MARKET PERSPECTIVE

By J Mulraj

Jan 18-24, 2025

Petty bureaucratic tinkering

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The ongoing Mahakumbh mela at Prayagraj, a month long religious gathering, is expected to be attended by 400 million people. That is a more than the population of the world’s richest country, USA. Organizing the logistics, food, housing, medical care, law and order for such a mass of humanity is a phenomenal achievement! To put this in perspective, only two countries, India and China, have a population exceeding 400 million. Kudos to the organizers!

Indian Railways have developed a 1200 HP (twice the capacity of trains of other countries) hydrogen train engine, enabling ecologically safe, fast, rail transport. Only four countries have hydrogen powered trains and India’s will be the fastest. Kudos to the Railways!

ISRO, India’s Space Research Organization, has successfully docked two satellites in space; with this, India becomes the fourth country in the world to have this capability. Docking capability paves the way for India to have a space station, or to bring back moon soil samples, clearing space debris, and the like. Kudos to ISRO!

These achievements, revealing the progress and advances made by India, make one wonder why bureaucrats/ministers are meddling in trivial things, indicating their wish, perhaps, to return to the abhorrent licence-permit raaj two Governments had, thankfully, dismantled. The Governments of Manmohan Singh and Narendra Modi.

Earlier, such pettiness in thinking was demonstrated by the idiocy of taxing caramelized popcorn at a higher rate of GST than salted popcorn, on the ludicrous ground that it was a ‘mithai’, or sweet, that consumers could afford to pay more for!

Now, the Government of Maharashtra, Ministry of Skill Development, is threatening to impose a stiff penalty on companies that fail to report to it any job vacancy they have! Why is such reporting necessary? It is in any company’s own interest to fill vacancies. such a diktat would make sense only if government officials were seeking to oblige their friends by coercing companies to have them fill the vacancies. That would be retrograde.

The stark contrast between the achievements of organization’s that value and encourage innovation, and the pettiness of a bureaucracy seeking more control, is obvious but perplexing. Unless political leaders stop such nonsense, the India story would get diluted.

An interesting episode last week was the disclosure, by Sunil Mittal, founder of Bharti Airtel, of an attempted fraud using his voice, artificially generated by AI. AI, like any technology, is beneficial to society, but can be misused. Our investigative agencies are ill equipped, worse yet, unmotivated, to act against fraudsters, and our judicial system too slow, and soft, to adequately penalized them. So AI frauds will allow fraudsters freedom to exploit individuals. Perhaps the only way to stanch AI fraud would be to ask the judiciary to act swiftly and serve exemplary penalties (like 30 year jail sentences) to discourage fraudsters.

The big news of last week was the inauguration, for his second term, of Donald Trump, as US President. He started by passing a slew of Executive Orders (EOs), about 200 of them.  According to the American Bar Association, EOs cannot be overruled by Congress, though it could withhold funding for it.

Some of the main EOs included immigration and border orders, permitting the military to take action, if warranted, designating cartels as terrorist groups, EOs related to energy, to cut red tape and make obtaining permits easier for fracking, EOs to terminate DEI programs, which promoted diversity, equity and inclusion at the cost of merit, withdrawal from WHO, to which, felt Trump, America was providing disproportionate funding, withdrawal from the Paris climate agreement, expecting to save the US a trillion dollars, and others.

Trump is also pressurizing warring nations to end conflicts, which is good. His threat to Israel and Hamas that ‘all hell would break loose’ if a ceasefire agreement wasn’t reached before his inauguration, did, indeed, result in one. A hostage and prisoner swap, in phases, has been initiated and, thus far, the ceasefire is holding. Trump has also pressurized Russia and Ukraine with stiffer sanctions, egging them to the negotiating table, to end a senseless war that should never have been allowed to start.

Whilst displaying a welcome penchant for ending conflicts, it is strange that Trump is pitching for a takeover of Canada! and of Greenland! He has also threatened to take back control of the Panama Canal, now being managed by China! He has threatened 25% tariffs on Mexico and Canada. So he has stirred the geopolitical pot within days of assuming the Presidency. These, though, could be his opening salvos for achieving some other goals, in his usual negotiating style.

Last week the Sensex closed at 76190, for a weekly loss of 429 points.

Trump is attempting to bring down energy cost globally, by encouraging fracking, and by pressurizing OPEC to cut prices. Further, if the Ukraine war ends, sanctions on Russian energy supplies will slowly ease, which would increase oil flow and bring down prices. So, lower energy prices, which will bring down inflation, would depend on how fast fracking in USA picks up, and how swiftly Russia and Ukraine negotiate a ceasefire deal. Ukraine has made two demands which seem untenable, viz that it’s wish for NATO membership be granted and that it won’t cede lost territory. It would need to be told that these are untenable. Without US financial and military support, given by Biden, Zelensky cannot continue the war; he simply does not have the manpower. With Biden gone, that support is not assured.

A tariff war would be bearish for stock markets for global trade accounts for 58% of global gdp. So Trump’s threats to hike import tariffs on China, Mexico, Canada, and Russia, would be serious, if implemented. One hopes there will be a sensible negotiated reduction.

The Indian story is getting diluted by the pettiness of some political and bureaucratic leaders. As also by a judiciary which is so slowed by the backlog of 51 million pending cases that it moves at the speed of a tortoise with gout. If PM Modi can take the lead and can curb petty thinking and lethargic judiciary, the Indian bull will fly.

The pitfalls are evident, and the path forward clear.

For those with the vision to see it.

Comments may be sent to jmulraj@asiaconverge.com