Per capita debt: Gujarat vs. India

There is a tweet from the Office of RG that the debt of each Gujarati is Rupees 27,000 crores. It is impossible. May be, it is reported wrongly. [Link]

The tweet is here.

But, if one did the math, the amount is Rupees 26,922.68 per Gujarati. That is based on media reported figures for Gujarat debt. As per media reports, the Gujarat State debt is Rupees 182,000 crores. The population is 6.76 crores in 2017. The answer is clear.

If one went by official figures, official figures are available only for March 2016 debt and that was Rupees 173,681 crores. 2016 population was 6.634 crores. So, per Gujarati ,the debt was Rupees 26179.50 in 2016.

By comparison, when UPA took office, the GoI internal debt per Indian was Rupees 15264.95 and in March 2014, it had gone up to Rupees 42261.38.

Union Government debt per Indian had almost trebled in a decade. That is 10.7% CAGR.

The relevant underlying figures are:

Internal debt in March 20104:  Rupees 1,718,832.75 crores
Population in 2004:                  112.6 crores

Internal debt in March 2014: Rupees 5,468,622.11 crores
Population in 2014:               129.4 crores

The debt figures are from Union budget documents. The population figures were taken from the output to a simple internet search query.

Australia ‘chooses’

Just minutes after reading this blog post at, I came across this Editorial in South China Morning Post that is disappointed with the new foreign policy white paper from Australia. The Editorial writer (s) appears particularly miffed that the white paper uses the term, ‘Indo-Pacific’ rather than ‘Asia-Pacific’. Interesting times. It is important that the logic of inexorable rise of China is challenged. Good that Australia is waking up. The White Paper can be downloaded from here.

Some key observations that I noticed through a quick keyword search on ‘Indo-Pacific’ and ‘India’:

We define the ‘Indo–Pacific’ as the region ranging from the eastern Indian Ocean to the Pacific Ocean connected by Southeast Asia, including India, North Asia and the United States.

The starting point is to be clear about the kind of Indo–Pacific region we want. We set out our vision for a neighbourhood in which adherence to rules delivers lasting peace, where the rights of all states are respected, and where open markets facilitate the free  flow of trade, capital and ideas.

Our alliance with the United States is central to Australia’s approach to the Indo–Pacific. Without strong US political, economic and security engagement, power is likely to shift more quickly in the region and it will be more difficult for Australia to achieve the levels of security and stability we seek.

To support a balance in the Indo–Pacific favourable to our interests and promote an open, inclusive and rules-based region, Australia will also work more closely with the region’s major democracies, bilaterally and in small groupings. In addition to the United States, our relations with Japan, Indonesia, India and the Republic of Korea are central to this agenda.

The Indo–Pacific democracies of Japan, Indonesia, India and the Republic of Korea are of first order importance to Australia, both as major bilateral partners in their own right and as countries that will influence the shape of the regional order.

India now sits in the front rank of Australia’s international partnerships.

We strongly encourage India’s strategic engagement with East Asia and the United States. We will work with India in the East Asia Summit (EAS) and build on the growing strategic collaboration between Australia, India and Japan.

The dreaded ‘C’ word

Although asset valuations are high by historical standards, overall vulnerabilities in the financial sector appear moderate, as the banking system is well capitalized and broad measures of leverage and credit growth remain contained. [Link]

Ms. Janet Yellen, the soon-to-be-former Federal Reserve Chairperson, delivered a brief speech to the Joint Economic Committee of the U.S. Congress. The above sentence is an extract. She had used the now infamous ‘contained’ word. Ben Bernanke famously said that the housing bubble was contained.

I think it makes sense for those who follow central banks to follow the blog of MarkGB.

Down and Under now?

These two headlines pretty much summarise the story of the Australian housing bubble:

  • Value of nation’s homes equivalent to four times the economy
  • Risk that ‘a minor shock could become far more significant’

But, the full story is well worth a read. The charts are great (ht: Rohit Rajendran). Do not miss noticing how big the housing bubble in New Zealand too is.

The Australian Government announced a Royal Commission to inquire into the conduct of its banks. The Bloomberg story on it lists the following ‘triggers’ for it:

The main opposition Labor party has for months been demanding a royal commission into the finance industry, amid a string of scandals ranging from misleading financial advice, attempted rate-rigging and alleged breaches of anti-money laundering laws. Pressure was growing on Turnbull to hold an inquiry, with some lawmakers in his Liberal-National coalition threatening to force a vote in parliament next week. [Link]

The Opposition leader well captures the ‘capture’ here:

Opposition Leader Bill Shorten said Mr Turnbull had spent 601 days fighting Labor’s call for a royal commission into the banking and financial sector.

“It says everything about Turnbull’s values and priorities that he only agreed to Labor’s royal commission when the banks told him he had to,” he said in a statement.

“He ignored the pleas of families and small businesses, he rejected the words of whistle-blowers. But when the big banks wrote him a letter, he folded the same day.” [Link]

The goose is beginning to get cooked well ‘Down Under’, regardless of the convincing win for Australia in the first Ashes Test at Brisbane.

A distracted post

I saw the link to the story in FT Alphaville about smart phones and their impact on productivity.  We should not be surprised at all. The evidence is in front of our eyes, as we walk on the road, as we drive, etc. Almost everyone is distracted, to the detriment of not just productivity but of safety. The FT Alphaville story is here. The original blog post is here. The original post is worth reading for it teases out other dimensions of what it means to be part of the distracted generation.

Izabella Kaminska had written in 2014 about supermarkets, big data and manipulation of human preferences. That link appeared in the post above. I quickly glanced through it. Helps us to focus on how powerless we are and how little influence and control we have over our own lives and choices. It is as much a spiritual realisation as it is a consequence of modern technology! Humans have unleashed a Frankenstein monster on fellow humans. Quite likely they did not intend it that way since they are not in control themselves! So, who really drives this? Perhaps, no one. Once we set down on a path of ‘conquering’ everything that we viewed as obstacles, this ought to be a logical conclusion?

In case you are too distracted to read ‘Thinking Fast and Slow’, please do watch Dan Ariely’s TED talk. I had posted that several times. But, worth reiterating.


Congress and the BJP are making India lose

(1) Two days ago, TCA had a piece in BS asking Rahul Gandhi to step down soon. Not a bad advice, in my view. Well, actually good advice. Soon, the newspaper wrote an edit criticising the Congress leader’s anti-business rhetoric in the Gujarat campaign.

This must worry Indians beyond partisan politics. It is not time to gloat that Rahul is helping BJP win or stay ahead in the race. His campaign, just as his remarks on ‘Suit boot ki Sarkar’ did, would propel a policy race to the bottom. Further, it tells us that the Congress has not gone beyond sloganeering and has not absorbed any lessons from its disastrous rule from 2004 to 2014 (and earlier too).

India needs to grow the pie and help the poor get out of poverty. India needs to deal with criminals-promoters and yet make way for entrepreneurship and competition. India needs to collect taxes but also make the tax system and rates reasonable. India needs to enforce laws but laws should be transparent, clear and be made clear and accessible to the public.

In other words, India needs leaders who understand the need for a multiplicity of approaches, interventions and seemingly contradictory thinking. It is only ‘seemingly’. There is nothing really contradictory about them.

The Congress leader has given us no hint that he understands this and, unfortunately, increasingly, nor has the BJP.

Therefore, the question really is if both of them are making India lose.

There is a race to the populist bottom that both the parties are practising. Now, Arun Jaitley is defending that the Insolvency and Bankruptcy Code does not reward capitalists. On that note, actually, this government has done quite well. Perhaps, according to Andy Mukherjee, too well. But, I disagree with Andy Mukherjee and agree with Sunil Jain and Debashis Basu. The government has done the right thing.

However, in the light of the (wrong and unjustified) criticisms that it is soft on capitalists, the government may go overboard with either even more anti-business policy decisions or seemingly pro-poor and pro-farmer policies or both.

Separately, in the light of what I wrote in MINT on Tuesday about how solar panels are being deliberately reclassified as ‘DC generators’ and charged customs duty, the PM’s appeal for investment into India is amusing.

(2) THE HINDU has featured an article by a writer who has raised the red flag on the ‘bail-in’ clause in the new Financial Resolution draft bill that has gone to the Parliament select committee.

It is an enabling provision and the government and the regulator will decide on which creditors would be ‘bailed in’ and in what amounts, etc. There is a long way to go but uncertainties have cropped up. The article in THE HINDU engages in needless fear-mongering. Two friends have raised the issue with me and asked me to study it and recommend whether they should pull their deposits out of the banks!

I did spend some time on it last night and find that there is no immediate concern but there is plenty of scope for mischief and uncertainty. Those who wish to assuage themselves should check out and peruse the documents here, here and here. These two documents might be useful too.

(3) For the future of India, there is a latent need for a genuine centre-Right/Right discourse. BJP is nowhere near that. As I wrote some seven months ago, there is single party rule in India when it comes to economic policymaking. But, I doubt if the people of the country too are ready for a centre-Right/Right discourse. By and large, people do not appreciate – yet – that the populist discourse and policies are superficial and short-term with deleterious long-term consequences.

The state of the political and policy discourse on either side of the aisle should worry Indians – a lot.

Corporate shenanigans

We had learnt of the gaming of emission tests by Volkswagen. In fact, the charge was made against other German car makers too. In August, all of them agreed to update their software. Of course, we know enough about financial institutions. They gamed everything – interest rates (LIBOR), exchange rates, option prices and precious metals. The saga is endless. See the more recent story about Wells Fargo (a great read) and also note that Australia is appointing a Royal Commission to inquire into the conduct of its banks.

Some think that central bankers – deliberately or not – are gaming the stock market. But, they are public institutions. Let us stick to the private sector.

We learnt of Kobe Steel and now there is another Japanese firm in this inglorious list.

It is quite disappointing that Japanese and German firms are part of the unfolding story line on corporate immorality. Firms in both nations have done a lot of work to acquire reputation for quality. It is sad to see them undo the hard work.

Without moral foundations, a market economy is meaningless.