What is driving China’s aggression?

There has been growing debate in recent times in India and other countries about China’s aggression. What’s driving Beijing to engage in contests on multiple fronts, be it Hong Kong, the near seas, or India, particularly amid a pandemic and economic weakness? Is it opportunism? Is it hubris? Is internal turmoil and insecurity leading to the Chinese Communist Party (CCP) lashing out? Or are there structural factors that one must consider?Read the full article in The Hindustan Times.

Consumers should get the benefit of falling oil prices

At a time when even deficit hawks are clamouring for an expansive fiscal policy to fight the severe economic consequences of Covid-19, it will be tempting for the government to exploit every opportunity to fund the welfare programmes. When oil prices first dropped to less than $30 per barrel, the Modi government had promptly increased the central excise duty. However, this will not result in increased revenue due to the enforced lockdowns and halting of economic activity.If the objective is to help the economy rebound and bolster government finances, there are better ways than raising petrol taxes. In fact, lowering it will increase the disposable income of consumers, who will go out and spend more on other goods and services. Apart from increasing incomes, it will also help the government collect higher indirect taxes. Many businesses, which are reliant on petrol, such as transport and logistics, will get a much-needed fillip by reduced petrol prices.Since the price of oil has a cascading effect on the general price level in the economy, maintaining petrol and diesel prices at the same level or increasing it can lead to higher inflation and can further dampen their demand. Moreover, additional revenue gained by the government is offset by increased subsidy payments and revenue foregone from sectors dependent on oil. Further, since petrol is outside the purview of GST, states will want their fair share as well and will competitively increase VAT on petrol.The additional amount that can be raised by petrol taxes is about Rs 30,000 crore, which will not make a dent to the Rs 8-10 lakh crore required for the post-pandemic economic revival package. It’s time to pass on the benefit to the consumers.This appeared in The Print's Talkpoint

Use the oil price crash to boost India’s strategic reserves

One area in which India can definitely use the lower oil prices to its advantage is to stock up on the commodity for future use. Like many other countries, India maintains strategic petroleum reserves (SPR), which is an inventory of oil for emergency purposes. To mitigate supply-side risks and cover for vulnerability to external oil shocks, India holds an emergency oil stockpile in underground salt caverns, which can provide around 4.5 days of import cover. There is additional capacity for five days of oil import cover, which must be filled up at this time when oil prices are at historic lows. Indian petroleum refineries hold an additional 65 days of import cover.India has been delaying the start of phase two of its SPR plans, which was to add another 12 days of oil storage capacity. This was to be done in partnership with either ADNOC (Abu Dhabi) or Saudi Arabia’s Aramco. It is probably the right time now to get this off the drawing board.Alternatively, we can also look at options outside India. We could persuade the Sri Lanka government to kick-start the utilisation of oil storage facilities at Trincomalee. This could be done in a mutually beneficial manner. We could also shop around for storage space in Oman (Ras Markaz) or the United Arab Emirates (Fujairah). Right now, we are in a bizarre situation where the storage space is more expensive than the commodity itself, but things will revert, and any investments now will help India in the long run when oil prices rise again.Finally, the private sector should look at this as an opportunity to lock into long-term contracts with oil suppliers based at current prices. The government can help the struggling Indian airline industry, for instance, by providing it lines of credit to enter into or renegotiate oil contracts.Here's the full article 

Let's make the most of dirt cheap oil

In a dramatic and unprecedented turn of events on Monday, crude oil began trading in negative territory for the first time since records began. The price on a futures contract for West Texas crude that was due to expire on 21 April crashed to minus $37.63 a barrel. This is a direct result of the market mayhem caused by covid-19, which has resulted in lockdowns around the world, brought economies to a screeching halt, and crushed demand for transport fuel. Reports say there is so much unused oil in the US that there is no space left to store fresh supplies. Storage costs money. Thus, oil producers had to pay to offload their stock.The sudden fall in oil prices is tied not just to a demand crunch, but also tensions among the world’s major suppliers. The global effort to contain the pandemic, international pressure, oversupply, and still-sluggish demand seem to have struck both Russia and Saudi Arabia hard. Though a production cut has since been agreed to, demand is estimated to have fallen far more than that.The best way to turn this situation to India’s advantage, therefore, is to grab this chance to fill up the country’s strategic petroleum reserves (SPRs). We should move quickly to boost our strategic petroleum reserves and strike long-term supply contracts with global oil suppliers.Read the full article here

To open or not to open India up: a dilemma that need not be one

As India decides what next after the 21-day national lockdown ends on 14 April, opinions are divided among those who want a phased lifting and those who want to extend it. This reflects underlying differences between those who believe it is worth taking calculated risks to forestall widespread suffering on account of lost livelihoods, and those who are concerned taking such risks could cause the pandemic to spiral out of control.

Bold as it was, Prime Minister Narendra Modi’s decision to impose a lockdown on 24 March was easier compared to what he has on his plate now. At that time, the consequences of the pandemic were clear, whereas those of the lockdown both unknown and in the future. It is almost the opposite now, and the moral dilemma appears far more acute. The prime minister has to weigh the real suffering of hundreds of millions of people caught in the lockdown against the millions who might catch the disease if the lockdown is lifted and the pandemic spreads. It’s not an easy decision, but there are ways to make it less difficult.Read more

Learn to be positive in coronavirus pandemic from this Vietnam war US navy pilot

During the Vietnam War, James Stockdale, a US navy pilot, was taken prisoner-of-war (POW) in 1965 and imprisoned in the infamous Hanoi Hilton for eight years, much of it in solitary confinement. As the author Jim Collins tells it in Good to Great, Stockdale was tortured “over 20 times…and lived out the war without any prisoner’s rights, no set release date, and no certainty as to whether he would even survive to see his family again. He shouldered the burden of command, doing everything he could to create conditions that would increase the number of prisoners who would survive unbroken, while fighting an internal war against his captors and their attempts to use the prisoners for propaganda.”Writing in 1999-2000, Collins knew that Stockdale survived the ordeal, was awarded the Medal of Honor in 1976, led the Naval War College and was Ross Perot’s running mate in the 1992 US presidential election. But he was struck by “how on earth did (Stockdale) deal with it when he was actually there and did not know the end of the story?(emphasis in the original)”

We are in a similar situation today. ...Read more

As Chorus of 'Chinese Virus' Rings Loudly in India, Is the Stage Set For an Info-Ops Tussle?

This article was originally published on The WireUsers of Indian Twitter, for want of a better term, will not have been able to escape the term ‘Chinese virus’ trending on the platform in the form of different hashtags over the last 10 days.What seemingly started off as agitprop by the American right has transcended boundaries and resonated in India as well, echoing sentiment that Beijing and the Chinese should be severely penalised for the COVID-19 pandemic.This sentiment was backed by what appeared to be some coordinated activity on Twitter from March 24 onward, around the time of India’s lockdown, all with the purpose of taking aim at China.#ChineseVirus19, #ChineseBioterrorisn, #Chinaliedpeopledied and #ChineseVirusCorona were some of the hashtags being used in favour of this narrative around March 24 and March 25.Read more

We must avert an economic disaster due to Covid-19

Indian economy will suffer due to COVID-19, but govt can ease the pain for individuals and firms with decisive and meaningful action nowFor businesses, the union government should think of delaying GST payments, tax credits, and any other policy that could support employers to keep their staff on board.  As on March 24, the Finance Minister, Nirmala Sitharaman has announced a few measures to ease the compliance and regulatory burden for businesses: increasing the threshold of default that triggers the insolvency and bankruptcy proceedings from 1 lakh to 1 crore, easing some of the rules for corporate affairs, and extending extending the deadline to pay excise and customs duty and GST. Government should ensure that the flow of critical supplies and services are uninterrupted, including food, healthcare, security, groceries and other provisions, electricity, telecom, ATM and banking.Most importantly, we need to think about how to protect the unorganised and informal workforce. While the salaried class, small as it may be, can afford to work from home and be assured of payments at the end of the month, the daily wage earner does not have the same luxury. A limited form of targeted Basic Income (not universal) using the JAM (Jan Dhan-Aadhaar-Mobile) trinity could be used to ensure sustenance. The union government can use the unexpected bonanza from the lowering of oil prices to fund some of these programmes.It is important, however, that any policy made for these emergency purposes come with sunset clauses. If not, the extraordinary measures to combat the disease and its impact will linger on far after the disease has faded from human memory.Read more here

Is the government doing enough to fight Corona on health & economic fronts?

The events of the past few weeks have served as a grave reminder of the challenges of living in a globalised world. The benefits of globalisation and its impact on human progress can never be understated. However, every once in a while, through global financial crises or through pandemics such as the one we are currently witnessing with COVID-19, we are also reminded of its perils. What started in Wuhan, China, in late 2019 has within a few months, impacted over 267,000 people in 185 countries, unfortunately killing more than 11,000 people as of 22nd March 2020 already.The economic and social impact of this pandemic will only unfold over time but the early signs are not comforting. An estimated 25 million jobs are likely to be lost due to the COVID-19 crisis, pushing millions more into underemployment and working poverty. With supply chain disruptions impacting almost every sector including Information Technology, Manufacturing, Entertainment, Travel, and Retail, stock markets across the world have witnessed their worst performances since the 2008 global financial crisis. Global income is expected to shirk by as much as US $ 2 trillion in 2020, with developing economies alone bearing as much as US $ 220 billion of the impact. The resulting economic shock and looming financial crisis is expected to push the global annual growth below 2.5% in 2020.The full article is published in and available on The Quint

If India has to control coronavirus pandemic, it must contain 4 other contagions as well

The infodemic and the behavioural contagion feed off each other, and higher levels of social anxiety exacerbate the process. Similarly, the psychological and economic contagions reinforce each other and are in turn amplified by informational, behavioural and viral contagions. The complex interactions among five contagions make it much harder to contain the spread of the coronavirus that triggered this cascade. This why a governmental response focused on public health alone (with some information management thrown in) will not suffice.Just like there are war cabinets during wartime, the multiple pandemics call for a pandemic cabinet. If there ever was a time for the cliched whole of government approach, it is now.Read more

COVID-19 & China: Crisis to opportunity

Three events last week underscore how the narrative has shifted around China’s handling of the COVID-19 outbreak. The first of these is Chinese President Xi Jinping’s visit to Wuhan, which coincided with the country’s health authorities confirming that the outbreak had peaked there. Second, the World Health Organisation’s declaration of Covid-19 as a pandemic for which the epicentre had shifted to Europe. And third, the Donald Trump administration’s initial ham-handed response to the outbreak in the US.Read the full article in Deccan Herald here

India can fight COVID-19, but only if the private sector is allowed to step in quickly

It is important to say this because thus far, the task of addressing the COVID-19 has been delegated exclusively to the government. Almost all activities, from airlifting Indian nationals, screening arrivals at airports, testing samples, quarantining and treatment are carried out by the government. While this will be effective if the number of cases remains in the current order of magnitude, the government’s facilities alone will not be sufficient if the number of cases rises 100 times or more.The good news is that India has a private healthcare sector and R&D capability that can be used in the fight. The bad news is that we’re not letting them.If we even have a few lakh suspected cases, the government’s resources will fall short of what is required. The right time to think about the capacity required to handle such a massive crisis is now. The single most important thing for India to have a national response — as opposed to a government response — is to enable the private healthcare ecosystem to play an appropriate role to complement the government’s efforts wherever possible.Read more

When WHO understates coronavirus risk, you know China’s geopolitics is at play

There is something a little puzzling about the international response to the Wuhan novel coronavirus – nCoV-2019 – outbreak: the actions taken by the United States, Singapore, Australia, New Zealand, Russia, and other countries exceed what the World Health Organisation has recommended. Is the WHO underplaying the risks of a global epidemic or are these countries over-reacting?

The WHO has declared the Wuhan coronavirus outbreak a Public Health Emergency of International Concern (PHEIC), which under International Health Regulations is “an extraordinary event which is determined to constitute a public health risk to other States through the international spread of disease and to potentially require a coordinated international response”. It implies that there is a risk of trans-border spread of a disease necessitating international coordination. Such a declaration obliges all countries to take appropriate countermeasures and share outbreak-related information with the WHO on a regular basis.

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China gives us hope why coronavirus won’t be as deadly as SARS in 2003

The outbreak of the novel coronavirus infection emanating from the wildlife and seafood markets in China’s Wuhan city reminds me of the severe acute respiratory syndrome, or SARS, epidemic that hit the world 17 years ago. I lived in Singapore at that time, and it was a traumatic experience.

The SARS virus, like the Wuhan coronavirus, originated in China and spread around the world through air travel. The Singapore economy depends on tourism, trade, and business travel, so closing the borders was not an option. When it emerged that the SARS virus transmits through humans, it looked like Singapore would be severely affected. The city-state is densely populated, most people take crowded buses and trains to work, and a lot of places — offices, shopping malls, schools, public buildings — are centrally air-conditioned. We went through weeks and months of anxiety and paranoia.

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