Political Diary 

New Delhi, 28 April 2020

Great Depression 2020

PRESENT, ONLY CONSTANT 

By Poonam I Kaushish

The Spanish Flu of 1918 to the Great Depression 2020, indeed times have changed where our future plans mock our present predicament. From our age of innocence before choice paralysed us, to an AI home delivery Alexia App. Liberated from the calendar of our travels, next destination, subsequent eating out, followed by gym, movies and concerts all nibbled away in our bruising battle against Covid 19. As we wait for the corona virus to reveal our future, the only constant is the present. Either which way, the world will never be the same again. 

Happily, a national strategy to tackle the pandemic and get the economy moving seems to have been worked out as Prime Minister Modi continues to talk to Chief Ministers, Panchayat members etc of the challenging journey ahead. Even as he extended the “total lockdown” to 3 May, he outlined an exit strategy for staggered re-emergence of the population taking into account the ground reality that life has to slowly pick up the reins of normalcy. 

Towards that end, the Government’s armed with a consensus among States has expanded its list of ‘essential services’ to include agriculture which employs more than 50℅ of the Indian workforce and contributes close to one-fifth of the country's GDP. With the harvest season grain and rice producing States have partially lifted the lockdown to ensure procurement of grains which in turn would generate income for farmers and also keep the supply chains at mandis functioning.

Alongside, fishing and aquaculture industry, tea, coffee and rubber plantations with maximum of 50% workers, processing, packaging, sale and marketing of tea, coffee, rubber and cashew, with maximum of 50% workers, animal husbandry farms including poultry and livestock farming activity.

Undeniably, even as the lockdown provided an immediate respite from the growing epidemic, there is an urgent need to ameliorate the adverse economic and social impact of the battle itself, and fine-tune the strategy to address the enemy. Towards that end, the 'JAM' trilogy:  Jan Dhan accounts, Aadhaar, mobile phones and Aarogya Setu app are coming in handy. 

Consequently, it has given the Government a free hand to resort to a selective lockdown depending on the exigencies of the situation which might differ from region to region. Whereby the ‘hotspots’ will be tackled in a differentiated approach of extended lockdown.

Pertinently, in a spirit of cooperative federalism some States are finding innovative ways to handle the crisis. While not a few prefer to follow the Kerala roadmap which has successfully slowed the spread of infection by preparedness, testing, promoting physical distancing instead of social distancing which has caste connotations and sanitary precautionary measures, providing better protection for health staff, getting religious leaders, local bodies and civil society organizations to participate in policy design and implementation. 

The Tamil Nadu police have found a novel way to reduce the number of vehicles on the road and movement of people. Unlike Delhi’s famous even-odd rule, the police therein paint the edges of car number plates and mudguards and two-wheelers with four different colours: yellow, red, blue and brown. On a particular day it allows only vehicles, marked with the assigned colour to ply for the day. The next day another colour and so on. Only Sunday has been assigned two colours. 

Other States are adopting Rajasthan’s Bhilwara model where ‘ruthless containment’ became the buzzword. In 1,910 villages in the district, panchayats, samitis and local SDMs and BDOs were involved in tackling the virus where it went from being the worst-affected district to a paradigm in managing Covid 19.

As cases spiked the district imposed a complete clampdown and had the situation under control in 10 days. First it sealed borders with other districts followed by mapping hotspots, door-to-door screening, aggressive contact tracing, ramping up quarantine and isolation wards, social distancing was strictly enforced with nobody allowed to venture out of their homes and a monitoring mechanism for rural areas put in place. Essentials including food items, rations and medicines were delivered to everyone’s doorstep. If people broke the social distancing rule, they were deprived of their rations for the day.

However, despite the doubling rate reduced to 10, should the situation get worse with the number of cases growing at an accelerated pace, the system will clearly be overwhelmed. The John Hopkins University's Centre for Disease Dynamics, Economics and Policy predicts that by June a total of 12 crores or 120 million Indians will be infected and of these 11 lakhs or 1.1 million will be hospitalized. Succinctly, we cannot be complacent. 

Take Madhya Pradesh where Government data shows the State with a population of over 7.5 crores has just one ventilator for every 75,000 people and one intensive care unit bed for every 47,000 and a total of 993 ventilators and 1,598 ICU beds in Government and private hospitals put together. However, the availability of hydroxychloroquine, a potential cure for the virus is around 30 tablets per person.

One upside in these stressed times we have come out with new modernism. Out of the window is the ‘Eskimo kiss’, Russian bear hug, Muslim salam, Namaste is the new hello. Also fresh lexicons have been added to our vocabulary:  PPE (personal protective equipment), VC (video conference), VPN (video personal network) and the ventilator have become objects of national fascination. 

With the lockdown causing a strain on the country’s already stretched fiscal situation, limited Government resources, rising unemployment, a likely recession and an increasingly worrying medical and humanitarian situation. Ironically, even as migrant workers are stranded at State and district borders without any money, the Government is hamstrung in finding labour to kickstart projects. 

The challenge today, is to put in place a strategy and articulate courses of action beyond the lockdown and look at possible solutions. Importantly, the Government needs to immediately tackle the economic and social costs of a large number of jobless and marginalised people who could slip into poverty. NaMo has made plain that we need to tighten our belts. The livelihood of hundreds of millions of people depends on how well the Government machinery handles the crisis. 

Clearly this is just the start of the war as the lockdown has only bought us time to get our act together. It doesn’t change the virility of Covid, has no effect on the morality rate and was only intended to delay it.  We need to protect our healthcare system to handle the load. 

It will be many weeks and months before this black swan crisis gets over. But don’t be fooled there could be lasting changes that are wrought. Yet it is times of despair and depression which show up the strengths and weaknesses of a system. The virus has exposed India’s new strengths and its inherent ability to tackle its weaknesses.

With cynics and pessimists predicting doomsday nearing, responsible statecraft is an imperative in such extraordinary times. Our netas have to collective chalk out a single uniform strategy for the whole country to get it out of this crisis. Modi has taken the lead and is showing statesmanship in engaging with Opposition leaders. 

Time is far gone for the Opposition to continuously whine and crib as no Party can absolve itself of responsibility. As Abraham Lincoln said, ‘A house divided against itself cannot stand.’ The times ahead will test the resilience of our rulers and us.  Clearly, the stakes are very, very high. ----- INFA 

(Copyright India News & Feature Alliance)

New Delhi, 

25 April 2020 

Round The World

New Delhi, 24 April 2020

Corona Corners China

INDIA JOINS BANDWAGON

By Dr. D. K. Giri

(Prof. International Politics JMI)

The predictable global reaction has started happening. China is being cornered by the world as it exposes itself with attempts at opportunistic takeover of distressed assets around the World. A host of big and medium powers are recognising and resisting Chinese game plan to dominate the world economy. The United Sates has been urging the world to ‘decouple’ Chinese economy. The big-economies have at last come to realise it and are taking remedial steps to fend off the Chinese aggressive moves in the wake of the Corona pandemic. India decided finally to bite the Chinese bullet and jumped into the contain-China bandwagon.

Arguably, India should have been wary of Chinese malicious moves quite some time ago. However, New Delhi, more because of its prevarication on China, or its foreign policy on it being a throwback to Non-Alignment days, than the rational dictates of trade and economy, kept dithering on China. Let us recall the maxim on dynamic of history, which is, “history repeats itself”. During India’s Non-Aligned days, New Delhi tried to maintain equidistance from both the Super Powers, but tilted towards the Soviet Union. Of late, New Delhi sought to do the same between USA and the new Super Power China with a bias towards the United States. Evidently, this was not working well.

New Delhi is now confronting the dragon as the rest of the world. The immediate provocation came from China raising its stakes from 0.8 per cent to 1.01 per cent in HDFC. This sent an ominous signal to the mandarins in South Block to change the FDI rules to avoid Indian companies being gobbled up by Chinese. The change in FDI says, any investment from the countries such as China having land border with India will need a nod from the Government of India. In addition, any transfer of ownership of any Indian entity will require approval from GoI as per the guidelines issues by the Department of Promotion of Industry and Internal Trade.

Beijing has reacted through its embassy in Delhi that the new rules issued by Government of India are discriminatory violating the WTO principle of non-discrimination, liberalisation and facilitation of trade and investment. New Delhi maintains that it is not so, India is entitled to protect its industries and economy form the predatory and manipulative investors.

One need be clairvoyant to say that New Delhi should have taken such steps much earlier. For some inexplicit reason, New Delhi wished to build strong economic relations with China with the imbecile hope that it (economic ties) will normalise the bilateral relations. In fact, many observers thought that India would replace China as the world manufacturing hub at the back of US-China intense trade rivalry. India failed to do so, apparently as economy hardly drives this government despite its rhetoric on $5 trillion etc. It is preoccupied with citizenship law and such other non-economic issues. Beijing was shrewder to divert its trade to India in order to restructure the global supply chain, and later to weaponise the same trade.

With regard to other big counties trying to tame China, United States is the front-runner as it strives to sustain its supremacy in the world politics. President Donald Trump blowing hot and cold on China in his utterances is doing everything in his capacity to cow China down. The latest is, he has asked his lawyers to file suits for compensation from China for the loss to the US economy due to Covdi-19. One hears on the grapevine that the compensation to be asked is to the tune $50 billion. In a related development, the US warships have entered the South China Sea.

From Europe, two biggies, France and Germany have launched the offensive; France through its foreign ministry and Germany with its media. The French Foreign Ministry has pulled up the Chinese embassy in Paris for publishing an objectionable article on their website that France is giving up on its old people and letting them die in the pandemic. The Ministry said tartly in a statement that such statements do not conform to good bilateral relations.

In Germany, the editor-in-chief of the newspaper, Bild, strongly criticised the Chinese leader Xi Jinping for his regime’s failure to come clean on COVID-19. He accused the Chinese government of not sharing the state of infection in Wuhan when other governments and agencies in the world had asked for it. Moreover, the Chinese authorities and scientists knew that the virus was highly infectious, ‘yet you kept the world in dark’.  The editor wrote to Xi, “You were too proud and nationalistic to tell the truth”. He asked in a letter to Xi Jinping, “Will you pay for the massive losses inflicted by the virus.”

The third European country to come out against China is the Netherlands. Its leading newspaper Volkskrant has incurred strong reactions from the Chinese ambassador in Amsterdam for accusing China on the spread of the virus. The European Union is wary of Chinese takeover of companies under duress. The Competition Commissioner Margarethe Vestager has suggested that the EU governments buy stakes in companies to prevent their acquisition by Chinese.  

Similarly, countries like Australia, Singapore, Iran and others have been cautious of the Chinese moves during the corona crisis. Australia has imposed restrictions on trade from China. The Brazilian Education Minister went a step further and said that China “spread the virus deliberately to dominate the world economy”, quite a strong statement that one. In our neighborhood, Sri Lanka had suspended the tweeter handle of Chinese Embassy in Colombo for putting out inflammatory tweets.

One wished New Delhi had partly led this counter-attack on China. Until the Communist empire fells China, the world cannot stop surveilling Beijing. As the truth from Wuhan gradually surfaces, the world might know to its horror that China either invented the virus or used it for its pernicious trade agenda.

At any rate, New Delhi should grab this opportunity with both hands to put China on the defensive in the India-Pacific region. New Delhi can no longer be oblivious of the history of Chinese animosity towards India, and its current subterfuges with Pakistan to destabilise India. Great leaders are those who can seize an opportunity as its presents itself. The world regards Narendra Modi to be one such big leader. Will he or will he not prove the world right? ---INFA

(Copyright, India News & Feature Alliance)

New Delhi

23 April 2020    

Economic Highlight

New Delhi, 20 April 2020

Pandemic Economy

INDIA, WORLD DRAINS OUT

        By Shivaji Sarkar

Coronavirus has sought some targets. World bodies are crumbling. Poor migrant labourers are suffering. Middle class lives in fear. Opposition parties ruling about half the States are in a quandary. The world economy is getting into minus three per cent ‘growth’ in a year, according to the International Monetary Fund. It is to lose $9 trillion. Indian economy like the rest of the world is getting into the level of 1991 growth of 1.6 per cent. Growth is now projected around 1.9 per cent.

People sinking into poverty are to phenomenally rise. India’s geriatric and the weaker sections remain most vulnerable without social security and pension, a gift of the market non-economy. The RBI Governor S Das announces Rs 1 lakh crore infusion into banks. This is expected to make lending available for industry, housing sector, farmers and micro-lenders. But this step will not infuse the desired cash. It will not address the poor labourers or informal sector. Micro-economic scenario is grim, it says.

The economy is draining out every day. The lockdown has halted Indian economy, says Das. It is impoverishing every Indian, not businesses alone. One wonders why 726 districts are in lockdown while 62 are hit and 325 remain untouched.

Indian economy, according to Care Ratings, during the lockdown is losing 80 per cent production, taking a hit of Rs 35,000-40,000 crore daily, a cumulative of Rs 6.3 to 7.2 lakh crore in Lockdown-1. Together in 40 days it is likely to lose Rs 13 to 15 lakh crores -- a huge hit for a poor nation aspiring to be developed. Different sectors are losing at their level such as tourism by at least Rs 5 lakh crore to hit about 4 crore people. Actual national losses may be more than estimated.

Would it fulfill the dream of $5 trillion economy? Rather it may even in rupee terms be a lesser economy than it is in 2019-20 (the rupee has slipped to Rs 76.86 to dollar). Government revenues are tottering. People are getting into distress. Farmers are losing billions. Floriculturists and vegetable growers have already lost crores.

There is much brouhaha about US President Donald Trump denying funds to the World Health Organisation. The US leaders, including former President Barack Obama, condemn it. They forget that in the past at least six US presidencies they have been closing the tap of various world bodies, the United Nations included. The UN Secretary General Antonio Guterres says that it has funds enough to pay only a month’s salary! The WTO’s dispute resolution system has been paralysed by the US’ tactics as it wants it to succumb to its diktat.

Bilateralism is being pressed by the US, EU and China at the cost of multilateralism. Bilateral Free Trade Agreement (FTA), which has many shackles, is being forced on poor nations. India is no exception. Somehow India has been resisting in its bid to re-energise multilateralism. Its BRICS initiative has yet to stabilise. China’s Belt & Road Initiative (BRI) has emerged as a parallel.

Simultaneously, Trump has made entry of Indian goods into his empire expensive as he has imposed severe duties on steel and aluminium, to textiles and other simpler items. Instead of any concessions, he hurled threats for getting hydroxychloroquine COVID-19 drugs. Trump is treating India and China with the same stick though pressurises New Delhi to maintain a distance from Beijing.

Unhesitatingly, it’s not a kind world. Corona is more a political syndrome than a health issue. Has Indian lockdown been forced by it? Or simply put is the lockdown a bigger conspiracy to keep India unstable and poor? May or may not be, but it has certainly unnerved the entire domestic political moves. Both the ruling and Opposition parties appear to be in the same predicament. Both see conspiracies in helpless migrants’ movement. The language used by both surprisingly is the same. Uttar Pradesh Chief Minister Yogi Adityanath sees conspiracy in Bareilly, and his counterpart in Maharashtra Uddhav Thackeray sees it in Bandra, Mumbai.

In Delhi, on April 15, thousands of poor gather at the Yamuna Pushta wondering if they can go back home or get some support. Delhi Chief Minister Arvind Kejriwal’s gruel kitchen is good propaganda and less reality. There is little empathy for the poor, helpless, hungry migrants locked out of jobs, wages, food or shelter.

The elite middle class blames the migrants for bringing bad name to their masters. It’s appalling.

Everybody forgets that across the country – Hyderabad, Mumbai, Bhubaneshwar, Chennai, Kochi, Surat, Ahmedabad, Jaipur, Anand Vihar, Ghaziabad, Bareilly - the migrants, numbering over five crore at the minimum, are in grave distress. They have been demanding nothing major but a train back to their homes or some wages.

Sadly, the Railways has been cruel to them. It booked tickets till April 13, issued circulars for running Jansadharan (unreserved) trains to clear the migrant crowd before suddenly canceling all. Even China gave eight hours before Wuhan lockdown, not the entire country.

The poor, small and medium businesses, the largest employers, need cash support for their survival and revival of the economy. Activity of any sort does require lubricant. The lowest class is the largest buyer. Maybe Rs 5,000 cash to each would be a life-saver for not only small but even larger industries. But an “incentive” to large sector has often drained banks and cost the economy.

The migrant labourers, cheapest input, socially and politically are being treated as non-entities. Had these people not toiled at less than minimum wages, the real estate and many industries would never have been there. The informal sector suffered the most in 2016 note-ban, and now corona is hitting them equally hard. A package must be worked out to help them and save small retailers.

As the US and EU are taking the poor nations for granted, the poor are being treated so in their homes. This is despite Prime Minister Narendra Modi giving a call to all in his April 14 national address to empathise with the poor

Remember, the factories -- legal, illegal, small or big; transport – taxi or truck drivers, rickshaw pullers, coolies, loaders or semi-skilled have added to the GDP. Post-COVID-19, India has to treat the labour with utmost care and respect. The reverse migration to villages may change Indian economy. It would take over three months to normalise operations after the lockdown. The nation must not wait any longer and open up with health caution or selected lockdown. –INFA

(Copyright, India News & Feature Alliance)

New Delhi

18 April 2020

Economic Highlight

New Delhi, 27 April 2020

Severe Downturn

TIME TO END LOCKDOWN

By Shivaji Sarkar

Pay or allowances cut exacerbates a crisis. It hits the purchasing power and recoils back on the economy. The crisis has been brewing and instead of sending a grim signal of DA freezing, the centre could have deferred DA payment or as in the past, credit it to provident fund instead of freezing it.

The DA freeze for Central and State government employees would amount to Rs 1.20 lakh crore. As it is not deferred payment it would hit all future payments, calculations and retirement benefits. It will be a major loss to the economy. This signals contraction as the corporate also either cuts salaries or reduces number of employees hitting about 10 crore workers in organised sector, as per official figures. In reality, the government would get back about Rs 65,000 crore -- Rs 40,000 crore as income tax and at least Rs 25,000 crore as indirect taxes -- if the DA is paid.

The unorganised has already ­thrown out over 1 crore vouched by Home Ministry statement to Supreme Court bench headed by Chief Justice SA Bobde about migrant workers. Actual may be far more. It is the largest exodus since 1947 partition.

It is the beginning of severe downturn and shall last years, says Sanjeev Sanyal, Principal Economic Adviser to the Government. About 5 per cent of companies are hopeful of revival in 12 to 24 months, reveals a study by Wills Towers Watson. The optimistic 57 per cent expect moderate to large negative business impact in the next six months due to corona lockdown.  While 46 per cent organisations expect the gloomy phase to be over in 12 months, 19 per cent expect it to last for two years.

Sanyal is silent on rising prices everyday as production and supplies are hit. A major concern of many organisations is labour shortage post lockdown as migrant workers are walking back in extreme weather conditions for survival and food. Some were buried under snow, many died a few miles away from their homes after walking for1000s of km, and some committed suicide, as per various published news reports.

According to news reports over 200 of the migrant workers across the country are said to have lost their lives till April 15. There are no official statistics to confirm these and neither are they on the list of corona heroes. This reminds us of the harshest treatment that Girmitiya or indentured labour, who left the country in mid and late-19th century to serve in British colonies, were meted out in Fiji, Mauritius to West Indies.

The deaths due to corona till April 23 are over 700. The official dole is being given to 80 crore people. However, this exposes the fact that the country’s claim of the number of people being below poverty line as per Asian Development Bank at 21.9 per cent or 23.6 per cent as per the World Bank i.e. 28 crore, needs a clear revision. Sanyal is right. He says, “We are not going to solve poverty by giving Rs 500. We are just cushioning the hit”.

The challenge is how to win back confidence of migrant workers for their return. The rural and farm economy has to be strengthened. Post-corona a new model is needed. Villages have to sustain India – decentralised cash economy, as discussed by RSS in its revival of village clusters – gram sankul yojana - in April 2015. The system has to respect the human capital. It is they who make an economy. Through toil they earn and by spending they sustain. Their wage suppression and harassment has to be replaced by giving the real cost to honour dignity of labour and sustainable livelihood.

The RBI, with great fanfare, announced it has recapitalised banks and other financial institutions with Rs 1 lakh crore cash. This does not reveal it’s depleting its reserves once again and at same time exposes the fragility of the banking system. This money is not to be spent for the poor but for habitual defaulters, at least since 2008 financial crisis.

The official Economic Surveys have recorded that 50 largest companies were the biggest defaulters leading to the collapse of the banking system and its huge NPAs since 2008-09. In reality, the large organisations do not need any support at this stage. If the government is expecting that these would create jobs, it is daydream. Recall in 2008-09 they didn’t do anything and neither are they likely to do it now. Worse, the interest rate cut is to hit the savers and geriatric.

There is no denying the sudden lockdown has hurt severely. Instead of such a strong step, India had the option to look for selected measures as some countries have done. The corona toll is almost comparable and the lockdown is virtually a major second blow since 2016 note-ban. The total loss might be more than presumed due to its lingering effect and the 23 per cent fall - $20 billion - in NRI remittances.

Then the oil price fall spells doom for the Indian workers in the Gulf. If the lower oil price, below $20, benefit is passed on to the consumers, it can help reduce costs and hardships. But falling rupee to Rs 79 to a dollar and high gold prices also have other fallouts. The Rs 43,574 crore Facebook investments in Jio telecom has helped wipe out its debt. Another Rs 7600 crore Abu Dhabi royal funding of LuLu groups of Kerala revives hope that India has still faith in foreign investors. So does Kotak Mahindra bid to raise $1 billion equity capital.

The pandemic reveals the 1991 economic model has failed and cautions a new system has to be carved out. As Bill Gates hails Prime Minister Narendra Modi as world model, chances are bright. But the revival plan has to target the common man and his free movement instead of large houses. An essential is to reduce and remove unnecessary costs like highway tolls, fast tag, many cess, fees, irrational charges, city entrance taxes and cut in GST.

The nation would revive as people toil and move freely. Restricted access -- controlled highways or facilities are the biggest revival hindrance. The poor need to be empowered and banks need to honour their savings with higher interest payments. It would help the banking sector bolster its cash reserves.

It is time, the nation ends the lockdown. Any further extension would be disastrous for all including education, farmers, transport sector -- train, flights, trucks, buses to taxis and small vendors. Diseases are not new to this country and selective isolation of areas would solve that. But policing the entire country has led to many protests, unhappiness and lack of trust, unsafe roads and even lynchings. Modi is capable of taking firm and bold decisions. If he takes the plunge, the virus would be conquered and economy would be back on rails. ---INFA

(Copyright, India News & Feature Alliance)

New Delhi

25 April 2020