We are what we are !!

 Regional Comprehensive Economic Partnership (RCEP) is the economic alliance formed with China and other 14 countries primarily from Asia recently but including  non Asian countreis like australia, New Zealand. India was said to have entered into this economic pact and was negotiating for its membership, but withdrew later when it rightly found that this trade partnership would only benefit other countries but not its interests. Maybe in the long run India would have to enter this trade pact but certainly not at this time when China's hegemony is strangling many of the Asian and African countries. With many of the other Asian countries India already has a free trade pact except China. China is a net exporting country to India and therefore any free trade pact removing the tariff barriers would only directly and indirectly benefit China. Let us look at the specific pros and cons to RCEP: Pros 1)The purpose of RCEP was to make it easier for products and services,investments, int...

 India's agriculture has hit a new high when the entire country is under lockdown and the industry has hit the rock bottom.Kharif sowing as on 5th Sep20 has reached 1095 lakh hectares which is 6% more than what was the sown area in kharif season 19-20.The acreage of paddy has grown by 8% to 396 lac hec.over previous year.The acreage under Oilseeds has grown by 12% to 195 LH; Pulses by 5%  to 137 LH; Cotton by 3% to 129 LH and Coarse cereals by 2% to 179 LH.This has been facilitated by 9% increase in rainfall during June-Sep 20 to 795mm. All five summer grown Oilseeds has seen higher than anticipated increase in their respective MSPs  and better procurement during the initial months of Covid pandemic phase.The increase in Minimum Support Prices including that of Paddy announced at the beginning of Kharif season in june 20 has really helped in increasing the sowing area and in augmenting the revenue of the farmer. That apart, India has witnessed a 23% increase in farm expor...

 The minutes of the recent meeting of Monetary Policy Committee  of RBi which were released this week, contain some interesting mentions. One of the news columns said that RBI minutes mention 'uncertainty' 12 times, 'growth' 43 times and 'inflation' 147 times It has expressed concern over inflation and it seems to be valid as CPI has remained above 6% which is more than the tolerance limit of RBI. Alongside, India is experiencing severe GDP growth pangs as its IIP has remained in the negative territory in the first quarter and in July also. Services sector is in a deeper mess except of course ITES, SAAS etc. which have been affected to a lesser extent. It looks like only Agri sector has not been impacted adversely so far ,as the progress of monsoon has been satisfactory and the spatial dispersion also fairly good. The RBI Deputy Governor Mr.Michael Patra had said : "If inflation persists above the upper tolerance band for one more quarter, monetary policy w...

 Import Trade wall or barriers are not new to India. The country had very steep walls in terms of Tariffs, licensing ,quotas etc. all in the name of safeguarding the domestic industry. When the country gained independence, many of the industries were either nascent or anemic and in order to restore their health, Central Govt had no option but to erect some import restrictions so that local industries in the economy are nurtured. This grooming of domestic industry with level playing field took a new turn in the late 1960s and 1970s with widespread nationalisation of private enterprises, ushering in an era of erratic socialism all in the name of protecting the citizens from private profiteering. This concept led to erecting walls within the country between the commanding heights of Govt. undertakings and the Private enterprises. The private sector was neglected and was left to fend for itself and scaling up an enterprise became a uphill challenge for private sector. Inorder to protec...

 RBI's recent Monetary Policy announcement after MPC considered the latest economic factors, CPI etc , came out with no repo rate cut. Primarily because CPI is elevated and at an uncomfortable level as far as RBI is concerned.since the mandated and stated objective of RBI is now inflation control, RBI has decided to hold the rate this time despite the economic slowdown calling for a steep rate cut.RBI also mentioned that this year would see real GDP contraction after more than four decades, but still decided to save the powder for a more rainy day or for a day when the bang will be worth its buck. India is facing rising prices also esp. food prices, fuel prices and therefore is experiencing a cost push inflation. There is a school of economists who say the inflation is fueled by easy liquidity floating in the economy and the stock exchange boom , gold price rise all indicate to easy money into areas where some quick money can be made.Even RBI is predicting a rise in inflation level...

Initially, when COVID 19 started spreading in India, PM Modi announced a war on Covid 19 and every single citizen abided by his exhortation. Many newspapers and media personnel screamed Modi is going hammer and tongs at Covid 19 virus in order to scorch it totally. But after a few lockdowns, both PM and the common man understood with humility that Covid demands hammer and dance strategy to deal with it. So we are now reconciled to the fact that we must learn to live with Covid 19 at peace instead of waging a losing war. Adapting to its speed and spread, the common man is now equipped with mask, social distancing etc. to tackle it and dance with it. Govt adopts the hammer and the common man adopts dancing with it. Hopefully, this will become a considered foreign policy also with China, the birthplace of Covid19. Hammer at LAC and then dance with it in commercial and trade space!!Also, dance with China to wean it off Pakistan!!

Policy prescriptions are flying thick and fast and on my part, I am adding one more . All Economists including me are prescribing deficit monetisation, pump priming etc. taking a leaf out of Modern Monetary Theory. As against this,Central Govt. has an alternative which is called Asset monetisation, according to me.Govt calls it Disinvestment/Divestment of PSUs. When the whole world is reeling under Covid pandemic , will there be a suitor for Air India? Even if there is a good buyer will he be willing to pay the right price for Air India.What will be the benchmark for its valuation when the whole industry is bogged down by this pandemic and its repercussions on the travel industry. In such unprecedented situations , it is best advised not to go in for outright sale transactions of Government stake in PSUs including Air India, BPCL,etc. Similarly, other intangible but real assets are Spectrum waves ( link ), Mining/Abiotic  ,Biotic Resources which are hidden inside the Ear...

If you do a SWOT analysis of India's capabilities, certainly Software prowess will be among the top in the list in terms of technological leverage. Pharma will come next to it and there are others like leather goods, cotton textiles, garments etc. There is one niche area where India has excelled in all- Research, Design and Manufacturing capabilities and that is two-wheeler production. Even though India borrowed the technology from Japanese manufacturers initially, now India has its own name in the world for 2 wheeler manufacturing competing and even outshining the best in the world. Yesterday I was listening to a panel discussion on defence manufacturing. Two out of the four panelists predicted in about 5 to 10 years time, India will be among the first three in terms of Research, Design and Mfg. of niche defense equipment incl high-end weapons built on the cutting end technology. According to them ,it has been made possible by the coherent, calibrated and painstaking efforts ...