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

#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

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


Packaging sells and also kills !

We heard the famous marketing quote that , ‘ packaging sells’, but the story for most of the India’s middle class, who eat on roadside eateries is somewhat different , and the new message is ‘packaging kills’ , and more so, when food gets garnished with lead and other hazardous chemicals !

India is a foodie nation, and with the rising middle class, our eating habits are changing. There is an increasing tendency to eat food outside, and India, predominantly being a middle class nation, our preference is for road side eateries and small or mid size restaurants. But what goes unnoticed is; the newspapers used in packing food items, or the printed material on tea bags, and the potential dangers associated with them.

It is a fact, that the newspapers are printed with ink that is dissolved on it with the help of chemical solvents. Studies have shown that printing ink from newspapers can easily gets into foods wrapped or served in them and this is dangerous for health. The solvents used in ink are potentially carcinogenic.

Also, newspapers and cardboard boxes used for packaged foods are made of recycled paper, which may be contaminated with harmful chemicals like di-isobutyl phthalate and di-n-butyl phthalate that can cause digestive problems and also lead to severe toxicity.

It is a fact that the recycled paper used has printing ink residues. These un-cleaned residues have found to contain hormone disruptors like benzophenones and mineral oils which can interfere with reproductive cycle of women.

Through the print based packaging, there is an exposure to organic chemicals called aryl amines, such as benzidine, Naphthylamine and 4-Aminobiphenyl, which are associated with high risks of bladder and lung cancer. Apart from these, printing inks also contain colorants, pigments, binders, additives and photo-initiators, which have harmful effects.
It is also believed, that the mineral oil-based printing inks for newspapers contain mineral oils, which consists of various types of hydrocarbon molecules that can exist as Mineral Oil Saturated Hydrocarbons (MOSH) and Mineral Oil Aromatic Hydrocarbons (MOAH). These hydrocarbons usually convert into gases by evaporation that eventually penetrates food items.
Newspapers are usually produced by a system called offset-web printing, which requires a certain consistency of the ink (it needs to be very thick) and a particular means of drying. For the former, mineral oils (petroleum-based) and solvents such as methanol, benzene and toluene are used; and for the latter, heavy metal (Cobalt)-based drying agents are used. None of these should be used in food packaging, as they are also classified as harmful and can be dangerous for health if consumed.
According to the FAO / WHO, Joint Expert Committee on Food Additives, the safe upper limit for the MOSH in foodstuffs is 0.6mg/kg. Older people, teenagers, children and people with compromised vital organs and immune system are at a greater risk of acquiring cancer-related health complications.
Another problem lies in the plastic bags used in takeaways. These bags are made of polyethylene (polythene) and the principal potential ‘migrant’ agent is ethylene. There are a number of potential additives to polythene, such as anti-static agents, ultra-violet protection and flame-retardants. These additives can be very dangerous if they find way into the takeaway food, which usually happens.
According to an article in the British Medical Journal, ‘Food packaging and migration of food contact materials: will epidemiologists rise to the neotoxic challenge? J. Epidemiol’ by Muncke J, et al. (Feb 2014), scientists say that most food contact materials (FCMs) are not inert. Chemicals contained in the FCM, such as monomers, additives, processing aids or reaction by-products, can diffuse into foods and this chemical diffusion is accelerated by warm temperature, and in India, the temperatures can touch as high as 45 degrees Celsius.
The scientists believe that FCMs are a significant source of chemical food contamination. As a result, humans consuming packaged or processed foods are chronically exposed to synthetic chemicals throughout their lives.
Formaldehyde, another known carcinogen, is widely present at low levels in plastic bottles made of polyethylene terephthalate. Other chemicals known to disrupt hormone production and used in food and drink packaging include; Bisphenol A, tributyltin, triclosan and phthalates.
There is an increase in the use of tea bags, and while using teabags, sometimes people squeeze the teabag using the label at the end of the loop. This can leak the ink from the label. I would recommend that the guidelines be framed and implemented to warn people of the same and prevent this practice
I also suggest that based on the facts available, it might be worthwhile banning the use of plastics, recycled materials and newspapers for food packing.

The FSSAI must act immediately and frame guidelines to control wrapping of fried foods in newspapers, banning the use of plastic bags for takeaways, and other practices that are harmful.
Further, it must mandate the use of ‘food packaging grade’ butter paper or aluminum foil for packaging food. We need to act on this without losing any further time
DISCLAIMER: The views expressed are solely of the author and do not necessarily subscribe to it. shall not be responsible for any damage caused to any person/organisation directly or indirectly.

About Rajendra Pratap Gupta

Rajendra Pratap Gupta is a global healthcare leader and a revered public policy expert, and is the author of the Healthcare best selling book,  ‘ Healthcare Reforms in India – Making up for the lost decades’ . @rajendragupta