MARKET PERSPECTIVE
By J Mulraj
April 25-May 1, 2021
Governments, institutions and people are collectively responsible for the tragic second wave of Covid
Everyone must bear collective responsibility for the second wave of Covid 19 which is hitting the country very hard.
After the Covid-curve started to flatten, people flouted rules and regulations. We Indians are accustomed to flouting rules and displaying bravado when challenged to obey them. The cops have been conditioned to go easy, for fear of offending someone who may be politically connected, and the resulting transfer. Several calls have been made to stop the politicisation of law enforcement, which have been, sadly, unheeded. Well, this is the result!
Social events such as farmhouse parties, or weddings with large crowds, became common. Elite clubs, like the Calcutta Swimming Club, organised dart tournaments, irresponsible behaviour by elites of the city.
The Election Commission permitted 5 states/union territories, to continue with normal electioneering. True, the second wave had not started when elections were announced, and dates determined, but it had, when elections were in progress. It was the responsibility of the Election Commission to stop public rallies, and the duty of political parties to, themselves, desist.
But we are, even after 7 decades, an immature democracy. Governments don’t care for people, people don’t care to obey rules, and institutions, supposed to guard against such dereliction of duties, don’t care to perform independently. It is worth asking why they don’t. A main reason is that, post retirement, they seek an income stream from a relatively cushier job, like, say, an assignment in World Bank or an Ambassadorship, for which they curry favour with the Government, or, say, a directorship or advisory role, for which they curry favour with the corporate honchos.
One must also consider the role of low interest rates (negative after inflation) in this dereliction of duties in order to secure a post retirement income stream. Had they been able to save enough to retire with dignity, they would be better able to fulfill their duties now. All these, and other issues, must be debated and suitable corrective actions taken.
The largest portion of the responsibility must, however, be borne by the Government whose job, as succinctly put by Ronald Reagan, is to protect the people, not run their lives. Not only did all political parties uncaringly hold huge electoral rallies of unmasked people, super spreader events for sure, not only did they permit the rallies/elections to continue long after the second wave was apparent and the country was critically short of hospital beds, oxygen cylinders, vaccines (despite chest thumping itself for being the world’s largest manufacturer of them) and treatments but it also allowed super spreader events like the Kumbh Mela to be held, that, too, a year ahead of its normal 12 year cycle. Why?
The excuse that the second wave could not be forecast, is wrong. It was anticipated by Dr. Rajendra Barud, the Collector of Maharashtra’s Nandurbar’s district. As per this article he anticipated a second wave in Sep 2020, when the curve started to flatten, and installed an oxygen plant in his small district then! He deserves commendation! Why couldn’t others?
The politicians have entered politics not as a service but as a business. Consider the variance in pay and perks to Swedish and Indian MPs. Swedish MPs get a salary of $ 4500, which, given their economy, or $ 54,000 pa, less than the per capita income of $ 56,000. They don’t have any secretary, are given a 450 sq. foot apartment outside Stockholm, have to travel by public transport (no car), no subsidized food in the canteen (they wash their own plates), need to chose the cheapest option when travelling for work, and don’t get a lifetime pension.
Indian MPs get a salary of Rs 1,10,000 pm, which is $ 17,800 pa, or 9 times the per capita income! Besides, they get Rs 2,000 per day of sitting in Parliament, a Rs 15/km travel allowance, 34 free air tickets and a free 1st class railway pass, 3 house staff, secretarial assistance, 1 phone with unlimited usage and virtually free electricity. So being an MP is not a social service but a business opportunity to earn 9 times the national income, with extra perks on the side.
Something needs to change, if we expect them to protect lives. Either their behavior or our expectations of it.
We should be open to evaluating different treatment options. Such as the inhaler developed by an Israeli professor, Nadir Arber, to treat acute respiratory distress syndrome (ARDS) caused by a cytokine storm triggered by the body’s immune system. If it is approved, it would provide a cost effecitive, fast and efficient solution in a country where oxygen and critical care is in short supply. In tests conducted on volunteers, 19/20 patients with ARDS went home in under 5 days. Indian hospital chains should consider joining in trials.
In corporate news of interest, RIL net profit for the quarter ended March 2021 more than doubled yoy, as a result of improvement in petrochem and consumer businesses. It has also revived talks with Saudi Aramco to sell a stake in its refinery business, in a cash plus stock deal, which would, besides providing cash flow, derisk the refinery business. It suits both companies. RIL refinery gets an assured supply of crude and Aramco an assured buyer of it. Perhaps it also, hopefully, serves as an insurance policy with Jamnagar being a few minutes flying path to our neighbor.
Other geopolitical news is not so good. Tensions are rising over a likely Chinese invasion of Taiwan, an event that could trigger off a stock market collapse. A stockmarket which has been pushed up on expectations of higher earnings, as Covid closures ease, but also due to low interest rate policies, making the risk reward ratio of equity versus debt tilt in favour of the former. But a geopolitical calamity such as a Taiwanese conflict, would puncture that.
The sensex was flat, closing the week up 904 points at 48,782. Another factor that can negatively impact US stock markets is the expected increase in capital gains tax to fund the infrastructure spend, and a likely hike in income tax for the wealthy, to fund a $ 1.8 trillion programme to fund children and families. A chunk of these huge spending bills is debt funded, and the level of debt, globally, is, in essence, unserviceable.
Right now Joe Biden is playing the piper, but one day, it will be time to pay the piper.
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Pix source: https://everydaypower.com/ronald-reagan-quotes/
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