Actually it's a gain.

  "The atmosphere has changed in Beijing since the Chinese capital's last Olympics in 2008," Vox. "Air pollution in the capital has decreased by 50 percent since the 2008 Olympics, which if maintained will lead to four years of additional life for the average Beijing resident." "In 2020, Delhi had more than twice the average annual PM2.5 of Beijing and over five times the average PM 2.5 concentration of Los Angeles." This is despite the fact that a stringent lockdown was imposed on India and Delhi from 25 March 2020, which was lifted gradually in seven stages until December, wikipedia. "India has nine of the 10 most polluted cities in the world" but with inadequate monitoring we do not know accurate concentrations of pollutants, "including sulphur dioxide (SO2), Nitrous dioxide (NO2), respirable PM10, the finer particulate matter or PM2.5, lead, carbon monoxide (CO) and ammonia", Indiaspend. Thirteen out of the top 15 polluted cities are in India, Earth.Org. "The Lancet estimates that air pollution kills more than 1 million people in the country every year." "For decades, public health officials have known that bad air quality can increase the risk of heart disease, stroke, lower respiratory infections, lung cancer, diabetes, chronic obstructive pulmonary disease (COPD), dementia, mental illness, premature births and more." As a result, "India lost an estimated $36.8 billion due to premature deaths and morbidity as a result of air pollution." Maybe not. "India is among the countries having the lowest public healthcare budget in the world, with the public healthcare system in the country merely getting 1.26% of the total GDP," TSG. Healthcare spending needs to increase by 0.35% to get to 2.5% of GDP by 2025, but actual spending increased by a minuscule 0.02% from 2015-16 to 2020-21. The 2022-23 Budget hopes to spend 0.25% more on healthcare over last year, but has reduced transfer of funds to states for Covid vaccines by 87%, BS. Most people pay for health emergencies out of their own pockets. "Nearly 70 percent of expenditure on health has to be borne by the patients and this pushes about 60 million Indians into poverty each year, the Finance Commission has said," TNIE. "Out-of-pocket expenses are among the highest in the world. More than 60% of the population isn't covered by insurance," wrote Anjani Trivedi and Andy Mukherjee. Outpatient services "which account for 60% of out-of-pocket expenditure, aren't included". Central government officials, politicians, judges and their families are covered under the Central Government Health Scheme (CGHS). Members of CGHS can get treatment from a long list of private hospitals at beggarly charges. Outpatient consultation is a paltry Rs 150, while we pay around Rs 1,500 per visit, and the revised rate for removal of venereal warts for government officials and politicians on high pensions, is only Rs 184, GTD. Hospitals have to recover these losses from other patients, thus increasing costs for us. There is a long list of social schemes targeted at poor people, wikipedia, and a reduction in the number of beneficiaries helps save money. So, CGHS is an indirect tax on private citizens and fewer handouts save money from social schemes. India may have lost $36.8 billion but the government saved money. Which will help reduce government borrowing, bring down government debt and reduce interest payments. Surely, that is good for the economy? 

A big success?

"The Beijing Winter Olympics drew to a close Sunday, rounding off the Games that will go down in history as much for their coronavirus restrictions and geopolitical tensions, as their nail-biting competitions and emotional moments," CNBC. "They have come to an end, the strangest, most controversial, most unwelcoming Olympic Games of our lifetime," USA Today. "We have never seen anything quite like these Olympics. They will be deemed a success only because they were not deemed an abject failure." The Winter Olympics was "a political statement by China to showcase its soft power" like "the 1936 Olympics organised by Adolf Hitler's Third Reich in Munich," News18. However, China may not have achieved what it wanted. In order to increase its medal tally China allowed foreign citizens to compete under its flag. "The Chinese law does not allow dual citizenship but the foreign-born Chinese players admitted that they were not even asked to renounce their citizenship." The Olympics also drew attention to Covid-19. Athletes who tested positive were isolated and "Team officials from Germany, Belgium and Russia said their athletes were facing nightmarish situations, like poor to no internet connections, bad food and no training equipment, in the so-called quarantine hotels set up by Chinese officials," npr. Russian athlete Valeria Vasnetsova posted a photo of the food she was served showing "plain pasta, a red sauce, charred meat on a bone, a few potatoes and no green vegetables. She also said that she is being served the same meal for breakfast, lunch and dinner," si.com. Many scientists are coming round to the opinion that the pandemic originated in Wuhan lab. "Under the natural origin theory, the novel coronavirus, or SARS-CoV-2, would have originated in an animal and traveled to humans either directly or through an intermediate host animal," as happened in the first Severe Acute Respiratory Syndrome (SARS) outbreak in 2003 in which "the intermediary host animals were masked palm civets that tested positive for the virus", yahoo. However, this time, "They tested an unprecedented 80,000 animals covering 209 species, including wild, domestic and market animals...and they found no infections in animals," said Prof Richard Miller. The good news for China is that its producer price index (PPI) increased by 9.1% in January compared to 10.3% in December but the consumer price index (CPI) increased by only 0.9% last month compared to 1.5% in December, Reuters. "The PBOC (People's Bank of China) has cut interest rates and pumped cash into the financial system to lower borrowing cost, with more easing steps expected." This, when the US Federal Reserve is deciding on the size of rate rises, ET. Why is the CPI so low when input costs are increasing? Does it show a collapse in consumer demand? So, is it good news? Or bad. 

Contrasting styles.

The Economic Times printed a proud list of men and women of Indian origin leading some of the largest and most well-known companies in the world. There must be many more because, "A total of 8,81,254 Indians have given up their citizenship since 2015, the Ministry of Home Affairs informed the Lok Sabha," money- control. In a way Indians are forced to give up citizenship because, "The Constitution of India does not allow holding Indian citizenship and citizenship of a foreign country simultaneously. Based on the recommendation of the High Level Committee on Indian Diaspora, the government of India decided to grant Overseas Citizenship of India (OCI) commonly known as dual citizenship," Australian High Commission. "According to the Expat Insider 2021 survey by InterNations, 59 percent of Indians working abroad relocated for their career -- a much higher share than the global average, which is 47%," 35% have a bachelor's degree, 54% have a postgraduate/master's degree and 6% hold a PhD degree. The Annual Status of Education (ASER) 2018 showed that although school enrollment is almost 97.2%, "After five years of schooling, at age 10-11 years, just over half (51% of students) in India can read a grade two level text" (appropriate for 7-8 year olds), BS. It was 56% in 2008. Math ability was more dismal with, "Just 28% of grade V students able to do division, compared with 37% in 2008." Following lockdown, "At least 80 percent of children in India between the age group of 14-18 years reported lower levels of learning during COVID-19 pandemic than when physically at school, according to a UNICEF report," ET. "Why are children not learning what they should in  school?" asked Anurag Behar. Not because they are stupid, but because children from poor families are often hungry, they are exhausted by having to do chores at home and poor parents cannot provide the kind of support the rich can. A nation of extreme contrasts. Ashish Mishra, son of Union Minister Ajay Mishra, accused of killing 4 farmers by ramming them with his vehicle last October, is out on bail, HT. "The number of Indian undertrials lodged in the country's jails since 2015 has increased by over 30 percent while that of convicts has reduced by 15 percent, NCRB (National Crime Records Bureau) data showed," ET. This maybe because people are being incarcerated under false charges of terrorism under the pernicious Unlawful Activities (Prevention) Act (UAPA) which cannot be proved in court, Scroll. Campaigning in Uttar Pradesh (UP) Prime Minister Narendra Modi claimed that, under BJP rule, UP was "safe for women and full of opportunities", BBC. But, "Even before the pandemic, only 9.4% of UP's women worked, and official data shows that the number fell further in the past two years." "Police recorded nearly 50,000 crimes against women in UP in 2020," with 2,796 raped, 9,527 kidnapped, 2,302 killed for dowry and 23 doused by acid. An app called 'Bulli Bai' and a website called 'Sulli Deals' have published photographs of Muslim women for sale, BBC. With great respect, no doubt. Dollar millionaires with personal wealth of over Rs 70 million have increased by 11% during the pandemic, BS, while massive youth unemployment is leading to a "nowhere generation", BBC. Extreme contrasts. Good for some.      

Stimulus without stimulating.

As the pandemic shut economies down, "Emerging markets which stimulated most aggressively got no payoff in faster recovery, owing in part to the downsides of overindulging. India was not among the biggest spenders, which tended to suffer higher inflation, higher interest rates and currency depreciation, at least partly cancelling out the sugar high of stimulus," wrote Ruchir Sharma. On 20 May 2020, Prime Minister Narendra Modi announced a stimulus package of Rs 20 trillion. "The PM said the Rs 20-trillion package, nearly 10 percent of India's gross domestic product (GDP), would be with the objective of putting money into people's pockets to spur domestic consumption and demand," BS. But the actual fiscal stimulus was just about 1% of GDP, according to Fitch Solutions. "The new spending will only amount to about 1 percent of GDP, which would take India's total central government Covid-19 fiscal response to-date to only 1.8 percent of GDP, it said," HT. Modi is known to indulge in jumla, as when he promised a gift of Rs 1.5 million to every citizen by confiscating black money, ET. Not surprising, "What is made to look like a stimulus is mostly a grand loan mela," The Print. Instead of stimulus, "Government earned around Rs 8 lakh crore (Rs 8 trillion) from taxes levied on petrol and diesel in the last three financial years, finance minister Nirmala Sitharaman informed Parliament," in December 2021, NDTV. Despite taxing money out of citizen's pockets, instead of helping them, "The fiscal deficit for 2020-21 was at Rs 18.3 trillion or 9.2% of GDP. The fiscal deficit for 2021-22, the current financial year, is expected to be at Rs 15.9 trillion or 6.9% of GDP," wrote Vivek Kaul & Chintan Patel. "The total liabilities of the central government as of March 2023 are expected to be at Rs 152.2 trillion. From March 2020 to March 2023, in a period of three years, the government would have ended up adding Rs 50 trillion to its liabilities." Government debt in emerging economies jumped by 10% to 63%, whereas "The Center's debt-to-GDP ratio for FY22 (financial year 2021-22) was 59.9%". "According to the Reserve Bank of India (RBI), states' debt-to-GDP ratio is also likely to be 31% in FY22," "which will lead to a debt-to-GDP ratio of approximately 90.9%," wrote Jagadish Shettigar & Pooja Mehra. Interest payment on government debt is expected to increase 15% to Rs 9.30 trillion in FY23, ET. Meanwhile, "The mobile user count in India fell by 1.28 crore (12.8 million) in December 2021 compared to the previous month....Trai data showed," CNBC. People have to really hard up to give up their phones. India is better off than other emerging nations, says Ruchir Sharma. The government isn't. Neither are the people.

It's win-win-win. Just don't try to win.

Is it real or just posturing? Tensions between Russia and Ukraine have been rising since last year when Russia accused Ukraine of failing to honor a 2015 peace deal, which granted "broad autonomy to rebel regions" and "sweeping amnesty to the rebels" in the east of Ukraine, npr. "Moscow has strongly criticized the US and its NATO allies for providing Ukraine with weapons and holding joint drills, saying that encourages Ukraine hawks to try to regain the rebel-held areas by force." In 2020, "On May 15, the US Ambassador in Warsaw, Georgette Mosbacher, suggested relocating US weapons based in Germany to Poland," Brookings. As a result, "Russia has Iskandr -M ballistic missiles in Kaliningrad. With a range of up to 500 kilometers, these missiles could strike targets in almost all of Poland within a matter of minutes and with very little warning." In 2017, the US agreed to supply Patriot anti-missile system to Poland for $10.5 billion, dw. NATO has a long history of antagonizing Russia. "NATO has four multinational battalion-size battlegroups in Estonia, Latvia, Lithuania (which have borders with Russia) and Poland," and a "ballistic missile defense center in Romania", CNN. First open bases on Russia's borders and, when Russia tries to protect itself, sell missiles systems worth billions of dollars. So, who gains from this game of chicken? Ukraine President Volodymyr Zelensky is facing many challenges with falling popularity. "Many people are also unhappy that the government hasn't yet delivered on benefits it promised and ended the conflict in the country's east. Anti-government protests have taken place in Kyiv." US President Joe Biden's popularity is also falling, since the shambolic retreat from Afghanistan, BBC. In a Reuters/Ipsos poll, "44% of US adults approved of Biden's performance in office while 51% disapproved and the rest were not sure". People are also unhappy with Biden's party, the Democrats. "In the first quarter of 2021, about 49% of Americans identified with or leaned toward the Democratic Party, compared with just 40% for the Republican Party, according to Gallup." By the fourth quarter, 47% of Americans identified or leaned towards the GOP and just 42% identified with the Democrats, Fortune. November is far away but it looks like the Republicans could win both the House and the Senate, leaving Biden a lame duck, with 2 years still to go. "House Democrats are retiring in numbers not seen in decades as a dire political outlook, new district lines and a negative environment at the US Capitol have combined into a toxic brew," with 30 Democrats not seeking re-election in 2022 compared to only 13 Republicans, CNN. Ukraine has given Biden the opportunity to match "every Putin chess move with an effective counter of his own", wrote an admiring Thomas L Friedman. Russia gains from oil and gas prices. After rising to $100 per barrel on 17 February, Brent crude futures are trading at $92.29 a barrel, CNBC. This is a huge jump from an average price of $39.68 in 2020 and $68.17 last year, macrotrends. Natural gas prices have doubled from an average of $2.03 per million BTU to $4.53 this year, macrotrends. Russia exports both oil and gas. So Russia announced partial withdrawal of troops from Ukraine border, TIE, but Biden warned that "Russia could invade Ukraine within days", AP. This game is a win-win-win for Zelensky, Biden and Putin. As long as no one tries to win.

Completely in sync.

"The Indian economy is poised to grow at the quickest pace among the league of large nations on the back of various initiatives taken by the Budget 2022-23, said Finance Ministry's Monthly Economic Review," ET. "The Budget has targeted a nominal GDP growth of 11.1 percent in 2022-23 with a GDP deflator of 3.0-3.5 percent." The implied growth rate is 8% and this will come on the back of manufacturing and construction. The Reserve Bank (RBI) echoed ministry's optimism. "The 2022-23 Budget proposals and the recent monetary policy announcements have set the tone for a durable and broad-based economic revival which has started gaining traction as the nation emerges from the third wave of COVID-19 pandemic, according to a RBI article," ET. "Both manufacturing and services remain in expansion with optimism on demand parameters  and uptick in consumer and business confidence." "Growth in India's factory activity slowed to a four-month low in January as COVID-19 curbs hurt new orders and output, while high price pressures weighed on business confidence about the year ahead," as the Manufacturing Purchasing Managers' Index (PMI) fell from 55.5 in December to 54.0 in January, Reuters. "India's Industrial Production (IIP) fell to 0.4 percent in December 2021 from 1.3 percent in the previous month (November 2021), according to official data. This is the slowest growth in 10 months," BT. "India's core sector growth improved marginally to 3.8% in December from a nine-month low of 3.4% in the month before, data released by commerce and industry ministry showed," ET. Much of this is base effect because "The core sector had contracted by 0.4% in December 2020." "The seasonally adjusted India Services Business Activity (PMI) fell to 51.5 in January, down from 55.5 in December," ET. "Wholesale prices in January rose 12.96% from a year earlier, less than previous month's 13.56%, government data showed," Reuters. Input prices rose despite a slowdown in manufacturing and services due restrictions to control the third wave of Covid-19. The RBI's survey of consumer confidence (CCS) showed, "While the Current Situation Index (CSI) in the CCS has improved marginally between the November 2021 and January 2022 round, the future expectations index (FEI) has actually fallen compared to the previous round," HT. India's GDP growth rate in 2019-20, that is before the pandemic, has been reduced from 4% to 3.7%, HT. Naturally, the compound annual growth rate (CAGR) of private final consumption expenditure (PFCE) in the 4 years between 2016-17 and 2019-20 fell compared to the previous 4 years between 2011-12 and 2015-16 in India, whereas it went up from 7.6% to 9.0% in the rest of the world, wrote Roshan Kishore and Vineet Sachdev. Not certain that the RBI should be echoing the government during ongoing elections in 5 states, NDTV. Should remember what Abraham Lincoln said about fooling people.

Making it worse?

"Evidence from around the world is that the economic policy paradigm, of first increasing the overall size of the pie by reducing taxes at the top and then 'redistributing' the wealth, has not delivered benefits to people. Trickle-down has dried up while gushing up has increased, with policies to make it easy for investors to do their business of making more profits for themselves," wrote Arun Maira. Maira may have missed the news. Since 2019, "India's top marginal income tax rate is 42.7%, the highest since 1992 when taxes were lowered as part of the first wave of economic reforms, and after finance minister Nirmala Sitharaman introduced a surcharge on income tax of people earning more than Rs 2 crore (Rs 20 million)," HT. Surcharge is levied on income above Rs 5 million. From Rs 5-10 million the rate of surcharge is 10%, from Rs 10-20 million it is 15%, from Rs 20-50 million it is 25%, and above Rs 50 million it is a whopping 37%, IT Dept. Add 4% Health and Education cess on top of that and the top rate comes to 42.7%. In the US, the top rate of income tax is 37% on income above $523,600, about Rs 39.27 million, but it is higher for married couples, bankrate. However, even the capitalist US provides social security benefits to taxpayers, such as pension, medicare and disability benefit, Investopedia. At about $2.8 trillion, the GDP of the United Kingdom is about the same as that of India, World Bank. The top rate of income tax in the UK is 45%, above an income of 150,000 British pounds, which would be about Rs 16 million, Tax Foundation. With superannuation and National Insurance contributions it may go up to 50%. But there is an elaborate social security net to prevent hardship and the National Health Service (NHS) is free for every citizen, Britannica. Indian taxpayers get nothing except threats and harassment and are humiliated as criminals. The list of social schemes for the benefit of the poor is very long, wikipedia, and would be much longer than in any European country, the difference being that benefits are targeted towards the poor and announced with great fanfare just before elections, TIE, whereas in Europe and in the US, taxpayers get the most social benefits. This could be an incentive to Indian politicians to maintain the number of poor at present levels, which is then used as an excuse to distribute handouts and to intimidate taxpayers in the name of altruism. According to a report by Mehrotra and Parida, using the Tendulkar poverty line, "even though the incidence of poverty has come down marginally -- from 21.9% in 2012 to 20.8% in 2020 -- India has witnessed an increase in the absolute number of poor in the country", wrote Udit Misra. "As against pulling 140 million pit of poverty between 2004 and 2011, India has seen more than 76 million fall back below the poverty line between 2012 and 2020," said Mehrotra. India is not creating enough jobs for its young people and India will probably grow old before it becomes rich, wrote Mihir Sharma. If taxpayers are assured pension and healthcare they will need to save less, demand will jump due to increased spending, requiring new investments, jobs will be created and poverty will decrease. Maira may mean well but needs to reflect.   

Gold-plated DA.

"India's benchmark inflation rate, measured by the Consumer Price Index (CPI) rose to 6.01 percent year-on -year in January 2022, data released by the Ministry of Statistics and Programme Implementation... indicated," ET. As per the RBI, "in a notification on March 31, 2021, the Central Government, in consultation with the RBI, retained the inflation target at 4 percent (with the upper tolerance level of 6 percent and the lower tolerance limit of 2 percent) for the 5-year period April 1, 2021 to March 31, 2026." "The uptick in the food basket was due to a sharp rise in prices of oil and fats which climbed 18.70 percent year-on-year in January. Apart from this meat and fish prices saw a rise of 5.47 percent while that of vegetables gained 5.19 percent and pulses and products rose 3.02 percent." No need to panic because "all possible scenarios in the oil price range have been taken into account", said RBI Governor Shaktikanta Das. ET. "Price stability is of upper most priority," he added. Thank you sir, we are so grateful. "Deloitte Touche Tohmatsu India expects the nation's biggest fuel retailers to sharply raise pump prices after local elections end next month," The Print. "Even in the past, immediately after elections or the polling is over what we have seen oil marketing companies revising their prices and these revisions have been pretty sharp and in line with the global oil prices," said Dr Sunil Kumar Sinha of India Ratings and Research. As transport costs spike, the cost of all goods, including food, will jump. Rural Indians spend an average of 53% of earnings on food while urban Indians spend an average of 43%. TIE. "Economists say the poor tend to spend most of their expenditure on essentials like food." "Malnutrition in children has risen across India in recent years, sharply reversing hard-won gains, according to the latest government data," BBC. "Over 33 lakh (3.3 million) children in India are malnourished and more than half of them fall in the severely malnourished category with Maharashtra, Bihar and Gujarat topping the list, the Ministry of Women and Child Development has said," NDTV. Thankfully, as a retired IAS officer, Mr Das is most probably protected by a gold-plated pension which will soon be augmented by the government. "There have been multiple reports around increase in dearness allowance (DA) by up to 3 percent," News18, which will take it up to 34%. On top of that central government employees may get a lump sum of Rs 200,000 as arrears, Zee News. 'Dearness' stands for 'costliness'. Cost of any goods in India is priced in rupees. So, when prices go up it means the value of the rupee has gone down. "Foreign institutional investors (FIIs) have been net sellers every month since September, dumping $7.9 billion worth of local shares since," ET. As dollars are taken out it puts a downward pressure on the rupee. To add to the fun, Goldman Sachs is predicting that the US Federal Reserve may increase interest rates up to 7 times this year, Fortune. The rupee is bound to fall further against the dollar. Das says he knows what the price of oil will be. He says nothing about the value of the rupee, which will be used by us to buy fuel. Dearness Allowance will protect him.

A very select group.

"India's aspiring middle class Gen Z - those between 18 and 25 years old - is making a break from tradition. But can the economy deliver on their dreams?" asked Ankur Warikoo. "For this group of Gen Z, college is not just a route to a job - instead, it's a space for opportunities." "It's where they can mull over or even launch an early version of a start-up or do multiple internships without any financial burdens." "They won't jump to find a job," "They want to marry late, if at all," and "They will take financial risks." Clearly, this is a very select group which has financial backing from parents to indulge their whims. So different from the "Thousands of youngsters" who burned down empty train coaches "in protest against what they call irregularities in recruitment by the mammoth railways department, one of the world's largest employers", Reuters. There were 24 million applications for 120,000 vacancies announced by Indian Railways last year, BT, an average of 200 applications for every post. Insulated from the "nowhere generation" whose lives have become one long "timepass", BBC. These protected Gen Z will probably run their start-ups with gig workers. "The gig economy can serve up to 90 million jobs (roughly 30 percent of India's non-farm workforce). This can add 1.25 percent to India's GDP, according to a Boston Consulting Group (BCG) report," BW. "India's gig sector is likely to grow to US $455 billion at a CAGR of 17 percent by 2024," ASSOCHAM predicted. According to BCG "participation in gig economy is higher in developing economies (5-12%) than developed economies (1-4%) and most gig jobs are in lower-income job-types such as deliveries, ride-sharing, micro-tasks, care and wellness," Fortune. "Those who celebrate gig work for high efficiency, high productivity and for bridging the income and employment gaps in India often ignore the wretched working conditions of gig workers, particularly at the lower end of the skill chain -- abysmally low wages/income, no social security, no job security and poor working environment." Warikoo's Gen Z are far removed from a whole list of young women who have been thrown into prison on trumped-up charges of sedition but they have not bowed. "Small wonder, then, that state authority so fears them -- youth unbridled, youth given its head, is a dangerous and worrying phenomenon for those who seek to control. For every policeman who raises a stick to the brave young feminists, the anxiety he is dealing with is real," wrote Urvashi Butalia. By marrying late or not marrying at all this class of Gen Z will probably refrain from the disgusting and hateful practice of dowries. "Dowries have been banned in India for more than 60 years, but the practice persists -- and not only in rural and more traditional parts of the country," CNN. Thankfully, they will definitely never join the 'Trads' who "praise lynching, oppose both Muslims and Christians, believe in the oppressive caste system, and hate all outspoken modern women, whether Muslim or Hindu," BBC. Warikoo's group of Gen Z are lucky -- they have a choice.

QE to QT: no choice.

Under quantitative easing (QE), the US Federal Reserve's assets "have ballooned to $8.9 trillion, from under $1 trillion before the 2008 crisis", Business Insider. "Now, however, the Fed is set to raise interest rates as it tackles inflation. And to give it more firepower, the Fed has also said it's likely to stop reinvesting the money from its maturing bonds, gradually reducing its support for the fixed-income market." "The stock of assets purchased under QE" "stands at 30% of gross domestic product (GDP) in the US and 40% in Britain", wrote Mervyn King in July 2021. "Today, policymakers are struggling to explain how or even whether QE will be unwound. They're rightly concerned about triggering a sharp market reaction to signals that asset purchases will be tapered, but the longer the confusion persists, the greater the possible damage." The opposite of QE has been labeled quantitative tightening (QT), which was tried in 2018. The S&P 500 dropped more than 6% and "After about 10 months, the central bank reversed policy." "The US Federal Reserve is preparing to raise interest rates in March, and last Friday's jobs report fueled speculation it may need to move aggressively. The Bank of England just delivered back-to-back hikes, and some of its officials wanted to act even more forcefully. The Bank of Canada is set for liftoff next month. Even the European Central Bank may get in on the action later this year," ET. In the US, "Nonfarm payrolls surged by 467,000 for the month (January), while unemployment rate edged higher to 4%, according to the Bureau of Labor Statistics," CNBC. "December which initially was reported as a gain of 199,000, went up to 510,000. November surged to 647,000 from the previously reported 249,000. For the two months alone, the the initial counts were revised up by 709,000." "The consumer price index for January, which measures the costs of dozens of consumer goods, rose 7.5% compared with a year ago, the Labor department reported," CNBC. "Stripping out gas and grocery costs, the CPI increased 6%, compared with the estimate of 5.9%." "The UK economy rebounded last year with growth of 7.5% despite falling back in December due to Omicron restrictions, official figures show," BBC. "It was the fastest pace of growth since 1941." "Inflation is at its highest rate for 30 years, having risen 5.4% in the 12 months to December," BBC. "Spiking energy prices are raising utility bills from Poland to the United Kingdom, leaving people struggling to make ends meet and small businesses uncertain about how much longer they can stay afloat," firstpost. "Utilities are passing the costs along to customers, and customers are getting hit twice: with higher bills at home and rising prices from businesses also paying more for energy." The global supply chain crisis "could finally start to unwind towards the end of this year", "But trade channels have become so clogged up it could be well into next year before the worst-hit industries see business remotely as usual," ET. Hesitant supplies with higher demand due to jobs growth can only push prices up. "India is prepared to deal with any situation arising out of global developments, including the US Federal Reserve's decision to roll back monetary easing," said Finance Minister Nirmala Sitharaman. Because, young people are not getting jobs and millions are doing low grade work because they cannot afford to sit idle, BBC. No jobs, no demand, no rise in prices. No worries.       

All about intrinsic value.

"This year, crypto companies are barging into the Super Bowl ad showdown, which as usual also includes more traditional advertisers like beer and car companies," CBS News. "A cryptocurrency is a medium of exchange that is digital, encrypted and decentralized. Unlike the US Dollar or the Euro, there is no central authority that manages and maintains the value of a cryptocurrency," Forbes. These tasks are performed by other users of the currency over the internet by using blockchain technology. Whatever that is. There are hundreds of cryptocurrencies, of which the Bitcoin is probably the best known. Each Bitcoin is worth $42,420, Coin Market. Super Bowl is the final of the National Football League in the US, wikipedia. Unlike normal football, or soccer, which is played with a round ball, American football is played with an oval shaped ball, with players wearing helmets and padding, and 7 referees who throw pieces of yellow colored cloth to call a foul play, wikipedia. Super Bowl advertising is expensive. "NBC -- which is broadcasting this year's game -- announced last week that it is sold out of Super Bowl ads, with multiple 30 second spots having sold for a record $7 million each," KCRA News. "Much of the Super Bowl audience may not know a lot about crypto, which provides an opportunity for these crypto advertisers to reach new customers, (Prof Robert) Kolt said." $7 million will buy 160 Bitcoin or 2,200 Ether, CNN. "FTX, a crypto exchange that recently raised funding valuing it at $32 billion" "is promising to give away bitcoins as part of the promotion". "A study conducted by the portal BrokerChoose's annual crypto proliferation index reveals that at over 10 crore (100 million), India has the largest number of crypto owners in the world followed by the US and Russia," TOI. While the US Federal Reserve and the European Central Bank (ECB) seem to be happy with citizens buying cryptos, "The Reserve Bank of India (RBI)...reiterated its stance on cryptocurrency and said the digital asset is a huge threat to macroeconomic and financial stability," CNBC. "RBI has remained critical of cryptocurrencies as it believes there is no intrinsic value in the digital asset." What is the intrinsic value of a the Penny Black stamp that was offered for auction at $8.25 million? Reuters. "India's central bank chief delivered a stark warning against investing in cryptocurrencies, saying that they lacked the underlying value of even a tulip," Reuters. He was referring to a bubble in tulip bulbs in the Netherlands in the 1600s, when "the rarest tulip bulbs traded for as much as six times the average person's annual salary", Investopedia. Wow, such erudition! The RBI is worried because it has printed huge amounts of rupees to finance government borrowing so that banks were having to park Rs 6-8 trillion in the RBI's reverse repo window at 3.35-3.75% in mid-December, wrote Madan Sabnavis. Cryptocurrencies have to be bought in foreign currencies before they can be sold for rupees within India. The RBI maybe worried that this may show up the intrinsic value of the rupee. And who is responsible. 

Lots of sound and fury.

 The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) decided to keep repo rate, reverse repo rate, bank rate and the marginal standing facility (MSF) rate unchanged at its latest meeting this week, ET. "With a 5:1 majority, the MPC also opted to maintain an accommodative stance in order to support economic growth and recovery. This is the tenth consecutive time that the rate has remained unchanged. The central bank last revised the policy rate on May 22, 2020." "Accommodative stance" means that, not only is the RBI ruling out any tightening of policy, it is ready to cut rates further if it so fancies. Possibly because it expects economic growth at 7.8% in 2022-23, lower than the 8-8.5% growth predicted by the Economic Survey, CNBC. "RBI has projected retail inflation at 5.3 percent for the current fiscal (ending 31 March 2022) and 4.5 percent for FY23." The RBI is faced with a trade-off between growth and inflation, wrote Samiran Chakraborty. "Should RBI offer a helping hand to the government by providing explicit buying support to the large borrowing program," even with "potential loss of credibility"? Chakraborty expected the RBI to increase the reverse repo rate, at which it borrows from commercial banks, ET, by a tiny 15-20 basis points, just to show that it is incharge, while keeping borrowing costs low to finance the fiscal deficit. "The government has pegged the fiscal deficit for 2021-22 at 6.9 percent of gross domestic product (GDP) and at 6.4 percent of GDP for 2022-23, finance minister Nirmala Sitharaman said," CNBC. This has disappointed Fitch Ratings. "India's public debt/GDP ratio, at about 87% in FY21, is well above the median of around 60% for 'BBB' rated sovereigns," Fitch. "The government has little fiscal headroom at its current rating level to respond to possible shocks to growth." Credit ratings for India are just above the speculative grade for all agencies, (world government bonds), so we cannot risk any downgrade. "Deloitte Touche Tohmatsu India expects the nation's biggest fuel retailers to sharply raise pump prices after Assembly elections next month," DH, which will immediately raise prices and impact consumer spending. "Retail prices of biscuits, beauty products and home appliances are among a host of consumer goods to face another round of price increase this quarter as companies battle high commodity costs and margin pressures," Mint. When the Budget announced higher than anticipated fiscal deficit, "yields on government securities shot up and their prices crashed", ET. "Debt mutual funds holding these bonds suffered enormous erosion in value." Ordinary investors suffered massive losses. To increase demand for government bonds and raise their prices the RBI increased the investment limit for foreign portfolio investors (FPIs) by Rs 1 trillion, TOI. In current times "monetary and fiscal policies cannot be a question of either or, but must go in tandem with each other", said RBI Governor Shaktikanta Das. Which means that the RBI is taking orders from the Finance Ministry. And all these discussions and debates are meaningless. Just lots of sound and fury.  

Just hiding the source.

The second phase of the FAME India scheme came into effect in March last year, aiming to support electrification of public and shared transportation through subsidies on electric vehicles (EVs) including buses, passenger cars and two-wheelers, ET. 'FAME' stands for 'Faster Adoption and Manufacturing of (Strong) Hybrid and Electric Vehicles in India'. A big mouthful. GST on vehicles and chargers/charging stations was reduced and the construction of charging infrastructure is to be encouraged, IBEF. Trouble is that EVs are more expensive, are heavier because of the battery pack, have shorter driving range than internal combustion engine (ICE) driven cars, charging infrastructure is poor, takes long time to charge batteries and batteries are extremely expensive, ET. "The replacement price of the Tata Nexon EV Battery Pack will be around Rs 5.50 Lakh to Rs 6.20 Lakh (Rs 550,000-620,000) in India," evehicleinfo. For that price one can choose from a range of new ICE vehicles. "The majority of battery manufacturers offer a five- to eight-year warranty on its battery pack. An electric car battery, on the other hand, is expected to last between 10 and 20 years before needing change." UK Environment Secretary George Eustice said that EVs produce 'polluting particles' "Not from exhaust emissions, but from brake linings, tyres and road surfaces because such vehicles are much heavier owing to the presence of the battery," DM. They will kill more people in accidents because of their weight. "Personal cars account for just 7 percent of global emissions," and the huge increase in electricity generation will need fossil fuels. "Compared with traditional ICE vehicles, greenhouse gases released while making battery-electric cars account for a higher portion of life-cycle emissions," wrote Anjani Trivedi. To reduce weight, manufacturers are using more aluminium and to make better batteries they are using nickel, cobalt and manganese, all of which release more greenhouse gases during extraction. The International Energy Agency (IEA) found that "global demand for electricity surged 6% in 2021", CNN. "Electricity has a crucial role to play in the fight against climate change as countries ditch fossil fuels and more battery-powered cars hit the road." "Electricity generated by renewables grew by 6% globally last year, while coal-powered generation leaped 9% due to high demand and skyrocketing natural gas prices." Carbon dioxide emissions from power generation rose 7% as a result." According to a survey by WHO of 1,650 cities in the world, air quality in Delhi is the worst than any major city, wikipedia. "In 2019, the country burnt 1,830 million tonnes (MT) of fossil fuel and biomass to meet its energy needs. In addition, about 100 MT of agriculture residues and 10-15 MT of garbage were burnt in the open," wrote Chandra Bhushan. Petroleum products constituted less than 15% so electric cars will make little difference. Cars can run directly on fossil fuels or on electricity produced from fossil fuels. Just transfer of pollution. What's the point?      

Deliberate gobbledygook.

"The Reserve Bank of India (RBI) is likely to keep its repo, the rate at which it lends to banks, on hold after the monetary policy committee (MPC) meeting this week. However, some analysts feel that the central bank may hike the reverse repo rate, the rate at which it borrows, as a part of its move to normalise liquidity," TOI. The RBI "may raise the reverse repo rate by about 15-40 basis points (0.15-0.40%) while pencilling measures to support the Union Budget that pump primed growth with larger capex and record market borrowings," ET. "Citing the massive spike in credit growth during the first half and the steeper fall in deposits and the resultant rise in term money rates, coupled with the record high borrowings, an SBI (State Bank of India) report has called for a 20 bps in reverse repo rate outside the MPC ambit so that the central bank finds buyers for the flooding new debt papers. The budget 2023 has pegged the Center's gross borrowing at a record Rs 14.3 lakh crore (Rs 14.3 trillion) and for the FY22 at Rs 10.5 lakh crore, lower than the Rs 13.5 lakh crore this fiscal, while together with the states, the gross borrowing will be Rs 23.3 lakh crore and net will be Rs 17.8 lakh crore," ET. We are required to guess what this gobbledygook means. 1. Borrowings from banks has increased along with a fall in savings. People save money in banks, on which banks pay interest, and banks then lend this money to people, to buy houses or cars, or to industry at higher rates to earn profits. People are saving less in banks because "Real interest rates have turned negative in India (which means the interest rate is lower than inflation), as has happened in the US and Europe some years back. This has created many problems for savers, especially senior citizens, many of whom have kept money safely with banks," moneycontrol. "Economists call this financial repression." The RBI is solely responsible for this repression as it has stubbornly held interest rate at 4% since May 2020, even as it fatuously projects retail inflation at 5.3%, HT. 2. Banks are required by law to keep a portion of savings in safe assets like cash, gold and government bonds. This is the Statutory Liquidity Ratio (SLR), wikipedia, an easy way for government borrowing. 3. Banks are also required to hold a certain portion of deposits in cash. This is the Cash Reserve Ratio (CRR), BS. At present the SLR is at 18% and CRR is at 4%, myloancare. 4. Along with high inflation and negative returns from savings there is massive unemployment. "For India's employment-to-population ratio to be at the global average, nearly 600 million people need to be at work. Currently, only a little more than 400 million are," wrote Andy Mukherjee. "200 million jobs are missing from the economy." People borrow when in financial distress. "The share of personal loans in bank credit has for the first time overtaken overall loans to the industry sector during the second quarter of the current financial year," TOI. Loans have to be repaid. The RBI is repressing people to help the government. Gobbledygook needed to hide it from us.    

A life of timepass.

On 3 February, "Mark Zuckerberg's wealth plummeted as much as $31 billion.., the third biggest one-day drop in wealth since Bloomberg Billionaires Index began compiling data in 2012," BS. As Zuckerberg lost wealth, two Indian billionaires, Mukesh Ambani and Gautam Adani zoomed above him on the Ferris wheel of billions of dollars, TOI. Yesterday, Adani's wealth was estimated at $88.5 billion compared to Ambani's $87.9 billion by the Index. "With an almost $12 billion jump in his personal fortune, Adani is the biggest wealth gainer this year," ET. Makes us proud as Indians. Meanwhile, in this year's Budget, "Buoyant revenues -- net tax revenues are higher than budgeted -- have been deployed towards fiscal consolidation rather than broad-based support to a struggling economy," wrote Yamini Aiyar. "Household incomes have stagnated at about 80% of their pre-pandemic levels and demand for MGNREGS remains elevated." But, allocations for MGNREGS has been cut from Rs 1.1 trillion in 2020-21 to Rs 730 billion next year, for rural development from 1.09% of GDP to 0.89% of GDP, and for the food subsidy bill from 2.74% of GDP to 0.80% of GDP. The total amount of welfare expenditure has been cut from Rs 5.3 trillion last year to "roughly Rs 4 trillion for next year", wrote Praveen Chakravarty. "In other words, the government will be spending Rs 10,000 less in welfare on every poor family in the bottom half of the population." This saving of Rs 1.3 trillion will be used for capital expenditure. The government managed to spend the budgeted amount last year, by paying Rs 611.31 billion to clear all the dues of Air India, including its entire debt and the fuel dues to oil companies, before transfer to the Tata Group, ET. "When the government struggled to spend 30% higher amount in capital expenditure in the current year, can it really spend 36.2% more in capital projects next year? "At $222 billion, the projected fiscal shortfall for 2022-23 is wider than this year's yawning $213 billion gap," wrote Andy Mukherjee. The government may force the Reserve Bank (RBI) to print new money. "But with the US Federal Reserve embarking on an aggressive monetary tightening campaign, extending the pandemic-era glut of easy rupee liquidity may be risky. A combination of loose fiscal and monetary policies at a time of high trade deficits and an inflationary buildup could destabilize the rupee -- and scare away foreign investors from India's asset markets." But why is the government taking such risks with elections to assemblies of 5 states, including Uttar Pradesh, the largest, starting this month? NDTV. It can be because of "The political incapability of the Opposition to make the economy an issue; a belief that there is nothing wrong on the economic front; or a deep rooted conviction that the Center is on the right path as far as the economy is concerned," wrote Roshan Kishore. What about jobs? "In the mid-2000s, a group of students at college in Meerut, Uttar Pradesh, jokingly referred to themselves as a 'nowhere generation'," BBC. " 'Well, our life has just become about timepass,' they would say. (Timepass is an Indian English word which means spending time without a purpose in life." They can vote. Their only purpose.   

Philia is the mirror image of phobia.

"Prime Minister Narendra Modi remained the most popular global leader leader with an approval rating of 71%, according to a survey undertaken by US consulting firm Morning Consult," TOI. President of Mexico Andres Manuel Lopez Obrador was a distant second with 66%. Apparently, other leaders are jealous. "Just days ago, the effective mouthpiece of the British establishment the Financial Times, abused Prime Minister Narendra Modi as a fascist, by using a well-known hack, the son of a former Lord Chamberlain to the Queen," wrote Gautam Sen. 'Hack' is an unflattering British word for a journalist. Why the anger? Sen thinks that most Indian commentators fail "to apprehend the political context of the passage of the infamous  Islamophobia Bill in the US Congress". In December, "The US House of Representatives voted...to approve a Democratic proposal for a US State Department office to address 'anti-Muslim bias' worldwide," TOI. "Republicans, on the other hand, denounced the bill, calling it rushed and partisan, and voted against it." "Disappointingly, the Bill received the backing of the entire Democrat Jewish caucus and was later applauded by the White House and it now only remains to be passed by the US Senate, which is evenly split between the political parties and the outcome will be decided by the casting of US Vice President Kamala Harris, notorious for anti-India prejudices." India is larger than Modi. In 2019, "The US Congress overwhelmingly passed a bill seeking a tough response from the Trump Administration over reports of mass detention centers in China's Muslim-majority Xinjiang province, prompting Beijing, to threaten possible retaliation," ET. In December 2021, "Members of the House voted 428-1 to pass the 'Uyghur Forced Labor Prevention Act," which requires corporations to prove 'with clear and convincing evidence' that any goods imported from the region were not made using forced labor," ET. On the other hand, in July 2021, "dozens of Muslim women in India found they have been put up for sale online", on 'Sulli Deals', "an app and website that had taken publicly available pictures of women and created profiles, describing the women as 'deals of the day'," BBC. In January, another app called 'Bulli Bai', an insulting term for Muslim women, shared photos of over 100 Muslim women for auction, BBC. Even the most ardent supporter of Modi should find this deeply offensive and shameful. Further, "An important legal action on caste discrimination has been launched by the California Department of Fair Employment and Fair Housing against an Indian entrepreneur in the Silicon Valley. It is shockingly being cited to widely denounce Hindu India's allegedly innate caste prejudices, though there is no evidence whatsoever to support the allegations in this particular legal action." Come on. "About 67% of Dalit respondents and 12% of Shudra respondents reported being treated unfairly at their American workplace because of caste," CNN. Sen maybe overestimating Modi's importance. Just embrace all Hindus, whatever the caste.

The fourth risk to wealth.

"For the world's richest people, there used to be three ways to see a fortune disappear: Death, default or divorce," BS. "The past few months have added another risk: Sky-high valuations of giant technology companies falling from the stratosphere." For example, "The mega market hammering suffered by Facebook parent Meta...--it recorded its worst-ever 26% crash and suffered a $230 billion erosion in market capitalization -- had a silver lining for the two richest Indians. As Facebook founder Mark Zuckerberg lost nearly $31 billion in networth, Mukesh Ambani and Gautam Adani moved ahead of him in the world's rich list, Forbes data showed." On the other hand, networth of Amazon founder Jeff Bezos jumped by $18.8 billion as Amazon shares soared because of higher earnings and a hike in subscription fees for Amazon Prime. However, these are notional gains and losses, which will be realised only if Messrs Zuckerberg and Bezos sell their shares, whereas divorce losses are absolute. In July 2019, "Amazon.com Inc AMZN.O founder Jeff Bezos' divorce from his wife of 25 years, McKenzie Bezos, was finalized by a Seattle-area judge.., paving the way for her to receive $38.3 billion worth of stock, Bloomberg reported," Reuters. She received 19.7 million or 4% of Amazon shares while he retained 12% worth $114.8 billion. Share prices are gyrating wildly. "For most of January, the Federal Reserve's shift toward a tighter monetary policy, along with soaring inflation, were largely responsible for a fierce downward spiral in the market," ET. Now it is earnings reports by companies. "The Bank of England raised interest rates to 0.5 percent...and nearly half of its policymakers wanted a bigger increase to contain rampant price pressures, as the central bank warned inflation will soon top 7 percent. In a surprise decision, four of the nine members of the Monetary Policy Committee wanted to raise interest rates by half a percentage point to 0.75 percent," ET. Last week, "Asian shares plunged to their lowest in nearly 15 months, short-term US yields hit 23-month highs and the dollar strengthened...after the Federal Reserve's chairman signalled plans to steadily tighten policy," yahoo. "Deutsche analysts point out that while some currencies managed to save face here and there, anyone who took the approach of hedging forex risk would have seen only one year that started worse than this one since 2021," Reuters. However, emerging market (EM) stocks performed better than in developed countries. Maybe because weaker currencies will increase exports by making goods cheaper. Sadly for India, exports rose 49.66% to $301.38 billion during April-December 2021, but imports surged by 68.91% to $443.82 billion, leaving a trade deficit of $142.44 billion, TOI. "When the Finance Minister announced on February 1, a higher than anticipated borrowing program, yields on government securities shot up and their prices crashed," wrote Balachandran. A clear signal that markets anticipate higher inflation. However, Finance Minister Nirmala Sitharaman reassured traders because she has been transparent," ET. She maybe sanguine about her ability to collect taxes but what if the rupee falls in value against the dollar. Imports will become more expensive and inflation will rise. She should beware of the big ogre -- the US Fed. 

Crowding-in of carnival mirrors.

"The Budget was welcomed on Tuesday by leaders of India Inc, who appreciated the finance minister's focus to push for strong economic growth through substantial increase in government spending on capital expenditure," HT. "The government's new connectivity push under the GatiShakti National Masterplan will set out to build 25,000 km more of national highways, 100 new cargo terminals, four logistics parks, eight ropeway projects, and help start 400 Vande Bharat trains over the coming years, Union finance minister Nirmala Sitharaman said." The government is to build roads with taxpayer money and then charge taxpayers for using the roads in the form of vary high toll tax. Thus, total toll tax for traveling by car from Delhi to Lucknow is Rs 1035 for a distance of 554 km, which works out to just less than Rs 2 per km, Tollbetween. Charges for trucks are higher, Relianceroads, which get added to cost of goods we buy at shops. "To walk the talk, the finance minister stepped up the outlay for capital expenditure in the central government budget sharply by 35.4% -- from Rs 5.54 lakh crore (Rs 5.54 trillion) in 2021-22 to Rs 7.50 lakh crore in 2022-23," wrote former Finance Secretary Subhash Chandra Garg. In 2021-22, the National Highways Authority of India (NHAI) borrowed Rs 650 billion and received Rs 573.50 billion from the government. However, "The NHAI would not borrow anything for finding its capex program in 2022-23! The government has substituted the NHAI's borrowings for capital expenditure." The Budget projects the fiscal deficit for 2022-23 at 6.4% of GDP or Rs 16.61196 trillion, higher than the revised estimate of Rs 15.91089 trillion in the last financial year, NDTV. "What you see is not what you get in the Union budget 2022-23 either. Chimera, subterfuge and carnival mirrors abound in the 2020-21 Economic Survey, finance minister Nirmala Sitharaman's budget speech, and, finally, data in the supporting documents," wrote Rajrishi Singhal. The Budget estimates nominal GDP to grow by 11% in 2022-23 while the Economic Survey expects real GDP to grow by 8-8.5%. Real GDP is arrived at by subtracting inflation from nominal GDP according to a GDP deflator, which is calculated on prices in a base year, lumen. Hence, for the real GDP to grow at 8% when nominal GDP growth is only 11% means that the Budget is predicting inflation at 3-3.5%. The RBI estimates retail inflation will be 5.3% in the current financial year and 5% in the first half of the next, NDTV. "The emphasis (in the Budget) is on attempts to crowd-in private capital expenditure along with a dose of import substitution. However, hardening G-Sec yields can also cause a crowding-out effect," wrote Dhanajay Sinha. "In view of the rising US Treasury yield, lower external capital flows, widening current account deficits, and rising credit-deposit ratio of banks, we now believe that India 10-year benchmark (bond yields) can rise beyond our earlier projection of 7.5% to 7.75% in the next 12 months (currently at 6.82%, post-pandemic low at 5.8%)." Good old 'tax and spend'. Will only increase prices.      

Refined core of unrefined prices.

"Financial markets have become volatile once again, owing to fears that the US Federal Reserve will have to tighten its monetary policy significantly to control inflation. But many investors still hope that the Fed will go easy if asset prices start to fall substantially," wrote Prof Raghuram Rajan. "The Fed cut its target for the federal funds rate, the rate banks pay to borrow from each other overnight, by a total 1.5 percentage points at its meetings on March 3 and March 15, 2020. These cuts lowered the funds rate to a range of 0% to 0.25%," Brookings. In its forward guidance the Fed promised to keep rates at these levels until the labor situation improved and it resorted to quantitative easing and other means to increase liquidity. On the fiscal side, "The US Congress passed multi-trillion-dollar bills offering something for everyone." "All this makes a return to the previous consensus more difficult." "In December, US inflation rose a staggering 7%, a four-decade high, with even core inflation (excluding fuel and food) up 5.5%," wrote Rahul Jacob. "The market is expecting as many as -- gasp -- seven rate hikes this year and even a 0.5% increase in one stroke." "Like the Fed, the Reserve Bank Of India's (RBI) acquiescence on interest rates suggested that it believed inflation was 'transitory'." "The Bank of England raised interest rates to 0.5% on Thursday and nearly half its policymakers wanted a bigger increase to contain rampant price pressures, which the British central bank warned would push inflation above 7%," Reuters. Here, the RBI has stubbornly inflicted an interest rate of 4% since May 2020 even as it predicts an inflation rate of over 5%, ET. The Economic Survey 2022 has coined a new 'refined core inflation', which gives a lower value than the traditional core inflation which excludes volatile food and energy prices, Investopedia. "However, core inflation calculation retains a component called 'transport and communication' under miscellaneous, which is heavily influenced by the fuel prices," moneycontrol. The government and the RBI may create 'refined' values but higher transport costs may lead to higher wage demands or people may reduce expenditure to compensate. Wage rises tend to be permanent. The Manufacturing Purchasing Managers' index (PMI) fell to 54.0 in January from 55.5 in December because of the Omicron variant of Covid and because "high price pressures weighed on business confidence about the year ahead", Reuters. The Services PMI fell to 51.5 in January from 55.5 in December for similar reasons, ET. Yields on the benchmark 10-year bonds rose to 6.87% as the Budget predicted higher government borrowing to boost investments in highways and affordable housing, Reuters. The bond market believes inflation will spike. Yields have risen to 6.931 on the NSE, Investing. Increased prices for people lead to increased borrowing costs for the government. Can't be refined.

The shortest speech.

The annual circus, known as the Budget, was revealed to anxious Indian citizens on 1 February by the Finance Minister Nirmala Sitharaman, ET. Thankfully, at 1 hour and 30 minutes, the speech was the shortest budget speech by Sitharaman, News18. With taxes on most goods and services being fixed under the goods and services tax (GST), bankbazar, there is no scope of tinkering with taxes on cinema tickets or diapers as in the 2011 Budget, taxguru. However, the itch to increase taxes on hapless citizens is uncontrollable and so, "Beginning in October 2022, unblended fuel will have an additional duty of Rs 2/liter," ET. Since most fuel used in India is non-blended the price of fuel will jump. This will be long after elections to assemblies of 5 states, including the biggest state of Uttar Pradesh (UP), NDTV, so the opposition cannot use it for campaigning. The government wants all vehicles to use fuel blended with alcohol and will probably package it as a 'climate tax'. However, a tax by any other name is still a transfer of earnings from suffering citizens to the government. In November, "The global energy crunch is putting pressure on the sugar market as the world's top exporters convert more cane into ethanol," BQ. "Facing rampant fuel inflation, Brazil and India are set to produce more ethanol from sugar cane, ensuring supply of sweetener remains tight." "Global food prices reached a 10-year high in 2021, rising by an average of 28 percent compared to the previous year, the UN's Food and Agricultural Organization said," NDTV. The US produces ethanol from corn, afdc, hence diversion of sugar and corn to produce fuel will keep prices high. While the government is increasing taxes on fuel and potentially increasing food prices, it has cut social protection for the poor. "At a time that rural India is grappling with low wages, high food prices, falling incomes and pandemic-induced job losses, the budget...slashed funding under the flagship rural jobs scheme by 25% compared to the previous year's expenditure," wrote Sayantan Bera. The situation assessment survey of the NSO reported that "farmers income from crop cultivation actually declined in real terms in 2019 compared to 2013," while the budget has drastically reduced the subsidy on fertilisers from Rs 1.4 trillion last year to Rs 1.05 trillion in 2022-23,'' and "The temporary freeze on electricity charges and diesel prices will likely be removed once elections to crucial states are over, leaving farmers to pay higher charges for energy as well," wrote Prof Himanshu. Then, there is a savage tax of 30% on transfer of cryptocurrencies, on which "No deduction except cost of acquisition will be allowed and no loss in transaction will be allowed to be carried forward," ET. CoinSwitch Kuber claims to have a user-base of 14 million in cryptocurrencies, of which 15% are women and 60% are under the age of 28 years, NDTV. There are 200 million jobs missing from the Indian economy, wrote Andy Mukherjee. With banks giving negative returns on fixed deposits and no jobs, young people, who are computer savvy, were trying to make some money from cryptos. The poor, the farmers and the unemployed sacrificed. No wonder the speech was short.      

World's largest exporter of gherkins.

"Chief Economic Adviser V Anantha Nageswaran...expressed hope that India would become a USD 5 trillion economy by FY26 or the next year on the back of 8-9 percent sustained growth. Gross domestic product (GDP) in dollar terms has already crossed 3 trillion he said," ET. India's GDP contracted by 6.6% in FY21 (financial year 2020-21), and not by the provisional estimate of 7.3%, according to the first revised estimate by the National Statistical Office, moneycontrol. It is not explained if this is a base effect because India's growth in FY20 has been revised down from 4% to 3.7%. Details show that except for agriculture, forestry, fishing, which grew by 3.3%, and government expenditure, which grew by 3.6%, every other metric went down. In a deluge of good news, "India was the world's largest exporter of gherkins (pickling cucumber) in 2020-21, shipping over 223,000 tonnes worth more than $200 million, the ministry of commerce and industry said. India produces about 15% of the world's gherkin requirement and ships it to 20 countries," wrote Manjul Paul. But, "In the seven days ending 22 January, the daily average domestic air passenger traffic fell hugely for the third straight week, owing to covid's third wave." Flying isn't cheap. "The civil aviation industry has to pay 21 percent of its revenues as indirect taxes and this "unreasonable proposition" is resulting in a chronically ill sector, IndiGo CEO Ronojoy Dutta said." "Dutta requested the Ministry of Finance to reduce central excise taxes on fuel from 11 percent to 5 percent." No chance. "Jet fuel or ATF price...was hiked by 4.2 percent - the second increase in rates this month warranted by firming international prices," ET. By October 2021, aviation turbine fuel (ATF) prices had been raised by 9% in one month and by over 80% in the last one year, HT, so that it reached its highest level by mid-November. It was reduced twice on 1 and 15 December. "While there are exceptions, hyper-nationalism is usually disastrous for an economy in the long run," wrote Prof Kaushik Basu. This was exemplified by Argentina, which was expected to overtake the US economy, until an army coup in 1930 brought in hyper-nationalist Gen Uhuru who increased tariffs and curtailed immigration. The US surged ahead. This is not the only example of Argentina. In a speech in 2018, then Deputy Governor of the Reserve Bank (RBI) Viral Acharya warned against raiding RBI reserves and interfering with its independence as Argentina did in 2010, BT. The RBI was made to transfer Rs 1.76 trillion from its reserves in 2019, ET, and Rs 991.22 billion for a period of 9 months on 31 March 2021, BS. India is moving towards import substitution and protection and a phased manufacturing program, tried even in the pre-reform era with disastrous consequences, wrote Prof Arvind Panagariya. Despite all this we will double our GDP. Somebody must be a genius.