Rising Oil, Plummeting Rupee, Slowing FDI/FII Foretell Sickening Roller Coaster Ride; China Sounds Off On ‘Indo-Pacific Nato’

Govt defends low intake of women to NDA, new index on legally sanctioned discrimination against women, more households believe life will worsen, Indians in Ukraine ride Pakistani's buses to safety

A newsletter from The Wire & Galileo Ideas | Contributors: MK Venu, Seema Chishti, Siddharth Varadarajan, Sidharth Bhatia, Sushant Singh and Tanweer Alam | Editor: Pratik Kanjilal

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Snapshot of the day
March 8, 2022

Pratik Kanjilal

The rupee hit a lifetime low yesterday. From Rs 65.47 to the dollar in 2017, it slid to Rs 76.96. For a government and a prime minister who once spoke of the value of a rupee as shorthand for national pride, this should be alarming. The Indian rupee has fallen the most in the region, barring the Pakistani rupee and the rouble, on which the West has declared financial war. The Bangladeshi taka has fallen, too, but less than the Indian rupee. Check out this comparative ranking. 

Also, with crude oil going through the roof and our increased dependence on imported crude, the rise in the rupee will hurt badly. It is unlikely to shore up India’s exports. There are four factors behind its depreciation — oil prices, dollar shortages, the wholesale shedding of equity and the decline of the currency carry trade, and further weakening seems to be inevitable. There is already talk of an exchange rate of Rs 80 to the dollar. Credit Suisse has downgraded India on oil price concerns, and finds India and the Philippines to be the Asian nations most exposed to rising oil prices. It will divert money from India to China for now.

Trayas, a regulatory research and policy advisory company, has built an index comparing 23 states on the economic freedom of women, using the lens of 48 Acts, 169 rules, and 20 notifications and orders. Effectively, it measures legally sanctioned discrimination against women. Kerala, Tamil Nadu and Goa provide the greatest freedom for women to choose work while Meghalaya and Odisha are at the bottom of the chart. The participation of Indian women in the workforce is among the lowest in the world.

Speaking to reporters at his annual press conference on the sidelines of the ongoing session of the National People’s Congress or Parliament in Beijing, Chinese Foreign Minister Wang Yi yesterday reiterated, in direct opposition to the Indian view, that both sides should not let boundary issues ‘interfere’ with the rest of the relationship. Without directly mentioning the US, he said that “some forces have always sought to stoke tensions between China and India and divisions between regions. Their attempts have put more and more people in reflection and on alert.” 

Wang also accused the US of trying to build an “Indo-Pacific Nato” using the Quad and its allies. “From Five Eyes and Quad to AUKUS,” he said, “the US is staging a ‘54321’ formation in the Asia Pacific… a sinister move. The real goal for the Indo-Pacific strategy is to establish an Indo-Pacific version of Nato… These perverse actions run counter to common aspirations of the region and are doomed to fail.” Meanwhile, it. has been announced that Indian and Chinese commanders will hold their 15th round of talks on the Ladakh situation on March 11.

“I think the issue for India is there is some level of dependence on Russia, both in terms of its defence relationships [and] economic relations. And I think the way forward is for a closer economic and defence relationship with India,” British Foreign Minister Liz Truss yesterday told a parliamentary committee. “I have spoken to my counterpart, Minister Jaishankar, and encouraged India to stand against Russia.”

Former NSA Shivshankar Menon, in nuanced comments on India’s handling of the Ukraine crisis, has said that it must shift gears because peace in Ukraine matters. It was wise to abstain in the UN, but it should have clearly called out the invasion and war. It is important for its credibility and interests that it quickly play a strong role in seeking a solution.

Norway’s sovereign wealth fund has put Adani Ports under observation for possible exclusion from its investments, for Adani’s involvement in building a port terminal in military-ruled Myanmar, according to Reuters.

Polling for Assembly elections concluded yesterday against the backdrop of deep and unequal economic distress, which has its origins from before the pandemic. The Financial Times asks the multi-million dollar question: will it hurt Modi? Viral Acharya, former deputy governor of the Reserve Bank of India and a New York University economist, tells FT: “The rich have been the beneficiaries of all the tax and monetary stimulus,” and the lopsided recovery “is not going to be enough to bring GDP to levels commensurate with pre-pandemic trends.”

With polling over, fuel prices are likely to be hiked this week. Oil companies will try to cut losses accumulated from being forced to keep rates steady for over four months in the run-up to elections in five states to help the ruling party, while international prices jumped to a 13-year high of $140 per barrel. The companies have been aligning prices daily with global crude prices since 2017, but amazingly keep prices unchanged for weeks preceding elections, and the supposedly independent and unbiased Election Commission doesn’t seem to notice.

Never mind Commerce Minister Piyush Goyal’s tall claims, Business Standard finds that India is expected to have an export-to-GDP ratio of 20.8% this year while in 2013-14, it was 25.4%. It has been below 20% since 2016 and the current rise in the ratio is more due to the poor GDP growth rate.

Mahesh Vyas of CMIE reports that in the first week of March, the proportion of households that believe financial and business conditions would improve over the next five years dropped to 8.4%. But, the proportion that believes that conditions will worsen is high and has risen. In February, 41.4% of households believed that conditions would worsen over a year, which went up to 42.3% in the first week of March.

Meghalaya’s voluble Governor Satya Pal Malik remains a key source of information for goings-on in the information silo of the BJP. It emerges that his friends had advised him not to criticise the BJP government. He could be made the president or vice president if he kept quiet, they said, but Malik said he “doesn’t care for these positions.” 

The cause of the sudden death of India’s envoy to Palestine, Mukul Arya, is not yet known. A press release from the Palestinian embassy declared that Palestinian authorities are investigating the incident. “As soon as the painful news arrived, immediate instructions were issued by President Mahmoud Abbas and Prime Minister Dr Mohammad Shtayyeh, to all the security, police and public authorities, in addition to the Ministry of Health and Forensic Medicine, to immediately move to the place of residence of the Indian ambassador, to closely monitor the cause of death.” The MEA has not said anything to indicate the cause was unnatural.

A local court in Guwahati has asked police to register a case against Assam Chief Minister Himanta Biswa Sarma based on an FIR lodged by Congress MP Abdul Khaleque, in which he alleged that Sarma made a “communally inciting” speech regarding an eviction drive. The court of sub-divisional judicial magistrate, Kamrup (Metro), B Baruah on March 5 directed the officer-in-charge of Dispur Police Station in Guwahati to register a case on the MP’s allegations, investigate the matter “fairly” and submit the “final form at the earliest”. The court issued the order while disposing of a petition filed by Khaleque, a Lok Sabha member from Barpeta constituency in Assam, in which he complained that police did not act on the FIR he lodged against the CM in Dispur Police Station in December last year.

The Gujarat government has admitted in the Assembly to a shortfall of more than 19,100 classrooms in state-run primary schools as of December 2021. Tribal-dominated Dahod district tops the list with a shortfall of 1,688 classrooms, followed by Banaskantha at 1,532, Bhavnagar 966, Mehsana 947 and Sabarkantha 941.