“Atmanirbhar” – From Exciting Slogans, to Executing Actionables

RBI bought more than $30 Billion of dollars in April-June period, the most in more than a decade, leading to a flood of rupees in the financial system!

And, India it’s reports first quarterly Current Account surplus of $600 Million in 13 years!

“On paper this looks healthy but it primarily reflects India’s economic slowdown, which has significantly reduced the non oil, non precious metals imports during FY20,” Rupa Rege Nitsure, Chief Economist at L&T Financial Holdings.

But now, around 70% of the World is holding its wealth in US Dollars!

A currency, of which Billions were printed in weeks time for free, without any inflation scare.

Experts say, a collapse in the $ is coming soon.
US debt as a % of GDP went from
35% in 1970 to 113% in 2020! (fundamentally bankrupt). India’s debt is at ~70% of GDP.

From 1960 to 2020, Emerging Markets:
China grown ~40x , South Korea ~25x ,
India barely at ~7x growth in past 60 years!

Of the many reasons for this, 3 key macro ones that need to undergo heavy correction :-
✓The Depreciating currency ₹
✓Exports !!
✓Ease of doing Business

Cleaning up of the NPA mess in India resulted in a high risk averseness rather than encouraging businesses, risks & NBFCs.

√China, Taiwan, Korea lend to business at 2%
√India business lending ~15%

India :
Total aggregate external Debt: $558 Billion
Forex reserves in our current acc: $500 Billion

Indicates?
We are borrowing at 4-5% & lending at 2-3% with an already clear -ve spread of 2%.

Breakdown of India’s GDP:
•Services: 65%
•Agriculture: 15%
•Industry: >20% {of which real #export is barely ~5%} A clear decline in our exports share, globally seen in past 12 yrs.

In 2016, Germany – world’s largest exporter with strongest currency.

In 2017, China takes over as the largest exporter, with it’s currency pegged (almost equal to) $ since past 10 yrs

Top Economies:
US: $22Trillion, China: $13 Trillion, Japan: $5Trillion

So, what do you think in the current landscape & policies are the right “actionables” for India to move past $3 Trillion?

By: Rony Saha