Monday, 30 March 2020
Thursday, 26 March 2020
After China & WHO failed to take proactive measures, response by Modi led India is sustained & Participatory (Organiser)
PM Modi has been able to motivate majority of the population to practice safe conduct. But the challenge facing him as he works round the clock to ensure that India recovers from Corona outbreak, is to jolt the governance system to provide a policy ecosystem needed for double digit growth.
The world is facing a double shock of World War proportions, to both the health of the population as well as its economic prospects. Entire sectors of the economy have been shut down in an effort to save what could be millions of lives. Almost every family has been affected by the Covid-19 earthquake that first began in the final six weeks of 2019 in Wuhan, a city in China of 11 million people.
The tragedy is not simply the disease and the outbreak followed by epidemic followed by pandemic that has occurred since its appearance in a "live animals for food" market in Wuhan, the capital of Hubei province. The tragedy is not simply that it took six weeks for authorities in the province to accept the view of a few perceptive doctors and researchers there that the new disease that they were treating could develop into a catastrophe of unimaginable proportions unless contained early.
Instead of heeding the whistleblowers, they were condemned as "anti-national" and the most perceptive, Wenliang Li, was forced by the police to recant in 2020, the way Pope Urban VIII forced Galileo Galilei in 1663 to recant his discovery that the earth revolved around the sun rather than the other way around. Those in Wuhan who acted against the doctor rather than the virus at a time when it could have been contained within a small perimeter are guilty of the mass murder of at least 15,000 victims of Covid-19 ( a figure that could reach into the millions) and the shutdown of the global economy consequent to the emergence of the pandemic.
Throughout January, when it was clear that the highly infectious killer novel coronavirus was on the loose, not even in China was the alarm sounded with sufficient force. Searches for the virus on Baidu were muted until January 23, 2020, soon after Chinese Communist Party General Secretary Xi Jinping assumed direct control of the fightback and sealed off Wuhan from the rest of the country. Interestingly, although searches on Baidu ( mostly within China) were low in number throughout the period leading up to the lockdown, Google searches from the rest of the world were rising.
Another reason why Covid-19 formed and subsequently grew into a pandemic was the fact that markets offering live birds,animals, mammals and sea species of different kinds continued to function throughout China despite the 2003 SARS epidemic demonstrating the danger of allowing such retail commerce. Several studies conducted by Chinese experts warned of the risk to public health caused by such trade, but the extensive machinery of the Communist Party and the state run by it failed to pay heed and bring such activities to a halt. This led towards the close of 2019 to the global calamity that emerged in the winter of last year from the "live food" market in Wuhan.
In the absence of a clear indication of the extreme seriousness of the situation from either the Chinese government or the World Health Organisation, governments across the world hesitated to take action. In the UK or Italy, for example, flights from and to Wuhan were allowed to land and take off even while India had shut its airports to all traffic from and to China. The impression even within the US was that the outbreak would be contained even within China, and that the risk to the rest of the world was negligible, a misreading of the situation that shows the incompetence of US agencies in ascertaining what the factual conditions in China actually were. The major powers believed that Chinese authorities would rapidly bring the situation under control and not allow it to spread. Such action finally took place during the second half of January, but not until CCP General Secretary Xi Jinping directly intervened to lead the fight against a virus that by that stage threatened to drag China into an economic quagmire and a public health nightmare.
Once the crisis became obvious, among the first of world leaders to act was Prime Minister Narendra Modi, who barred entry of visitors from China, following the examples of Taiwan and Singapore. Should India escape an elevated curve for community transmission or Stage III of the Covid-19 outbreak, the credit will go to Modi for his unprecedented action in first blocking access to India from China and thereafter wisely extending visa cancellations to Europe, at a time when it was not yet certain that the European Union had become the epicentre of a health emergency that was coming under control in China.
Subsequently, the rest of the world was cut off from India. On March 19, Prime Minister Modi gave a historic call for an all-day "Janata Curfew" a few days later, a measure designed to break the chain of human-to-human transmission of the novel coronavirus. Prime Minister Narendra Modi, assisted by External Affairs Minister S Jaishankar and Heath Minister Harsh Vardhan have initiated multiple steps to protect the 1.29 billion people of India from going the Iran or Italy way during the present pandemic. If only authorities in Hubei had heeded Dr Wenliang Li rather than persecuted him, both China as well as the rest of the world would have been spared the situation that is now deluging the world. If only the rest of the world had been alerted to the immensity of the crisis by January 1, 2020 rather than only after the sealing off of Wuhan was announced on January 23, the global economy would not have been as close to the ICU that it is now, and countless may have been saved.
The Covid-19 pandemic shows the importance of transmitting bad news up the administrative ladder at speed, especially in governance systems where only good news gets moved upwards while bad news gets suppressed, as the novel coronavirus outbreak in Hubei initially was for six precious weeks after its toxicity and incurable nature was accepted by Hubei authorities in mid-November, reaching the highest levels of the Chinese system residing in Beijing only by 27 December, 2019. It took a further three weeks before President Xi decided to directly intervene and order unprecedented steps which jolted the world out of its complacency. Nine weeks that have shaken the world. Nine weeks during which action could have been taken to ensure that the deep,dark pit that first China,then Europe, and now the US and others in the global community have fallen into could have been avoided.
The contrasting examples of China in 2019 and India in 2018 show what a difference a quick and effective response to a disease makes. Like Covid-19, the Nipah virus that struck Kerala on May 2,2018 originated in the bat population. In coordination with the National Institute of Virology in Pune and the Manipal Institute of Virology, the Kerala state government immediately placed more than 2300 individuals in the districts of Malappuram and Kozhikode in quarantine, and imported a drug from Australia that had not yet completed testing for general use. After confirming that the outbreak was a potential health hazard, the state government issued an advisory on May 23 and joined hands with the central government to access what knowledge about the disease (which is fatal in almost 90% of cases) was available globally. Useful information was secured from Malaysia, especially relating to treatment, that ensured the saving of a two patients, while 17 died. The Nipah outbreak was officially declared over on 10 June, less than six weeks after the first case was identified in the Government Medical College, Kozhikode.
A disease which could have killed tens of thousands was eliminated in a short time because of close coordination between the central and state government, as well as the work done on detection and containment by the National Institute of Virology at Pune and the Manipal Institute of Virology. The difference six weeks can make is readily seen in the case of the Covid-19 pandemic that is sweeping the globe. Had the authorities in Hubei province in the Peoples Republic of China responded in the manner that was seen in India when the Nipah outbreak occurred, Covid-19 could have been contained within a few locations in the province and considerable death and suffering avoided.
Should India escape an elevated curve for community transmission of the Covid-19 outbreak, the credit will go to Modi for his unprecedented action in first blocking access to India from China and thereafter wisely extending visa cancellations to Europe.
As mentioned, when a doctor in Wuhan warned that a new virus was on the loose and needed to be eliminated quickly, rather than act upon his suggestion, the provincial authorities labelled him as "anti-state" and forced him to write a confession that he was nothing but an alarmist. This while the novel coronavirus was spreading like a blaze among the people during the final weeks of 2019. It was only in the very close of that year when provincial authorities conveyed the depth of the problem to the leadership in Beijing. By that time, several million people had left Hubei and gone to other parts of China as well as abroad. Several of them were carriers, many rendered more deadly because they themselves had no symptoms of the disease that they were passing on to any individual who came in contact with them or with any surface touched by them.
Unlike the case of Kerala government which alerted the central government as soon as the first case of Nipah was detected, Chinese provincial authorities continued to believe that the infection could be localised, and that they could handle it o their own. By their hesitation in conveying bad news to a higher - indeed, the highest - level of the Chinese governance system, these officials have caused a global disaster. After getting information of the outbreak of this new disease, it took a further three weeks for the central authorities to sound the alarm globally. Only by the close of January 2020, after President Xi Jinping took the unprecedented step of closing off an entire city of 11 million and a province from the rest of the country did governments across the world realize that they were facing a public health disaster. Some responded swiftly - including India and Singapore - while others such as Italy and France failed to understand the danger to their own public.
First Singapore and then India under the leadership of Prime Minister Narendra Modi shut the entry door to visitors from China. Later, when it became clear that Europe was badly infected with Covid-19, visitors from across Europe were blocked from coming to India. Unfortunately, several foreign tourists were already in the country, while later on, Indian citizens who had been visiting Europe returned. Some within these two groups brought with them the novel coronavirus. Coordinated action by the PMO, the Ministry of External Affairs and the Health Ministry ensured that community spread was prevented, at least till the time of writing this report. Should India escape the ravages of Stage III ( community spread) or have a very shallow curve of such infections, it would go as mentioned earlier to the credit of Prime Minister Narendra Modi, who has been assisted by External Affairs Minister S Jaishankar and Union Health Minister Harshvardhan.
From the start, they understood the depth of the calamity that could befall India were the most extreme action not taken, action that they ( with the assistance of the Indian Council for Medical Research) took from the very start of the period when they first were made aware of the depths of the crisis through the Wuhan lockdown. Avoiding the worst would also go to the credit of the people of India, for Covid-19 can only be eliminated by a community effort involving every citizen. Just as a single thread can unravel a fabric, a single individual can put to naught efforts at containing Covid-19. The call for social distancing given by the Prime Minister on March 19 needs to be obeyed by the entire population, so that India escapes the ravages of the disease in a manner that Italy or Iran have been unable to do because social distancing was not taken seriously by their populations in time.
By contrast, in India Prime Minister Modi has been able to motivate the overwhelming majority of the population to practice safe conduct, although there remain a few citizens who are irresponsible enough to risk calamity for other citizens and the economy through flouting the few simple rules needed to protect both themselves as well as the nation from the worst of the Covid-19 pandemic.
That the Government of India has had to rely even during the Covid-19 epidemic on a law that was first brought into effect in 1897 shows the need to ensure that the overwhelmingly colonial-era system of laws and regulations still faithfully adhered to by the governance mechanism needs to change. The Indian Penal Code has to reflect not 19th century but 21st century values and needs. The new structure should reflect the importance of involving Civil Society in the processes of governance through formal methods of consultation and monitoring, rather than concentrating such authority solely in the Civil Service.
Freedoms taken away by the addition of the First Amendment to the Constitution of India should be restored, while the legal system needs to deliver transparent justice ( including through live streaming of all court proceedings) that takes decreed within a time frame that is closer to that of other major economies. An audit needs to be conducted by an independent authority of the economic and financial effects of court judgments, many of which lead to substantial consequences,including the shutting down of several industrial units. Such an audit is also called for where the National Green Tribunal is concerned. India must certainly be as green and as filled with sustainability as possible, but this must be in a manner that takes into account the needs of the human population for income and employment, the foundation for a good life.
Several NGOs recommend measures that assume that human beings have no right to rights and that decisions should be taken irrespective of the human cost, as for example in the forced closing of large units rather than making them adopt clean technologies and continue operations. A table showing the number of cases as well as the time taken for disposal by each member of the Bench needs to be prepared for courts and placed online. The country has been waiting for decades for a Chief Justice of the Supreme Court who would ensure that the judicial reforms needed for transparency and accountability within this very powerful Estate of the State get carried out, and hopefully such reforms will not long remain unfulfilled. India has an exceptionally qualified judiciary, and as such it is reasonable to believe that such necessary reforms are not an impossibility but can become a reality that reinforces public confidence in the judiciary.
While the public health effects of the Covid-19 epidemic are being energetically tackled by the Modi government, what is as important is the health of the economy. A three month moratorium on loan repayments and interest payments both in the case of private moneylender loans and those of the banking system need to be enforced, so as to ensure that a flood of NPAs and bankruptcies do not get caused by circumstances beyond the control of the financial and economic victims of the 2020 public health emergency.
Chancellor Rishi Sunak of the UK has put in place a scheme to ensure that 80% of the salaries of workers get paid by the state, so that layoffs are minimised. Retraining workers and restarting businesses from scratch are very difficult, and a similar scheme needs to be carried out in India for workers and employees. Compensation can be paid for salaries upto a maximum of Rs 10 lakhs per person annualised, so that businesses do not retrench citizens during these months of Covid-19 stress. Former Finance Minister P Chdambaram has evidently never travelled to Europe in his life, for he kept on telling taxpayers that the rate of tax was the same as in several countries in the EU. Chidambaram was clearly unaware of the many benefits that citizens in those parts of the world get from the state. In India, even the poor pawn their gold jewellery to avoid public hospitals and schools, not to talk of the average taxpayer. Chidambaram clearly believes that government schools, hospitals and other services are at the same level as in the EU, and may be they are for a VVIP like him, but not for 99.9 per cent of the citizens of India.
There has long been need for direct and indirect tax reform as well as an overhaul of a regulatory structure that strangulates industry and trade while doing nothing to end endemic corruption, as for example through using corrupt officials to hound innovators in India so that alternatives to what they have discovered may get imported. It is not an accident that India is dependent on imports for so many critical items, and the answer lies in the obstacles placed on domestic producers in order to clear the way for imports.
The Covid-19 epidemic is a crisis that needs to jolt the governance system into making itself such as to give the people of India the policy ecosystem needed for double digit growth. That is the challenge facing Prime Minister Narendra Modi as he works round the clock to ensure that India recovers from a fever that has travelled from Wuhan to all parts of the world.
Wednesday, 25 March 2020
Prof M D Nalapat on Brand China taking a beating from COVID-19 (PGurus)
As COVID-19 brings every nation down to its knees, Prof. M D Nalapat looks forward and suggests that GOI can encourage India's Pharma to come up with vaccines and drugs for COVID-19 to enable it to be the world's supplier of affordable medicine.
Tuesday, 24 March 2020
Saturday, 21 March 2020
A Biden-Harris ticket would energise Democrats (Sunday Guardian)
By M D Nalapat
Kamala Harris would better meet the needs of voters who have received the dirty end of the stick in the US economy.
Just as national elections in India matter to US policymakers, elections there—especially to the US Presidency, the House of Representatives and the Senate—are important for India, a country that three Prime Ministers and three US Presidents in succession have brought together into what may be described as an alliance that dare not speak its name, for fear of inviting blowback from the historically reliably pro-Soviet Congress Party and the Communist parties within India. Some countries on the outside would also be uneasy at a coming together of New Delhi and Washington, these principally being Moscow, Islamabad and Beijing. The European Union would prefer a continuation of the present predisposition of several within the foreign policy establishment in India to prefer the EU to the US as the lead partner rather than lock onto the latter the way the GCC and Japan have done. In the past, it was Israel that developed what may be described as a “closet closeness” with India. Even during the 1960s, a period when Yasser Arafat was both calling for the end of Israel as well as hugging Indira Gandhi in public whenever the opportunity arose, the canny Prime Minister who in 1971 detached Bangladesh from the clutches of Pakistan ensured that Moshe Dayan was a welcome guest in her inner circle. The Israeli hero of the 1967 war would land into a military aerodrome near Delhi and be brought by car at night to the capital, escorted by disciplined (and discreet) military officers. Such visits were for both his insights as to how to prevail in battle, as well as ensure access to the technologies used by Israel to ensure its security against what till the 1967 war was a formidable phalanx of foes. From that period onwards, despite multiple UN votes and countless official statements against the Jewish state, Israel has remained a reliable ally where supply of critical equipment and insights are concerned. It took PM Narendra Modi to escape from the closet and visit Jerusalem to openly embrace Prime Minister Netanyahu in a fashion that his predecessors had lacked the courage to do. Even Prime Minister A.B. Vajpayee suffered from a phobia of admitting in public how closely linked Israel and India were in matters of security. When this columnist, together with JINSA, organised the first ever India-Israel-US trilateral in early 2003 at the India International Centre, New Delhi, strenuous efforts were made by the then “Executive PM” Brajesh Mishra to get the conference cancelled. Once that mission failed, his next move was to get cancelled all VVIP appointments made for the delegates from Israel and the US. It speaks for the character of Deputy PM L.K. Advani, Defence Minister George Fernandes and most notably President A.P.J. Abdul Kalam that each of them met the Trilateral Conference delegations “informally” in their residences, to much gnashing of molars by individuals close to Vajpayee. National Security Advisor Mishra, on being told that the conference would not be cancelled, had warned darkly that the entire Muslim world would club India with the US and Israel as forming a gigantic—and mythical—“Hindu-Jewish-Christian” alliance against them. This columnist had—and continues to have— confidence that the Muslim community is as progressive and moderate as those belonging to any other faith in India, and the threatened blowback at the India-Israel-US trilateral failed to materialise. Indeed, among those who graciously hosted the US and Israeli delegations to dinner were filmmaker Muzaffar Ali at his farm and Nafees Fazal at the Viswa Yuvak Kendra. Ms Fazal, among the most senior lady politicians of the time, was then the Medical Education Minister of Karnataka.
In the US, Joe Biden is on course to be the Democratic Party nominee for the 2020 US Presidential election. His opponent Bernie Sanders made the cardinal error of following the example of Jeremy Corbyn and embracing not mainstream Muslims but the Wahhabi fringe, choosing a Pakistan-centric individual as his Chief of Staff. The main goal of this individual was to earn brownie points with GHQ Rawalpindi by getting Sanders to release one toxic statement after the other about India. An Erdogan acolyte, Representative Ilhan Omar, went around the country as the lead campaigner for Sanders, ensuring that Biden gained substantially over Sanders wherever Omar spoke. But although he may have once again failed to win the Democratic Party nomination, Senator Sanders genuinely cares about the poor. His very presence in the field has moved the Democratic Party away from the camouflaged elitism of the Clinton machine, which for long dominated the party machine and which is now prodding Biden to anoint Senator Amy Klobuchar as his running mate rather than the feisty Kamala Harris, who would better meet the needs and aspirations of voters who have long received the dirty end of the stick so far as the US economy is concerned. The selection of Kamala Harris as his running mate by Biden would be an acknowledgement by the 74-year-old that he has truly imbibed the spirit of the revolution in politics (and in society) spearheaded by the rise to the Presidency of Barack Obama. A Biden-Harris ticket would pose a grave challenge to President Donald Trump and Vice-President Mike Pence. There has been talk that Trump may replace Pence with Nikki Haley, but this is unlikely. Vice-President Pence has shown his loyalty to a boss not easy to handle or to please, and has demonstrated skills in administration which have helped the overall image of the Trump Presidency. Not just that, but Pence has deep links with the religious establishment in the US that would be essential for Trump’s victory in the November polls. What is more likely is that the charismatic Haley will be made Secretary of State should Trump prevail over Biden, and perhaps become the Vice-Presidential candidate in 2024, should Mike Pence run that year for the job that brought Trump to the White House.
The challenge before President Trump is less Biden than it is the economy. If economic stabilization does not take place by the middle of 2020 and the effects of Covid-19 on the economy not get shaken off by August, the Republican ticket will face headwinds across the slateboard during the elections. Whoever wins in 2020, what is certain is that the US-India “closet alliance” will continue and be strengthened. Both sides need each other to ensure that the two biggest democracies continue to lead in matters of both security as well as the economy. US citizens who are more loyal to GHQ Rawalpindi than to American interests may not be happy about this, but the alliance of the world’s two biggest democracies is here to stay.
Friday, 20 March 2020
Saturday, 14 March 2020
Bharat Shakti calls for unbound Yuva Shakti (Sunday Guardian)
By M D Nalapat
India needs to be liberated from chokehold of regulations that favour the well-connected and their foreign partners over domestic talent, startups.
With better governance, the Union Territory of Pondicherry could see better days, as indeed would several other locations in a country that has ever since 1947 serially undershot its potential, usually by a substantial margin. Even in the town’s tourist quarter, where French street names and many of the houses built before the 1950s charmingly remain, the streets are a tad untidy, although not as much as in the rest of Pondicherry, a small town that survived during the days of the Raj as one of the few refuges left in India by the Brits for the French. Were the lady bothered about such matters, Congress Permanent President Sonia Gandhi could have taken her party’s control over the government of the UT as a challenge and ensured that it transformed the town into a magnet for tourism from not just the Francophone world but all Europeans nostalgic for a whiff of their culture-suffused continent on distant shores. Despite its immense potential as a tourist destination, the babus (the politicians whom they control the way Humphrey Appleby did Jim Hacker) have seen to it that tourist facilities and footfalls in India are a small fraction of what they ought to be. This applies to Pondicherry as well. Were the still magnificent beach cleaned up, the waters of the ocean would be an ally in such an effort. However, Pondicherry seems not to have figured majorly in the plans of the Sonia Gandhi-led branch of the Nehru family, which has controlled the Congress Party since the passing away of Sanjay Gandhi in 1980, barring the five years (1992-96) when P.V. Narasimha Rao was the Prime Minister and declined to adopt the subservient posture of another non-Nehru PM, a posture now etched into history books. Given the intellect and knowledge of Manmohan Singh, he could have been even more successful in transforming the country than his boss during 1992-96 was. During much of the Manmohan decade, even the national security establishment responded and reported to 10 Janpath and to its nominees rather than to 7 RCR. As Prime Minister, Manmohan Singh seemed resigned to a visible lack of control over the processes of government. Clearly, just being in the job was enough for him, and not using the most powerful post in the country to carry out the reforms that a mind as imaginative and profound as Manmohan Singh’s could have devised. Had Manmohan Singh liberated himself even to the extent that was the case with Narasimha Rao, India would have gained substantially through better policy and personnel, as wistfully pointed out by his admirer Sanjay Baru in a brilliantly written book, The Accidental Prime Minister. Not using the powers presented to him and mining the information available to subdue political and other opponents of the reforms still not implemented was Manmohan Singh’s error, for recourse to even a smidgen of the vast powers of the Prime Minister would have prevented Sonia Gandhi from unseating him through party intrigues. Even in the case of Narasimha Rao, the “Permanent President” of her party was able to remove him from the Prime Ministership only by destroying the Congress Party’s prospects in the 1996 polls by setting up a rival political outfit that cut into Congress votes and helped the Vajpayee-led BJP emerge as the key non-Congress party. As PM, Vajpayee showed his gratitude to Sonia for this favour throughout his six years in office
To ensure a degree of freedom of action similar to that of his former boss and predecessor, Manmohan Singh could have established his supremacy over the government, by throwing out a few ministers and high officials whose only reason for being included was because they were servitors of 10 Janpath. During his decade in office, with rare exceptions, not just ministers but even senior civil servants were chosen not by 7 RCR but by “Number Dus”. Unlike the PM, ministers collaterally useful to Sonia Gendhi, such as S.K. Shinde and P. Chidambaram, were given substantial latitude in choosing their suite of officials, as such freedom enabled such ministers to serve the interests of Number Dus in a very satisfactory manner.
Given its toxicity, getting away from the Lutyens bubble is usually refreshing. As was a visit to the Union Territory to speak at the Bharat Shakti—India Unbound conference organised by Professor Mohanan Pillai of the Department of International Relations of Pondicherry University. Indians are resilient. Mumbai the day after the 1993 terror attack was back to normal, as indeed the city was soon after the success of the (initially botched) series of operations against the 26/11 terrorists in 2008. A similar spirit was evident in the students and staff of Pondicherry University, who went about their studies and other activities refusing to allow fear of the Novel Coronavirus to deter them. In this, they were joined by the conference participants, some of whom came from the other end of the country despite being on the wrong side of 70, the age when infection with Covid-19 could be deadly rather than a mild inconvenience. Talking to the students and absorbing the range and intensity of their knowledge and interest in global trends, as well as gauging their self-confidence, it was possible to believe that the years ahead would finally see an India Unbound. Or more accurately, see Indians unbound, released at last from the death grip that the colonial bureaucratic edifice is continuing to retain. Should Modi 2.0 succeed in ensuring “Minimum Government”, there would not be any need for hundreds of thousands of talented youngsters to leave India every year actualise their dreams (and their inventions) in countries where regulations are not so numerous and regressive. That there are bureaucracy-created blockages to achievement in the country is recognised most of all by the country’s high officials, many of whom get their children admitted in prestigious educational institutions abroad and encourage them to settle there. Countries where regulation is kinder to talent than to influence have long scored over India. PM Modi needs to enhance the ecosystem for individual growth by an throwing into the dustbin the numerous blockages to enterprise of those citizens who are unassisted by influence. An example of such regulations is a Sonia-era clause that in many important bids, only organisations with a turnover of Rs 1,000 crore are allowed to participate, even though MSMEs and in the case of mny components SMEs could meet the specifications with ease. Naturally, with foreign collaboration are given an advantage over those without such linkages. A complex of rules has been created over the years so as to ensure that imports prevail over domestic production, including in bulk items such as coal, a feedstock where India’s own reserves are left largely untouched while imports soar. Is it any wonder that India is so hopelessly dependent on imports for so many key sectors, including telecom, health and defence?
Bharat Shakti can only be powered by Yuva Shakti. For that, the country needs to be liberated from the chokehold of regulations that favour the well-connected and their foreign partners over domestic talent and startups. Science facilitator Y.S. Rajan and others at the conference spoke about their vision of an India Unbound, and the response of the students of Pondicherry University to their ideas makes clear that India has in abundance the human material needed for double digit growth. What is needed is for policymakers to replace lingering remnants of the Nehruvian governance construct with a much lighter, much kinder, matrix of laws and regulations which promote rather than smother domestic innovation and enterprise.
Putin’s Covid-19 oil shock designed to topple US dollar (Sunday Guardian)
By M D Nalapat
Both MBS and Putin have initiated measures that will have the eventual effect of ending the 1971 link between petroleum and the US dollar.
Bengaluru: Unlike in India, where Prime Minister Narendra Damodardas Modi has diplomatically adopted a cautious approach in practice towards the Lutyens Zone, US President Donald John Trump sought from the very start of his first term not to merely weaken but eliminate the influence of the long-term czars and czarinas of the Washington Beltway. As a consequence, while Modi has had to endure only the usual political vitriol during his first term, Trump has been subjected to an unending barrage of abuse, sabotage and subterfuge from inside his administration and outside on a scale far above that which any of his predecessors endured in more than a century. Independent as his thinking was of that of the Beltway, President Trump sought to (a) move the centrepoint of US foreign policy away from the Atlantic to the Indo-Pacific, (b) co-opt Moscow as a partner, thereby raising the fear of future irrelevance in Paris, Berlin and London, (c) abandon the historical alliance between the United States and the Wahhabi International by backing Crown Prince Mohammad bin Salman in Saudi Arabia over those within the Al Sauds who sought to retain the primacy of Wahhabi elements, (d) focus on China as the primary threat to the US rather than remain fixated on the “Russia threat” as his European partners wanted him to be, and in the process, (e) bring North Korea through personal diplomacy towards a path as would preclude resort to force in the peninsula. The Europe-obsessed Washington Beltway, the Wahhabi International and China boosters (such as Bill Clinton and Michael Bloomberg) have consequently combined in a so far successful effort at preventing the comprehensive geopolitical changes that Trump with his practical business logic senses are key to a 21st century future where the US remains the primary power. The consequence of the policy mishaps caused through the contradictory moves of a change-seeking US President and the many tradition-bound elements in his team has been the evolution of a situation where the primacy of the US is now under threat. Although this is being sought to be explained away by the Beltway and its captive media as a consequence of the actions of the 45th US President, the reality is that the steady shredding of US influence is the consequence of governance meltdown caused by the savage attacks on the Trump Presidency by the triumvirate of the Atlanticist Beltway, the Wahhabi International and the China boosters.
DOLLAR MAY LOSE TO OTHER CURRENCIES
While President Trump is close to Saudi Crown Prince Mohammad bin Salman (MBS) and has demonstrated personal regard for Russia’s President Vladimir Putin, his need to survive in office has resulted in agreeing to a dilution of the policies he favours. Repeated barbs directed at both Putin as well as MBS by officials within the Trump administration as well as influential voices in the legislative branch appear to have convinced MBS that the Trump administration is no longer a reliable partner in bad times, or, in the view of Putin, will change its NATO-centric obsession with Russia as a malign force. Both have, therefore, initiated measures that will have the eventual effect of ending the 1971 link between petroleum and the US dollar. Russia already sells petroproducts to the European Union using the euro, and to China using RMB rather than the dollar. Indeed, Rosneft has set the euro rather than the dollar as its default currency for the sale of petroproducts. There has been a repeated weaponisation of the US dollar through the imposing of financial sanctions on target states. Such measures have been used as an intimidatory tactic especially since the time of Bill Clinton and have resulted in a decline in global trust in the safety of the US dollar as a store of value. Several countries are, therefore, switching from relying just on the dollar to going in for a basket of currencies. In some cases, they are avoiding the dollar altogether. The petrodollar link was established when the US was the top net buyers of petroproducts, whereas it is now the biggest producer, overtaking Saudi Arabia and Russia. Such a changeover has reduced the incentive to make the US dollar the unit of calculation in the industry. Meanwhile, for both Saudi Arabia and Russia, it is China that has emerged as the largest buyer of their petroproduct exports. Much of additional US crude production is coming from shale oil, producers of which need a price of around $60 per barrel over the next five years if they are to meet the cost of repayment of the massive loans that they have taken. Should China begin buying oil in substantial quantities from Iran, as well as assist Venezuela to once again become a major oil exporter, and should Russia and other contra-Wahhabi forces succeed in ensuring that General Haftar gets control of Libya from the government based in Tripoli, there is scant chance of oil reaching even the $50 per barrel level. Absent significant technological developments that sharply reduce the price of tapping into shale oil within the next few years, there will not be enough revenue from shale sales to rescue from bankruptcy more than half of the thirty-odd major shale producers in the US from liquidation.
INDIA’S NEGLECT OF DOMESTIC COAL UTILISATION
Judging by the deft moves that he is making in the oil market, it is safe to assume that Crown Prince Mohammad bin Salman is conscious that oil may become a useless asset in about 15 years, rather than in the 40 extra years that has been assumed by analysts. Hence the incentive for both him as well as President Putin to win back the major share of the oil market from the US through predatory pricing of the kind that both are now orchestrating. Both Russia and Saudi Arabia are keen to avoid the unhappy experience of India, which has allowed its vast coal reserves to largely go unutilised, even while imports have soared. Putin and MBS would like to sell as much of their oil reserves as possible before the feedstock gets replaced by the steady lowering in costs of solar, wind and nuclear energy. India ought to have been a global solar energy or thorium technology superpower in view of its abundance of such resources as well as talent, but the Lutyens Zone has ensured through defective policy that this has not happened. Similarly, India has for decades been a dump yard for telecom products, the foreign exchange outgo for which is much higher than for any other head. In the case of an essential technology such as 5G, a much smaller country such as Vietnam is ahead in both innovation and rollout than the country which renowned television anchors constantly refer to as being in the same league as the US and China. Prime Minister Modi has now got the opportunity to use the Covid-19 emergency to hold a combined sitting of both Houses of Parliament to get passed numerous reforms essential to the future of India. Several in his party who are dismissive of economic issues, forget that Hindus are respected in the UK and the US because of their high average incomes, while the situation is not the same in Malaysia, where most (Muslim) Malays and (Buddhist) Chinese are much better off than (Hindu) Indians.
END OF PRIMACY OF BRETTON WOODS SYSTEM
The anti-Trump tripartite alliance of the Atlanticist Beltway, the Wahhabi International and the China boosters have forced on the Trump administration policies that are having the unintended effect of the collapse of the 1944 Bretton Woods financial architecture and the subsequent de-dollarization of the global economy. Spurned by Washington, Putin has hewed closely to Xi Jinping. Looking at the way the US has walked away even very recently from the Kurds and the Afghans, and comparing that to the manner in which Russia has stood by the Assad regime in Damascus, even the NATO-friendly GCC rulers may be forgiven for believing that their longevity is assured not by an alliance as fickle to its friends as NATO, but by the rival Sino-Russian military alliance. The only viable alternative on the field would be a full-scope India-US military alliance, in which the GCC and the US ensure economic advantages to India in exchange for India’s superb military helping to ensure the retention of the present governance structures within the GCC. Sadly, the continuing influence of the Lutyens Zone in the policies of the Government of India makes such an eventuality unlikely, despite Prime Minister Narendra Damodardas Modi being cognizant of the importance of India assisting in protecting stability in the Middle East, especially within the GCC. Despite the importance of the Middle East to India, the governance team put in place by Modi since 2014 has adopted a policy of extreme caution where external military activity is concerned. This is probably the result of India’s unhappy foray in Sri Lanka during the 1980s still affecting their thinking strongly. Rather than get skittish about occasional use of the military, the Sri Lankan setback ought to have been dissected for the errors made, especially the way in which President Ranasinghe Premadasa was allowed to ally with the LTTE against the IPKF, without even a murmur from the Government of India. As for the US, parts of the Trump administration (such as the US Trade Representative) seem oblivious to the fact that helping to secure through commercial sweeteners the willing participation of India in US defence moves abroad has become an existential necessity for Washington in a world where the Sino-Russian military alliance is steadily gaining traction. As for other world leaders, given the manner in which President Trump is being savaged by his domestic opponents, it is unlikely that world leaders would trust in the word of Donald J. Trump any more, given what is perceived to be significant weaknesses in his hold on Presidential authority. This is a world where geopolitical tectonic plates are shifting. Xi Jinping and Vladimir Putin are jointly engaged in creating the conditions for a world order that is without the centuries-old overbearing influence of the countries on both sides of the North Atlantic. Putin, in particular, has sought to prepare for an oil price war ever since it became clear by the middle of 2018 that President Trump would not—at least in his first term—be able to prevail over the Atlanticists where policy towards Russia was concerned. Unlike the two largest democracies, the US and India, Russia under Putin has controlled public debt to GDP (which is 17% in Russia as against 104% in the US). Russia, in contrast to India and the US, has a budget surplus. And despite being in charge of a much smaller economy, Putin has earned foreign exchange reserves that are the same size as India’s. Importantly, while India is known to have the largest private gold reserves in the world, any effort by the government to use the law or state power to dip into that would create a firestorm within the country that would be politically untenable. In contrast, both the Russian as well as the Chinese governments have built up gold reserves that can back their money supply. The jury is still out as to whether the recent jousting between Saudi Arabia and Russia in the oil market is real or merely a drama. What is not in doubt is that both MBS and Putin recognise the need to monetise their oil reserves before the feedstock becomes redundant through alternative energy solutions. Rather than calculating sales only in US dollars from oil sales, more economies are turning to a basket of currencies that includes the euro and the RMB. The present oil shock is likely to be the start of the de-dollarizaton of the global economy. In their obsession with kneecapping President Trump, the Washington Beltway has been oblivious to the harmful effects that their vicious campaign against an elected Head of State is having on the overall interests of the US in a situation where the superpower is being challenged by the Sino-Russian alliance.
ECONOMIC OPPORTUNITY FOR INDIA
Covid-19 presents both a health threat to India as well as an economic opportunity caused by the decline in commodity prices. Navigating the emerging world order in a manner which maximises benefits to the 1.3 billion people of India is a task that needs to be tackled by the Modi government in an imaginative and decisive way. The situation meets the standard of an economic emergency, and needs to be tackled in the manner such a situation merits. Land and labour laws need to be changed the way insolvency law was. Tax rates need to be reduced and compliance made easier so as to ensure a voluntary expansion of the tax base, including in the matter of GST. In this crisis, what is expected is directioned and decisive leadership by Prime Minister Modi to ensure that a policy matrix gets put in place that will replace the dysfunctional colonial governance system that ought to have been jettisoned on 15 August 1947 but has been kept in place to serve the interests of those who seek to continue the colonial practice of gouging profit from India in a manner that enervates and impoverishes the country and its people. In this world of disruption and crisis, “business as usual” is no longer an option for a country aspiring to be the Third Superpower.
Friday, 13 March 2020
Thursday, 12 March 2020
Saturday, 7 March 2020
The Covid-19 threat is also an opportunity (Sunday Guardian)
By M D Nalapat
The Covid-19 age may result in more services getting done from home, a trend that is expected to multiply in coming decades.
Many of our political leaders (almost all of whose children have studied in English-medium schools throughout their education) repeatedly bewail the ubiquity of the international link language in India, which hosts the second-biggest number of those speaking the language, just behind the US but more than those found in the UK. Someday, India will join what will then be termed the Six Eyes club of nations that coordinate closely with each other in matters of security. Meanwhile, among the common factors linking President Donald Trump, Prime Minister Boris Johnson and Prime Minister Narendra Modi is their vigorous call to avoid fear and panic in this age of the coronavirus. There will be many more Covid-19 cases in the three countries, some of which will end in death. However, the disease will almost certainly run its course by May, which is why the Japanese Olympic Association has postponed to that month a final decision on whether the 2020 Tokyo Olympics will go ahead as scheduled. In India, individual institutions are taking decisions on whether or not to declare holidays (in the case of schools and colleges) or cancel events such as conferences. There have been examples of behaviour that can only be described as contemptuous of the public interest, such as individuals hosting birthday parties despite exhibiting symptoms of the disease. A sore throat, sniffles and even a fever are unlikely to have been caused by Covid-19, so plentiful is the supply of germs in India. However, those having such symptoms need to quarantine themselves and get tested, should symptoms persist. The WHO has been vocal about claiming credit for the way governments are handling outbreaks, although the government that has been most successful in containing the virus has received zero assistance from the WHO, which refuses to even acknowledge its existence. This is Taiwan, which is a hundred miles off the Chinese coast, and which has contacts running in the millions of individuals with the other side of the Taiwan Straits. By using technology, the Tsai Ing-wen government in Taipei has integrated the travel history of airline arrivals with screening procedures, with mobile phones being used to warn those judged to be of higher risk of being infected to pass through special channels designed to spot signs of the disease. Those who are asked to self-quarantine (a few are sent directly to hospital) get tracked through their smartphones to ensure that they are obeying such a command rather than moving out of their homes and potentially placing others at risk. Testing is quick and reliable, and public medical attention of a much higher standard than that found in the US, where falling ill is a nightmare except if the patient be a millionaire. As a consequence, the number of coronavirus cases is less than four dozen, despite the extensive linkages between the two sides of the straits. Perhaps there may be someone in the WHO, who has heard of Taiwan, and who can ensure that the methods used to keep the Taiwanese population reasonably safe get used elsewhere, especially the use of the smartphone and Big Data to monitor and control the spread of the disease. India, with its expansive smartphone-enabled population, would be able to adopt several of the techniques that have worked well in Taiwan to limit the spread of the virus.
Although China has thus far been the worst affected by Covid-19, besides being the origin of the disease, it must be said that the measures put in place for detection and containment since the closing week of January have been helpful in ensuring that much of the rest of the world reacted in an energetic manner to the risk of a pandemic. The quarantining of a city of 11 million was the shock that brought home to the globe the danger that was spreading invisibly in their midst. Covid-19, probably, made its appearance within some form of animal life in China during October 2019, acquiring the ability to spread from them to human beings a few weeks later. Had authorities in Wuhan understood the toxicity of the new disease by November 2019 and taken steps to limit its spread, China and, subsequently, the world may have been spared substantial grief. It took six weeks between the recognition by authorities in Wuhan that an unknown virus similar to SARS was in droplets settling on multiple surfaces and infecting a growing number of humans. Finally an SOS was sent to the Chinese Communist Party leadership core in Beijing. After this information was received by President Xi Jinping and flagged as a potentially catastrophic crisis, action on a scale with no clear historical parallels got initiated, including the enforced quarantine during the third week of January 2020 of Wuhan and soon afterwards many more cities. Xi’s warning bell was heard across the world, leading governments to initiate steps designed to reduce the risk of facing an epidemic on the scale that China was witnessing. Several of the measures taken had consequences for China, including the prompt action by President Donald Trump and Prime Minister Narendra Modi to cancel visas issued to Chinese nationals intending to visit. While the Indian economy could be better, and hopefully soon will be, the coolheaded manner in which the Government of India (as well as citizens) has responded to what Xi calls the “Devil Virus” has ensured that these be on a manageable level. Trains and flights are still crowded, although foreign travel has been impacted, not least by the fact that a visit to a growing number of countries will entail quarantine on return. Just as both sides of the Taiwan Straits have done, Prime Minister Modi needs to ensure that regulations get passed that would ensure that those quarantined do not lose out on leave. Among the reasons why China is weathering the epidemic better than expected is the fact that society there has gone digital in a much more comprehensive manner than its superpower rival, the US. From movies to foodstuffs to clothes or medicines, almost all such services can be done online. India has a rapacious army of middlemen that denude both producers as well as consumers. Digital systems could replace them, linking producers of food and other consumer items to shops and establishments that sell them, which can then get the same delivered to homes. In this manner, an Amazon would not lead to the closure of shops, or a FoodPanda the shutting down of restaurants. An innovation that needs to be made commonplace is for housewives to cook meals at home and get these picked up for delivery to consumers.
The Covid-19 age may result in more services getting done from home, a trend that is expected to anyway multiply in coming decades. It may generate an expansion of digital-based enterprises, some of which may in future take on Chinese and American rivals. Every threat is an opportunity and India needs to respond to the Covid-19 menace in such a manner.
Covid-19 crisis may ensure Modi makeover of economy (Sunday Guardian)
By M D Nalapat
RBI seems to be of the view that the Covid-19 economic emergency will be a transient phenomenon. No crisis measures appear to have been taken by the RBI to meet the effects of the worldwide Covid-19 supply-demand shock on India.
NEW DELHI: The emergency caused by the spread of the novel coronavirus (Covid-19) to India needs to result in the introduction of transformational reforms in the economy, as took place in 1992 because of the precarious condition of the country at the time when P.V. Narasimha Rao took over as Prime Minister. The societal aftershocks of the Citizenship Amendment Act (CAA) and the visible slump in “animal spirits” within the economy indicate the need for both policy as well as personnel changes that need to be undertaken by Prime Minister Narendra Modi for the country to get back to the growth trajectory that it was in before the assumption of full control by 10 Janpath over 7 RCR following the 2009 repeat of the UPA’s 2004 national election win. Such steps are urgently needed in view of the fact that the onset of Covid-19 in an increasing number of countries across the world is creating a classic “Demand and Supply Shock”. This threatens to tip the international economy into systemic recession. Ironically, the greatest impact of Covid-19 is being felt in the developed world, as well as in those sectors located within developing countries that are more globally competitive than the rest of the economy. This is a consequence of the dominance of China in both global demand chains through its purchases of natural resources, services, manufactures and consumables from countries across the world, most prominently in North America, Europe and the Indo-Pacific. The recent sharp reduction in imports by the People’s Republic of China is leading to a fall in overall consumer demand in several engines of growth of the world economy, including through steep falls in the prices of petroleum and other feedstocks. In the case of supply, whether it be Japan, India, the EU or the US, a substantial segment of the supply chain in manufacturing is based in China, and much of this has been temporarily brought offline by the unprecedented emergency responses of President Xi Jinping since the third week of January 2020 to the coronavirus outbreak after it had made its first appearance in the country months before. The Covid-19 global emergency demonstrates the danger in major economies allowing their supply chains to be as dependent on a single country the way much of global manufacturing is on China. Despite this, the downturn in growth caused by the Covid-19 demand-supply shock means that most corporates will find it difficult to build up substitute manufacturing capacities in locations other than China at speed. Aware of the danger that considerable manufacturing capacity may migrate from China and thereby impact the employment outlook, President Xi Jinping has ordered manufacturing units to restart operations, calculating that the risk of some infections within the workforce is less than the damage that would be caused to the Chinese economy through large-scale migration of manufacturing capacity to Taiwan, Vietnam, the Philippines and to an extent India.
MOVE TOWARDS NEGATIVE INTEREST RATES
Inadvertently, the US Federal Reserve Board indicated the depth of the crisis being faced by the global economy by its unscheduled decision to make an emergency cut lowering the already historically low level of interest rates by 50 basis points for the first time since the 2008 financial meltdown. This was taken by investors as a sign of panic, which is why US stock prices fell rather than rose immediately after the interest rate cut. Over the past years of being on the edge of a global recession, central bankers have ensured that interest rates in the developed world have been lowered to levels not seen during the previous millennium. The Federal Reserve Board realistically has about three more rate cuts left in its quiver, after which it will need to impose negative interest rates, thereby sending the banking sector in the world’s largest economy into a tailspin, once depositors find out that they need to pay interest (howsoever small) to a bank when they put their savings in it, rather than have the sum earning interest for them. The EU and Japan are also near crossing the borderline into a regime of negative interest rates, so deep have been interest rate cuts by the central banks located there. In contrast, despite the Covid-19 situation, the Reserve Bank of India seems to be of the view that the Covid-19 economic emergency will be a transient phenomenon, as no crisis measures appear to have been taken by the RBI to meet the effects of the worldwide Covid-19 Supply-Demand shock on India. Surprisingly, the RBI is yet to signal that the panic fall now being witnessed in the value of the rupee to a historical low has even merited its attention, much less action. This needs to be more than reassuring words spoken to halt the dive in the value of the rupee, which is now the worst performing currency in the Indo-Pacific along with the sanctions-hit Iranian rial. Such lack of any high octane response is in contrast to the central banks in other major economies. It may be added that a similar belief (that the economic effects of the Covid-19 pandemic on the Indian economy will be shallow and transient) seems to have taken root within the Finance Ministry as well. Thus far, there does not seem to be much in the way of policy barriers to the Covid-19 shock being set up by that ministry, which is next only to the Prime Minister’s Office in its potential to determine the course of the economy. Prime Minister Narendra Modi chose Nirmala Sitaraman as Finance Minister, after having studied her performance first as Commerce Minister and later as Defence Minister.
MODI’S MANY INITIATIVES
Those who have been studying policies adopted by Narendra Damodardas Modi believe that from the start of his first term in office on 26 May 2014, the Prime Minister put as priorities (a) overall economic development, (b) youth empowerment and (c) a safety net for the needy. Much has been done in all three spheres, especially where civil society has been roped into service, as for example with the Ujjwala scheme. However, as the relatively thin layer of administrative talent in his government has yet to be added on to through lateral entry of domain specialists and performance-oriented ( rather than procedure-obsessed) practitioners from the private sector, thus far the overall strike rate has not been of the level expected from a Modi government. A higher success rate would be achievable, were the HR managers and head hunters in the system to give less attention to pushing into key positions individuals that are part of the more influential durbars dotting the Lutyens Zone. Instead, they need to prioritise talent over relationships and make their selections with an absence of the personal bias that is universal in the Lutyens Zone, which still dominates in the number of entrants to high-level positions within the current establishment. Even investigative agencies are sometimes pressed into service to give misleading positive reports about dubious candidates that the Lutyens Zone favours, while the preparation of fake dossiers on inconvenient names has been developed into a science by those in the agencies eager to do the bidding of influential officials, businesspersons and politicians seeking to exclude those who are not part of the daily durbar of Lutyens potentates. Rather than spend time working in a productive manner, attendance at such durbars is not just the best way to advancement, but, in many cases, the only way to career advancement since the dawn of the “Overt Nehruvian Era” in the 1950s. This period may be distinguished from the “Covert Nehruvian Era”, where much the same interests as promoted by that cohort have been pursued, although of course not openly acknowledged. The foundation of policies designed to favour such interests is a continuation of the vice-like grip of the Estates of Governance over both the economy as well as the society of the country. Barring perhaps a few hours in the quiet of the bedroom each night, there is little in India that is outside the attention and the intervention of one or another of the Estates of Governance. It is noteworthy that the First Amendment to the US Constitution added to the rights of ordinary citizens, while the First Amendment to the Constitution of India diluted the Fundamental Rights that formed the core of the constitutional matrix gifted to the Republic of India by the Constituent Assembly.
BOLD STEPS TAKEN QUIETLY
The good news is that the very first weeks of Modi 2.0 have seen several initiatives which have been taken to reduce the chokehold of the colonial system of governance on elements of society and the economy. Examples:
(1) PM Modi has sought to quicken the pace of induction of domain specialists into the administration, despite this move facing headwinds from traditionalists designed to ensure that the new inductees only get placed in positions that are absent genuine influence. The intention of the Lutyens Zone traditionalists is to reduce the domain specialist inductees to the level of consultants, rather than empower and task them with operational responsibilities.
(2) The Prime Minister has made moves towards the scrapping of the Sonia-Sibal-Chidambaram laws and regulations that made it child’s play for almost any official to arrest almost any citizen on a multiplicity of grounds. As a consequence, any position of responsibility (such as being a company director) has become a form of Russian roulette, where the destruction of a life and career can take place because of accidents taking place over issues with which the individual concerned has had no real involvement. The Lutyens Zone is fighting hard against necessary dilutions in draconian laws and regulations, claiming that such moves would promote graft and incompetence, despite both being in ample abundance precisely because of regressive laws and regulations handed over to officials, many of whom are less than honest.
5G telecom will play an important role in modernising India through empowering citizens. More and more services need to come into the control of the individual via the smartphone. It may therefore be worthwhile to look around at the various 5G systems that are in process of development, and inviting global tenders that include a timetable and road map for going online. This would ensure that the 5G network of the country not be the monopoly of any single player but gets shared with at least three and preferably five major players, given the size of the market in India. It is a symptom of the malaise that has afflicted innovation in India that Vietnam has rolled out an indigenous 5G system, while India has not. Over the decades, foreign competitors have become proficient in using systemic roadblocks within India to slow down and to stop domestic competition, which is why so many migrate to other countries with their innovations, because of the ease with which they can be derailed in India by hyper-complex procedures and those in charge of enforcing them. What is needed is more sandbox style regulation, where innovators and entrepreneurs are free to take decisions without having to get permission from official agencies, but who need to keep the agencies informed of their activities. The agencies can intervene where needed, but such interventions would then not be the rule but the exception. Further, they would be shown online, so that the procedure is transparent.
CRYPTO-CURRENCY BAN ILLOGICAL
An example of the manner in which the bureaucracy in India has sought to retain control over processes even at the cost of the country’s future was the 2018 decision of the RBI to ban crypto-currencies, now overturned by the Supreme Court. The RBI failed to accept that the 21st century is no longer the age of the pigeon telegraph but that of the internet. Crypto-currency is merely a sequence of random numbers, and as such impossible to eliminate. What is needed is to create a “sandbox style” reporting and regulatory structure for them, so that millions of Indians can join in the expanding world of crypto-currency rather than be shut out because of defective policy. The RBI needs to factor in the fact that the era when central banks could tightly control instruments of exchange is drawing to a close. The post-Gold Standard era that began in 1971 is nearing its end, and from now onwards, the power of traditional central banks is going to diminish, just as Chief of Army Staff M.M. Naravane pointed out that battle tanks and fighter jets will soon belong to museums rather than be useful in the field of battle, where drones, missiles and cybertech are taking over. PM Modi once called for “minimum government”, and hopefully he will be able to overcome those in his own establishment who are seeking to subvert his policy.
POLICY STABILITY NEEDED IN TAXES
Ever since the RBI and North Block mishandled PM Modi’s 2016 replacement of Rs 1,000 notes with Rs 2,000 notes and changed the design of Rs 500 notes, overall investor confidence in policy stability has been lower than necessary for fast growth. As much as rates should be reasonable rather than absurd (as in the case of some of the GST rates), it is important that there be policy stability in both direct and indirect taxes so that HNIs and corporates are enabled to plan costs and profits better. A similar stability in customs duty needs to be ensured, which is very possible for the present PM given the stability of public support to Narendra Modi. Foreign funds should not be allowed to continue their grip over North Block so that they can continue with policies which make Indian assets ever cheaper for those with foreign exchange and reduce the value of the rupee steadily. Speculators are confident that North Block and the RBI favour a lower rupee, hence they continue battering the currency. This happens despite a higher rupee being best, as this allows FPIs more profitability, besides allowing corporate debtors to pay less than if the rupee continues to be devalued, as is happening now. Imports into India are mostly inelastic (oil, telegoods, coal and gas being examples) and hence a higher rupee would benefit the economy. As for exporters, a lower rupee does not seem to have assisted them at all, as countries where currencies are appreciating are doing far better in exports than India. Further, lower interest rates are needed, so as to lower the cost of capital. In the case of GST, the system should be so simplified that a battery of chartered accountants are no longer needed to file returns. There should not just be Saral direct taxes but Saral GST as well, with forms so simple that they can be filled in by the taxpayer without needing recourse to professional assistance, as has become inevitable these days.
CATCH THE BIG FISH
In India, while some “flies” (small or medium depredators) seem to be getting caught, the “tigers” (mega depredators) seem to be laughing all the way to the Bahamas. Financial enforcement agencies need to use “sniper rifles” to go after a few Big Fish rather than continue to use AK-47s to spray prosecutorial bullets all around. Continuing with UPA-era tax terrorism has caused substantial collateral damage to the economy. Only VVIP depredators need to be given special attention, rather than allowed to roam free across the world, spending the money they looted from the public. At the same time, individuals such as bankers whose error was to obey a call from the Finance Minister of the time need to be incentivised to turn approvers. They should be given full pardons if they assist in bringing VVIPS to book. Thus far, only one VVIP (P. Chidambaram) has had to suffer incarceration, that too over a much smaller matter than others with which he is involved. Chidambaram’s network of facilitators needs to be identified, and those still in high positions need to be removed. The same goes for other VVIPs found to abuse the public trust. India has to be made dangerous for the VVIP depredator, and modern technology can assist in such a task. Today, the economy is facing a situation that in many respects is not unlike that of 1992. Just as China under Deng in 1982 and India under Narasimha Rao in 1992 launched transformative economic change, a similar rejuvenation needs to take place during Modi 2.0. The Covid-19 crisis has presented an opportunity for the Government of India to show that it is able and willing to replace the models and methods of the 19th and 20th centuries with those of the 21st.
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