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Opinion

Repo rate, credit policy, inflation and EMIs: Hard facts

An economy like India that grew at 8.7% last year and is slated to grow in excess of 7% in the ongoing fiscal year cannot continue to have a Repo rate of 4% or thereabouts.

Sanju Verma

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The Repo rate, the rate at which RBI lends money to commercial banks,was hiked by 0.5% or 50 basis points to 5.4% on August 5,2022. The Monetary Policy Committee (MPC) of the RBI came to this judgment since it felt the need to keep inflation and inflationary expectations under check, without compromising on India’s domestic economy which is in the midst of a full blown V-shaped recovery. Before getting into the Repo rate in detail, it is worth noting that the Bharat Bill Payment System (BBPS), an interoperable platform for standardized bill payments, will now be able to accept cross-border inward bill payments. This will thereby enable NRIs too, to use BBPS to pay their bills for utility, education and other such services, on behalf of their families in India. Again,to make the RB-IOS more broad-based, credit information companies (CICs) are being brought under the RB-IOS framework. With this, we get a cost-free alternative mechanism for redressal of grievances against CICs. Also, CICs will now need to have their own internal Ombudsman (IO) framework. The RBI has decided to set up a committee to explore the need for transitioning to an alternative benchmark for Mumbai Interbank Outright Rate (MIBOR) and suggest the way forward.

The RBI has retained the GDP growth forecast for FY23 at 7.2% and inflation forecast at 6.7% for the current financial year, assuming average Crude Oil price at $105 per barrel. Since India imports over 83% of its Crude requirements,a fall in global Oil prices will mean India’s GDP growth will further accelerate going forward while Inflation,will come down, faster.

On inflation, the RBI is looking to persevere with its stance of withdrawal of accommodation, to ensure that inflation moves close to the target of 4% over the medium term. Those criticising the Modi government for a rise in the Repo rate need to understand that an economy like India that grew at 8.7% last year and is slated to grow in excess of 7% in the ongoing fiscal year,cannot continue to have a Repo rate of 4% or thereabouts. RBI,till date has raised Repo rate by 140bps in 2022, with the first hike happening this year in May 2022. Keeping the Repo rate too low when the economy is showing strong traction, can create asset bubbles and overheat the economy, which can in turn lead to hyperinflation, eventually. In fact this is exactly what the US and UK did–they kept rates too low for too long, with the result that both these economies are now grappling with 9.1% inflation. Bank of England (BoE) sees inflation breaching 13.3% in the UK by the end of 2022, with the UK slated to enter recession. The USA is already in recession technically speaking, with GDP contracting by 1.6% and 0.9% in the March 2022 and June 2022 quarters respectively. Clearly, while most big nations are struggling in the aftermath of two Black Swan events, namely the COVID pandemic and Russia-Ukraine conflict, India under the astute leadership of Prime Minister Narendra Modi, stands tall as an oasis of economic stability, amidst geopolitical shocks and financial mayhem, worldwide.

Of late,there has been a massive outcry that a hike in Repo rate will mean more expensive, equated monthly installments (EMIs). The key factors influencing home loan rates are the MCLR rate,loan-to-value (LTV) ratio,credit score and tenure of the loan. MCLR is the marginal cost of funds’ based lending rate. MCLR is the threshold or minimum level below which a bank cannot lend at. MCLR depends on other factors such as operating cost, marginal cost of funds, the cash reserve ratio (CRR) for banks,which currently is 4.5% and any negative carry on it. There is an annual reset date for the MCLR during which banks review the rate for existing home loan borrowers. The MCLR on the reset date remains applicable until the next year’s reset date, even if there are changes to the Repo rate in the interim. This basically means that your interest rate will increase or decrease based on the changes in the MCLR rate and not necessarily the Repo rate. Of course, a hike in the Repo rate leads to a hike in the MCLR and therefore a hike in EMIs too, but the hike in EMIs is not in the same proportion, but by a much smaller degree. Also, changes in MCLR, post a change in Repo rate, do not happen immediately but often with a lag of a few months. Hence all those self styled opinion makers and economists who claim that a hike in Repo rate will be automatically followed by a hike in EMIs in the same proportion,are completely wrong.

Post the Repo rate hike on 5 August 2022, Opposition and fake intellectuals have been harping about how home loans, car loans and personal loans will now become more expensive. The truth however is, if you have taken a home loan on or after 1 April 2016, you automatically come under the purview of the MCLR regime and not the “Base Rate” regime. Also, a hike in Repo rate will lead to higher interest rates that will now be available on fixed deposits, term deposits and other debt paper, which in turn,will be a significant income booster for those who largely invest their savings in short term deposits, debt instruments or bank FDs.

Under an incompetent Congress,the Bank rate in February 2012 was 9.5%,while the Repo and reverse Repo rates were a steep 8.5% and 7.5% respectively. Bank Rate has lost its significance as a monetary policy tool, as the RBI currently signals changes in policy stance through changes in Repo rate, which is the rate at which banks borrow short-term funds from RBI. Reverse Repo is the rate at which banks lend to the RBI. Bank Rate,is the standard rate at which RBI buys or re-discount bills of exchange or other commercial paper and is used more as a penal rate which the banks have to pay for their failure to meet the mandatory Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) requirements.Bank Rate is merely used by several organisations as a reference rate for indexation purposes.

Marginal Standing Facility (MSF) is the rate at which the RBI offers money to the scheduled commercial banks that are facing a shortage of liquidity. This rate differs from the Repo rate and the banks can get overnight funds from the Reserve Bank of India by paying the MSF rate. The current MSF rate is 5.65% and is aligned with the Bank rate which is also 5.65%. In 2018, the amended Section 17 of the RBI Act empowered the Reserve Bank to introduce the standing deposit facility (SDF), an additional tool for absorbing liquidity without any collateral. The SDF is basically a mechanism which gives banks an option to park excess liquidity with the RBI. It is different from the Reverse Repo facility in that,it does not require banks to provide any collateral to the RBI while parking funds. The SDF was launched on April 8,2022,at a rate of 3.75% but now the SDF rate is 5.15%. Introduction of collateral free SDF as the lower threshold rate in the liquidity adjustment mechanism (LAF) corridor, has been an excellent measure in strengthening the operating framework of the banking system. Access to the SDF will be at the discretion of banks and it will be available on all days of the year after market hours. To cut to the chase, Repo, Reverse Repo,Bank rate, MSF and SDF are at the end of the day, all liquidity management tools, aimed at sucking out excess liquidity from the system and thereby taming inflation. From a surplus liquidity of Rs 8.5 lakh crore in April 2022, the figure has now fallen to Rs 3.8 lakh crore, signifying how both the RBI and the government are working in tandem to curtail inflation. Inflation, at the end of the day, is about too much liquidity chasing too few goods. Hence containing excess liquidity via hikes in the Repo rate in a calibrated manner, without hurting growth, is the need of the hour and that is precisely what the RBI is doing. Inflation is the most regressive form of taxation but to the Modi government’s credit,despite unusually challenging global circumstances, it has managed to contain average retail inflation in the last eight years at 4.9%,versus 8.4% under Congress led UPA and an abnormally high 10.49% under the Congress led P.V Narasimha Rao government. Over Rs 23 lakh crore given to the needy in the last eight years via the direct benefit transfer (DBT) mechanism, is a classic example of how PM Modi’s government has judiciously combined both welfarism and reforms at a time when the global financial order is seeing cataclysmic changes.

Sanju Verma is an Economist, National Spokesperson of the BJP and the Bestselling Author of ‘The Modi Gambit’.

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Opinion

PFI ideology must be countered

Joyeeta Basu

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From the dossier made public on the Popular Front of India, it emerges that it is a hydra-headed radical organisation with deep terror links, which has been flourishing across the country for over a decade. As has been reported, PFI’s activities came under scrutiny in 2011, five years after its formation in 2006 in Kerala. It was reported around 2011 that the PFI was recruiting youths and giving them arms training in the forests of Kerala, as well as looking to spread its footprints across the country by aligning itself primarily with radical left-wing groups. From there, when the PFI was confined to one small state, to a situation where it is present in at least 17 states and abroad, and has spawned various affiliates, apart from carrying out fraudulent financial activities, the story that is emerging of the PFI is how to use and abuse a rules-based order to hide its own nefarious activities. That it had the audacity to go on a spree of rioting in Kerala, trying to shut down the state, post the arrest of its activists, shows how its influence has increased over the years. Allegations abound about PFI’s involvement in almost all the violent protests that the country has witnessed over the last few years, including the anti Article 370, CAA, and the Nupur Sharma protests. There are also reports that it was the PFI affiliate, Campus Front of India, which was behind the hijab ban protests and had brainwashed the girls involved in the incident to turn wearing the hijab in school into a matter of their religious identity. According to the dossier on PFI, this radical organisation has over 1,400 cases of violence registered against it. One may recall the infamous case where the hand of a Kerala professor was chopped off by the activists of the PFI for alleged blasphemy, way back in 2010, a year before the radical organisation caught the eye of the national security apparatus. It was in 2012, again a decade ago, that the Kerala government had told the High Court that the PFI was a “resurrection” of the banned terrorist group SIMI. If steps had been taken at the time, the PFI would not have been able to spread its tentacles across the country. But then no one can discount the possibility of any such action turning into a hotbed of competing political interests, given the track record of India’s political parties. Also, unless and until the investigating agencies have a full-proof case, they may prefer to gather enough evidence to ensure that the cases are able to withstand both political and judicial scrutiny.
As it is politics has already started over the PFI ban, with Bihar’s Lalu Prasad Yadav, who considers himself to be the saviour of the minority community, trying to cast aspersions on the investigation. The “mistake” these so-called “secular” politicians make is that they try to brainwash the minority community into believing that they are being persecuted by a majoritarian government. Ironically, it is a similar narrative that the radicals of PFI sell to the gullible youth of the minority community to brainwash them into following a path of radicalism. They tell them that they are being persecuted and victimised. It is only by playing on their fears can the mainstreaming of the minority community be stopped. And this radicalistion has been going on for a long time—according to reports, from the UPA government period. So the PFI agenda of creating an Islamic state out of India has nothing to do with the BJP coming to power. It has been there all along.
In fact, it’s an insult to the minority community to depict the action on the PFI as an assault on the community. Lest we forget, the Sufi sect has come out in support of the ban on PFI, for they were being terrorised by them.
In conclusion, it is hoped that the agencies’ PFI case will be able to withstand judicial scrutiny. It is also hoped that the resistance to organisations like the PFI will increase from within the minority community, so that such entities cannot brainwash the youth into their own vile ideology of hatred for India and its people.

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Opinion

Gender inequality: Need for micro-planning in policy implementation

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The conceptual domain of equitable growth is a distant reality after the cost-of-living crisis sweeping across the echelons of middle class entrepreneurs and small-scale investors. Most of us are unaware of how the lowest strata of our society are denied equal opportunities to the best quality healthcare and education, wherein privatization of the basic healthcare and education has silently ditched the subalterns to remain at the same category of exclusion. It is significant to walk the talk through the mechanisms of inclusive growth and sequence the changes through nano-precision at every level.
Gender neutral policies are of little use when a vast number of educated women do not get any opportunity to work for the country. It is impossible to precipitate any meaningful transition in our social and political life without empowering women. It could be a challenge for the corrupt bourgeoise to resurrect the social dimensions of change and hope through incessant policy planning and implementation.
Many political think-tanks argue out a case for equality through systemic changes such as streamlined data collection and direct cash transfer mechanisms. However, there could be an orchestrated systemic fiasco being projected to discard highly successful poverty alleviation programmes such as Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme(s) in future, once they gather all the relevant data to be traded off.
The symbiotic relationship between the data protection authorities and the data mining operations of the private companies must be meticulously overseen by the judiciary and media watchdogs.
There appears to be a decisive policy focus to make the rich to be richer by pedaling the wheel of fortune and signaling an abysmal transition with euphoria. Nothing has changed on the ground for the rural poor. The dharmachakra of the Indian Republic stands for absolute transparency and integrity, which is unknown to the political masters allegedly supporting the online rummy companies to swindle the hard-earned money of our youngsters. Our chanakyas spin the wheel against one another but maliciously look for illicit corroboration. None could spot Iago till the end. We knew the fate of Desdemona and Othello, long after the foul play took place in the typical Shakespearean theatrics. Our political theatrics is imponderably complex display of comical characters caught up with lethargic planning for the people.
It is believed to be a clarion call of the policy makers to think about alternate policy making mechanisms through indigenous micro-planning solutions. We cannot bell the cat, when there is a rat race for power and wealth through hook or crook. Undoubtedly, the intelligence agencies will one day unearth all the traces leading to sudden pitfalls endangering the profit pathways of BHEL (Bharat Heavy Electricals Limited). Slowly, the privatization of the public sector banks will also be justified with a twist and tale of corporate image management.
It has been feasible to have had inclusive growth to a certain extent because of these public sector banks till now. We need to be aware of the fact that over three billion people cannot afford to have healthy nutritious meal in the lower middle-income countries according to the World Bank Report. Millions of our people may go hungry everyday if our planning for the future is not in alignment with the poverty alleviation and rural development. Our public sector banks have in fact helped the rural poor and urban middle class to a considerable extent through several loans.
Let us make sure that the systemic changes of these banks could be highly beneficial to the poor by streamlining their services with certain guidance instead of selling them off to a few crony capitalists. Our leading thought leaders have been sidelined with the (temporary) demise of planning commission. How do we make our political bosses accountable for all their decisions? Can they publish their asset lists or the list of their common binamies every year? No political party would be ready for a whitepaper in this case.
Mangalaprathaban Muralidharan is a corporate trainer, course developer and curriculum consultant.

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Opinion

Xi set to win 5 more years as China’s supreme leader

Xi Jinping is poised to extend a tenure that began in late 2012; however, there is still uncertainty about how much influence he will wield over the formation of a new power structure. But the Congress will end speculation about China’s rising stars on the horizon.

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The 20th Congress of the China’s Communist Party will begin on 16 October, a five yearly exercise. This time it is expected to approve Xi Jinping as country’s paramount leader for the third unprecedented time.
Recent rumours of a military or a political coup in China seem to be largely unsubstantiated and unreliable. They can be dismissed as based on the fact that the current leadership has in the past week acted harshly against what it called a “political clique” against the Chinese Communist Party (CCP), and this is not a new phenomenon and more or less, happens before every major party conference.
Last week, China’s former Deputy Public Security Minister Sun Lijun, former Justice Minister Fu Zhenghua and three former police chiefs of Shanghai, Chongqing and Shanxi provinces were jailed for life, after being denounced for “seriously damaging the unity of the party”. This was also intentioned as a message to anti-Xi forces to fall in line and support the current leader.
Though there is little doubt that Xi is poised to win five more years as China’s paramount leader, extending a tenure that began in late 2012, there is still uncertainty about how much influence he will wield over the formation of a new power structure. But the Congress will also end speculation about China’s rising stars on the horizon.

20TH CCP CONGRESS
Xi, 69, is widely expected to be exempt from the party’s informal “seven up, eight down” rule that ordinarily requires senior officials who are 68 or older to step down. The rule will also not be applicable to everyone in the party’s inner circles, meaning at least two of the seven-member Politburo Standing Committee and half of the 25-strong Politburo will probably retire.
But the new structure could be even more innovative, as there have been suggestions that Xi may shrink the CCP standing committee to five members, giving him more freedom, and replace some of those members who have yet to reach 68 by having them retire to make way for his supporters.

CCP OVER THE YEARS
Mao Zedong overshadowed the Chinese political system for first 27 years of the CCP rule. Until his death in 1976, Mao had the final word on every state and party matter, including deciding the leadership’s formation, enlarging or shrinking the size of the Politburo and the standing committee at will.
In 1978, Deng Xiaoping became paramount leader. Though considered very powerful, yet he also had to consult with seven other senior party members, a group known collectively as the “Eight Elders” or the “Eight Immortals”.
By 1989, with Jiang Zemin’s rise to power and after Deng Xiaoping’s death in 1997, consensus politics had started to take hold in the CCP. The top party leadership introduced channels to balance and institutionalise power, and to improve accountability and governance. Jiang, for instance, introduced the “seven up, eight down” practice. Jiang’s successor Hu Jintao, from 2002 to 2012 further institutionalised Consensus rule, through intra-party democracy, through straw polls and competitive elections for the members of the party’s Central Committee.

XI’S TENURE
This led to June 2007, about four months before the party’s 17th Congress at which Xi was inducted into the Politburo Standing Committee, when a straw poll was held for the first time among all Central Committee members and other leading officials to recommend provisional candidates for the new 25-member Politburo.
Five years later in May 2012, the party’s elite officials again met in Beijing to make recommendations on candidates not only for the 25-member Politburo, but more importantly the Standing Committee, also. This poll was then used as a benchmark to shape the new leadership line-up for the 18th Congress, at which Xi emerged as party supremo. However, Jinping did not like the previous electoral methods. Before the party’s 19th Congress in October 2017, from which Xi emerged as a stronger leader having secured a second term, the party leadership found serious faults with the straw poll method. Ahead of the 19th Congress, Xi opted instead for face-to-face meetings to select the new leadership.
The most obvious prerequisite for being elected to the new party structure is to be seen as being loyal to the current leader and party leadership besides possessing experience in key areas like ability to handle crises, a proven track record of competency, the ability to earn Xi’s trust, a highly educated background and strong regional leadership experience. In the forthcoming Congress, many contenders for top posts also share close connections to Xi and his trusted aides and have professional expertise in areas such as technology and business. Several of Xi’s former associates in Zhejiang and Fujian provinces are expected to be promoted to even higher positions. One such high-flyer is Shanghai party chief Li Qiang, and the other one is He Lifeng, who is in charge of the National Development and Reform Commission.
Some other regional chiefs are also seen as strong candidates for advancement, though they have not been associated directly with Xi before he became president. This includes Guangdong party boss Li Xi; Fujian party secretary Yin Li and Shanghai mayor Gong Zheng; Liu Haixing, a seasoned diplomat; Liu Jieyi, currently Head of the State Council’s Taiwan Affairs Office, and might be the next Chinese foreign minister; Liu Zhenli, commander of the PLA’s ground forces and Shen Yiqin, one of the few women in a provincial party leadership role or on the Central Committee, Shen is a front runner to succeed Sun Chunlan as a Politburo member when she retires. Vice-Premier Sun is currently the only woman in the Politburo. A confident Xi looking set to secure his third term as the party chief at the Congress, has plans to achieve the target of creating a more modern socialist China by 2049–the centenary of the founding of the People’s Republic of China, and to accomplish this dream, he needs a new leadership line-up which will help him take forward and deliver that promise or a legacy which we would want to leave behind.
Asad Mirza is a political commentator based in New Delhi.
He was also associated with BBC Urdu Service and Khaleej Times of Dubai.

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Opinion

India’s progress in implementing its COP26 commitments

India’s efforts will need to be bolstered by the availability of climate finance from developed countries.

Ashraf

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India’s progress in implementing its COP26 commitments

Climate change is a concern, but it’s exacerbated by the fact that it affects individuals who made little to no exertion to generate it. The first year of the UN Climate Change Conference (COP26) in Glasgow will start in the days to follow. It will be interesting to watch how 120 international leaders, more than 40,000 registered attendees, including 22,274 party delegates, 14,124 observers, and 3.886 media representatives, progress their commitments to address the many facets of climate change. There are challenges like global greenhouse gas emission reductions, which are still far below the levels required to maintain a livable climate, and support for the most vulnerable nations afflicted by the consequences of climate change, which underscores the relevance of differentiated responsibilities.
Meanwhile, in terms of their obligations, nations like India are batting fantastically. India, which has been subject to its whims, has only contributed about 4% of the total global emissions during the pre-industrial era. India is faced with a number of difficulties, including the wealthy nations’ reluctance to take the initiative in addressing climate change and their failure to provide the developing nations with the promised climate financing support.
The Prime Minister highlighted the five main aspects (Panchamrit) of India’s climate action to the world at the COP26 conference in Glasgow. India’s expanded Nationally Determined Contributions (NDCs) under the Paris Agreement, which were submitted to the UNFCCC, correspond to the 2030 targets of the Panchamrit announcements. Thus, despite the difficulties India aspires to lead the way in developing and putting into practise solutions.
Global cumulative emissions must not exceed the associated global carbon budget in order to meet the Paris Agreement’s temperature goals. They must not emit more than their fair share of emissions over the course of the past, present, and future. In light of this, India, a global leader in climate action who walks the walk and talks with authority and responsibility, pushed industrialised nations to step up their efforts by announcing its intention to become “net zero by 2070” as part of the Panchamrit statement in Glasgow.
Due to their excessive use of the global carbon space, developed nations owe India $15 trillion. India has made it plain that, in its opinion, industrialised nations must take the initiative in “phasing out” all fossil fuels, not just coal, and that they must do so quickly. India has also assumed the lead both domestically and internationally in accelerating its efforts to promote renewable energy while making domestic progress toward cleaner coal technologies.
India has set a net-zero emissions target for 2070, which is backed up by immediate climate action. India evidently placed the project in the trial of the developed world by announcing 500 GW of non-fossil electricity capacity by 2030; 50% of energy requirements coming from renewables by 2030; one billion tonnes of emissions reductions by 2030; and a 45 percent reduction in emissions intensity of GDP by 2030. This is meaningful climate change action. India is now demanding USD 1 trillion in climate funding as quickly as feasible, and it will be monitoring not only climate action but also climate finance delivery.
After China, the United States, and the European Union, India is the world’s fourth largest producer of carbon dioxide, although its large population means that its emissions per capita are far lower than those of other major world economies. In 2019, India released 1.9 tonnes of CO2 per person, compared to 15.5 tonnes for the United States and 12.5 tonnes for Russia.
Quite significantly, India has pushed for a change in lifestyle once again. The prime minister has rolled out a warm welcome for global and domestic entrepreneurs who want to invest in green technology research, development, manufacture, and deployment in India by announcing a net-zero year. However, India’s efforts will need to be bolstered by the availability of climate finance from developed nations. This shift will be difficult if foreign money is not available on favourable terms. India co-chairs the Leadership Group for Industry Transition, which encourages voluntary low-carbon transition in challenging industries, with Sweden.
The most ambitious NDCs (Nationally Determined Contributions) have been made by India under the UNFCCC. India has already met 40% of its installed electric capacity from non-fossil fuel sources, some nine years ahead of its target date, exceeding its pledge made under the Paris Agreement. India is also on track to fulfil its increased NDC target of 45% below 2005 levels by 2030 with its GDP emissions intensity in 2016 being 24% below 2005 levels.
With the GGI-OSOWOG, India’s leadership of the International Solar Alliance benefited enormously. The International Solar Alliance (ISA) was created to pool demand and minimize the cost of solar financing for developing countries. The Infrastructure for Resilient Island States (IRIS) will be launched by India, along with the United Kingdom and Australia, for island nations and developing countries.
Recognizing the severity of climate risks, which can undo decades of development, particularly for most susceptible communities and countries, the Infrastructural facilities for Resilient Island States is a critical initiative.
India also backed the Africa Group’s demand for $1 trillion in climate action from affluent countries to be made available to underdeveloped countries.
India will also be a part of the Green Grids Initiative’s commencement. If successful, interconnecting grids across countries can dramatically increase energy interdependence and security and enable emerging economies to leapfrog to a sustainable energy future.
Conversely, despite being the world’s greatest carbon emitter today, accounting for 11% of all emissions, China has made no significant obligations. China has stated that it will achieve carbon neutrality by 2060, whereas the United States and the European Union aim to achieve net zero emissions by 2050. Such incidents put India’s commitment to the test, but they also make India’s announcement to become net-zero far more ambitious than China’s or the European Union’s.
India’s announcement will give Indian and global energy markets a clear path and expedite the transition to profound decarbonization and a 1.5°C future. The announcement also serves as a roadmap for India’s shift to a low-carbon economy. In order to satisfy the obligations, India will require an additional $1 trillion in financing over the next ten years. India is one of the few countries on track to meet its Paris Agreement targets, which were set during the 21st COP. India is being praised in this context, despite the fact that it ranks 131st on the Human Development Index and still has a long way to go in terms of eradicating widespread poverty.

Ashraf Nehal is a columnist and foreign policy analyst who focuses primarily on South Asia.

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Opinion

Has Putin already won against the West?

Instead of being smashed, the ruble has been one of the best performing currencies against the US dollar over this year. Also, the value of Russian energy exports has gone up by 50% compared to the same second quarter last year.

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Has Putin already won against the West?

By listening to many western commentators, be it on the daily BBC to CNN news hour, Putin is losing the war in Ukraine. First, they spoke of his humiliating defeat as his armed forces could not take Kyiv. And according to many western analysts, Moscow thought it was going to be a cake walk to take all of Ukraine, producing a victory in days. How disappointing for it that it now only holds around 15% of the country, goes this logic. Then more recently north of Donbas, Russia has swiftly given up thousands of square kilometers it had previously taken. I will argue that in fact, Putin has already won the war in the broader sense. Why?
First, let us look at sanctions. This is the economic war dimension that cannot be separated from the overall war. The West that controls most of the financial system and investment capital believed they had so much leverage that they would make the Russian economy scream. That their central banks and others by essentially confiscating a major part of the Russian central bank’s foreign exchange reserves would reduce the ruble to rubble.
But what do we see from the massive economic ganging up on Russia by NATO members and their allies on the economic war front? Instead of a smashed ruble, it has been one of the best performing currencies against the US dollar over this year. Rather, it is Europe with its euro and Great Britain with its pound that have significantly gone down against the greenback—so this is victory number one for Moscow.
Furthermore, the value of Russian energy exports has gone up by 50% compared to the same second quarter last year. Why? Because the war in Ukraine in a significant part has destabilized the energy market causing dramatic rises in the price of gas and oil. This is especially so in Europe. All because so many measures in the West have led to its cutting off Russian energy. With pressing away with so many over-the-top sanctions, it caused Putin to shut down a majority of Russia’s western gas exports under the guise of maintenance.
The net effect of this energy picture is that there are worrisome signs of greater impoverishment of many western consumers and voters. And there is major economic fallout onto many in the middle class on their energy and food bills. Also, there is a greater uncertainty about the investment and future job picture, especially for Europe, leading to continued election losses of NATO governments. This is a double victory for Moscow, suffering much less than the West predicted with Putin retaining higher popularity with his people and major exports.
And what is happening on the diplomatic front, another part of the war? Countries representing half of the world’s population have refused to condemn Russia over the war. In fact, trade between Russia and China has gone up significantly and so has it with India. India and China are calling for peace, not the condemnation of the Kremlin. Rather than isolating Russia, NATO and its allies seem to have few allies in the South that squarely blame Russia for the mess in Ukraine. But does the South more and more see the West as a barrier to promoting a ceasefire? The other fallout for the West is that the South sees how weakened the West is geopolitically by not getting anywhere near the results by hammering Russia so economically. And the South’s lack of full solidarity with the US position on the war and sanctions reinforces Putin’s view along with the Chinese premier’s that a new multilateral world order is emerging that goes well beyond a convenient rules based one, dominated by the US’ and its allies’ preferences. Cannot this be called another Putin victory?
There is another win for Moscow. At least, it feels that after its security concerns being so ignored by its neighbours that it has shown it is willing to go to war and not bend over. There was a lot of hurrah in Washington when Victoria Nuland (highly promoted by US President Biden) was proud to say several years ago how billions of US dollars had essentially helped to bring about an anti-Russian government in Kyiv—a coup, as some describe it. Moscow has clearly put down a marker on this regarding Washington’s attempts at excess meddling in its neighbours to both major security and economic disadvantage to Russia?
Yes, the Russian economy has not benefitted from sanctions. Yes, the battlefield situation especially recently has not been favourable, leading Putin to a mobilization of many extra troops. And many Russian soldiers have lost their lives.
But as the New York Times, top best-selling author and leading psychologist, Jordan Peterson, has stated on the famed talk show hosted by Piers Morgan on Sky News: Putin could have had his troops leave Ukraine and declare victory to his people. Why? Because he basically took on the combined economic and weapon might of US-led NATO and really did not fall and is still standing. And he showed to the West that there is a major price to pay economically and otherwise for so thoroughly running roughshod over Moscow’s redline interests. 
Putin has won in many ways, whatever the outcome of the war is on the ground. This gives him more reason to leave Ukraine, sooner than later and not to use the nuclear option to save face. Period.

Peter Dash is an educator in Southeast Asia and is a frequent contributor.

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Opinion

Tale of Two Presidents

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Tale of Two Presidents

Throughout the last fortnight, we have had triumphant Congress spokespersons beating their chests with pride and talking about how democratic the Congress is for it is the only political party that is holding elections to the post of the party chief. And then they would talk about how the BJP may have had several party presidents who came from different families, but these were all nominated and not elected candidates. In this, the Congress was right to take the higher moral ground, for however flawed the process may be (there have been allegations that the PCC Delegates who will elect the next party chief have mostly been nominated, not elected and therefore will tend to follow the high command’s line), it still had the optics of a democratic process.
Then came the Rajasthan crisis and the very man elected to be trouble shooter has now become the party’s main problem. Suddenly the narrative has changed from the election process to a conversation around the Gandhi family’s inability to pick the right team. At a time when Rahul Gandhi is busy with his Bharat Jodo yatra, the BJP is having a fine time taking potshots at him for not being able to keep his party together. As Union Cabinet Minister and BJP leader Bhupinder Yadav tweeted with a picture of Rahul flanked by both Sachin and Ashok Gehlot, that first Rahul should focus on uniting these two! Having said this, there is an attempt to mend fences between the Gandhis and the Gehlot camp with some leaders pointing out that the Rajasthan CM had never taken on the “family” or spoken against the Gandhis, but that that his “rebellion” was targeted against Sachin Pilot only. Whether the Gandhis buy this spin or not, it still makes them look bad, for the commentary now is that the leadership had no clue what was brewing at the state level. The first thumb rule of public life is never go public with a vote if you don’t know which way it’s going to turn out. How could the Gandhis not know that the bulk of the state MLAs would support Gehlot and not Pilot? 
In the meantime, while the Congress was busy hogging all the headlines for all the wrong reasons (suddenly Rahul’s Bharat Jodo yatra has vanished from the media mentions), the BJP quietly gave a second term to its incumbent party president J.P. Nadda. There was no talk of election or nomination or competing candidates. A decision was taken and it was conveyed. End of debate. Since Nadda’s term does not finish till end this year, there was enough time to take a decision on his extension. It didn’t have to be announced in the middle of a Congress crisis. But it was, only to be buried amidst the Congress drama. Perhaps the BJP wanted it this way.
At the end, though the BJP went in for a nomination and the Congress is still struggling to go ahead with its election, it is the former that has come out looking good. Unfortunately for it, the Congress is looking even worse off than before the presidential process started. Talk about shooting itself in the foot.
PRIYA SAHGAL

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