Economic pandemic -Helicopter money, pump priming and fiscal deficit

Helicopter money(link) is a concept first used by Milton Friedman to illustrate air dropping money to the people in need directly when interest rate is zero and the economy is in recession. In modern day it is like Govt. sending subsidy money to the beneficiaries through direct transfer to their bank accounts. But it is the quantum that determines whether it is "heli drop" or simply a lollipop. It is a method by which Govt or CEntral bank monetises the fiscal deficit.Some of my friends wanted to link it to Dhoni's helicopter shot which used to send the ball for a six.

When too much of money is sent thro Heli drop, the economy can go for a six through hyper inflation later on, and other attendant problems from fiscal deficit bulge, ratings downgrade, interest rate shooting up etc. can wreck a booming economy. Fiscal deficit denotes that we are borrowing money from our children and grandchildren to run our households today.

As the famous saying goes Nothing is free in Economics.So you borrow today and spend lavishly and your children curse you and pay for it through their nose. I am hearing murmurs that already we are paying for our grandfathers' profligacy and what is wrong in pushing this to our children and grandchildren. It is not simply pushing but adding to their burden by our spendthrift policies. One cannot spend through his misery without earnings to back it up. One can only borrow in multiples of yone's earnings which one can repay in his lifetime after including the time value of money i.e interest.

Same is the case of Pump priming the economy unless it is used for building infrastructure and assets.

So the primary principle in managing fiscal deficit  which one must always remember is "This country's resources have not been bequeathed to us by our forefathers ,but borrowed from our children and grandchildren".So it is incumbent upon us not to leave them in lurch by increasing their debt repayment burden.

Inorder to cater to the kisans of the country the govt has launched several initiatives like e-NAM( link)which is the biggest online marketing place for agri produce, under PM Kisan(link) programmes. The Govt should connect all farmers through PM Kisan app linking them with e-NAMs,Kisan crop insurance, banks or kisan credit cards and finally also linking them with a nearby Govt Agricultural Institute/University for knowledge upgradation and transfer.

Few State Govt/Private  initiatives that I came across are really laudable One is e-Thottam in Tamilnadu which supplies packed Veggies and Fruits linking the vendors and the customers through its App.(link)In Maharashtra this initiative is path breaking (link)

Few tips for reviving the Economy post COVID 19

India's population is growing at an annual rate of 0.9% now and so we can safely assume , our consumption to that extent will automatically grow. There is no dearth of consumption and all FMCG and industries dependant on primary consumption commodities need not worry. Only in consumption dependant on discretionary income or disposable income will suffer in the immediate short term.

The lifestyle goods' consumption will suffer in the medium term. But in the long term it will be back as economy bounces back as it will certainly.

But we cannot just rely on the inherent strength of the economy. The Govt is expected to do its part and that too in large measure. in terms of fiscal steps. What the govt has done so far is to keep the economy alive.The Govts both Central and State Govts should be willing to forego atleast one quarter of their earnings to revive the economy, leave alone kick starting it.

If they forego one quarter earnings ,they can convert it into 1/4th of GST rates which they need to reduce straightaway.So, if the GST rate on Auto sector is 28% make it 21% straightaway. Simple and easy for Govts and people to understand.

Similarly in IT, the personal IT to be slashed by 1/4 th of the rates.

Govts can restore the original rates from next FY 21-22.

All Govt Depts including Power Discoms, NHAI etc. should pay off their liabilities, if not 100% at least 90% and hold 10% or take BG.

Govts on their part should look at indexing their user charges to inflation from next year onwards.All EB Tariffs,Royalties etc to be similarly inflation indexed.   Zero rating is anathema to increasing Tax GDP ratio. Except primary produce from land all else should bear atleast 1% GST on anything that is packed and sold.

Few interesting points about this Pandemic

So far this COVID 19 has not killed babies who are less than 9years old or atleast on its own it has not killed babies if there are no co-morbidities.see Age of Coronavirus Deaths in this link. This information on worldometers.info/coronavirus is either eye-popping or eye opening.

Is there something unique resistance substance present in these babies that produces enough antibodies to ward off the threat of Covid 19?

Some doctors have also said that the pregnant mothers even if they are infected with COVID 19 , the amniotic fluid or the baby does not get infected. There are few facts for which we do not have any convincing answer as of now.

Doctors are puzzled that for some COVID 19 patients, there are blood clots appearing suddenly, for some their blood pressure sharply goes up, for few others heart attacks get triggered and there are patients having strokes etc.etc.

The speed, the spread and the severity of the disease have confounded the best of minds and scientists along with doctors are constantly grappling with solutions to this mysterious disease.

Inscrutable are the ways of Nature or China?

Sleeping Giant Economy woken up by a Pandemic!

We all want more.yeh dil maange more! But not virus...

But in these difficult times of pandemic, we want our Govts.to loosen their purse strings and become spendthrifts. When Indian govt announced a fiscal relief package of Rs.1.7 lac cr. everybody cries hoarse immly saying this is not enough by throwing comparative figs. of USA, Germany etc.

The people who do this either they do it wilfully to push Govt to spend through its way and land in dooms day after couple of years in terms of galloping inflation ,huge twin deficits, etc. or ignorant of the consequences. The unintended consequences of unbridled spending can be costlier than the problems we face today, in the medium to long term. Human tendency is to postpone the pain and not bite the bullet today. Seldom we understand that when we are postponing our pain, we are also inadvertently postponing our gain.

Secondly, they do not want to put the spending of Rs.1.7 lac cr in the perspective of two economic indices when comparing with advanced economies.One is in PPP terms and another in terms where India's Tax to GDP ratio remains as compared to advanced countries. I will give some interesting comparison base don World bank data on GDP in PPP terms. US is with USD 20.544 trillion approx and India is at USD 10.5 trillion even though at current  prices it is at US$2.72 Trillion. link,link.

Next is, What is Tax to GDP ratio in US, which enables a country to spend more in times of need - it is at 24.3% (after Trump's Tax cuts ) and in India  it is at 16.8%. Inorder to understand this we should know that OECD countries average Tax to GDP ratio is above 34%; in BRICS countries which are in our league -Brazil at 34.4%; Russia at 19.5%; China at 20.1% and South Africa at 26.9%- are all much ahead of us in terms of Tax compliance. Are we paying our Taxes properly, so that we can ask our Govt. to spend during times like this ? We have umpteen grouses against the Govt. to justify why we are not fully Tax compliant both in letter and spirit.

The above figs. must open your eyes to the fact why India cannot spend its way through the pandemic. However everything is not lost. India has huge forex and food reserves for a rainy day like this, its demography is a huge dividend potential which remains untapped , has IT,Pharma and Tech giants & has innovative Startup culture to be nurtured,and this is the right time for the Govt. to unleash its animal spirits-whether a sleeping elephant or a tiger.

இந்திய வழிபாட்டு மரபுகள்

நம்நாட்டில் தொன்மையான வழிபாட்டு மரபுகள் இருக்கின்றன. சில மூதாதையர் வழிபாடாகவும்,மேலும் சில கிராம தெய்வ அல்லது, பெருதெய்வ வழிபாடாகவும், மற்றும் சில உயர் தத்துவ வழிபாடாகவும் வெளிப்பட்டு பரிணமித்து உள்ளன.இந்த மூன்று வழிபாட்டு மரபும் தான் கர்ம,பக்தி மற்றும் ஞான யோகமுறைகள் என்று வேத மார்க்கங்களிலும் பகவத் கீதையிலும் அனாதிகாலமாய் சொல்லப்பட்டிருக்கிறது.

இதானால் தான் விவேகானந்தர் இந்த சனாதன தர்மத்தை "mother of all religions" என்று கூறினார்.

"akasaath pathitham thoyam yadha gachadhi saagaram; sarva deva namaskaram sri kesavam pradhigachathi" என்ற கீதை ஸ்லோகத்தின் வாயிலாக விவேகானந்தர் தன்னுடைய சிகாகோ சொற்பொழிவில் எந்தக் கடவுளைக் கும்பிட்டாலும் அது நீரோடையாய் கடலை சென்று அடைவதைப்போல கேசவனையே நோக்கிச்செல்லும் என்று ஞானிகள் அறிவர் என்று ஆரம்பித்தார்..

அதனால் கருப்பண்ணசாமியை கும்பிட்டாலும், கிருஷ்ணஸ்வாமியை கும்பிட்டாலும் ஒன்றுதான்! அதனினும் மேலாக உன்னையே நீ அறிவாய் என்று த்யானித்தாலும் அதுவும் ஒன்றுதான்.

நாம் ஆன்மிகத்தின் ஒன்றாம் கிளாஸில் இருக்கும்போது கருப்பண்ணசாமியையும், டாக்டரேட் பட்டம் பெறும்நிலையில் த்யானத்தின் மூலமும் இதை அறிவோம். இடைப்பட்டநிலையில் பெருதெய்வ வழிபட்டாகவும் இதை அறிவோம். ஆனால் இது எந்த நிலையையும் ஒன்று உயர்வு மற்றொன்று தாழ்ந்தது என்றுசொல்லவில்லை என்பதே இதன் சிறப்பு.கண்ணப்பர் செய்த பூசையும், சபரியின் அன்பும், தர்மவ்யாதனின் கடமையும்,சங்கரரின் மேதாவிலாசமும் அங்கே சங்கமிக்கும்!!

VOICE OF THE PEOPLE- A HOLISTIC APPROACH TO DEMOCRATIC GOVERNANCE

VOICE OF THE PEOPLE- A HOLISTIC APPROACH TO DEMOCRATIC GOVERNANCE

 The govt. bureaucrats may have been given targets- but are they in sync with

a)People-Demographic Dividend- perspective;b)Growth/improvement/Productivity & Value add perspective;c)Cost & Efficiency perspective;d)Trade, Industry and Service sectors perspective.

I am only trying to put some of my thoughts here on this.

For example, People perspective may contain 1)Targets, Plans vs Actuals for review of Basic Infrastructure requirements of the citizens whose welfare is supposedly in their hands;

2)the reviews may be done in terms of Quality, Cost and Delivery;

3)Local administration may be looked after, along with a Steering council to assist the Bureaucrats; this Steering Council may have nominated representatives with fixed tenure of 1 to 2 years, as suggested in the box below:

Equal weightage may be given to all Stakeholders.

the above matrix gives representation to all the Pillars of Democracy. This framework can also be used as a sounding board for the Policies to be passed by the Legislature.

Apart from regular interactions atleast once a month, whenever any emergency communication will have to be sent to the people also like in a Disaster situation, this Council can be convened for quick dissemination of govt. communication and for transparent functioning. Power when expressed through transparent communication at the ground level can build Trust in the long run.

The Govt can then have a motto which reads " In People we Trust"- Vox Populi, Vox Dei.

Madurai, an Unique city!

Madurai is an unique city in many ways. I am just sharing one of the unique coincidences, I came across.

Of course, it has Meenakshi Amman temple which is an architectural marvel.

But, how it received its name?. Mathura in the north is the Birthplace of Lord Krishna.Madura , which means a drop of nectar, in the south is the place where Lord Narayana /Vishnu took his first Avatar, Matsyavathar. According to Srimad Bhagavatam, the first Manu (Vaivaswatha Manu) was the Dravida King by name Satyavrata who saw the Lord in the form of fish in Krithamala/Vaigai River in Madurai and what follows is the story of Matsyavatar ,which is similar to that of Noah's Ark.(there is still a branch of river Vaigai by name Krithamala in Madurai( now it is a drainage)).By the by, the name Pandya literally has come from Tamil word "Pandaya"(பண்டைய ) i.e old.

The first Manu is from Madurai!! ( There is an interesting corollary to this which tells that Ikshvaku dynasty are the descendants of this King from Madurai. This implies that Sri Rama is also King of Madurai.)

Now move over to another religion, Islam and its Holy Prophets

According to some of the Islamic traditions, the first man and the Prophet, Adam crossed the sea from South India (Al-Haafiz Ibn Katheer (may Allah have mercy on him) said:  
Al-Saddi said: Allah said (interpretation of the meaning): “Get you down, all” [al-Baqarah 2:36]. So they came down; Adam came down in India and the Black Stone and a handful of leaves from Paradise came down with him, and he scattered them in India, and a perfume tree grew, which is the origin of what comes from India of perfume from the handful of leaves that Adam brought down. Adam only took them because of his sorrow at leaving Paradise when he was expelled from it.)  and went to Srilanka(Sarandip) , Garden of Eden , and did a penance there.

Is it not an interesting coincidence that both Srimad Bhagavatam and Quran talk about the first man from  South India?!!