BUSINESS
Political calculations underpinning GST 2.0
It ticks all the right boxes by protecting the base which contributes the bulk of GST revenue while moving most items of mass consumption to a lower slab. That’s the template all political parties agree on
WORLD
China’s WWII victory parade has an Indian foundation
WWII remembrance is a highly politicised contemporary global event. India doesn’t really figure in these narratives. That’s a pity because it’s Indian blood and treasure that played a consequential role in the outcome. Something Indians, unfortunately, are not well acquainted with
INDIA
Modi’s I-Day speech signals the need for atmanirbharta from cynical big powers
He faces perhaps the toughest challenge in his 11+ years as PM, with the world’s dominant powers displaying hostility. He has called for a big economic transformation to insulate India’s strategic decision making space from the cynical manoeuvring of big powers. This transformation will have to be politically spearheaded by Modi himself
BUSINESS
Trump is a short-term irritant; overlapping Indo-US interests are a long-term reality
Cold War politics and commercial interests in the backdrop of a menacing China will help both countries get over this phase. Don’t expect an immediate rapprochement but never underestimate the binding power of mutual self-interest
BUSINESS
India’s not a ‘Tariff King’. Data shows its tariffs are in line with its peers
Tariff rates shouldn’t be viewed as an undifferentiated mass represented by a simple average. Countries typically having varying rates with some sensitive sectors getting more protection. Context matters. When viewed through the right lens, India’s anything but a closed market. It’s open, with its non-tariff barriers such as regulatory standards lower than Japan, South Korea or China.
BUSINESS
Nixon to Trump: Tracing the ups and downs of a mercurial engagement
Trump may not share Nixon’s personal dislike of Indians. But Nixon, who passed away a few decades ago, has a successor when it comes to damaging bilateral ties.
BUSINESS
TCS’ job cuts may not be about AI, but its fallout across sectors is visible
The advent of GenAI has made white collar workers more vulnerable than blue collar workers, an inversion of the traditional cycle. In any industrial revolution, it’s destruction effect and the consequent worker displacement which is apparent in the early stage
INDIA
Lord’s 2025 was a thriller, but a comparison with Chennai 1999 is superficial
Chennai 1999 was by far a better cricket match both in terms of quality of the game and drama. It remains unsurpassed among excruciatingly close games which ended in heartbreak for Indian fans
POLITICS
PM Modi signals ‘new normal’ for the full spectrum of relationship with Pakistan
Last week’s display of aerial superiority by Indian military has catalyzed a reset in the full spectrum of ties with Pakistan. Be it trade or even sharing of Indus waters, Pakistan’s approach to using terror as a part of its strategic tool kit will be the reference point. It signals a long period of dormancy in bilateral ties. However, a reset of approach from Pakistan is unlikely
POLITICS
Operation Sindoor: Why it is different from earlier strikes against Pakistan
The primary message is that there is no safe location in Pakistan. The International Border can no longer be used as a shield for terror infrastructure.
BUSINESS
US imagines a new Weapon of Mass Destruction: Trade Deficit
Over two decades after George W. Bush authorised the invasion of Iraq over the fear of WMDs, which unleashed forces that still threaten many, another American president has launched a new war. Donald Trump’s sweeping new tariff regime will ignite a trade war with consequences that cannot be foreseen. Even this war is based on misrepresentation, this time of economic data
BUSINESS
The puzzling breakdown in the link between GDP growth and private investment flow
Private non-financial corporations have turned into enthusiastic savers. The effect is apparent in the investment-to-output ratio of manufacturing which has declined over the last decade when even agriculture registered an increase. Not even spurts of economic growth have moved the needle. It’s a trend which doesn’t lend itself to an easy explanation
INDIA
Bangladesh is India’s problem because Americans couldn’t care less
Donald Trump put to rest the allegation of an American ‘Deep State’ involvement in Bangladesh. India, however, has a problem on its hands and reason to be interested in what’s going on there.
BUSINESS
Urban India's economic drive powers rural consumption growth
Rural-urban consumption gap has been narrowing over time, which is a good development. With at least two of three agricultural households working marginal land holdings, there are limited economic prospects for them in the rural economy. It’s the income, over 50 percent, sourced from areas beyond their farm which is holding up consumption
BUSINESS
India’s GST model is set to get more lopsided
Creating a new a GST slab of 35 percent for some so-called sin goods will only complicate the rate structure. The GST Council however has left itself with no option as it lowered the average GST rate even when governments were under fiscal pressure because of economic shocks. Today, we are left with a system that levies a marginal tax on most of the GST base and compensates with almost punitive rates on a small proportion of the base.
BUSINESS
Trump 2.0 tariffs are a blunt tool to meet multiple aims. That’s bad news
This time, Trump appears to be using tariffs as a blunt instrument to meet different objectives, from choking the flow of fentanyl to the U.S to the more conventional economic goal associated with protectionism. It is likely to make the fallout harder to foresee
BUSINESS
CM Naidu, fertility is not a switch to be turned on at will
AP’s chief minister did well highlight the biggest demographic challenge India faces, collapsing fertility rates. However, his solutions ignore a global reality. Humanity is in uncharted waters when it comes to fertility. Exhortations and incentives, such as Naidu’s idea, will not work
BUSINESS
Mystifying divorce between India’s GDP trend and quality of jobs
Output as measured by GDP bounced back fast after the first impact of Covid-19. Three years of fast-paced growth has not helped the employment structure, which has regressed. The economy is booming but people are drifting back to agriculture and the category of unpaid helper in household enterprises is where many jobs are being created
POLITICS
ONOE represents a disruptive move when federalism is under stress
The biggest cost of transitioning to ONOE is the political cost as the natural life of most state assemblies will have to be terminated. Centre-State relations are under stress which makes this moment unsuitable to go back to where we started
BUSINESS
Unified Pension Scheme: Old, bad ideas in a new package
If actual market performance is short of the government’s assumption, the union budget will have to make good the shortfall to honour its commitment. That’s the risk of a guarantee which is what the 2004 pension reform bypassed. UPS effectively takes on the risk again which has to be backstopped by tax payers
TRENDS
Rice inflation is not a supply problem, but one of poor management by government
Currently, we have a situation where paddy/rice inflation is largely a problem of distortions in the market introduced by governments, both centre and some states
BUSINESS
MPC is way behind the curve; policy rate is too high
Since April-June 2022, inflation has been driven primarily by supply side shocks. It hasn’t spilled over as core inflation is at a record low. Voting status quo hurts the economy’s productive capacity
BUSINESS
Near-term consumption kicker in Budget 2024
Budget 2024-25: Fiscal benefits for creating new jobs and changes in the new income tax regime will put more money in the hands of a demographic with high propensity to consume
BUSINESS
Economic Survey projects conservative growth forecast for FY25, but leaves jobs and private investment puzzle unanswered
India’s GDP level is at the pre-pandemic trajectory, the Economic Survey reveals. It means that the speed of the GDP expansion has ensured no permanent loss in output and demand. Though, employment remains a crucial link between growth and prosperity
