"No
matter how corrupt and unjust a convict may be, he loves fairness more than
anything else."
Anton
Chekhov
(Russian, 1860-1904)
(Russian, 1860-1904)
Word for the day
Slugabed
(n)
A lazy
person who stays in bed long after the usual time for arising.
(Source:
Dictionary.com)
Malice towards none
People
who have recently performed Chhath Puja in toxic Yamuna waters are more likely
to get sorrow, than blessings in return.
I do
not have any Award to return. But if I were somebody who is heard, I would have
certainly protested loud!
First random thought this morning
The government seems to be in
split mind. On one hand they sincerely wish to get opposition's, especially
Congress Party, cooperation on key economic legislations, while on the other
hand they do not want to be seen compromising on their committed for
"Congress Free India".
So on the same day, Swamy and
Jaitely send totally conflicting signals to Congress leadership.
The question that would agitate
some minds is "whether Swami could have waited for another month, i.e.,
till the end of winter session of PArliament?"
Catch-22
Indian merchandise exports have been contracting since December
2014 and have now contracted for 11 straight months now.
During April-October Indian merchandise exports have plummeted by
17.6% to US$154.29bn against US$187.3bn during the corresponding period in
FY15. Adjusted for export of petroleum products, the picture is only slightly
better.
Imports were lower by 15.2% during the same period. However,
adjusted for import of petroleum products, imports for the period are almost
flat.
No wonder the government is alarmed. In a recent TV interview, the
commerce minister sounded almost panicked over falling exports. The Union
Cabinet has consequently announced some incentives to support the falling
exports.
In my view, these steps may be helpful only in the immediate term.
The government would need to make a lot of structural changes to achieve the
target of US$900bn total exports by 2019.
The following three things are noteworthy in this context:
(a) In past one decade the
export destinations of India have changed in favor of emerging markets from
developed markets. The share of North America and Europe has fallen in India's
export basket whereas Asia and Africa have gained. Besides USA, China
(including HK), UAE and Saudi Arabia are now amongst our top five export
destinations.
Many of these economies might be in a midterm downtrend due to
correction in commodities cycle; hence the export demand from these economies
may not pick up in hurry.
In fact these economies account for much of "invisibles"
also, and could be an additional cause of worry on that count too.
For records, China (including HK) now accounts for ~8% of our
exports, and over ~13% of our imports.
(b) Gold (including
jewellery and gems) and petroleum products account for over one third of our
foreign trade. If the recent trend in demand and pricing of these items
prevails (which seems most likely) the value of our foreign trade may shrink a
little more, regardless of the incentives.
It is critical to note
that our imports are relatively less sensitive to GDP growth, as compared with
exports.
(c) In past one year INR
has strengthened against many of our competing currencies. The trend is likely
to sustain should Fed hike rate in next few months.
Schemes like interest subvention could help our exporters to bid
lower prices. But that would be no sustainable solution. RBI will have to let
INR go and find its true value, which will have much wider implications for the
economy. We are thus in a Catch-22.
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