It’s crunch time for China … or for the hedge funds betting against it
2016 is the year when China bites the bullet, the experts say. One way or another the debt is now so large it has to be addressed, no choice – deleveraging, rebalancing of the economy (and much lower growth), or a reckless dash for even more debt-for-growth. The question is, which way will China decide to break?
This matters for India. China is its heavyweight neighbour, used to throwing its weight around. It is a trading rival and a political-strategic competitor, a partner in balancing power – the very definition of a frenemy. India in the old days of fresh independence under Nehru naively believed that China was its best friend: ‘Hindi-Chini bhai bhai’ (India-China best brothers!) was the slogan as the 1960s opened. Then in 1962 Chairman Mao bitch-slapped India when Chinese forces invaded the north-east territories and shredded India’s brave but ill-equipped troops. The country suffered a nervous breakdown it has perhaps never quite recovered from. India even today is still ginger and over-accommodating not only in its dealings with China but Pakistan, too.
Continue reading “China Crisis?”
Looking at China’s experience can give us clues about what India should produce in the future
It’s interesting that the more I think about India, the more I find myself reading about China. Bharatiyata! is supposed to be comparative in spirit, so I guess it is natural for me to compare; it certainly provokes many thoughts.
In fact a very thoughtful piece over at Andrew Batson’s China blog concerns itself with the mystery that, for all its export volume, over the years China hasn’t really specialised in any area but continues to make and sell everything to everyone. Why? Or why not?
Most countries specialise by choice or necessity to partake of what economists call ‘comparative advantage’. It means that you can make or do something more efficiently than somebody else or some other country. (Batson quotes Carsten Holz who refers to Taiwan speedily adapting to supply niche markets globally, and South Korea, which aimed for a broad industrial base but quickly specialised). By each party concentrating on what it does best, everybody makes more money.
Continue reading “Loo seats and asparagus”
Aiming to get consumption up and savings down is a step in the right direction
Perhaps more of a footnote, or a doggy-bag.
Spending is up on infrastructure, farms and rural sector. Irrigation – Modi’s big innovation in Gujarat and the thing that, tied to electrification, transformed the state’s economic fortunes, is now a major element of the national Big Plan. Good.
The income of farmers is supposed to double over the next five years, providing a feel-good factor into the next general election, but more importantly giving more of the economic pie to households – increasing consumption at the expense of savings. This is also good and needs to happen because India has too many poor people, and at the same time absolutely massive potential internal markets. If spending goes up then India can become rich; that’s not going to happen if the mass of people has no money to spend.
Continue reading “Budget – second helping”
Rajan knows that all accelerated growth always leads to dangerous economic imbalances.
Revealing a despair that I shared, Elaine Meinel Supkis wrote in 2007 that,
‘There are very, very few fiscal conservatives around. We like reduced debts, sober analysis of economic facts and building for the future coupled with real capitalism, not predatory, debt-fueled speculation.’
Debt-fuelled speculation, aided by the venality of bad-faith politicians and academic central bankers, has ruined the economies of the West. We live in hope that India will resist mammon-obsessed financial quants, and follow a line of genuine value creation, unleashing prosperity across society and nurturing aggregate demand not asset-price bubbles, generating healthy rather than piratical profits. As Hyman Minsky eloquently put it , ‘The primary aim is a humane economy as a first step toward a humane society.’
Continue reading “Indian budget takeaway”
India needs to be careful not to take on too much foreign debt
These days which country would not relish minimum 7% annual growth and a central bank lending rate of 6.75%? Apart from being an attractive investing environment, it means a whole range of monetary policy options can be deployed in response to changing economic conditions, especially adverse ones. This happy situation stands in contrast to those countries where zero, near zero or even negative interest rates mean that governments and reserve banks have nowhere left to go except competitive currency destruction, which ultimately means the impoverishment of their citizens.
India, despite its relatively benign position compared with the USA and China – to name only two out of dozens of troubled economies – remains oddly unloved in terms of the inflow of foreign capital and the tenor of opinion surrounding its prospects.
Continue reading “Development dangers for India”
India’s fear is that change will destroy its ability to suffer and survive; therefore India fears change.
Although Bharatiyata! Is mostly concerned with India, it is important to compare it with neighbours and competitors. To this end, examining India and China together is interesting, especially because their journeys into the future will run so much more closely together in the political, economic and military fields from now on.
One particular way in which the two countries can be held up to the light, as it were, to see how they differ, is in their weaknesses. What are their Achilles’ heels, psychologically speaking, and how might these affect them in macro terms?
Continue reading “Fears and weaknesses – comparing India and China #1”
I always tell people that Indians do not ‘get’ Adolf Hitler. In fact, as an example of what I want to do on this site – help Westerners to understand India – Hitler is a good place to start.
I was in Mumbai airport, passing through the dingy and down-at-heel domestic terminal this time, not the sleek and art-ified international one, when I spotted a proud stack of Hitler’s Mein Kampf for sale in the rather good little bookshop there. To say the least, this is not something that would go down well in London or Berlin (although apparently the Germans are reprinting the book for the first time since World War II).
For Indians, though, the prominent swastika on the cover – and on the cover of Nazism itself, if you like – speaks spiritually of the cycle of life and harmony and piety. They don’t see the symbol reversed and transformed into Hitler’s sinister black spider. But the big thing to remember is that Hitler is something of a hero in India. Not, I stress, because the Indians are at all inclined to be fascist; in fact I cannot think of any nation less inclined. Rather, it is because the Indians see Hitler as having stood up to the dictator Churchill.
Continue reading “Hitler in Mumbai – the strange case of Subhas Chandra Bose”
Putting this site together has been quite an education. I have now figured out enough of the software to be able to use it, and I was looking forward to making the joint look nice by adding some photos and videos. I tracked down some lovely images of India on Flickr and on YouTube found some films I helped to make for the BBC. The Flickr photos were from people who had uploaded and listed them with a Creative Commons (CC) re-use licence: you are supposed to be able to insert them on your site under certain conditions (don’t alter them or use them for commercial purposes and so on). All was well until I began to double-check on the licence and copyright situation – and then my blood ran cold.
Continue reading “A word about photos and videos on this site”
In a couple of decades India will be one of the two largest economies in the world, and Bharatiyata! aims to be here for those entire twenty years as India takes its place as world leader. With our very first post, and as a foundation project, we are embarking on our long journey by setting a challenge: that by the time 2036 comes around, the incredible beauty of the Andaman and Nicobar Islands will have been enhanced by the development of the largest resorts, deep-water harbours and free trade entrepots in the world, dwarfing Dubai and surpassing the beaches of Thailand, even outclassing Hong Kong and Singapore as vibrant free-trade utopias. That quest begins right here and now.
Continue reading “A twenty-year project: Andaman and Nicobar Islands #1”