Showing posts with label India. Show all posts
Showing posts with label India. Show all posts

2021-05-29

Go Woke, Get Killed: American Progressives Cancelled Sir Alexander Fleming

America is ruled by a primitive ruling class whose ideology bears more resemblance to a Stone Age tribe or a cargo cult. In their language, "science" takes the place of a deity. The result is a perfectly good treatment for SARS2 is rejected in favor of killing people on ventilators and waiting for an experimental vaccine that has a far higher death rate than other vaccines that were pulled from the market, such as for the swine flu outbreak in the 1970s.

ZH: Is Ivermectin The New Penicillin?

As those Indian States using Ivermectin continue to diverge in cases and deaths from those states that forbid it, the natural experiment illustrates the power of Ivermectin decisively.

Cases in Delhi, where Ivermectin was begun on April 20, dropped from 28,395 to just 2,260 on May 22. This represents an astounding 92% drop. Likewise, cases in Uttar Pradesh have dropped from 37,944 on April 24 to 5,964 on May 22 - a decline of 84%.

Delhi and Uttar Pradesh followed the All India Institute of Medical Sciences (AIIMS) guidance published April 20, 2021, which called for dosing of .2 mg per kg of Ivermectin per body weight for three days. This amounts to 15 mg per day for a 150-pound person or 18 mg per day for a 200-pound individual.

The other three Indian states that adopted it are all down as well. Goa is down from 4,195 to 1,647, Uttarakhand is down from 9,624 to 2,903, and Karnataka is down from 50,112 to 31,183. Goa adopted a pre-emptive policy of mass Ivermectin prevention for the entire adult population over age 18 at a dose of 12 mg daily for five days.

Meanwhile, Tamil Nadu announced on May 14 they were outlawing Ivermectin in favor of the politically correct Remdesivir. As a result, Tamil Nadu's cases are up in the same time frame from April 20 to May 22 - 10,986 to 35,873 - more than a tripling.

2018-10-21

The Dollar Doom Chart

Trade weighed U.S. dollar versus all currencies. I expect the DYX will eventually move, but first emerging market currencies will lead the way down. If emerging market currencies remain more volatile and DXY hits 100, the chart below will hit a new two-decade high.
Dollar bears are looking at a 4 to 5 year H&S pattern forming with the right shoulder ready to descend towards the neckline. That's the effect of the euro. The overall elevation of the index comes from EM weakness.

2018-09-23

EM Decline: India Next

The next leg of EM decline should see India complete its topping pattern.

ZH: India's NPL Crisis Erupts: A Major Shadow Bank Defaults On Three Debt Payments
With the meltdown of IL&FS in motion, another unit, IL&FS Transportation Networks, reported that its chief financial officer, Dilip Bhatia, was demoted to chief strategy officer, for the goal of divestment of assets. The regulatory filing said Bhatia would relinquish his responsibilities as CFO with immediate effect, and the company will search for a replacement.

The shockwaves spread further on Friday, when IL&FS Financial Services, another unit of the IL&FS group, said its managing director and chief executive had resigned.

Why is this important? IL&FS’s outstanding debentures and commercial paper account for 1% and 2% respectively, of India’s domestic corporate debt market as of March 31, according to Moody, while its bank loans made up about 0.5% to 0.7% of the entire banking system loans.

And while bad loans in the Italian banking system have received a ton of attention from investors, India is not far behind and India's economic recovery is built on an even shakier foundation.
India ETFs in U.S. dollars are tracing out a topping pattern, but the Sensex is still in an uptrend.

2017-06-04

Indian Customers Replace US and EU in Yiwu

EO: 义乌式转型:中国小商品贸易的大买主变身印度人
In India, close to 1 million people in the hands of this handbag from China Yiwu International Trade City, a second named Junxi luggage store. In the past five months, the store has just gone through nearly three years of the hottest wave of the market, some orders have not yet completed delivery - the factory has been busy to come.

Junxi luggage owner Chen Lixiu in the past 5 months time to contact overseas buyers, the most is from India's buyers, they are characterized by a huge amount of purchases, but the sensitivity of the price is also very high, in the procurement, They will be counter-offer for the unit.

January to April 2017, in Yiwu City, the export of many countries, the highest total exports is India, and in a few years ago, the top position is generally occupied by the United States.

Yiwu, the "Made in China" foreign trade landmarks, is taking place is not easy to detect but it affects the profound changes: Indians replaced Europe and the United States, Yiwu become the largest new buyers. They are in the Yiwu small commodity market and the Chinese shopkeepers to PCT as a unit bargain, like the global economic arena on the same as the dragon game.

2015-06-09

India: Seize Your Destiny

China is aiming to be a world center for gold finance.

Caixin: The Redeployment of Asia's Forex Reserves
Gold and the New Silk Road
Part of the Silk Road initiative is the Silk Road Gold Fund, which aims to raise 100 billion yuan (US$ 16 billion) within five to seven years to invest in gold-related business and mining companies in countries along the Silk Road.

China is the world's largest producer of gold, and also a major importer and consumer. Among the 60 countries along the Silk Road, numerous Asian countries are identified as important reserve bases and consumers of gold.

Two top Chinese gold producers, Shandong Gold Group and Shaanxi Gold Group, will own 35 percent and 25 percent of the new financing source, respectively. The fund may also include an exchange-traded fund for gold and investments in miners of the precious metal.

The gold fund will be run by a new company, under the umbrella of the Shanghai Gold Exchange, to be established by gold producers and financial institutions, and is expected to facilitate central banks' redeployment of forex reserves into gold. The fund is to increase gold trading in yuan, internationalizing the yuan and increasing China's pricing power over gold.

The New Silk Road Investment Fund and the Silk Road Gold Fund are not just a new paradigm of infrastructure finance. Designed to fill the gap of finance infrastructure, these two facilities will enable central banks to diversify and redeploy their excess forex reserves. The gold fund is particularly important to this objective because it will ease gold purchases by central banks in the countries that are part of the New Silk Road development project. In this way, forex reserve managers will benefit from portfolio diversification, and at the same time, they can convert excess reserves into a nearby institution, which guarantees rapid availability to help cool off currency disorders.
I read this and immediately thought of India. Why does the Indian government fight its people when they are behaving well? Saving money is good! They choose to save in gold, you are the government, you should reflect the will of the people and give them more ways to save in gold. Stop treating traditional culture and good behavior as a problem that needs to be combated.

India is already considering monetizing the domestic gold supply (India Details Freegold Framework), but why not attract foreign gold deposits as well? Modi's development plans will require massive capital investments. If I have to choose between a Chinese-led project to invest in Central Asia or India's domestic development, I'm going to pick India hands down for various reasons, with the law as the biggest one.

India could use its domestic infrastructure development to build a domestic gold finance industry, then develop it into a global industry. The Indian government wouldn't have to worry about buying gold because the people of India and foreign investors would supply whatever is needed.

Ashok Rao: Rethinking India’s Gold “Imports”
Indeed the official fear about gold treats it as if it is a poor investment, which ipso facto means it shouldn’t be included in the current account. Even then, for many poorer Indians gold offers access to a banking system that otherwise requires 10th grade board exam results to borrow money at reasonable rates. Gold is an investment in an alternative source of financing to loan sharks that charge annualized rates north of 60% on a good day. Gold also doesn’t depreciate or perish. It might loose value but that is completely a capital loss.

This is a mistake that anyone who doesn’t understand why S = I might be prone to make. Business investment, i.e. a firm investing in machinery or platform development, isn’t the only form of investment. If I earn $1000 and place it under a mattress that is an interest-free investment in the form of deferred consumption (indeed if I burn it, it will be an investment to that amount rolled over in perpetuity, with an ultimate value of (1/discount rate)*1000).

This isn’t intuitive to most people. It’s very, very common to hear that gold is an unproductive investment or that “Americans are saving too much and not investing enough”. In fact, what they really mean to say is that interest rates as they stand are creating an investment situation in which an inefficient amount of funds are invested in very low return areas (such as inventory) and are not optimally productive.
The people are already using a parallel gold finance system. The government should recognize it, give it legal protection and allow it to develop. The result will be inflows of gold to India, very low financing costs for development and the creation of a major global financial industry. India already has 1 billion built in customers for gold finance who wouldn't need convincing. Only the central bankers, economists and politicians need some educating.

China's scrambling to build its gold reserves, India is trying to find ways to stop gold from flowing into India. Hopefully, someone in the Modi government will wake up and realize India is sitting on a gold mine.

P.S. Under the gold standard, gold inflows cause the currency to appreciate unless the central bank prints more money. (Similar to how China kept the yuan from appreciating by printing 8.28 yuan for every dollar brought into China.) Under the modern financial system, gold imports cause the rupee to devalue. India's solution for the past however many years has been to push the modern system harder. Stop fighting the market. A parallel gold system can exist alongside the rupee, and then see where the market takes it.

2015-06-04

Voting Rights in the AIIB

WSJ: India to Have Second-Largest Shareholding in China-Led Bank
ndia will hold the second-largest portion of shares and voting rights in a new China-led infrastructure investment bank that is expected to start operations by end of the year, a senior Indian official said.

China’s shareholding in the Asian Infrastructure Investment Bank, or AIIB, is expected to be around 30%, while that of India will be around 8%, the official, who didn’t want to be identified, said Thursday. The official said India’s vote share is likely to be around 7.5%.

The shareholdings and voting rights of all 57 founding members of the bank were finalized recently in Singapore on the basis of the countries’ respective gross domestic products and purchasing power parity, said the official familiar with the developments.

...“India hasn’t been eclipsed by China, which ought to lead the bank given the large size of its economy,” the official said.

India’s finance ministry is expected to soon seek approval of the federal cabinet to accept and ratify the draft article of the agreement to join the AIIB, the official said.

“I don’t see any difficulty in India joining the bank as we need immense funds to build the country’s poor infrastructure,” the official added.
Good news for the Indian economy.

2015-05-21

India Details Freegold Framework

Gold Savings Account:
• When the customer produces the certificate of gold deposited at the Purity Testing Centre, the bank will in turn open a ‘Gold Savings Account’ for the customer and credit the ‘quantity’ of gold into the customer’s account. Simultaneously, the Purity Verification Centre will also inform the bank about the deposit made.
Interest payment by banks:
•The bank will commit to paying an interest to the customer which will be payable after 30/60 days of opening of the Gold Savings Account. The amount of interest rate to be given is proposed to be left to the banks to decide. Both principal and interest to be paid to the depositors of gold, will be ‘valued’ in gold. For example if a customer deposits 100 gms of gold and gets 1 per cent interest, then, on maturity he has a credit of 101 gms.
Redemption:
•The customer will have the option of redemption either in cash or in gold, which will have to be exercised in the beginning itself (that is, at the time of making the deposit).
Tenure:
•The tenure of the deposit will be minimum 1 year and with a roll out in multiples of one year. Like a fixed deposit, breaking of lock-in period will be allowed.
Tax Exemption:
In the Gold Deposit Scheme (1999), the customers received exemption from Capital Gains Tax, Wealth tax and Income Tax. Similar tax exemptions are likely to be made available to the customers in the GMS after due examination.
Here's a crucial section:
The banks can directly get gold from the international market on a consignment basis and lend it to the jewellers. If this route is more lucrative, then the entire purpose will get defeated. Thus, this aspect will also have to be kept in mind, while deciding the interest rate.
Random thoughts: If foreigners want to lend gold to Indian banks (deposit it), what happens to the rupee price of gold? Economics 101 and the gold standard says the rupee price of gold declines. Is that gold a capital inflow or a trade deficit? What happens if Modi announces that India will finance its massive infrastructure build out with gold backed loans? The returns to the economy will far exceed to cost of the low interest rates attached to gold loans.

ZeroHedge: In India, Gold Is Not Only Money But Now Pays Interest

Draft Gold Monetization Scheme

2015-05-15

India And China Discuss Border

India-China border dispute: Li and Modi seek resolution
Mr Modi said at a press conference that he and Mr Li had agreed to explore a "fair, reasonable and mutually acceptable resolution" to the issue.

At his speech at Tsinghua later he said: "The solution we choose should do more than settle the boundary question. It should do so in a manner that transforms our relationship and not cause new disruptions."

Mr Li said the two countries had "enough political wisdom to manage and control" differences. "Our common interests are far bigger than our differences," he added.

Forget border deal: CCTV's India map reveals China's ever growing appetite for land
True to form, even as President Xi Jinping laid out the red carpet for Prime Minister Narendra Modi yesterday (14 May), China's state-controlled TV showed an India map with Jammu & Kashmir and Arunachal Pradesh lopped off. This was only to be expected as China believes in unsettling guests from whom it wants major territorial concessions.

2015-05-14

Emerging Market Currencies Outlook Negative, RMB Favored

Reuters: Reuters poll - Asia FX sentiment turns down
Foreign investors continued to sell Thai bonds as top policy makers expressed a preference for a weaker baht as exports sagged and the economy struggled for momentum.

India's rupee experienced its largest short positions since mid-August. Sentiment on the rupee had been bullish since early October last year before souring in recent weeks.

...In the previous poll published on April 30, views on most emerging Asian currencies turned bullish for the first time in six months amid views that the U.S. Federal Reserve may wait longer before starting to raise interest rates.

The latest survey showed long positions in the Chinese yuan fell only slightly even as the economy continued to lose steam in April despite a series of policy easings, including an interest rate cut on Sunday.

Overall optimism on the renminbi held firm as China's top officials including Premier Li Keqiang and PBOC Governor Zhou Xiaochuan have pledged to keep the yuan stable despite downward pressure exerted on the currency from the slowing economy.

Other emerging Asian currencies weren't so lucky, with sentiment turning negative on the slowdown in the world's second-largest economy and as the global bond rout prompted investors to dump government bonds in the region.

WSJ: Asian Currencies Hit by Bond Market Turmoil
Following the global bond selloff and the recent rise in oil prices, the region’s bonds are beginning to show signs of outflows with yields, which move inversely to prices, inching higher in recent days. As investors’ risk appetite wanes, analysts from Morgan Stanley say currencies that have seen outsize inflows in recent months will be most vulnerable. They point to Thailand’s baht and note that the Korean won, Taiwanese dollar and Singapore dollar “also appear exposed, given the magnitude of inflow over the past month.”

As economies in the region grapple with a broadly stronger U.S. dollar and looser monetary policies, currencies have become the only tool for central bankers to spur growth. Weaker currencies can help languishing export sectors.

WSJ: China Market Fails to Lift Other Boats
iFeng: 新兴市场货币人气"急剧"恶化 人民币意外"独领风骚"

2015-04-30

Oil Divestment: Try Harder

Sometimes when I consider Tainter, debt levels and demographics, I think it could be a long, slow slog back to high returns on invested capital. Then I see these stories.

Guardian: Group representing 1m medical students backs fossil fuel divestment
The fossil fuel industry is a bigger threat to global health than tobacco and the Bill and Melinda Gates Foundation and the Wellcome Trust have a moral obligation to divest from it, an international organisation that represents 1 million medical students has said.

A letter to the charities from the International Federation of Medical Students’ Associations (IFMSA) called on the charities to drop their fossil fuel company interests, which amount to almost £1.5bn.

The students said investments in coal, oil and gas companies were in direct contravention of the solemn Hippocratic 0ath, which doctors take before they begin their service.
My buy orders aren't going to fill themselves. Let's get going with this divestment.


“The threat to public health posed by fossil fuels is even greater [than tobacco],” said the students, who noted the medical profession’s leading role in the tobacco divestment movement. “The arguments that led the health sector to divest from tobacco provide a still more compelling mandate for divestment from fossil fuels.
I wonder if the Russians are paying for this, like they did with the nuclear disarmament movement in the 1980s.

2015-04-13

Interest Bearing Gold

Thought experiment. Assume the physical gold is independently monitored and this is not a paper gold scheme. If the banks offered a gold lending program that paid positive interest in gold, would you be more or less likely to hold gold?

If the U.S. government offered a 10-year Treasury priced in one ounce of gold and agreed to pay back the gold in American eagles in 10-years time, with interest of about 2%, such that if you own 10 bonds, you would receive 11 ounces of gold and cash for interest not equal to 1 ounce of gold in the equivalent U.S. dollar price at settlement, would you swap your gold? If you don't own gold, would be more or less likely to buy gold if you could swap your gold to the U.S. Treasury at interest?

Modi government eyes temple gold
Now, the Narendra Modi government reportedly wants to get his hands on this temple gold, estimated at about 3,000 tonnes, more than two-thirds of the gold held in the U.S bullion depository at Fort Knox, Kentucky, to help tackle India’s chronic trade imbalance.

The Modi government is planning to launch a scheme in May that would encourage temples to deposit their gold with banks in return for interest payments, it is said.

The government is likely melt the gold and loan it to jewellers to meet an insatiable appetite for gold and reduce economically-crippling gold imports, which accounted for 28 per cent of India’s trade deficit in the year ending March 2013.

2015-04-06

Gold Developments in India

Are more or less likely to hold gold if you are paid interest on your gold holdings?
Gold monetisation scheme and sovereign gold bonds may be launched in May
In an attempt to utilise the idle gold in the economy, the government is likely to launch the gold monetisation scheme and sovereign gold bonds by May, reported ET Now.

Finance Minister Arun Jaitley had announced the government's intent to introduce these schemes during his Budget speech on February 28. According to ET Now, the government is likely to offer a nominal rate of interest as a part of the gold monetisation scheme.


"The government is ironing out various pricing and infra availability issues. It is also figuring out the kind of rate of interest that can be given on the gold monetisation scheme," ET Now said.

In a move that may make the scheme lucrative, the government plans to add unused or broken jewellery as a part of the gold monetisation scheme. "This will help monetise unused gold that is currently lying at homes," ET Now said.

Gold savings scheme could erode India's gold demand
As per the proposed gold monetization scheme, customers could deposit their idle gold under the safe custody of bank. The deposited gold will earn interest too. Previously introduced gold monetization schemes had been failures on account of lower interest rates. However, the proposed scheme will pay higher interests in order to achieve maximum monetization of the household gold. The banks in turn will be allowed to lend this gold to jewelers. This will cut down the country’s gold import bill. The customers, upon the end of deposit period, will be paid equivalent gold in the form of bars.

The gold sovereign bond scheme allows customers to purchase gold bonds instead of physical gold. Upon completion of the bond term, the bond can be redeemed at the market value of gold on the date of maturity.
Monetization could curb gold imports because increased velocity causes the total money supply to increase, reducing the price. However, this assumes that in India, this doesn't make gold even more attractive. Gold is great sitting in your drawer, but you have savings in interest bearing accounts. If gold pays interest, why not pull your gold out of your drawer and your savings out of the bank?

Can Modi unlock $1 trillion worth of gold stashed away in India’s lockers?
Just 10% of this bullion, estimates the State Bank of India, could raise over Rs1 lakh crore in gold deposits over the next three years. And because Indian banks are required to maintain about a fifth of their deposits in gold or cash reserves, more gold in their vaults could free up money to lend for housing or business.

“This is a very good scheme,” said Samraj Jain, whose family runs the M. Shermal Jain Jewellers chain in Hyderabad. “Instead of their gold lying dead, people can give it to the bank and earn some money.”

“The banks can then lend it to jewelers at a higher interest rate,” he explained. “The depositor is happy because his gold is safe, the jeweler is happy because he doesn’t have to import so much gold, and the government is happy because gold is being recycled.”
Unless India's government or financial system plan this as a scheme for replacing physical gold with paper gold, it will fail to reduce demand because gold is more attractive when it has fully rediscovered its monetary value.

The plan is a great idea because India has a lot of capital lying dormant. Putting capital to work is always a good idea and it will benefit everyone. Whether it actually curbs demand in the long-run, however, is an open question. Unless Indians give up their affinity for physical metal, making it more profitable to own gold will increase the long-term physical demand.

Indian jewellery billionaire Rajesh Mehta to buy Australian gold assets
India's biggest jewellery maker, billionaire Rajesh Mehta, wants to deepen his relationship with Australia's gold industry by buying stakes in Australian mines and potentially opening retail jewellery stores in the country.

Speaking on a rare visit to Melbourne, Mr Mehta said his company wanted to spend up to $US700 million ($921 million) growing its presence in Australia, with mines the primary focus.

'We have been importing gold from Australia on and off in the past, but now we want to have a formal presence in Australia," he told Fairfax Media.

"We are setting up a subsidiary in Melbourne primarily to look into acquiring interests into the gold sector of Australia, looking at gold mining assets in terms of equity or loan or whatever is feasible for us so we can ensure a reliable and permanent gold supply-line to our company.
I read articles like this and wonder, why don't the gold miners see the future and open their own banks? One day in the future, the banks are going to take the mine supply and earn a lot of money off of it. Why not go vertical and cut out the middle man?

2015-03-02

India Set to Pass China As Fastest Growing Economy

With a positive demographic dividend, low hanging fruit and competent leadership, India is finally ready to fulfill expectations.

A chance to fly
India possesses untold promise. Its people are entrepreneurial and roughly half of the 1.25 billion population is under 25 years old. It is poor, so has lots of scope for catch-up growth: GDP per person (at purchasing-power parity) was $5,500 in 2013, compared with $11,900 in China and $15,000 in Brazil. The economy has been balkanised by local taxes levied at state borders, but cross-party support for a national goods-and-services tax could create a true common market. The potential is there; the question has always been whether it can be unleashed.

PM Narendra Modi passes budget test despite lack of reform dazzle
Jaitley's headline innovation was a roadmap for simpler taxation, with a promise to cut corporate tax to 25 per cent from 30 per cent over four years, and a commitment within a year launching a national service tax union to make business easier.

The budget also shifted more resources to states in a boost for federalism. It promised to clamp down on India's black economy and warned of tough new penalties including overseas asset seizures and jail time for tax evaders.

All of this was praised in India's leading newspapers and analyst notes, with public opinion also broadly positive.

2014-05-15

India Breaks Out


Indian Exit Polls Show BJP Headed for Victory in Record Election
Official results are to be announced by the national Election Commission on Friday for the vote in the world's largest election, which began in April and ended Monday.

A series of exit polls over local television networks on Monday evening projected that the BJP and its allies would win roughly 250 to 280 of the 545 seats in the lower house of the Indian Parliament. If those results are correct, it would put the BJP in a position to form a government.

India is single handedly holding up the BRICs.

There are several India ETFs in the U.s., including EPI, INDY and SCIF.

2014-05-04

India Swings Right; A Blessing or a Curse?

I do not follow Indian politics too closely, but the electoral shift underway there fits the pattern seen all over the world: a shift to the right. However, in Asia much of the shift has been structural: the rise of China, the ongoing success of Singapore and Hong Kong, plus the rise of dynastic families in China, South Korea, Japan and elsewhere: see Princelings are ruling not just China

In India the move appears to be ideological, a right-wing shift within a left-wing system.

The real reason Indian intellectuals are backing Narendra Modi
All of this is new because until very recently, BJP had had a severe deficit of intellectual firepower. Apart from a few former and current editors such as Swapan Dasgupta, Chandan Mitra, and Arun Shourie, a few retired men from the defense services, and some self-appointed historians, the BJP had no one much to show for all the decades it had been in existence under one name or another. That was because until recently, movers and shakers in academia, journalism, literature and films had tended to steer clear of the bad odour that came with the aggressive, religious-identity based politics that the party championed, based on issues such as demolishing mosques that are believed to have been built on top of then-existing temples a few centuries ago by Muslim invaders. In the course of promoting these agendas, the BJP has often found itself at the receiving end of accusations that it stirred up violence and riots. The biggest of them happened in Gujarat in 2002, when Modi was the chief minister of the state. Those riots killed more than 1,000 people, mostly Muslims. This helped polarize the state along communal lines, and Modi fought the central Election Commission to ensure elections were held as early as possible, before passions that the riots had stirred up cooled down. Modi went on to win the elections handsomely, even though his party had been losing all the by-elections in the period before the riots.
This is where the rubber meets the road with cycle theories of history. The linear interpretation of history says these political shifts are the result of short periods such as the 1910s to 1940s that saw the rise of communism and fascism. The other interpretation is that history is cyclical and the rise of communism and fascism, both democratic movements, was the death rattle of a left-wing impulse that began some 200 to 300 years earlier. (Despite the ending of elections once in power, these regimes, including North Korea today, claim to represent the will of the people. Monarchs didn't need to represent the will of the people, his rule was secured by other means, such as the Mandate of Heaven in China.) The big question today is whether these are more road bumps or a trend change. If these are road bumps, the BJP will appeal to the people. If structural and part of a trend change, the BJP will begin dismantling democratic systems in India.

On that score, Outside In notes:
There are some obvious reasons for caution (beside dim parochialism). Most centrally, the role of democracy in the BJP wave is strongly analogous to that afflicting the 20th century European far right, and the record of reactionary demotism scores a straight ‘F‘. Democratic pressures suck the right into an ideological black-hole, since the only parts of its agenda that hit the tingle-spot with the masses are its crudest appeals to atavistic sentiment. Cognitive regression is the inevitable price of popularity.
Is BJP leading the country to the right, or following the electorate (riding a mood shift) to the right?

Back to the Quartz piece, the BJP does appear to have fused together an electorally potent policy mix that has worked before:
But all this is beginning to look like distant history. Modi, who has been the chief minister of Gujarat for the last 12 years, has rebranded himself as a go-getting, business-friendly free marketer who has delivered a consistent growth rate of about 10%. And the BJP is now so surfeit with newly imported talent that it is causing heartburn among long-established supporters of the party.

......Shekhar Gupta, editor of the liberal Indian Express—one of numerous newspapers that excoriated Modi during the 2002 riots—wrote in a recent column mockingly titled “Secularism is dead!”: “This anti-Modi battle cry is lazy, illiberal and an affront to Muslims—and Hindus.” But he makes two strong points. One, the BJP-led alliance would get no more than a third of the popular vote at best, and though this may be enough for it to come to power under India’s first-past-the-post voting system, what is clear is that the vast majority of the Hindus, who form more than 80% of the population, have not given up on secularism. Two, even the 30% who might end up voting for Modi would be doing so not because they want to build temples or banish the Muslims to Pakistan, but because they want an alternative to “the weakest, most incompetent, uncommunicative and incoherent full-term government” in India’s history (the Congress).
The rise of China is both a strategic threat and an ideological one. India should be growing faster than China given its smaller economy, but its system has held it back. Whereas the Chinese mandarins could undo socialism with the wave of the hand, India has a lot harder time of reforming itself. It would be a mistake to discount the failure of socialist/democratic systems in producing economic growth. (As for China, communism is being slowly removed from the political system. You can look at the past 30 years and current reform and call it many things, but communist or socialist it is not.)

So the elephant in the room is the question: Can a Modi-led BJP rule the country in a democratic and non-divisive manner, without causing a gradual slide into societal strife? His track record in Gujarat is not reassuring. Though there have been no major riots there since 2002 under his watch, his government has victimised police officers and other critics who spoke up against it; refused to field a single Muslim candidate in state assembly elections though a tenth of the population is Muslim; and inducted into the cabinet a politician who was directly involved in the massacre of 96 people, and was later convicted. He has also sidelined all potential political rivals within his own party. In the words of Ramachandra Guha, well-known historian and author, Modi “is a bully and bigot… Unlike others, I don’t believe he will change, because at 62 you cannot have a personality transformation.”

But an even bigger worry is the RSS, the fountainhead of the Hindu nationalist ideology, which controls the levers of power in BJP and which has put its weight behind Modi to make him prime ministerial candidate. At the heart of the problem lies the RSS definition of who is a Hindu. According to M.S. Golwalkar, one of the founding fathers of RSS, a Hindu is one for whom India is both punya bhoomi and karma bhoomi (holy land, and the land where one lives and works). In the RSS version of nationalism, only those who belong to religions of the land—Hindus, Sikhs, Jains, etc.—can consider India a holy land. For others such as Muslims and Christians, the holy land is elsewhere, in Mecca or Jerusalem, it insists.

Having made this unilateral assertion, Golwalkar argues that all Indians who are not Hindus “must adopt Hindu culture and language, must learn and respect and hold in reverence the Hindu religion, must entertain no idea but of those of glorification of the Hindu race and culture. … In a word, they must cease to be foreigners, or may stay in the country wholly subordinated to the Hindu nation, claiming nothing, deserving no privileges, far less any preferential treatment – not even citizen’s rights.”

India's shift to the right is good news for the economy, if reforms follow. Indian shares are already outperforming the emerging market complex due to buying the rumor, but it will take actual policy changes to make a difference. Jim Rogers is not optimistic given India's track record:
Has the BJP said or done anything revolutionary, or said anything different? They say we like business people better than Congress, but can they do anything other than making some cosmetic changes? Yes, if they (BJP) win, Goldman Sachs will be happy; they can buy stocks and markets will go up. But a year later everyone will look around and say that nothing has changed. It will still be impossible to do business in India unless you are in bed with politicians and bureaucrats. It will still be impossible for people to buy and sell currencies the way they want to…. I can buy gold nearly anywhere in the world, but not in India because I am foreigner. What kind of garbage is that?

Even if reforms due follow, it bears watching how the new leadership deals with other issues mentioned above, extending to foreign policy with Pakistan and China. As the U.S. recedes from prominence on the world stage, states will jostle to fill the power vacuum. If the BJP's internal cultural policies are also expressed internationally, it does not bode well for regional tensions.

2014-03-05

China Ramps Up Military Spending; Move Will Strengthen Anti-China Alliance

In The Logic of Strategy: Yuan Devaluation and the Road to Trade War, I look at the economic angle and Edward Luttwak's book, The Rise of China and the Logic of Strategy. One of his points was that a major military buildup by China is alarming to its neighbors and sending them into the arms of the United States, to the point where they are prodding the U.S. to play a role in the region.

This latest news means there will be no easing of tensions.

China's Xi ramps up military spending in face of worried region
The government said it would increase the defense budget by 12.2 percent this year to 808.23 billion yuan ($131.57 billion), as China seeks to develop more high-tech weapons and to beef up coastal and air defenses.

Will the United States eventually decide that the way to slow Chinese military spending is to slow the Chinese economy? As I mentioned in the prior post, there are growing economic arguments against free trade. Trade deficit nations such as the U.S. also benefit in the short-run from trade restrictions because it means the domestic economy must supply more goods and services. The odds are certainly above zero that a politician will see a way to boost the economy and appeal to nationalism with one policy.