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Animal spirits are back to bolster Indian economy

While the agrarian economy did the heavy lifting, India’s economy picked up speed in September also because of the revival in demand and business activity. Five of the eight high frequency indicators, including exports, improved in September, while three were steady.

Sanju Verma

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Britannia Industries reported a 23.23% surge in consolidated net profit for the 30 September 2020 quarter. Colgate saw a 26.6% rise in EBITDA, with a 540 basis point surge in margins, to 31.8%. Cement major ACC saw operating EBITDA rise by 20.47% to Rs 671 crore in the September quarter, with EBITDA margin up by 328 basis points at 19%. Cement behemoth Ultratech also reported a 113% surge in consolidated profit, 30% rise in EBITDA and a 480 basis point jump in margins to 26.6%. Overcoming the challenges posed by the Covid-19 pandemic and lockdown, ICICI Bank posted a 549% jump in net profit at Rs 4,251 crore for the September quarter, with mortgage disbursements at record levels and credit card spends at 85% of pre-Covid levels. India’s largest private sector bank, HDFC Bank, also saw a good 18.4% rise in profit, driven by a solid 15.8% rise in loan growth, with total loan book at a whopping Rs 10.38 lakh crore for the September quarter.

What these numbers from cement, fast moving consumer goods (FMCG) and the banking sectors indicate is that economic momentum has been gaining rapid traction in the last 3 months under the aegis of the Narendra Modi-led government. Of course, there are Doubting Thomases like Rajiv Bajaj, who has failed to deliver shareholder wealth and instead of improving Bajaj Auto’s market share—that is a lowly 18.69% in the motorcycle segment, compared to arch rival Hero Moto Corp, that has a solid market share of 35.9%—can be seen giving lame interviews to television channels, playing victim and blaming just about everyone but himself for losing out to Hero, which is now ruling the roost.

The economic recovery is in large part being led by the rural sector, vindicated by the fact that most of the aforesaid companies derive well over 40-50% of their sales from rural and semi-urban areas. More than Rs 22,000 crore were given to over 9 crore farmers during the lockdown under the PM-KISAN scheme via direct benefit transfer (DBT) and over Rs 75,000 crore were given by way of MSP purchases. Loans worth Rs 4.2 lakh crore were also disbursed at concessional rates to over 3 crore farmers, showcasing how the Modi government has boosted rural spending.

While the agrarian economy did the heavy lifting, India’s economy picked up speed in September also because of the revival in demand and business activity. Five of the eight high-frequency indicators, including exports, tracked by Bloomberg News, improved in September, while three were steady, endorsing the fact that the famed “Animal Spirits” are back!

Is the recovery being led by just pent-up demand and inventory re-stocking? No, that is not the case. There is a genuine rise in aggregate demand. For example, Maruti Suzuki reported 18.9% growth in total sales, including exports, in October 2020, at 1.82 lakh units. Of this, 1.66 lakh units were sold domestically. That basically means that more than four cars were sold every single minute! Even in September 2020, Maruti sold 1.64 lakh units. The highest number that it achieved by way of domestic sales, prior to 2020, was way back in July 2017, when it sold 1.53 lakh units. In fact, in just the 9 days of Navratri, Maruti sold 95,000 vehicles this year, compared to 65,000 units in the same period last year. Overall, passenger vehicle sales, a key indicator of demand, rose 26.5% in September and 17% in October, when compared with numbers from a year ago.

 Activity in India’s dominant services sector also continued to recover, with the main index rising to 49.8 in September, from 41.8 in August. That’s a marked improvement from April’s record low of 5.4. Manufacturing activity was a bright spot too, with the purchasing managers index (PMI) rising to 56.8 in September and a solid 58.9 in October, the highest readings since January 2012, on the back of a sharp expansion in new work orders, according to IHS Markit. This helped the composite index back into expansion territory at 54.6 in September.

Exports returned to positive territory too with shipments rising 6% in September, year on year (YoY), driven by farm exports, shipments of drugs and pharmaceuticals, engineering goods and chemicals. It is true that industrial production fell 8% in August from a year earlier, but it was smaller than July’s revised 10.8% contraction. Capital goods output dropped 15.8% from a year ago in August, but again, it was milder than the 22.8% drop seen in July. Output at infrastructure industries, which make up 40% of the industrial production index, shrank 8.5% in August, versus a steep fall of 37.9% seen in April 2020. Clearly, the pace of decline in key sectors has been stemmed, which is good news as it is never easy to stand back erect after being hit by the worst global pandemic in 102 years. That India, under the consummate leadership of Prime Minister Narendra Modi, has been able to withstand, fight back and recover more sure-footedly than a whole host of other nations, is laudable. That “animal spirits” have taken centre-stage, with recovery being a full blown one in coming months, is best amplified by the GST collections of Rs 1.05 lakh crore in October, 2020 versus Rs 95,480 crore in September.

 The e-invoicing system under the goods and services tax (GST) regime got off to a smooth start in October, overcoming initial apprehensions, with invoice generation per day rising threefold within a month of its roll-out. About 2.4 million invoice reference numbers (IRNs), or e-invoices, are being generated daily now, compared with 800,000 on 1 October, when it was made mandatory for entities with turnover of Rs 500 crore or more.

 Digital payments via Unified Payments Interface (UPI), worth Rs 1.92 lakh crore, also crossed 1 billion transactions in volume terms in the first 15 days of October, with a full month›s figure likely be more than 2 billion transactions, a feat that has never been reached since its inception in 2016. In September too, UPI clocked record high volumes of 1.8 billion transactions worth Rs 3.29 lakh crore. Google Pay was downloaded more than 12 million times in September, of which over 80% installs came from India. PhonePe, Paytm and SBI YONO’s downloads were also recorded at 6.9 million, 3.9 million and 3.1 million, respectively.

Meanwhile, India›s total foreign exchange (forex) reserves stood at $560.532 billion on 23 October 2020, the highest ever. In the 1991 crisis, India did not have forex reserves to finance even 6 weeks of imports, whereas, today, thanks to the excellent management of external finances by the Modi government, India can finance over 17 months of imports very comfortably. FDI inflows between April-August this year were $35.73 billion, a rise of over 13% YoY, vindicating that overseas investors continued to invest in India, reposing faith in Prime Minister Modi›s reforms, despite the pandemic which crushed business sentiments worldwide. A moot point worth noting is that, in September 2020, oil imports fell 35.92%, to $5.82 billion. During April-September 2020-21, oil imports contracted by 51.14% to $31.85 billion. Non-oil imports in September too fell 14.41%, to $24.48 billion, with non-oil imports during the first half of the current fiscal year declining by 36.12%. Gold imports dipped by 52.85% during September this year, which bodes well. The fact that the pace of the fall of non-oil imports is much lower than fall in oil imports and gold imports is good news as it shows the recovery is gathering steam.

Allegations of a jobless recovery are also absolutely false. Nearly 9.3 lakh new members joined the ESIC-run social security scheme while nearly 6.7 lakh new subscribers joined the EPF scheme in August 2020. The number of new members in both schemes has significantly surged over the previous month. In July, nearly 7.5 lakh new members joined ESIC while around 6.5 lakh new subscribers joined the EPF scheme. Taking together the new entrants and those who exited but returned, the net addition in EPF subscribers was nearly 10 lakh in August, after factoring out those who left. This shows that formal sector jobs are coming back and is good news.

Earnings from goods› transportation via Indian railways continued to rise in October, indicating recovery in demand and an uptick in economic activity. Freight loading grew 18 % year on year (YoY) at 43.46 mt as of 13 October, while earnings jumped 11% on year to Rs 4,124 crore. Cement and coal segments comprise more than 50% of freight movement for Indian railways. As of 13 October, the national transporter carried 19.13 mt coal, compared to 17.20 mt a year ago. As much as 4.36 mt of cement was transported in October, compared to 3.28 mt. Similarly, as much as 126 automobile rakes were loaded in October, compared to 74 rakes last year. This is by far the biggest indicator of how “animal spirits” are taking centre stage. The average loading of 53,774 wagons per day was up 16.5% YoY in October. India’s power consumption grew 13.38% to 110.94 billion units (BU) in October, mainly driven by buoyancy in industrial and commercial activities. Electricity consumption in the country had been recorded at 97.84 BU in October 2019.

Further proof of the economic revival was evident in India›s September retail spending, that rose 12% from August, with the revival being strongest in rural areas, according to data collated by CMS Info Systems, which handles cash movement and ATMs across the country. CMS said it gathered the data by tracking cash movements in 98% of the country›s districts from 53,000 retail points and 62,000 ATM services.

An amount of Rs 2.03 lakh crore has been sanctioned under the ECLGS scheme to 60.67 lakh borrowers so far, while an amount of Rs 1.48 lakh crore has been disbursed. Under the scheme, fully guaranteed and collateral-free additional credit to MSMEs, business enterprises, individual loans for business purposes, and MUDRA borrowers is provided to the extent of 20% of their credit outstanding as on February 29, 2020. Needless to add, Prime Minister Narendra Modi’s vision of “Aatmanirbhar Bharat” has grown wings and the target of a $5 trillion economy in the foreseeable future is increasingly looking very, very realistic indeed.

“Aatmanirbhar Bharat is not just about competition but also about competence, it’s not about dominance but about dependability, it’s not about looking within but about looking out for the world. A self-reliant India is also a reliable friend for the world.” This powerful quote by Prime Minister Narendra Modi sums up the ethos of “animal spirits”, reforms, inclusivity and India›s global outreach, in PM Modi’s charismatic style, driving home the point fair and square.

The writer is an economist, national spokesperson for the BJP and the bestselling author of ‘Truth & Dare: The Modi Dynamic’.

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Opinion

TIME TO GET THE COVID-19 VACCINE

Priya Sahgal

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This is the one topic that everyone is talking about these days—have you got vaccinated or not as yet. And if so, which one? The vaccine hesitancy that we saw in the early days of the roll out with even health workers hesitant to take the needle is no longer the case. As you can see from the queues of Mercedes, BMWs and Maruti Suzukis parked outside hospitals, everyone who is eligible to take the dose, is lining up for it.

The registration part is simple, however when you reach your designated hospital they will check your papers, give you a token and ask you to wait. This can vary from an hour to longer depending on the queue as most hospitals even have a counter for walk-ins i.e. those who have not been able to register themselves on the Co-WIN website. But don’t let this deter you, because the vaccination is certainly worth the trouble. And this seems to be the general mood. Going for my morning walk in south Delhi, I saw a number of elderly leaving their homes at around 9 am, picnic baskets in tow, ready for a long wait but determined to make the vaccine trek. 

There is some confusion about the gap between the two doses which currently has been set for 28 days. Not for Covaxin but Covishield as there are some reputed studies that state that a longer gap of between 8 to 12 weeks makes the dosage more effective. Since India is sticking to the 28 days gap (other countries like the UK have gone in for the longer one) it is left to the individual’s discretion. Another reason that explains the rush is that the vaccination is an added passport for those wanting to travel. India has been more successful than some other countries in combating the virus. Hence it makes sense to secure yourself before boarding that flight. 

Of course, there are still some who are hesitant to take the vaccine. Some are waiting for the nasal dosage, others for the crowds to thin. But in the end, don’t forget for the vaccination to work it is important that everyone takes it. This is important not just for making the country safe again, but also for each individual for his or her own sake. For as more than one doctor has told me on the NewsX-Sunday Guardian Roundtable, the complications of taking the vaccine are nothing compared to the complications of not taking it. So, go, get that vaccine.

What has helped the optics is that the Prime Minister himself took the vaccination. This was something that needed to be done as the Opposition and other sceptics were raising this issue and wondering about his hesitancy to do something that other world leaders had done in full media glare. Finally, once the vaccine was opened to senior citizens (and not just emergency workers) the PM took the jab—that he opted for the Indian origin Covaxin instead of Covishield was a no brainer as that fits into his narrative of nationalism. But the larger message here was more important as it gave the confidence to others to overcome their hesitancy and take the vaccine.

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Opinion

India set to make a V-shaped recovery

The sharp improvement in the performance of core sectors and the quick resumption of high activity levels in the economy indicate that India is close to achieving a fast-paced and broad-based V-shaped recovery in the third quarter of FY21.

Sanju Verma

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India’s GDP growth for Q3 FY21 has come in at 0.4%, versus the -7.3% recorded in Q2 of FY21. Earlier, the contraction for Q2 had been estimated at 7.5%, but has now been revised upwards to a decline of only 7.3%. Q1, on the other hand, has been revised from a 23.9% to a 24.4% contraction. The NSO said, “GDP at constant (2011-12) prices in Q3 of 2020-21 is estimated at Rs 36.22 lakh crore, as against Rs 36.08 lakh crore in Q3 of 2019-20, showing a growth of 0.4%.”

Will the Indian economy have a V-shaped recovery, as is now increasingly being touted? The answer, without doubt, is a resounding yes! With a Covid recovery rate of over 97%, a mortality rate of barely 1.4% and an active caseload of only 1.2%, and with over 15 million people vaccinated, the overall economy of the country is rapidly moving back to normalcy and the GDP numbers are only going to get better in Q4. This is evident from the IHS Markit India Manufacturing PMI reading of 57.5 and 57.7, recorded in February and January 2021, respectively. Composite PMI reading rose from 55.8 in January 2021 to 57.3 in February, the highest since October 2020, while Services PMI rose from 52.8 in January to 55.3 in February, the highest in a year. Unified payments interface (UPI) trades hit a new high of 2.3 billion transactions in January 2021, amounting to Rs 4.31 lakh crore in value terms. The blistering pace continued in February 2021, with 2.29 billion transactions, amounting to a value of Rs 4.25 lakh crore, further corroborating the full-fledged V-shaped recovery which is taking shape.

Services growth in Q3 fell by 1%, which is much lower than the 11.3% fall seen in Q2 and the 21.4% fall in Q1. Agriculture growth has come in at a solid 3.9% in Q3, versus 3% in Q2. Manufacturing sector grew by 1.6% in Q3, which is great news as the big decline of 35.9% in Q1 and the 1.5% fall in Q2, at the height of the Covid pandemic, has now turned into a positive number. The industrial sector witnessed a growth of 2.7% versus a -3.03% growth in Q2. This 2.7% growth was supported by a manufacturing growth of 1.6%, electricity, gas, water and utility services growth of 7.3% and a healthy growth in construction at 6.2%. The high traction in the real estate sector was on the back of the reduction in stamp duty and other levies across various states, thereby attracting home buyers to invest in new homes.

The output of eight core infrastructure sectors grew 0.1% in January 2021 as compared to last year. The infrastructure output, which comprises eight core sectors, including coal, crude oil, and electricity, fell by 8.8% during the April-January period in 2020-21, against a growth rate of 0.8% in the corresponding period in 2019-20. However, Q4 should see a turnaround in the infra space. The Modi government’s decision to invite private investment in 400 port and shipping projects worth Rs 2 lakh crore will give a fillip to the infra space. The Modi government is also aiming to attract investment worth Rs 3.39 lakh crore during the Maritime India Summit 2021, that kicked off on March 2, 2021. 

The Indian Railways carried 119.79 million tonnes of freight in January 2021, the highest ever in a month, beating its previous record of 119.74 million tonnes in March 2019, showcasing how the Indian economy’s momentum is gaining rapid traction. In February 2021, the Indian Railways’ loading was 112.25 million tonnes, which is 10% higher compared to February last year, which had been 102.21 million tonnes. On just February 28, 2021, the freight loading of the Indian Railways was 5.23 million tonnes, which is 37% higher compared to last year’s loading for the same date, at 3.83 million tonnes. 

For the December 2020 quarter, cement major ACC saw a solid 73% jump in profit, while cement behemoth Grasim saw profits rise by a massive 107%. Since cement sales are a lead indicator, it should be suffice to say that a core sector bounce is back on the cards. Car sales, another lead indicator, continued to be robust with a 16% growth year on year (YoY) in January 2021, with Toyota, Tata Motors, Honda and Nissan, witnessing a YoY growth of 92%, 94%, 114% and 220%, respectively. In February 2021, while Maruti saw a growth of 11.8% year on year (YoY), tractor major Escorts saw a growth of 30.6%, showing the all-pervasive nature of a demand resurgence that is underway in both rural and urban areas.

The economic growth in the coming year, i.e., 2021-22 (FY22) will be robust, with a broad-based momentum across various sectors. The government’s focus on infrastructure, real estate demand on the back of low-interest rates, recovery in commodity prices and healthy consumption expenditure all point to better times for the GDP trajectory. Private and foreign investment is also on the rise and capex should be higher than in previous years, aiding long-term growth. In the last one year, FPI and FDI inflows put together have been in excess of Rs 2.32 lakh crore, which speaks volumes about India’s attractiveness as an investment destination, all thanks to Prime Minister Narendra Modi’s courage of conviction and reformist mindset which is now bearing fruit.

Significant recovery in manufacturing and construction segments also augurs well for the support these sectors are expected to provide to growth in FY 2021-22. Real GVA in manufacturing has improved from a contraction of 35.9% in Q1 to a positive growth of 1.6% in Q3, while in construction the recovery has been from a contraction of 49.4% in Q1 to a positive growth of 6.2% in Q3. Going ahead, only for a quarter at the most, we are likely to see the continuation of a K-shaped recovery, with some sectors growing faster than others. However, beyond Q4 FY21, the K-shaped recovery will soon transform into a sharp V-shaped recovery that will be both fast-paced and broad based in FY22.

The growth stimuli available from the Union Budget and additional measures, including the production linked incentive (PLI) scheme, will lead to a sturdy growth path over the recovery horizon. The real push will be visible in the Q4 (January-March) 2021 because lockdowns in many sectors, particularly hospitality and travel, have begun to ease substantially. The 1% growth in GVA and 0.7% growth in core GVA (core GVA excludes agriculture and public administration), in particular, marks the end of a contractionary phase. In fact, all the sectors except (a) mining and quarrying, (b) trade, hotels, transport and communication services, and (c) public administration, defence and other services, have recorded positive growth in the third quarter of FY21, which is great news as it vindicates the flurry of GDP upgrades seen in recent times. Even in trade and hotels, the pace of decline has slowed down significantly from a negative growth of 15.3% in Q2 to 7.7% in Q3. In public administration, the pace of fall has been reined in at -1.5% from -9.3% in Q2. The construction sector, which contributes about 9% to India’s GDP, is back with a bang on the back of a strong recovery in execution, registering a 6.2% growth in Q3 from -7.5% in Q2, which is nothing short of outstanding. India is amongst the very few economies which are posting growth for the December 2020 quarter—one amongst 16 major world economies – which shows that Prime Minister Narendra Modi’s Rs 30 lakh crore stimulus package has been able to boost both business sentiment and spending via the multiplier effect.

While gross fixed capital formation (GFCF) has improved from a contraction of 46.4% in Q1 to a positive growth of 2.6% in Q3, private final consumption expenditure (PFCE) has recovered from a contraction of 26.2% in Q1 to a much smaller contraction of 2.4% in Q3. The revival of investment demand, triggered by capital spending by the Modi government, has helped in a big way. Besides the overall uptick in the economy, the resurgence of GFCF in Q3 was also triggered by capex by the Central Government, that increased year-on-year by 129% in October, 249% in November and 62% in December 2020. The fiscal multipliers associated with this capex are at least 3-4 times larger than government final consumption expenditure (GFCE), as capex induces much higher consumption spending than normal income transfers.

For the fortnight ending January 8, 2021, credit growth has picked up to 6.6% YoY, while deposit growth is 11.4%. Excellent results by banking sector biggies showcase the ongoing economic momentum. HDFC Bank and ICICI Bank posted profit growth of 18% and 19%, respectively, for the December 2020 quarter, with the retail loan book growing by anywhere between a healthy 13% to 16%. The robust profit growth for these two banking giants came about, despite a high provision coverage ratio (PCR) of 148% for HDFC and 78% for ICICI.

Needless to add, the Indian economy has seen a superb rebound from the onslaught of the Covid-19 pandemic, thanks to the Modi government’s relentless war against the Wuhan virus. From being a net importer in March 2020 to becoming the world’s second largest exporter of PPE kits and N95 masks, it is a telling tale of how “Make in India” is about a grand vision and also about the ability to translate that vision into a meaningful end result. India produced more than 60 million personal protection equipment (PPEs) and almost 150 million N-95 masks till October 2020, from almost zero in March 2020. India also exported more than 20 million PPE and over 40 million N-95 masks during this period. Speaking of Covid, the two states that account for over 72% of all the active coronavirus cases in India are Maharashtra and Kerala, one where the Congress in in power with allies and another which is a Left-ruled state. The horrific performance by these two states in reining in Covid is a testimony to all that is woefully wrong with both the politics and economics of the Congress and the CPI(M).

With a pro-growth budget, structural farm and labour market reforms and the Modi government’s bold decision to raise Rs 2.5 lakh crore by monetising 100 sick, loss making and unviable CPSEs, coupled with the RBI’s resolve to support the financial markets and economy, the Indian economy is well poised to ride the long-term structural growth path, despite states like Maharashtra being a drag due to the misgovernance of the Congress-centric Maha Vikas Agadhi (MVA) alliance.

Investments were the primary driver in pushing up Q3 GDP numbers and were up 2.1% YoY, versus a fall of 28.2% in the first half of fiscal year 2020-21 (1HFY21). Consumption was down only 2.2% YoY in Q3, versus a sharp fall of 16.7% in 1HFY21. The 4.9% growth in consumer durables and 2% growth in consumer non-durables in December 2020 are a precursor of demand resurgence. Even two-wheeler major Hero Moto Corp, for the last six months, has been selling over 4.5 lakh units every single month, with more than 14 lakh units sold in just the two months of October and November 2020. Tractor major M&M too has seen utility vehicle sales growing in excess of 20% on an average in the last few months, pointing towards a demand rejuvenation. Nominal GDP grew strongly at 5.3% in Q3, implying that GDP deflator was 4.8% in 3QFY21. While CSO/NSO expect a contraction of 1.1% YoY in 4QFY21, implying an 8% fall in FY21, this is highly unlikely. Many domestic investment banking houses believe Q4 real GDP growth could be as high as 3.5%, leading to a GDP decline of only 6.7% in FY21, versus CSO’s more conservative estimate of an 8% decline in GDP in FY21.

An 8% or 6.7% GDP decline is less relevant. The more relevant part is that growth momentum is picking up pace significantly, with GST collections in January 2021 at Rs 1.19 lakh crore and February collections being equally healthy at Rs 1.13 lakh crore. GST collections have topped the Rs 1 lakh crore mark every single month from October 2020. FASTag collections hit Rs 102 crore last Friday, crossing the earlier high of Rs 80 crore collected by way of toll in a single day. E-way billing is applicable for inter-state sales in excess of Rs 50,000. Rs 6.42 crore E-way invoice reference numbers (IRNs) were generated in January 2021, versus a number of just 26 lakh IRNs that were generated in September 2020, once again vindicating the sharp uptick in routine business activity.

The GVA equivalent of manufacturing companies, arrived at after adding up wages, depreciation, interest and profit before tax (PBT), grew a robust 17% on a yearly basis in Q3 FY21, after a 9% growth in Q2 this fiscal and a 29% contraction in Q1. Since manufacturing GVA is a leading indicator of the manufacturing sector’s performance, the sharp uptick in manufacturing GVA is indeed highly reassuring. In many cases, GVA equivalent is a better predictor of manufacturing sector’s performance than IIP since the latter captures volume of production while the former captures value of production, ICICI Securities argues. Hence, the manufacturing sector is expected to record a healthy growth in the upcoming Q4FY21. The manufacturing GVA currently has a share of 19% in the country’s real gross value added (GVA).

Moody’s has raised India’s growth forecast to 13.7% for FY22, from the earlier 10.8%. For the current FY21 fiscal also, Moody’s revised its prediction of a contraction in real GDP to 7.1%, from the earlier projected contraction of 10.6%. Interestingly, Moody’s has also said that the Modi government’s fiscal deficit for FY21 and FY22 could be much lower than the projected 9.5% and 6.8% of GDP, respectively, supported by stronger revenue generation in the fourth quarter of FY21 and higher nominal GDP growth in 2021-22 (FY22). The big upside to growth projections in FY22 are absolutely realistic and not based on a low base effect. Rather, the massive growth upside in FY22 will be driven by facilitative government measures, including the Modi government’s capital expenditure increases, with the Central Government budgeting an impressive 34.5% rise in capital spending at Rs 5.54 lakh crore in FY22, compared to the revised estimate for FY21.

Exports which were lagging too have begun to pick up, with a 6% YoY growth in January 2021, and February seeing only a minor fall of 0.25%. Imports also grew by 7% in February, versus a 2.03% growth in January 2021. Interestingly, in February, while oil imports fell by 16.63% YoY, non-oil imports rose by 16.37%, suggesting both an economic revival and improving terms of trade.

The initial policy choice of “lives over livelihoods” succeeded by “lives as well as livelihoods” is now bearing excellent results, converging with the foresight the Modi government had about an imminent V-shaped recovery when it entered the war against the pandemic. The sharp V-shaped recovery is being driven by rebounds in both private final consumption expenditure (PFCE) and gross fixed capital formation (GFCF) as a combination of the astute handling of the lockdown and a calibrated fiscal stimulus that has allowed strong economic fundamentals to trigger quick resumption of high activity levels in the economy. It would be apt to sum up India’s swift economic recovery with a brilliant quote from Prime Minister Narendra Modi’s Independence Day speech last year, where he emphasised the relevance of Aatmanirbhar Bharat, when he said, “It is now time for India to move forward with new policies and new customs. Now simple and ordinary will not work. Our policies, our processes, our products, everything should be the best.”

The author is an economist, national spokesperson for the BJP and the bestselling author of ‘Truth & Dare: The Modi Dynamic’. The views expressed are personal.

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NO, MINISTER

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Even teams led by experienced and expert captains suffer from occasional self-goals. These are usually a consequence of the best of intentions, but end up as embarrassments. There was in the recent past a stray statement by a Union Minister that the gallant soldiers of the Indian Army had moved several more times in the direction of the PRC than PLA forces moving in the other direction. The movement of Indian troops, who are and have always been seeking only to safeguard or to re-occupy territory that belongs to India, cannot be compared to the transgressions of the PLA, which is seeking to expand through military means the territory controlled by them, every bit at the expense of India. That remark of a minister, possibly reported out of context, was swiftly used by PRC spin masters to try and spread the falsehood internationally that it was Indian forces and not the PLA who were theaggressors on the LAC.

Fortunately, the world knows the truth, and such deception was not believed except by the usual suspects, such as Prime Minister Imran Khan, who is swift to repeat as gospel whatever gets conveyed from Beijing. The minister who made the earlier (possibly misquoted) remark has distinguished himself for his service both before and after joining the Council of Ministers at the Centre, and has not repeated the earlier remark attributed to him. The movement of Indian troops is to safeguard existing control over land and to recover territory that has been snatched in the past. This can never be compared with the transgressions of the PLA, which has joined hands with GHQ Rawalpindi in the errand of seeking to constrain and damage the growth and stability of India. These need to fail repeatedly, an outcome that can be made possible through strong will and capability on the part of Prime Minister Narendra Modi and his colleagues. Care needs to be taken to avoid statements that can be used by the other side to obscure facts and to discredit the factual narrative that has been disseminated by India about the situation on the borders.

The armed forces defend the territory of India with zeal when given full support by the government. In several statements and through many actions, Prime Minister Modi has shown his commitment to stand by the courageous men and women in uniform who are tasked with defending the borders of the Republic of India, the most populous democracy on the face of the planet. Moreover, ours is a country that alone in its neighbourhood has remained a democracy and not fallen victim to authoritarian rule of any form, save a brief period of quasi-authoritarian rule during 1975-77 that was swiftly replaced with the holding of elections that led to the replacement of the existing government through the ballot box and to a peaceful and orderly transfer of power from Indira Gandhi to Morarji Desai in the PrimeMinister’s Office.

Now another self-goal has been scored, in the form of the remarks of a Union Minister that the power outage in Mumbai was not the consequence of a cyberattack executed by elements in the PRC but was the consequence of “human error”. The statement is reminiscent of several made by other policymakers in the past, when unexplained misfortunes afflicted some of the most potent weapons platforms of different wings of the armed forces. In some cases, entire platforms were rendered inoperable, to great human and material cost, besides causing gaps in defence preparedness. Very quickly, unnamed sources rushed to pin the blame on “human error”, whether these relate to naval personnel or air force pilots. Both risk their lives in defence of the country and have shown an exceptional degree of competence in handling the weapons given to them to operate. The possibility seems to have been ignored of malfunctioning of equipment as a consequence of glitches introduced clandestinely, and which have had the effect of so damaging operational capability that nothing the pilot or seaman did could have rescued the situation.

In the past, there were serial deaths of those associated with the nuclear and missile programme, and the dots were first connected by the Sunday Guardian after having been in the open for several years, in each of which those connected with these key programmes had their number reduced through “accidental” deaths or “suicides”. Circumstances indicated that such hastily reached conclusions were far from accurate. That there was a cyberattack is not a reflection on the Power Ministry but a warning that this is a threat needing much more attention than shown in the past. There are powerful lobbies involved in the import of critical infrastructure equipment from countries that have a record of hostility to India expressed in a kinetic way. Such lobbies should not be given a handle to continue to keep the country vulnerable through dependence on equipment or other services from companies deeply involved with strengthening the offensive capabilities of at least two foreign militaries that have attacked India in the past, and are expected to do so again. There must not be a rush to hasty conclusions and the giving of clean chits to those companies and entities who are transparent in their linkages to enemy forces, including in Pakistan-occupied Kashmir, territory that belongs to India and where no other country has a right.

Prime Minister Modi has spoken firmly and often about the dangers facing the country. Among the reasons why the PM is popular is the trust voters have in his ability to defend the nation. That same strength of purpose and determination should be present in each of the members of the government. The country is facing a grave threat, and action is needed to reduce vulnerabilities and to expand capabilities. In such a task, it is all hands-on deck, and an end to remarks by policymakers that may be used by foes of India to paint themselves as innocent of the wrongs that they have flagrantly committed.

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Embedded patriarchy in science must end

History and research have shown proof of how few women in science have received their due, despite making discoveries and providing services which have led to the progress of modern science and civilisation. Decision makers must find a way to put an end to the gender bias.

Amita Singh

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Albert Einstein with his wife Mileva Marić.

Two years of #MeToo have changed little in the world of scientific research, according to most women in science across the world. India has 43% of women as science graduates—the highest number in the world—but a mere 14% in science-related jobs. Despite the additional push the present government has provided since 2017, in which the Department of Science and Technology was provided Rs 2,000 crore to encourage more girls into science-related careers, the picture remains grim. Gender inequity, subtle discrimination, indifference, workplace derision and isolation have kept women in India out of the job market that matches their science training. This has serious challenges for the country’s developmental ambitions. As a McKinsey research report of 2020 emphasised, narrowing gender gaps in science, technology, engineering and mathematics (STEM) can lead to an increase of $12 trillion to $28 trillion in the global economy. Does this sound an alert for decision making bodies of science and the NITI Aayog?

In developed countries such as Sweden, women science graduates are much less than India, at 35% only, but 34 % of them get placements in STEM jobs. The lack of women in these jobs reflects gravely on India’s science policy as only one woman out of 41 men has been able to reach the position of an office bearer in 86 years of the existence of the Indian National Science Academy (INSA). This marginalization further unfolds in the shortlist for the INSA awards, which have so far gone to only 14 women as compared to 501 men. The situation is appallingly unfavourable towards women in other top science awards too, such as the Shanti Swaroop Bhatnagar Award which has been bestowed on only 16 women against 500 men beneficiaries. It appears that patriarchy rules most science academies across the world even if women are fortunate to obtain a STEM job, since globally only 12% women are represented in 69 science academies across the world.

India’s developmental dreams may have to crash land over an utterly deficient terrain if women in engineering and technology, despite holding a 50% share of undergraduate degrees, fail to get absorbed into appropriate jobs. As a consequence, many switch to non-science jobs or become homemakers—recent situations show that more than 49% women in science are ready to switch to other jobs which they would have otherwise rejected. The irony of the STEM job market is that it has the potential of creating 10.5 million additional jobs, if countries can promote gender equality, as was suggested by a report by the European Union. Most new fields in science such as artificial intelligence (AI) and big data are currently completely male-dominated with a pathetic 10-15% jobs going to women in top companies like Google and Facebook.

Science, to be appropriate, should be able to absorb dynamic social relationships from the living and non-living or everything around it. Women have proved to be more perceptible and transdisciplinary in their approach than men with similar training. Traditional societies which were hierarchical, orthodox, fatalistic and believed in supernatural forces offered little space for modern science to flourish. Yet when modern science came, it also became a source of immense power which was soon captured by men. Modern science advanced through state power and started distancing itself from a holistic social relevance, inadvertently falling into a trap of increased productivity and control which the industrial revolution brought about.

Minnie Vaid’s book on the role of women space scientists in the Mangalyaan mission exposes an embedded gender bias that pushes women out of key positions where they can perform better than their fellow men. Nonetheless, this bias can also help analyse an unanswered question that most students in social science classrooms are perplexed about: why did Einstein win the Nobel Prize when his invention destroyed the world? Did Einstein know what could happen when his invented genie would be released from the laboratory to a wider and ever-advancing world of power aggrandizement?

The nature of science is founded on a matrix of human disconnect, and after reading an interesting Paul Halpern’s science narrative from 2015, titled Einstein’s Dice and Schrodinger’s Cat: How the Two Great Minds Battled Quantum Randomness to Create a Unified Theory of Physics,the fact reveals, to our dismay, that scientists give much greater priority to winning the right scientific algorithm than the world around them. These power pathways of science have ignored many achievements by women who fed and fuelled these discoveries within the fortresses of labs. This was a terrain where questions on social conscience were never ever asked.

This does not mean that all scientists are directly influenced by dominant interests as many are also instructed by their own or their society’s cultural framework which is embedded in their individual morality, values, beliefs and community ethics. An example is the case of Joseph Rotblat who withdrew from the Manhattan Project in 1939 for he firmly believed that such weapons of mass destruction should be avoided due to their catastrophic impact upon humanity. He preferred to receive a Nobel Prize for Peace rather than for Physics which was awarded to his number two scientist, Einstein. However, the most astounding is the revelation about Einstein’s wife, Mileva Marić, who, despite being a classmate of Einstein with an equal or even stronger disciplinary training in physics, was not acknowledged for her influence and contribution to Einstein’s achievement. A 2019 book Einstein’s Wife, written by Allen Esterson and David C. Cassidy, with Ruth Lewin Sime, presents an evidence-based history of Marić’s life with Einstein. Science historians have repeatedly established that Marićs ideas were central to Einstein’s science but while her pregnancy, childbirths and divorce gradually weakened her relationship with science, Einstein marched ahead to the Nobel Prize. 

Another astounding case is that of Henrietta Leavitt who in 1900 joined the Harvard College Observatory as an assistant for Edward Pickering. There were some far-reaching astronomical revelations which were observed and discovered by her. One such observation was that slower-moving stars were more luminous through which the size of the galaxy and much more on the study of variable stars could have been discovered. She paved the way for modern astronomy. enabling scientists to measure the universe. Edwin Hubble, the American astronomer, became famous by using Leavitt’s ground-breaking research and he also admitted that it was she who deserved the Nobel Prize. But Levitt watched all this as a silent worker at the laboratory, where she was paid half of what her fellow men researchers got ($10.5 a week) and did not raise an alarm when Pickering published her findings without giving her due credit.

The laboratory’s new director Harlow Shapely also used her work without acknowledging her phenomenal contribution. The patriarchal culture in science of keeping women out of mainstream publications and awards has been so strong that the world has wasted many years seeing men scientists reach milestones which had already been achieved by women much earlier. Leavitt’s work was interrupted by her family obligations and her early death by stomach cancer ended the tragic and continuous marginalisation she suffered because of her powerful male colleagues.

The world of science has not changed much. Most laboratories belong to men scientists who continue to control them even after they are transferred, retire or are thrown into disrepute through charges of corruption or sexual harassment. Women scientists, on the other hand, are made to leave their laboratories immediately when they retire or are transferred, notwithstanding that their ongoing research might prove a great contribution to society. From life sciences to physical, environmental and geophysical sciences, a woman’s journey is gripped by obstructions and gendered ostracism. From Muthuswamy to Swaminathan, some leading women scientists—the ones who led the ICMR towards an accountable bioethical journey or silently brought out key cancer research findings in the biochemistry lab at AIIMS while taking care of her ailing father or dedicated herself to set up the Brain Research Institute at Manesar—have definitely not received their due despite their services being of utmost importance to the progress of India. The country needs to look for more of them in the IITs, CSIR, INSA, ICMR, AIIMS and other science institutes for more holistic progress of science. Why should one hear science policy talk only from male scientists, who are now also controlling NITI Aayog as well as the TV channels?

Unless the needs, capacities and acceptability patterns for women are absorbed in the behaviour of decision makers, the road to gender equity in science would remain bumpy and hazardous. Science shapes society and women in science break stereotypical frames of research, bringing acceptable solutions to the problems of development and acting as catalysts for change and progress.

The writer is president, NAPSIPAG Disaster Research Group, and former Professor at Jawaharlal Nehru University, Delhi. The views expressed are personal.

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G-23 LEADERS SHOULD HAVE WAITED TILL THE ASSEMBLY POLLS

Priya Sahgal

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The Congress is fighting two battles, one is the electoral one against the BJP in the oncoming Assembly elections and the other is the battle within as some members of the G-23 fired another salvo from Jammu last week. Whichever way you look at it, it’s a tussle for power. 

The Congress high command (read the Gandhi family) has tried to create a wedge in the G-23 by weaning away those it can with party posts and responsibility. That’s also a smart move because it’s always easy to criticise from afar (as is what happened after the Bihar debacle) but not so easy if you are part of the process. For instance, what stopped Kapil Sibal who has been a Rajya Sabha member from Bihar from campaigning in the state during the polls. While he did not campaign, he did criticise the poor showing post polls. In fact, the only leader who campaigned in both Bihar and the Madhya Pradesh bypolls (apart from Rahul Gandhi) was Sachin Pilot. But therein lies another story.

Social media is also full of images of the Gandhi siblings with Rahul deployed in the South and Priyanka Gandhi in the north—so far, she has been focusing in Uttar Pradesh, but last week saw her dancing the Jhumur dance with tribals of Assam during her two-day visit to the state. Rahul too was seen doing push ups with college students in Tamil Nadu and jumping into the sea with fishermen in Kerala. The subliminal message is clear—the Gandhi siblings are leading from the front and owning this election campaign. Deputing Chhattisgarh CM Bhupesh Baghel in charge of Assam has also given the leaderless party a fighting chance to wrest the state away from the astute Hemanta Biswa Sarma because Chhattisgarh is the only Congress-ruled-state that has access to funds.  

Given the B+ for effort, perhaps the rebels who met in Jammu should have waited till the Assembly polls were over before declaring open hostilities. That battle is pencilled in on the Congress calendar, for the party’s elections for president are slated post the Assembly results. Maybe that was the time to bring out the divisions within. Why this rush to praise Narendra Modi? 

As things stand, the Congress is really fighting a battle to win in Assam and Kerala; in Tamil Nadu, it’s in the role of a supporting actor at best. However, Kerala is important as that’s the state where Rahul Gandhi is now an MP from, that is also a state where he made his now infamous North Vs South comment. It was a gamble and he really needs it to work so he is focusing all his energies in the South, leaving Assam in the hands of the Chhattisgarh CM and some shrewd alliances. 

For the BJP the big fight really is in West Bengal and Assam and if the Opposition can somehow stop the saffron party in its tracks here then it could be the turnaround in the fortunes of the Modi government. The onus of stopping the BJP in West Bengal is on Mamata Banerjee, while the Congress is doing its bit in dividing the anti-TMC vote. And all this is happening against the backdrop of the farmers’ protests which is now firmly established as an anti-BJP movement.

Given all this, at a time when the rest of the Opposition, including the Congress, is focusing on stopping the BJP in its tracks, perhaps the dissidents should have waited till the Assembly polls were over before diverting from the agenda.

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Why PM Modi can’t be Ronald Reagan

In a country where three-fourths of the population is either facing acute poverty or dependent on agriculture that is contingent upon the grace of rain gods, welfare spending becomes imperative rather than a choice. The lack of an Indian Reagan is partly due to electoral reasons but also partly due to the lack of an intellectual ecosystem that produces Reaganomics.

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On the eve of the 2019 elections, Ruchir Sharma, the chief global strategist at Morgan Stanley, expressed his disappointment for Prime Minister Narendra Modi in a New York Times column. According to Sharma, beneath the Modi rhetoric of “minimum government, maximum governance” lay a Bernie Sanders-like socialism including a welfare splurge, which disappointed a free-marketeer like him who expected a Reagansque redux of reform and small state. In a subsequent book, he ascribes Modi’s socialism to electoral exigencies instead of philosophical moorings.

Sharma’s analysis is partly true. In a country where three-fourths of the population is either facing acute poverty or dependent on agriculture that is contingent upon the grace of rain gods, welfare spending becomes imperative rather than a choice. Hence, when American political scientist James Manor asked P.V. Narsimha Rao who his role model was, he intuitively named social democrat Willy Brandt, the German Chancellor whose economics was animated by expanding both private capitalism and welfare spending. Astute politicians like Rao and Modi, both boasting a humble background, understand social welfare as a fait accompli in India. While Modi never publicly espoused the likes of Brandt as his hero, his former chief troubleshooter and strategist, the late Arun Jaitley, alluded to this balance: “Being pro-poor and pro-business are not mutually exclusive.”

But what makes a government pro-business? The Ruchir Sharmas sitting in global capitals are much more ambitious in their ask from what is termed as a right-wing government in India. They can grudgingly countenance an increasing welfare spending so far as reforms remain on track. Lesser taxes, divestment, and minimum state interference start their wish list followed by a range of expectations. Reagan and Thatcher personify their ideas of economic governance, and hence, they sum up their pro-business laundry list by citing these conservative British and American giants.

The lack of an Indian Reagan is partly due to electoral reasons but also partly due to the lack of an intellectual ecosystem that produces Reaganomics. President Reagan enacted policies that incubated in the American conservative movement for decades. The likes of the American Enterprise Institute and Heritage Foundation prepared the fine print that was impregnated with political will before those policies were finally conceived. Reagan was a heavy consumer of Friedmanite worldview even before he considered running for the presidency. However, it was The Heritage Foundation, headed by Edwin Feulner, that injected conservative principles and policies through a 1000-odd pages prescription-laden manual, which encompassed a potential policy outlook for all major US cabinet departments and federal agencies. To see these policies through, the Foundation manned key political appointments with suitable conservatives.

Thatcher’s story is no different. Her two steady sources of prescriptions were the Institute of Economic Affairs and then-inchoate Center for Policy Studies. Sir Keith Joseph, another Friedmanite and founder of CPS, is considered the most significant influence on Thatcher while she was in office. He chose to be the Secretary of State for Industry in the Thatcher administration and kicked off the divestment program in Britain on an unprecedented scale.

Coming back home, where are Modi’s Edwin Feulner and Keith Joseph? Where are BJP’s Heritage Foundation and Center for Policy Studies? Surely, Sangh has affiliate organisations working on economic policies—Swadeshi Jagran Manch (focuses on indigenous economic development), Bharatiya Vitta Salhakar Samiti (for finance and taxation professional), Laghu Udyog Bharati (for small and medium enterprises), and Sahkar Bharati (for cooperatives). These organizations, more than producing an economic canon that defines the Indian right, have mostly served as a feedback loop for RSS and BJP. Something that comes closest to a CPS is Vivekanda International Foundation in terms of personnel, but its impact on policy is not that evident.

Economics, it seems, is barely on the mind of even modern Hindutva ideologues. For example, BJP MP Swapan Dasgupta in his book Awakening Bharat Mata curated two dozen essays by the pantheon Indian right would like to venerate. From historian R.C. Majumdar to former Prime Minister Atal Bihari Vajpayee and current Sangh ideologue S. Gurumurthy, it features the writings of who’s who. The anthology attempts to collate and create a philosophical canon sans a single essay on economic thought.

Another BJP MP, Subramanian Swamy, now a little sidelined politically, produced his version of ‘constitutional Hindutva’ in his book The Ideology of India’s Modern Right outlining five dimensions that suggest how Hindutva can exist within a constitutional framework. To his credit, Swamy, an old free-market warhorse and professional economist, sporadically mentions minimalist state as a governance desideratum. His subsequent work Reset makes a modest attempt to add to his earlier work using the framework of Integral Humanism of Pandit Dindayal Upadhyaya but falls short of adumbrating a complete economic program.

The illustrations of two oft-visible ideologues broach the lack of clarity and focus on economic thought in the broader Hindutva intellectual imagination. Their relevance to and influence on policy, if at all, remain questionable. Somehow, the Indian right, too preoccupied to parry itself from secular salvos, have failed to produce an ecosystem that can moor itself in a coherent economic philosophy. Such an ecosystem has to function outside of the party in the quiet, away from the rough and tumble of incessant elections.

Finally, such an intellectual ecosystem not only incubates policies but reconciles economics with other priorities of the movement. When Tory Brexiteers faced the challenge of squaring business interests with their Euroscepticism, the policy ecosystem outside the party salvaged them. Through its extensive outreach, it also brought on board scores of businesses who otherwise saw Brexit as detrimental to their trade.

Ruchir Sharma is correct to predict that India would never have its Reagan or Thatcher. In toto import of Western economic conservatism would be both unsuitable and undesirable. Given electoral exigencies, an occupant of 7 Lok Kalyan Marg would never be able to sign-up for it either. India would need a cocktail of Sanders and Reagan is a given. The Reagan part of it still remains undefined, and to an extent, unimagined. It is high time for this intellectual vacuum to be filled by the Indian right drawing from two ancient ideals: Sarve sukhinah santuh (prosperity for all) and making India vishwaguru (a leading major economy).

Chirayu Thakkar is a Visiting Fellow at the Stimson Center, Washington DC. The views expressed are personal.

Ruchir Sharma is correct to predict that India would never have its Ronald Reagan or Margaret Thatcher. In toto import of Western economic conservatism would be both unsuitable and undesirable. Given electoral exigencies, an occupant of 7 Lok Kalyan Marg would never be able to sign-up for it either. India would need a cocktail of Sanders and Reagan is a given.

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