 1,930 tonnes of food grains were wasted in 2019-20, which was 0.002 percent of total procurement of 7.52 million metric tonnes. Wastage is due to rotting and being eaten by rodents and MSP makes grains too expensive to export. Panagariya reminds us that "private corporations such as Nestle and Hatsun have been buying milk from hundreds of thousands of small milk producers side-by-side with government cooperatives for years". Indeed, but a private cooperative for milk Amul was set up in 1946 and set the basis for buying milk at fair prices. "Both of us have argued in the past that India's farm laws are antiquated, that the APMC Acts need reform," agreed Prof Kaushik Basu and Nirvikar Singh, but, the "new regulatory system seems to ignore the fact that, farmers, the world over, receive subsidies and protection". A few days back, a group of economists wrote to Agriculture Minister Narendra Singh Tomar "requesting the government to repeal the central farm laws which, they claimed, were not in the best interests of small and marginal farmers". The state of the rural economy can be judged by wages of agricultural laborers, which "increased in both real and nominal terms in May and June" just after the lockdown was lifted, but have been "declining thereafter until September, by when real wages of general agricultural labor were down 0.3% from year earlier, while those of non-agricultural workers were down 1.3%", wrote Prof Himanshu. Farm-gate prices have been declining as shown by the wholesale price index (WPI). "Increasing government support to the agriculture sector is the real reform needed at this hour." Farmers have given a point-by-point rebuttal of the government's arguments that these Acts will only benefit farmers, wrote AA Chaba. "India is going through an erosion of trust in recent times. I just hope we have the sense to come together," said Prof Basu. And, trust cannot be rammed down the throats of citizens. Or, obtained through mendacity.   
  

Do we really want a repeat of the Roaring Twenties?

The Spanish flu in 1918-19 "led to the decade of the Roaring Twenties, the 1920s", wrote BJP Lok Sabha MP Jayant Sinha. "Entertainment, art and music flourished", "the adoption of new life-altering technologies accelerated", spending on construction increased "to rebuild the cities, roads, and bridges devastated by World War I". As the Covid-19 pandemic comes under control, "we are likely to see another such decade: the Roaring Twenties of the 21st century," as "Cooped up consumers are ready to spend", new technologies like 5G and AI are taking off and "central banks unleashed a tidal wave of liquidity". This is going to be India's Roaring Twenties. We hope so, but "The household consumption is going to be negatively impacted over 2020 and 2021," said the Boston Consulting Group. Household expenditure is expected to rise by 40% by 2030 but it will be 7-8% lower than pre-Covid estimate. "Experts believe retail inflation is likely to average around 6.3 percent this fiscal and mostly will remain sticky going forward owing to pick-up in demand across sectors." Lower food inflation, muted demand and base effect will drive retail inflation to 4.5-5% in 2021, said Nomura, but "core inflation will remain sticky at 5 percent, in 2021 as rising commodity input cost pressure amid firming demand lead to a gradual return of firm pricing power". The Monetary Policy Committee (MPC) of the Reserve Bank (RBI) warned that "short-term interest rates falling below the desired levels raising the risk of financial instability", and "rising pricing power of oligopolistic businesses and commodity prices" will result in inflation. A few companies controlling entire sectors will form cartels and raise prices. "The worry is that dominance by a handful of capitalists may not leave enough space for others," wrote Andy Mukherjee. "But then, who's is even ready or willing to compete, especially in sectors where state policy has a big role in determining winners?" Without increased government support India will lose $300 billion dollars of income in two years, wrote Jehangir Aziz. "The Indian economy was in one of its worst ever deceleration phases even before the pandemic," wrote Roshan Kishore. "It was 8.2% in March 2018 and fell to 3.1% in March 2020." Sudipto Mundle suggests an easy way to increase government expenditure while reducing fiscal deficit at the same time. Assuming nominal GDP growth of 15% in 2021-2022 and inflation rate of 5%, revenue will grow by 15%, so government expenditure can grow at 12% which will stimulate the economy and reduce fiscal deficit. The Budget has a habit of presuming ridiculously high GDP growth on which it calculates tax collections and then encourages tax terrorism. Hundred years ago the Roaring Twenties ended with the Wall Street crash on 29 October 1929 which led to the Great Depression and World War II. Is Mr Sinha indirectly hinting that is what lies in store for us? He wouldn't dare upset Dear Leader, of course. Would he?     

Wouldn't it be wise to be thrifty at this time?

"Nearly a year into a pandemic that has ravaged the global economy like no time since the Great Depression", "Calculating the prospects of a vigorous economic recovery entails wrestling with questions of human nature," wrote Peter S Goodwin. "The Depression imprinted a generation with a tendency towards thriftiness and aversion to risk." If people don't spend companies will not expand capacity and employment levels will fall, suppressing economic growth. The Indian government must spend more on infrastructure projects to revive growth, wrote Shobhana Subramanian. "Without a near-term spend of Rs 4-5 lakh crore (Rs 4-5 trillion), it is going to be difficult to reboot the economy; thousands of small units will simply perish, sectors such as restaurants, aviation, tourism and hospitality, which employ large numbers will be battered, and there will be a spillover effect on other sections of the economy." Problem is, "Cumulative debt levels now exceed GDP in many developed countries; and, on average, debt as a share of GDP is approaching post World War II levels," wrote Prof Raghuram Rajan. Modern Monetary Theory (MMT) posits that any government can print any amount of its own currency to create full employment and taxes should be used only to control inflation. However, a lot of the money handed out by the government will return to banks as savings and banks will park the excess money with the central bank through the reverse repo window. In May, banks in India parked over Rs 8 trillion with the Reserve Bank (RBI) at 3.75% interest. Yields on government bonds are zero or even negative in developed countries so the governments there might as well lock in very low interest rates by long-term borrowing from commercial banks. However, banks will only lend to a government if they are sure of its ability to repay the old debt so the government could use inflation to reduce its debt load. Emerging economies are restricted by their ability to repay debt and by the risk of inflation. Recently, sovereign bonds worth 4 billion euros issued by China generated orders worth 18 billion euros. Bonds for 750 million euros were priced at -0.15%, wrote Prof VA Nageswaran. "Even as this issue was being priced in the market, news of defaults by many Chinese state-owned enterprises were hitting the wires." "Global debt is expected to soar to a record $277 trillion by the end of the year as governments and companies continue to spend in response to the Covid-19 pandemic, Institute of Finance said in a report," reported Reuters. Global GDP is expected to be just over $87 trillion in 2019. Richard Cookson fears inflation will pick up "both soon and sharply. "As has been the case for many years, global inflation has 'Made in Asia' stamped all over it." "Many erroneously believe gold is some sort of inflation hedge, because of our experience in the 1970s," wrote Jared Dillian. "Gold is a hedge on policy-makers screwing up, and there has been a lot screwing up in the last 20 years." Economists in India do not understand why Indians buy gold. Perhaps, because they have been screwed. Repeatedly. 

She promised vibrancy. Will he allow it?

The coronavirus pandemic was "the biggest disruption of the global economy since the Great Depression of the 1930s and World War II", wrote Sanjeev Sanyal. "Unlike other governments, Indian policy-makers judged that it was inefficient to use limited resources to attempt a grand stimulus during a lockdown." "Let it be clear that there is both monetary and fiscal space to do more when appropriate." Total lockdown was announced by Prime Minister Narendra Modi on 24 March and there was assembly election in only one state, Bihar, after that. In 2021, there are elections in 4 big states, Assam, Kerala, Tamil Nadu and West Bengal. Finance Minister Nirmala Sitharaman has promised that "the forthcoming budget will have the vibrancy required for revival of the economy". "Meanwhile, despite the severity of the economic shock, India's macro-economic conditions remain broadly stable. The rupee is stable, foreign exchange reserves and financial markets are at all-time highs, and the current account is in surplus (albeit reflecting demand compression)." "India's current macroeconomic situation is 'very uncertain' and the country's GDP could contract closer to 10 percent in the current fiscal, former chief statistician Pronab Sen said on Sunday." "I think there is too much optimism going around," he said. India's GDP shrank by 7.5% in the second quarter after shrinking by 23.9% in the April-June quarter. But this is not a technical recession, which is negative growth for two successive quarters, "But the growth rate is measured on a quarter-over-quarter, not a year-ago basis," wrote Jehangir Aziz. "In fact, we expect GDP growth in FY22 to recover to 12 percent from -9 percent in FY21, which implies that six quarters from now it will still be about 7 percent below the pre-pandemic path, or $300-billion-a-year income losses across two years, compared to the pre-pandemic path." "While not avoidable, much of the income loss could have been mitigated by budgetary income support. But the government chose not to provide this." "A collapse in imports during the coronavirus lockdown has left India awash with dollars," wrote Andy Mukherjee. "What the authorities have done so far -- scoop up the dollars by giving banks rupees -- has left the financial system swimming in money and threatens to fuel inflation that's already above the central bank's target." "A stronger rupee might help the central bank tame inflation; a liquidity glut will make it worse." "Hence, there's pressure on the governor to accept a more flexible inflation target: Politicians will want their V-shaped recovery at any cost." India will have "foreign currency reserves of close to $650 billion by 31 March 2022, and foreign exchange reserves totalling $700 billion", wrote Niranjan Rajadhyaksha. But this has fiscal costs. "Most likely, the PMO fears that a fiscal spending spree will send inflation soaring to 9%, the level at which voters have historically rebelled against the ruling party," wrote SA Aiyar. Better be careful about vibrancy of budget. May not stop vibrating.       

Don't criticise, embrace him.

Sanjay Jha, disaffected member of the Congress Party, advised former President of the Congress Party Rahul Gandhi to "take a leaf from Sachin Tendulkar's book. He gave up the thorny crown of leadership of the Men in Blue but remained the team's sheet-anchor and biggest draw throughout his career." "Dynasty has now become unfashionable; a young, aspirational India treats entitled successors as arrivistes." True, but Gandhi cannot get rid of his ancestors so he should study and talk about their successes and failures. As the first prime minister, his great-grandfather Jawaharlal Nehru set up the Constituent Assembly, with a dalit Bhimrao Ramji Ambedkar as chairman, to write the Constitution of India. He set up the Indian Institutes of Technology (IIT) at Kharagpur, Bombay, Madras, Kanpur and Delhi, the first Indian Institutes of Management (IIM) in Calcutta and Ahmedabad and appointed Rajkumari Amrit Kaur as the first health minister who set up the All India Institute of Medical Sciences (AIIMS). Prime Minister Narendra Modi has taken credit for adding to the number of IITs, IIMs  and AIIMS. Modi attacks the Congress and the Gandhi family for the Emergency which was proclaimed by then President Fakhruddin Ali Ahmed and upheld by a majority verdict of then Supreme Court (SC). The Emergency did away with fundamental rights of citizens, not much different from today when anyone can be detained indefinitely by being called a terrorist under Unlawful Activities (Prevention) Act and any criticism of the government invites immediate attack under the British law of sedition. "Why is the independence and integrity of the SC being questioned in the public domain, in a way that it has not been since the Emergency?" asked Gautam Bhatia. Because it is helping the government by postponing hearings of constitutional matters almost indefinitely, it accepts the government's version without question and its allocation of cases is not transparent. Modi is proud of authorising surgical strike against Pakistan, but India gave a bloody nose to Pakistan in 1965 with a much inferior air power. While Modi is proud of the air attack on a terrorist camp in Balakot, it was Indira Gandhi who liberated Bangladesh from Pakistan with the surrender of 93,000 Pakistani troops. Gandhi cannot win by criticising Modi because Modi has been able to persuade people to his vision of India and is by far the best orator in India today. Import substitution resulted in the licence permit raj, wrote Prof Arvind Panagariya, so we should not adopt Atmanirbhar, which means self reliance. Gandhi has to be humble, acknowledge mistakes committed by his ancestors and show that Modi is doing exactly the same, if not worse. For that he has to study, talk to historians and economists and work very hard. If he wants the ultimate prize. 

Headlights on the rupee.

"The covid shock revealed the anachronism of stiff fiscal compression targets set by India's Fiscal Responsibility and Budget Management Act of 2003," wrote the Mint. The government intends to borrow Rs 12 trillion this year instead of Rs 7.8 trillion predicted in the Budget. "Remember, India is endowed with neither the privilege of cheap loans for the asking, nor sufficient slack in productive capacity to keep prices stable." "It is true that economic contraction, as seen in early estimates for the first half of 2020-21, necessitated cheap credit as RBI's top priority in its laudable effort to keep commerce going and contain the pain," wrote the Mint. "It is also true that any over-indebted government could by tempted to inflate some of its debt away by letting prices rise. This should be resisted." After months at over 7%, retail inflation dropped to 6.93% in November due to a fall in vegetable prices. India's consumer basket is heavily weighted in favor of food and beverages, because higher food prices affect the poor disproportionately, with transport, healthcare and education having much lower weights. "Between March and December, Brent crude prices have fallen more than 3%, but petrol and diesel prices have climbed 17% and 15% respectively," wrote the Economic Times. Transport may not contribute much to CPI level directly but "since fuels are not under GST, tax increases cascade into higher prices of everything". Health insurance companies have raised their premiums by up to 200%, especially for senior citizens, forcing some to let their policies lapse, wrote Deepti Bhaskaran. Hundreds of private schools may shut down because the government is not allowing them to charge full fees for the year as teaching switched to online because of the coronavirus. In 2016, the government set a retail inflation target of 4% (+/- 2%) for the Monetary Policy Committee (MPC) at the Reserve Bank (RBI). Some economists argue that "by focusing narrowly on curbing inflation, the MPC lost sight of growth, contributing to India's economic slowdown", wrote Bhattacharya, Kwatra and Devulapalli. However, except in 2017 when the economy was trying to recover from the sudden hit of demonetization, the MPC has always managed to keep average inflation rate above its target of 4%. Central banks cannot control inflation or economic growth, they can only control credit growth and thereby influence money supply, wrote Prof VA Nageswaran. The biggest borrower by far being the government, low borrowing rates may encourage injudicious spending, leading to higher debt and rising interest payments. Then there is the rupee. "In the 12 months through November, the PPI (US Producer Price Index)  advanced 0.8% after increasing 0.5% in October," reported Reuters. This means the buying power of the rupee is decreasing at over 7% compared to 0.8% for the dollar. The rupee is riding high because foreign investors have bought Indian shares worth Rs 629.51 billion in November. The RBI has been buying dollars to stop the rupee strengthening too much and to increase liquidity into the system. One dollar bought Rs 3.30 at Independence in 1947, which has dropped to 73.66 today. At some point the rupee will have to adjust against the dollar and then prices of imports will shoot up, taking inflation to levels last seen in 2010-2011. No wonder, talks of higher fiscal spending is complete hot air. Frozen in fear. Like deer in headlights.  

This is an accumulation of pressures.

"Punjab farmers have huge political clout and extract massive subsidies invisible to the public," wrote SA Aiyar. Farmers have been protesting on the borders of Delhi for 17 days demanding complete repeal of new farm laws which allow farmers to sell their produce directly to private buyers, instead of being forced to sell through government controlled wholesale markets known as Agriculture Produce Market Committee (APMC). These markets are controlled by middle-men who form cartels to fix low prices for farmers while selling at high prices to consumers. The new laws seek to get rid of APMCs. The state of Bihar got rid of APMCs in 2005, and "For 14 years now, experts said, farmers have not had a favorable market for their produce." "Before the scrapping of the APMC Act, farmers would sell their produce to the market committees where minimum price was guaranteed. But after the repeal of this system, they indulged in distress sale lest their produce would go to waste because they had no storage facility," said economist Abdul Qadir. "But these laws are highly sensible," wrote Aiyar. "Modi must stick to all three laws." 'Sensible laws' would not "expressly exclude the jurisdiction of the civil court, leaving the farmers remediless and with no independent medium of dispute redressal mechanism".  "Autocracies like China would smash such agitations. But democracies do not shoot agitators," regrets Aiyar. Aiyar has forgotten the fierce beating of students and teachers of Jawaharlal Nehru University (JNU) in January this year by Delhi Police, as well as the shooting of members of certain community during riots over citizenship bills in Delhi in February, and the death by police shooting of five farmers protesting for better prices for their produce in Mandsaur in Madhya Pradesh in 2017. India is supposed to be a federal republic, but "The real power is with the center, which has all-important 'agencies' and holds the purse-strings in fiscally-challenging times," wrote Harish Damodaran. In May, Prime Minister Narendra Modi announced a stimulus package for the economy, worth Rs 20 trillion. In a recent reply to a query under the Right to Information (RTI) Act the government revealed that Rs 3 trillion was sanctioned for loans, of which just Rs 1.20 trillion has been disbursed. "Many of India's current draconian laws have their ancestry in the British era where they were very frankly instruments of repression," wrote Manoj Joshi. Autocratic governments in China, South Korea and Singapore enriched their people by growing their economies, wrote Diva Jain, whereas the rate of growth in India's economy was falling sharply even before the coronaviurus epidemic, explained Roshan Kishore. No wonder 74% of Indians are suffering from stress and 88% from anxiety. Pressures have been building since 2014. Protests are better than an explosion. Over to Modi.  

Atmanirbhar Britain.

In December 2019, Boris Johnson led the Conservative Party to an absolute majority in elections to the House of Commons in Britain, promising to "get Brexit done" and take the UK out of the EU. "Brexit's true believers celebrated: Their messiah would now be able to finish the job he had started in 2016," wrote Luke McGee. "A scant 12 months later, much of that goodwill has vanished -- despite his party continuing to perform well in opinion polls compared to the opposition Labour Party." In January this year, the British Parliament passed a bill finalising Britain's exit from the EU and set a transition period till 31 December to come to an agreement on future trade relations. "Unless the UK asks for an extensions beyond 2020, trade relations from the start of 2021 will either be governed by whatever agreement can be reached, or World Trade Organization rules." Which will mean tariffs on imports, increasing consumer prices, from, and on exports, losing to cheaper competition, to, the EU. Talks on a trade deal have been fruitless and today has been set as the deadline for coming to an agreement, or else a 'No Deal' Brexit will go ahead from 1 January 2021. After 11 months of chest thumping on how the EU has much more to lose from Britain's exit, "Business leaders were sweating last night as the prospects of a No Deal Brexit increased dramatically," reported the Daily Mail. "It came as bank Morgan Stanley dealt another blow to Britain's post-Brexit prospects, becoming the latest Wall Street lender to shift chunks of its assets out of London." Perhaps, Johnson's trouble in coming to any agreement with the EU is a hangover from the Conservative Party icon Margaret Thatcher who forced a reduction in Britain's contribution to the EU's budget. Her famous "No, no, no" speech against greater integration with Europe in the House of Commons in 1990 was apparently based on an article written by Boris Johnson in the Daily Telegraph. Johnson has repeatedly claimed that Brexit, even a No Deal one, will be good for Britain as it will be able to negotiate separate deals with all the other countries of the world. But, the EU takes 43% of all UK exports and sends in 52% of all UK imports. In panic Johnson rushed over for a dinner with European Commission President Ursula von der Leyen (pronounced Lion) but the "lady is not for turning". There will be last ditch talks today but both sides are pessimistic about a favorable outcome. In a sign of British arrogance and colonial mentality the Mail on Sunday savages Angela Merkel of Germany and Emanuel Macron of France for refusing to surrender. It's not just about fish and cheese. Scotland and Northern Ireland voted overwhelmingly to remain within the EU and First Minister of Scotland Nicola Sturgeon has warned that she may ask for a referendum to leave the UK. Without Scotland and Northern Ireland, Britain cannot claim its seat in the UN Security Council. The 'Little Englander' may pine for 'Atmanirbhar' or 'self reliance' but may become really little. A lesson for us, perhaps.

Surely too little, not too much?

Tough reforms are difficult in India because "we are too much of a democracy", Niti Aayog CEO Amitabh Kant seemed to complain. Naturally, his remark was greeted enthusiastically on social media. To stop the controversy this remark generated, Union Minister Ravi Shankar Prasad said, "We are proud of our democracy." "My statement, with relevant portions, is that India is too much of a democracy to mirror a China model," explained Mr Kant.  Argentina, Brazil, South Korea, Singapore and Malaysia all grew fast economically under authoritarian governments, wrote Diva Jain. Robert J Barro showed that "after controlling for other drivers of growth, the overall effect of democracy on growth is weakly negative on average". "In another observation relevant to India's case, he states that the growth-retarding features of a democracy are redistributive schemes and the enhanced voice of special interest groups." India has always had a plethora of social schemes for redistribution to the poor, and this government has been prolific in adding more schemes. Prime Minister Modi announced waiver of bank loans to farmers to win UP assembly election. Last year, he promised Rs 6,000 to all farmers at a cost of over Rs 870 billion and pension scheme for farmers at a cost of Rs 100 billion. Now farmers are protesting at the borders of Delhi, demanding repeal of new farm laws, and the minimum support price (MSP) to be written into law. In fact, they want a "guaranteed remunerative MSP (GRMSP)" to be made mandatory for the private sector with punishment for anyone offering to purchase farm produce at less than that. "Also, many growth drivers in a democracy, such as accountability, rule of law, enforceability of contracts and enriched information environment, do not require drastic legislative action and can be improved through better administration." Indian politicians see accountability and civil servants see information to citizens as loss of power. Every year, at this time Delhi suffers from hazardous levels of pollution. Stubble burning by farmers in surrounding states, encouraged by subsidies, contribute a large chunk to pollution, wrote Seddon and Prof Gulati. When assets of the insolvent non-banking finance company DHFL was put up for sale, US based Oaktree Capital Management looked like a potential winner but the Adani group submitted a bid slightly higher than that of Oaktree after the deadline, leading to suspicions about confidentiality. No one held accountable for cheating. A US firm admitted to paying $1.1 million in bribes to the National Highway Authority of India (NHAI) in 2017. No one punished in India. Right to Information Act (RTI) has been hamstrung by the government by not appointing commissioners so that queries are piling up. "The SC (Supreme Court) simply refuses to hear constitutional challenges to far-reaching State action, sometimes for years," wrote Gautam Bhatia. "Judicial evasion is accompanied by judicial deference." The SC accepts false assurances from the government. Mr Kant must be living on another planet. Democracy is just a word in India. Opium for the people.

Not just an expensive building, could divide the nation.

Prime Minister Narendra Modi laid the foundation stone of a new parliament building in the center of New Delhi yesterday. The parliament building will be part of a 'Central Vista Project' at a total cost of Rs 200 billion. There will also be a new residence and office for the prime minister and the vice president. Modi "praised India's spirit of democracy" and said that "other countries discuss elections and other administrative issues when speaking about democracy and that a day would soon come when other countries will say 'India is mother of democracy'." A batch of petitions against the new building have been filed before the Supreme Court which allowed the ceremony to go ahead but ruled that "no construction or demolition will be allowed until it disposes pleas opposing the Central Vista Project". "World history is replete with examples of public infrastructure projects playing a key role in reviving economies in distress," wrote Secretary, Ministry of Housing and Urban Affairs Durga Shanker Mishra. "The 'New Deal' in he USA included over 34,000 public works worth $3 billion for recovery from the Great Depression." Indeed. The famous Route 66 in the US, "True to promoters' foresight, traffic on the highway increased, a growing share of it long-distance, and the need for food, fuel, repairs and shelter transformed the economies of towns through which the route passed." A new parliament building will generate some construction jobs initially but will cost massive amounts of taxpayer money for maintenance and members of parliament are exempt from paying income tax. "The first Lok Sabha, constituted in 1952 had 461 seats , but within three years, the number increased to 499. 'Subsequently, the seats went up to 522, then to 530' and 'now, presently up 550 within the same building' according to documents" available in the Lok Sabha secretariat, wrote Saubhadra Chatterji. At present the Lok Sabha has 543 members while the Rajya Sabha has 245. A larger building is needed to seat 888 members in the Lok Sabha and 384 in the Rajya Sabha. That indicates imminent delimitation, which seeks to allocate the number of seats in parliament according to population in states so that each member represents roughly equal number of people. "Although unintended, this meant that states that took little interest in population control could end up with more seats in Parliament, while southern states that promoted family planning could end up with fewer seats." As it is the Hindi states have a stranglehold on the parliament with the Bharatiya Janata Party (BJP) of prime minister Modi winning 156 out of 303 seats in Hindi states, in the Lok Sabha in 2019. The present distribution of seats in the Lok Sabha has not changed in decades but populations of Uttar Pradesh and Bihar have increased more than 19% while those of Madhya Pradesh and Rajasthan have increased by about 18%, between 2011 and 2019. Not just enormous expense. Could lead to further division of India. Is that what Modi wants?

Should we expect optimism or pessimism?

The micro, small and medium enterprises (MSMEs) sector has "over 60 million functional units, employs around 110 million people and contributes a little less than 30% to the country's economic output and more than 40% to its exports". wrote Lalit Bhasin. During the coronavirus lockdown, struggling MSMEs "found e-commerce to be an effective, swift and low-cost option to reach customers". This proved to be a trap. "The mandatory 'country of origin' tag is their latest regulatory entanglement, after recently-implemented tax deduced at source (TDS)  and tax collected at source (TCS) requirements multiplied the complexity of their compliance management." The informal economy "may not come under direct taxes, as income here may be mostly under the taxation threshold", wrote Satya Mohanty. "Studies in Latin America show that a thriving under-ground economy could aid growth" because "60% of earnings from unaccounted-for-economy are used almost immediately in the official economy". However, this is totally different from black money. "Electoral bonds with no trails are effectively an invitation to a government-crony nexus and a recipe for further generation of black money." The government needs high tax collection "to boost public spending in a manner that puts money in people's hands, especially those who are more likely to spend rather than save it", wrote an editorial in the Mint. "In basic-input sectors like cement, steel and aluminium, clear signs have emerged of a revival in capital spending," wrote the Mint. Why, when "Consumer confidence, as measured by a RBI (Reserve Bank) survey, remains dismal," is unclear. "Estimates peg the total job loss for salaried individuals at 21 million between April and August of 2020," wrote Shayan Ghosh. "Initial data released by the central bank shows that more than half off all retail borrowers who had availed a loan had opted for a moratorium by the end of April." As the moratorium period ends, banks are using loan recovery agents to coerce customers to repay loans. "I foresee even suicides from this retail distress," said Jehangir Gai, a consumer activist. The RBI is helping the government by tolerating a high inflation because high prices means higher GST collection and higher wages result in higher income tax collection. High inflation results in a fall in the value of the currency which reduces value of government debt. "A repo rate of 4% when inflation is expected to stay above 6% means that negative real interest rates by design," wrote The Economic  Times. "Revising up inflation bands for the central bank will hurt the poor," former Deputy Governor of the RBI Viral Acharya said. "For consumers, the high excise duty and VAT, which make up 63% of petrol and 60% of diesel prices, makes the pinch harder due to their incremental increase after every hike in the base price." As transport costs rise so will prices of goods and services. High taxes, high prices, high individual and government debt. A tsunami maybe on the way.  

Will he go with Trump's policy or Obama's?

Iranian nuclear scientist "Mohsen Fakhrizadeh was shot dead in a convoy outside Tehran on 27 November."  Deputy commander of the Revolutionary Guards Brig-Gen Ali Fadavi said that a machine gun mounted on a Nissan pick-up "was equipped with an intelligent satellite system" and "was using artificial intelligence" so that it was able to focus "only on martyr Fakhrizadeh's face in a way that his wife, despite being only 25cm (10 inches) away was, not shot". Before that, Al Qaeda's second-in-command "Abdullah Ahmed Abdullah, who went by the nom de guerre Abu Muhammad al-Masri, was gunned down by two men on a motorcycle in the streets of Tehran on Aug 7". Iran has denied that any Al Qaeda members are living in the country. In June a previously unknown group calling itself Homeland Cheetahs, which claimed to be "composed of dissidents within Iran's military and security forces", said "it had attacked the major Iranian nuclear site at Natanz". In the months before this attack, "Numerous fires have broken out in nuclear facilities, oil refineries, power plants, major factories and businesses across the country." In July, at least seven boats caught fire at a shipyard in the port of Bushehr. "Sixty million Iranians, 75% of the population, are living, are living below the international poverty line," wrote Struan Stevenson. The currency, the rial has lost 49% of its value this year due to the sanctions imposed by the US. "President-elect Joe Biden made it clear during his campaign that his administration would favor a return to the 2015 Iranian nuclear deal, reversing a cornerstone of President Donald Trump's foreign policy in the Middle-East." "US President-elect Joe Biden will insist Iran agrees to new demands if it wants the US to return to a nuclear deal and lift sanctions," the New York Times reported. "Iran would also have to address its 'malign' regional activities through proxies in Lebanon, Iraq, Syria and Yemen in the talks that would have to include its Arab neighbors like Saudi Arabia." That would surely be too much. Persian versus Arabs, Shia versus Sunni, total annihilation of Israel versus secret talks with Israeli Prime Minister Benjamin Netanyahu. Naturally, Iran said it "will not accept preconditions from a new Biden administration over its nuclear program and the US must return to a 2015 deal before talks can take place". It will resume enriching uranium and stop all inspections by the IAEA after two months if the US fails to do so. Meanwhile, Iran is having to credit Israel with a satellite-controlled, AI-operated machine gun pinpointing Fakhrizadeh using facial recognition technology, to hide its own weaknesses. Whether people agree or not, President Trump knew what he wanted. Does Biden?

How to save our savings?

"This year's budget sneaked in some stuff that hits senior citizens right in the gut," wrote Sandipan Deb. Exemption limits for income tax has been Rs 250,000 for those under 60 years of age, Rs 300,000 for those between 60-80 years, and Rs 500,000 for those above 80 years of age. "But this budget set all limits at Rs 250,000. No concessions for elders." However, the official site of the Income Tax Department shows that exemption limits remain unchanged in Assessment Year 2021-22, which corresponds to this financial year. Previously, companies had to deduct a 15% distribution tax on dividends and individuals were required to pay another 10% tax on dividends in excess of Rs 1 million. Now dividends will be taxed in the hands of the recipient. Pensioners have been savaged by the Reserve Bank (RBI) lowering interest rates far below the rate of inflation so that interest on savings is less than erosion in the value of money. "As per a National Family Health Survey (NFHS) of 600,000 households in 2016, 30% of households owned a refrigerator", which means that about 33%, or 450 million, of Indians are middle class and these people "have been neglected or simply ignored by successive Indian administrations", wrote Deb earlier. According to the State of Tax Justice, India is losing $10.3 billion, or Rs 750 billion, every year to tax evasion. "Of this, over USD 10 billion is lost to tax abuse by multinational corporations (MNCs) and USD 200 million (about Rs 15 billion) to tax evasion committed by private individuals." Less than peanuts, considering our GDP of around $2.9 trillion, though it could be less next year if the economy contracts due to the lockdown to control spread of coronavirus. "The belief that India has very few taxpayers and millions of people routinely hide their income has been the underpinning for the country's onerous income tax administration and a consequent mistrust of citizens," wrote Praveen Chakravarty. "India's per capita income is around Rs 1.4 lakhs (Rs 140,000)." "Even if millions of people hide their incomes from tax authorities, it will be accounted for in India's GDP and per capita income data since they will use this hidden income to eventually spend on goods, real estate, gold and so on," and if they hold vast amounts of wealth in cash it will show up in "currency in circulation" data provided by the RBI. To reach income tax threshold you have to earn Rs 21,000 per month, but "82 percent of male and 92 percent of female workers earn less than Rs 10,000 per month, finds 'State of Working India' report". "India must break out of this vicious cycle in which taxes are high, consumer demand is low, investment and job creation are constrained, and wage incomes are insufficient to boost purchasing power at the bottom of the pyramid," wrote Andy Mukherjee. High taxes on low earnings. Will never lead to wealth.    

Why do foreigners expect to make profits at this time?

"In line with economists' fascination with alphabets, we see a 'double barrel V'-shaped (one V over the other) recovery for India," wrote Sonal Varma and Aurodeep Nandi. The festival demand boosted manufacturing, the government is procuring enough vaccines, interest rate is negative, which should encourage borrowing, and the global economy will recover in 2021. However, "India's pre-pandemic crisis involving a triad of weak balance sheets -- of corporates, banks and shadow banks -- are now skeletons temporarily hidden inside the cupboards of moratoria, credit guarantee schemes and procedural delays to the recognition of bad loans." "Job cuts and salary adjustments have not been as widespread as originally apprehended despite the severe impact on the revenue of companies in the aftermath of Covid-19 pandemic, a study has revealed." The Indian economy will enter a 'Goldilocks' phase in 2021, said Morgan Stanley, which means moderate growth without inflation. "The Reserve Bank of India (RBI) on Friday held interest rates steady, forecast a lower GDP contraction for the second half of the year, and sharply raised inflation projections, asserting that growth will return to the positive territory in the third and fourth quarters of the 2020-21 fiscal year," reported Times of India. "Normally, with this kind of elevated inflation scenario, the regulator would have treaded a more careful path," but, "given the extraordinary situation, the RBI decided to give growth a priority over immediate price stability," approved Sunil Sanghai. "This is clearly visible in the equity markets' reaction with the BSE Sensex Index touching the 45,000 mark which has not been witnessed in this last year." "A repo rate of 4% when inflation is expected to stay above 6% means that negative real interest rates by design," wrote an editorial in the Economic Times. We can only hope that the RBI is not allowing inflation to go unchecked only to help the government reduce its debt load as the government has announced it will need to borrow Rs 12 trillion this year to meet its expenses. However, RBI's tricks may not work because tax collections may not rise in line with inflation. "In India, the net profits of listed companies grew 25 percent (in real terms) last quarter. This despite revenues shrinking because firms aggressively cut costs, including employee compensation," wrote Sajjid Z Chinoy. No salary, no income tax. And if demand does recover, inflation is bound to shoot up because "the pump price of petrol is set to breach all-time high levels next week". Foreign portfolio investors (FPI) "pumped in a net sum of Rs 16,520 crore (Rs 165.20 billion) into equities and Rs 1,298 crore (Rs 12.98 billion) in the debt segment during December 1-4". A total of Rs 629.51 billion in November. Clearly, they expect huge profits. Who will pay for those profits? Dread finding out.

Brown colonialists are lethal.

"Many of India's current draconian laws have their ancestry in the British era where they were very frankly instruments of torture," wrote Manoj Joshi. "If you, through 'words, either spoken or written, or by signs, or by visible representation' bring 'hatred or contempt' or excite 'disaffection towards the government' your goose is cooked, according to the sedition clause, Section 124A of the IPC." "This year, a primary schoolteacher and a mother were arrested for sedition, and children were interrogated" as "a chilling warning to all protesters and dissenters, that the price of liberty is high, very high". Belatedly, "In an order of far reaching significance the Supreme Court on Wednesday put the police, CBI, National Investigation Agency, Enforcement Directorate, Narcotics Control Bureau, Department of Revenue Intelligence and Serious Fraud Investigation Office under CCTV surveillance to prevent custodial torture." Many police forces in the US require their officers to wear video cameras on their bodies to try an prevent unnecessary use of force. "But in a heated situation where force becomes necessary, it is instinct rather than careful consideration that takes over" because, "Primarily it is police training -- honed over decades -- that prevents a police officer from fighting or running away," wrote Honig and Johnson. "Dozens of protesters have clashed with police in the French capital Paris in fresh demonstrations against a controversial draft security law," reported BBC. "Article 24 of the proposed bill makes it a criminal offence to publish images of on-duty police officers with the intent to harm their 'physical or psychological integrity'." This is clearly an effort to hide police brutality. Unfortunately for the government a video of four police officers "beating up and racially abusing a black music producer in Paris went viral", forcing the government into a humiliating u-turn. Indian police are famous all over the world for executing suspected criminals without having to account for their actions. While peaceful protests are allowed everywhere in the world, Indian politicians respond by asking police to shoot protesters to death. Thus, Tamil Nadu Chief Minister Edappadi Palaniswami called it a "natural reaction" when police shot 13 people to death for protesting against a copper plant for contaminating their drinking water. The plant was permanently shut down after the killing. No one has been charged with unnecessarily killing law abiding citizens. A senior bureaucrat issued orders to "shoot-on-sight" if anyone protested against the conviction of Gurmeet Ram Rahim Singh on charges of rape. "At least 38 people were killed and more than 200 were injured," reported Reuters. A day later train and bus services were stopped to prevent people from gathering. When our government finds us disposable why do we become indignant if Richard Nixon described us "scavenging people". Other people have value. We have none.

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Animals and humans, all are fair game.

"India heads the list of countries with the highest annual average exposures to PM 2.5 - fine particulate matter hazardous to health - and the third highest average ozone exposures in the world, with a 17% increase in the last decade." 1.67 million, including 116,000 infants die of pollution every year. The pollution level in the national capital Delhi is deemed to be hazardous this morning.  "Under the National Clean Air Program (NCAP), the central government had approved the clean air plans in more than 100 cities in 2019. The program aims to cut down pollution levels in these cities by 20-30% by 2024 (with 2017 as the base year). But there are serious questions about NCAP's effectiveness," wrote Tauseef Shahidi. "New Delhi has the worst air of any capital on the planet, according to IQAirVisual, a Swiss-based group that gathers air quality data globally," wrote Bhardwaj and Arora. "Delhi has blamed farmers burning crop stubble in the neighboring states for its sickly air", but "more than half the pollutants in Delhi's air are the result of vehicular emissions, toxic waste and smoke from thousands of small unregulated industrial units and dust from never-ending construction". "About 78% of the cities exceeded PM10 standards compared to 36% for PM2.5, 9% for NO2 and none for SO2," wrote Chandra Bhushan. "The three easiest things to do" is "stopping farm fires; preventing the burning of garbage; and prohibiting the use of diesel generators, not just in Delhi, but in entire NCR (National Capital Region)". wrote Chanakya. This is not being done because different parties govern Delhi, Haryana and Punjab. State-run electricity generating company NTPC said that thermal power plants are not responsible for pollution in Delhi/NCR. "Stubble burning in northern India has long been a major cause of air pollution, but efforts to stop it fail every year,' wrote Pathi and Chhabra. Farmers are a crucial vote bank, and so "court orders like bans and fines remain unenforced". "Stubble burning incidents saw a steep rise of more than 20 percent this year in comparison to the last two years," said KJ Ramesh. "The situation of air pollution in Delhi is still serious. Stubble burning has stopped but Delhi's air quality index still remains in 'very poor' category," Union Environment Minister Prakash Javadekar said. Even as "their fellow citizens were distracted by pandemic related anxieties", the National Board for Wildlife, at the direction of Mr Javadekar, "successively rubber stamped approvals for an astonishing 16 proposals impinging on ostensibly sacrosanct national parks and wildlife sanctuaries", wrote Vivek Menezes. Speaking with forked tongue. Thick skinned.

Balancing one vote bank against the other. Not easy.

"India's economy left cratered by the pandemic is drawing energy from one of its invisible and often neglected engines: farmers," wrote Kotoky and Alfonso. "Business leaders, policy makers and politicians alike are pinning hope on the rural sector as bountiful rains have set the stage for another year of record crops. Higher disposable incomes with farmers are expected to boost demand from automobiles to cement to gold jewellery." If farmers are buying cars and gold why are they protesting on the outskirts of Delhi, with women and children joining the men in sleeping out in the cold weather? After talks, lasting 7 hours between Union Agriculture Minister Narendra Singh Tomar and farmers' unions yesterday, ended without an agreement, the minister hinted that the government might amend the 3 farming laws. Earlier in the year there were protests at Shaheen Bagh in Delhi, led mainly by women, against the Citizenship (Amendment) Act (CAA) which was broken up with the lockdown to control the coronavirus from spreading. "If the laws really are as beneficial for farmers as the Center claims, why were they rushed through parliament in such a sneaky manner?" asked advocate Uday Pratap Singh. "How can we trust the government's very late reassurances about the farm laws when it openly favors big corporates?" "When the method of voice voting was resorted to on September 20," "MPs demanded division. This was voiced at 1.09 pm on Rajya Sabha TV. But it never reached the public ear because footage was doctored to such an extent that it was muted," wrote Tulis and Puri. "This was the most anti-democratic moment in the history of the Indian Parliament." Can't expect trust after such low down tricks. "Shaheen Bagh had this pressure of being a civics and moral science lesson all at once," said Simranjeet Singh. "The right wing will have to work harder at villainising us." Over 50% of India's workforce are engaged in farming but agriculture contributes only 17.5% of GDP which means farmers are not sharing in the growth of the economy. This makes farmers a huge vote bank. Farmers are demanding the minimum support price to be written into law. "The most immediate impact of such a law will be higher inflation. MSPs prima facie lead to higher overall prices," wrote Zia Haq. Retail inflation jumped to 7.61% in October, with food inflation at 11.1% year-on-year. Inflation hurts the poor, so the government banned export of onions in September. The poor are a bigger vote bank than farmers. If the government depresses prices, the promise of riches from private sector is merely jumla. Farmers are right to call the government's bluff. What if it's all jumla.           

Public sector means belonging to people. Not for personal use.

 "Early last month, a directive went out from the central government to the public sector undertakings (PSUs) owned by it to pay higher dividends and not to wait for the end of the financial year to do so," wrote Vaidik Dalal. "Further, it asked them to consider not just the current year profitability, but also dip into their financial reserves for these dividends." Dalal goes on to make an extraordinary statement, writing, "As the majority owner, the Center is within its rights to do all this." This is to say that laws of business do not apply to the government and politicians are at liberty to plunder any company if they want. Last year, the government forced the Reserve Bank to transfer Rs 1.76 trillion from its reserves to the government. By this logic Mr Ramalinga Raju would have been within his rights to divert money from his company Satyam if he had done it openly. Following this scam, the government passed a law to make auditing firms liable if they fail to detect and report diversion of funds. The Corporate Social Responsibility (CSR) Act requires companies "with a net worth of INR 5 billion (US$70 million) or more, or an annual turnover of INR 10 billion (US$140 million) or more, or net profit of INR 50 million (US$699,125) or more," to spend 2% of profits on social schemes. "The Indian Express reported that RTI responses received by it from 38 PSUs showed that they had contributed Rs 2,105 crore (Rs 21.05 billion) -- 60% of their total CSR spend -- to the newly launched PM Cares Fund," wrote Dalal. Questions have been asked about the PM Cares Fund, about "how it is constituted and managed, how much money has been collected, from whom, and how it is being put to use", reported the BBC. Queries based on the Right to Information Act are refused on the pretext that the fund is not a public authority when money has been raised from the public and from PSUs, which are traded in stock markets. We already have a National Disaster Relief Fund (NDRF) and rightly all the money should be transferred to that fund, but the Supreme Court refused to consider it. In 2012, the then government forced the Life Insurance Corporation (LIC) to buy 400 million ONGC shares at a cost of Rs 126.67 billion, to finance its spending. This government has not been shy of forcing the LIC to buy shares of PSUs which it passes off as disinvestment. As a result the LIC "has seen the value of its holding erode by more than Rs 20,000 crore (Rs 200 billion) in just five major stocks in roughly two years." In September, the Finance Minister announced 'Loan Melas' wherein public sector banks will dish out loans "in 400 districts of the country to boost demand ahead of the festive season". Small wonder, non-performing assets (NPAs) in banks are likely to reach 11-11.5% of total lending this financial year, "the highest among comparable countries". The governor of the RBI expects NPAs to rise to 14.7%. Public sector means belonging to the public, or the people of India. How to make politicians understand that public money is not their's? Without being charged with sedition.

The vanishing middle class.

"As the covid pandemic continues, the Narendra Modi government has spent millions of rupees to aid the poor," wrote Sandipan Deb. Excellent, "But the middle-class devastation that has been going on for the past few months has received almost no attention -- either from the government, or the media." Hundreds of thousands have been sacked and those remaining have seen their salaries slashed by up to 40%. "The economy is shrinking this year and companies have seen their sales decline year-on-year for five straight quarters. But listed companies have never made profits like they made in the quarter ended September 2020," wrote Mahesh Vyas. "Understandably, shareholders are being rewarded interim dividends and buybacks," but rise in wages has been little. Naturally stock markets recorded their highest levels a few days back. Foreign portfolio investors (FPIs) had poured Rs 58,694 crore (Rs 586.94 billion) into Indian stocks till 26 November. "Over the last few years, bank credit to industry has been shrinking, while that to consumers has been growing rapidly," wrote Vivek Murthy, With jobs being lost due to shrinking of the economy, "consumers without jobs and income will be unable to pay the huge debts they are now incurring". "Since April, most economists have maintained that high inflation will be transitory. Yet it has assumed a permanence throughout the year, driven by high food prices," wrote Nikita Kwatra. "The world economy will bounce back in 2021 with global gross domestic product jumping up by 4.2% after falling in similar proportion this year, the Organization for Economic Cooperation and Development says in its latest report. As the world recovers from the virus induced recession, commodity prices will rise affecting India, because we import 80% of our oil needs. India imported "270 million metric ton of crude oil valuing $120 billion in 2019-20," wrote Abhimanyu Joon. "The amount is nearly 500% more than the average value of exports made by India in the corresponding year." The price of petrol is now at record levels of which taxes comprise over 60%. The Reserve Bank (RBI) has created the real interest rate which is effectively (-)4% in India, said Prof Raghuram Rajan, which means middle class savings are being sacrificed to help the government and its cronies. Richard Cookson is worried about inflation picking up sharply as "the developed world recovers over the next few months". However, "As has been the case for many years, global inflation has 'Made in Asia' stamped all over it." A combination of loss of income, high prices, extortionate taxes, and RBI repression may eliminate the middle class and make us all poor. Real equality.