Election: a distraction from the grim reality

Shankkar Aiyar’s column is worth reflecting upon: Must things be necessarily this way? He is right in noting that the election schedule has put governance on hold in the country for 73 days. That is one-fifth of a year!

Buttressing the data that Shankkar provides on the extent of drought prevalent in the country, there is the news that India’s pre-monsoon rainfall is 27% deficient:

It is a grim tale and so is this one by Andy Mukherjee, in its own way. If we think that corruption is endemic only among bureaucrats and politcians, we are telling ourselves a big fat lie.

Across the political spectrum, where is the leadership that recognises the depth and gravity of the issues we face – in agriculture, the impact of climate change, pricing and availability of water, the mess that our banking and financial systems are?

Strictly going by manifestoes, the Congress Party’s manifesto reads somewhat better than that of the BJP with respect to the underlying preparation and specifics. There are only few specifics in BJP manifesto. But, the Congress thinks that fiscal largesse and government are the answers. They are part of the problem.

Of course, these require a more detailed commentary. Will come in a few days.

But, the manifestoes are non-binding. How about making them the equivalent of a business plan submitted by an investee company to a Fund?

Why not a PIL on that?

India needs a leadership that can convince the public that it is aware of the problems but projects confidence and determination in resolving them with resolute attention and focus until the last mile.

Are we likely to get it after the elections?

Substantive vs. superficial change

A good friend forwarded this thoughtful piece to me.

To a degree, the BJP mimicked the Congress behaviour of yore that have brought the Opposition parties together and in bed with the Congress again! The mistake Modi made was not in creating a ‘Congress-culture-mukt’ Bharat. 

It is also a failure of any of the regional leaders to rise above their regional origins that, as a country, there is no real alternative to the Congress and the BJP.

The BJP should have presented a true alternative to the Congress – pragmatic and practical policy agenda, centrist but leaning towards less-distortionary and less interventionist attitude towards governance, true devolution to lower levels of government, true delegation with empowerment in the Union Cabinet, transparent performance evaluation annually, facilitating emergence of state-level leadership, etc.

In other words, the failure to institutionalise governance at all levels – a failure of the Congress Party for over the many decades that it dominated Indian politics and governance – has made the anti-Congress alliances of the past become the anti-BJP political formations.

One different but important final point:

What makes the prospect of an alliance this time of the Third Front that much more frightening is that an alliance with a much weaker Congress (than of yore) means that regional parties with narrower and more limited ambitions and goals will dominate. They won’t have a national perspective on many things. They may also be more vulnerable to capture by India-inimical forces. I hope I am very wrong on this.

What do the four years since 2014 mean for 2019?

It is about two weeks since the National Democratic Alliance (NDA) government completed four years. I had written my own evaluation, together with Ajit Ranade for MINT. Many thought that it was a balanced critique. Coalitions involve compromises. So, both of us accommodated each other’s points of view on some aspects. But, predominantly, we converged in our assessment.

Our article had a very brief critical comment on demonetisation. Personally, I have a nuanced take on it. It was motivated for the wrong reasons. However, the verdict on its impact will change depending on the horizon over which we evaluate it. Take bank nationalization for example. It certainly helped the government to take financing to rural areas. The benefits exceeded the costs in the first twenty years (1969-1989) of nationalization, perhaps. In the next twenty-five years, the costs have vastly exceeded the benefits. We are still cleaning up after the biggest saga of non-performing loans. So, the judgement on bank nationalization – over forty-five years is different from the judgement one would have had after the first twenty years. I feel that it would be the reverse with demonetisation.

For now, the judgement is bound to be mixed to negative. The fact that we still have the 2000-Rupee negates the corruption argument. Political funding through anonymous bearer bonds with the identity of the donor known to a very few negates transparency and sets back the cause of integrity in public policy. So, as an anti-corruption and as an anti-terrorism initiative, it has question marks hanging over them because the seriousness of these goals have been diluted by subsequent government actions. But, demonetisation might have set in motion some other big and irreversible trends towards digitization, towards tax compliance and towards formalization whose impact will be felt later and in a big way.

Few days ago, Shekhar Gupta, formerly with the Indian Express, India Today and now the promoter of print.in, had published an interesting piece. I read it in ‘Business Standard’. It was a good piece in the sense that it contains important warnings that the Bharatiya Janata Party (BJP) leadership would do well to reflect upon.

One of the better critiques I read on the fourth anniversary of the government was written by Shankkar Aiyar for Bloomberg Quint.

I read the four-part evaluation of the NDA government’s policies on agriculture by Ashok Gulati, the agricultural economist and his co-author. While it is clear that the farmers are unhappy and that the NDA government has been blamed for it, it is really the case that not too many in the world and in India surely have answers for the financial viability of farming except through heavy subsidies. The lag between market signals and production decisions, the role of the weather and climate change and the fact the demand for food is income-inelastic make farming inherently a difficult economic proposition. In India, several other factors compound it – poor reach of irrigation, dominance of intermediaries, fragmented land holdings, excessive extraction of groundwater and application of fertilisers resulting in diminished soil fertility, etc.

The four articles actually show us that the NDA government had much better answers than its predecessors for farm sector woes. It relaunched crop insurance. It tried to create a national agricultural market. These two help farmers with two key requirements – one is risk management (crop failure, etc.) and the second is price discovery and remunerative prices. On the distribution side, the government had promised to unbundle the Food Corporation of India and immediately appointed a Committee to recommend actions.

The execution on crop insurance and on the national agricultural market was in the hands of states and they have muffed it. One of the four articles mentions that several states have not paid their insurance premium subsidy dues to the insurance companies for 2016-17 even now! The dominance of the middle men continues with unreformed or half-reformed Agricultural Product Market Committees.

Mr. Gulati and his co-author in their four-article series have mentioned more than once that the Union government should have or could have tried to move the reform process forward at least in BJP-ruled states, given that the BJP is in power at least in twenty + states. I agree with that very strongly. That missed opportunity is not just with respect to agriculture. In education, in labour (some modest labour reforms have happened in BJP-ruled states), there could have been a serious push to set the agenda for other States through initiatives and pilots in BJP-ruled States. That is a big missed opportunity.

Some of the government’s critics point to the fact that the economic growth numbers are overstated. That is true. But, that is a problem of the Central Statistical Organisation and not that of the government. I do not think it is mala fide because, more importantly, there is a more egregious overstatement of GDP growth from 2011 to 2014 too. The Bank Non-Performing Assets (NPA) numbers are telling their story. Industrial production growth (or, the lack of it) tells its own story.

Tax terrorism has continued and may have expanded. Even the government’s supporters have conceded that.

Of course, on the credit side of the ledger, there is Jan Dhan Yojana and Direct Benefit Transfer using Aadhaar. Then, there is infrastructure push. Goods & Services Tax (GST) and the Insolvency & Bankruptcy Code (IBC) implementations are good and they will be very important. Cooking gas connections to women, last-mile electricity to villages and Swachh Bharat must count too.

Good chance that a Congress-led Government would have done GST and IBC too but then, there is an equally good chance that the initial design and starting troubles with both would have been the same. That has to do with the nature of the political process in the country.  See the excellent interview by Arvind Subramanian in ‘Finance & Development’ of the IMF.

In his article in ‘Business Standard’, Shekhar Gupta notes that the election to 2019 might be more open than it was a year ago. But, the prospect of a return to 2004 or the 1996-98 days must make many Indians nervous. There is a feeling that coalition governments have worked well for India. I have to say that the evidence is very mixed or unconvincing.

In general, in the last thirty five years, India, at the level of the Union government, has had roughly six years of good governance: 1984-86, 1991-93 and 2002-04. I very much doubt that they were due to coalitions.  Some point to the first NDA government (1998-2004) and the UPA government in its first terms for evidence that coalition governments resulted in better governance. I beg to differ.

The first NDA government was pretty much an underperformer until 2002. It was held back more by internal critics of the BJP Parivar more than by coalition partners, as far as I can recall. But, the government redeemed itself with many decisions on infrastructure, on privatisation, on fiscal reforms and none of them were because of coalition partners.

My recollection of the first UPA government was that it was held to ransom by the Marxist Communist Party on almost everything it tried to do. Then, I do recall a Minister who was a fugitive from law. As far as UPA II is concerned, not many reasonable people disagree on the overall disastrous rule of UPA II and not just with respect to the economy – coalition or no-coalition. Hence, the evidence on the proposition or perception that coalition governments work well for India is flimsy at best and non-existent at worst.

However, I will concede this, even though this too is generalisation since we are working with too few sample points. That is in the nature of these things.You cannot have too many observations except over two centuries! Then, there will be other issues such as controlling for other factors, to worry about.

But, let me still go ahead and generalise:

If the BJP comes back to office, in a coalition framework, it might be better.
If the Congress comes to office heading a coalition or is part of a coalition, it is disaster.

For the BJP, coalitions tend to temper their arrogance and the extreme wings of the larger BJP parivar. That is good.
For the Congress, coalitions stoke their irresponsible, unsustainable and unviable redistribution tendencies. That makes a bad situation worse.

UPA-1 basked from the growth effects of NDA government policies and infrastructure push, global boom and capital inflows. Their incompetence and venality of the first term showed up in the second term on top of the consequences of the second term venality and incompetence. The most egregious example is banks’ NPA. We are still grappling with them.

The first NDA government did well in its last two years due to infrastructure reforms, privatization, global and Indian economic recovery and corporate balance sheets being in great shape after being put through the wringer. It had nothing to do with coalition.

After 2019, if there is a coalition government – whether or not the Coalition is led by the Congress or supported by it – there is a very high chance of it being fiscally ruinous. Fiscal irresponsibility and imprudence are not just some economists’ fancy pet peeves or themes. They are directly responsible for higher inflation.

This government has been, until now, a model of fiscal virtue. Government market borrowing including from Small Savings Schemes has hardly budged in the first four years. They had gone up by 9 times from 2005 to 2014!

Of course, the NDA Government has probably botched its copybook with farm loan waivers and it had managed to achieve the revised fiscal deficit target for 2017-18 only by postponing payment to Food Corporation of India – similar to what UPA did between 2013 and 2014. NDA had to make good UPA’s fiscal numbers and the oil price crash helped them do that, hugely.

So, how do I pull all of these together and summarise?

(1) The NDA Government has been somewhat more efficient and reasonably less corrupt than the two UPA Governments.

(2) The Congress or the Opposition will take off from where they left off in 2014. That will be quite a setback for the nation and not just with respect to the economy.

(3) The NDA Government has done quite a bit to boost the long-term growth potential of the economy. That is the big difference and clincher for me. The UPA government – in the two terms – managed to pull India’s economic growth potential down considerably. From around 8% in 2006, it had dropped to 6.5% by 2013, as per IMF estimates. Some of the policy decisions that the NDA government had taken will actually lift India’s potential growth up in the years to come.

If only the NDA government had thought of their role as doing precisely that – how to enable the potential growth to keep rising – then, they could have done much more.

But, what they had done on lifting India’s potential growth – in spite of their failures mentioned here and in spite of a sluggish global growth environment and rising hostility to globalisation of which India was a beneficiary – is a big contrast to what happened in the ten years between 2004 and 2014.

Some would mock the silence of this post on social issues that many are agitated about. Two reasons explain my silence. Most of the outrage is manufactured around election time and built on dubious claims. It is hard to separate the truth from propaganda and noise. Second reason – and this is the important reason – is that democracy is very active, vigilant, vigorous and healthy when a so-called ‘Hindu-Right’ (this government has not been pro-Hindu nor has it been an ‘Economic-Right’ government as is conventionally understood) government is in office in this government.

Come to think of it, lifting economic growth potential is one of the most secular things any government can do.

Foreign donations to Indian political parties

An email group that I am part of had an animated discussion on how the NDA government in India had opened the floodgates for all and sundry foreign donors to political parties merely because the BJP wanted to regularise a donation that it might have received from a foreign source. Not only that, the BJP went back and amended the relevant section or clause all the way back to 1976.

Well, the truth is somewhat anti-climatic. It had only amended a clause that deemed Indian companies majority-owned by foreigners as a ‘foreign source’. Everything else about foreign sourced donations remains unchanged.

Take these lines for example from an article that does not seem very well disposed towards the BJP government:

Tellingly, they recently collaborated to insert an unobtrusive clause in the latest annual budget that has the effect of absolving both from any prior violations of rules restricting foreign political donations. [Link]

These lines appear in the article that reviews two books on India. The lines are a perfect illustration of the sloppiness that has  characterised the discussion on what the BJP-led NDA government had done with respect to political donations from ‘foreign sources’.

Look at the header in a story that appeared in ‘BusinessLine’:

BL Headline

That is both over the top and wrong or grossly misleading. But, in reality this is what had happened:

(1) A Delhi High Court Ruling in March 2014 found the two major political parties – BJP and Congress – guility of violating the provisions of FCRA, when they accepted donations from Vedanta. The petition was moved by the Association for Democratic Reforms and they were represented by Prashant Bhushan, in this particular case. [Link]

(2) Then, in order to nullify the court ruling, the BJP government, along with the budget for 2016-17, had sought to retrospectively amend the applicability of FCRA for political donations from foreign sources up to 2010.

Source: same as above.

(3) The ‘BusinessLine’ article with the header featured above gives the exact wording as per the Finance Bill:

Entry number 217 in Part XIX of the amendments in the 2018 finance Bill (Amendment to the Finance Act, 2016), which reads : “In the Finance Act, 2016, in section 236, in the opening paragraph, for the words, figures and letters ‘the 26th​ ​
September, 2010, the words, figures and letters ‘the 5th August, 1976’ shall be substituted,” said the amendment. [Link]

However, it is interesing that when I saw the Finance Bill tabled in the Parliament along with the Budget, these are the wordings I found:

It is proposed to bring the said amendment with effect from the 5th August, 1976 the date of commencement of the Foreign Contribution (Regulation) Act, 1976, which was repealed and re-enacted as the Foreign Contribution (Regulation) Act, 2010. [Link – p. 99/102 – right column, penultimate paragraph]

May be, BusinessLine saw the Finance Act text because once the Bill is passed by tthe Parliament, it becomes an Act.

(4) Prospectively too, the FCRA provision will not be applicable to foreign sourced donations for politcal parties. That was ensured by the amendment to FCRA moved with the Finance Bill 2016:

Under the proposed amendment—part of the budget proposals presented on 29 February—a donation by a company which has majority foreign ownership will no longer be treated as “foreign source” as long as it conforms to the sectoral foreign investment cap and conditionality. [Link]

(5) This is from the Finance Bill 2016

Clause 233 of the Bill seek to amend the Foreign Contribution (Regulation) Act, 2010 so as to insert a proviso in sub-clause (vi) of clause (j) of sub-section (1) of section 2 of the said Act providing therein that notwithstanding the nominal value of share capital of a company exceeding one-half per cent at the time of making contributions such company shall not be deemed to be a foreign source, if the foreign investment is within the limit specified under the Foreign Exchange Management Act, 1999 or the rules or regulations made thereunder. [Link]

(6) The ‘clarification​’ made by the Finance Bill 2016​  allows for funding made by Indian subsidiaries (of foreign companies) ​ to be treated as ‘non-foreign sourced’ even if the majority ownership (above 50%) is with the foreign parent company, as long as the investment is wthin sectoral caps for foreign investments for that sector.

(7) If we go to the FCRA 2010  (2) (1) (j) (vi) – which is what was amended by the Finance Bill 2016 and again by the Finance Bill 2018, it is clear that a company under the Companies Act 1956 was deemed a ‘foreign source’ if it was majority held by a ‘foreigner’ with foreigner being defined elsewhere in the section. See here.

Now, this has been amended such that an Indian company incorporated under the Companies Act will not be deemed ‘foreign source’ even if more than 50% is held by ‘foreigner’ as long as the investment by that company is within sectoral caps, etc. This amendment has been made effective retrospectively from 1976.

(8) But, this amendment does not facilitate Indian politcal parties collecting donations from totally foreign sources. The amendment is only with respect to Indian companies that were deemed ‘foreign source’ earlier. To be very clear, the amendment and its retrospective effect are specifically ONLY with reference to Section 2(1)(j)(vi) – definition of ‘foreign source’​ with respect to a company​ – of the Foreign Contribution Regulation Act, 2010.

(9) ​The Government of India press release provided a clarification as well to reiterate this aspect but it is clear that this was done specifically to regularise past donations by Indian subsidiaries of foreign companies with majority held by foreigners and to facilitate such donations in future too.

(10) Now, let us evaluate the decision by the government:

Together with bearer politcal donation bonds that was part of last year’s budget proposals (2017-18), donations to political parties have become a lot more opaque and non-transparent and now with donations by an Indian​ ​ company which has majority foreign ownership will no longer be treated as a ‘foreign source’, the wellspring of corruption from ‘political funding’ has become incrementally more rejuvenated, with this retrospective and prospective amendment. To be clear, the wellspring has always been existed. That is why the Congress Party did not criticise the BJP for this amendment. At the margin, BJP has rejuvenated and not depleted that wellspring. That is a disappointment for many.

(11) I​t is not a blow in favour of probity and integrity in political funding for sure. But, it is not as ‘open-ended’ invitation for foreign influence as many have alleged.​

It is possible that this distinction was a bit blured in people’s minds while discussing this matter.

However, making it easier for Indian companies majority-owned by foreigners does not necessarily advance the cause of sound public policy. Further, bearer political donation bonds being made through banking channels does not help either. In general, the idea behind making political funding transparent is for the public to know who is donating to whom so that public policy decisions can be understood and evaluated better.

In sum, the BJP has lost an opportunity here to really burnish its reputation for anti-corruption and to stop foreign influence-peddling into Indian domestic affairs.

Concern for Opposition unity

This blog post was triggered by an edit that ‘Business Standard’ had written today, advising the Opposition parties that without unity in their ranks, the Opposition parties cannot hope to defeat the BJP in the national elections in 2019

This is not a critcism as much as loud thinking on what a newspaper edit should concern itself with. Can ‘Advising the Opposition Parties of their political strategy against the ruling party’ be fair game for a newspaper Edit?

In contrast, if the Opposition Parties united to defeat a ruling party, a newspaper can ask whether the purpose was merely about replacing the ruling party or if there was a larger national purpose to it. Is there an alternative policy agenda that is thought-through, that is different, etc.,? Those are valid questions for an Edit to raise.

After all, the Congress Party has been in office for more than 80% of the time since independence. What has it learnt and how is its policy agenda in 2019 going to reflect that learning, if there is a learning, to begin with? Is it ‘proud’ of the fact that its farm loan waivers have been adopted as the answer to rural and farmers’ distress by several States, including those ruled by the BJP? Or, is there a reflection on the costs and benefits for the nation (not to leave out farmers) from such policies?

Whichever way one slices it, the problem of bad loans in Indian banks is the legacy of the credit boom and wrong loan decisions – mala fide or bona fide – of the era between 2004 and 2014. Was it a rather indirect taxpayer funding of one or more political parties via the banking system and its borrowers?

Has there been an honest introspection on the part of the Congress about the moral, ethical and economic fallout of the bad loan crisis?

Editorials can be legitimately concerned with that.

Equally, when the BJP trumpets a ‘Congress-mukt’ Bharath, it is important to ask quite what it means for the nation, if the policies are no different from those that the Congress Party followed.

Without responsible answers to these questions, it hardly matters to the public, except to the most partisan of them, as to whether the Opposition is united or is disparate.

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 www.prsindia.org 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.

Unjustified Indiaphoria

A friend sent me a message this morning on WhatsApp:

“Rupee at 63 handle, Sensex over 30k, nifty over 9300! Too good to last? Methinks not!”

My response:

“Sorry, Sir. I am afraid so. Economic fundamentals do not justify them. I will be happy to short them all, if I can.”

That response was given as someone who was the Chief Investment Officer of a Wealth Manager and one who is a natural contrarian (with all its attendant risks and pitfalls) when it comes to investing.

In other words and in the interests of brevity, I belong to the school that believes in buying when no one has a good word to say on the market and sell when everyone is a cheerleader for a market. India, more or less, belongs to the second category.

In fact, its fundamentals are not great too. Its economic growth rate is exaggerated. The current real GDP growth is close to 6% or slightly lower. I had a blog post on it yesterday. Corporate earnings are improving but gradually.  On that, this is what I heard from a stock broker six weeks ago:

Despite an improvement in the economy after the demonetisation shock, the earnings downgrade cycle has continued. In the past month, consensus Nifty EPS for FY18 has seen 6% downgrade and that for the wider BSE100 has seen 5% downgrade. Commodity sector companies have seen the highest upgrades whereas the large downgrades were concentrated in sectors such as banks, telecom, and consumer discretionary. Consensus estimates still imply doubling of profit growth (ex-PSU banks and metals) to 15% in FY18, which looks optimistic to us, given limited scope for margin expansion.

Leather industry hubs in Uttar Pradesh have recently come under a cloud. Someone should visit them and check out the fallout of the ‘Cow Protection’ movement. Hotels are beginning to feel the fallout of the alcohol ban. See this article in FT (could be behind a paywall).

Then, the government’s orders on stents are backfiring. Pharma companies are fighting back. The government order on price controls and its rediscovery of the price controls as a public policy tool is rather unfortunate. My column in MINT yesterday was largely built around this. The consequences are not so much unexpected as they are unintended.

Reliance Jio has placed the financial health of many of its competitors under a question mark and the Reserve Bank of India has warned the banks of the risk of exposure to the telecom sector. Usually, public warnings mean that the situation is no longer a risk but a reality. It has asked banks to set aside higher provisioning.

E-Commerce start-ups are seeing big erosion in valuation and investors are marking them down in their portfolios. Further, there are other stories that sap investor morale and sentiment. In general, Indian PE/VC investing is a bit like Hotel California. You can check out but cannot leave.

Overall, bank credit growth to industry is contracting. Non-performing loans are holding back credit growth and the revival of capital formation in the country. This story is not an exaggeration. The extradition order on Vijay Mallya is a sideshow. Non-banking sources of finance are picking up market share, surely. But, they cannot be accessed by smaller firms. Not surprisingly, this article mentions that the International Monetary Fund, in its latest World Economic Outlook (April 2017), does not expect a big jump in India’s investment share of GDP.

Government’s tax and black money collection drives – laudable though they are as to purpose but condemnable as to process – are unlikely to help investment sentiment.

Notwithstanding (or, because of?) the Bharatiya Janata Party (BJP)’s political successes in elections including in Delhi, there is actually economic malaise in the country.

Financial markets and asset prices are largely a sideshow, supported by an equally unjustifiable and myopic global market sentiment. That is a separate story, however.