Thinkpad: Independence, Inflation And Indignation
India’s 74th Independence Day celebrations escaped the Covid-19 clampdown. Prime Minister Narendra Modi still made the speech against the backdrop of the stately Red Fort. The coronavirus made its presence felt in the way of socially distanced seating and masked soldiers.
As part of his speech, Modi spoke of a National Digital Health Mission and a health ID that every Indian will have. This one, its implementation, its implications will be hotly debated.
With the speech coming against the backdrop of extreme economic distress, we were watching for any clues on a revival strategy. Modi suggested that the National Infrastructure Pipeline will be the vehicle used for providing a boost to the economy. This is a good idea. The details of the NIP have now been released and experts like Vinayak Chatterjee and Pronab Sen have earlier suggested that we get started with the shovel-ready projects, where plans, etc., are in place.
Of course, there is still that little issue of funding.
There was one other potentially important project spoken off. The plan to lay out optical fibre in all Indian villages in the next 1,000 days. While on the subject of India’s digital build-out, spare some time to listen to this interesting conversation between Sanjay Pugalia and Nandan Nilekani, who calls for a portable network of government services.
Inflation was back in focus this week. Locally and globally.
Locally, July inflation at just short of 7% was a bit painful. The data shook bond markets out of the central bank-induced slumber they’ve been in lately. Yields rose, an auction of a benchmark bond partly devolved and the RBI/MPC likely revisited their math to see whether they would miss the target for three consecutive quarters—an event deemed as a failure of policy.
On domestic inflation, we would like to flag two interesting reads on inflation. TCA Srinivasa Raghavan recently suggested that we need a little inflation at this time. And Niranjan Rajadhyaksha asked whether we may need to revisit our target and the chosen measure of inflation.
The global debate picked up after a higher-than-expected U.S. CPI print, which sent yields higher and gold tumbling. Ah, the irony. Yes, gold has been gaining on other triggers lately such as the fear of negative rates. Still. Gold, the inflation hedge, falls as inflation rises. Eye-roll.
Couple of interesting things to think about as detailed in these articles: Is this a covid-induced flash in the pan? Or could it be that there is inflation lurking, which isn’t being measured properly?
Beyond the world of finance and in the world of justice, indignation was a prominent theme.
The Supreme Court held advocate Prashant Bhushan guilty of contempt of court over his tweets against Chief Justice of India SA Bobde. At the Supreme Court, there was indignation over Bhushan’s tweets that could “shake the confidence of the public at large in the institution of judiciary”. The verdict, in turn, sparked indignation at least amid the country’s twitterati. We’ll leave you to debate this one in your WhatsApp groups!
As you get back to your Sunday and any online shopping you may have planned, know that your shopping cart will never match up to this: Someone just spent $3 million on a white Ferrari. Online.
Now don’t go getting any ideas your bank balance can’t support!
Till next week.