RBI consumer confidence survey of May 2020 and getting the common man's dreams back.

RBI consumer confidence survey was done in May 2020, which came out a few days back paints a dark picture of consumer confidence. It has hit rock bottom so far.link. Whether it will hit another bottom is a moot point.

According to RBI Consumer confidence collapsed in May with the Current Situation Index (CSI) touching a historic low of 63.7 dipping from 85.6 in March 20. One year ahead Future Expectations Index entered the zone of pessimism at 97.9 for the first time after Modi govt. took charge, falling from 115.2 just two months ago.

These are all negative news, but as expected. However these are lag news and therefore markets looking for lead indicators ignored this. We all now know that Covid 19 has wreaked havoc on our economic health more than what it could do to people health.

But there are several silver linings like not many people do not expect price levels to go up. If we discount the "recency bias" in their opinions and perceptions,I still find 14.4 % people saying in May 2020 that the economy has improved. We must also keep the date of survey and context in our minds. The survey date is between  May 5-17 and in the midst of Covid fear, with lakhs of migrant workers walking and shown endlessly 24x7 in TV news. Sometimes I wondered how come with so many trains and buses being stopped which were all running overcrowded, people are managing commuting and travelling. Our media has put a little spin and exaggeration to this by labelling every traveller on foot a migrant labourer leaving for his native place. Every reporter worth his salt with a mike on hand interviewed every single person on foot asking whether he was migrant labour and everyone being asked acknowledging it. Now I understand that all those trains and buses running daily are only for migrant labourers!! That is beside the point.

Coming back to my point that almost 14.4% of people still finding that the economy has improved is a testimony to the confidence of the people on the Govt. Govt has rightly acted with alacrity by announcing Rs.21 lac crore bundled package which will make  supply-side fire on all cylinders. All of us agree that it is the supply side which needs time to pick and put all its pieces together. But the confidence and speed with which Supply-side can get back on its feet, essentially depends on its perception of demand perking up. The demographic dividend is a major contributor to the demand but Future Expectations Index indicator is a proxy for this perception by the Supply-side. When FEI is weak, it is time for the Govt. to understand that income levels are falling and people are losing faith in the strength of the economy. This pessimism will damage the Supply-side booster shots going waste unless the perception is reversed quickly. Opening up of the economy after lockdown will itself augur optimism but sustaining it depends on Demand-side actions by the Govt. To kickstart a flagging economy, the man on the street who is the ultimate consumer must get his job back, his income back and basically his dreams about the future back.

Govt must work for getting his dreams back without losing time. Cut  Auto sector GST, for a start.

India, Columbus and its rich multi-cultural ethos.

Oranisation for Islamic Cooperation has 53 member countries and out of which seven nations have the suffix "stan" in their names.

If your look at the etymology of the word "stan" , you will find that this derived from Sanskrit and its origin clearly show towards the direction of India. Many scholars call it Proto-Iranian-Indian origin but those who have studied Sanskrit know that the word Sthan is extensively used in our literature to denote a land.Even the temple in India is called Devasthan and India is full of such Devasthans.

What I am driving at is that the Muslim World predominantly uses this Sthan or its shortened Stan to denote its countries including Pakistan, Kazakhastan , Turkmenistan etc. Apart from this both Pakistan and Bangladesh owe its existence due to the benevolence and brotherhood of India.

India is replete with example of religious harmony and Sabarimala in South india offers ample testimony to the syncretic Indian culture which behoves the pilgrims to visit  Wavar Dargah in Erumeli before darshan of Swami Aiyappa at Sabarimala.This is the ritual a hindu devotee is compelled to follow and this has been happening for the past many centuries.

India/hinduism is rightly called Mother of all Religions by Swami Vivekananda and the world acknowledges it. The World as One Family is the Indian concept from Vedas- "Vasudhaiva Kutumbakam" and carried over the ages.

Only when Muslims who have lived, eaten and thrived in India all of a sudden shout India Murdabad, throw bombs and bullets to kill innocent women and children and say will not respect Bharat Mata, there is a reaction from the majority Hindus. When Muslims respect the sentiments of the majority Hindus and want to live in peace, Hindus will heartily reciprocate. India is a multi cultural, multi ethnic mosaic society and has lived that way for many millenia now and will continue to be like that because of its deep rooted Hindu culture and ethos. Columbuses will always find ways to reach India.

Rs.20 lac cr.Covid camouflage and pending GST reduction

Who says nothing is free in economics.

All of us want everything free and Modi Govt should find a solution to all our problems today and today itself. All this in the name of pandemic.

This Rs.20 lac cr is the most maligned number like "Rs.15 lac in bank account of everyone."

People have been counting zeroes or sibals in this huge number .People started hearing about 1 lac crore during UPA times when Govt auditor bandied 1.76 lac cr.for the first time in his scathing 2G audit report.

So now Rs.1 lac cr. has fallen out of fashion and so 10 lac cr. is better keeping pace with the inflation of our times. Like director Shankar's mega block buster big budget bash, Modi has to announce this humongous figure to take the wind out of opposition's sails.

this package has pulled many punches and seems to contain well thought out stimulus prescriptions. Some short term like money to Jan dhan accounts and many medium to long term .As we all are used to crisis for bringing out the best economic reforms, financial, agricultural, power reforms have all been bundled together using Covid camouflage.

GST reform/reduction is still pending.GST reduction of Auto sector from 28% to 18% will be a good starting point.This will push up demand,sentiment and also generate employment in one stroke.Covid struck people are looking for personal transport vehicles and this is the best time for this GST reduction. Revenues foregone notionally in short term will get recovered in medium term with its beneficial effects spilling all over the economy. In any case States should not worry as they will get any revenue loss compensated by Central Govt for 5 years.

This will be a great fillip with huge multiplier effects, ripple effects on the economy since Auto sector is the biggest driver of the GDP of the entire economy.

Eat to live or live to eat- in harmony with principles of hormesis/eustress!!

There is a raging controversy as to why Indians in general advocate vegetarianism as against the world view of eating according to one's preferences.

It is an established fact that we are driven by our chemistry which is made up of enzymes et al derived from what we eat. Then isn't it true what we eat guides us both physically as well as mentally.

Swami Vivekananda on nonvegetarian diet:

"About vegetarian diet I have to say this - first, my Master was a vegetarian; but if he was given meat offered to the Goddess, he used to hold it up to his head. The taking of life is undoubtedly sinful; but so long as vegetable food is not made suitable to the human system through progress in chemistry, there is no other alternative but meat-eating. So long as man shall have to live a Rajasika (active) life under circumstances like the present, there is no other way except through meat-eating. It is true that the Emperor Asoka saved the lives of millions of animals, by the threat of the sword; but is not the slavery of a thousand years more dreadful than that? Taking the life of a few goats as against the inability to protect the honour of one’s own wife and daughter, and to save the morsels for one’s children from robbing hands - which of these is more sinful? Rather let those belonging to the upper ten, who do not earn their livelihood by manual labour, not take meat; but the forcing of vegetarianism upon those who have to earn their bread by labouring day and night is one of the causes of the loss of our national freedom. Japan is an example of what good and nourishing food can do.

(Complete Works, 4.486-7)

All liking for fish and meat disappears when pure Sattva is highly developed, and these are the signs of its manifestation in a soul: sacrifice of everything for others, perfect non-attachment to lust and wealth, want of pride and egotism. The desire for animal food goes when these things are seen in a man. And where such indications are absent, and yet you find men siding with the non­killing party, know it for a certainty that here there is either hypocrisy or a show of religion.

(Complete works, 5.403)"

கலியில் ஜீவபலி உண்டா ? : தெய்வத்தின் குரல் (இரண்டாம் பகுதி)

ஒரு வாதம் உண்டு. அதாவது:

பூர்வ யுகங்களில் மநுஷ்யர்கள் ரொம்பவும் உயர்ந்த சக்தியோடும் பண்புகளோடும் இருந்தார்கள். மனஸிலே பரமப் பிரியத்தை வைத்துக் கொண்டே லோகக்ஷேமார்த்தமாக அவர்களால் ஜீவபலி கொடுக்க முடிந்தது. அதனால் அவர்கள் அசுவம், கோ இவற்றைக்கூட யக்ஞங்களில் பசு பலியாகத் தந்தார்கள். சிராத்தத்தில் மாம்ஸம் சேர்த்தார்கள். இப்படி மனஸில் பட்டுக்கொள்ளாமல், தேவ சக்திகளை லோகநலனுக்காகப் பிரீதி பண்ணும் பொருட்டே அவர்கள் நடுத்தர வயஸில் கிருஹஸ்தர்களாகக் கர்ம மார்க்கத்தில் இருந்து கொண்டு நிஷ்காம்ய கர்மம் செய்தார்களென்றால், பிற்பாடு விருத்தாப்யத்திலோ ஸகல கர்மாவையும் விட்டு விட்டு பூஜை புரஸ்காரங்களும் ஆசாரங்களுங்கூட இல்லாமல், அப்படியே செயலற்ற ஆத்மாராமர்களான ஸந்நியாஸிகளாக இருக்கவும் அவர்களால் முடிந்தது. அவர்களுக்கு எப்பேர்ப்பட்ட உத்தமப் பண்பு இருந்தது என்றால், ஒரு ராஜ்யத்திலே தன் சகோதரனான ராஜா, வாரிசு இல்லாமல் செத்துப் போய்விட்டால், ‘அராஜகம் வராமல் தேசம் க்ஷேமமாக இருக்கவேண்டுமே’ என்ற ஒரே எண்ணத்துக்காக, தங்களுக்கென்று காமமே இல்லாமல் தங்களுடைய பிரம்மசரியம் குலையாமலே, ஸஹோதரனின் ஸ்தானத்தில் தாங்களே இருந்துகொண்டு புத்ரோத்பத்தி பண்ணக்கூட முடிந்தது. நம்முடைய கலியுகத்தில் இப்படிப்பட்ட நிஷ்காம்ய கர்ம பாவனையோ, பிரேமையோடேயே கொலைகூடச் செய்கிற பாவனையோ, ஸகல கர்மாவையும்விட்டு மனஸையும் அடக்கி ஸந்நியாஸியாக இருக்கிற தகுதியோ, ஸ்திரீ ஸங்கத்திலும் பிரம்மசர்ய பாவனை நழுவாத தன்மையோ எவருக்கும் இருக்க முடியாது. அதனால் அச்வமேதம், கோமேதம், சிராத்தத்தில் மாம்ஸம், ஸந்நியாஸம், ஸஹோதரன் ஸ்தானத்தில் புத்ரோத்பத்தி செய்வது ஆகிய இந்த ஐந்தும் கலியில் வர்ஜமாகும் (விலக்கத் தக்கதாகும்) என்பது ஒரு வாதம்:

அச்வாலம்பம் கவாலம்பம் ஸந்-ந்யாஸம் பல பைத்ருகம் |
தேவரேண ஸுதோத்பத்திம் கலௌ பஞ்ச விவர்ஜயேத் || 1

I am not a scholar to question the wisdom of Swami Vivekananda nor am I learned to doubt the words of Maha 

Periyava.

For those who practise and pursue Sattva , they have clearly told what is prescribed and models of modern 

scientists like Yerkes-Dodson curve based on principles of hormesis/eustress accept even Dietary Restrictions 

including fasting as methods to cope with emotional and behavioural challenges. 

"Unprecedented" budget deficits ,all in the glory of COVID 19!

Governments looking for an exit , looking for an excuse to wriggle out, looking for an alibi have all got a valid reason-COVID 19.

In the name of COVID 19 nations are filing compensatory suits against sovereign countries. Govt agencies and big corporates around the world are invoking force majeure clauses for reneging on the contracts. Suddenly the corporate legal etiquettes are no more sacrosanct. The times are unprecedented and the usage of the word 'Unprecedented" has been unprecedented ,as commented by one journalist.

Govts. are exceeding their budgetary deficit limits, want to try "the nuclear options" of fully monetising the deficits,drop helicopter money, encourage everybody to borrow and spend,pushing the lenders to go on a lending spree and loan deferrals and waivers left, right and  centre. In short spend your way through the disease and misery. But none of them are clear as to who is going to foot this spendthrifts' bill. We, in three years time, will be saddled with the repayments and interest on it with inflation tax .We should be prepared for this or should prepare our children for this if we do not survive this pandemic.Nothing is free in economics.

But all this leads us to the fundamental question is the Govt trying to white wash its inability in raising tax GDP ratio , rein in fiscal deficit and push for the GDP growth, all in the name of Covid 19.

Probably the Govt is reluctant to draw a separate COVID 19 budget for this reason.Possibly it wants to purge the fudged Govt deficits and wash of all its past accumulated sins due to window dressing of budgetary deficits, all in one go under the guise of Covid 19.

Covid 19 may well turn out to be Budget saviour after all the mayhem.

Economic pandemic disruptions and Commodities Price Risk Mechanism

 Price Risk Management fund is an important economic concept especially in emerging economies like India.

Commodity Price fluctuations especially in Oil, Rubber etc. impact the allocation of resources in countries like India. The volatility in the prices of such commodities in the international markets affect the prices in India.When the gyrations of price of movements are carried into the economy there will be steep fall and rise in the local prices, which affect the consumers  by distorting their incomes.This in turn affect the allocation of resources over the medium term and long term as depressed prices drive out further investments in Oil etc and inflated prices bring in increased investments which may become unviable after some time.

Inorder to buffer the violent fluctuations in the prices when the international prices are high govt collects Price Risk Management levy from local producers and keep it in a separate kitty and then when international prices are low give the money out of it to local producers inorder to compensate them for low prices in the market.But the tricky question is when to start this levy . For this many theories abound and my simple take is to take a medium term view of 6 months to 3 years  of the prices. When prices are below or above the median line, we should start this.

So now the levy of additional excise on petrol and diesel should be collected and used as Price risk management fund and not for immediate use for fighting Covid 19 despite huge temptations to do that.

We already have such a fund for all other commodities also -Rubber ,Cotton etc.

COVID 19- an enigma and finding a solution

Many researches around the world are frantically searching for the elusive vaccine to COVID 19. There are rumours at every corner either saying vaccine is there or never.In the morning news some scientist says there is probably no vaccine as it is like common flu or cold and 'herd immunity' is a better solution than lockdown.In the evening some scientist claims that there has been a breakthrough in finding a vaccine and till it is available everybody should be under lockdown.Next day morning another renowned medical expert asks how can you have a vaccine for 10 different mutated versions of Covid 19.Another nobel laureate says there cannot be a vaccine for lab made designer virus.Third day another pharma company claims antibody breakthrough and then fourth day another one debunks yesterday's claim and says their new medicine is a miracle cure. Finally another scientist says this pandemic is exaggerated and the mathematical models should not be considered by Govts for formulating their policy responses.The common man is dumbfounded and thoroughly confused and Govts are at their wits' end. The confused folk are now saying either let us work and earn or allow us to die in peace at our choice. To die or not to die is Govt's choice or individual's choice. But somebody is turning the old proverb on its head "Live and let others live" and saying "pl. dont die and let others die".

Few points on COVID 19 tracking  and for augmenting govt. finances that may be useful.

1)The asymptomatic out of those tested positive is around 80% based on the current statistics in India. So India should also separately track Symptomatic patients every day. This trend should be seen along with SARI, ILI(influenza like Illness) as testing is not enough in many states.

2)With ref. to economy , the Govts are in dire straits.They want money. One way to get money is to sell the Assets or pledge them and get money. Another is to hike taxes on petroleum goods,liquor and other sin goods and on people with surplus money. So, Securities Transaction Tax is an easy target. People with money are in Stock market and so even doubling STT at this point in time should not hurt anybody.Temporarily the market sentiments may be hit but once the fundamentals are back, doubling STT will yield good money for the Govt. Long term capital gain on securities which involves cumbersome calculations may be removed to compensate for this.STT is simpler to understand and easy to comply with