"Human beings can always be relied
upon to exert, with vigor, their God-given right to be stupid."
—Dean Koontz (American, 1945—)
Word
for the day
Egalitarian (adj)
Asserting, resulting from, or
characterized by belief in the equality of all people, especially in political,
economic, or social life.
Malice
towards none
The
cabinet reshuffle has at least settled that Ms. Irani and Ms. Bharti are not
the BJP's chief ministerial candidate in UP.
First random thought
this morning
The media is trying to project the transfer of Ms.
Irani from HRD ministry to Textile ministry as 'demotion' reflecting on her
poor performance as HRD minister.
I do not understand the logic. Textile ministry has
been the mainstay of employment generation in the country since independence.
It still continues to be a sector where the central policies are a key
determinant of growth. Whereas education primarily being a state subject, HRD
minister's role is more advisory, besides being administrating a handful of
central institutions and universities.
Moreover, if HRD has JNU, Textile Ministry has NIFT.
After all, being fearful is not a bad idea - 3
In past couple of months, my readers have raised more
queries regarding currency than equities. This does not sound unusual to me.
In past one decade or so, our society has been
integrating with the global economy at much faster rate than a common man would
realize at once. An analysis of kitchen (fruits, pulses, bakery, confectionary,
crockery, appliances etc.), kids desk (stationary, bags, books, toys, movies,
cartoons, etc.), bedroom (clothes, accessories, shoes, slippers, lights, ACs,
TV, wall paper, tiles, flooring), and office space (vehicles, appliances,
equipments) etc. would show that imported stuff (including assembled from
imported components) occupies prominent space in our daily life.
Mind you, it is not just true for the typical upper
middle class urban household. This is in fact more true for a middle or lower
middle class semi urban or semi rural household. In fact, I will not be
completely off the mark, if I say that the whole Consumer Revolution in India
(rising propensity to consume amongst people staying at the middle and bottom
of the demographic pyramid) is primarily built around the cheap imports
(popularly referred to as "Chinese" in generic terms) of both
consumables and durables.
Persistent suppression of CNY by China; intense war
between JPY (Japan) and KRW (Korea); fall in global commodity prices; and
financial crisis in Europe — at a time when in India (a) affordability and
propensity to consume is rising; (b) liberalization of domestic retail trade
and foreign trade is gathering pace; (c) foreign investments are being
encouraged through FDI route; and (d) INR is relatively stable with one of the
best yields amongst EM peers — are certainly aiding the trend.
The precipitous fall in GBP on account of Brexit vote
may see another major round of currency adjustments. We have already seen ~2%
devaluation in CNY, ~4% devaluation in JPY. INR has however stood its ground.
This implies the flood of imported consumable (and durables) is likely to
worsen further.
As a consumer its certainly music to my year.
But as a local businessman dealing in domestic stuff,
I would be worried. Despite all anti-dumping and other measures, I may be
losing my market share to these "imported" stuff. I would envy my
fellow businessmen who have moved to trading in and/or assembly of imported
stuff.
I would be worried as an administrator also.
Structurally, it does not augur well for the country's foreign trade balance.
Should a 2013 like BoP crisis recur before Make in India starts yielding
results.
Other side impact of currency volatility could be that
the technology and process knowledge transfer that had accelerated in past one
decade takes a hit as the manufacturing stays back or relocate to Americas;
thereby impeding India’s endeavor to transform itself from supplier of raw
material and low cost converter — the reliance on imports may rise, whereas the
value addition in exports declines.
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