All things Money Thread


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Modiji, enough of politics, focus on economy now!
By T C A Srinivasa Raghavan
January 07, 2020 12:31 IST

'With the big political job done, the time has come to pay attention to the economy, which is the main problem now,' argues T C A Srinivasa Raghavan.

Illustration: Dominic Xavier/

Between May 2014 and November 2016 the Modi government was in continuity mode and everyone complained that it wasn't going fast enough.
After that it has adopted 'bash on regardless' mode, which has sometimes been hugely disruptive.
Whether it was demonetisation or GST or triple talaq or Article 370 or the latest amendment to the citizenship law, the government has chosen to force change in a series of sudden and massive strokes rather than gradually.
Even the JNU fee hike was massive -- which is tenth in the order of smalls -- from Rs 20 per month for a single room to Rs 600!
To understand this behaviour, we perhaps need to understand what the Germans call zeitgeist and, simultaneously, the push exercised by a government's political benefactors.

To see why and how, go back to 1969.
In July that year, Indira Gandhi had split the Congress party and was running a minority government with the help of the Communist Party of India.
To please them, she nationalised 14 of the biggest banks in India.
Then she abolished privy purses, via which the rulers of non-British India were promised a monthly stipend in return for joining the Indian union.
She said she was abolishing privilege.
Between 1971 and 1973, she nationalised the coal industry.
Her coal minister Mohan Kumaramangalam was a former Communist.
In 1973, she even nationalised the grain trade.
Mercifully this lasted only for a few months.
The foreign oil companies were also nationalised between 1974 and 1976.
All this was Disruption with a capital D. India hadn't seen anything like it.
The reason why I have two explanations for why governments sometimes disrupt so massively.
One is elemental, the other is tactical.
The latter requires the government to please someone whose support is critical to survival.
Or someone who provides the ideological moorings of the ruling party.
But for this to succeed the first should already have happened, namely, a massive change in the zeitgeist or the spirit of the times.
A good politician senses this when it happens and exploits it.
Indira Gandhi detected the hankering for redistribution of wealth that had developed by the late 1960s, and capitalised on it.
In that sense, it is important to understand that the problem of massive disruption is not caused by the government alone, but the mood of the country itself when it changes.
The correct question to ask, therefore, is why a new mood comes about, and whether it is the politician who creates the new mood or the new mood that creates the politician.
For instance, until the end of the 1960s, neither socialism, nor the self-conscious secularism we see now was very evident on political platforms.
No one talked very much about these things.
In fact, any attempt to use these ideas as a political tool was intensely disliked and dismissed by the people.
Those who insisted, like the Jana Sangh, were regarded as nuts who were best ignored.
The Jana Sangh's electoral performance till 1989 is witness.
So what changed? As I said earlier, the most important driving force at the end was the Congress party's dependence on the Communists.
Together, these two hugely exploited the spirit of the times in favour of redistribution and India became overtly socialist.
In 1976, Indira Gandhi even inserted the term 'Socialist' into the Preamble of Constitution.
She also inserted secular.

The driving force
I think something like the change in mood that happened vis-a-vis Socialism has now happened with Secularism also.
Whatever the proximate and longer-term reasons for it, Indians are now overtly non-secular.
But political bargains aren't always one-sided.
By 1974, a huge economic crisis, together with her brute majorities in Parliament and assemblies, had both forced and enabled Indira Gandhi to discard the Communists as she no longer needed them.
She was able to stabilise and consolidate the economy after that, albeit in Socialist, shortage mode.
Compare this to the present.
In just seven months into its second term, the Modi government has pushed through everything that it and its ideological partner want -- triple talaq, abolition of Article 370, and the new Citizenship Act.

But now, with the big political job done, the time has come for it to pay attention to the economy, which is the main problem now.
In probability theory, this is called variable change, meaning you change the variable if you can work out that doing so will stack the odds in your favour.
Indira Gandhi used it with great success. Now Mr Modi too. In fact, he must.
She nationalised. He must de-nationalise.
T C A Srinivasa Raghavan
Source: source

Modiji, enough of politics, focus on economy now!


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Air India's prospects of finding a buyer look bleak
By Anjuli Bhargava
January 17, 2020 11:32 IST

'With a less than comely bride and no dowry to speak of, the prospects of landing a good match look bleak, a grim, sinister and no-nonsense prospective father-in-law notwithstanding,' says Anjuli Bhargava.
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Modi may shut Air India by June

Will Modi find a buyer for Air India?
Will Modi find a buyer for Air India?

Air India

Photograph: Shailesh Andrade/Reuters
The other day, a news report caught my attention.
t quoted a government official claiming that two airlines -- IndiGo and Etihad -- had evinced interest in acquiring Air India.
It also stated that the Tatas had not yet shown any interest in the proposed sale.
As things stand, only an Indian-owned carrier can opt for 100 per cent of the stake; a foreign airline or investor can own only 49 per cent.
Of all the possible airlines, the two mentioned in the report struck me as most unlikely suitors.
IndiGo already commands close to 50 per cent of the domestic market share and although Air India's domestic presence has been on a steady decline, the combined entity would cross 50 per cent of the market share, attracting the attention of the Competition Commission of India.


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As it is, IndiGo is driving fares and many in Jet argue that its closure was driven by the market leader's predatory pricing once Jet’s problems surfaced.
A former CCI chairman told me that there was no chance that the CCI would approve an acquisition of the national carrier by Indigo.
Expecting Etihad -- which recently burnt its fingers with Jet's closure and has plenty of troubles of its own -- to step in would be equally naïve.
In 2018, the airline posted a loss of $1.8 billion, taking its three year deficit up to $4.8 billion.
There have, in fact, been talks of Etihad being bought out by Emirates or one of the stronger partners in the Gulf region.
To float its name as a potential taker for Air India at this stage sounds almost silly.
Meanwhile, Air India's own internal problems refuse to abate.
The airline's net loss for 2018-2019 was Rs 8,400 crore, against a revenue of Rs 26,400 crore.
Although at some stage during the current financial year and after Jet's demise, Air India hoped to lower its losses for the year and even post a small operating profit, it now seems unlikely.
CAPA estimates that the airline will end the year with a loss upwards of $500 million, but the industry is willing to bet the final loss will be much higher than the CAPA estimate.
In addition to its mounting losses, a substantial part of Air India's fleet is on the ground due to maintenance problems and parts being unavailable due to a paucity of funds.
Almost through the last year, between 25 and 35 aircraft were grounded, give or take a few.
This, of course, is paradoxically good news for the carrier as more aircraft in the air means higher losses.
Typically, airlines don't want to keep any planes on the ground and look at maximising utilisation.
As with the country as a whole, none of the usual yardsticks apply in the case of our national carrier!
An acute shortage of funds has the airline strapped on all fronts.
Salary delays are a given, no one expects timely payments.
They are, in fact, grateful that payments are still being made.
CMD Ashwini Lohani meanwhile has been out with a begging bowl, yo-yoing between the threat of closure and reassurances of continued operations, a daily comedy circus that no one takes very seriously any longer.
Responses to his threats and exhortations appear to be taken in from one ear and let out from the other by a government that is mired in all manner of controversy.
Although Lohani with his more tempered handling of staff has proved better for employee morale than his predecessor, junior pilots in the airline have been putting in their papers.
Resignations have been high enough in numbers to raise a degree of alarm, stirring the director operations into action, making himself available to meet the aggrieved in the last week of the holiday season in December.
Heavens must truly be falling!
Resignations of any kind are a rarity in our national carrier, known for the stickiness of its staff in general.
After you have worked in Air India, a job in any other airline feels like actual work so you'd really have to be bitten by a mad dog to quit.
When I asked one of the senior employees -- who has been there since the late 1980s -- about this strange and recent phenomenon, he pointed out that it must be the younger lot.
"The high command and commanders of the airline will never leave until it shuts down; who else will tolerate their tantrums?," he said in jest but with an uncanny degree of realism.

So dear reader, loath as I am to be the harbinger of bad news, I am really not optimistic on any kind of wedding in 2020.
With a less than comely bride and no dowry to speak of, the prospects of landing a good match look bleak, a grim, sinister and no-nonsense prospective father-in-law notwithstanding.
Anjuli Bhargava
Source: source

Air India's prospects of finding a buyer look bleak


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Let's stop making cash the villain
By Ajit Balakrishnan
January 14, 2020 09:16 IST

Ajit Balakrishnan offers a New Year resolution for our policy-makers.
Illustration: Dominic Xavier/

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How cash became a bad word

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Revealed: How PM planned demonetisation

As we step into 2020 and battle for new ideas on how to grow our economy and create jobs, it is probably time to find inspiration in this piece of advice given nearly a hundred years ago by French writer/philosopher Marcel Proust: 'The real voyage of discovery consists not in seeking new landscapes, but in having new eyes.'
This line of thinking may be useful in redefining the role of cash in India's economy. Indian policy-makers and politicians seem to agree that the main villain that stands between India and a super-high growth economy with abundant tax revenue and jobs is the extensive role of cash in the economy.
If only cash could be banished and all transactions in every sphere of life be done through digital/electronic means, they believe we would reach utopia.
This belief is as widespread today as 'socialism' used to be in the 1960s.
Let's follow Proust's advice and take a relook at these assumptions. To start with, let's do an analysis that is the staple of data mining -- the co-occurrence of words in the Indian public discourse with the word 'cash'.

You will find words such as 'money-laundering', 'black money', 'bribery', 'tax evasion' and not 'convenience', 'cheap' or 'ease-of-use' associated with cash. This shows how deeply embedded our vilification of cash is in the English-language media discourse in India.
How did such a simple tool as a currency note come to acquire a Ravana-like reputation for capturing our innocent Sita-like businessmen and forcing them into such morally corrupt things as tax evasion, money laundering and bribery?
Anecdotes about the bad things cash enables one to do are aplenty, with the implied note that if cash did not exist, such corrupt practices as donations to political parties, paying for real estate or selling real estate partly in cash, paying or receiving bribes would not be possible.
But dig a little deeper and the crimes possible with cash are really bizarre: Setting up entities in special economic zones, creating fake invoices to foreign parties and receiving remittances from them, thereby creating tax-free incomes or creating fake start-ups and booking and receiving revenue into them from non-existent customers who are given cash but pay the money back by cheque.
A 2017 book, The Curious Case of Black Money and White Money, by Varun Chandna lists and describes such bizarre practices in detail.
What is the worldview that drives the pursuit of such business models? To dive deep into this, through the good offices of a journalist friend who comes from a traditional Indian business, I spent a few days listening to the perspectives of such businesspeople. Here are some of their strongly held beliefs that I unearthed.

Belief 1: Never pay taxes because the only purpose of taxes is to provide and maintain jobs for bureaucrats who serve no useful function in society. The taxes I evade I will use in my business, which creates jobs for ordinary people and provides useful products and services for society.
Belief 2: Never try and use technology to win against competition and grow your business. The most reliable way to succeed in business is to cultivate personal relationships and use that goodwill to get orders, and this is best done by approaching potential customers who have some family or have community connection with you.
Belief 3: Always be ready to reward people who send orders your way, or help you in collecting money faster, even more so if they are government officials -- they are poorly paid and need to be compensated by you for the help they give you. If some people call this corruption, disregard this; they don't know how business is done in real life.
If this is the ingrained belief among traditional Indian businesses who, incidentally, account for 60 per cent of the country's gross domestic product and employment, then who are the main voices in the anti-cash chorus?
First come the banks. They hope that the banishment, or at least a reduction in cash use, would reduce the demands on them to open more ATMs.
ATMs, which started out as a cute and customer-friendly innovation, have turned out to be expensive and complex to manage, what with the need to keep ATMs filled with currency notes at all times. Thus, commercial banks are the first voice in the anti-cash chorus.
They are joined by the foreign private equity and venture capital providers who operate in India: These folks fund fintech start-ups whose future depends on the size and scale of non-cash transactions in India.
Then come the e-commerce retailers. Indian e-commerce customers seem adamant about paying for goods they order on e-commerce sites by cash once the goods are delivered to their homes -- the so-called cash-on-delivery model.
Except that Indian e-commerce customers, who use the cash-on-delivery model, also tend to return goods if the delay in delivery is more than a couple of days, and this happens with 70 per cent of the orders.
This leaves the e-commerce company with the labour and cost of carting the goods back to their warehouses. The return rate among customers who use credit or debit cards or bank transfers, though, not surprisingly, is just 3 per cent.
While the anti-cash and pro-digital slogans and placards private equity and venture firms hold, on the face of it, seem to be driven by a desire to modernise the Indian economy, the hidden reality is that they want to 'flip' their start-ups (fintechs) to foreign companies, mainly American and Chinese -- who gain a back-door entry into the Indian economy.
This is why we need a balanced view about the role of cash in the economy and not one of these two extremes.

Ajit Balakrishnan, founder and CEO,, is the author of The Wave Rider, A Chronicle of the Information Age. You can reach him at [email protected]
Ajit Balakrishnan /

Let's stop making cash the villain


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India lost over $1.3 billion to internet shutdowns in 2019
By Neha Alawadhi
Last updated on: January 10, 2020 19:19 IST

The total cost of internet shutdowns across the world stood at $8.05 billion in 2019, an increase of 235 per cent since 2015-16.


Illustration: Uttam Ghosh/

India lost over $1.3 billion in internet shutdowns across the country - lasting 4,196 hours in 2019 - making it the third-most economically affected country after Iraq and Sudan, says a new study.
The report, titled The Global Cost of Internet Shutdowns, in 2019 by internet research firm Top10VPN, worked on calculating the data in major regions of the world using the COST tool.

The tool was developed by internet monitoring NGO Netblocks and advocacy group The Internet Society, and uses indicators from the World Bank, ITU, Eurostat, and US Census.

The total cost of internet shutdowns across the world, according to the report, stood at $8.05 billion in 2019, an increase of 235 per cent since 2015-16.
The report also looked at data collated by not-for-profit legal services organisation Software Freedom Law Foundation.
Its internet shutdown tracker for India calculated 106 shutdowns in 2019.
“India imposes internet restrictions more often than any other country, with over 100 shutdowns documented in 2019,” said Samuel Woodhams and Simon Migliano, authors of the report.
“As they tend to be highly targeted - even down to the level of blacking out individual city districts for a few hours while security forces try to restore order - many of these incidents have not been included in this report, which instead focused on larger region-wide shutdowns.
"The full economic impact is, therefore, likely to be higher even than our $1.3 billion figure,” they added.
An April 2018 report by the Indian Council for Research on International Economic Relations (Icrier) estimated the economic impact of internet shutdowns in India from 2012-17 at $3.04 billion, and the overall number of hours of shutdown worked to 16,315 hours.
It has been reported globally that the internet shutdown in Kashmir, which was imposed on 4 August, is the longest-ever internet block imposed by any country.
It has now been over 158 days and counting, since internet access was cut off in Kashmir.
“The most significant disruptions have been in the turbulent Kashmir region, where after intermittent shutdowns in the first half of the year, access has been blocked since August, with no end to restrictions in sight,” the report noted.
In contrast, Iraq - which suffered the highest economic impact from internet shutdowns, was hit by $2.3 billion and 209 hours of blackouts.
The most significant internet blackouts were in October amid anti-government protests due to rising unemployment, failing public services and corruption, the Top10VPN report said.
Sudan suffered the second highest impact at $1.87 billion, and 864 hours of blackouts.

India lost over $1.3 billion to internet shutdowns in 2019

Countries across the world also put blocks selectively on specific online platforms.
WhatsApp was the platform that saw the highest number of shutdowns globally at 6,236 hours.
Facebook was second, blocked globally for 6,208 hours, followed by Instagram (6,193 hours), Twitter (5,860 hours) and YouTube (684 hours).
Neha Alawadhi in New Delhi
Source: source

Big Daddy

Super User
I think Modi is fine and he actually is focusing on the economy. Bank nationalization, nationalization of Coal India, etc. was all bad. Indians were spoiled because of it. They did not care about profitability and did little to earn income. Most of the income was entitlements. Nationalized railways, Airlines, etc. gave freebies to politicians and banks financed it. All of that can last so long and now is the time for changes.

Unfortunately, government changes are always sudden because all governments delay until they cannot delay making changes anymore. Just look at Greece. Their changes were also sudden. Even those guys did not want to make the cuts because those guys were also spoiled like the Indians.

All those bad Modi decisions were only bad for Indians but they were not bad for India. Demonetization helped restore the Rupee. Private trains are profitable and have created a lot of jobs. Just look at how many waitresses are there on a private train. And the JNU :r: 600 fees is still a bargain. Higher education is not an entitlement regardless of what JNU students might claim. No Indian university is ranked in the top 400 world universities. If you are going to subsidize student fees and pay professors peanuts then forget competitiveness. University rankings are determined by faculty research. Faculty need resources to attend international conferences, administer national research surveys, etc. India has been cutting those priorities and giving freebies to students. If India wants to increase the competitiveness of its universities then it has to raise resources and faculty expectations substantially. You cannot raise faculty expectations without increasing their salaries. Modi wants to attract international faculty as well and you have to pay a lot of money for that and taxpayers should not be on the hook for this initiative. So students have to decide whether they want to pursue higher education by paying a lot of money or not. It is their decision. Universities will decide their fees. This bullying by students and asking universities to make sacrifices will not work this time around.

Part of the reason for India's increasing population is the low cost of living. Parents need to learn that education, health care, etc. are all expensive things. Additionally, as disinvestment happens, traditionally safe jobs will disappear as well. So, job uncertainty and expenses will play a major role in deciding how many children people should have. If people have a lot of children then they are screwed immediately. Life is harsh and Indians are just waking up to reality. For far too long, many were shielded from this harsh reality. Blaming Modi for economy is not making any sense because Modi is going in the right direction.


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2020 is a critical year for the Indian economy

By Akash Prakash

January 10, 2020 17:55 IST

'If India can only grow at 5%, why bother spending time on the country?' asks Akash Prakash.
Illustration: Uttam Ghosh/

2019 was a tough one for active fund managers in India.

Market breadth was narrow, and though the indices showed gains of 5% to 7% in dollar terms, many India-specific funds were actually down for the year.

One allocator recently told me that she had never seen such a divergence in India funds performance before.

Large and well-known funds are at both ends of the spectrum, some up double digits, while others down an equal amount.

As we move into 2020, many have started questioning the long-term bull case for India.

India is at a gross domestic product/capita where China was in 2003-2004.

Nobody expects India to deliver double-digit real GDP growth like China did, but is even 7% realistic, given our administrative and judicial constraints?

Global investors will be assessing what is India's real trend growth rate.

Is it only 5% to 6%, as some now suggest, or can the country come back to the old growth metric of near 8%? This makes a big difference to investors.




If India can only grow at 5%, why bother spending time on the country?

At 5% real GDP, we will be at 9% nominal, and the bears can argue that will be the long-term growth rate in earnings as well.

Why bother with a country delivering only 9% to 10% earnings growth and trading at 18 times earnings? India only delivers a return on equity of 10% to 11%, so that is no solace either.

Yes, there are some great companies, but most are already priced for the greatness.

By this narrative, India is just not set up for high and sustained growth.

We lucked out in 2003-2008.

The global growth environment was benign and we had the tailwinds of prior reforms, but we will never come back to such high growth rates again.

At 5% GDP growth, one-third of India will take forever to start consuming.

Incremental penetration rates across categories and products will fall drastically.

The metrics obviously look different with higher growth.

You can build a case for nominal GDP near 13%, and profit growth for a few years of more than 20% (as profit share-to-GDP normalises).

With profit surge, the ROE will also rise.

For this earnings stream, investors are willing to pay up, for no other large market will deliver this in the coming five years.

In a growth challenged world, high growth and rising ROE are very valuable.

In this higher growth scenario, as the third of India starts consuming, sustainability and predictability of growth will also improve.

Investors will pay a premium for less volatile and more predictable growth.

Investors are still not sure whether this growth slowdown in India is cyclical or structural. Many will form a long-term view over the next 12 months.

The slowdown has already surprised everyone in terms of its duration and ferocity.

Depending on their conclusions on the slowdown and its cause, they will move their long-term allocations to the country.

In 2020, investors will also finally come to a view on the economic agenda and policy-making prowess of the Modi government.

The last five years have seen a series of shocks (demonetisation, goods and services tax, Insolvency and Bankruptcy Code, non-banking financial company crisis) and a general clean-up and deleveraging in corporate India.

This has to end at some point.

All the pain taken has to have some payoff.

Of course, there are leads and lags, but some benefits need to start becoming visible.

What does formalisation of the economy mean?

Why is it good for the country?

How can we have formalisation if corporate earnings go through their worst patch ever?

Does formalisation mean a wipeout of small scale enterprises as they cannot transition?

Will formalisation necessarily lead to severe job losses?

For those who doubt the importance of the economy to the political leadership, the coming year is critical.

How will the leadership tackle this serious slowdown? The next year will show the willingness of the Modi regime to undertake structural reforms.

We have a serious economic slowdown, if we don't do the heavy lifting on reforms now, then when will we do it?

There is a clear belief among global investors that this is India's best chance to move ahead on public sector bank reforms, administrative changes and making India a more predictable and hospitable business destination.

This government has the political power, an all powerful leader who in the past has been pro-growth and shown the willingness to take risks.

If this government cannot bring the bureaucracy to heel, can anyone else?

If we do not push ahead now, it is difficult to argue that we ever will.

This opportunity lost today will lead to a derating of the country, as investors will reduce the probability of India ever breaking out and delivering on the $5 trillion ambition.

Rebuilding domestic confidence also needs to take priority in 2020.

I have not seen corporate India as demoralised as today: Partly because of their own fault, and partly because of judicial and government intervention in certain cases.

People have to be willing to take risk again, for any investment or capital expenditure involves risk and the financial system has to support risk-taking.

Investors understand that the country is in a tough spot currently.

We don't have any fiscal space.

The government cannot spend its way out of this slowdown.

With the Reserve Bank of India, seemingly conscious of headline inflation, even the monetary space is limited.

Ultimately, without an improvement in sentiment, we cannot really get out of this mess.

Sentiment will only improve with greater confidence, both among companies and consumers.

In 2020, I do expect non-US markets to outperform the US and the dollar to weaken.

It may be a positive backdrop for emerging market equities as global growth (especially non-US) strengthens, but liquidity conditions remain benign.



Given how poorly the broader Indian markets have done over the past 24 months, any return of positive sentiment and broadening of markets can lead to large gains, if we can only stabilise the ship and rebuild confidence.

Global investors want to believe the India story.

We must give them more reason to do so.

Akash Prakash is with Amansa Capital.

Akash Prakash



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2020 will be the year of the economy, but...


January 03, 2020

'Neither Modi nor the BJP have lost control over the minds and votes of their original supporters due to their tremendous political ability to play upon baser communal instincts.'
'But this buoyant support will melt away if the economic scenario remains depressing.'
'That makes 2020 an interesting year to watch out for,' notes Sheela Bhatt.


IMAGE: A protestor against the Citienship (Amendment) Act. Photograph: ANI Photo

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They sit there, stoic, implacable, defiant

After a tumultuous 2019 which brought at its very end anti-government forces and Muslims out on the streets, the protests leading to the death of 20 people, one looks forward to the new year with unease and caution.

2020, for obvious reasons, will be the year of the economy.

Prime Minister Narendra Damodardas Modi and his team expect that three quarters from now, they will be able to show better economic parameters.

It is 'perform or perish' time on the economic front.

That in just six months of winning a historic electoral verdict from voters the government is faced with a genuine mass movement speaks volumes about an India that is transforming under Modi's rule and is convulsed over many things, including debates over the Constitution and the spirit behind it post-1947.

Whether it will end up for the better, good or worse will, among other things, depend on Modi's delivery on the economic front.

Unlike what his detractors allege, Modi and his team are over-cautious of the economic reality that confronts them. A lot of decisions are being taken at multiple levels to push the economic systems to deliver.




A powerful Bharatiya Janata leader told this correspondent that Modi will set the agenda for the 2024 election in 2020.

Explaining how, the Cabinet minister stated last week in an off the record conversation that India is moving towards a new political-economic agenda in 2020.

"Seculars will welcome the situation where the economy and development will be the issues in future elections and not identity politics," the minister said. "We won't err in setting the agenda of development. Ayodhya and Kashmir, the issues which dominated past elections and the BJP voters's minds since 1947, have been settled in the national interest."

However, looking at the ground realities, things don't look as if they unfolding in a linear fashion.

It is difficult to understand how the BJP will offer a tension-free all-round social environment for economic progress while continuing its saffron identity politics.

When the government itself proactively opens up the zakhm of Partition 72 years later, it can't shift the blame if things turn messy in 2020.

"During the Bangladesh war around 1.2 million refugees arrived in India. It is believed that a majority of them were Hindus. Indira Gandhi could have extended citizenship to them," says BJP General Secretary Ram Madhav. "Even under the UN Convention Relating to Status of Refugees, such refugees have a right to citizenship in the host country."

Before it became contentious and the youth and Muslims in large numbers hit the streets, the government deliberately linked the Citizenship (Amendment) Act to the National Register of Citizens and the National Population Register, and clearly acknowledged it in home ministry documents. It was because of this that the issue created a massive backlash, turning the entire issue into a CAA versus the Constitution confrontation.

When the mass protests against the CAA erupted all over India, the government was caught unawares by its scale.

The situation may be 'under control' now with the help of police batons, but it has given enough hints that if the Opposition parties unite in the states, then the grand idea of setting the economic agenda for the third decade of the 21st century can be derailed.

The only thing going well for the BJP is that its core saffronised support remains consolidated and, one daresay, content.

In the eyes of this crowd, Modi remains far ahead of others in the national arena and the only one of consequence.

Also, the Congress didn't take a nuanced stand on the issue covering all aspects, including the Partition sentiment, while highlighting the problems with the CAA.

It fast-forwarded its stand to the NRC and seeing it, the government retreated, created confusion and put aside the NRC debate to save the day.

In the May 2019 election the voters had supported Modi for a second term, and the flurry of political developments since then has not changed them. The erosion of the BJP in state elections may have affected power politics, but not its power base.

To lift the BJP's supporters and change the tone, party President Amit Anilchandra Shah desperately needs one victory in a state election.

If the BJP fails to win Bengal in 2021, the BJP will lose more than the state.

A victory in Bengal will impact deeply the BJP's next decade. Its ideological standing and expansion plan for the next general election depends on winning Bengal.

In spite of serious electoral setbacks in Jharkhand and Haryana, and a defeat of Modi-Shah's political strategy in Maharashtra, neither Modi nor the BJP have lost control over the minds and votes of their original supporters due to their tremendous political ability to play upon baser communal instincts.

During the anti-CAA demonstrations in Uttar Pradesh one saw an unjustifiably harsh clampdown by the UP police against agitators and by the Delhi police on the Jamia Milia campus, but public opinion for or against it remains split along communal lines, giving a clear political advantage to the BJP.

In fact, within the Sangh family there is near unanimity over the political stand taken by Modi and Shah over making redundant Article 370, the final outcome of the Ayodhya movement and the CAA. It is difficult to find substantial ideological dissent among the BJP crowd who voted for Modi in 2014 and 2019.

But this buoyant support will melt away if the economic scenario remains depressing. That makes 2020 an interesting year to watch out for.

Former home secretary G K Pillai put it aptly once, that if the GDP doesn't remain at a certain level it becomes difficult to maintain law and order within India. What he meant was that the crime rate in Indian society is interlinked with the GDP rate. Better GDP helps the men in khakhi control crime.

That is why, in spite of not losing support over its explosive decisions taken in 2019, the Modi government cannot be complacent. Actually, India can't be.

Primarily because the theatre to vent anti-government emotions is readily available.

This creative outburst of 'secular liberals' in the form of slogans, poems, memes, columns and WhatsApp messages and effective outbursts of a variety of minority groups against the CAA is the ready platform to take the anti-government battle to the next level.

They are helped along by the Western media's passionate pursuit to remind India of its democratic commitment.

A senior source in the government, who is in the know of things, claims, "Look, Donald Trump, Boris Johnson, Vladimir Putin, Xi Jinping and Modi are ruling their respective countries at the same time. How helpful it is for India to take decisions that have an impact on its diplomacy!"

According to him, India's relations with Russia is "excellent" and with China "steady". On matters like Kashmir, the bucks stops at Trump's table. These three bilateral relations give Modi strength in spite of the "extremely critical" Western media coverage.

However, when history is in the making, one trigger can and will change the current situation.

The government is unlikely to retreat on the CAA in spite of viral renditions like Varun Grover's emotive poem Hum kaagaz nahin dikhaenge and impressive protests like in Shaheen Bagh.

Soon after passing the CAA there may have been confusion, lack of clarity and absence of communication by the government over the entire gamut of issues related to 'citizenship'. But the government made a U-turn saying the NRC was not on the table 'for now'.

That claim, nobody believes.

One voter asked looking into the camera, 'What is the proof Modi is an Indian citizen, how will he prove it? I want to know what will be the criteria to prove it and which particular card will be enough to prove that I am an Indian citizen?'

These are real questions confounding not only Muslims, but Hindus as well.

As the CAA is likely to stay, the need of the hour is to not rush in with the NRC.



There should be an all-party committee with experts to decide a transparent set of criteria on who is an Indian citizen.

In many ways, it is more important than setting the economy right.


Big Daddy

Super User
India's consumption may be down but its growth potential is not down. What India now needs is not domestic consumption, but a business environment that attracts foreign investments. The privatization of everything will achieve this goal. Private railroads, private airlines, private hospitals, private car manufacturing, private steel companies, and even private DRDO and HAL is a way to go. The government should also cut funding in universities and let them raise revenues from student fees and tuition.

Whatever savings the government gets from cutting these budgetary items should be directed towards infrastructure. People are not going to like it but if the government listens to the people then India is not going to grow. If India does not grow then worse is yet to come. Currently, some people have unpaid salaries, but in the future, you will also have pensioners who will not get paid.

It is nice to complain, but there is only one solution--- privatization.


Plz Help Himabuj (Amit Tyagi) in Corona Fighting
India's consumption may be down but its growth potential is not down. What India now needs is not domestic consumption, but a business environment that attracts foreign investments. The privatization of everything will achieve this goal. Private railroads, private airlines, private hospitals, private car manufacturing, private steel companies, and even private DRDO and HAL is a way to go. The government should also cut funding in universities and let them raise revenues from student fees and tuition.

Whatever savings the government gets from cutting these budgetary items should be directed towards infrastructure. People are not going to like it but if the government listens to the people then India is not going to grow. If India does not grow then worse is yet to come. Currently, some people have unpaid salaries, but in the future, you will also have pensioners who will not get paid.

It is nice to complain, but there is only one solution--- privatization.
And Private Sector is in Recession !
Already Private sector is suffering very badly.
Parle G is not able to sell it's Rs.2 cost pack of Biscuits.
This is the basic item and the entry level product for customers.
Forget about Luxury items.


Who is going to take up ?
This is the Big question now !

Drop in demand may force Parle to lay off up to 10,000 employees18% GST and low demand in the FMCG sector has forced the company to hike prices; affecting their sales
Ratna Bhushan

, ET Bureau|
Updated: Aug 21, 2019, 09.41 PM IST

[Image: Parle may lay-off up to 10,000 employees over weakening demand] Parle may lay-off up to 10,000 employees over weakening demand

NEW DELHI: The country’s largest biscuit maker Parle Products said on Tuesday that it may have to let go of 8,000-10,000 people if the ongoing consumption slowdown persists, indicating that all’s probably not well with the economy.

“We have sought reduction in the goods and services tax (GST) on biscuits priced at Rs 100 per kg or below, which are typically sold in packs of Rs 5 and below, but if the government doesn’t provide that stimulus, then we have no choice but to let go of 8,000-10,000 people from our workforce across factories as slowing sales are severely impacting us,” said Mayank Shah, category head of Parle Products.

With sales of over Rs 10,000 crore, Parle, which makes the popular Parle-G, Monaco and Marie brand of biscuits, employs 1 lakh people, and operates 10 company-owned plants, in addition to 125 third party manufacturing facilities. More than half of Parle’s sales come from rural markets.

The sub-below Rs 100 per kg biscuits were taxed at 12% under the previous tax regime, and firms had expected the GST rate to be fixed at 12% for premium biscuits and 5% for the lower-priced ones. But after the government introduced the GST two years back, all biscuits were brought under the 18% tax structure, forcing companies to increase prices which affected sales. Parle, too, had increased prices by about 5%, which led to sales declining significantly, Shah said.

Another biscuit and dairy products giant Britannia managing director Varun Berry had voiced similar concerns last week when he had said consumers are even hesitating to buy Rs 5 packs of biscuits. At a post-earnings conference call, Berry had said that consumers are thinking twice before buying even a Rs 5 worth of product, indicating a “serious issue in the economy”.

“We’ve only grown 6% and the market is growing slower than that,” Berry said in the call. The Nusli Wadia-promoted company’s net profit fell 3.5% year-on-year to Rs 249 crore for the quarter ended April-June 2019.

Parle’s Shah said with consumers downgrading over the past two quarters, offtake from retailers is getting severely impacted. “Weakening consumer demand is because of increased GST on biscuits and worsened by the absence of adequate government stimulus. We have multiple biscuit brands that are aimed at mid- and low-income consumers which form the core consumer base of a category such as ours, and we are hoping the GST increase will be rolled back if the government wants to revive demand,” he said. Low-priced biscuits anyway operate on low margins.

Last month, market researcher Nielsen had revised its growth forecast for the FMCG sector to 9-10% in 2019 from its previous outlook of 11-12%, citing a sharp rural slowdown. Nielsen said the slowdown was significant across all food as well as non-food categories, with categories such as salty snacks, biscuits, spices, soaps and packaged tea leading a slowing consumption.

Citing Nielsen data, industry officials said growth in the FMCG sector has declined in the past four quarters consecutively since July-September 2018 – both by value and volume – as consumers down-traded to lower-priced daily use products in urban markets and rural growth slowed.

Drop in demand may force Parle to lay off up to 10,000 employees

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Plz Help Himabuj (Amit Tyagi) in Corona Fighting
Parle, India's biggest biscuit maker, may cut up to 10,000 jobs as slowdown bites
2 min read . Updated: 22 Aug 2019, 01:36 PM IST
Sachin Ravikumar , Reuters
  • Parle, founded in 1929, employs about 100,000 people, including direct and contract workers
  • Mayank Shah, category head at Parle, Shah said demand for popular Parle biscuit brands such as Parle-G had been worsening since India rolled out GST in 2017

Bengaluru: Parle Products Pvt Ltd, a leading Indian biscuit maker, might lay off up to 10,000 workers as slowing economic growth and falling demand in the rural heartland could cause production cuts, a company executive said on Wednesday.
A downturn in Asia's third-largest economy is denting sales of everything from cars to clothing, forcing companies to curtail production and raising hopes that the India government will unveil an economic stimulus to revive growth.
A sharp drop in Parle's biscuit sales means the company may have to slash production, which may result in layoffs of 8,000-10,000 people, Mayank Shah, category head at Parle, said in a telephone interview from Mumbai.
"The situation is so bad, that if the government doesn't intervene immediately ... we may be forced to eliminate these positions," he said.

Parle, founded in 1929, employs about 100,000 people, including direct and contract workers across 10 company-owned facilities and 125 contract manufacturing plants.
Shah said demand for popular Parle biscuit brands such as Parle-G had been worsening since India rolled out a nationwide goods and services tax (GST) in 2017, which imposed a higher levy on biscuits costing as low as 5 rupees, or 7 cents a pack.
The higher taxes have forced Parle to offer fewer biscuits in each pack, hitting demand from lower-income consumers in rural India, which contributes more than half of Parle's revenue and where two-thirds of Indians live.
"Consumers here are extremely price-sensitive. They're extremely conscious of how many biscuits they are getting for a particular price," Shah said.

Parle, which has an annual revenue of above $1.4 billion, held talks over the past year with the government's GST council as well as former Finance Minister Arun Jaitley, asking them to review tax rates, Shah added.
Once known as Parle Gluco, the Mumbai-headquartered company's flagship biscuit brand was renamed as Parle-G, and became a household name in India through the 1980s and 1990s. In 2003, Parle-G was considered the world's largest selling biscuit brand.
The slowdown in India's economic growth, which has already led to thousands of job losses in its crucial automotive industry, was accelerating the drop in demand, Shah said.
Market research firm Nielsen said last month India's consumer goods industry was losing steam as spending in the rural heartland cools and small manufacturers lose competitive advantages in a slowing economy.

Parle is not the only food product company to have flagged slowing demand.
Varun Berry, managing director of Britannia Industries Ltd, Parle's main competitor, said earlier this month that consumers were "thinking twice" about buying products worth just 5 rupees.
"Obviously, there is some serious issue in the economy," Berry had said on a conference call with analysts.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

Parle, India's biggest biscuit maker, may cut up to 10,000 jobs as slowdown