Thought for the day
"I have become my own version of an optimist. If I can't make
it through one door, I'll go through another door - or I'll make a door."
-
Rabindranath Tagore (Indian, 1861-1941)
Word for the day
Shenanigan
(n)
Mischief; Prankishness; Remarks intended to deceive;
deceit.
(Source:
Dictionary.com)
Teaser for the day
What is the best option for Shiv
Sena?
(a) Claim
the entire Hindutava space and become a national party.
(b) Merge
with BJP.
(c) Fade
into oblivion silently or boisterously.
(d) Turn secular and ally
with Congress
My five cents - the Great Wall of India
Imagine would India be a global ITeS superpower without Y2K or
technology bubble during late 1990s! Would we build so many houses, roads,
malls, power plants, cement plants etc. during last decade but for a global
credit bubble! Would capital be so easily and cheaply available to Indian
entrepreneurs without a QE bubble in the west! The answer is obviously
"No".
From my negligible knowledge of the laws of physics, I
understand that we need much less force to stop an object which is falling from
a cliff, as compared to the force we would need if we were to reverse the
direction of the movement of the object upward.
In economic sense, I refer to this extra force needed to reverse
the direction of an economy, as bubble. These bubbles are needed to neutralize
the gravitational forces of unemployment, pessimism, poor demand, excessive
indebtedness, deflation and poor fiscal health etc. that work to pull the
economy down into recession.
In Indian context, our governments have used the force of
bubbles rather reluctantly. We have mostly participated in global bubbles.
Whether it was commodities bubble in early 1990's; dot com bubble in late
1990's or credit bubble in mid 2000's.
The Atal Bihari Vajpayee led NDA government did make a reluctant
attempt to create a domestic bubble to fight the economic sanctions, by large
scale investments in infrastructure sector especially roads and energy. In the
process many government monopolies like coal, oil & gas E&P, telecom,
roads, power, airports, ports etc. were divested. The bubble did get support
from easy global liquidity post dotcom bubble bust. The consequence was super
normal economic growth during 2003-08 period.
In my view, if the incumbent government wants to reverse the
direction of the current economic cycle quickly, it must create a bubble almost
immediately. I could think the following three ideas for creating this bubble:
(a) Initiate some
ostensibly egregious construction project like Taj Mahal or Fatehpur Sikri. A
statue of Sardar Patel is not enough.
One such project
could be to construct a 15 feet high wall alongside the entire railway lines in
the country. The construction may start simultaneously in all villages using
MNREGA funds.
Local and aspiring artists, architects and
sculptors could be engaged to give a distinct local cultural color to the wall.
This wall when fully constructed will protect the railway line, facilitate
faster speed trains, conceal the disturbing filth and garbage usually strewn on
vacant land adjacent to railway lines, reduce noise pollution for the adjacent
localities, and make rail journey more pleasant.
(b) Cut personal
income tax rates and small savings interest rates by 50% to leave more money in
the hands of consumers to spend.
(c) Abolish all restrictions
on FDI in productive activities subject to each million dollar of FDI creating
at least 2 new direct jobs.
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