Until very recently, I used to teach a course called Contemporary India. The program in which I used to teach this course is suspended temporarily, for it was designed for American students who would spend a semester studying in India.
One of my favorite classes in that course was about India’s demographics. It was one of my favorite classes because I got to show three slides in it. These slides were nothing but screen-grabs from an excellent feature that the Economist magazine had published a while back. Note that the content requires Flash, and it therefore probably will not work in our modern browsers. But the slides I speak of are presented below.
The first of these shows each state in India mapped to the country that is closest to it in terms of economic output:
The second shows each state as mapped to the country that is closest to it in terms of economic output per capita:
And finally, we have the third chart: each state in India being represented as a country that is closest to it in terms of population:
Each chart is worth more than a few minutes of your time. Note how Maharashtra is like Singapore, Sri Lanka and Mexico respectively, for example, when you make comparisons in terms of economic output, economic output per capita and population respectively.
My favorite thing to point out, especially to my American students, used to be how all of Canada’s population could fit inside Kerala. India is truly a mind boggling country!
But, Uttar Pradesh. That is what we’re going to talk about today. This is a mind boggling country (not a typo. It really is a country. If it were a country, it would be the fifth most populous country in the world. Yes, really).
It has, as this article points out, about 10 percent of India’s districts. One out of every seven Lok Sabha MP’s comes from this state. One out of every six Indian is from the state of Uttar Pradesh. Yogi Adityanath is the chief minister of Uttar Pradesh, but he is responsible for the same number of people as Imran Khan or Jair Bolsonaro. It, to put it mildly, is a truly large state.
And the article that I linked to in the paragraph above makes a point that is worth thinking about: is it too big?
Shekhar Gupta recommends carving up the state into five separate states, and before you scoff at the idea, consider the facts once again: should one chief minister be responsible for the governance of the fifth most populous country in the world?
And the problem isn’t just about population, it is also about national level politics. Or rather, about a problem that nobody wants to think about with any level of urgency.
Here’s the problem: how many people should a Member of Parliament in the Lok Sabha represent? Ideally, it ought to be India’s population divided by the number of elected representatives in the Lok Sabha. But obviously, in a country of India’s size and complexity, that isn’t always possible.
We may desire “equality” of constituencies, but economic development and demographic patterns do not develop uniformly across the country. Some states have achieved zero population growth while others still have very high fertility rates. This pattern too has a north-south dimension. It is as if the economic centre of gravity is shifting south and the political centre of gravity is shifting north.
Here is what he means by that: in the year 1976, we passed a law that effectively froze the number of seats in India’s Lok Sabha, per state. That number was frozen on the basis of the 1971 census. And from 1976 until the year 2000, we decided to not do anything about it.
And then, in the year 2000, we made the problem worse. Here’s Ajit Ranade again:
In 2000, another amendment postponed the day of reckoning to 2026. Thus, only after 2026 will we consider changing the number of seats in Parliament. Till then, everything is frozen as per the 1971 census. Remember, in 1971, India’s population was 548 million, and by 2031, the first census after 2026, it may well be close to 1.4 billion. The great apprehension is that redrawing boundaries and distributing the existing 550 MPs might mean that the south will lose a lot of seats to the north. Even if more members are added to the Lok Sabha, that incremental gain will mostly go to the northern states.
It is not just the fact that Uttar Pradesh is too big from an administrative viewpoint, and that it contains too many people for it to be administered as one state in a country. It is not just the fact that it is far too important a state in the political calculus of India.
It is the fact that it is about to get a lot bigger, a lot more complex, and a whole lot more important in about five years from now. Why do I say that, you ask? Well, for all of the reasons above, but also for the chart below:
Here’s Shekhar Gupta, from the article I referred to earlier:
Twenty crore people, divided over 75 districts spread over 2,43,000 sq km, is too much to govern for one government, especially when run entirely by one individual, which is the norm in our states now. Similarly, 80 seats in the Lok Sabha is too much power for one state in a federal republic. It is more than Gujarat, Rajasthan and Karnataka put together. It is politically distortionary. Especially when UP’s politics is so internally divisive based on caste and religion that the incentive for improving social indicators is poor.
When you think about that excerpt, and think about the point Ajit Ranade makes in his article two years ago, you realize that we need to start talking – soon, and a lot – about what is to be done about Uttar Pradesh.
I would love to read more about this. If any of you reading this have reading material to share, I would be very grateful indeed. Thank you.
I’ve thoroughly enjoyed learning more about Germany as a consequence of writing these articles. Alas, I am all too aware that the learning has been very superficial indeed, but that will hopefully only serve to whet my appetite further. I’ll attempt to summarize my key learnings in a post scheduled for later this week, and in March, we’ll learn more about France.
Onwards then, to the topic of today’s essay: where does Germany go from here?
For many years, Germany’s economic strength has been based on prudent
monetary policy, a highly skilled workforce and a renowned manufacturing
sector that has successfully built up export markets across the world. Germany
has enjoyed political stability and exhibited a contained approach towards
foreign policy, where Germany regularly played by the rules set by others in the
liberal international order.
However, these pillars of Germany’s strength and stability may not be the right
tools to manage the upcoming disruptive changes.
That is from the executive summary of a report titled “Is Germany ready for the future? The case for action in a climate changed world“. The report speaks about how increasing digitilization, rising social inequality (globally), the disruption to the rules based trading order that worked so well for Germany, rising nationalism (again, globally) and low/non-existent aggregate demand will challenge Germany’s current model. The infographic below gives their (the authors) recommendations to deal with these challenges. Also, the word for the day where I am concerned: mittelstand.
“Germany isn’t exactly in a state of disrepair. It doesn’t feel as though it is, even though potholed streets aren’t a rarity, trains often don’t run on time and cellular reception is spotty outside cities. Nor, however, does it feel future-proofed enough, even after a decade and a half of Merkel’s generally successful rule. The WEF touts unshakable financial stability (the country got 100 points out of 100 for it in the competitiveness ranking) as one of Germany’s biggest advantages, but that stability has been achieved, in part, by shifting problems to the local level. “
The World Economic Forum ranks Germany as the world’s seventh-most-competitive economy this year, down from third in 2018. According to WEF, its greatest weakness is in information and communication technology adoption, where it’s ranked 36th in the world; only one German out of 100 has a fiber optic broadband subscription, compared with one out of 32 in South Korea.
In an embarrassing episode on Monday, a state TV broadcast about a special government session on improving mobile coverage was broken off because of a bad connection.
I traveled through parts of Germany last month, and while Internet speeds in both Airbnb’s that I stayed in were slower than in France, they were certainly good enough, and with no loss in connectivity. I’ll note that for about four hours in a town called Gottingen, I lost connectivity on my phone.
Does this report on population trends in Germany by the year 2050 hold a cultural clue that might help us think more about the excerpt above? Pure conjecture on my part, of course, but worth thinking about, perhaps.
As a result, there will be a clear shift in the age structure of working-age people.
At present, 50% of working-age people belong to the medium-age group, which includes people of 30 to 49 years, nearly 20% belong to the young age group of 20 to
29 years and 30% to the older age group of 50 to 64 years. In 2020, the medium-age
group will account for as little as 42%, the older one, however, will remain almost
unchanged at about 40%; the situation will be similar in 2050 (medium group: 43%,
older group: nearly 40%). The percentage of the 20 to under 30-year-olds will not
change very strongly. As a result, older people will clearly prevail among working-age population.
I’d never heard of Strategic Perspective 2040 until I started searching for phrases linked to the future of Germany. But the fact that it was written, leaked, and the responses to it – they’re all equally fascinating.
The assumption behind the UK’s repeated promise of security cooperation with Europe after Brexit is that the core democracies – Germany, France, Italy and Spain – will remain committed to Nato, democracy and the rule of law. And that a reformed and revitalised Europe will deliver enough jobs and growth to sap the energy of the nationalist and xenophobic right. But it would also be wise for politicians to begin admitting that these things are no longer certain. If we want order, we have to create it – through engagement, multilateralism, by accommodating what we can of the demands of rising powers and through the promotion of resilient democratic institutions. If we fail to achieve order, we must deal with disorder when the US is no longer a reliable ally, nor even a stable democracy.
And now for the bonus. I have read quite a few articles/PDF’s/essays about Germany, and given last week’s essay, about the Berlin Wall. None was as gripping as this one. It is titled “The Story of Tunnel 29“, and it is an absolute must read.
My thanks to Gandhar Joshi, a student of the BSc programme at Gokhale Institute, for sharing it with me.
Making forecasts is a fool’s game, and while I’ll be the first to admit that the adjective in question is applicable to me more often than not, it’s not because of making forecasts!
This post, then, is not about quantitative forecasts about where Poland’s economy might go. It is, instead, about Poland’s recent trends that mightcontinue in the near future, and what that would mean for Poland, and her neighbours.
“The attractiveness of their promises are difficult to outdo, as they represent a long-desired ambition by Poles. However, on other issues the PiS is found wanting and at odds with the values and opinions of the majority of Poles. The conflict between local level activism and centralistic ambition will determine the course of the Polish politics in the next decade. Poland’s recent history surely should not let us think that the outcome is already known. ”
.. On how Poland’s recent political trends don’t bode well for the future.
“In 1989, it would have been considered utopian or plainly misplaced to imagine that, in 2019, most Polish people would live in the countryside despite only 10 per cent of the population working in agriculture. Today, the countryside is more than ever the ‘happening’ place in Poland. Four trends drive this phenomenon: re-ruralisation, de-agrarisation, de-urbanisation, and internal migration.”
.. This report came as a complete surprise to me. The notion, as an Asian and especially as an Indian, that urbanization will declinegoing forward was completely (pardon the pun) foreign to me. Also, the first time that I read about “water in the tap” – that’d certainly be my pick.
“The growth rate is predicted to continue slowly decreasing in the years to come and should reach -0.50% by 2035. The population is predicted to be 37,942,231 by 2020 and 36,615,500 by 2030.”
Those are literally the only two lines in the entire article about the future of Poland’s demographics. That being said, the article is still worth reading if you want to better understand Poland’s demographics today, about which I do not think we have learnt so far.
“They assert that the modern Polish Republic rests on “two pillars: the European Union and NATO,” and that these communities are not at odds with one another. This is the strategic balance this is needed to shield Poland. What it is pursuing at the moment is strategic imbalance. As the saying goes in Polish, “nie stawiaj wszystkiego na jedną kartę”—don’t gamble everything on one card. ”
Broadly speaking, the article suggests that Poland cosying up to the United States of America might not be the best idea for securing Poland’s future, not least because it is subject to the whims and fancies of just one man.
“A few weeks ahead of COP24, the Ministry of Energy published a draft Energy Policy for Poland 2040, by the Ministry of Energy, with updated projections beyond 2030–perhaps the beginnings of a clearer path toward the green transition. The report provides a summary of Poland’s vision for eventually transforming the energy sector. Coal will remain a significant part of the energy mix through 2030 and decline more rapidly by 2040, shifting to nuclear power, renewable energy and high-efficiency cogeneration.”
.. A useful summary of Poland’s economics since 1989, its stellar performance in terms of achieving climate change goals until 2015, and then a tapering off of its enthusiasm – and some optimism about its targets in the two decades to come.
One target for this year, 2020, is to write about one country a month. As this Wednesday article makes clear, this month’s country is Poland. Given its history and its current politics, I was curious about immigration and Poland – as the title of this post suggests, the movement of people into and out of Poland.
This is a topic that is of interest to me for a variety of reasons. I got the chance to teach a course on migration and its impact on development some years ago, and reading up for that course was quite instructive. Specifically, I got to know the works of Douglas Massey, and also chanced upon this lovely paper – lovely to me, that is – by Bryan Caplan. I also want to read this book, written by him.
Our government’s approach to migration – completely wrongheaded, in my view – is of course another reason to want to read about experiences in other parts of the world.
Onwards, then: five articles about Poland and its approach to immigration.
“A draft of the interior ministry’s new migration policy, leaked to Polish media last month, revealed the government’s priority is to lure Poles back from western Europe, and to attract people from Russia, Belarus and Ukraine, who can prove they have Polish origins.The document said Poland’s safety was guaranteed by its cultural, national and religious homogeneity, and said the new policy would focus on selecting immigrants who would follow Poland’s law and customs, as well as “values emerging from . . . Poland’s dominating religion”.
“Poland’s massive migration numbers, and the warm welcome Ukrainians have received, stands in marked opposition to the anti-migrant electoral campaign that helped bring PiS to power four years ago. The party crushed a coalition of opposition parties with 46 percent of the vote in last month’s European Parliament election, its strongest ever result. Stumping in 2015, PiS head and Poland’s de facto leader, Jarosław Kaczyński, said that “refugees” would “bring in all kinds of parasites, which are not dangerous in their own countries, but which could prove dangerous for the local populations.”
.. The title of the article says it all, really.
“So it may come as a surprise that the Polish government has, very quietly, presided over the largest influx of migrant workers in the country’s modern history — though they are mostly Christians from neighboring Ukraine.Prime Minister Mateusz Morawiecki has not been shy about promoting the government’s agenda. “We want to reshape Europe and re-Christianize it,” he said in 2017 in an interview with a Catholic television station. The government recently ordered all new passports include the phrase, “God, Honor, Motherland.”
But immigration is Poland’s paradox. It has benefited greatly from the European Union’s open borders, earning billions of dollars in remittances from the hundreds of thousands of Polish workers who have migrated to other countries in the bloc, especially to Britain. Yet with Poland now facing labor shortages, the government is failing to lure back the diaspora — and is restricted by its political stance against migrants.”
.. The more things change, the more they stay the same, as the saying goes.
“Since the opening of the labour market following Poland joining the European Union in 2004, Poland experienced a mass migration of over 2 million abroad. As of 2011, 52 out of 1,000 Polish citizens have lived outside the country; estimated at 2.2 million by the Polish Central Statistics Office (GUS), and 2.6–2.7 million by the journalists. GUS statistics estimate that the number of long term Polish immigrants abroad have risen from 0.7 million in 2002 to a peak number of almost 2.3 million in 2007, and has since declined to 2 million by 2010–11.It has remained relatively stable at that level for a short period, following the uncertainty of Global Recession of 2007–08, By December 2015, 12% of Polish labor population left for UK to work there.According to a 2013 survey, approximately 14% percent of adult Poles have worked abroad since 2004 (approximately a quarter for over a year); 69% have a family member of a close friend who lives abroad, and approximately 24% are open to immigration. Majority of Polish migrants or those considering leaving are young; according to a 2014 survey approximately 90% of Poles under 34 have considered some form of migration. ”
.. That is from a Wikipedia article about the topic.
“BELGIANS must believe Siemiatycze is the capital of Poland, residents of this eastern Polish town like to quip. Those that are left, that is. Since before the fall of Communism Brussels has been the destination of choice for thousands of Siemiatyczans who seek work abroad. Accurate figures as to just how many have left are hard to come by, as people often retain Siematycze as their official place of residence. But it is clear that the real population of the town, at any given moment, is considerably less than the official figure of 15,000.”
From within that Wikipedia article, an article from the Economist about the number of people who have left Poland over the years.
1. Lazonick's analysis of the impact of the shareholder-value model on the US economy is just wrong. He claims ascent of that model (which he dates to the early 1980s) has made companies short-termist, and led them to stop investing in their businesses. https://t.co/mHlGst18NX
Many of you might have noticed the pictures of the mangoes from our house trees. Many might have felt good. Few jealous. But the trouble of careful plucking and ripening is an enormous task that we have to do with great care. 1/n pic.twitter.com/C8TTM72qXN
“The world economy desperately needs a plan for “peaceful coexistence” between the United States and China. Both sides need to accept the other’s right to develop under its own terms. The US must not try to reshape the Chinese economy in its image of a capitalist market economy, and China must recognize America’s concerns regarding employment and technology leakages, and accept the occasional limits on access to US markets implied by these concerns.”
.. Dani Rodrik explains the need for, as he puts it, peaceful coexistence – between China and the USA. My money is on this not happening: history, current affairs and game theory are my reasons for being less than optimistic.
“Yes, there was arsenic in Bangladesh’s wells, and it may have posed a health threat. But in areas where people were encouraged to switch away from the wells, child mortality jumped by a horrifying 45 percent — and adult mortality increased too. It turns out that the alternatives to the wells, for most people in Bangladesh, were all worse — surface water contaminated with waterborne diseases, or extended storage of water in the home, which is also a major disease risk.”
.. Unintended consequences is one of the most underrated phrases in economics.
“Only one of Murdoch’s adult children would win the ultimate prize of running the world’s most powerful media empire, but all four of them would ultimately have an equal say in the direction of its future: Murdoch had structured both of his companies, 21st Century Fox and News Corp, so that the Murdoch Family Trust held a controlling interest in them. He held four of the trust’s eight votes, while each of his adult children had only one. He could never be outvoted. But he had also stipulated that once he was gone, his votes would disappear and all the decision-making power would revert to the children. This meant that his death could set off a power struggle that would dwarf anything the family had seen while he was alive and very possibly reorder the political landscape across the English-speaking world.”
.. A very long, but very entertaining and informative read about the Murdoch family – its rise, its stumbles and its influence on the world today. Be warned, this is only the first part – but the entire thing is a great read.
“There has been a lot of churn in the Sensex over the decades. Corporate power in India seems to be more fragile than usually understood. Only a handful of companies such as Tata Motors, Hindustan Unilever, Mahindra & Mahindra, ITC, and Larsen & Toubro have managed to hold their place in the index. Many of the older industrial houses such as the Thapar group, the Walchand group and the Kirloskar group have slipped out of the benchmark index. Even the real estate and infrastructure giants who had a strong presence in the Sensex a decade ago — Jaiprakash Associates, Reliance Infrastructure and DLF, for example — are no longer in the index.” Niranjan Rajadhakshya writes in Livemint about the churn in the Sensex. Worth reading for the chart alone that appears midway through the article.
“The government has tried to change ideas about death through directives and incentives. In 2016, officials issued guidelines for encouraging more burials within nature, rather than delineating plots for tombs and memorials. In a revised law on funeral management in September, the central government called on local governments to provide financial support for public cemeteries, which would be cheaper for residents.”
An interesting read about the burial problem in China, and what they’re doing about it.
“India holds the dubious distinction of having the worst non-performing loan ratio among the world’s major economies, having surpassed Italy. The Reserve Bank of India said in December that the ratio for banks fell for the first time since 2015, though it’s still “high for comfort.” A $190 billion pile of soured and stressed debt has cast the future of some lenders in doubt and curbed investments.” There actually isn’t that much more to read at the link, but the chart is instructive. Also bear in mind that it is quite unlikely that the data is accurate – this is not a criticism of the IMF, but rather of the banking system itself in both Italy and India.
““Let there be no misconceptions about who protects [JeM]. Pakistan is small potatoes . . . True global power shielding Jaish is China. As death toll rises today, let nobody forget how China has consistently blocked action against Jaish,” tweeted Shiv Aroor, a television reporter specialising in military and strategic affairs.” China’s blocking of India’s move to have Masood Azhar declared a terrorist has been an issue that hasn’t recieved as much attention, both within and outside India, as it should have. But the reason reading this article makes sense is because it’s a good way to think about how China’s bargaining position as regards this issue is slightly weaker now, given it’s trade wars with the USA.
“All it takes is a half-hour at this intersection in Lagos, the sprawling metropolis in Nigeria, to begin fearing this city. White oil tankers crawl along both on and beneath an overpass on the multilane Apapa Road, making their way out of the Niger River delta. Zipping around them are black-and-yellow rickshaws and minibuses, with sweaty passengers clinging to the doors. Every few meters, a truck hits the brakes with an ear-splitting shriek, the clouds of exhaust mixing with the diesel fumes of the generators. The foul air hangs like a thick blanket over the corrugated metal slums to the right and left of the street. Just 30 minutes at this intersection is enough to make you want to flee this city — a megalopolis that is growing faster than almost any other place on earth.”
Who can predict the future? Short answer: don’t bother trying. One thing that makes economics so endlessly interesting is reading conflicting views – if you recall the article on The Empty Planet the other day, this one is in direct contradiction – at least in terms of the theme, if not the data itself. Der Spiegel reviews three different countries and the challenges they are facing, and will face, on account of population growth.
“Nobody is expecting the prince to do anything about Pakistan and India being on the brink of a war yet again. Like all little princes he does not have to pick sides or make a choice. When he visits India this week, he is expected to sign more investment deals. The Pakistani government calls his visit historic, and Indian officials call it historic. But only people with no sense of history call every passing chariot a historic event. The prince is playing with Pakistan and India because he is being temporarily snubbed by the boys and girls of the West, the ones he really wanted to play with.” Mohammed Hanif is dismissive of the storm in the teacup that is Prince Mohammed’s visit to India and Pakistan. Sometimes, having that perspective helps contextualize the visit, and it’s inevitability. Think from a game theoretic perspective: what choices did Saudi Arabia, Pakistan, India (and China have)?
“If these behaviors add up to consciousness, it means one of two things: Either consciousness evolved twice, at least, across the long course of evolutionary history, or it evolved sometime before birds and mammals went on their separate evolutionary journeys. Both scenarios would give us reason to believe that nature can knit molecules into waking minds more easily than previously guessed. This would mean that all across the planet, animals large and small are constantly generating vivid experiences that bear some relationship to our own.” The Atlantic explores a veterinary hospital in Delhi, Jainism, birds (crows in particular), fish, consciousness and a temple in Gujarat – all in one glorious article. Worth it in particular for the theme of consciousness – but much else besides as well!
“The time for masking such equity-type investments as loans has passed. Real estate in India is facing a glut, with $110 billion worth of unsold homes across the top eight markets, including Mumbai. That’s almost four years of sales, according to property analytics firm Liases Foras. Back in 2009, when apartment inventory was equal to about one year of sales, only 25 percent of construction funding came from shadow financiers. Banks controlled 75 percent.The tables have now turned: Housing-finance firms and other nonbank lenders, more adventurous than conventional banks, account for 55 percent of advances to builders. Lenders pocketing 2 percent to 3 percent of the loan value as upfront fees in exchange for not collecting on the principal for years has allowed a buildup of poor-quality debt. Moratoriums have delayed builder bankruptcies, and prevented timely detection of the problem.”
This is a problem just waiting to become a full blown crisis in India – not the real estate sector per se, but the financing of the real estate sector in India. Read this article to find out how and why it has become as big a problem as it has.
“Like all great work, it was the foundation for other huge contributions – work by other great economists such as Oliver Hart, Bengt Holmstrom, Paul Milgrom and many others can easily be traced to this paper. The paper’s starting point – that coordination within firms is not accomplished ‘by fiat’ (Demsetz famously remarks “This is delusion”), and that one should instead examine how incentive structures within firms create efficiencies relative to other forms of organisation – became the starting point for nearly the entire field of the economics of organisation ever since.” I have linked to this piece earlier, I think in January. But since I am currently teaching a course in Industrial Organization at Gokhale Institute, I found myself reading this piece all over again. Demsetz really was a giant in this field – and his analysis of why firms exist, and how they coordinate and incentivize activity within the firm is truly illuminating.
“So, the UN forecasting model inputs three things: fertility rates, migration rates, and death rates. It doesn’t take into account the expansion of education for females or the speed of urbanization (which are in some ways linked). The UN says they’re already baked into the numbers. But when I went and interviewed [the demographer] Wolfgang Lutz in Vienna, which was one of the first things we did, he walked me through his projections, and I walked out of the room gobsmacked. All he was doing was adding one new variable to the forecast: the level of improvement in female education. And he comes up with a much lower number for global population in 2100, somewhere between 8 billion and 9 billion.”
Population “crises” are over-rated in any case (people are a resource!) – but even the forecasts for how many people there will be on the planet in the next thirty to eighty years are likely to be wrong. The world is changing right in front of our eyes. The problem of the (near) future isn’t one of too many people – it’s one of too few.
“Instead, the signatories objected to the election of a student union president of Tibetan descent, who “was found to hold the political belief that Tibet should be free”.” Based on what you have read above, which country are we talking about? Not only might the answer surprise you, but it will also help you think about geopolitics, international finance and the benefits of diversification.
“Most developed countries of today addressed many of their basic plumbing challenges largely through public production. China is clearly an example of the latter. It appears to have perfected the use of industrial policy to co-ordinate private enterprise even into some of the most difficult areas for private engagement. This is the case of industrial policy to both address a critical plumbing issue as well as catalysing a market. And this is what makes its achievement exceptional.”
Law, innovation, state led industrial policy and judicial pendency, all in one lovely article by Gulzar Natarajan. Gokhale Institute recently released a report on judicial pendency in India – China has an interesting way of tackling this problem.
“If there is one number that can make the edifice of budgetary arithmetic collapse and impair the growth prospects, it is the movement of crude oil prices. If for nothing else, but simply reduce the vulnerability of the fisc, this should be done. For, it is the “resource deficit” of the country which is the single biggest threat to sustained growth of 9%”
How might a new age budget look like? Haseeb Drabu takes a look at the ways – five of them. You’ll be reading this by the time the budget has come out, of course, but it still makes sense to read this in order to think about how the budget needs to be structured.
“The 0.9 per cent year-on-year (YoY) growth in the adjusted net profit of 385 companies, which have released their results for the third quarter (Q3) of the current financial year so far, does not inspire much confidence. If financials and energy companies are removed from the sample, net profit has grown 6.4 per cent in Q3 — the worst performance in five quarters.”
I’d recommend that you read this article to either get a sense of how to judge the macroeconomic environment (partially!) on the basis of stock market performance, or even better, if you are new to finance, read this with an Investopedia tab open alongside.
“Passenger vehicle sales in China fell for the first time last year since the early 1990s due to a cut to government tax breaks and wider economic sluggishness. Hyundai, which was once the third-largest automaker in China together with Kia, is now sorting out overcapacity as its sales in China have not picked up much since being hit by the anti-Korean consumer backlash in 2017.”
The FT provides additional information on the slowdown in China – and the link on the anti-Korean backlash is also worth reading.
“From the start of 2012 to the end of 2016, China produced nearly three times as much cement as the US did in the entire 20th century.Much of that investment has gone to waste. A recent study by China’s Southwestern University of Finance and Economics estimates that more than one in five Chinese homes in urban areas, or about 65m apartments, are empty. And if demography is destiny, China’s prospects are bleak. Between 1980 and 2012, China added about 380m people to its working-age population. But that number has been shrinking for the past five years and is expected to fall by a third, or about 220m people, in the next three decades.” More grist to the China recession mill, from the FT. The numbers are truly breathtaking – especially that quote about cement!
“China’s fertility rate has officially fallen to 1.6 children per woman, but even that number is disputed. Yi Fuxian, a professor at the University of Wisconsin-Madison, has written that China’s government has obscured the actual fertility rate to disguise the disastrous ramifications of the “one child” policy. According to his calculations, the fertility rate averaged 1.18 between 2010 and 2018.” The NYT picks up from where the FT left off, and tells us about the impending population crisis in China – that there may soon be too few people in China, not too many.