Archive for the ‘India’ Category

Lamenting Modi’s absolute win is more phobic than rational

May 25, 2019

The point about phobias is that they are all irrational fears. A phobia is not removed by rational argument but by addressing and removing the underlying fear(s). “Phobic” assertions are futile then in a rational discussion just as “rational discourse” has no impact on reducing a phobic fear.

I have been hearing many people lamenting the absolute win that Narendra Modi and the BJP party have just achieved. They believe themselves – in the main – to be of the educated middle classes; to be liberal, secular and rational. Nearly all of them believe themselves to be atheists (conveniently forgetting that their atheism is existentially dependent upon others’ beliefs) and they are all generally contemptuous of those who profess themselves to be religious. They generally claim a monopoly over “reasoned argument” and dismiss nationalistic or religious claptrap out of hand.

But what strikes me is that their lamentations about the Modi win and the rise of dark, nationalistic and religious forces are more manifestations of a Modiphobia or a BJPphobia than the exercise of reason. It is not unlike the Trumpophobia that now dominates the Democrat discourse in the US. But just as in the US, the apparently “rational arguments” are subordinated to irrational fears and only carry the appearance of rationality. They end up being phobic assertions and lose rationality along the way.

Following the Indian elections the BJP, by itself, now commands a comfortable majority in parliament. The BJP with its allies now have almost two-thirds of the seats in parliament (353 of 543). Narendra Modi is unchallenged as Prime Minister and is perhaps the first to to have transcended some of the traditional block-voting patterns of caste and religion.

Back in 2014, I posted:

If Narendra Modi manages to break – or even to weaken – the debilitating stranglehold that caste and clan have on Indian life, he stands some chance of releasing the huge potential that is still buried deep in the country. Paradoxically, his brand (now mellowing) of Hindu nationalism may allow him the freedom not only to challenge the shackles of caste and clan but also to keep in check the extravagant expectations engendered by the pampering of minority groups (which was unavoidable with a coalition government).

I find the lamentations now lacking in reason:

  1. There was not a single individual among all the opposition parties who realistically aspired to be or (or was capable of being) the Prime Minister.
  2. There was no majority coalition of any kind remotely feasible without the BJP.  The option of the BJP not being in government did not exist.
  3. A parliament having a party with an absolute majority is more likely to be effective as a parliament and less likely to be disrupted than a minority or a coalition government. A BJP minority government or a BJP led coalition (and since BJP is in a minority in the Rajya Sabha) would have given India an impotent government.

India will have at least 5 more years of Narendra Modi and the BJP. From 2020 the BJP will likely have a majority even in the Rajya Sabha. The subcontinent is awash with fractures and fissures. My reason tells me that the chance of Indian potential being unified and harnessed is far greater now than it has ever been since independence in 1947. It is greater now than it was under Nehru and his phobias, and greater than it was under Indira Gandhi’s Emergency. I may not like some of the fanatics riding the BJP wave, but paradoxically, a strong Modi has a better chance of keeping them in check than a weak Modi.

I suspect that 2020 – 2024 will see a period of unprecedented growth of not only the Indian economy but also of Indian infrastructure and social welfare.


 

Middle class demographics will cause Indian stock market capitalisation to grow by a factor of 20 till 2050

April 4, 2019

The underlying Indian stock market growth is fueled by a burgeoning middle class with a voracious appetite for owning stocks.

The BSE Sensex is India¨s primary stock index. The Bombay Stock Market has been going for some 140 years (formed 1875) but the Sensex Index of 30 shares was established in 1986 and set its reference value of 100 on a base date chosen to be 1st April 1979.  It is now 40 years since the base date and the index stands at over 39,000. For stock investors this represents an annual rate of growth over the 40 years of over 17%.

Rather than a measure of – except indirectly – of the economy or industrialisation, I see the BSE Sensex as primarily a measure of the appetite for investing in stocks. As such, it is a phenomenon of, and by, and for, the “middle class”. Much of the growth of the index is thus due to new owners of stocks entering the market.

It is thought that India has around 25 million owners of stocks. There are many definitions of the “middle-class”. I find defining the middle-class by the number of households with a disposable, annual income of over $10,000 is probably the best indicator of the number of stock investors. By this measure the number of stock investors is about half the number of such households. Currently – 2019 – the number of such households is about 50 million and covers 120 – 150 million of the total population of 1,300 million.

The Indian population will probably reach around 1,500 million and start declining after 2050. It can be expected that the growth of the stock-owning middle-class will keep increasing till then and even for a decade or two after population decline begins. A not-unreasonable projection would be that the underlying growth of the stock index will follow the appetite for owning stocks.

The total number of shares available, the number of investors available and the price of the shares are inextricably linked with the state of the economy. An increasing appetite for a fixed number of available shares will follow the number of investors available. This would increase both share price and market capitalisation. However the number of shares available will, given even a modest growth in the economy, probably track the growth in total population.  However, the underlying growth over the next 30 years is unlikely to reach the heights of the last 40 years. A saturation law applies and my expectation would be a growth in the index of between 2 and 3 times the current value. Since the number of investors would have grown by a factor of 8 this implies that the total capitalisation of Indian companies on the stock market could be closer to 20 times higher than now.


 

Kejriwal – Fasting unto death?

February 23, 2019

When I was around 10 or 11 and was being punished by my parents for some wrongdoing (usually by the withdrawal of some privilege), I remember I used to “threaten them” that I wouldn’t eat. I remember actually carrying out my threat and missing dinner on two occasions.

My parents were sensible enough not to give in.

There was never a third occasion.

The Chief Minister of the National Capital Region of Delhi, Arvind Kejriwal, is now going on indefinite hunger strike from 1st March to get full statehood for Delhi (and thereby get a salary increase). He says he is prepared to “face death”. Wow!

How brave! How simply frightful! How delightful!

I expect he will face death from a great distance and then turn away.

NDTV:

NEW DELHI: 

Delhi Chief Minister Arvind Kejriwal on Saturday announced that he would start an indefinite hunger strike demanding complete statehood for Delhi next month. “From 1st March I will begin a hunger strike. I am going to fast till we get statehood. I am ready to face death,” Mr Kejriwal said in the assembly.

Gautam Gambhir had the right response to Kejriwal’s histrionics.

Just another manic narcissist.


 

Islamic terror attack probably secures Modi a second term

February 15, 2019

The Indian General Election is due in April/May 2019.

Indian politics are never straightforward.

Whereas the Indian National Congress has lost its clout as a truly national party, the concept of the INC allying itself with different regional parties seemed to be a pragmatic way for them to begin to challenge the BJP and PM Modi. Of course the ideological convolutions of allying with a variety of regional parties, ranging from communists in some states and muslim fanatics to the parochially nationalistic in others, were more than a little intellectually challenging for Rahul Gandhi. Which has, of course, led to a sort of Egyptian solution, where his sister, Priyanka Gandhi, has been brought to stand beside/before/behind him.

The idea of Priyanka & Rahul Gandhi ensuring the security of India does not fly.

There are still 3 months to go but if security is a matter of concern at the time of the election, the Priyanka effect will not compensate for the INC’s perceived policy of appeasement of Muslims.  Security will override any other issues of the time and PM Modi would then be returned with some ease.


 

Short memories for Indian Rafale deal

October 16, 2018

The Rafale deal was done in 2012 when Manmohan Singh was still Prime Minister. The bidding process actually began in 2007. All the “side deals” would have been well structured at this time. The current Modi Government could only have taken over the “tributary mechanisms” of money flows from what was already structured by the previous government. Of course these would have been embellished a great deal.

Rahul Gandhi, it would seem, is trying desperately to obliterate the personal Bofors stain.

I wrote this in January 2012: Indian MMRCA: Dassault’s Rafale dumps its price to beat the Eurofighter

Finally the winner of the Indian MMRCA competition has been announced (or at least the L1 bidder) and it seems that the French dumped their prices for the Rafale to beat the Eurofighter by $4-5 million per aircraft. The performance of the Rafale in the Libyan adventure was also to its benefit compared to the Eurofighter Typhoon. Normally in the procurement process, the L1 bidder is called for final discussions to settle the contract and some further price negotiations can be expected. The contract will not be settled till the next fiscal year (after April 2012) and it would be very unusual for the evaluated L1 bidder not to get the contract. This contract is particularly important for Dassault since not only did the Rafale need a boost but also because they are guaranteed a market with the Indian Air Force for at least the next 15 years.


Related:

https://ktwop.com/tag/dassault-rafale/


 

Some realism returns to the Indian energy debate

August 18, 2017

There has been a demonisation of carbon dioxide which goes beyond the ridiculous. Atmospheric carbon dioxide concentration in the atmosphere lags temperature amd man-made carbon dioxide emissions are largely irrelevant to climate. Allied to the bloated hype about renewables, this has led to an anti-carbon imperialism which represents politically correct dogma. India has also been overwhelmed – in public – by the new religion. Of course India managed to ensure that domestic coal utilisation could be tripled while still complying with the sanctimonious, but meaningless, Paris agreement (note that China can double its coal consumption under the agreement). Publicly, however, it was not acceptable to admit reality. Fortunately, there are some signs of reality creeping back into the public energy utterances in India.

The Chief Economic Adviser to the Government of India has confirmed the importance of coal and criticised the “carbon imperialism” that is being religiously disseminated. The hidden costs of renewables are not to be ignored.

Arvind Subramanian slams carbon imperialism, calls for global coal alliance

Arvind Subramanian says coal will remain the primary source of energy for India in the short to medium term as it remains the cheapest energy source for development needs

Coal will and should remain the primary source of energy for India in the short to medium term as the fossil fuel remains the cheapest source of energy for India’s development needs, chief economic advisor Arvind Subramanian said on Thursday.

Renewable energy, on the other hand, comes with hidden costs, Subramanian said in a lecture organised by think tank The Energy and Resources Institute (TERI).

Subramanian called for setting up a global coalition for clean coal technology, mirroring the international solar alliance, which could find ways of sustainable use of coal in power generation.

“India needs coal in the short to medium term. Renewable sources must be part of the energy mix but they also come with hidden costs, which should not be overlooked in our headlong embrace with renewables,” said Subramanian.

India cannot allow the narrative of “carbon imperialism” to come in the way of realistic, rational planning for the country’s energy future, he added.

Subramanian’s call for caution in the adoption of renewable energy comes at a time when many state power utilities are forcing solar power developers to lower their power tariffs in a market where tariff discovered in subsequent auctions keep declining.

Although the solar power tariff keeps declining due to a fall in imported solar panel costs, renewable power projects bear the extra cost of power storage equipment. However, industrial consumers, which bear cross-subsidy for domestic consumers, find solar power cost attractive. This leads to reduced capacity utilisation of coal-based thermal power plants, adding to the stress in the power sector.

“Coal will remain and should remain. The time is ripe for creating a green and clean coal coalition mirroring the (international) solar alliance. That, rather than unconscionable calls to phase out India’s cheapest source of energy, will serve the cause of climate change and India’s development needs,” said Subramanian.

The chief economic advisor also said that policy decisions on coal and renewable sources of energy have to be taken jointly as these two are connected. Declining prices of renewable energy is threatening to upend the thermal power sector as prices are renegotiated by distribution companies, which themselves are in stress, Subramanian said. This renegotiation could transfer the stress in the power distribution sector to the renewable energy sector.

Railway minister Suresh Prabhu, who was present on the occasion, said the country’s energy policy was forward looking and was adequate to achieve overall economic growth as it captures the linkage between economy, environment and social development.

India meets its Paris emissions commitments (which are measured per capita) not so much by reducing coal use but by increasing the proportion of nuclear and renewable stations.

Institute of Energy Research

Between 2006 and 2016, 139 gigawatts of coal-fired capacity was brought on-line. A record 21 gigawatts of new coal capacity was built in 2015, and almost another 18 gigawatts in 2016. The planned construction of an additional 178 gigawatts would make it nearly impossible for India to meet its climate promises. By developing all of the planned coal-fired capacity, India would increase its coal generating capacity by 123 percent.


 

Indian Budget today – Economic Survey published

February 1, 2017

The Indian budget will be presented today and the annual Indian Economic Survey (which forms the basis for the budget) is also out. The Economic Survey is the responsibility of the Chief Economic Adviser to the GoI (this year Arvind Subramanian).

india-economic-survey-2016-17

The budget itself is expected to be mildly expansionist (especially after the jolting brake applied to the economy by the demonetisation circus of the last few months). Certainly some black money was removed from the system but this may be a one-off affair. Certainly, from the anecdotes I hear, the generation of “new” black money has not been slow to start. Maybe demonetisation will have to become an annual affair – or a regular occurrence every so often. But, no doubt, India has made a step-change in the level of electronic transactions being used. It has also brought a huge number of people into the banking system. One of the main concerns for the government is that the cash economy has allowed so many to remain invisible and completely outside the tax base. Considering that only 7 of every hundred voters is even registered for tax, it was imperative for the government to reduce the huge number of the tax-invisible. This they probably have done.

The Economic Survey itself highlights “8 interesting facts”:

  1. Indians on The Move – New estimates based on railway passenger traffic data reveal annual work-related migration of about 9 million people, almost double what the 2011 Census suggests.
  2. Biases in Perception – China’s credit rating was upgraded from A+ to AA- in December 2010 while India’s has remained unchanged at BBB-. From 2009 to 2015, China’s credit-to-GDP soared from about 142 percent to 205 percent and its growth decelerated. The contrast with India’s indicators is striking.
  3. New Evidence on Weak Targeting of Social Programs – Welfare spending in India suffers from misallocation: as the pair of charts show, the districts with the most poor (in red on the left) are the ones that suffer from the greatest shortfall of funds (in red on the right) in social programs. The districts accounting for the poorest 40% receive 29% of the total funding.
  4. Political Democracy but Fiscal Democracy? – India has 7 taxpayers for every 100 voters ranking us 13th amongst 18 of our democratic G-20 peers.
  5. India’s Distinctive Demographic Dividend – India’s share of working age to non-working age population will peak later and at a lower level than that for other countries but last longer. The peak of the growth boost due to the demographic dividend is fast approaching, with peninsular states peaking soon and the hinterland states peaking much later.
  6. India Trades More Than China and a Lot Within Itself – As of 2011, India’s openness – measured as the ratio of trade in goods and services to GDP has far overtaken China’s, a country famed for using trade as an engine of growth. India’s internal trade to GDP is also comparable to that of other large countries and very different from the caricature of a barrier-riddled economy.
  7. Divergence within India, Big Time – Spatial dispersion in income is still rising in India in the last decade (2004-14), unlike the rest of the world and even China. That is, despite more porous borders within India than between countries internationally, the forces of “convergence” have been elusive.
  8. Property Tax Potential Unexploited – Evidence from satellite data indicates that Bengaluru and Jaipur collect only between 5% to 20% of their potential property taxes.
Trade IES 2016-17

Trade IES 2016-17


 

Monsoon season is over but the rain continues as withdrawal lags

October 3, 2016

The monsoon season “officially” runs through June, July, August and September. This year it was about a week late in being established and now, at the end of the season, total rainfall has been about 3% lower than the long-term average and it counts as a normal monsoon (just).

Predictions of a better than average monsoon have been proven wrong . But have they?

The monsoon does not much care about calendar dates and the withdrawal of the monsoon is running about 2 weeks behind its “average” schedule.

graphic imd

graphic imd

It looks like monsoon rains will continue sporadically over the next 15 – 20 days. Currently the rains stretch across central India from Gujarat to Bihar. The total rainfall – though not conforming to the official calendar – may well be slightly above average.

Once it has finally withdrawn the verdict is likely to be that the 2016 monsoon was “good”.


 

India celebrates individuals wildly but the Olympic record is shameful

August 26, 2016

The two Indian medal winners surely deserve all the celebration and adulation they are now receiving. They have overcome corruption and incompetence and indifference that is endemic of the state government and sports organisation in every sport except cricket. To participate in the Olympics is itself a battle won for individual athletes.

But 2 medals (one silver and one bronze) from a population of 1.2 billion is a shameful indictment of the organisation and administration of sports.

The difference between India and China is stark.

India China olympic record

Sports Ministers in every State are pathetic. Sporting associations are riddled with incompetence and nepotism and corruption.

Winning medals wins no votes.


 

A “good” monsoon and approach of La Niña augur well for extended Indian growth period

August 10, 2016

Half of the Indian monsoon season is over and “so far so good”. There is a good probability that 2016 is going to have a “good” monsoon.  A uniform rainfall over the entire country and an excess rainfall of over 5% from the long term average and less than 15% in excess of the LTA is most desirable. (More than 15% excess will almost certainly give some very serious flooding, while less than 5% excess would probably leave some parts of the country dangerously dry). The El Niño is clearly over and weak La Niña conditions are developing. If La Niña conditions continue to develop, and are established before the end of the year, then there is a good probability that India will even have a good monsson during 2017.

The harbingers for an extended period of good growth in India look promising.

There is an increasing possibility of a hard winter ahead in Europe. In Sweden, autumn seems to have come early and it could be a long, cold winter.

IMD

  1. Rainfall over the country as a whole for the 2016 southwest monsoon season (June to September) is most likely to be ABOVE NORMAL (>104% to 110% of long period average (LPA)).
  2. Quantitatively, monsoon season rainfall for the country as a whole is likely to be 106% of the long period average with a model error of ±4%.
  3. Region wise, the season rainfall is likely to be 108% of LPA over North-West India, 113% of LPA over Central India, 113% of LPA over South Peninsula and 94% of LPA over North-East India all with a model error of ± 8 %.
  4. The monthly rainfall over the country as whole is likely to be 107% of its LPA during July and 104% of LPA during August both with a model error of ± 9 %.
Monsoon cumulative rainfall till 9th august 2016

Monsoon cumulative rainfall till 9th august 2016

The El Niño conditions over the equatorial Pacific prevailing since April, 2015 reached to strong level in July, peaked in December 2015 and started declining thereafter. The rapidly declining El Nino conditions became moderate in early April 2016, weak in early May and now have turned to neutral ENSO conditions. Recent changes in the atmospheric conditions over the Pacific also reflect the weakening El Niño conditions. Latest forecast from IMD-IITM coupled model indicate ENSO neutral conditions are likely to continue and turn to weak La Nina conditions in the latter part of the monsoon season. There is about 50% probability of La Nina conditions to establish during the monsoon season. Most of the other models also suggest development of La Niña conditions during the latter part of the monsoon season. 

Over Indian Ocean, the sea surface temperatures are warmer than normal over most parts except along the coast off central and south Africa. Currently neutral Indian Ocean Dipole (IOD) conditions are prevailing. The latest forecast from IMD-IITM coupled model indicates positive IOD conditions are most likely during early part of the monsoon season and same to turn to negative IOD during the latter part of the monsoon season.

image nirapadnews

image nirapadnews


 


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