Covid pandemic induced income inequalities and how to tackle it in India

 Covid has not been an economic leveller even though it is considered to be a social leveller. High or the low, weak or the mighty in terms of social status have not been spared by the disease but it has created greater inequality between income earners.

1)Better paid white-collar workers are Working From Home whereas low paid blue-collars have no privilege like this and many have them have been laid off.

2)Higher level of low paid workers are in areas like Nursing, cleaning, policing, teaching, garbage removal and store or delivery attendants where they are more likely to come out with more touches with those who are infected;

3)low paid workers in hotels, restaurants and tourism & hospitality sectors have been severely affected without jobs.

4)richer countries have bailed out their small businesses by pumping more liquidity into areas that are suffering but smaller and weaker countries have no adequate finances and therefore have not been able to protect the small businesses from going down the drain . This has only further exacerbated the gap between the rich and the poor countries.

5) lack of adequate vaccination facilities and medicines in the poor countries have pushed them into the harsher pandemic status and prolonged lockdown situations which have only multiplied their economic woes leading to an increase in poverty.

6) Easy liquidity conditions laid out by Central banks/Federal Reserve have only boosted stock market-based income further exacerbating the income gap between the rich and the poor.

The above problems are universal and all countries have faced this predicament.

India too is not an exception. But the govt of the day has initiated well-targeted efforts to revive the economy. This is an investment led push which the govt has paved the way with its ProductionLinked Incentives schemes, Credit Guaranteed loans and other MSME support measures, apart from the Capital intensive infrastructure investment undertaken by the Govt. The marginalised in the rural areas have been supported by MNREGA employment income scheme to provide them a cushion against this debilitating pandemic shock.

The first quarter GDP (Q1-Fy 21-22) at 20%+ is heartening to note as this will bring back jobs and employment to the economy.These are still early days and as WEF reported , every 3 out of 4 in most countries including India have had a decline in their household income and reclaiming the lost ground would take few more quarters of sustained growth. 

It is anybody's guess as to when people will start having sufficient discretionary income to go for consumption led growth. Government has to initiate certain enabling ground for this by deepening the reforms like bringing down GST rates, streamline Court judicial and legal processes etc.

If the third wave does not create scare and panic, India can look forward to this as early as in second or third quarter of FY22-23 with the demographic dividend coming to its aid.

some more ruminations

 1)This news item in Dinamalarin June 2021 shows that Local bodies,Govt departments r not paying EB tariffs for many years.

If Govt itself is the delinquent, this is a serious loss of credibility and governance.

Long-term remedy has to b thought of.

Further funding reqtuirements of these local bodies to b linked to payment of pending EB bills.

Beyond a point should withhold even Salaries to the Top Govt secretaries ,like in private sector ,for non-payment of EBdues,Property tax or any other govt levies.

For unpaid Motor accident compensation ,courts many times initiate distraint proceedings against Govt transport corporations.Something similar to b done for these unpaid dues.

Or fast track privatization of EB distribution.

2)w.r.t media why not ask those who have PEP(Politically exposed Person/s) in their Boards, their relatives, those affiliated to parties &controlling their labour union,donating ,providing ads revenue more than 10% of income http://etc.to show in small letters" affiliated to such& such party" ticker in Channels,publications etc like showing warning tickers for cigarattte smoking and liquor drinking.

3)Similarly for those News or those public political,social discussion on TVchannels which have funding from minorities or those run with minority reps or receive their funding,donations,ads beyond a threshold say 10% of their revenues must show a ticker mentioning "channel run/ affiliated to minorities".This shd be made compulsory.

some random musings

1) Fundamentally, we all go by our System 1  thinking - with  'perception  bias"," recency bias" and what not. All of us including the so-called Economists are basically Irrationalists.

We are all very good critics and so we want to find all the wrong reasons to blame the Government at the Centre and Modi in particular.

(E.g Some of the questions our analysts and researchers frame for fixing the blame for the pandemic deaths/distress in their families- Do you Blame Centre or State or your fate-sounds childish-no blame for China!!!)

Those who want to blame Modi often confuse others  with Pandemic induced downturn with economic policies of the Govt  , which are bad according to them.

So many of their arguments are based on their convenience and not based on any economics per se.Most of them will start by saying "Tea sellers do not know anything beyond Pakora", or "Demon led to all these economic downturns etc. with a sweeping judgmental tone".

None of them give any cogent counter narratives which can address the problems that were existing before Modi came to power.They are the people who say Indian health infra is in pathetic state and the foreign media which is already under the control of a cabal wants to put it on loudspeaker.

Modi and his Team must now manage the perception and the optics as it has its hands full with internal as well as China ,Pak induced external problems

2)I also endorse Mr.Rajnish Kumar's(former Chairman of SBI) views. But our Judicial process under IBC  which is thro NCLT court  process now is slightly different with time bound actions and  so better than regular judicial process under erstwhile DRT or Sarfaesi act. I have first hand experience in this.However still this process can be improved like by having leave restrictions/summer vacations or by introducing more courts or by two shifts operation. (You know even when judges get transferred from one bench to another, some of them either refuse to take the trasnfer or delay the joining date which becomes very frustrating for the parties involved) Now atleast judges think twice about giving adjournments which used to happen at the drop of a hat in regular courts incl. HC. Even Chanakya in his Arthashashtra had talked about restricting no. of "vaidhas" based on his logical reasoning.

Now Judicial /Court reforms and Police reforms have to be concentrated upon by Govt.

 "(Adjournments.) The plaintiff shall (‘rejoin’) reply soon after the defendant has answered the questions at issue. Else he shall be guilty of parokta, for the plaintiff knows the determining factors of the case. But the defendant does not do so. The defendant may be allowed three or seven nights to prepare his defence. If he is not ready with his defence within that time, he shall be punished with a fine ranging from 3 to 12 panas. If he does not answer even after three fortnights, he shall be fined for parokta, and the plaintiff shall recover out of the defendant's property the amount of the case. But if the plaintiff sues for a mere return of gratitude (pratyupakarana), then no (decree shall be passed). The same punishment shall be meted out to such of the defendants as fail in their defence. If the plaintiff fails to prove his case, he shall (also) be guilty of parokta. If he fails to substantiate his case against a dead or diseased defendant, he shall pay a fine and perform the (funeral) ceremonies of the defendant, as determined by the witnesses. If he proves his case, he may be permitted to take possession of the property hypothecated to him. But if he is not a Bráhman, he may, on his failure to prove his case, be caused to perform such ceremonials as drive out demons (rakshoghna rakshitakam.)  "

This is the extract from Arthashastra -see the logical reasoning that plaintaiff knows the determining factors and so if he asks for adjournment it will not be given lightly...

 3)is there any database where the following Details are available :1)how many Govt cos.in Central and States which r private limited cos ,without need for Independent Directors,no need for Secretarial Audit..For eg I hear TASMAC in TN is one such private limited co.2)how many Retd IAS,IPS etc r functioning as Independent Directors in Govt cos both Central and State( is this crudely called incest).3) How much Unsecured loans given by PSUs to such Private limited Govt cos.For eg.TASMAc is believed to have taken huge Unsecured loans from Indian Bank others for more than Rs1000cr.Any database?

4)I am not too sure about the GST impact on the Vaccine value chain, but in a Value Added tax without an avenue to adjust the input tax credit , it will only add to the cost and push up the final landed cost.But as you rightly said, it is not "good optics" in the pandemic situation when States clamour for zero taxing vaccines without a rhyme or logic. Probably this will help improve the ties with States.

There is one another way also- Govt can say that the Vaccine GST at the final stage(single point i.e end of the value add chain), will be totally borne by the Govt out of an increase in Health and Education cess on the highest slab income taxpayers. This can be made revenue neutral. or charge 0.01% GST inorder to minimise the tax impact without disturbing the input credit chain. In fact, Zero GST or total exemption from GST is anethema to any Value Add Tax chain. It can be 1% or less than that ,but not ZERO.

RCEP and India

 Regional Comprehensive Economic Partnership (RCEP) is the economic alliance formed with China and other 14 countries primarily from Asia recently but including  non Asian countreis like australia, New Zealand. India was said to have entered into this economic pact and was negotiating for its membership, but withdrew later when it rightly found that this trade partnership would only benefit other countries but not its interests.

Maybe in the long run India would have to enter this trade pact but certainly not at this time when China's hegemony is strangling many of the Asian and African countries.

With many of the other Asian countries India already has a free trade pact except China.

China is a net exporting country to India and therefore any free trade pact removing the tariff barriers would only directly and indirectly benefit China.

Let us look at the specific pros and cons to RCEP:

Pros

1)The purpose of RCEP was to make it easier for products and services,investments, intellectual property rights of each of these countries to be available across the region. Differential rights have been granted to economically less developed countries

2)this pact covers the economic powerhouses of Asia including Japan, China and South Korea covering roughly 30% of Global GDP and 30% of World's population.

3)the pact is intended to reduce redtape and also tariffs.

4)it will bring about uniform customs procedures and  rules of origin which will facilitate global supply chains and trade within the region.With less regulatory framework trade will become seamless.

Cons:

1)this does not cover labour unions, environmental concerns and sustainability,human rights and government subsidies.

2)it does not commit countries to open services and other vulnerable areas of their economies.

3)Some countries may become dumping grounds for other manufacturing countries.The pact consists of countries that are the largest exporters of the world.

4)India's trade deficit with 11 RCEP member countries has worsened post 14 RTAs(Regional Trade Agreement) already signed with them. There have not been any significant export gains for India out of the already existing 14 RTAs.

5)Tariff reduction in a calibrated manner suggested by India has not been accepted by other RCEP countries. India suggested that with ASEAN countries it will reduce tariffs by 80%,for other countries like Japan, South Korea by 65% and for other countries like China, Australia,New Zealand by 42.5%.The countries disagreed and demanded uniform relief of 90% on tariffs.

(Courtesy:Rabobank Research analysis)

6) In order to protect domestic manufacturing, India suggested auto-triggering and snapback measures which will kick in immediately if certain agreed thresholds get breached in imports from certain countries esp. China for manufacturing imports and Australia and New Zealand for dairy products and other ASEAN countries for plantation products like Rubber .

7)India is already suffering from half of its trade deficit coming from China, and post the pact its trade deficit may worsen as with other RTA countries since India is a big consumption destination with vast population.Moreover the vagueness in addressing the concerns on trade in Services sector in which india has a comparative advantage.  also left India with no option but to keep out of it for some more time.

8) Since India has launched its "Atmanirbhar Bharat", PLI schemes for giving a huge push for Make in India , India will be benefited from RCEP after its manufacturing sector makes some significant gains in the domestic market.

9)Some countries do not see political alignments with few other countries like India and China due to the ongoing geopolitical tensions.(link)

RCEP member countries have kept the door open for India and india may well take a decision to join this after a year or two lag when its domestic economy starts growing at 8-10%. India can bring strong institutional policy framework to RCEP and many countries want India to be in RCEP as a counterbalance to China's growing clout and influence.

Hanuman and Ganesha!

 

The two major loved deities of the Hindu pantheon are Hanuman and Ganesha.

Let us dwell into the concepts and significance of these two dieties.

Ganesha, the son of Parvati and Shiv, is worshipped first before starting any new job or work. Even if you want to start writing or reading , you invoke the blessings of Lord Ganesha who goes under various names- Ganapathi, Vigneshwar, Vinayak, and  Pillayar in Tamilnadu. Ganesha Gayathri, Pancharatnam are some of the important Ganesha mantras and hymns.

Adi Ganesha idol is in a Temple near Tiruvarur in Tamilnadu with a human face.The mythological story says that Shiv slew His head and then fixed the head of the animal that He saw first after this beheading of His son. Ganesha after that with the elephant head is worshipped as the wisdom god by Hindus.

Why only Hindus. He is worshipped in Indonesia where He finds Himself in their currency notes. He is considered the destroyer of evil in Japan. In Mexico, Ganesha idols were said to have been found in archaeological excavations.

Now let us move to Hanuman or Maruti. His name has been given to the car that moves India. He is a monkey-faced god found in Ramayana epic. When Sage Valmiki describes Hanuman, he calls Him the most learned, the valorous, and yet the most humble servant of Lord Rama. Lord Hanuman is also called by several names-Maruti, Anjaneya,Pawankumara, Vayuputra,Ramadasa etc.Hanuman Chalisa is the most famous hymn dedicated to Him.

There are some striking similarities apart from the fact the both have animal faces yet considered and worshipped for conferring on the devotees the education, wisdom, valor to face any obstacle and overcome it, the erudition, and the true enlightenment.

Both of them are sung highly by praising the chivalry they showed in removing the sadness and hassles of two women- Parvaati ( Umasutham soka vinasa) and Sita(Janaki sokanasanam) by Ganesha and Hanuman respectively.

Both of them involved in Bhagavat Gita- one for writing it when Sage Ved Vyasa composed Mahabharath verbatim and another remaining in the flag of the chariot of Arjun listening to Lord Krishna when  He sang Gita for the benefit of humanity.

Ganesha wrote Mahabharath by breaking his tusk which he used as his pen. This story shows that Ganesha would go to any extent to help His devotee to fulfill a great task on hand that will serve humanity. Hanuman blessed Arjun that he would provide him with His prowess in the war against the evil and adharma supporting Dharma.

There is a form of deity which is the combined form of Ganesha and Hanuman and that goes by the name Athyandha Prabhu. This form is worshipped in South India and under the directions and blessings of Kanchi Paramacharya,a temple for Athyandha Prabha has been built in a place called Madhya Kailash in Chennai.

Cyber threats and data privacy

 "Data Piracy is threatening Data Privacy".Information security starts with the CIA Triad-sounds more like mafia and counter-espionage jargon- is the bedrock of the cybersecurity edifice.CIA stands for Confidentiality, Integrity and Availability encompassing the entire gamut of Information security. Consider the following examples and contemplate on these real-life threats faced by all of us:

1)TWITTER SAYS 130 ACCOUNTS WERE TARGETED IN A MAJOR CYBER

ATTACK OF CELEBRITY ACCOUNTS TWO DAYS AGO SOURCE: BBC 17 JULY 20

2)MARRIOTT INTERNATIONAL NOTIFIES GUESTS OF PROPERTY SYSTEM INCIDENT SOURCE:

HTTPS://NEWS.MARRIOTT.COM/NEWS/2020/03/31/MARRIOTT INTERNATIONAL NOTIFIES GUESTS OF PROPERTY SYSTEM INCIDENT

3)Computers containing data relating to national security and VVIPs like Prime

Minister Narendra Modi were compromised in early September after

a security breach at the NIC (National Informatics Centre), Delhi Police

sources have said.The computers affected also stored data relating to National Security Advisor Ajit Doval, Indian citizens and senior government functionaries

There are Emotet Trojans, Email hacking,Rogue IoT devices, hacked admin passwords, stealth drones, compromised employees, even Central bank hacking, Pentagon data breach etc. etc. are happening all over the place. They pose risks of all kinds including an unimaginable quantum of funds being siphoned off which remain untraceable.

There are millions of people who are active in the Dark web and create this havoc in our real life on a day today. But cybersecurity has emerged as the foremost priority of any country, organisation or anything to do with the organized white web, which is legal,confidential and safeguards the sovereign interests. More so when it comes to individual data security and privacy. The fundamental right to existence of any human is threatened if  his information security is breached and pirated.

As a result the Central Govt is keen on legislating GDPR(General Data Protection Regulation) Act similar to the EU GDPR  and if all goes as planned this Act may become a reality during this year winter session of the Parliament.

Gartner has come out with the above trend with respect to Emerging Technologies which are likely to complicate and disrupt the Information security scenario.

In order to make the Cybersecurity robust National Institute of Standards and Technology has come out with a detailed Cyber Security Framework considering the ISO ISMS 27001:2013 standards.

In short, all the stakeholders of our economy must endeavour to protect their data and privacy with a robust framework and protect their passwords as they are the keys to the door to their individual privacy and prosperity. 

Health is Wealth - the maxim remains true always. However, today the Health of Your Wealth in a digitalised world , depends on robust Cyber Security.

Pollution Control and Corruption uncontrolled

 

State pollution Control Boards have enormous powers and the absolute power corrupts absolutely. They can bar and mar a factory, a company etc by wielding their bureaucratic overreach, pelf and power or even by threatening to use them. Under Environmental rules drawn by Govt. to rid the environment of pollution, those in power misuse these provisions and line up their pockets.

The typical case is that of a mid-level officer in Vellore recently caught by the State DVAC  who was found to be owning cash, jewellery, assets and landed properties to the tune of Rs100 cr.(link)

Pollution Control or management should be best left to experts and the bureaucrats should not be involved in this. The corporates should be under the surveillance and audit of third party experts certified by agencies like UNFCCC etc.

The present system provides for nexus between Corporates and the bureaucrats or Corporates and the political class with bureaucrats at their beck and call or bureaucrats in cahoots with crass politicians working against the Corporates. In every pemutation and combination you can imagine, the final loser is the country and its environment.

It is high time the Central Govt realised this and bring internationally accredited third  party experts to evaluate the Environment Impact Assessments and also in regular certification of Corporates and their factories for consent to operate and run.

Whenever the complaints of pollution are received from citizens, these complaints may be properly looked into and investigated by one or more of these independent internationally accredited third-party experts.

Either the Central Govt on its own or SC must order Central Govt to bring in suitable legislation for bringing in transparency in the implementation of evaluation by independent pollution management experts in all areas of Envrionmental impact areas.