Modi's govt had completely miscalculated on the latest budget, and I've no idea what led them to do so. Investors were hoping for something much more reformist, and felt completely let down by the latest budget announcement. Meanwhile, the economy is slowing down fast, as malaise seems to be accelerating, with associated layoffs, etc.
Modi & Co need to come up with a quick re-do on this budget, as there's still time to do so. Forget any sacred shibboleths about the budget having already been anounced -- forget that, and just re-do it.
Furthermore, recent developments in the US-China situation are causing major ripples for the world economy, creating perils and opportunities which India must not ignore.Trump's tariffs targeting China are of course driving many businesses to shift operations away from China to other convenient nearby alternatives. Vietnam has been a significant beneficiary of this, reaping a windfall of new business which has fallen into their lap due to business shifting away from China toward them.
India is less well-positioned to harvest the business flight from China, but it must take advantage of the current US-China fallout, in order to reap the vital and timely opportunities from it. The budget needs to be re-done in order to take aim at major developments like the current US-China clash, due to the large size and scope of its impact.
As we can see, China is now retaliating against US tariffs, and is timing its retaliation with an eye to the November 2020 elections in the US. In India, the Congress Party had stalled and then eventually approved passage of the GST with an eye to timing any resulting pain from GST transition with the upcoming national elections, hoping that this would cause the most hurt to Modi's re-election chances. Likewise, China's retaliatory tariffs against the US are now timed so that any resulting build up of economic pain will coincide or peak near the time of the US elections, to cause maximum damage to Trump's re-election bid.
Would that be considered election meddling? This tactic has never been seen before against the US, mainly because obviously not everybody has the economic heft to try something like this against USA. In China, we're now seeing for the first time somebody who does have that heft. In this high-stakes game neither side seems likely to back down, and the resulting shockwaves will likely be felt across all markets. That's why India mustn't miss out on the opportunities from this, because it could be a good opportunity to get more Make-In-India happening, which we badly need for our own employment.
2 comments:
South East Asia will grab most of the factory jobs. Indians don't like working in factories:
The trouble is finding jobs that Indians actually want. The country’s workers would rather drive for food-delivery services on the breezy, albeit steamy, roads of Mumbai and work in hotels than in factories. Fair enough. Who would want to work in a yarn mill, which needs to maintain a temperature of 33 degrees Celsius? Conditions on other industrial factory floors are likely worse
People desperately want jobs - beggars can't be choosers - and underdeveloped India are mostly beggars compared to the developed world. We need to have factories available - and if those factories stay empty because Indians are staying away from working in them, then so be it - but the option needs to be available to them. I'm quite sure that most Indians want to fill their stomachs, and so the better wages that come from factory jobs compared to the miserable conditions of the agricultural sector, will likely shift their minds in direction of manufacturing. 50% of India's population are in the farming sector with pretty miserable working conditions, and so manufacturing would be a relative improvement for their lives. That 50% of India's population who do farming are producing only 15% of the country's entire GDP, and meanwhile the other 50% of India's population who don't farm are producing the other 85% of the country's GDP. So obviously farming isn't the most productive or value-adding sector of the economy. Developed countries use automation for farming, which produces more agricultural output and lowers food prices.
Let Indians have the opportunity to flood into manufacturing, and let them also influence the field of manufacturing itself toward their own predispositions. There will always be give-and-take. But the opportunity itself should not be withheld or denied to them.
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