Temple alone cannot save Nation’s Economy and People

Now that the Hindus have secured what they wanted, Ayodhya can no longer subsume all other issues of human survival in the Hindi heartland, where a Ram Temple upon Babri Masjid has always had its maximum appeal. Ayodhya has almost played out politically and as such, more mundane issues of day to day life are expected to re-engage the cow belt attention.

It is true that Indians had perfected the art of achieving absolute happiness through spirituality, but this faculty was never universal and only the most enlightened were privy to its secret. For the rest of Indians, spirituality is only a means to achieve greater material progress. So, the Ram temple cannot keep them obsessed for much longer. This puts the attention back on the economic conditions of the nation and the people, which unfortunately have not received Ram’s blessings despite all the sacrifices that have gone into the making of his temple.

No one has elucidated this helplessness more vividly than former Prime Minister Manmohan Singh in his latest critique of the Indian economy and the Modi government. Manmohan Singh’s only blemish perhaps was his tenure as prime minister, which didn’t match up to his stature as an economist. But in everything else, of course, with the exception of politics, where he continues to be as alien as he ever was, his performance has been unimpeachable.

Economy

By K Raveendran

November 19, 2019

Why Thomas Issac is less than forthcoming on KIIFB

When Chief Minister Pinarayi Vijayan rang the opening bell at the London Stock Exchange (LSE) in May this year to mark the listing of the Masala bonds sold by the state-government-owned Kerala Infrastructure Investment Fund Board (KIIFB), it was celebration time in Kerala. Masala bonds are investment products issued by Indian entities outside the country and denominated in rupees.

KIIFB’s debut bond on LSE raised Rs 2,150 crore as part of a plan to collect up to Rs 50,000 crore for the agency, set up by the state government to raise resources and fund infrastructure projects. It was the first-ever offshore capital market issuance from a state-level entity.

Although it is a customary practice for the exchange to let the CEO or president of the listing company do the honours of opening the market as a public relations exercise to please the clients, the event was made out to be a great achievement for Pinarayi Vijayan personally and the state government in general.

Development, Economy, Kerala, Opinion, Politics

By K Raveendran

November 19, 2019

How Kochi can Combat Climate Change

Climate change—and sea-level rise—is going to seriously impact the Kochi urban region as half of it lies on or below the mean sea level. It becomes imperative that climate change and its consequences are taken up as an urgent urban governance agenda. This needs special attention and should be addressed through scientific planning and policies.

It is important to device resilience and mitigation strategies to effectively address this critical issue. To frame the right policies, we need to study the problems faced by the city and their short-term, medium-term and long-term repercussions on land and people. The major climate change threats to Kochi include intermittent precipitation, increase in temperature and sea-level rise.

Erratic rainfall pattern has been reflected in the form of short-duration high-intensity rainfall. In the month of August 2019, an all-time high rainfall of 820 mm was recorded in Kochi surpassing the previous record of 783.5 mm in the month of August 2014. In the month of July 2018, rainfall of 231.8 mm was recorded in a short duration of 24 hours and this has been the highest rainfall recorded in a day, in the recent past. Last month, on October 21, heavy rains lashed across the city bringing normal life to a standstill. On this particular day, the rainfall recorded was 197.6 mm in a day and the same is the second-highest rainfall figure for Kochi.

Climate Change, Development, Economy, Environment, Features

By Rajan Chedambath

November 18, 2019

Survey shows PMMVY not reaching rural expectant mothers in five states

The Jaccha-Baccha survey (JABS), of pregnant and nursing women in rural India by student volunteers, coordinated by economists Jean Dreze, Reetika Khera and Anmol Somanchi, in June 2019 and released today found that expectant mothers in six states where the survey was held—Chhattisgarh, Himachal Pradesh, Jharkhand, Madhya Pradesh, Odisha and Uttar Pradesh—were underweight (as low as 40 kg) even by the end of their pregnancy. One of the key findings of the JABS Survey was that the much-touted Pradhan Mantri Mathru Vandana Yojna (PMMVY) was restricting the maternity benefits to just one child per woman. Shockingly, the government’s own data shows that less than a fourth of eligible expectant women have received the benefits.

On December 31, 2016, Prime Minister Narendra Modi announced that women would be entitled to maternity benefits of Rs 6000 each after delivery. A budget allocation of Rs 2,700 crore was made in Union budget 2017-18 for the purpose. However, to cover 90 percent of all deliveries, on an assumption of a birth rate of 20 per thousand, Rs 15,000 crore would be necessary. Moreover, while drafting rules for the distribution of this maternity benefit, the Centre restricted it to just the “first live birth” and reduced the amount to Rs 5000.

Under the National Food Security Act 2013, all women are entitled to a maternity benefit of Rs 6000 for the birth of a child, unless they avail benefits as organized sector employees. The PMMVY was introduced in 2017 to implement this provision of the 2013 Act. In violation of the NFSA Act, the PMMVY restricted the benefit to just one child per woman.

Daily, Development, Economy, Gender, Health, Life, People

By Rosamma Thomas

November 18, 2019

Surveys Confirm Fall in Consumption Expenditure

Leaked reports over estimates of consumer spending is sending shock waves across the economy and the political spectrum. A report that consumer spending has fallen in 2017-18 compared to 2011-12 has created serious concerns. Monthly consumption expenditure of the average rural household has fallen to Rs 1446 in 2017-18 from Rs 1501 in 2011-12. More poignantly, expenditure on food has fallen from Rs 643 in 2011-12 to Rs 580 in 2017-18. Consumption expenditure in urban areas have increased but only marginally.

It is one thing that consumption expenditure has not risen. But to have fallen in absolute terms is sheer horror for a developing economy like India’s. Overall, deprivation is widespread, that only hefty rises in consumption could lift the situation.

It is taken to be the ultimate vindication of the deepening slowdown in the economy for the last couple of years and, since these things do no change overnight, the slowdown might just as well mutate into a full-blown recession—unless reversed with policy interventions or through some ambient dynamics.

Economy, National, Politics

By Anjan Roy

November 7, 2019

SC looks the other way as BJP corners Electoral Bonds

The Bharatiya Janta Party is taking full advantage of the existing electoral bond scheme of the NDA government in bringing about massive expansion of its finances by cornering more than ninety per cent of the funds received under the scheme from the donors belonging mainly to the traders and the corporate houses. This scheme has given BJP, the present ruling party at the centre and in most of the states, a phenomenal advantage in influencing the course of the elections in the states and the centre.

Electoral bonds worth a total of Rs.6128 crore were sold between March 2018 to October 2019 with more than Rs3622 crore sold just before the Lok Sabha elections in May 2019 which the BJP won with ease trouncing the cash deficient Congress Party and the other opposition groups. The Supreme Court, despite a large number of petitions pending, is sitting silent and till now, there is no indication that the apex court judges have taken up the issue seriously though they have been talking about removing corruption from public life.

The Association of Democratic Rights (ADR) filed a petition in Supreme Court in March 2019 challenging the controversial scheme and ADR was followed by another petition by Common Cause and the third one was filed by the CPI (M). All three are pending and Chief Justice Ranjan Gogoi is retiring on November 17 after pronouncing verdict in some key cases including Ayodhya but the electoral bond scheme is not a part of that.

Corruption, Economy, National, Politics

By Nitya Chakraborty

November 6, 2019

India did the right thing in backing out of the RCEP

India’s decision to back out of the Regional Comprehensive Economic Partnership (RCEP) with Prime Minister Narendra Modi stating that Indian concerns were not addressed in the agreement received mixed reactions—with the vast majority across the spectrum backing the Government decision.

The main opposition parties led by the Indian National Congress, some of the powerful influencers of the ruling Government including the Rashtriya Swayamsevak Sangh-affiliated Swadeshi Jagran Manch, and some of the leading farmers and traders unions with significant electoral clout were all vocally against the mega free trade agreement (FTA).

The proposed agreement was to be between the ten-member ASEAN countries (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam) and its six FTA partners of India, China, Japan, South Korea, Australia and New Zealand. The agreement if materialized could have covered over half the world’s population and 30 % of the global GDP. All the countries except India have agreed to the terms of this mega deal.

Development, Economy, National, Opinion, Politics

By Anil K Antony

November 5, 2019

A Curious Case of Billionaire Promoters and Insolvent Companies

India may hold the third position on the list of countries with the highest number of family-owned business, after China and the United States, but not many of its family-managed public firms are as clean as their counterparts in most other large economies. The Credit Suisse Family 1000 report, last year, based on a study of 1015 companies of $250 million or more in market capitalisation each, listed 111 of such companies in India. Most of these companies are stock-exchange listed and controlled by family promoters. Among top 50 profitable companies globally, 24 were from Asia, with a total market capitalisation of $748 billion, of which 12 were Indian family-owned companies valued at $192.2 billion, the report said. However, these Indian companies are more of an exception than representing a normal trend. There are little to talk about thousands of India’s family-run public companies as the daily stock exchange list would suggest.

Therefore, the Credit Suisse list may be somewhat misleading. There are about 5,000 listed firms on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE), both based in the country’s financial capital of Mumbai. There are many common stocks between the two bourses. Although an overwhelming number of these companies is family controlled, only a few hundreds seem to be doing well. On the other hand, most family promoters seem to have built more personal assets than clean assets for their public companies. Forensic audit of over 200 companies facing corporate insolvency resolution action under the Insolvency and Bankruptcy Code (IBC) has revealed irregularities of over Rs one lakh crore, including possible diversion of funds. Almost all of them are family controlled.

The ministry of corporate affairs, which is responsible for implementation of IBC, is expected to initiate action against the promoters, directors and even auditors in some cases, although the ministry is stretched for manpower and resources. Apart from siphoning of funds, instances of transactions with related parties and several other irregularities are noticed, including involvement of large commercial banks. Forensic audit refers to an independent evaluation of an entity’s accounts and transactions to detect data and evidence of fraud and financial irregularities.

Economy

By Nantoo Banerjee

November 5, 2019

Depoliticisation of the Economy is the need of the Hour

Much has already been said about the economic slowdown. Some important facts about the matter are: India is experiencing a growth slowdown where the GDP continues to grow, albeit at a falling pace. A slowdown is not the same as a recession in which case there is negative growth or a net reduction. Even while a negative GDP growth is highly unlikely in developing nations like ours due to our vast economic potential, in the situation where an economy continues to experience a slowdown for two or more quarters, the odds of it falling into a recession are heightened. Among other early signs of a recession are: increasing unemployment, rise in the number of non-performing assets (NPAs) and a sharp decline in revenue and demand. As per these indicators, a recession is on the horizon.

As a consequence, a few urgent questions come to mind: What ails our economic system? And, what can we possibly do about it? These are also rather big questions and I hope to advance simple suggestions–ones that do not require a deep engagement with statistics or an expertise in economics for two obvious reasons. First, often it is the simpler ideas that resolve complex issues and second, arguments for a better economy should be debatable and comprehensible by everyone, not just experts.

I began my search for simple answers by exploring the intellectual history of the subject. Economics, presently considered the ‘science of everything’ was originally referred to as Political Economics. The older name is far more telling and accurate about the workings of the subject, since it is mostly about the political management of economic matters. It was–and to an extent, still is–commonly acknowledged that politics is at the heart of economic policies. In the present context, this is manifest in the ongoing US-China trade war, which was motivated largely by Donald Trump’s promise of ‘getting America a fair deal’. Naturally, when two of the world’s biggest economies limit trading, there are serious repercussions. Today, markets everywhere, including India, are suffering in some shape or form because Trump’s aggressive politics of nationalism and protectionism has infiltrated US foreign policy and trade. In India, a fine example of economic policy gone awry is the demonetisation of high value currency notes in 2016, motivated purely by political logic and proving catastrophic for the economy.

Economy

By Saud Amin Khan

October 31, 2019

A Debt Trap called Educational Loans

Educational loans have caught large sections of South Indian youth in a debt trap and the problem is so acute that even if the recipients manage to repay the loans, they suffer life-long consequences, from which there is no easy escape.

The problem is particularly bad in the case of Kerala, with its high rate of literacy, where the aspirational value of education as a means of securing a better life is much stronger compared to many other states. Kerala also is one of the most exemplary examples of how education and certain professions have lifted whole communities out of the social and economic hierarchy.

It is no wonder, therefore, that Kerala accounts for the largest disbursement of educational loans by banks and financial institutions for any single state. Over half of total educational loans in India are disbursed in South India, according to rating agency Care Ratings; and Kerala and Tamil Nadu together account for 36 percent of all outstanding educational loans in the country, which gives an idea about the high dependence on bank finance for education in the two states. About 95 percent of the loans are provided by the public sector banks under priority lending, with State Bank of India leading the pack by far.

Economy, Education

By K Raveendran

October 22, 2019

A Critique of Randomised Control Trials in Poverty Alleviation

Last week, Michael Kremer, Abhijit Banerjee and Esther Duflo received the Nobel for Economics for their “experimental approach to alleviating global poverty” and for addressing “smaller, more manageable questions,” rather than big ideas.

This experimental approach is based on the so-called ‘Randomised Control Trials’ (RCT). Simply put, in such experiments, a randomly selected group of individuals (randomization is a method of removing bias) receive an intervention whose efficacy is tested. Changes that result in the conditions of this random experiment group is compared with those in another ‘similar’ group of individuals (referred to as a ‘control group’) that was not provided the intervention. The difference in outcomes is directly attributed to the intervention.

The RCT as a scientific research method is primarily widely practiced in clinical research to test the efficacy and safety of new pharmaceutical products/treatments. RCT is a pre-requisite for the regulatory approval of a new drug or vaccine. Evidence from such experiments have to confirm both internal validity (are the results of the study reliable?) as well as external validity (are the conclusions universally applicable to other population groups/locations?). Once a treatment/product is so approved, it is made available for general use.

Development, Economy, Opinion

By Mona Mishra

October 21, 2019

Nirmala Sitharaman: A Clueless Finance Minister

If press statements had the power to lift an economy, Nirmala Sitharaman would have proved herself to be India’s best finance minister. Unfortunately, statements can conjure no such miracles and Sitharaman continues to be what she is: a minister who is completely clueless about the state of the economy.

Her stimulus programme, coming initially in ‘Equated Weekly Instalments’, and now with lesser frequency, has failed to make any mark and the economy continues to suffer from a persistent lack of demand.

In her much-fancied series of announcements, her primary focus remains presenting a rosy picture of the economy—and that is where the problem actually begins. The finance minister is in a perpetual state of denial. The first step to solve a problem is the recognition that the problem exists but Sitharaman refuses to accept that the economy is in deep trouble.

Economy

By K Raveendran