4th March

Lots of silver lining

The article discusses the good things among the bad times with respect to India with its rising trade data despite the global economic slowdown.

Recent trade data for India showed 16% decline in exports and 18% in imports. However, at the closer look, in rupee terms both, exports and imports, show a healthy positive growth. In fact, the gross formation capital formation still remains 33% of GDP which shows that India Inc has not stopped investing despite the downturn and higher cost of capital. This shows the confidence in domestic revival from meltdown very soon and the companies want to be fully prepared when the recovery starts. Rupee exports have grown 12%, 22% and 4.3% from November to January while the corresponding dollar figures are negative. Clearly rupee depreciation is the primary reason. However, the 20% and 32% growth in exports and imports respectively in third quarter clearly defies the global recession even though developed markets goes southwards with respect to merchandise and service exports.

With declining commodities prices, the trade deficit remains below $100b for Apr 08-Jan 09. While non-oil imports tightened by 0.5% in dollar terms, in rupee terms they grow at 23% in January compared to 64% in December. Thus the crux here is that while major economies fall, there is one economy that is still climbing northwards.

Us and the US

The article has drawn similarities between US and India with respect to huge fiscal deficit but also points out the differences which raises a need for a well sought out plan to tackle the huge vacuum in govt finances in the future for India. 

While US and India both suffer with huge fiscal deficits of about 12% of the GDP, there are differences. First, US has the whole world to finance its deficit since US treasury bills are in demand because of dollar’s poll position as international reserve currency. Secondly, US is aware of the cost of fiscal deficit and plans to fill the gap as soon as the economy revives. Obama plans to revoke the tax cuts for the wealthiest by 2011 and to introduce new taxes to the families earning more then $250k or more to pay for healthcare expansion. For India, the interim budget remains completely silent with respect to usage of public finances to health. However, the acting finance minister, Pranab Mukharjee has expressed a need to return to fiscal correction.

The point is, in spite of all the constraints govt has due to election, absence of medium term strategy is a cause of concern. All the countries around the world, presently, is in need of fiscal and monetary stimulus but what is also necessary is a well thought and executed plan to fix the problem.

No strong-arm tactics

The article strongly defends the US First Lady, Michelle Obama, for her rights to wear any outfit she feels comfortable with. The recent uproar in US over the bare arms display of Lady Obama on several occasions is completely unjustified and unnecessary. 

The uproar is completely senseless since the trend of bare arms by the first lady of the nation was already started by Jacqueline Kennedy some five decades back. Thus, she reserves the right not to be misinterpreted in any ways. The lady’s preference for bare arms not only confers to the constitutional norms but also reiterates the Obama’s opposition to the proposal of US attorney general Eric Holder to impose a nation-wide ban on assault weapons. Obama, exactly a year ago when he was a senator, clarified that it’s an individual right to bear arms, subject to common sense regulations.

However, it’s possible that gunning her may have other reason like her apathy to the indoor heating bills of White House while the rest of the nation fights recession by making a cut in their energy bills or perhaps her extravagant display of biceps while her compatriots gave up their work-out routine. In anyway, it’s unfair to judge her on her appearances.