The Harajuku moment, as defined by Malcolm Gladwell, is a moment in time where you have a revelation that
must happen. And must happen now.
Now, I've never exactly been the most politically inclined guy around. I managed to scrape through school and
college with minimal involvement in any of the electoral processes. Sure, on
the run up to election day in 8th std, I distributed those "Vote for xyz"
pamphlets. But that was only because I
actually did believe that xyz would fundamentally alter man's understanding of particle physics - And while at
it, she'd also increase the lunch break by 15 minutes.
But there comes a time
when every well-meaning citizen must sit up and take notice of his/her nation's
affairs. At some point, everyone needs to get aware of the direction
in which his/her nation is heading. And this Harajuku moment can arise
from a bunch of noble reasons.
Or, in my case,
the cost spike of Anker's ultra-high density external battery charger.
I'm talking, of course,
about the 10000 mAh Lithium-Polymer beaut which is good enough to
recharge your android twice (at least) on the go, can also charge your tablets
and is cross-compatible across multiple devices. Its listed on
Amazon for USD 54.
Which means that on 1st May 2013, I would have paid INR 2906.28 (at an exchange rate of 53.82) for it.
But I ordered it on 20th August 2013, and ended up paying INR 3440.88 (at an
exchange rate of 63.72).
Basically, I ended up paying 18.4%
more in a matter of 1 quarter.
For the same price of
USD 54.
And I’m Marwadi.
It didn’t add up.
So I decided to dig a
little deeper into India's CAD (Current Account Deficit) issues and
understand why I was paying 18.4% more just because I thought Sachin Tendulkar
was a bigger deal than Wayne Gretzky. That
is, just because I was desi.
India's rising CAD was
to take significant blame for my financial misfortunes. CAD basically resulted in a
surplus of INR floating around the world, which reduced its appeal to
the point where the owner of the friendly, neighborhood American dollar-store
said “53.82 rupye mein kaam nahi chalega, 63.72 aande”.
You know how it is - you’re
willing to sell off your kidney for your first Wimbledon Centre Court ticket,
but after you’ve seen too many matches on Centre Court, you’re only willing to
sell off 81.6% of your kidney for it.
Something like that.
CAD, as Investopedia
explains, occurs when a country's total
imports of goods, services and transfers is greater than the country's total
export of goods, services and transfers. That’s not always a bad thing, not for
a growing country anyway. That is, not until your GDP stalls.
When it
does, investors start noticing that there are better and safer places to park
their funds than a nation which thinks it can retrospectively amend tax
laws to levy penalties of over INR 20,000 crores on a telecom company. Or one
whose Planning Commission truly believes that you’re not actually poor if you can
spend over INR 26 per day. Or one where Chennai Express was a smash hit.
So why is the CAD
rising? Let’s break it down further.
Now let’s examine the LHS
elements of the equation.
·
Total inflows - This was a tough one to crack. It’s
inexplicable why foreign investors aren’t tripping over each other to put their
last penny on India. Ok, so as a country where 300 million citizens (or
about a quarter of the total population) have no access to electricity (as on
Dec 2011), we may still insist on 65 clearances to set up a coal-based
power plant. And with
over 58% of our workforce involved in Agriculture, we may have decided that the
best way to prop our famers up against global competitors from Australia and
America was to subject them to a 5 hectacre limit on land holdings. And we may juggle with the odd IAS officer who’s inconveniencing the sand mafia over some silly environmental norms.
But
what’s a little red-tape and corruption between friends? After all, we are still the world’s
largest democracy, aren’t we? (Notwithstanding Didi’s run-ins with the odd,
errant cartoonist)
So
it just beats me why there’s been a sudden exodus of USD 16 bn in the first 5
months of 2013 (a 67% y-o-y increase in FDI exodus). Let’s just put this
capital flight issue down as inscrutable and move on to the next item then.
·
Total outflows – Our biggest problem, of course, is the revival
of the US economy and we can’t really be blamed for the US finally getting its
act together, reducing its count of jobless fukras and generally boosting
investor confidence enough to get them packing out of the emerging markets and
back into Uncle-Sam-land without waiting for a toodle-oo.
Isme
hamari kya galti hai ki unhe America zyaada pasand hai? As explained above, we
toh gave them a ton of reasons to louuu India.
With
a heavy heart and a philosophical “If you
love something, set it free. If it comes back, it's yours. If it does not come
back, it was never meant to be”, the Indian government has decided to overlook
this blatant treachery of the foreign investors.
And do nothing in terms of fundamental structural
changes or other such pish posh.
It has instead moved on to contain the CAD, largely, by
regulating the elements of its Outflow. What, then, are the elements of the Outflow ie what are we importing?
Close to half of India’s
import bill is accounted for by 2 elements: Oil and Gold.
1. Oil = 30% of India's import bill
a. The country produces only 25% of its
domestic requirement. This, inspite of the Oilmin going out of its way to incentivize the private sector to make something out of our natural reserves. (Just dial Mukri's number and say 'KG D6' for more deets on this)
2. Gold = 12% of India’s import bill
a. We are responsible for anywhere between
25-33% of the annual global gold demand.
How,
then, has the government gone about managing our CAD? In a couple
of ways, but lets look at two of the brighter measures:-
1. PC has asked investors to pump
money in quasi-sovereign bonds by Indian Infrastructure entities - So he's basically encouraging you to buy a pass for the aforementioned Great-Indian-65-clearances ride
2. Just as a check between friends, PC first
banned gold imports and then raised duties on them, once imports were resumed –
sort of a “Why won't you believe me and let me dictate your choice of asset classes for
investment? After all, you have my fine track record to go by” (The NDA passed
on an India with a Current Account Surplus to the UPA. Thereafter, PC and
Pronobda have helmed the Finmin. India’s expected CAD in FY14 is USD 70 bln)
Now
the UPA figured that some of the ignorant masses may question the wisdom of
these perfectly logical moves. So as an add-on bonanza offer, it finally
unleashed its finishing manoeuvre yesterday – Effective 26/8/13, it has decided to levy
a 36% custom duty on flat panel TVs brought back from Thailand, Singapore and Dubai. This will
discourage you and me from rationalizing our next Thai trip under the pretext of
buying a cheap TV. And will keep our INR in the hands of Indian retailers.
Surely, if that cant save our failing currency, nothing can.
All
of which brings me to my key point – In view of these grand, wise moves from
the UPA, can Anker just do the right thing and let me buy that portable charger
at INR 54 to the USD?