Optimism amidst Obstacles

 

 

 

 

 

 

To peep into the economic scenario of 2020, one will have to start with 2019. In the name of economy, the talking points in 2019 were:

• Ambani–Adani
• Bank Scams/BSNL
• Car Sales/CAG/Chanda Kochhar/CBI/Cash Burn
• Data/Demonetisation/DHFL/Disinvestment
• Economic Advisor/ED
• Fraudster Businessmen/Fake News
• GST
• Huawei (5G)
• Indian Airlines/Infrastructure/IBC/IHFL
• Jet Airways
• Kapil Sibal Vs Barkha Dutt
• Loans
• MUDRA/ MTNL/Make In India
• NCLT/NCLAT/NBFC/NPA
• Onion Prices/Online Shopping
• P Chidambaram/ PMC Bank/ PSU
• Quattrocchi, Ottavio
• RBI Governor/Rahul Gandhi/Raghuram Rajan/Rahul Bajaj/Regulatory Bodies
• Supreme Court/ Startup
• TRAI/Twitter
• Unemployment
• Vodafone
• WhatsApp
• Yes Bank
• Zaveri

 

 

Before proceeding further, let us look at some of the above-mentioned points.

 

 

• Ambani-Adani is often quoted to stress that the current government is favouring them. While in reality Reliance Capital, Reliance Home Finance and Reliance Infrastructure are the biggest wealth destroyers of 2019. (https://economictimes.indiatimes.com/markets/stocks/news/top-wealth-creators-of-2019-stocks-that-defied-odd-to-rally-up-to-2200/articleshow/72741904.cms)
• Somehow everyone has missed the headline “Centre seeks to restrain Reliance Industries stake sale to Saudi Aramco. RIL, India’s largest company, had announced plans to sell the stake to Saudi Aramco in a deal estimated to be worth $15 billion. According to the government, which is fighting the arbitration with RIL, the company and its partner appropriated huge sums of money in violation of the production sharing contract in the PMT gas and oil fields. In 2016, the tribunal finally decided what part of the amount was wrongly appropriated by RIL and its partner and on the basis of that award, the government has computed that $3.8 billion, excluding interest, is to be paid to it. With interest, the amount now comes to $4.5 billion (over Rs 30,000 crore). (https://timesofindia.indiatimes.com/business/india-business/govt-seeks-restraint-on-ril-assets-sale-to-aramco-demands-security-for-4-5-bn-arbitralaward/articleshow/72910001.cms)
• PSU Bankers are the biggest hindrance to India’s development after regulatory bodies. Their selection and training process should be relooked asap.
• GST is one of the finest measures taken by the government.
• Infrastructure investment has seen a lot of push by the government. Most of the infrastructure development has taken place in far off areas like northeast or the border areas. These developments are coming almost 70 years late. These are essential developments but their return on investment in immediate economic terms will be low because they are remotely located. Kudos to the government for not only initiating those projects but also completing them.
• Few in secular camp thought that Kapil Sibbal not paying Barkha Dutt’s salary has impacted the economy adversely while in communal camp those waiting to see NDTV fold up, witnessed the disappearance of the print edition of DNA.
• Make in India, for big projects especially on Defence, which are the big ones have not seen much development, and I do not see any groundwork happening on them even in 2020.
• Regulatory bodies will have to realise that they are not there for boosting their egos but to contribute to nation’s development. The government should also think of organising training programmes for the honourables heading such bodies. This can help in boosting economic growth in the country substantially.
• Zaveri’s of Tribhovandas Bhimji Zaveri had some anxious moment because of similarity in name with Tribhovandas Bhimji Zaveri & Sons Retail, which filed for bankruptcy;

In the new balance sheet of 2020, almost all the talking points will be carried forward. And there will be few new additional issues that will affect the economy in 2020. The new issues will be the following:

 

 

1. Attempt to create civil war by Left-Liberal-Secular-Jihadi-Missionary-Media cabal. They have been attempting to create the civil unrest since 2014 in bits and pieces in different states, mostly in the name of reservation or farmer distress, but always failed to do so. In 2019, they have succeeded in doing so and it will continue in 2020. While writing the article, government and nationalists both are trying to figure out how to handle the situation. As usual, there will be two groups. One asking for kid-glove treatment and the other for harsher measures. India is a big market, hence without thinking about the international pressure government should go all out to crush the civil war propagators, and if required it should create training centres like the Xinjiang re-education camps, officially called Vocational Education and Training Centers by the government of the People’s Republic of China. Institutes like JNU, AMU, JMI can be converted into such training institutes.

 

 

A 2014 report states that “Migrant workers from the impoverished South Asian country (Bangladesh) sent home $14 billion last year, according to the World Bank. Bangladeshi workers in India transferred more than $6.6 billion to their home country, making them the biggest source of remittances to Bangladesh. This is more than four times the money being sent from Saudi Arabia, the second-highest contributor.”(https://qz.com/india/221317/remittance-economy-india-is-to-bangladesh-what-the-middle-east-is-to-india/)

 

 

Imagine if there were not so many Bangladeshis in India then these jobs would have been with Indians and this money would have stayed in India contributing to India’s and Indian’s economic development.

 

 

2. No of Cyclones. The Sindhu Sagar (The Arabian Sea) witnessed one of the highest numbers of cyclonic disturbances in a year till date. Normally, the Arabian Sea sees 1.7 cyclonic disturbances (depressions/deep depressions) annually. However, this year so far, a total of seven cyclonic disturbances have formed in the Sindhu Sagar. The India Meteorological Department (IMD) data show that the year witnessed the formation of seven cyclone disturbances, which is the highest for any year since 1891.Control of cyclones is beyond the means of Government, but it will affect the business and life negatively and will cause immense damage to infrastructure. The insurance industry can witness a huge change if it continues in 2020. Looking at the above factors it will be safe to say that the Economic condition of India in 2020 will remain as it is in 2019. Let me stress that it was not a pessimistic outlook.

 

 

Most individuals are looking for a V Shape recovery. (https://www. investopedia.com/terms/v/v-shaped-recovery.asp). A V-shaped recovery is characterised by a sharp economic decline followed by a quick and sustained recovery. A V-shape recovery depends on various factors, one of the most important one being that the society as a whole attempting for a fast recovery. In India, this is missing. There are ideological driven businessmen in this country who are willing to take a hit on the business to propagate their ideology. On top of it, the current dispensation has successfully managed to alienate the businessmen who were inclined towards it. (it is right or wrong can be subject of a different article). This combined with the cabal mentioned in the above paragraph will slow down the recovery process.

 

 

The economy is downhill. Before it recovers, it will have to pause and then start the recovery journey and 2020 could be the year of that pause. The economic recovery will follow a Hockey Stick Chart.

 

 

A hockey stick chart is a line chart in which a sharp increase occurs suddenly after a short period of quiescence. A hockey stick is comprised of a blade, a small curve, and a long shaft. A hockey stick chart displays data low-level activity (y-axis) over a short period of time (x-axis), then a sudden bend indicative of an inflection point, and finally a long and straight rise at a steep angle. (Will Kenton, https://www.investopedia.com/terms/h/hockey-stickchart.asp)

 

 

One can also say that the economy in 2020 will follow a Taste Match approach. One must remember that it is not India alone which is going through an economic crisis, but the world economy is facing a slowdown and compared to other countries India is doing much better. Those who would have travelled to rural India will realise that today even rural India is connected directly to the global economy. The money that comes through remittance from abroad drive a large chunk of economic activity in rural India, and with a global slow down, even remittance is affected which in turn has hampered the economic activity in India. This is just one example. Genuine economists across the world look at India with optimism, time Indians looked at India with the same optimism. India is set to become a $5 Trillion economy and no one should be allowed to become an obstacle.