GDP and Gross "Depression" Product !

We are what we are!

Lot of noise about GDP numbers released yesterday. All TV news in English and vernacular discuss about fall in GDP growth to 4.5% , in ominous tones and words from Economists including former PM,  threatening the people with dire forecasts for the country and the economy. Why should this add to Gross depression, desperation and despondency in the country. And when was the last time we were at 4.5% or thereabouts and that was not too long ago .It was Q3 Fy 12-13. Who were at the helm? our good old Dr.MMS and financial wizard & US educated Mr.PC. Mr.PC suspected CSO numbers and doubted its methodology.link another (link).

There are some methods by which this Growth recession can be tackled.Some of the good measures already brought in by the Govt will kick in with a lag.Many of them like corporate Tax cuts are supply-side and so will not address demand deprivation .
1) "Pump Priming" is a time tested method to boost the demand and consumption.Govt. by pumping money into the economy through building infrastructure is the best route possible since other alternate routes will be highly inflationary. Even though this can cause demand pull inflation temporarily,  in the short run it will follow Phillips curve which will reduce unemployment.

2) another important measure for Govt to do is pay all its Suppliers esp. in infrastructure sector like Power Generating Cos, Road Construction cos. and clear its dues.As an offshoot Govt must also look at indexing all the User charges it collects to inflation.This must include Electricity Tariff also in all the States.

3)Big Infrastructure projects which are stuck and small infra where the last mile completion is a challenge must be taken up to unclog the system. If they are stuck due to land acquisition disputes Govt. should try to invoke emergency powers to bring an ordinance for speed tracking these issues.

4) Also Govt must look at reducing IT for individuals and increase Sec 80C exemption limits for savings and investments or reduce all IT rates to just 10% of incomes earned whether the income is Rs.1 lac or Rs.10 cr.eliminating all exemptions.This will make IT wrinkle-free since all talk about progressive taxation is actually regressive in reality.This will bring demand back to the table in a big way.

5)Central govt should work with GST council to cut GST rates on Autosector. This can start with reducing Cess which is over and above GST at 28%.
Some of the suggestions mentioned above can lead to expansion in fiscal deficit this year and next year but they will have a salutary long term effect beneficial to the economy.

Where the mind is without fear and the head is held high!!

We are what we are!

whenever I read Tagore's great poem "Where the mind is without fear" many times I used to wonder what he meant by "where the clear stream of reason has not lost its way into dreary desert sand of dead habit!" .After seeing the see-saw matches in Maha politics I come to realise that habits die hard and we repeat the same mistakes again and again , thinking that this time it is different.

Beyond politics Tagore is relevant for Swaach Bharat mission also- "Where we tread without fear and the head is held high, where the potholes are filled and the manholes are closed dry, where the citizens do not spit and the litter is not thrown on the way, where the roads are levelled and rules of the traffic people obey, where the corrupt  realise their wicked way,  where the clear stream of future of young indians has not lost its way into the dreary desert sand of unemployed, Into that land of dream GDP and heaven ..."

God's language- Symmetry!

We are what we are!!

My title is symmetrical.It starts with "we are" and ends with "we are". Many of you would have also noticed that almost everything in this Universe is based on Symmetry.

Imagine how humans would look like if you have only your left side and there is no right side of your body. Or imagine if you have one big round eye in the middle instead of two eyes. The holy books say God created man in His form.

Even otherwise God has created everything with Symmetry as His language of expression. Perhaps some may say it is Nature's language.Be it flower or  leaf or a dancing peacock with its feathers panned out in full bloom or anything where nature has expressed itself, it is through the display of Symmetry.Under the microscope even DNA strands display symmetry.Nature simply loves this.Nature not only abhors vacuum but also abhors asymmetry.

Do you think it is mere coincidence. So, I call it the God's language!!

Murphy's Law!!

We are what we are.
There is an Universal law apart from law of karma and that is called Murphy's Law.If things can go wrong they will definitely go wrong. This law is applicable to Indian context more than any other country. Probably our politicians are adept at making this law true each time , every time. Take for example the Maha mess now. Just last year we watched the tamasha in Karnataka where the rank outsider Mr.Kumaraswamy suddenly being catapulted into CM's chair due to holy or unholy alliance with Congress after elections.They made strange bedfellows. Every day routine of Mr.K was to brief the media in the morning that the coalition was working fine, and in the evening media appearance to have his handkerchief handy and shed tears that nothing was alright in coalition and he would not continue as CM.This tamasha went on for nearly 8/9 months and we know what happened after that.

Now we are not learning anything from such past history and we want to repeat that at all costs.The theater is now Maharashtra and the stage actors are different but the screenplay is the same.Another tearjerker is in the offing!!

Even Ram temple will get constructed in Ayodhya and even J&K will return to normalcy but our politicians cannot but enact and repeat the same story line in every state. Is there anybody to disprove Murphy's Law.!!

We are What we are!

Many times we are made to repeat our mistakes because we tend to forget basic rules and laws that govern our activities. Somebody said ,those who forget history are condemned to repeat it!

When Virat or Rohit score centuries we tend to think that they will continue to score that way in every match.But sooner or later law of averages will catch up. Same thing happened to Sachin and Gavaskar and the same will also happen to Virat and Rohit.

Our Auto sector is also plagued by the investment decisions made by forgetting the law of averages.Indian auto sector grew by more than 15-20% in the second half of 2017-18 and upto the first half of 2018-19.Everybody, who is who in Indian Auto Industry thought that it will grow at this phenomenal pace continuously for another 3-5 years.But the law of averages hit them hard in 2019-20 first half to bring them back to senses.

According to me Indian Auto sector can hope to grow faster only after the future tech policy of the govt on auto mobility gets settled and the roadmap is communicated properly to the buyers and other stakeholders. Since Indian per capita disposable income is growing steadily at 8-10% annually, things should settle down sooner than later.

MV Act and financial sector health!

We are what we are!
I find to my amusement that Insurance premium payments for TP cover has gone up several folds this fiscal year.Even though every other sector incl. gold jewellery business is facing down turn with a long face, our insurance cos are laughing their way to the bank. How this has happened?Only because some body chose to bring in stringent penalties for breaking rules under Motor Vehicles Act and the police has also chosen to implement them strictly.

This hideous combination has boosted the fortunes of a financial services sector i.e insurance with bulging cash inflows.So people do not have money to buy gold, gadgets etc. since they have compulsorily paid the TP premium!!

If somebody gives you gyan that our economy is sputtering, tell them in their face that people are now paying their insurance TP premium and so they are left with no disposable income to buy other things. The other funny thing about this is, people with their chaltha hai attitude have been shaken out of this mindset  to fall in line and cough up TP Premium.This pinches their pockets. But for strict implementation come what may by Traffic police, we would have continued to say "You collect from x, y, z before asking me to pay my TP premium"!!!

GDP without our mothers' labour and contribution !

We are what we are!
Many times I have wondered why are we so obsessed with GDP-Gross Domestic product nos. which is only a measure of raw economic activities to put it crudely. You go to any seminar or trade/industry association meeting worth its name , the speakers start talking about slowdowns and dip in GDP immediately after the official prayer song is sung and finished!

How many of us really understand what GDP is and how it is  calculated with lot of guesstimates,punctuations ,surmises etc.only to include goods,services that are counted and calculated as defined by the National Income Accounting methodologies. GDP in simple terms is equal to the sum of Consumption + investment+ Govt spending+(Exports-Imports).GDP does not include many good things and bad things.In Indian context Parenting, bringing up children by our mothers on their own, taking care of the aged without engaging a  care taker, Volunteer work -preserving the nature and resources, the value of culture and the value of resources not being exploited etc are outside the purview of GDP calc. Somebody said if all the fish in our seas and rivers are caught in a year and sold it will boost the country's GDP but the fishing industry will collapse after that!

There is also another flip side -it does not include our shadow economy and its illegal and underground manifestations. Hope only Terroristans and banana republics should worry about this. Certainly (or is it hopefully),  we are not one among them.

Nowadays people are talking about Genuine Progress Indicators and Sustainable Economic Development Assessments apart from Human Development Index, Corruption Index, Hunger index,Happiness index etc.

So let us contemplate for a minute whether a GDP number without our mothers' immeasurable contribution is truly indicative of our Country's value and progress!