By J Mulraj
Sep 24-30, 2022

India’s economy can sprint like a cheetah, but a lot of work still needs to be done

India has become the 5th largest economy in the world and is predicted to become, by 2030, the 3rd largest, overtaking Germany, #4, and then Japan, #3. It has the potential to achieve it, for sure, by staying the course of sensible economic policies. It’s large population, with a young demographic profile, all of whom are enabled, through UPI (Unified Payment Interface), to participate in, thus contributing to, economic growth, ensures a huge domestic market for goods and services. With the help of things like UPI, India executed 48 billion real time financial transactions, the largest number, globally, and 3 times that of China.

The huge domestic market, with a young population, in turn, attracts foreign investment, especially as China, with an equal population, is making itself unattractive to investors by its frequent and unpredictable Covid lockdowns. India’s PLI (Production Linked Incentive) scheme to attract Foreign Direct Investment has brought in the likes of Vedanta, with Foxconn, to set up a fab in Gujarat, and Foxconn, to make IPhones in TN.

The Government has recently introduced a National Logistics Policy, which strives to improve logistics efficiency, thus lowering cost. Cost of delivering goods is around 12-14%, which ought to go under 10% after a successful implementation of the policy (see

At the recent Forbes Global CEO conference held in Singapore, Gautam Adani spelt out the India growth story, and detailed his group’s plans. He talked about the start-up ecosystem that has sprung up, all across India, indicative of the entrepreneurial urge gripping India. Of the 760 districts in India, over 670 have at least one registered start up. In 2021 India added a unicorn (a start up with a valuation of $1 b) every 9 days!

The Adani group plans to invest heavily in Energy Transition. This includes investment in renewables; it’s already the world’s largest solar player, and in green hydrogen, of which it expects to be the world’s cheapest producer of. The group also plans to invest in Digital Transformation, and its Green Data Centre would, it hopes, become a game changer.

So the India story looks good, and achievable. India will be a growth economy, but in order to become a developed one, some hard work needs to be done.

The functioning of Democracy: The electorate elects parties based upon pre-election alliances. So they may vote for a candidate simply because he is the alliance partner of the one they want to vote for, but who is not standing in his constituency because of the alliance. So, if there is a subsequent discord, and a section splits away to form another alliance, the electoral mandate is vitiated. Why should such breakaway factions need to be sequestered in hotels unless it is to avoid “wooing” by others, in an electoral ‘kaun banega crorepati’ grotesque distortion of democracy?

Here is an idea for consideration by the polity. Let any faction be free to exercise their political freedoms, but with a price to pay for vitiating the electoral mandate. The price could be a deduction of, say, 20% of popular votes received by those breaking away, in the next election. Perhaps that may encourage a responsible tolerance for other viewpoints, and be a damper on greed.

The functioning of the Judiciary, and investigative agencies: Thankfully the SC belatedly denied a request for adjournment by a senior advocate, who was appearing in another matter. Like any other professional, lawyers, too, must accept cases based on ability to deliver, and shouldn’t be granted the leeway of accommodation, if they don’t.

It’s also regrettable that gestures are allowed to pass for justice. In cases of frauds, such as Rose Valley, or NSEL, or several others, the act of ‘seizure of assets’ is assumed by the judiciary to be the end of the matter. It is the beginning. The assets have to be liquidated and the moneys disbursed. This does not happen. It is the responsibility of the judiciary to ensure that it does, in a time bound manner. A failure to ensure this would negatively impact foreign investment, thus the India story.

One sees, with dismay, the vulgar stacks of cash hoarded by politicians and displayed on TV when raids expose the ill gotten wealth. But nothing happens to the guilty! A political settlement allows the politician to be reinstated, especially if he switches parties. That’s a sham of democracy, a mockery of justice and a cruel mockery of the notion that we are becoming a developed nation.

The functioning of local bodies: Our cities and towns don’t resemble those of developed countries. The roads are potholed, the pavements are a disgrace. No one cares about noise pollution, which gets worse during festivals. Rules can be broken with impunity and a little sleight of hand. There is no awareness of the need to control noise or air pollution, thus no action against those who do it. These are important, and not small, things that need to be done. And yes, noise pollution includes the use of sirens, whistles, and foghorns, to control traffic for ‘VIP movement’. This nauseating practice had once been removed but is now back.

Globally, the Ukraine war distressingly continues unabated, with Russia and the West both playing a high stakes chess game. Including escalations of a threat of nuclear war, and, equally worrying, attacks on civilian infrastructure. Someone, we don’t know who, has blown up both Nord Stream I and II pipelines, in an act of sabotage. There are several theories about whodunit. Could it have been Russia who blew up the pipelines? The theory is that it would allow them to claim force majeure to get out of contractual obligations. Another theory says it could be USA, perhaps to remove, from Russian hands, the lever with which it could tempt some EU countries to break away, in order to get energy security. (Hungary may do this).

This act of sabotage regrettably expands the boundaries of war, and exposes all countries to attacks on civilian infrastructure. These can be undersea telecom cables, electric power grids, internet services or others. When will hate, and destruction, stop?

Even more depressing is that the perpetrators either didn’t realize (ignorance) or didn’t care (apathy), that 85% of natural gas is methane! Methane is far more dangerous to the environment than carbon dioxide, and lingers much longer. It is pure madness to deliberately release it.

Environmental disdain has spread across an ocean, in Brazil, where President Bolsonaro has stupidly turned a blind eye to illegal mining and deforestation of the Amazon, the world’s lungs. Large tracts of erstwhile forest are used, to plant soya, used to export to China, to feed pigs, which are eaten. Never mind the damage to the lungs of the world! Hopefully, this Sunday, Bolsonaro may be replaced in a general election, by former President Lula.

In China there were rumors of an attempted coup, and the house arrest of Xi Jinping, which are now believed to be just that, rumors. He is likely to get a third term, later this month. However a recent Pew Survey reveals that 80% of respondents, in several countries, view China with distrust.

Last week the BSE Sensex dropped 572  points to close at 57426.

The price of Brent crude has dropped below $ 90/ b. which will ease India’s import burden. India’s current account deficit in Q1 was 2.8%, so a fall in the cost of oil, it’s main import, is very welcome, and eases the downward pressure on the currency. It fell to around Rs 82/$. At some point in the future foreign investors would want to invest in the Indian stock market, as the India story remains strong. If, at that time, the INR is perceived to have fallen enough, FIIs would be enthused to invest, as the currency risk would have been reduced.

Global stock markets should continue their downward drift as Central banks stay the course of higher interest rates, and the Ukraine war continues to dampen EU growth. There is a general expectation of Xi getting a third term, any other outcome may be a white swan event!

Putin held a referendum in four of the partially captured territories, a bizarre act, and has proceeded to annex them. The implication of this is dire, because if Ukraine counter attacks, Putin will claim it as an attack on Russia, justifying his assumed right to defend, with nuclear weapons. An unimaginable prospect.

The India story is good, but we have miles to go, as spelt out above. Doing these would ensure a tsunami of funds, both FPI and FDI, once the time is ripe. Perhaps mid ‘23. We can then sprint like a cheetah!

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