"Pictures deface walls
more often than they decorate them."
—William Wordsworth
(English, 1770-1850)
Word for the day
Astroturfing (n)
The deceptive practice of
presenting an orchestrated marketing or public relations campaign in the guise
of unsolicited comments from members of the public.
Malice towards none
Do you see India playing any
role in mitigating the looming threat of Trade War amongst its largest trade
partners?
First random thought this morning
Recent reports suggests that organizations like Khadi and Village Industries,
scores of cooperative banks, temples, religious and charitable trusts etc. were
(mis)used by people to convert their old unaccounted currency notes during
demonetization. Many professionals, doctors, chartered accountants, lawyers,
bankers etc. helped people in this endeavor, going out of their way.
In that sense, the entire exercise was a total failure. It did not
evoke any sense of nationalism in the people (a) having money, more so having
unaccounted money; or (b) having an opportunity to make money by helping people
in possession of unaccounted money. Penniless may have lauded the move more to
have sadistic pleasure than any nationalist fervor.
Are we playing Ostrich?
The world around us is experiencing changes at massive scale. The
structural changes in the world order — economic, political and strategic —
will have material repercussions for all, in near term as well as long term.
Paradigms are shifting diametrically and Uncertainties are rising
with each passing day. This is one of those times which comes once in many
decades. During these times the economics usually stops working and philosophy
becomes the guiding force of trade and commerce.
One of the major change in global order is that China is looking
to end the unipolar conditions prevalent in the world even since the demise of
USSR in 1991.
After subsidizing the global economy with its cheap labor and
capital, China is claiming its due place in the global order. Elevation of the
premier Xi to the status of Mao, must be looked in this context only, in my
view.
To be acceptable as the other Pole in the global order, China is
opening its markets; changing its business practices, emphasizing on
environment and sustainability rather than growth at any cost; making effort to
establish RMB as a global currency; extending its outreach in the global trade
through massive projects like one belt one road; and asserting itself
aggressively in the geopolitical matters.
One almost certain outcome of all this is that we may soon see the
end of export of deflation from China. Overcapacities, suppressed wages and
subsidized funding for US and Europe fiscal deficits by China no longer seems
to be a reasonable business assumptions for anyone.
Given these circumstances, and political & economic realities
back home (impending rise in MSP, fiscal constraints, etc.) — RBI's mostly
dovish inflation outlook sounds like a misfit.
RBI
Monetary Policy Report - April 2018 and MPC
Resolution of April 6, 2018 both appear suffering from some sort of
cognitive dissonance.
To make my point a bit clear, I would just point out the baseline
assumptions for the monetary policy stance of RBI/MPC.
Crude Oil: US$68/bbl during FY19.
Exchange Rate: Current Level
Monsoon: Normal for 2018
Global Growth: 3.9% in 2018 and 2019 (As per IMF
forecast)
Fiscal deficit: 3.3% of GDP for FY19, as per Budget
Estimates
Domestic macroeconomic/structural policies during the
forecast period: No major change anticipated
...to continue
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