Rupee hits historic low of ₹71 per USD

USD INR breaches life time low of  ₹71

The Indian rupee touched a historic low of ₹71 against the US dollar on Fri Aug 31, 2018, falling 26 paise today, 1.55% during the week and more than 11% year-to-date. It was trading at around ₹64 to the dollar on same day last year. 

The causes of supporting USD and INR weakening are:

• Consistent demand for the USD from oil importers.
• Fall in EM currencies.
• Rising crude oil prices.
• Inflationary pressures.
• Lingering Sino-US trade tensions.
• Looming US sanctions against Iran's oil exports.
• Shutdowns in Libya, debt crisis in Venezuela have led to crude oil supply constraints. 
• India's widening current account deficit.
• INR is under performing its emerging market (EM) counterparts.
• US economy reported best performance in last nearly 4 years, showing 4.2% growth. 
• As the US economy is growing and US Federal Reserve raising interest rates, the demand for dollar has also been increasing.

Rupee is still overvalued and healthy forex reserves may limit the downside of the rupee. RBI may crush speculative longs but it can do little to prevent INR opening weaker on gaps. RBI is unlikely to intervene as the rupee is still overvalued and currencies of EMs are also depreciating. 

Since the present situation that is strengthening USD and weakening INR is likely to continue for some more time, USD-INR rate could touch ₹80 by end of the year. Despite good monsoon, depreciating rupee and its consequences on domestic price rises etc could spell doom for Modi since general elections are just 8 months away and there is very little he could do to contain damages.

Varavara Rao & 4 others arrested - Arbitrary crackdown

Deccan Chronicle | Hyderabad | 29-8-2018

Virasam leader Varavara Rao (77 years), lawyer Sudha Bharadwaj, Arun Fereira, Gautam Navlakha and Vernon Gonsalves were arrested on 28-8-2018 by the Maharashtra Police for their alleged involvement in organising Elgaar Parishad, suspected with Maoist links, earlier this year in Pune. They were arrested under IPC Section 153 (A) and according to the FIR, provocative speeches were made at the event, and these triggered the violence in Bhima Koregaon.

• The National Human Rights Commission observed that "it appears that the standard operating procedure in connection with these arrests has not been properly followed by the police authorities, which may amount to violation of their human rights."
• He’s almost 80 years old. I don’t know how he will hold up in prison, said Hemalatha, Varavara Rao’s wife, as she broke into tears.
• This entire plot is devised to garner Hindutva support. Modi is already losing support and he wants to gather sympathy by stating that a Hindu leader is going to be killed. This Bhima Koregaon, an assertion of Dalits is a barricade to the Hindutva politics, so they want to taint it, said Kurmanath.
• This is a witch hunt and an attempt to divert attention from the failures of the current government, questions that are being raised about demonetisation, the Rafael deal, and right wing extremism, said historian Ramachandra Guha.
• The Hyderabad High Court bench of Justice C V Nagarjuna Reddy and Justice T Amarnath Goud gave the direction while hearing an urgent plea filed by Hemalatha wife of Varavara Rao. Seeking counters from DGPs of Maharashtra and Telangana, the bench said that it would declare the arrest illegal if their counters did not disclose a valid case against the writer. “If it is found that police did not follow due procedure, we will intervene,” the bench said while adjourning the case to next week. 
• The Supreme Court today (29-8-2018) said the five people arrested yesterday in connection with the Bhima Koregaon investigation should be kept under house arrest till Sep 6, 2018 - the date of the next hearing in the case.
• Dissent is the safety valve of democracy and if you don't allow these safety valves, it will burst, said the Supreme Court bench, which comprised Chief Justice Dipak Misra, and Justices A M Khanwilkar and D Y Chandrachud.

The recent multi-city crackdown on human rights activists and left-leaning intellectuals and academics is in violation of fundamental rights. It was totally unjust, but sought to be justified on the pretext that they working against the country’s interest. But the fact remains that they championed the cause of the country’s impoverished people. It would be a sad day for Indian democracy when the defense of the weak and vulnerable is treated as a crime.

Demonetisation - Much about nothing - RBI report

The Hindu Businessline | August 30, 2018

The RBI, its annual report released on Wed Aug 28, 2018, has revealed that only  ₹16,050 crore out of the  ₹15,44,000 lakh crore (1.04%) of the scrapped higher denomination notes have not returned back into the banking system and therefore remain missing or unaccounted for. This data has raised questions about the overall gains and the impact on the economy, especially the informal sector, because of the disruption 'Demonetization' has caused. 

• The Modi government had framed the dramatic announcement as a move to clamp down on corruption and black money, cut off terrorist financing and tackle fake notes. But with almost all the demonetised notes coming back, everyone wonders whether the stated purpose of demonetisation has been served.
• Modi's hidden objectives of demonetisation were (i) its perceived windfall in terms of an enhanced dividend for the government from the RBI as government expected at least 30% (~₹5,00,000 crores) of cash, black money stacked will not get back into banking system and (ii) disarming opposition parties with all their stacked cash becoming worthless and thus paving his way to win UP elections effortlessly.  
• The initial narrative by the government was that a large amount of demonetised currency will not find its way back into the system. This purported benefit did not materialise in any significant way. It cannot be said that significant losses have been inflicted upon those holding black money.  
• The claim that it would lead to an increase in tax collection, nothing can be anything with confidence.
• During the reporting financial year, 522,783 pieces of counterfeit notes were detected in the banking system, which was 31.4% lower than in the previous year.
• The cash-based terror and criminal activities may have been disrupted for some time, as did cash-based legitimate activity, it is not clear that there has been any significant disruption.
• The liquidity surge in the banking system that came about in the aftermath of demonetisation complicated the RBI's conduct of monetary policy.
• RBI had to introduce many instruments to absorb demonetisation induced liquidity from banks.
• The increase in CRR dented bank's earnings.
• The mopping up of liquidity eroded the RBI’s earnings. 
• RBI's expenditure on printing of currency doubled from the previous year. 
• RBI's income for the year decreased by 23.56% and its expenditure increased by 107.8% resulting in a sharp decline in the RBI’s surplus.
• Demonetisation served as a negative shock to the economy. GDP growth in the Jan-Mar 2017 quarter slowed to 6.1%, and to 5.7% in the next quarter (April-June 2017). 
• A number of small-scale businesses were adversely affected. The unorganised sector especially bore the brunt of the sudden shock. Economic activity shrinkage is over ₹300,000 crores & loss of jobs at over 2 million, this is the worst any PM could do to any nation. 
• The value of banknotes in circulation increased by 37.7% over the year to ₹18,03,700 crore as at end-March 2018. The volume of banknotes, however, increased by 2.1%.
• While there no benefits at all (all pain & no gain), the clear lesson is that tax reforms and effective monitoring of suspicious transactions are a better alternative for addressing the stated objectives. 

What India has done to its money is sickening and immoral - Steve Forbes ... In November 2016, India's government perpetrated an unprecedented act that is not only damaging its economy and threatening destitution to countless millions of its already poor citizens but also breathtaking in its immorality. Without any warning India abruptly scrapped 85% of its currency. It claims the move will fight corruption and tax evasion by allegedly flushing out illegal cash, crippling criminal enterprises and terrorists and force-marching India into a digitized credit system. Human nature hasn't changed since we began roaming this planet. People will always find ways to engage in wrongdoing. Terrorists aren't about to quit their evil acts because of a currency change. There's no misunderstanding what this is truly about: attacking your privacy and inflicting more government control over your life. What India has done is commit a massive theft of people's property without even the pretense of due process--a shocking move for a democratically elected government. (One expects such things in places like Venezuela.) Not surprisingly, the government is downplaying the fact that this move will give India a onetime windfall of perhaps tens of billions of dollars. By stealing property, further impoverishing the least fortunate among its population and undermining social trust, thereby poisoning politics and hurting future investment, India has immorally and unnecessarily harmed its people, while setting a dreadful example for the rest of the world. 

WTO and globalisation

The World Trade Organization (WTO) was established in 1995. Two major changes agreed were: (i)  not to impose import duties in excess of certain agreed rates and (ii) not to manufacture a patented item using alternate process. 

• The large-scale imports of goods from China taking place at present is a consequence of  provision (i) of the WTO which we willingly accepted.
• The provision (ii) restricted the growth of our pharmaceutical companies.
• The drugs invented by MNCs were hitherto produced by our pharma companies using alternate processes and making them available at a fraction of the MNC's price and that freedom was lost.
• The major benefit expected from WTO was that our farmers will be able to export their produce to the developed countries and get much higher prices. But the developed countries fudged the rules of the WTO and continued to provide subsidies to their farmers and that deprived our farmers ability to export their goods. 
• Thus the WTO and the globalisation has become largely a losing proposition for us. It has even become a losing proposition for developed countries like USA as well. They find that their jobs are disappearing. 
• The WTO needs to shape up for the US to stay a part of it, said former Trump trade advisor Dan DiMicco. He further said that WTO has enabled China’s bad behavior and allowed the country to manipulate its currency from 1995 to 2015. Nobody has held them accountable.
• President Donald Trump told that the WTO has treated the US “very badly". Trump also said "I hope they change their ways. We’re not planning anything now, but if they don’t treat us properly we will be doing something.” Trump told his advisors, “I don’t know why we’re in it. The WTO is designed by the rest of the world to screw the US"
• India has walked out of the WTO mini-ministerial being held in Geneva in July 2006 to thrash out the thorny agriculture and industrial tariff issues, with the US refusing to agree for wider cuts in farm subsidies. The Indian Commerce and Industry Minister Kamal Nath said: "We came here to negotiate, but there is no space for negotiations. We are on 8 to 9% growth. I've come here looking for a trade deal which helps me to reach 10 to 11%. I have not come here to get a trade deal which makes me go to 4 or 5%." 
• The failure of WTO to move ahead in framing rules for global trade means that globalization is retreating.
• Our Mughal rulers thought that by allowing the British to trade in India will be beneficial for the country. Similarly, we have agreed and signed the WTO treaty because we thought we would get foreign investments and access to foreign markets for our exports.
• The globalisation under the Mughal rulers and the WTO are fundamentally similar. In both the cases, we ceded our sovereign rights willingly in the belief that the benefits will be more than the costs. In the former case the benefits to us were less than the costs and that arose Mahatma Gandhi and we retracted from that globalisation. Very much the same is happening with the WTO today.
• The globalisation succeeds only if it provides more benefits than costs to all the member countries. We can today walk out of the WTO because it is not beneficial to us. People are the ultimate sovereign and no power on earth can take their sovereignty away. The people will rise no matter how strong the forces of globalisation are.
• The challenge is to inform the people of the benefits and costs of globalisation to make an informed choice to withdraw or not. The worry is that our intellectuals will get coopted and misinform the people of the true costs of present globalisation.
• Our government should wake up, walk out of WTO and start supporting domestic businesses instead of running after MNCs.

Read the source article

Copying western models and implementing in India without proper groundwork is futile. The more we stay in WTO and globalisation, the more our poor and peasants would lose and suffer. Since the present WTO model can't be modified so easily due to the influence of vested interests like China, the only option India has is that it should walk out of WTO and work in the direction of mutually beneficial bilateral treaties and self-sufficiency.

Gossiping is good

Gossip is casual or unconstrained conversation or reports about other people, typically involving details which are not confirmed as true. Gossip is also defined as the unsanctioned evaluative talk about people who aren’t present. We all enjoy the pleasures of talking about other people. Word on the street is that gossip is the worst. Gossip was once characterized as “the faceless demon that breaks hearts and ruins careers.” It was described as a “three-pronged tongue” that kills three people: the teller, the listener, and the person being gossiped about. An observation was that “if people really knew what others said about them, there would not be four friends left in the world.” Convincing as these indictments seem, research suggests that gossip may in fact be healthy. 

• Talking behind other people's backs may not always be nice, but sometimes it can help promote cooperation and self-improvement.
• Gossip can play the role of protecting others from being exploited by passing on information about bad behavior to warn others.
• Gossip is a good thing since it is pervasive. Despite its dodgy reputation, only 3-4% is actually malicious.
• If two people share negative feelings about a third person, they are likely to feel closer to each other than they would if they both felt positively about him or her.
• We can trade information with third parties about people who aren’t around in order to learn from other people’s experiences.
• In organizations, management becomes defensively tight lipped at a time of impending crisis. Nature abhors a vacuum and the gossip rushes to fill it.
• Gossip may even make us better people. Gossip about others made research subjects more reflective. Positive gossip inspired self-improvement efforts, and negative gossip made people prouder of themselves.
• Many people felt upon hearing a piece of negative gossip, are likely to say they had learned a lesson from it.
• Negative gossip can also have a pro-social effect on those who are gossiped about. Once people who were ostracized from a group due to reputed selfishness had reformed their ways in an attempt to regain the approval of the people they had alienated.
• Leaders and politicians have to be reminded that openness costs less than the impact of false stories and the time it takes to rub out the stain they leave. It requires a community of trust for gossip to be good for all of us.

So the next time you are tempted to dish the dirt, fear not. You may actually be promoting cooperation, boosting others’ self-esteem, and performing the essential task of the human family. 

Small people talk about other people, 
mediocre people talk about things and great people talk about ideas.
Gossip is when you hear something you like about someone you don't ... Earl Wilson

Gossip is what no one claims to like, but everybody enjoys ... Joseph Conrad

Women are more skilled than men at making gossip entertaining ... Kate Fox

Read the source article

Although some benefits exist for gossip, it is basically negative trait. But it is part & parcels of the fundamental rights of citizens and can't be accused of any crime. The problem with gossip is that it is based on little facts, fiction or hearsay. That's what makes it fun, but people take it as the truth, turn it around, and throw it in your face. However, it is better to stay away from gossiping as it serves little purpose and ruins our character.

Kerala floods, a man-made disaster

In late July 2018, severe flooding affected Kerala due to unusually high rainfall during the monsoon season. Kerala's worst floods in nearly a century affected all 14 districts placed on high alert. Report as on 21 Aug 2018 ... No. of Villages Affected:776 | Population Affected:54,11,712 | Lives lost: 373 | Missing: 32 | Evacuated:2,80,679 (7,500 in last 24 Hrs) | Relief Camps:5,645 | Inmates in Relief Camps: 12,47,496. The flooding has affected hundreds of villages, destroyed about 10,000 km of roads and thousands of homes have been damaged or destroyed. The total loss is estimated at about ₹20,000 crores.

• The rainfall on Aug 8, 2018 was 310 mm. Kerala has 41 rivers flowing into the Arabian Sea, and 80 of its dams are now said to be open after being overwhelmed.
• The overflow gates of the Idukki Dam were opened after a gap of 26 years. For the first time in history all five overflow gates of the Idukki Dam were opened. For the first time in the state's history, 35 of its 42 dams have been opened, flooding local low-lying areas.
• Around 42 teams from the Indian Army and the Navy, along with over 20 helicopters and hundreds of boats, were involved in rescue operations across the state. The Coast Guard is working in 28 locations and the National Disaster Response Force (NDRF) has deployed 39 teams so far. The NDRF has rescued over 4,000 people, while the Navy has rescued 550. 
• As all the districts in the state have been affected by flood, there have been demands to declare it a "national calamity" but the centre has declared the floods a “calamity of severe nature.”
• Heavy rains have caused severe landslides and have left the hilly districts isolated. Between June 1, 2018 and August 17, 2018, Kerala received 2226 mm rain fall against normal of 1620 mm i.e. 41% excess.
• Kerala state government has sought a special package of ₹2,600 crore for relief and rehabilitation. While HM Rajnath Singh has announced immediate relief of ₹100 crores during his aerial survey, PM Modi in his aerial survey has announced additional ₹500 crores. Very meager by any standards.

  

• UAE, where thousands of expatriates from Kerala work, has promised assistance to ₹700 crore, which is rejected by centre citing UPA policy of 2004. The Thailand’s offer of assistance and aid was also rejected. This international disaster relief policy is only limited to foreign governments with conditional aids. Since 2004, India has refused relief aid from Russia, United States and Japan for disasters across Uttarakhand and Kashmir.
• On August 15, Cochin International Airport, India's fourth busiest airport suspended all operations until 26 August, following runway flooding.
• Over 80% of the state has been cut off from power supply. Schools in all 14 districts of Kerala have been closed and some districts have banned tourists, citing safety concerns.
• More than 300 boats are also involved in rescue operations.
• Life and general insurance companies expect deluge of claims of about ₹500 crores, it is less than 3% of the total loss.
• Insurers are also expect big claim for Kochi airport, which has an insurance cover of ₹2,500 crore. (Claims from the 2015 Chennai floods were over ₹5,000 crore, followed by the Mumbai floods of 2005 over ₹4,000 crore and the J&K and Uttarakhand floods, at about ₹2,000 crore each).
• The Western Ghats Ecology Expert Panel (WGEEP), also known as the Gadgil Committee, headed by Madhav Gadgil, had suggested that 140,000 kilometres of the Western Ghats be classified in three zones and recommended strong restrictions on mining, quarrying, use of land for non forest purposes, construction of high rises etc. The report submitted in 2011 was rejected by the Kerala government and none of its recommendations were adopted. Madhav Gadgil says that the recent floods and landslides in Kerala was a "man-made calamity" and irresponsible environmental policy is to be blamed for. 
• There were allegations that the shutters of 34 dams were opened in one go. The unplanned opening of sluice gates of the several dams caused most submergence. CM Vijayan stated that Idamalayar and Idukki dams were opened after proper inspection and deliberation with officials. Vijayan said “Nobody could’ve foreseen this but still warnings were given and evacuations were done, but torrential rains were beyond any control."
• Kesari, a weekly affiliated with RSS published an editorial on its website criticising the central government appeared to be acting vengefully towards Kerala and was not responding with the political decency shown by Vijayan. Later it was taken off claiming its website was hacked.
• Kerala's flood relief fund drive is getting overwhelming response from all kind hearts across the world and donations have crossed ₹309 Crore on Aug 22, 2018.
• As people left camps, many found mud and slush up to six feet level in front of their houses. All possessions have been lost, and people have to start afresh in obtaining their books, certificates, Aadhaar card, ration card etc. More important is the drinking water, electricity supply, managing contagious diseases etc.

There is no question that Kerala floods was a man-made disaster and is a result of ecological destruction and lack of protocols and weather forecasting algorithms to manage this type of calamities. While its occurrence could not have been avoided, its impact on life & properties could have been contained. Modi government rejecting unconditional cash aid of ₹700 crores from UAE & significant aid from Thailand willingness and granting meager amounts for relief operations has sent a very wrong message to the people of opposition ruled states. Modi has violated most of the UPA policies and why he preferred to follow this particular policy remains unexplained. For Visakhapatnam 2014 Hudhud cyclone damages, Modi announced ₹1000 crores aid but paid only ₹750 crores. During 2017 Bihar floods, against a request for ₹7,600 crore, the Centre had given ₹1700 crore, including the ₹500 crore initial relief given to the state. Keeping aside Centre-State politics, the government should gracefully accept the assistance for Kerala and junk the 2004 policy or precedent.

Turkey's woes today

Turkey's currency, the lira, has hit record lows, creating a headache for the country's president and pushing up prices on everyday items. Although the exact cause is, of course, hard to say, tourism bookings to Turkey have gone up in recent months. Holiday company Thomas Cook has seen a 63% rise in bookings to Turkey.

• On Fri Aug 10, 2018, the US dollar would buy almost six Turkish lira; at the end of January, it would have got you less than four. The Turkey's currency Lira, has lost more than 34% of its value against the US dollar.
• The stock market has also fallen 17%.
• Government borrowing costs have risen to 18% a year.
• Inflation in Turkey has hit 15%.

The causes are:

• Investors are worried that Turkish companies that borrowed heavily to profit from a construction boom will struggle to repay loans in dollars and euros, as the weakened lira means there is now more to pay back.
• Turkey's worsening relations with Trump administration with sanctions due to the detention of American pastor Andrew Brunson, who has has been held for nearly two years over alleged links to political groups.
• On Fri Aug 10, 2018, the US dealt Turkey and the lira a further blow when Trump said he had approved the doubling of tariffs on Turkish steel and aluminium.

These problems were compounded by a political set-up which is unconducive to proper economic management. Much of the recent concern has been fueled by President Recep Tayyip Erdogan's economic policy. Flustered by the current situation, President Erdogan urged supporters not to worry, saying that while overseas investors had dollars, Turks had Allah. Meanwhile, UK Foreign Office recommends against all but essential travel to a number of regions and says not to travel within 10 km of the Syrian border at all, due to the ongoing Syrian war. The US rates Turkey at level three, urging people to reconsider travel to the region.

Read the source article

Although far better, India's direction is Turkish way. Today INR stands eroded by 16% against USD in the past 2 years. In 2018, INR lost 8% value against USD. Our FE reserves is looking southwards. Trade deficit increasing due to reckless import of non-essential items from China. Exports stagnating, inflation above 5% are other negatives. Flight of dollars is due to Fed Reserve increasing interest rates indicates our vulnerability. Increasing oil prices suggest that INR will remain under pressure for many more quarters. Unfortunately, our government doesn't have any plans to resurrect while preferring to be in observing mode perennially.