Since yesterday there has been plenty brouhaha on "resumption of trade between India and Pakistan ", many well meaning people are jumping and cursing the govt. Here's my two bit on how this will hasten Pakistan's economic collapse. (1)
First of all this "resumption of trade" is an ambiguous term. We are as off now only planning to export to Pakistan. This means they will pay in their currency which is severely devalued compared to ours for our farm produce. (2)
Second given the shambles that Pakistan is in currently it can be safely assumed that they have neither the economic heft nor the expertise to argue or even produce stuff to sell to India for the next couple of years. (3)
Third, once Pakistani economy, life becomes dependent on produce from India, it will become that much easier to cause deep seated economic turmoil in their country should they ever pose a threat to India. Remember the jokes on lack of Indian tomatoes etc.(4)
Fourth this is exactly what has been done by China over the years. In the guise of help, they have loaned large sums to smaller countries, knowing fully well that they cannot pay back. Then they have taken over the asset built by them in those countries. Eg. Srilanka. (5)
This Chinese methodology for lack of a shorter term can be called, Imperialism by Debt Trap. (6)
Fifth that this is a good time to do so, given the fact that Pakistan is largely without friends in Middle East and now running out of donors, including China which is interested in return of its fund.(7)
It's a bit sad that I have to put all the possible strategies of this govt here on Twitter, coz folks are very quick to judge.
In any case I hope this helps in understanding how things stand in this context. Please feel free to add if I have missed out. Regards
*one small correction Pakistan will have to pay us in $, € or ₹ which implies that the Pakistani currency will devalue more with respect to the other currency. Devaluation of currency can lead to more inflation and economic collapse!
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A couple of my friends here wanted me to elaborate on what I liked about this budget compared to other budgets in the past. So, here goes my understanding of why this budget is one-of-a-kind! (1) @iamshinerk@NetraDaoo
Adversity is the mother of invention: We came to this budget on the back of crippling economic situation in wake of the pandemic. The immediate focus was therefore revival of the economy.
1) The budget announced the fiscal stimulus route of govt expenditure to fuel growth! (2)
2) As mentioned by the honorable FM, the fiscal stimulus is going to happen through three sector focus, namely:
(a) Healthcare ; (b)BFSI ; (c) Infrastructure
3) These sectors have been chosen since they are by far the biggest employment generators! (3) @nsitharamanoffc
Today I write on how we are facing a different predicament of "Demand Collapse" due to #COVID2019. (1/n)
When such worldwide catastrophic events happen, people anticipate tectonic shifts in money flow and scared by that prospect they withdraw all their investments/spendings, in effect triggering a self-fulfilling cycle of events.(2/n)
Once people start sitting on cash, refusing to spend/invests businesses see a sales dip. Anticipating that sales dip, lack of demand they in turn put off expansion plans, freeze hiring/begin layoffs. This feeds into the "doom-gloom" scenario. (3/n)
Today I will write on a live example of what happens when an Economic System fails, for eg. U.S.S.R (1/n)
On 26th December 1991, Union of Soviet Socialist Republic, remember there used to be a country called that, ceased to exist, The last president of Soviet Union, Mikhail Gorbachev who had promised economic reform resigned to make way for Russian President Boris Yelstin. (2/n)
To be fair, this was a political collapse, but Boris Yelstin went into this event without any clear cut plan of how he was going to migrate a state owned country, to a country run by private enterprise.A prolonged period of economic chaos and disruption followed. (3/n)
Have been meaning to write on Money Flow, since it is difficult to comprehend. So, using hotel as an example, here goes:
A 300 room hotel on an average employes around 1000 people.
When one books a hotel room. A small %age of it immediately heads to govt as taxes. 1/n
The balance is used by hotel to pay salaries, pay it's bills to reservation companies, to travel agencies, to electricity companies, to water supplier, to sellers of food and sellers of amenities.
In turn the suppliers, employees use the money to pay their own bills.2/n
The suppliers receiving money from the hotel use the money to pay their transport partners, the farmers producing the items and their own employees.
The employees of the hotel/the supplier pays his/her own bills. With that money they buy food and other goods. 3/n
Have been meaning to write about Why India needs a homegrown, home owned E commerce behemoth, ever since CCI flagged Amazon, Flipkart for malpractices in January 2020.
So, here goes my two cents on Why, How GoI should go about creating this giant. (1/n)
In January, Confederation of All India Traders with 6 crore members held protests against Amazon's Jeff Bezos.
In addition to this the Delhi Vyapar Mahasangh red flagged both Amazon and Walmart owned Flipkart to CCI for malpractices! businesstoday.in/current/corpor… (2/n)
Its a well known fact that Amazon has indulged in predatory pricing in the past. Predatory pricing implies pricing ur products so low, that ur competition cannot sell without making a loss. An example of this is Amazon and the Toys R US mess!
@narendramodi Dear Sir, while ur move is completely laudable, there has been no concrete announcements on how groceries, water etc are going to reach people stranded at home.
So after ur announcement people are out on streets at grocery stores and medicine stores. 1/n
@narendramodi Furthermore reports are coming of BIG BASKET delivery guys being beaten up for delivering groceries.
Also streetlights are off creating unwarranted hazards for people scampering to buy groceries and medicine.
What if people were to fall into open manholes at such times. 2/n
@narendramodi Also, by delaying announcement on grocery deliveries, medicine supplies, unnecessary panic is multiplying and people are forced to populate grocery stores and make the choke points for spread of Corona.