Some food for thought
"I shall not waste my days in trying to prolong them."
—Ian Fleming (Irish Poet, 1908-1964)
Word for the day
Otiose (adj)
Being at leisure; idle; indolent.
First thought this morning
While the newely elected MPs with criminal antecedents and large
wealth have attracted lot of media attention, I find the profile of some MPs
from Odisha quite interesting. For example,
Chandrani Murmu aged 25yrs is the youngest MP in 17th Lok Sabha.
An engineering graduate was apparently searching for a job, when BJD
representative approached her to contest elections. Her father is a govt
employee, but mother comes from a politically connected family.
Pratap Sarangi aged 65yrs is a social worker. A spiritual seeker
since childhood he wanted to become a monk, but was advised to stay with his
widowed mother and serve the society. He has done commendable work for
promotion of Sanskrit, and opened many schools for the poor called Samar Kara
Kendra, under the Gana Shikhsa Mandir Yojana in tribal villages. He did not
marry and lives an ideal austere life.
Achyutananda Samanta,
aged 55yrs, is the founder of Kalinga Institute of Industrial Technology
(KIIT); Kalinga Institute of Social Sciences(KISS), which provide free
accommodation, food, healthcare, and education from class 1 to post-graduation
with vocational training; KIIT International School (KIS), an International
Baccalaureate affiliated school, and Kalinga Institute of Medical Sciences
(KIMS), a medical college. His affidavit say he earns Rs25lacs yearly from his
teaching profession, but owns a total of Rs12lac in assets. Raised by widow
mother with seven siblings he spent most of his childhood in abject poverty.
Aprajita Sarangi, aged 50yrs, quit her job as IAS officer and
joined politics last year. Her husband is also an IAS officer.
After scanning through profiles of over 150 MPs, I strongly
believe that nothing is lost for Indian democracy. It is strong as ever and has
a bright future. Unfortunately, mainstream media is unable to see these
brilliant people in its preoccupation with sensational headlines.
Chart of the day
Question is "How much" not "if"
The need for lower cost credit could be expressed from three
different perspectives, i.e., (1) Consumer demand; (2) Government borrowing;
and (3) Growth stimulation.
Consumer demand
From consumer perspective, we have seen a consistent trend of
decline in savings and rise in household debt. Persistent high real rates in
past five years failed in stimulating savings as well as discouraging debt. The
stressed household finances are finally reflecting in overall slowdown in
consumer demand.
Government borrowing
As per a research report by Elara Securities, in past five years
"the reduced fiscal space due to continued shortfall on tax revenue
receipts has compelled the government to move a significant part of its
expenditure to public sector enterprises. The combination of high government
borrowing along with off-balance sheet borrowing programs could squeeze the
space available for private borrowers and NBFC."
Whereas the fiscal spending to support rural economy has grown
3x in past five years.
Consequently, the fiscal improvement is stagnating at much
higher level then what is desirable.
The deficit is crowding out public investment in building social
and physical infrastructure.
Growth stimulation
The GDP growth estimates for FY19 have been scaled back. 4QFY19
GDP is now expected to grow at a rate lower than previously estimated. This
means that the long term growth trend is likely to stay flat for at least 3yrs.
Therefore, if the government has to meet its target of growing
GDP 2x to US$5trn by 2024 and make infrastructure investment 10% of GDP, from
4% now, the economy would need a variety of stimulus, both qualitative and
quantitative.
Neutral to negative real policy rates, easy liquidity,
competitive lending rates, and competitive currency are some of the
quantitative prerequisites.
Significant ease in conditions for doing business, medium term
predictability of taxation policy and rates and predictable sustainability
standards are some of the qualitative requirements.
