Schemes and taxes.

In the Union Budget 2023-24, "Of the Rs 45 trillion total expenditure, Rs 10 trillion was allocated for capital expenditure, primarily for infrastructure, representing a 33% increase from the previous year." In contrast, healthcare got Rs 891.55 billion and education got Rs 1.12 trillion. Investment in infrastructure creates jobs immediately and is a great opportunity for photo ops which are useful for winning elections. But, "A population that is undernourished, poorly educated and unhealthy cannot fully harness the benefits of advanced highways or industrial parks," wrote Rajeshwari UR. That is not entirely true. While direct spending on education and healthcare may not look much, the Central and state governments provide a plethora of subsidies in direct cash transfers and in kind. The Centre's subsidy bill peaked at Rs 7.58 trillion (3.8% of GDP) but is expected to be lower at Rs 4.28 trillion this year. TIE. The Central government lists 320 Direct Benefit Transfer Schemes (DBT) from 54 ministries. dbtbharat.gov.in. As for the states, "The Economic Survey of 2022-23 had pointed out that as of December 2022 there were more than 2,000 such schemes run by state governments." Through DBT, "India is moving towards a universal basic income," wrote Vivek Kaul. The government finances these handouts through taxes and borrowing. In this year's Budget "the gross and net market borrowings during 2024-25 are estimated at Rs 14.01 trillion and Rs 11.63 trillion respectively." pib.gov.in. All this borrowing adds to government debt. The government's internal debt from market borrowing was Rs 163 trillion on 31 March 2024 and is projected to increase to nearly Rs 176 trillion on 31 March 2025. inidabudget.gov.in. The government can reduce its debt load by collecting taxes and by generating inflation. High inflation increases goods and services tax (GST) collections and direct taxes as workers demand higher wages. Also the value of debt falls. Economics Help. The Reserve Bank has been helping the government by tolerating consumer price (CPI) inflation at around 6%. RI. The government is constantly seeking to increase the tax load on citizens. Inflation indexation on capital gains from the sale of equities and properties was removed the Budget. ET. The Budget aimed to collect net tax receipts of Rs 25.83 trillion, thus setting a target for the tax officials. To meet their targets, officials resort to excessive demands and to harassment and bullying. No wonder Indians are groaning under the violence of tax terrorism. ET. "The government is making a concerted effort to recover direct and indirect tax arrears amounting to over Rs 46.57 trillion. HT. Whether these are genuine or an attempt to extract money under pressure is not known. While taxpayers are treated with contempt, Prime Minister Narendra Modi's government has written off Rs 16.11 trillion in unpaid bank loans in the last 10 years, wrote Jawhar Sircar. Cronies all? Those who can, escape. Around 4,300 millionaires were expected to leave India in 2024, less than 5,100 that left in 2023. Mint. Thousands of schemes and taxes by terrorism. By a scheming government.      

A partial RBI.

On 20 December 2024, "The rupee breached the 85 level for the first time...as the dollar gained ground against most currencies in the wake of the US Federal Reserve indicating that there would be fewer rate cuts in the future than expected." "According to Reuters data, the rupee's drop to 85 from 84 has taken place in about two months, while the decline to 84 from 83 took nearly 14 months." TOI. It has taken just 20 days from 20 December to 10 January for the rupee to find the 86 level as The rupee closed at 85.97 against the dollar yesterday, and "There were reports that the rupee crossed the 86 level in the non-deliverable forward (NDF) market." TIE. "India's foreign exchange reserves fell for the fifth consecutive week to a 10-month low of $634.59 billion as of Jan 3," as "The reserves declined by $5.7 billion in the reported week." "Reserves have fallen by about $70 billion from their all-time high of $704.89 billion in late September." Reuters. The Reserve Bank (RBI) sold dollars to slow the fall from becoming precipitous. As the RBI sells dollars it depletes the supply of rupees in the market. As a result, "Indian lenders have asked the central bank to infuse durable liquidity into the banking system," as "The tightness in liquidity, if sustained, is likely to keep borrowing rates of banks high, potentially impacting lending rates at a time when India's economy is cooling down." "Banking system liquidity has moved into deficit since mid-December, with the daily average deficit at around 1.5 trillion rupees ($17.47 billion) over the last five weeks." Reuters. So, yesterday the RBI "conducted its largest variable repo rate (VRR) auction in nearly a year with a notified amount of Rs 2.25 trillion. Cash-starved banks submitted bids totaling Rs 2.77 trillion, prompting a second VRR auction of Rs 500 billion." FE. The RBI resorts to VRR for short term lending to banks against collateral. This lowers borrowing costs for banks and, in turn, for the economy, wrote Govind Gurnani. These financial contortions are necessitated by the Impossible Trilemma which says that a central bank cannot have a fixed currency exchange rate, allow free flow of currency and also control monetary policy (Investopedia). The RBI tries to partially control each arm of the Trilemma. It forbids Capital Account Convertibility, which would allow Indians to buy or sell any amount of foreign financial assets. As of 2024, the rupee is not capital account convertible. Investopedia. However, Current Account Convertibility is allowed, which means the rupee can be converted to other currencies and vice versa for the purpose of international trade in goods and services. Medium. The RBI only partially follows its mandate to keep consumer price (CPI) inflation at 4% (ET), by holding its interest rate at 4% for 24 months from May 2020 to May 2022 (cleartax) while CPI inflation ran uncontrolled at over 6% (RI) in a partially futile effort to stimulate growth. And partially controls the exchange rate of the currency as it buys or sells dollars to keep the rupee depreciating slowly against the dollar. Why does the RBI exercise its authority only partially? Because, "Though originally privately owned, since nationalisation in 1949, the Reserve Bank is fully owned by the government of India." rbi.org,in. Hence, it just obeys orders. Yes Massa.     

Consumption, not calculations.

"India's GDP is projected to grow 6.4% in 2024-25, down from 8.2% in 2023-24, due to reduced investment, impacting fiscal and monetary policies ahead." HT. In January 2021, "India's gross domestic product (GDP) growth in 2019-20 revised to 4% from 4.2% estimated earlier," while "Nominal GDP grew by 7.8% compared with the provisional estimate of 7.2%." Mint. So, in 2019-20, the nominal GDP was revised upwards while the real GDP was revised downwards, meaning the GDP deflator (Investopedia) was increased to compensate for high inflation. As recently as in October 2024, the Reserve Bank of India (RBI) projected GDP growth at 7.2% and headline inflation at 4.5%. BS. The State Bank of India, a public sector bank, is now projecting growth rate at 6.3% with a downward bias. TNIE. The Household Consumption Expenditure Survey (HCES) released in February 2024 showed that, "Indians are spending less on food, particularly staples like rice and wheat, and more on discretionary items such as processed food, as well as durables like televisions and fridges, government data showed." Reuters. Since the low GDP growth is because of inflation and food and beverages contribute over 50% to the consumer price index (CPI) basket (pib.gov.in), "The government is reportedly considering reducing the the weight of food items in the CPI basket to address inflation concerns (BS) in view of the changing consumption habits of Indians. What if changing the consumption basket actually shows an increase in CPI inflation rate? While fresh vegetables and unpacked food grains are not taxed, processed food and fruits carry a goods and services tax (GST) at 12%, ice cream and pasta at 18% and consumer durables such as AC and fridge at 28%. cleartax. GST on bakery items such as cakes and cookies is at 18%. My GST. Pizza eaten in a restaurant is taxed at 5% while one delivered to the customer's home is taxed at 18%. cleartax. "The traditional nutritious home-cooked meals in Indian households are increasingly being replaced by processed and packaged food items." "According to the HCES, the monthly per capita expenditure on beverages and processed food has risen from 8.98% and 7.9% (2011-12) to 11.09% and 9.84% (2022-23) in urban and rural areas, respectively." DH. If people ease their hunger with anything legally edible, it may be described as food. And, since pre-cooked and packaged foods are much more expensive, often with very high GST added on, the share of food and beverages in CPI inflation could actually increase even if their weightage is reduced. A report by Nuvama says "The income outlook for both rural and urban households remain bleak for FY26," and "rural consumption may increase as it was weak for few years but urban consumption may further slow down." ET. As a result, "Calls for middle-class tax relief have been growing louder." BT. High taxes are hitting consumption and high inflation is bringing the Real GDP lower. Changing the base year may not help. Lowering taxes may send the fiscal deficit shooting skywards. The world is watching.  

Possibilities are bright.

"The crisis facing multilateralism has been years in the making.'' Reforming the UN is critical because, "Historically, the five permanent members of the UN Security Council (the P5) - the United States, Russia, China, France and the United Kingdom - have been reluctant to support meaningful reforms to the multilateral system. These powers built the current world order and have a vested interest in maintaining it," wrote Kanica Rakhra. The US is ranked the richest and the most powerful country in the world, followed by China, Russia, the UK and Germany, with tiny Israel coming in at number 10. "As of November 2024, India ranks 12th on the list of most powerful countries." Forbes. Naturally, what the US President says has a lot of weight. Although Donald Trump will not be sworn in till the 20th of January (NDTV), he has been "sending shock waves around the world (DH). Donald Trump has said "his administration will focus on ending the Russia-Ukraine war, as he lamented the killing of people in the conflict." ET. Ending the Ukraine war should be relatively easier as all President Putin wants is that Ukraine should not join NATO. Trump said "he sympathized with the Russian position that Ukraine should not be part of NATO," and "blamed outgoing Democratic President Joe Biden for allegedly changing the US position on NATO membership for Ukraine." The war in the Middle East will be much more difficult to end. Trump has promised "there would be 'hell to pay' in the Middle East if hostages held in the Gaza Strip were not released prior to his Jan 20 inauguration." "Around half of the 101 foreign and Israeli hostages still held incommunicado in Gaza are believed to be alive." Reuters. This war could also end, mainly because Iran, the supporter and supplier of Hamas, has weakened very much. "Iran's economy has already been crippled by a mix of bad management, corruption and existing sanctions." "Iran's currency - a bellwether of economic sentiment - ended 2024 at a record low of 821,500 rials to the dollar, down 40% from where it started the year." Mint. It has fallen from an official rate of 42,000 in 2020 to 767,550 in 2024 in both the grey and the official markets. wikipedia. Exploding pagers and walkie talkies killed at least 32 people and injured thousands of Hezbollah operatives in September (BBC) followed by the killing of Hassan Nasrallah in a heavily fortified bunker located over 60 feet underground in southern Beirut (NDTV) has severely depleted Hezbollah. This frightened Iran so much that Ayatollah Ali Khamenei was moved to a secure location, meaning he is in hiding. Reuters. "In a speech last week, Iran's top general in Syria said the Islamic Republic was 'defeated very badly' by the fall of Syria's Bashar Al Assad." Times of Israel. "I would not be surprised to see the Iranians turn to Russian President Putin to broker an agreement with Trump." "Though it may seem counterintuitive, there is a chance that the region could become more stable in the coming year," wrote Dennis Ross. If there is a change of regime in Iran, Hamas, Hezbollah and Houthis will be rendered highly debilitated, the Persian Gulf and the Red Sea will become peaceful, sanctions on Iran may be lifted, oil will flow and the global economy will boom. Can Trump do it? We hope.  

Tackling the impossible.

"In November 2024, central banks globally added a combined total of 53 tonnes of gold to their reserves," while "the RBI's additional 8 tonnes in November raised its total gold holdings to 876 tonnes. This brings the RBI's year-to-date gold purchases to 73 tonnes, securing its position as the second-largest buyer of gold in 2024, behind Poland." TOI. "Former Reserve Bank of India (RBI) Governor Shaktikanta Das's term was marked by efforts to staunch currency swings, as he sought to impart predictability to foreign investors as well as local exporters and importers." As a result, "the rupee's inflation-adjusted trade competitiveness, or real effective exchange rate (REER), rose to a historic high of 108.14 in November, suggesting an overvaluation of about 8%." ET. The rupee has depreciated from Rs 83.2295 to one dollar on 1 January 2024 to Rs 85.5772 on 31 December 2024. Exchange Rates. One dollar buys Rs 85.83 this morning. xe. com. While the RBI watches the rupee's exchange rate against the dollar, our merchandise trade with China is the highest compared to any other nation. India's goods trade deficit with China rose 13% to $57.83 billion during April-October 2024 compared to $51.12 billion last year. Imports increased to $65.90 billion from $60.01 billion while exports fell to $8.06 billion from $8.89 billion. Mint. No wonder, the rupee tracked the Chinese renminbi which depreciated 3% against the dollar in 2024. CNBC. However, it's the dollar/rupee exchange rate which affects every aspect of the Indian economy, wrote Prof Ajit Ranade. "Whether it is food prices that have an embedded transport fuel or fertilizer cost element, or domestic steel facing import competition, everything is influenced by that rate." "Former chief economic advisor Arvind Subramanian and Josh Felman find that for past three years, the REER has been kept much higher than the average for the previous two decades." This was achieved by the RBI selling dollars. "From February till October 2022, RBI sold or lost a whopping $105 billion of its stock." This achieved two purposes. First, selling dollars at a price higher than its buying cost the RBI made profits which it passed on to the government. In FY 2022-23 the RBI paid Rs 874.16 billion and in 2023-24 it handed over a record Rs 2.11 trillion. Infometrics. By engineering a higher REER the RBI sought to control the cost of imports and thus keep the consumer price index (CPI) from rising too high which would have forced a higher interest rate. Thus the RBI kept interest rates on hold at 4% from May 2020 to May 2022 (bankbazaar) while CPI inflation ranged above 6% (RI) which is the upper limit of CPI inflation allowed by the government (ET). From 15 March 2020 to 16 March 2022, the US Federal Funds rate was 0.00-0.25% (wikipedia), which means that the difference in interest rates between the US and India was a full 4%. From 16 March 2022 the Fed increased its Funds rate to a high of 5.00-5.50% on 26 July 2023 but has lowered it to 4.25-4.50 since 18 December 2024. The RBI too increased its interest rate in tandem with the Fed but by smaller amounts so that it is now at 6.50%, higher by just 2% than the US. "Foreign flows into Indian government bonds are set to decline in 2025, after spiking a record in 2024," as "Overseas investors net bought 1.24 trillion rupees of Indian bonds under the so-called fully accessible in 2024." Reuters. So, what will the RBI do? Keep selling dollars to keep the REER high which will restrain import prices, hurt exports, result in higher trade deficits and give eye-watering payouts to the government? Or will it stop selling dollars which may result in a fall in the rupee, a flight of foreign funds, higher prices of imports and a fall in handouts to the government? All central banks have to face an impossible trilemma (wikipedia) but the RBI may have a quadrilemma. Or even more.     

Too late now.

"Under growing pressure from his own party, Canadian Prime Minister Justin Trudeau has announced he will step down and end his nine-year stretch as a leader." "Trudeau's personal unpopularity with Canadians had become an increasing drag on his party's fortunes in advance of federal elections later this year." BBC. In July, "Rishi Sunak said..he would resign as Prime Minister and Conservative Party leader after losing heavily to Keir Starmer's Labour Party, leaving with an apology, a tribute to Britain, and a call to protect 'kindness, decency and tolerance'." Reuters. In India, no one resigns because politics provides the semi-educated incompetent with luxury and perks (ET) that billionaires would envy and a safe refuge for hundreds accused of serious crimes "including rape, murder, attempt to murder, kidnapping and crimes against women" (BS). Losing an election would result in the loss of undeserved opulence paid for by taxpayers. After resigning as Prime Minister of Britain in 2022, "Boris Johnson has registered an advance payment of nearly 2.5 million pounds (1 pound buys Rs 107.30,xe.com) for speaking events, in his latest declaration of outside earnings. It brings the former prime minister's declared income since leaving office last September to almost 4.8 million pounds." BBC. After paying income tax and national insurance like all citizens, the UK prime minister earns 75,440 pounds (NDTV) so earnings multiply after leaving. India's hatred of Justin Trudeau dates back to his father Pierre who was Prime Minister of Canada from 1968-1979 and again from 1980-1984 (wikipedia). In 1974, Ottawa's experts were outraged when India conducted nuclear tests, suspecting that the Canadian designed and collaboratively constructed CIRUS reactor was used." India was furious after Air India Flight 182 was blown up by a bomb on 23 June 1985 by Khalistanis masterminded by Talwinder Singh Parmar. Pierre Trudeau denied Parmar's extradition request. TOI. However, Indians celebrating Justin Trudeau's departure should remember that there have been two Conservative prime ministers in Canada before him - Brian Mulroney 1984-1993 and Stephen Harper 2006-2015 - but foreign policy did not change. Rishi Sunak's government offered 500 million pounds incentive for India's Tata Motors to set up a 4 billion pound ($5.2) factory to manufacture car batteries. ET. Sunak is a Conservative of Indian origin and a practicing Hindu. wikipedia. Ouch! Et tu, Brute? wikipedia. Trudeau is gone, but Trump is coming. In September, "Prime Minister Narendra Modi, who was on a three-day visit to the United States, returned to India...without meeting former President Donald Trump days after Republican nominee announced a meet at a rally in Michigan. This comes after Republican candidate Trump referred to India as an 'abuser' in terms of import tariffs." TN. Trump is now the President-elect and will remember the snub. And, the US is no Canada. "Nations have no permanent friends and no permanent enemies, only permanent interests, - old British adage." reddit.com. We should have learnt from the Brits. Now it's too late.

Turning Chinese.

"China is now a country where a high-school handyman has a master's degree in physics; a cleaner is qualified in environmental planning; a delivery driver studied philosophy, and a PhD graduate from the prestigious Tsinghua University ends up applying for to work as an auxiliary officer." Youth unemployment figure was 16.1% in November 2024. BBC. In India, "The International Labour Organization estimates 29% of young university graduates were unemployed in 2022. That rate is nearly nine times higher than for those without a diploma, who typically find work in low-service or construction jobs." ET. According to a government report, unemployment has dropped from 6% in 2017-18 to 3.2% in 2022-23." "A separate report form Azim Premji University in Bengaluru published last year, meanwhile, found that more than 40% of college graduates under the age of 25 were unemployed, compared with just 11% in the same group who were literate but had not completed primary school." International Banker. However, a graduate is not necessarily useful. According to a report in December, "the employability among Indian graduates has seen a steady rise, reaching 54.81% as per a recent test." ET. Which means 45% are not fit to be employed. "For the first time in Nov, services exports were provisionally estimated by the commerce ministry at $35.7 billion, higher than merchandise exports of $32.1 billion." Software services contributed 47% of the total, with a rising share of Global Capability Centers (GCCs), the in-house centers of multinationals. As per Wizmatic, "over 1,500 GCCs employ 3.2m Indians (mostly engineers and scientists), generate revenues of $121 billion, and export $102 billion," wrote Swaminathan SA Aiyar. "India is on track to host 2,100-2,200 GCCs, creating 2.5-28 million jobs by 2030, said a Zinnov-Nasscom India GCC Landscape Report." The Hindu. So, "An American graduate degree continues to be highly sought after by Indian students despite worries about a rising number of them returning home after failing to secure decent jobs," and "Although 65-70% of graduating students secured jobs in 2022, the figure declined to 60% in 2023, with projections for 2024 even more somber at 55%." ET. "The Canadian government officially ended the Student Direct Stream (SDS) visa program on November 8, which had allowed Indian students to fast-track their study permit applications." About 60% of Indian students applied through this route. India Today. In addition, "Indian students studying in Canada have been left reeling after receiving emails from Immigration, Refugees and Citizenship Canada (IRCC) requesting the resubmission of crucial documents, including study permits, visas and educational records such as attendance and mark sheets." TOI. "View: India shouldn't let its data turn Chinese," wrote Mihir Sharma about the economy. ET. Since economic growth creates jobs, rosy growth must create rosy jobs. But, are they rosy? When in doubt, fake it.

Quality starts with the assessor.

"Driven by high growth in exports of 'aircraft, spacecraft and parts' and 'ships, boats and floating structures', Indian engineering exports continued its growth run for the seventh straight month to November 2024." Engineering goods exports grew 13.75% to $8.90 billion in November compared to $7.82 billion in 2023 and from April-November exports stood at $75.47 billion as against $69.32 billion in 2023. ET. "Commerce and Industry Minister Piyush Goyal...said despite global economic uncertainties, India's exports of goods and services are expected to cross USD 800 billion this fiscal, which will be a record." It was $778 billion last year. ET. "From plywood to door hinges and from footwear to furniture, ceiling fans, tyres, copper and steel products, there are over 200 items on which govt agencies have decided to impose QCO (quality control order), which are nothing but standards to ensure that goods are of international quality, both produced locally and abroad." TOI. "QCOs are apparently innocuous demands that imports into India satisfy quality standards. In practice, however, they have become over the past two years an instrument to restrict imports and minimize competition." "This country has had decades of experience with such import restrictions before liberalization," and "The inevitable consequences include inflation, the growth of monopolies, failing small businesses and a collapse in productivity and competitiveness," wrote Mihir Sharma. This is borne out by, "A bunch of top companies is hanging on to almost Rs 1 trillion of free cash that it has yet to find a use for," and an analysis of "the top Sensex 500 companies - with a few exceptions - shows that 66 of these companies collectively held Rs 2.7 trillion in cash and equivalents at the end of FY24," wrote Nehal Chaliawala. The average monthly per capita consumption expenditure in rural areas rose to Rs 4,122 in 2023-24, from Rs 3,773 the previous year. It increased from Rs 6,459 to Rs 6,996 in the urban areas." "Adjusting for inflation, consumption grew at 3.5%, but it should be noted that this was much less than the GDP growth rate of 8.2%." DH. With prices rising inexorably, goods and services tax (GST) collections hit Rs 1.77 trillion in December, 7.3% higher than Rs 1.65 trillion in December 2023. BS. "A pani puri (a street snack) seller from Tamil Nadu has gone viral on social media after receiving a GST notice for online payments of Rs 4 million in 2023-24." Zee News. At Rs 50 for 6 pani puris, it amounts to a sale of 2,000 pani puris every single day for a year. Seems a tad incredible. And if pani puri selling is so lucrative, selling pakodas (HT) should be in billions of rupees. Finance Minister Nirmala Sitharaman has been asking for more investments from the private sector (ET) but private companies will expand capacity only when they see rising consumption and consumption is being eaten up by inflation. Sure, goods must have quality, but the orders have no quality. A case of cart before the horse. Can only go backwards.           

Whose actual control?

Since a sudden, unexpected, brutal attack by Chinese soldiers, killing 20 Indian troops at Galwan Valley in Ladakh on 5 May 2020 (BBC), "The two countries dug themselves into adversarial positions." India's "Regulatory action focused on imports from the mainland," "Chinese investment into India was banned as well. Visas for Chinese citizens to visit India dried up." "Oddly, "India was importing more from China in precisely those sectors - such as electronics - where it also seemed to be improving its own competitiveness, and exporting more to the West." "If these new jobs in electronics exports need India to share supply chains with China, that might be a price worth paying," wrote Mihir Sharma. Last month, a Ministry of Defence statement said, "India and China achieved a broad consensus to restore the ground situation in certain areas along the LAC (Line of Actual Control). Both countries have been holding talks...As a result, a broad consensus was developed on the basis of equal and mutual security." BS. Does it mean that all is sweetness and light between us and China? No chance. At Pangong Tso in eastern Ladakh, "a July report based on satellite images has said that China had completed and operationalised a bridge connecting the north and south banks of the lake," and that "the PLA had constructed underground bunkers for storing weapons and fuel, along with hardened shelters for protecting armored vehicles, at a key base in the area around Pangong Lake, indicating that China was digging in for the long haul in the region." BS. Now, "China has approved the construction of the world's largest dam, stated as the planet's biggest, on the Brahmaputra River in Tibet near the Indian border." It will be an enormous and permanent danger for India "as it not only empowers China to control the river's water flow but also poses the risk of flooding border areas by releasing large volumes of water during potential hostilities." TOI. In the east, "Amid growing diplomatic strain, Bangladesh army chief Waker-Uz-Zaman," said that "ties with India is based on 'give and take'," while China is a "partner". FP. Meanwhile, "The Washington Post continues its series on, what it calls, the shadowy secrets of India's intelligence activities abroad," and writes that the Research and Analysis Wing (R&AW) has deployed "a methodical assassination program to kill at least half a dozen people deep within Pakistan". The Print. "India has categorically dismissed allegations made in a recent Washington Post report that claimed the Maldivian opposition sought $6 million from New Delhi to facilitate a plot to impeach President Mohamed Muizzu." ET. Apparently, "India's foreign policy in 2024 showcased a bold stance, with India asserting its influence not only in its immediate neighborhood but also on the global stage." ET. Foreign policy may seem bold but it seems that dangers are surrounding us from all sides. Perhaps, it's just as well that the picture of the 1971 surrender of Pakistan's army has been replaced with one depicting "Krishna guiding Arjun's chariot" in the office of the Army Chief. India Today. We need divine help. Urgently.    

Just convert to dollars.

"The average Indian's monthly spending increased 9.2% to Rs 4,122 in rural areas and 8.3% to Rs 6,996 in urban regions in 2023-24 compared to the previous year," as "The National Statistics Office's Household Consumption Expenditure Survey (HCES) showed poorer classes increased spending at a faster rate while expenditure by the richest declined even in nominal terms, leading to reduced consumption inequality." Rural India spent 54% on food. HT. One US dollar buys Rs 85.77 this morning. xe.com. Taking a rate of Rs 85.5 to $1, rural India spends $48.21 per month, or $1.61 per day, while urban India spends $81.47 per month, or $2.72 per day. "The last change was in September 2022, when the World Bank adopted $2.15 as the international poverty line using the 2017 PPP." unstats.un.org. "The poverty line is usually calculated by estimating the total cost of one year's worth of necessities for the average adult." By this metric, the poverty line for a lower-middle income country like India is $3.65 per day in PPP. wikipedia. So, according to the government's own figures, average Indians in both rural and urban areas are living in abject poverty. "The expenditure on social services has increased from 6.7% of GDP in 2017-18 to 7.8% of GDP in 2023-24." As a result 135 million Indians are estimated to have escaped from multidimensional poverty and the National Multidimensional Poverty Index has nearly halved, according to the Economic Survey 2024. pib.gov.in. Distributing handouts may improve the poverty index but net household financial savings (flow) during 2023-24 "stood at 5.3% of gross domestic product (GDP), up slightly from 5% in 2022-23. In 2019-20, they stood at 8.1%." Income growth has slowed, higher spending on food because of high prices and more loans to pay for consumption resulted in a lower savings rate, wrote Vivek Kaul. "Once the backbone of domestic consumption, India's middle class, which represents 31% of its population, is cutting back sharply on daily and discretionary expenditure." FE. The Union government has increased investment spending to stimulate growth, "But fresh private investment continues to remain subdued. These companies are probably waiting for consumption to pick up to a level where the expansion of capacity becomes a necessity." The Union Budget should aim to boost consumption and "The fastest way of doing so is through tax cuts," Kaul. "net direct tax collection grew 16.45% year-on-year to over Rs 15.82 trillion till December 17 this fiscal," which "includes corporate tax of over Rs 7.42 trillion and and non-corporate tax mop-up of Rs 7.97 trillion." BS. Individuals are paying more income tax than the corporate sector. "The net goods and services tax (GST) collection grew marginally by 3.3% year-on-year to Rs 1.54 trillion in December," while the gross GST collections rose by 7.3% to Rs 1.76 trillion. BS. Consumers pay the gross collection while companies get the refunds. They can't reduce taxes because handouts are essential to maintain the fiction of falling poverty rates. Just convert to dollars. And every average Indian becomes poor.

No danger to the community.

"At least 15 people were killed and dozens injured when a driver rammed a pickup truck into a crowd during New Year's celebrations on Bourbon Street in New Orleans early Wednesday morning. Authorities have identified the suspect as Shamsud-Din Jabbar, 42, of Texas who is an army veteran." CNN. "Federal officials and local law enforcement in New Orleans said that Jabbar did not act alone and that they are looking for accomplices. The FBI said Jabbar had an Islamic State flag on his truck and view the attack as a potential act of terrorism." Reuters. "Weapons and potential IED were located in the subject's vehicle. Other potential IEDs were also located in the French Quarter." FBI. "A Tesla Cybertruck that exploded outside the Trump Towers in Las Vegas early Wednesday, killing one person in the vehicle, is being investigated, as a possible act of terrorism." Sheriff Kevin McMahill said, "gasoline canisters, camp fuel canisters and large firework mortars were found in the back of the vehicle after the explosion, which occurred 15 seconds after the vehicle pulled in front of the building. It's still unclear how the explosives were ignited." CBS. However, not just the Islamic State, it seems that the US is a storehouse of loonies determined to blow themselves up and take as many unsuspecting people as they can with them. "The FBI says it has discovered more than 150 bombs during a raid on a farm in Virginia - thought to be the largest such cache seized by the law-enforcement agency in its history. Brad Spafford was arrested on 17 December in Isle of Wight County." "Mr Spafford had allegedly used photos of US President Joe Biden for target practice and expressed hope that Vice-President Kamala Harris would be assassinated." But, "A lawyer for Mr Spafford denied he is a danger to the community and is seeking his client's release from pre-trial detention." BBC. Spafford lost three fingers of his right hand in 2021 while making a bomb. Either the lawyer is equally bonkers as his client or bomb making is a normal hobby in the US and so not considered "a danger to the community". Is bomb-making now taken as a corollary to the Second Amendment which states that "A well regulated Militia" will "keep and bear arms" (US Constitution)? Over time "A well regulated Militia" has come to mean an individual has a right to possess an arsenal of deadly weapons. "There are approximately 398.5 million arms in the US,"  (Consumer Shield) for a total population of just over 346 million (Worldometer). "The US recorded 491 mass shootings as of Dec 18 - the lowest since 2019." This is 25% less than in 2023 which saw 656 mass shootings, the second highest since Gun Violence Archive began tracking mass shootings. Forbes. Motor vehicles are legal, guns are a right and bombs no danger to the community. Who would want to go to such a place? Between 1 October 2023 and 30 September 2024, 90,415 Indians, at an average of 10 Indians per hour, were arrested for trying to enter the US illegally through Canada and Mexico borders. DH. Perhaps, a greater danger to the community.           

GST at 18% and tax of Rs 44.6 million.

In 2024, Jamnagar's tiny airport "hosted about 600 flights during the pre-wedding celebration of Mukesh Ambani's son." "Upon the Union Defence Secretary's request, the Chief of Air Staff authorised round-the-clock operations at the Jamnagar air base." BS. Microsoft co-founder Bill Gates had tea at Dolly Chaiwalla, 10-year old Sushila Meena from Rajasthan reminded Sachin Tendulkar of Zahir Khan's bowling action  (BBC), 18-year old Gukesh Dommaraju defeated China's Ding Liren to become the youngest-ever world chess champion and the GST Council recommended 18% GST on caramel popcorn. "Security analyst Sushant Saran said that India will always be a third world country if we have a 'brainless bureaucracy' and 'clueless politicians' who penalise anything that remotely resembles upgrading products." BT. "The Reserve Bank of India (RBI) has sharply slashed its growth projection to 6.6% for the current fiscal from 7.2% earlier." "The Indian Economy is in big trouble and the government is in denial, Bloomberg columnist Andy Mukherjee has written." The government blames the RBI for not slashing interest rates despite high inflation. ET. The RBI's December 2024 Financial Stability Report (FSR) said that "The global financial system shows resilience, but medium-term risks persist," but "The Indian economy and domestic financial system remain strong, supported by strong economic fundamentals and healthy balance sheets ." ET. As Gukesh Dommaraju and Dolly Chaiwalla have shown, India's fundamentals are strong if they do not suck the lifeblood out of us with their insatiable greed for ever higher taxes. "The RBI has cautioned that the outlook for unsecured credit, particularly credit cards and personal loans, could face significant pressure due to rising delinquencies." "A default on unsecured loans, such as credit cards or personal loans, could trigger delinquencies in other loans, including housing and vehicle loans, due to the interconnected nature of borrower liabilities." ET. Indian banks have written off Rs 16.11 trillion during Prime Minister Narendra Modi's first 10 years, wrote Jawhar Sircar. The last United Progressive Alliance (UPA) 2 wiped off less than Rs 2 trillion and, because of that, "the UPA 2 government was declared 'intolerably corrupt' by an orchestrated campaign, but now it is really time to wake up. Never before have frauds, cronies and oligarchs played havoc with our money while the lying lama smiled." "Indians make up the largest group of H1B holders, with over 70% of the visas granted to them in recent years. For many, it represents not just a job but a pathway to permanent residency and the realization of the 'American Dream'." ET. The billionaires can enjoy caramel popcorn from the Rs 16.11 trillion they plundered, but Gukesh will have to pay at least Rs 44.6 million in taxes out of his prize money for making the country proud (BT) with absolutely no help from the government. The rest dream of the American paradise.     

Touring for our standing.

"The global landscape in 2024 was one of extraordinary complexity and volatility." Wars in Ukraine and Gaza, China's economic slowdown and the debt burden of emerging economies. "These interconnected challenges demand deft diplomacy and robust leadership," and in just one year Prime Minister Narendra Modi visited UAE, Qatar, Bhutan, Italy, the USA twice, Russia twice, Austria,Poland, Ukraine, Brunei, Singapore, Laos, Nigeria, Brazil, Guyana and Kuwait, wrote Harsh Vardhan Shringla. Mr Shringla was in the Indian Foreign Service and was appointed ambassador to various countries. wikipedia. Apparently, "These visits strengthened bilateral relations and elevated India's global standing." Inconsequential returns from billions of rupees spent on VVIP tourism. At home, "Inflationary pressures are set to upend household budgets, potentially worsening stressed urban demand." "Companies' production costs have swelled due to 22% increase in import duty on edible oil this September and up to 40% in calendar year 2024." ET. The rupee has collapsed against the dollar from Rs 76.31 to one dollar in 2021 (Thomas Cook) to Rs 85.59 to $1 this morning (xe.com). A 12.16% drop in 3 years. The Reserve Bank of India (RBI) has been selling dollars to support the rupee, so that our foreign exchange reserves have fallen to $644.39 billion as of 20 December (ET) from a record high of $704.89 billion as of 27 September (ET). A weaker rupee raises prices of imports and pushes inflation higher but the RBI's support has meant that "The rupee's 40-currency trade-weighted real effective exchange rate (REER) stood at 108.14 in November, indicating the currency was overvalued by around 8%," and "The rupee's overvaluation relative to its trading partners makes India's exports more expensive." ET. Since the arrival of Mr Modi in 2014, the RBI has been transferring vast sums of money to the government from its surplus. Except for FY 2016-17, the year of demonetisation (wikipedia) and in FY 2021-22 as a result of millions of deaths due to Covid and lack of oxygen (BBC), the RBI's generosity rose to a record high of Rs 2.11 trillion in FY 2023-24 (infometrics.com). Even when the RBI shortened its accounting year to eight months from 1 August 2020 to 31 March 2021 to coincide with India's financial year (The Hindu) the RBI transferred Rs 99,122 to the government. Can the RBI go bankrupt? The RBI has to shrink its assets to balance its shrinking reserves and printing notes to make up the shortfall will push up inflation. As happened in Venezuela in the 1980s and 1990s, wrote Andy Mukherjee. The RBI's Financial Stability Report 2024, on 30 December, says, "The Indian economy and domestic financial system remain strong, supported by sound macroeconomic fundamentals and healthy balance sheets." ET. "US President-elect Donald Trump has set the stage for a potential trade conflict with India, threatening to impose reciprocal tariffs if the country continues to levy high taxes on American goods." BS. Eighteen foreign visits in 12 months. To improve global standing. No wonder India is at a standstill. Happy New Year.         

What could be.

"Dalal Street had a roller coaster ride in 2024," reaching record highs as, "The first half of the year saw robust corporate earnings, a surge in domestic flows and a resilient macro landscape." However, there has been some correction in the last two months but still, "As of December 27, the BSE benchmark Sensex has gained 6,458.81 points or 8.94% while the NSE Nifty climbed 2,082 points or 9.58%." BS. Growth in the manufacturing sector has been just 2.5% annually from 2017-18 to 2022-23 and as a result, "the share of manufacturing in national income in 2022-23 is lower than it was in 2017-18." Wages have increased by 1% in the unorganized sector and in the organized sector by a paltry 0.42% between 2014-15 and 2022-23, wrote Prof Himanshu. "India presently has more than a quarter trillion dollars of essential imports. These include crude oil, coal, edible unrefined oil, fertilizer, steel and copper." Inward remittances brought in $129 billion while software services earned $200 billion this year. "Both can be said to be de facto exports of skilled or semi-skilled labor." Tourism exports could create huge employment but India received only 9 million foreign tourists compared to 85 million for Spain and 29 million for Thailand, wrote Ajit Ranade. There were 27.8 million outbound tourists from India in 2023 and the number is expected to grow in 2024 at a cost of $19 billion and projected to hit $55 billion in a decade, wrote Rahul Jacob. In 2023, "Construction activity has picked up now and public expenditure is crowding in private sector participation here." "The construction sector grew 13.3% in the September quarter of 2023-24 from a year earlier in terms of gross value added (GVA)." "In India, construction activity in housing and third-party logistics is growing faster than infrastructure at the moment," wrote Madhurima Nandy. Perhaps, the biggest problem with running a business in India is the predatory and repressive taxation. The investigation arm of the Goods and Services Tax (GST) authority has issued over 20,000 notices pan-India for assessment year (AY) 2017-18 to AY 2021-22, involving tax demand of over Rs 800 billion." Maximum number of notices were for AY 2017-18 because there is a time limit of 5 years for such notices. Taxo. Whether the reasons are genuine or an effort to bully companies into paying something to rid themselves of the hassle is not known. No wonder, "India's model bilateral investment treaty (BIT) and the finance ministry's firm stance against amending it are becoming significant roadblocks for trade negotiators." "In 2016, India introduced the current model BIT following its loss in the White Industries arbitration case in 2010." ET. Because of the Indian government refusing tax benefits to Nestle the Swiss government has suspended the Most Favored Nation (MFN) status for India which means that Indian companies will now have to pay tax at 10% instead of at 5%. Netherlands and France may also follow suit. ET. Indians are helpless against 'we-will-do-whatever-the-hell-we-want' behavior of the government but other nations will not tolerate. Maybe that's why our stock exchanges have gone up by 8-9% whereas the Pakistan Stock Exchange has soared 80% from 62,052 last year to 11,351 points on 28 December 2024 (Tribune). India is a story of what could be. But will not be. Ever.

A Gini for luxury.

"In 2024, India's consumer landscape has been marked by paradoxes," as "According to the latest GDP data, private final consumption expenditure dropped to 6% in the July-September quarter from a seven-quarter high of 7.4% in the previous quarter." "Global luxury brands, such as Panerai, Bulgari and Gucci, are expanding their presence, with many targeting online platforms to overcome the limited availability of luxury real estate," and thus "reaching smaller towns across India." ET. Though India has lifted millions out of dire poverty, inequalities persist. The Gini coefficient measures the rate of inequality, with 0 representing total equality and 1 meaning one individual earning all the income. wikipedia. In 2023, the Gini for income improved to 0.41 because of cash transfers and food subsidies, Gini for expenditure was 0.36 and Gini for wealth was 056, wrote Rajesh Shukla. "Dimensions of inequality are interconnected." "Income inequality directly drives savings inequality," and "Expenditure inequality reflects disparities in access to goods and services, further amplifying income and savings gaps." "Income is the money you receive in exchange for your labor or goods." Investopedia. It could be argued that cash transfers and subsidies cannot be called income because they are unconditional. On the other hand, by paying for essentials, cash transfers and subsidies allow the poor to use their earnings to buy durable assets thereby boosting the economy. The UN Global Multidimensional Poverty Index 2024 says that with 234 million India has the highest number of poor people followed by Pakistan with 93 million and Ethiopia with 86 million. The Reporters' Collective investigation has revealed "a 'whole-of-government approach' devised by the Prime Minister's Office to closely monitor 30 global indices and reach out to agencies that publish the indices to convince them to change their parameters," and to that end "a nodal unit named 'Global Indices for Reform and Growth' (GIRG) has been set up." The Wire. During the 2024 Parliament elections Mr Modi claimed that 250 million people had been lifted out of poverty in the 10 years of his government. "The number had been rigged by his government in a pre-planned manner to spruce up its image." The Wire. Not just poverty, the India State of Forest Report 2023 by the forest Survey of India "has found that the forest and tree cover, combined, has increased by 1,445.81 sq km over the assessment made in the last report of 2021." Also, "except Himachal, all Himalayan and North-Eastern states have lost forest cover considerably." DH. According to the US Immigration and Customs Enforcement (ICE), "over the past three financial years, an average of 90,000 Indians were apprehended while attempting to cross US borders illegally." ET. When Indians are buying luxury online why are these Indians trying to sneak into the US? We need a Gini coefficient for luxury.  

Dare to cut.

"The rupee breached the 85 level for the first time on 19 Dec as the dollar gained ground across most currencies in the wake of the US Federal Reserve indicating that there would be fewer rate cuts in future than expected." TOI. Recently, "Two senior ministers of the Narendra Modi government," "Union Finance Minister Nirmala Sitharaman and Union Commerce Minister Piyush Goyal have flagged high interest rates as a dampener for growth. and want the RBI to change its tough stance on using high rates to tackle inflation." India Today. On 6 December, the Monetary Policy Committee of the Reserve Bank of India (RBI) held its policy rate at 6.5% for the eleventh time. "The RBI has maintained the repo rate at 6.5% since February 2023." BS. On 18 December, the US Federal Reserve cut its Funds rate by 25 basis points for the third time this year to 4.25%-4.5% and projected two more cuts in 2025. NBC. One would have expected that the higher yields on the rupee would lead to increased investment in Indian bonds by foreign investors looking for higher returns. In fact, yields on the benchmark 10-year bonds hardened from 6.751 on 18 December to 6.90 on 27 December. Investing.com. "The rupee plunged to a record low yesterday, closing at 85.53 against the dollar from its previous close of 85.26," having "touched an intraday low of 85.80 - its sharpest fall in nearly two years." TOI. "The fall in the rupee was driven by panic dollar buying from importers, increased month-end demand and maturing non-deliverable forwards." "India's foreign exchange reserves dipped by $8.4 to $644.39 billion as of December 20." ET. Reserves must have fallen further this week as the RBI sells dollars to prevent a collapse in the value of the rupee. The RBI's November bulletin shows that the real effective exchange rate (REER) of the rupee was overvalued because other currencies fell more against the dollar. REER rose from 104.4 to 105.3 against a basket of six currencies including those of the US, China, Eurozone, Hong Kong, the UK and Japan. TOI. Foreign investors (FIIs) net sold Rs 13.23 billion worth of shares on 27 December (Moneycontrol) and got relatively more dollars, which means the RBI effectively transferred dollars from its reserves to FIIs. When RBI sells dollars it creates a shortage of rupees in banks, pushing up lending rates. "As of 23 December, the liquidity deficit stood at Rs 2.43 trillion." ET. An overvalued REER against China means more imports from China. The merchandise trade deficit with China has risen 13% to $57.83 billion from April-October. Mint. A weakening rupee means higher cost of imports and higher inflation. At 6% inflation rate the value of Rs 100,000 will almost halve to Rs 55,840 after 10 years, will be nearly one-third at Rs 31,180 after 20 years and less than one-fifth at Rs 17,410 after 30 years. FE. If RBI cuts interest rate the rupee could fall further. Inflation will jump. And the value of the rupee will fall further. Will ministers take responsibility? Will Dear Leader?

Where the buck stops.

"The combination of monetary policy stance and macroprudential measures by the central bank, and structural factors, may have contributed to slowdown in demand, a finance ministry report said on Thursday (yesterday) in the latest sign of divergent views between North Block and the Reserve Bank of India (RBI)." TOI. The attempt at shifting blame is because, "India's Gross Domestic Product (GDP) growth slowed down to 5.4% during the second quarter of the financial year 2024-25 due to the falling growth rate in manufacturing, consumption and mining." HT. This sleight of hand is mendacious because the RBI is but a department of the Ministry of Finance. "Though originally privately owned, since nationalisation in 1949, the Reserve Bank is fully owned by the Government of India." rbi.org.in. "An impression has been created that India's FIT (flexible inflation targeting) is failing the country on growth," but "The ministers need to deconstruct another puzzle for the public: the reason industrial capacity utilization has ranged around 75% for close to 10 years. This indicates stagnating consumption demand, which is independent of interest rates but is overly influenced by inflation rates," wrote Rajrishi Singhal. "Add rising unemployment to the mix and the demand situation indeed looks grim." Indeed, consumer price index (CPI) inflation has been consistently above 4.5% (RI), since 2014, when the Bharatiya Janata Party (BJP) first grabbed power (wikipedia), except for 2017, 2018 and 2019 because of the sudden demonetization of the Rs 1000 and Rs 500 notes on 8 November 2016 (wikipedia). One very important contribution to inflation comes from taxes. While crude oil prices averaged around $100 a barrel from 2011 to 2014, oil prices plunged from 2015 to below $50 per barrel (Macrotrends). The government did not pass on the price advantage to consumers but raked in windfall profits by massively hiking excise duties on petrol and diesel  (mycarhelp line). Hence "Petrol tax in India consists of 55% of petrol's retailing price while diesel tax is 50% of the fuel's retail value." cleartax. In addition, "India's toll collection in 2024 could surpass Rs 700 billion, government data indicates." ET. The rising cost of transport is passed on to every goods and services thus increasing prices. Goods and Services Tax (GST) is collected as a percentage of the retail price. Total GST collections have risen exponentially from Rs 215.72 billion in July 2017 to a high Rs 2.10 trillion in April 2024. wikipedia. The RBI's mistake was in holding its interest rate at 4% for 24 months from May 2020 to May 2022 (BS) when it suddenly raised rates by 40 basis points in an emergency meeting (ET) to preempt the US Federal Reserve. Rake in taxes, push up prices, kill consumer demand, thus restricting investments, causing unemployment, and then blame the RBI. The buck stopped with President Harry Truman. Where does it stop with Dear Leader?    

More good or more bad?

"India's economy is expected to grow at 6.5% in FY25 and FY26, despite challenges from weak private consumption and reduced government spending, according to the EY Economy Watch." "The GDP growth rate fell to a seven-quarter low of 5.4% in the July- September period," and "The Reserve Bank of India (RBI) has revised its Real GDP growth forecast for FY25 to 6.6% during its latest Monetary Policy Committee (MPC) meeting." BS. "The year 2024 presented a mixed bag for the Indian economy, with notable successes tempered by emerging challenges." Foreign exchange reserves were high, hitting a record high of $704.89 billion as of 27 September (ET). Purchasing Managers' Index (PMI) was consistently positive; Manufacturing PMI was lower at 56.5 in November from 57.5 in October (BS) and Services PMI at 58.4 in November from 58.5 in October (ET). Foreign Direct Investment (FDI) increased 26% in the first half of FY25 to $42.1 billion and monthly GST collections averaged Rs 1.7 trillion. High GST collections were a result of consistently high inflation and GDP growth is starting to slow. As a result of uncontrolled inflation, "Once the backbone of domestic consumption, India's middle class, which represents 31% of its population, is cutting back sharply on daily and discretionary expenditure." FE. "Makers of packaged food to personal care products have ramped up supply of affordable packs and launching specific brands for rural areas as India's hinterland drives consumption even as urban demand cools." Mint. However, "Since much of the middle class in India resides in cities, FMCG companies have seen urban slowdown pangs hit growth rates in recent quarters, experts say." Because, "A recent FICCI-Quess Corp report on the marginal increase in  wage growth in the corporate sector, despite a four-fold growth in profits over the last four years, has brought the issue of stagnant wages into sharp focus in India." "Private final consumption expenditure dropped to 6% in the July-September quarter from a seven-quarter high of 7.4% in the previous quarter," but "the appetite for premium goods continued to grow." "Global luxury brands, such as Panerai, Bulgari and Gucci are expanding their presence, with many targeting online platforms to overcome the limited availability of luxury real estate." "Credit card spends in November dropped 16.1% month-on-month (M-o-M) to Rs 1.7 trillion, owing to moderation in consumer spending, following strong festival season momentum in October." Only 350,000 net credit cards were added in November compared to 1.3 million last year. "Drawing from his tenure at Infosys, (Mohandas) Pai pointed out that freshers earned Rs 3,25,000 annually in 2011. Today, 13 years later, they earn between Rs 3,25,000 and Rs 3,75,000 - an increase of merely 15%," whereas CEO salaries have gone up by 50-60%. BT. Middle class cuts spending while crony capitalists buy premium products. India remains poor.  

Asymmetry worse than inequality.

Prof Thomas Piketty, author of Capital in the Twenty-First Century, is of the opinion that "a wealth tax of 2% on billionaires would raise a lot of money to fund India's social infrastructure and health. He also urged India to raise its tax revenue as a proportion of GDP," wrote Prof Satya Narayan Misra. Piketty's book is a reminder of Das Kapital by Karl Marx. Piketty's hypothesis is that "inequality is not an accident, but rather a feature of capitalism and can only be reversed through state interventionism." wikipedia. Marx proposed that "the motivating force of capitalism is in the exploitation of labor, whose unpaid work is the ultimate source of surplus value." wikipedia. The first volume of Das Kapital was published in 1867, just after the American civil war from 1861-65 (Britannica) and probably draws on the persecution of slaves in the US. This led to Communism in which the working class "would control the government and economy" and would form a classless society "in which the production and distribution of goods would be based upon the principle 'From each according to his ability, to each according to his needs'."Britannica. However, Communism did not create a workers' Utopia. When the state controls every resource, service and means of production it gives total control over the lives of citizens to a small coterie of individuals, who then enforce their power through executions, famine, deaths through forced labor, deportation, starvation and imprisonment (wikipedia). Perhaps, Prof Misra should read The Gulag Archipelago by Aleksandr Solzhenitsyn (wikipedia) before recommending The Robin Hood Effect which is income and wealth distribution from the rich to the poor (Investopedia). In November 2024, the Supreme Court "upheld the inclusion of 'socialist, secular' in the Preamble of the Constitution." The Hindu. India already has a plethora of social subsidies for the poor. wikipedia. The e-Shram site of the Ministry of Labour & Employment gives a list of cash transfer schemes, distribution of food grains and accident and health insurance for the poor by the central government. eshram. gov.in. "In fact, the Economic Survey of 2022-23 had pointed out that as of December 2022, there were more than 2,000 such schemes run by state governments." In practice, India is quietly adopting universal basic income, wrote Vivek Kaul. There is no accountability. Just 6.68%, of Indians, or 80.9 million, filed Income Tax Returns (ITR) in financial year 2023-24 (FY24), up from 74 million in FY23. However, of the 74 million filers, 49 million declared zero taxable income in FY23 (Assessment Year 2023-24). ET. Thus 66.2% of those who filed ITR did not earn enough to pay income tax. Even so "Net direct tax collections so far this year have witnessed a strong uptrend, having gone up by 16.45% year-on-year to over Rs 15.82 trillion as of mid-December." Net individual tax collection was Rs 7.97 trillion while net corporate tax collection was less at Rs 7.42 trillion. ET. The state is defined as having a 'monopoly on violence'. Britannica. Income tax is extortion with threats of imprisonment. The government controls the investigating agencies CBI and ED and can imprison anyone without giving any reason. The Wire. It's not inequality of wealth, it is the asymmetry of power that is killing Indians. Professors should ask the right questions.  

Popcorn for economic growth.

"The British economy flatlined in the third quarter of the year," as "the Office for National Statistics said the British economy showed no growth against the previous estimate of 0.1%." Treasury Chief Rachel Reeves "raised taxes on businesses to help shore up public finances and ailing services," and "many businesses are responding to the tax rise by either raising prices or reducing employees or wages." BS. In the US, "Total debt outstanding has surged to $36 trillion from $19.5 trillion in 2016, or approximately 120% of gross domestic product (GDP) from 105%." But, even as the federal government debt has ballooned, state and local governments, households, companies and financial institutions have reduced their debt loads. Still, high public debt pushes interest rates higher which discourages companies and households from borrowing. This could hurt growth. Bloomberg. According to Business Insider, Chinese economist Gao Shanwen "stated that the actual GDP growth of China could be averaging somewhere around 2% over the past two or three years, in spite of the official figures reporting close to nearly 5%. He also speculated that future growth will be at 3%-4%, "while the government will likely continue to report around 5%." ET. In the EU, annual Real GDP growth rate for 2024 was 1.1% and GDP at current prices, or nominal GDP, is $19.4 trillion. IMF. Total population is 450.7 million and the average fertility rate is 1.5%. World Economics. To add to its problems, "Europe's struggling industries are bracing for a new gas price shock over the coming winter months, as colder weather depletes stocks, competition with Asia for liquefied natural gas intensifies and the prospect of reduced natural gas supplies looms." Reuters.  "The world's debt stock surged by over $12 trillion in the first three quarters of 2024 to a fresh record of nearly $323 trillion," But "Economic growth enabled debt to GDP to slip to roughly 326%." "Debt in emerging markets is approaching a record $105 trillion - a whopping 245% of GDP." Reuters. "The Syrian government fell...in a stunning end to the 50-year rule of the Assad family after a sudden rebel offensive sprinted across government-held territory and entered the capital in 10 days." ET. "Iran's embassy in Damascus was stormed after the rebels seized the Syrian capital, Iranian state- run Press TV said." Eurasian Times. Older Iranians will remember "On November 4, 1979, Iranian students seized the (US) embassy and detained more than 50 Americans, ranging from Charge d'Affairs to the most junior members of the staff as hostages. The Iranians held the Americans hostage for 444 days." history. state.gov. In India, "The Goods and Services Tax (GST) Council, chaired by the Finance Minister and including state representatives, announced on 21 December that non-branded popcorn mixed with salt and spices would attract a 5% GST, pre-packaged and branded popcorn 12% and caramel popcorn, categorized as a sugar confectionery, 18%." ET. No matter what happens in the world, good or bad, the Indian government will find sly, deceitful ways to extract the last rupee from citizens, including children. Merry Christmas. If you can afford it.  

Foreign policy should be diplomatic, not bold.

"India's foreign policy in 2024 showcased a bold stance, with India asserting its influence not only in its immediate neighborhood but also on the global stage." India and China agreed to return to "the Line of Actual Control (LAC) in eastern Ladakh that were in place before the Galwan clashes in 2020 after several negotiations." ET. However, China being an uncivilised and barbaric nation, "has built at least 22 villages and settlements over the past eight years within the territory that has traditionally been part of Bhutan, with eight villages coming up in areas in proximity to the strategic Doklam plateau since 2020, according to satellite imagery." HT. According to India's tourism ministry data for 2023, "foreign tourist arrivals were 9.5 million while NRI/diaspora arrivals were 9.4 million. The total was surpassed by outbound domestic travelers from India at 27.8 million." "A recent report in Mint showed tourist arrivals in 2024 are unlikely to cross 10 million, less than the 10.9 million pre-pandemic level, and Vietnam has already received 14.4 million tourists in the first 10 months of 2024, wrote Rahul Jacob. Unfortunately, "There are some startling similarities developing between India and China." GDP growth fell to 5.4% in the three months to September, only 80 basis points faster than that of China, business tycoon Gautam Adani has been indicted in the US for securities fraud and Canada has slapped a tag of 'foreign interference' on India. Reuters. "As the US prepares for President-elect Donald Trump to take office next month, nearly 18,000 undocumented Indians have been identified for deportation, according to recent data from the US Immigration and Customs Enforcement." ET. "Indian students studying in Canada have reported receiving emails asking them to resubmit crucial documents such as study permits, visas and educational records, including marks and attendance," causing "widespread panic among international students, many of whom hold visas with up to two years' validity." TOI. "At the outset of 2024, Prime Minister Narendra Modi was riding a wave of international acclaim and anticipating an election campaign that look like such a formality he talked of a thousand-year legacy. Now, he is looking back at a year of setbacks - at the ballot box, on the economy, in relations with foreign partners and in India's backyard." DH. In addition, "Union Parliamentary Affairs Minister Kiren Rijiju has said that (94 year old) George Soros wants to create chaos in India adding the alleged charges against the deep state are extremely serious." Republic. Mr Rijiju is probably referring to the US 'deep state', which has been denied and found 'disappointing' by the US after the BJP made similar allegations. TOI. BJP is a political party and so its allegations can be ignored, but a minister repeating the same allegations makes it the official position of the Indian government. As countries close their doors to Indians, the Economic Times has some advice for those wishing to escape - 'An Indian's Guide to Moving Abroad'. Bold foreign policy has received bold reactions. All routes closing. No way out.