May 22, 2020

China – GST – Airlines | Learning by Proxy

Every Saturday, I publish this series called ‘Learning by Proxy’. It is a capsule of some of the stuff that I found interesting over the week along with some context to it. I hope you enjoy it.

This one became long thanks to all the political Chess.

Follow Up

The Prime Minister of India had announced a 21 Lac Crore Stimulus package. The details emerged.

Iron-fist continued – Several reforms have been pushed through in a hurry under the guise of the stimulus package. Apart from propping up the banking and NBFC system through doles from RBI. There is little in terms of real outlay made.

The APMC Act which had horrible consequences for the farmers has also been lifted and there is much to be happy about. The space sector has been opened up to private players which is also positive. 

Minerals, Defence, Civil Aviation, Power Sector and Atomic Energy have also been opened up and they are likely to attract a lot of investment especially given that labour laws have been waived and Companies Act has been decriminalised.

Apart from this everyone can take a loan. How many do end up taking is another question?

You can see the entire list of changes announced here.


Politics

Hong Kong – Democracy or not?

Hong Kong was the last of the British Dominions to be handed over. China which took control at the time promised to let the government be separated from Beijing till 2045. The Chinese government has been working hard to remove democracy from Hong Kong for the past few years. This led to the Umbrella Movement and several other protests that have rocked the city for more than a year. Coronavirus has offered the country a great opportunity to tighten the vice and undo democracy.

Beijing fired its opening salvo on April 17, when its liaison office in Hong Kong effectively dismantled over two decades of legal precedence by declaring that it has full authority to interfere in Hong Kong’s affairsleaving legal scholars and experts on the city’s mini-constitution appalled. The next day, 15 veteran leaders of the city’s democracy movement were arrested over their roles in last year’s protests. A few days later, the central government’s Hong Kong and Macau Affairs Office issued a string of statements, voicing support for the liaison office while condemning opposition figures and politicians. In the span of five days, the rules of engagement between Beijing and Hong Kong—ostensibly a city with a high degree of autonomy over its own affairs—were completely rewritten.

Source: Quartz

Chinese infiltration in Ladakh

Last week I had mentioned the Chinese incursion and island-building in the South China Sea. They are also building up their presence in Ladakh where the Indian forces have had a few skirmishes with them. Now they are building up a presence on the Pangong Tso Lake.

The number of Chinese patrol boats, sources told The Indian Express, have gone up three times — they had earlier been using only three boats. The Indian Army also has a similar number of boats to dominate the 45-km long western portion of the lake which is under Indian control.

Source: Indian Express

WHO do we use

Trump has been berating WHO since April and blaming them for not bringing the “China Virus” to the world’s attention. Under pressure WHO finally agreed to investigate the origins of the virus. Trump promptly went ahead and ordered the WHO to “get things together in 30 days” or find its US funding cut. WHO is being used to wage a proxy battle against China. 

While the U.S. government was the first to call for a pandemic inquiry, Tuesday’s resolution happened largely in spite of the Trump administration, not because of it. The U.S. has annoyed allies by shopping inaccurate coronavirus intelligence to them and by undercutting global pandemic coordination from the U.N. Security Council through to the G-7. In the end, it was the European Union’s diplomacy that pushed the inquiry resolution towards the finish line.

Source: Politico

Flip Flop

When the lockdown was announced, the Indian government declared that nobody should be fired or be given a salary reduction. These were instructions from the highest office. Last week, that all went away. Under pressure for announcing a stimulus package which does not seem to be stimulating anything, the government blinked.

In a new notification, the home ministry has withdrawn its March 29 circular which had made it mandatory for all private enterprises to pay full salaries to their employees irrespective of their presence or absence in the workspace during the lockdown. The rule was also applied on micro, small and medium enterprises (MSMEs) as well.

Source: Inc42

Economics

Open and Shut

Several economies are trying to open up after the lockdown. Several including South Korea have discovered that it is not that easy. Now it is the turn of the French. Emmanuel Macron had announced a clear date for re-opening of the country – May 11th. They re-opened most institutions including schools. There was a sudden flare-up of 70 COVID-19 cases linked to schools and the government moved swiftly to shut the schools down.

But French Education minister Jean-Michel Blanquer sounded the alarm Monday, telling French radio RTL that the return has put some children in new danger of contamination. He said the affected schools are being closed immediately. French media reported that seven schools in northern France were closed.

Source: AP

When companies lose revenue its business; when the government loses revenue its economics!

When businesses lost revenue, the PM said ‘Aatma Nirbharta’. Now, they are on the other side of the table. The inevitable question of tax waiver has raised its head in India. GST is paid on all goods and services sold. And given the two-month lockdown, businesses are asking the government to waiver GST for these two months and more. For a government which was already broke – losing income is unthinkable. They concocted some lousy reasoning.

“In the past also, when the GST exemption on sanitary napkins was allowed, it had led to similar hardship for domestic manufacturers of sanitary napkins. Later, the domestic industry complained of adversity. So was the case with GST exemption on PPEs, mask, etc. The GST exemption would lead to blocked input tax credit (ITC) resulting in increase in the cost of manufacturing and a higher price for consumers,” an official said.

Source: Indian Express

Business

Volte-Face

Given the degree to which Jio has dominated the newswires, it is easy to be led to believe that the company is doing well. Last year the Supreme Court awarded a victory to the government on a 20-year-old case on spectrum charges. This left the established telecom companies saddled with nearly the equivalent of the (actual) Indian stimulus package – Rs. 90,000 Crores in fee and interest. Airtel along was responsible for a third of it. Idea declared itself dead. But the fight is not over yet!

Bharti’s India wireless revenue growth at 16% quarter-on-quarter, was significantly higher than Jio’s 6% q-o-q, a first since Jio started charging for services in 2017. “This print reinforces our view that Bharti may have closed the gap with Jio on revenue trends, and market share between the two players should not diverge from hereon,” Goldman Sachs noted.

Source: Financial Express

Fly Away

The embattled airline industry has had close to zero income since the lockdown began. They have been flying supplies, which amounts to one or two flights a day. They also have to refund all the tickets that were booked and scheduled to fly during the lockdown, which they still have not. To make matters worse they had started taking new bookings for mid-April when the first lockdown was supposed to end. They desperately need to start flying and for cash rotation to begin if they are to make good on their obligations. It was finally announced that they can restart on the 25th of May. Alas, the joy was short-lived because…

The government will fix a price cap with both an upper and lower limit for domestic air fares for three months after flights resume on 25 May, following a nearly two-month hiatus two months during which the entire airline fleet was grounded, civil aviation minister Hardeep Singh Puri said on Thursday.

Source: Live Mint

Technology

Nuclear Technology has been stagnant for a long time and many including Bill Gates think that it is the salvation. The human energy needs are so high that no other technology can meet the need effectively in all weather conditions. Bill Gates and the Breakthrough Energy Ventures has invested in several experimental nuclear technologies including a football-sized reactor. This is another leap using 3D printer technology to print the reactor core. This will allow sensors to be embedded in the core which allows scientists and engineers to have visibility into what is happening within the core.

Although most of the reactor will be made from conventional components, the core will be entirely 3D-printed out of silicon carbide, an extremely rugged material that is all but impossible to melt. The cylindrical core is a dull metallic silver with several irregular nonagon fuel assemblies arranged in its center. 

Source: WIRED

Misc

Kanwal Rekhi is the man who invented the Ethernet. This post was genius. I just had to share it.

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