I wish you all a Happy New Year! May the year 2025 usher in unprecedented opportunities and unheard-of prosperity to all of us. It is a long time since our planet and its inhabitants has had a decent year of peace and tranquility.
Shaktikanta Das demitted office as the Governor of Reserve Bank of India (RBI) on 10th December 24 after completing two terms as the top honcho at RBI. For a dyed-in-the-wool bureaucrat his tenure at the RBI was a remarkable one. Das has navigated the RBI through a period of significant economic and financial uncertainty. He has demonstrated a proactive approach to policymaking and a commitment to supporting economic growth while maintaining financial stability. Despite these challenges, his leadership has been instrumental in guiding the Indian economy through a difficult period. He showed remarkable sagacity during the Covid 19 pandemic. He will be remembered for a series of measures, including interest rate cuts, liquidity injections, and regulatory relaxations, to support the economy and mitigate the impact of a series of crises. During his tenure he prioritised maintaining financial stability by closely monitoring risks and implementing measures to strengthen the banking sector. Das championed the digitalization of the Indian financial system, including promoting the use of digital payments and encouraging innovation in the fintech sector. Despite all these achievements there were still some lingering issues lately in the economy like stubbornly high inflation, pace of economic growth and job creation. It was generally believed that transmission of monetary policy to the real economy has been somewhat muted. Every time he presented his proposals one could always see his steady hand and a common man’s commitment to his chosen cause. After two terms with such a stellar performance to show, I still feel that the government’s decision to appoint someone else in his place when his already extended tenure ended was the right one. In a nation’s administrative machinery there is little scope for too much sentimentalism and indefinite continuum though I personally will miss his periodic presentations spiced always with Gandhian thoughts make his case. Well done, Guv. Enjoy your free time now; you have earned it.
Dr Manmohan Singh passed away at the ripe old age of 92. That presents an opportunity to look back at his life and career once more. If I try to write his obituary till the cows come back home, I still will not be able do justice to the job. End of it all, I was left wondering how he could achieve so much in one lifetime! He dominated the political scene in India without being a conventional politician himself. He was an oxymoron in the political firmament. Despite being a politician, there was not a single accusation against him for being corrupt or showing favouritism to anyone. Look at his CV. Singh attended Panjab University in Chandigarh and the University of Cambridge in Great Britain. He later earned a doctorate in Economics from the University of Oxford. In the academic world he started off as a Professor of Economics at Punjab University. In the 1970s he was appointed to a series of Economic Advisory posts with the Indian Government, and he became a consultant to many a Prime Minister. He was a Member of the Rajya Sabha representing Assam. He served as the Chief Economic Advisor to the Government of India, Chairman of the Planning Commission, Governor of Reserve Bank of India, Finance Minister of India before becoming the Prime Minister of the country from 2004 to 2014. Amongst all these achievements, his stint as the Finance Minister was the most consequential. Dr. Manmohan Singh’s contributions to India are significant, particularly in the realm of economic reforms. As the Finance Minister in 1991, he spearheaded the liberalisation of the Indian economy, a crucial turning point that moved India away from a centrally planned economy towards a market-oriented one. These reforms laid the foundation for India’s subsequent economic growth, leading to increased foreign investment, job creation, and poverty reduction. He presided over deregulating the economy, opened various sectors of the economy to FDI. He reduced tariffs and duties and privatised public sector units. During his time in the government, India saw a slew of reforms to strengthen the banking and financial sectors, and his initiatives saw a well laid down system to determine interest rates. His initiatives included National Rural Employment Guarantee Act, Right to Information Act, National Health Mission besides Higher Education Reforms and promotion of Information Technology. These are but a few significant initiatives taken under his watch. Dr. Manmohan Singh’s reforms laid the groundwork for India’s rapid economic growth and transformation into one of the world’s largest economies. His policies emphasised liberalisation, social justice, and inclusive growth, significantly impacting the lives of millions while positioning India as a global player in the economic arena. Strangely during his tenure as PM there were scandals in the Ministry of Coal. So strong was his image as an honest politician (an oxymoron) no finger pointed at him personally! His famous philosophical reactions against his critics were: “History will be kinder to me.” There, for once the gentle sardar made a mistake. That decision we had taken even when he was alive. We, the citizens, know only too well that when the shit hits the ceiling fan it spares no one in the room. In his case, he was still spared of any malfeasance speak volumes for his sincerity and honesty in a dishonest political environment. Even the last vestige of litigation against Dr Singh was also disposed of by the apex court as infructuous subsequent to his death. Today when he is sitting next to the Almighty, advising Him on all matters finance, we can be rest assured. We will miss him, nevertheless. However, I was aghast to see the unseemly conduct of both the ruling party and the opposition on the subject of conferring Bharat Ratna to Dr Singh. In the process they diminished the very stature of Manmohan Singh’s soul.
Here is some good news for those looking for instant solution to the biggest of their problems – the safest and surest way to reduce weight. If it is a big problem for people, it is a bigger commercial opportunity for drug companies. The solution to this problem is now at hand. For decades, Big Food has been marketing products to people who can’t stop eating, and now, suddenly, they can. The prospect of tens of millions of people cutting their calorific intake down to roughly 1,000 per day, which is half the minimum amount recommended for men, is unsettling the industry. The magic potion is Ozempic. Ozempic users aren’t just eating less. They’re eating differently. These drugs seem not only to shrink the appetite but to rewrite people’s desires. Almost everyone’s cravings for ultra processed foods had been replaced with a lust for fresh and unpackaged alternatives. Ozempic is a prescription medication used to manage Type 2 diabetes. It is administered as a once-weekly injection and works by helping the pancreas to release more insulin, reducing the amount of sugar produced by the liver, and slowing the rate at which food passes through the stomach. This helps lower blood sugar levels and reduces the risk of major cardiovascular events such as heart attack and stroke in adults with type 2 diabetes and heart disease. Ozempic is part of a class of drugs called GLP-1 receptor agonists, which mimic the action of a naturally occurring hormone in the body that regulates insulin release and appetite. While it is not specifically approved as a weight-loss drug, clinical trials have shown that it can help with weight loss as a secondary effect. It is important to note that Ozempic should be used in conjunction with diet and exercise, and it is not suitable for people with type 1 diabetes. Common side effects include nausea, vomiting, diarrhea, and stomach pain. This drug would engender a cultural change in India, for sure. In the diabetic capital of India, there is a lot of moolah to be collected by the drug companies thanks to Ozempic!
When the Goods and Services Act was introduced in 2017 it was expected to be a game changer for more reasons than one. The Government promoted it as a “good and simple” tax – something that the people of India were desperately looking forward to. However, ever since its introduction, this promise of simplicity seems to have evaded the tax authorities. This aspect became a topic of heated debate recently during the 55th meeting of the GST Council followed by funny memes after the meeting. The GST Council, chaired by Finance Minister Nirmala Sitharaman, introduced some changes to bring clarity to the varying tax rates for popcorn across different states. The idea was to categorise popcorn based on its content, with sugary popcorn (known as caramel popcorn) attracting a higher tax rate to encourage healthier eating habits.
The revised classification now looks like this:
Non-branded popcorn with salt and spices: Taxed at 5% GST.
Pre-packaged and branded popcorn: Taxed at 12% GST.
Caramel popcorn: Taxed at 18% GST because it is classified as a sugar confectionery.
The decision has sparked a furor and backlash for several reasons:
Many people find the new tax system overly complicated for something as simple as popcorn. Critics argue that it adds unnecessary complexity to the GST scheme itself. Former Chief Economic Advisers to the Government of India, K.V. Subramanian and Arvind Subramanian have also voiced their concerns stating that the new system brings minimal revenue benefits but adds more complications for ordinary citizens. Opposition parties, especially Congress, have criticised the decision, calling it an example of how absurd a system can be made! The announcement has also triggered a meme fest on the social media, reflecting the frustration and exasperation of India’s middle class. Memes mocking the Finance Minister’s explanation have gone viral, highlighting the perceived absurdity of the new tax slabs. While the GST Council’s intention may have been to create a clear and uniform tax system for popcorn, the decision has been met with widespread criticism for its complexity and perceived lack of significant benefits. The controversy underscores once again the ongoing challenges of implementing and managing a comprehensive tax system like GST which still seems to add to its complexity every step of the way. The lesson to be learnt – you can conceive a good and simple tax till the system is handed over to the government to implement.
H-1B Visas are the topic of the day in the US today. It is of particular importance for Indian IT sector. The H-1B visa program allows U.S. companies to employ foreign workers in specialty occupations requiring technical or theoretical expertise. This programme is essential for industries such as technology, healthcare, and engineering, as it enables companies to attract skilled talent from around the world. Donald Trump had viewed engagement of labour for the tech industry through this route suspiciously earlier when he was President. His administration proposed changes aimed at reducing the number of H-1B visas issued, claiming that the programme was being abused by companies seeking lower-wage foreign workers. His war cry was “Buy American and Hire American,” which aimed to protect jobs for American citizens and ensure that economic decisions prioritise American labour. During his tenure his administration took steps to increase scrutiny of H-1B applications and tighten eligibility requirements, leading to a decrease in the number of visas issued during his previous tenure. Musk on the other hand, had differing views on this issue. Musk has generally supported the H-1B program, arguing that it is crucial for attracting talent necessary for innovation and economic growth in the U.S. He has pointed out the need for skilled workers in the technology and engineering sectors. In contrast to Trump’s stricter stance, Musk has advocated for policies that would facilitate immigration for high-skilled workers. He emphasises that the U.S. should welcome talent from around the world to maintain its competitive edge. Musk has called for a rethink of the immigration system as a whole, advocating for reforms that streamline the process for skilled workers and entrepreneurs. The discussions surrounding H-1B visas involving figures like Donald Trump and Elon Musk illustrate the complexities of immigration policy and its implications for the workforce in high-demand industries. While Trump advocated for reforms to protect American jobs, Musk highlighted the need for skilled foreign workers to support innovation and economic development. The balancing act between protecting domestic labour and attracting global talent continues to be a critical issue in U.S. immigration policy. There is a lot riding for India’s tech industry. The American society is now deeply divided. Ramaswamy’s comments on the subject are perceived to be racial in nature. The fight now is between MAGA (Make America Great Again) and immigrant workers. Whether you like whatever Trump does, he is never away from controversies – remember that he has not been sworn in as President yet.
“If you look back at the bygone century, you will realise that one of the things that sticks out is the sheer amount of change, especially in comparison with other similar stretches of time in history. Whether it’s the impact of technology and globalisation, leaps in science and health care, or the freedoms won by women and minority groups, there has been an incredible amount of progress”. This is according to Fareed Zakharia, the renowned Indian-born American journalist, political commentator and author. He adds “But every time power structures are challenged, there is resistance. Change is never easy; progress often comes with backlash”. He further adds further in his book ‘The Age of Revolutions’ – “if you think about the 20th century broadly, most political disagreements aligned themselves on the left-right spectrum on a very simple issue, which was the state’s role in the economy. People on the left wanted more state, more taxation, more redistribution; people on the right wanted less state, less taxation, less redistribution. That was the meta-narrative of politics”. We Indians have lived-in experiences of this. He goes on to add: “What we have seen instead of the left-right spectrum over economics, is a new open-closed spectrum. On the one side, there are people who say it’s great to have a more open world, open to trade and travel and capital and goods and services, open technology platforms, open societies that are diverse and multicultural. And on the other side are people who say, no, no, no, that’s too much openness. You end up with a multicultural disaster. You end up with too much immigration, too much trade, too much openness. Even in technology, we want to hive ourselves off from the Chinese, hive ourselves off from the Russians. So that’s the new divide. And of course, everybody will find themselves somewhere on that spectrum. Not always in favour of everything being open versus everything being closed. It’s also the best predictor of your political identity nowadays. In the old days, it was simple: If you were a white-collar worker and you made more than the median income, you voted right of center. If you’re a blue-collar worker, making less than the median income, you voted left of center. Now that’s all scrambled up. The divide that predicts how somebody will vote is more cultural. It’s more class. It’s more tribal, in a way”. He goes on to add: “I think this is the greatest philosophical and practical tension in the American foreign-policy project. On the one hand, we say you should be with us because we uphold the rules-based international order. We created it. We sustain it. We’re willing to sacrifice both blood and treasure for it, policing the world and underwriting the world with the dollar. And then we say, but we get to cherry pick. Every time we want to really get something done; we can violate it”. Some sumptuous food for thought on the eve of the New Year! Haven’t we heard this before?
Thank you.
Venkat R Venkitachalam
