Archives  >  2020  >  January  >  13th

The Great Indian Slowdown

1. What’s the story?

This has been a long-time coming, but now most experts agree that the slowdown in India’s economy (with a projected GDP growth of 5%) is not set to end any time soon. “It’s going to be stuck in jam for a while.”

Tell me more.   

A lot of this blame may be put on the shoulders of demonetisation, that move when Prime Minister Modi suddenly made 86% of the cash in circulation worthless, sending the economy into massive shock. 

“There is a growing consensus that we didn’t fully understand what was happening in the economy during demonetisation, because the older assumptions about links between formal and informal had broken. 

Many understood that the informal sector was in pain, and it was not showing up in India’s statistics, which are heavily based on the assumption that the formal and the informal sector move in tandem.

But another theory suggests that for a while, the formal sector actually saw massive gains to the detriment of the informal sector. People were forced to financialise their cash, which moved into the Non-Banking Financial Companies that were suddenly able to lend, leading to some growth. As people still attempted to consume at the same level as before, for a while the bottom-line of big companies was actually expanding – which would have showed up on GDP indicators as growth (even if the informal economy was going into recession).

Eventually the bottom fellow out and consumption plummeted, leading us to the situation where we are now, with the lowest growth in years.”

So, what now?

According to former Chief Economist Ashok V Desai, the only thing that can now kick-start the economy is a “lucky accident” — like that which happened in the 70s when Malayalis went to West Asia to capitalize on the oil boom, or in the 80s when Indians went to the US to write IT codes. “Such lucky accident may happen at any time. But it is fundamentally unpredictable,” he said. By all accounts, we are set for a few years of slow growth before we can even think of growth in the double digits. 

Keep your eyes on this place. We’ll keep you updated. 

2. What else should I be keeping my eyes on?

India’s much-maligned education system, that’s what. According to recent studies, “India’s education system, arrested by inequality and loopholes in policy, sets poor children up for failure.”

“From mid-September to mid-October in 2019, tens of school teachers were absent from government high schools in New Delhi — teachers who taught Math, Science, Hindi, Social Studies, Sanskrit and English, including to those all-important ‘board exam classes’. The teachers had been called up, on the orders of the Election Commission, for ‘full-time election duty’ to update Delhi’s state electoral rolls. As many as 10-12 teachers were absent from a single school. Their students just had to make do.

Only a little over 50 percent of children enrolled in school in India make it to Class 12. Less than half of them enter higher education. And by and large only those who can afford expensive ‘private coaching’ advance through that other ‘merit-based’ system – the entrance tests to the coveted engineering and medical colleges.

These children enter the public discussion on education about once a year, through a media blitzkrieg to promote the NGO Pratham’s annual poor learning outcomes survey. Every year the survey finds, what it has found for the last decade or more, that between 25-30 percent of children in most states can’t read a sentence in a Class 2 book and can’t do two-digit subtraction. It says nothing about the children, whether they attend school regularly and if not why not; if anyone has ever read to them, if they have a library they can use, if their teacher has been out on census or election or disaster relief duty, or if their teacher is just not a good teacher or an interested one.”

3. What more?

Davinder Singh, a high-profile cop from Jammu and Kashmir, was the recipient of the Police Medal for Meritorious Service last year. The shocking twist? “He has now been arrested while accompanying two Hizbul Mujahideen militants from Srinagar to New Delhi on Saturday…”

“His name reverberated in courtrooms during the trial proceedings in a suicidal terror attack on the Indian Parliament on 13 December 2001.

Even as some reports suggested that Mohammad had already died in a different encounter in Kashmir, the prosecution claimed that he was among the five terrorists who attacked the Parliament and got killed during the operation.

But neither Davinder nor the senior police officer’s relative were ever interrogated, or even summoned for questioning by the Special Cell of Delhi Police or any court.

Holding the most sought-after positions since long, Davinder has remained posted as an officer in the super sensitive anti-hijacking wing at the Srinagar airport for the last one year or so. He had gone on a brief leave and had not been on duty since last Thursday.

Davinder, according to these reports, claimed that he had convinced the two Hizbul terrorists to surrender, which in no way was the job of the deputy SP of Srinagar airport.

“He (Davinder) has worked on several anti-militancy operations. But the circumstances under which he was arrested… is a heinous crime. That is why he is being treated at par with militants,” IGP Vijay Kumar said, adding that further interrogation and investigation in the matter was underway.”

4. Anything else?

In the latest news from an increasingly tense Middle East, mortar bombs struck the Iraqi military base of Balad on Sunday night, wounding a number of people and spreading panic across the region

“Seven mortar bombs fell inside Iraq’s Balad air base on Sunday, which houses US forces, and four Iraqi soldiers were wounded in the attack, two military sources told Reuters.

The military sources said the mortar bombs fell in the base’s runway inside the base, which is located 80 km (50 miles) north of Baghdad.  Military sources identified the wounded as Iraqi soldiers. They said seven mortar bombs had hit the base’s runway.

There was no word of any US casualties among the US forces at the base.

The Iraqi military statement did not say who was behind the attack and made no mention of heightened tensions between the United States and Iran, which last Wednesday fired missiles at two military bases in Iraq which house US forces.

The attack on the American base came hours after United States President warned Iran not to kill the agitators protesting against the downing of Ukranian passenger airliner, that was shot down by Iranian armed forces.”

(Quick recap: Iran, Iraq and a number of other Middle Eastern nations have been tense since Iranian General, Qasim Solaimani, was killed in a US drone attack earlier this year.) 

5. Is that all?

The Philippines’ Taal volcano erupted in a massive plume of smoke and ash on Sunday, “prompting thousands of people to flee and officials to shut Manila’s international airport.

“The volcanology institute raised the danger level around Taal three notches on Sunday to level 4, indicating “a hazardous eruption may happen within hours or days,” said Renato Solidum, who heads the volcanology institute. Level 5, the highest, means a hazardous eruption is underway and could affect a larger area.

There were no immediate reports of injuries or damage, but authorities scrambled to evacuate more than 6,000 villagers from an island in the middle of a lake, where the volcano lies, and tens of thousands more from nearby coastal towns, officials said.”

6. Before you leave…

Take a look at the royal furore that’s been happening because Britain’s Prince Harry and his wife, Meghan Markle, have announced that they intend to “step back from their roles as senior members of the royal family.” Their announcement has apparently blindsided the royal family and the British public alike, and sent the entire nation into a tizzy.

“The announcement, which people have started to call “Megxit,” has drawn both backlash — from Buckingham Palace to London’s Madame Tussauds wax museum — and praise for the couple. As royal fanatics and casual onlookers alike dissected the statement’s wording and envisioned the couple’s new life away from the throne, the decision prompted a torrent of questions online.

How does one exactly become a senior royal? Does financial independence mean Harry and Meghan will have to actually work? In that case, will Meghan restart her lifestyle blog the Tig and possibly advise on the next season of The Crown? Will Harry be, like, a trophy husband?

A lot of questions remain, especially after Buckingham Palace released an icy response to the couple’s independent announcement. For now, it seems Harry and Meghan are adamant on carving out a life with baby Archie that involves splitting time between the UK and North America. On Friday, it was reported that Meghan has flown back to Canada while Harry remains in Britain to have talks with his family.”

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