Author: Rajendra Pratap Gupta

I work , write and speak on Public Policy , Economy, Innovation & Governance Reforms. Twitter handle @rajendragupta

India needs to define its long-term strategy & pursue it


 

  • Despite the best efforts and pressures, USA has not been able to force or impress China to open its virtual world where America wants to dominate

  • On top of it, China’s US dollar reserves are nearing $3.5 trillion and its e-commerce market is now reaching $5 trillion

  • The US needs China to accept some of its terms to keep its head inside China, and China will do all in its ambit to avoid it

India walked out of the Regional Comprehensive Economic Partnership (RCEP) and is exploring a deal with the USA. Let’s go a little back in time. Over the past few months, we have seen bullying and strong posturing from the US about showing China the door, and China has retaliated back equally, giving the world an impression that both are equal for now and there is no fun in trying to bully each other.

For the world, we are made to believe, that the two nations are breaking their trade and going their own way. The arrest of Huawei executive, barring of Chinese companies from the US market, tariffs on Chinese goods—all point to the same direction. However, we need to see the facts underlying the tough posturing of China and the US. When we dig the facts, China seems to have an upper hand and appears a more matured nation with a stronger plan, built over half a century, whereas, USA has been issuing circumstantial threats with knee-jerk reactions.

US-China trade deal will go through; sandwiched between super powers, India must learn to plan, invest to protect its sovereignty

Let us see who depends on whom? Today, the world and the wars, both are driven by wealth (trade). We can see that from the history of wars in the past two decades. The nature and definition of war, warfare, and wealth are changing. Earlier, the wars happened for capturing geography, now it is for capturing and controlling the economy. Earlier, it used to be the land for which people fought, then it was oil, and now it is for the virtual world and its ecosystem (data is the new oil); and finally, we will fight for clean air, water and space.

The definition of wealth is also changing. Look at the BRF (belt and road initiative from China). It is not about controlling trade, it is about controlling trade routes and a new form of building another East India company!

So, why can’t US just rub off China and show it the door? The reasons are not just the current trade dependence, but also the future market for US products and services in China. US still does not have much to do in China’s virtual world, and it desperately needs access to grow the US economy which is floundering. Google, Facebook and Twitter don’t work in China. The Chinese tech gadget market is stronger than the US. Major US brands have been brought by China. Alibaba is another success story for US to worry.

Despite the best efforts and pressures, USA has not been able to force or impress China to open its virtual world, where America wants to dominate and make its next big bang and also to control the world virtually for trade and security reasons. At the top of it all, China’s US dollar reserve are nearing $3.5 trillion and its e-commerce market is now reaching $5 trillion. Besides, China has entered into a ‘controlled slow-down’ to boost its dependence on domestic consumption, and not be overly dependent on exports. This means China is well on its course, and this is a big worry for the USA. It needs to ‘force’ China to accept some of its terms to keep its head inside China, and China will do all in its ambit to avoid it. Despite hectic lobbying and other trade tactics, USA continues to fail in securing its foot in China’s web economy.

China, which used to be an imitator is now an innovator. This has been a big fundamental shift. Be it research or patents, China has left America behind and this is the real cause of worry. China has not only questioned America’s supremacy but also shown it the thumb, and it’s for real for those who have looked at the achievements in education, research and patents in China.

In 2000, the US President, Bill Clinton said, ‘In the new century, liberty will be spread by cellphone and the cable modem’. He was trying to influence and impress China to open its internet market to the USA. But all successive US Presidents have failed to achieve that goal. China has its own, and perhaps better versions of Google, Facebook and Twitter, which are homegrown giants. 5G tech is more advanced in China. All these give reasons to worry for the Global Big Brother, whose supremacy had been unquestioned after the collapse of the USSR. In fact, going by the pace of developments in China, I am of the opinion that we will move towards a new Cold War era between China and the USA, and China will emerge as a new leader post-that second Cold War.

India has lessons to learn, and we are in quite an opportune position. We are sandwiched between two superpowers and India has the wherewithal and the time during this Cold War period to emerge as the winner. But today, America has our ‘controls’. Today, it can shut our payment gateways, social media, tech transfer and we, as a nation, will come to a grinding halt! We know how independent India is after more than seven decades of getting freedom. China can cut off Active Pharmaceutical Ingredients (API) supplies and the death rate due to lack of essential medicines will go up multiple times. India has failed to invest in critical areas and become independent. India should develop its own ecosystem than falling back on shortcuts through international agreements, which puts the future of 1.3 billion at the mercy of two foreign expansionist powers which masquerade as Indian allies.

Given the compulsions with the US, the US-China trade deal will happen, and it has important lessons for India. India achieved freedom in 1947 but not independence! We have a long way to go, and we need to plan and invest for protecting our sovereignty

 

Prof.Rajendra Pratap Gupta @rajendragupta

Link to the original article

https://www.firstpost.com/business/us-china-trade-deal-will-go-through-sandwiched-between-super-powers-india-must-learn-to-plan-invest-to-protect-its-sovereignty-7656381.html

#China #uschinatariffs #tradewar #rcep #uschinatradewar #usa #trump #us #india #USINDIA

Economic Slowdown- A terrific opportunity for a radical change


Over the last few weeks, we have been reading about the economy slowing down with companies cutting production and piling up inventory and jobs being lost. Former RBI Governor Bimal Jalan called it a cyclical slowdown and said that it may take 1-2 years to get back to normal.

A few days ago, industry leaders called for Rs one lakh crore stimulus to revive the investment cycle. A few industrialists want an immediate GST cut to revive the auto sector demand while others want it to be implemented later, when BS VI fuel norms kick in.

Several economic indicators point towards a long-term slowdown, which is a result of the policies of the past decades. Finance Minister met the industry during the drafting of the BJP manifesto earlier this year, then again during the vote on account, then before the budget, and now again recently. Despite the unprecedented four meetings in the past six months, the result is the same – the slowdown is aggravating.

Also, we must realise that the sectoral stimulus is not going to solve the issue of the slowdown. It can be at best temporary, though I doubt, that easy money will help much. Our economic problem is akin to stiffness in the joints and economists and industrialists are suggesting giving it a pair of good sneakers to make it run. Well, we need to address the real issue.

Last year, I looked at various data sets. I realised that India was passing through a tough time due to poor policies of the past and so, the issues were basically structural. Now, cyclical issues have added to the problem. With our integration with the global trade, the global trade wars and protectionist policies as well as the impact of climate change have had their influence on the Indian economy. The enforcement agencies going overboard in India too has a dampening effect.

In my book, ‘Your Vote is not Enough’, I looked at all the options to revive the economy with a long-term perspective and the truth is that we don’t have many options on our table. Those who are asking for one lakh crore stimulus are just concerned about one or two sectors, but the money will go waste, if the issue is not addressed holistically and the root cause of the problem not addressed.

For sure it is Prime Minister Narendra Modi’s problem, but not his fault. The person who received the Bharat Ratna recently knows well that wrong and lopsided policies for decades created wealth, but only in a few hands, leading to growth sans jobs. The growth during the past regimes was ‘cyclical’, and so, the current economic slow-down is ‘structural’.

According to my multiple factor analysis, about 15 crores of the total 130+ crore population are middle class with discretionary spending capacity, and these numbers cannot boost demand that the country needs, no matter if we cut the repo rate or give a one lakh crore stimulus.

Also, if we don’t address the structural and cyclical issues soon in a comprehensive manner, ‘reality’ (of a slowdown) and ‘perception’ (things not going to improve), will lead to a ‘negative sentiment’ (people will post-pone investment/ spending decisions). This may happen by Diwali and the numbers will come down further. This does not bode well for the India story as investors will then move in the reverse gear. Right now they have only halted.

So, what do we need to do? According to my analysis, with the critical opportunity being missed in the 2019 budget, we would need Rs 4 lakh crore investments annually till 2022 to re-start the economy and propel it to a high double-digit growth. In fact, massive investment in just the infra-sector would not yield the desired outcome

Most important is, how and where this investment goes. It certainly cannot be in the form of tax cuts. I have delved in my book on how money goes into district-level investments across sectors and if done in a planned manner, this can take our growth to above 12 per cent in the medium term (3-5 years) and also address the issue of creating 1.2 crore jobs a year.

In fact, this slowdown is a fantastic opportunity to re-look at the theoretical economic policies and create a new model of structural (not just cyclical) growth. India has the potential to grow between 12-16 per cent per year reviving critical sectors for a structural growth.

Also, by next year, we will have at least two manufacturing giants relocating their production base to India from China. India will get the much-needed boost in FDI investment. But the lethargic bureaucracy still remains a speed-breaker to leverage the massive opportunity emerging out of the trade war between the United States and China.

With Modi as Prime Minister, India has an able leader at the helm, who is both the face and force for India. I am quite optimistic that the slowdown will serve as an opportunity to not only jump start the economy, but also propel it to the next level of double-digit growth and turn India into a developed economy in the next two decades. The truth is, that It’s a 1991 moment for India, and, it cannot be business as usual. Can we change the reality, perception and the resultant sentiment? What we do in the next 60 days will tell.

(Prof. Rajendra Pratap Gupta is a leading public policy expert and author of the book ‘Your Vote is not Enough’ which focuses on economic revival and job creation. Views expressed are personal.) Follow on Twitter @rajendragupta 

Originally published in Outlook India https://www.outlookindia.com/website/story/business-news-economic-slowdown-is-an-opportunity-for-radical-change/338523

#India #economicslowdown #GDP #Autosales #autosector #recession #Indianeconomy #Globalslowdown #GDPgrowth

 

Your vote is not enough


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My queries haunt the Chairman, KVIC & rather than addressing them, he is running away & trying to keep me out of KVIC.


See the points raised in the Board meeting of National Khadi & Village Industries board on 6th April , 2018. I requested that we need  ;

  • White paper be made on ‘all aspects’ of institutional supplies done e.g. ONGC , Railways , Postal department etc.
  • We must move to ‘asset light models’ like franchisees rather than setting up investment intensive Khadi Plazas
  • Productivity of Charkha and looms needs to be focused rather than buying them more and more
  • Out of a total of 455854 artisans only 193598 are having Aadhar linked bank accounts

There are complaints of ghost artisans in the system and this needs immediate attention

  • No schemes are there to add more artisans ( as per the note sent by KVIC dated 28. 02.2018), and so , the growth plans presented are unrealistic and would fail and this has been raised recently by Tamil Nadu Sarvodaya Sangh as well four days back – 2nd April , 2018
  • Meeting in Ahmedabad in January 2018 brought up the issue of the serious shortage of raw material , and this has to be addressed for ensuring that growth is achieved. Else, it will lead to ‘Fake Khadi’ products being sold .
  • As per the data made available on 22 Feb, 2018, Bhopal DSO was showing a profit of Rs.3.88 lac in 2014-15 and the loss was Rs.88000.00 in 2015-16, and now shows a marginal profit of Rs. 5000.00 . Goa has increased losses from 5.84 lac in 2014-15 to 11.03 lac in 2015-16 and Rs.12.23 lac in 2016-17 . When it is a major tourist destination and should have had the best profit margins in the country . This shows that about 30 % of the DSOs ( Khadi Bhawan’s , which are under the direct control of KVIC ) are  almost in loss . This was raised by me in the letter dated 02nd April , 2017 point no 39 were specific to the issue of Bhopal and Goa.
  • We need a Governance and Compliance audit from either of the big four firms on the terms of reference defined by the Commission

You can open the document in the weblink below 🙂

KVIB 6th April 2018