28 August 2019
https://www.bbc.com/news/world-asia-india-49470466
It seems too much of a coincidence for India’s RBI to transfer money from it’s reserves an amount through dividends and a new euphemism called transfer of surplus, which is exactly the same shortfall calculated from the appendages to the Bahikatha presented by India’s Finance Minister. It would actually seem to us, that like Hanuman to the rescue of Sita, flying over the ocean to Lanka, the RBI Governor Shaktikanta Das has presented Ms Sitaraman a rescue lifeline.
I am just not one of the rare outliers spotting this trajectory of the RBI, where the RBI as a interest rates wonk, as one who holds for India a counterbalance of various denominations and runs a statutory reserve ratio, also declares itself so successful as a bank, that the rest of Indian banking needs to learn tricks from their overlord real quick. Is it not an irony that when Mr Modi’s first term saw an additional generation of record deficits in bank balance sheets, in the form of NPAs and despite the formation of the new Bankruptcy Code, the recoveries have been not even a trickle, we see that RBI has made such a windfall as to offer the Government over the last three years a dividend of more than a lakh crore and now transfer this massive tranche of 1.76 lakh crore!
We know that demonetisation did return huge cash reserves back to banks as people deposited money in bulk but could withdraw limited sums only over more than six months, but we are also faced with this situation that cash in the Indian economy has shown a secular climb, from some 16 lakh crores in 2016 to some 21 lakh crores in 2019! We know that while few would have been dissuaded by Pay To Modi( an insinuating expansion for PayTM) due to it’s political support to Digital Transactions, but it is more likely that the offset costs of transactions on line forced people to come back to cash. Since last quarter, even with no costs cash transfers digitally with all manner of relaxations, including for payments, the progression of cash volume in the economy was sustained. It belies the Jan Dhan Accounts statistics, because if means that people still find it profitable to receive money in hand rather than through their bank accounts. Or their sums are too low in amount and frequency for entrepreneurs and employers to transmit through digital form?
In an environment of what we have today, a Himalayan Wall stands apparently forbidding, preventing us from having access to reality about economic affairs. It appears that a controlled environment has created a near Communist style Iron Curtain, covering from its occupants the reality of our own world? For what else will explain how till May 2019, only Mr Rahul Gandhi was crying hoarse about the economy, and how even yesterday only he tweeted about the ‘ adhesive bandage for gunshot’ analogy regarding the RBI transfers? What is he wearing that we are not able to see? While we take Alan Greenspan’s yardsticks of auto sales and inner wear sales for growth indicators, we must remember that Indians do use kaccha, or a unstitched loin cloth-kaupinam, and perhaps what has happened over the past year or so, when these indicators have come down crashing is that patriotic and religious Indians have switched to Pushpaka Vimana, or to more Greener options like Bicycles, bullock carts, and not to mention the use of App based mobility options like Uber, Ola, and Yulu while the inner wear downtrend is explained by simple religious requirement of using woven cloth unstitched. Two stellar things Indians will always do un-compromised- keep moving from place to place in what is called ‘Yatra’ and inner cleanliness and hygiene.
When PM Modi himself has promised that officials will no longer view money makers as enemies of the state, then where can there be any harassment from IT or ED officials? Our ease of business must be so rapidly progressing that soon business will be so soapy and greased slipping out of our desperate hands? The almost disjointed at birth kind of presentation on our economy is as if money matters have political colour. If you ask RSS or the Sanghi votaries, there’s an economy not worth fussing over, it’s chugging along nice and proper, with Mr Modi at the steering wheel. If you ask the Congress and international economists, their views are that we are hurtling towards a disaster of unprecedented nature! Look at the World Bank and you get a gut feel that it is quite clueless at India’s complexity and the at times appearing and at times disappearing numbers hosted by the Government.
Actually India’s exports have stagnated for last 10 years, from 2011 onwards. Her imports are largely based on oil prices which luckily have been down for the last six. Still from mobile covers to pseudo leather bags, the ubiquitous presence of Chinese imports and the growing trade gap with China, leaves us a question if Make In India did not make more than that geared lion mascot? Farm distress is not going to go away unless we embrace Agricultural sector as part of the formal economy subject to revenue assessment and taxation. The entire lack of investment in agriculture by state and union governments for last decade or so, unless you call the Farm Loan waivers of UPA 1 as investment, ( I look at it as the first tranche of bail out for PSU banks in the name of the Kisan) shows that India has no money for either her Kisan or her Jawan. Remember that the Defence budget has been lower than 1962 budget as percentage of GDP for better part of Mr Modi’s first term, (late Mr Arun Jaitley’s budgets) and this first Bahikatha has been highlighted by the current Naval Chief as causing his service an acute unprecedented shortage of funding. So naturally where did the fastest growing economy of the world spend in the last five years?
Actually we are not sure. We are supposed to have cleaned up our country side, built toilets, built millions of miles of highways, last mile roads, cleaned up our rivers, built a new health care architecture based on insurance, offered crop insurance to farmers, OROP to soldiers, flood and disaster relief and reconstruction packages, sent crores of cylinders to rural homes and on education of the girl child. Sure?
Why do folk feel unsure? Why should the economy show preference for ‘potato chip’ over semiconductor and circuit chips? Why the fastest growth segment of the economy be food delivery and processed food micro retail sector- the vada/pakoda/tea stalls and restaurants & bistros? Anecdotally I saw in the last 8 months in my sector blocks, more parlours and saloons open while electronic stores including an Apple store close, more tea retailers and vendors open where custom goods and high end fashion shops used to be.
I can say at one level, my locality has become prosperous as more people come out to have tea, snacks and meals rather than cook at home. I can also say that more poorly skilled people are getting generic jobs vending food or fetching meals than repairing or retailing electronic goods or fashionable raiments. Economy is in the detail. Without raw reliable data, to call India any thing now is silly downright. Of course she is no longer the third largest economy, and her growth has slowed as admitted by her government.
indiarubberman.com 