USA's growth impressive these days...
-There are a lot of criticisms on the kind of growth that comes out of USA today.. by increasing fiscal deficit heavily and offering too much tax concessions, momentary growth is shown. It is not a sustainable model with continued deficits in long run, according to many experts view. Note that the cumulative deficit under last President of USA was higher than the collective deficit of his 30 predecessors (Presidents) (1 trillion USD per year). He had to do that to bail out the economy from sub- prime disasters with an understanding that the deficits will be unwound in future.
The future, which is the current one is of-course only adding further deficits.
- While in short term - GDP growth, consumption, employment numbers may be rosy in USA now, all these are coming from borrowings. If you leverage beyond your capacity to repay, you have taken more than what you can chew. Already debt to GDP ratio has crossed 100%. in USA. A leader looks at his next term. But a statesman is seeing the generations to follow.
-We need more statesman today. He should have the political guts to say that when something can not be cured, it has to be endured and sacrifice is the key.
-We should not make the future generation to pay their present debt, past debt and so on. A father need not pass on a legacy of assets to his children, but he should never pass on his debts to his children.
-Even USA has heavy trade deficits with China & EU inspite of the new additional tariff restrictions. Also against a GDP of 16 trillion, the permissible 2% level current account deficit is much higher than what we have on a 2.5 trillion USD GDP.
-USA dollar strength (strength is sometimes triggering a new weakness) is curbing export competitiveness and increasing import penetration due to other currencies becoming cheaper.
- Dollar strength is not due to any extra ordinary brilliance. The dollar is the only accepted universal currency and many countries place their money in dollars. China is still navigating in shallow waters, afraid to internationalise their currency since it may affect their trade competitiveness with limitations imposed on their currency manipulative capability.
-For next decade no other country currency can aim at nearing the strength of US dollars. That gives them ample cushion to have more dollar preference from all countries. Even oil is priced in dollar not in other currencies. Many middle east currencies are pegged to the USA dollar.
People should not confuse dollar strength denotes country strength.
- having said these, USA attracts best talents and best innovations come from there. That is because it is a land of immigrants with best brains and the meritocracy is rewarded unhesitatingly. But India is a land of people from organic roots and it needs to reward meritocracy with an equal focus on social justice. We can not get away from this. People who feel that merit is not recognised well in India are going abroad to the land that rewards meritocracy. But they should create mega companies like google etc in India and pass on their loyalty to their country of origin by making "Make in India" successful. We need atleast one new business model in emerging fields in India that creates disruptive innovation and become a global company on the likes of google etc.
The bottom line - "All that glitters are not gold, all those that are not bright are not bad, as the lotus blossoms even on the mud."
- Now, we need governance to be carried out by people who are not afraid of taking bold decisions and those who have the conviction to implement. Who is there to give such governance - take your call after an unbiased introspection.
God bless India. Drdd