Modi Avoids Trump, While Delhi Chokes On Diwali: The Week That Was
Markets rose on US-India trade hopes, but Modi skipping Trump meet signaled diplomacy; meanwhile, Delhi’s AQI spiked from fireworks.
The Gist
In anticipation of a US-India trade deal, stock indices have surged despite PM Modi's absence from the ASEAN summit with Trump.
- The US has waived the $100,000 H1B visa fee for certain visa holders.
- Modi's avoidance of Trump may reflect discontent over oil import discussions with Russia.
In the expectation of a trade deal being struck with the US, stock market indices have soared, even as Prime Minister Narendra Modi avoided a face-to-face meeting with US president Donald Trump by deciding to skip physical presence at the Kuala Lumpur summit of the Association of South-East Asian Nations (ASEAN) scheduled for October 26-28, expected to be graced by the US president.
News reports put the post-trade-deal US tariffs on India at 15-16%, more or less in line with the duties that India’s competitors for a share of the US import market face.
Another favourable development in India-US relations has been the US government’s decision to lift the $100,000 fee for H1B visas in the case of those already in the US on other visas, say the F1 student visa or the L1 intra-company transfer visas used by multinational companies to bring to the US their own employees deployed in a non-US country.
This change of heart on the part of the Trump administration comes in the wake of the US Chamber of Commerce suing the government over the restriction of access to foreign talent that American businesses need, via the visa fee hike. US universities could gain as well from the fee waiver for student visa holders: foreign students would steer clear of American campuses if, after graduation, their employment prospects are crimped by a $100,000 visa fee.
Trump Waives, Modi Waits
Prime Minister Modi’s reluctance to meet with Trump at Kuala Lumpur does not necessarily mean that the trade deal talk is just trumpery: it could simply signal his displeasure at Trump’s utter disdain for Modi’s discomfiture over Trump’s repeated claim that New Delhi has accepted to sharply lower oil imports from Russia, even as Russian president Vladimir Putin tweets that India will refuse to be humiliated, and the Indian government continues to be non-committal on buying oil from Russia.
It is not just Modi who is skipping a meeting with Trump. Trump had announced a meeting with Putin in Budapest to discuss Ukraine, only to have the Russian external affairs minister scotch that proposal.
China Trumps Trump
Now, Trump is hoping to meet with his Chinese counterpart Xi Jinping at the Asia Pacific Economic Cooperation summit slated to take place over October 31-November 1 in Gyeongju, capital of the Silla kingdom, Korea’s so-called land of gold, which lasted for almost all of the first millennium of the Common Era. Trump has been blowing hot and cold over how he would deal with China’s refusal to roll over and accept Trump’s bullying on trade.
China’s economy grew 4.8% in the quarter ending September. China’s overall exports grew in September by 8.3% year-on-year, despite a sharp fall in exports to the US. Meanwhile, Beijing is encouraging African nations that have borrowed from Beijing to convert their dollar loans into yuan loans. The yield on yuan bonds is lower than on dollar bonds, so it is a good deal for the borrowers. For Beijing, it is a nominal loss in interest earnings but a big plus in the international usage of the yuan.
Chinese Communist Party bigwigs gave their approval, this Thursday, to the country’s 15th Five-Year Plan, which lays out the focus of economic policy till the end of 2030. The overarching goals are technological independence to bolster national security and boosting the internal circulation, meaning domestic consumption, as opposed to production for exports.
Artificial intelligence, quantum computing, domestic design and manufacture of advanced semiconductors, advances in electrification of everything and the green transition figure prominently. China has been letting the yuan appreciate, with low inflation and low interest rates. A strong currency would boost imports and consumption — at least, that is the hope, even if it comes up against continuing export growth.
Gold To Keep Shining
Gold and silver prices have come down after a sustained rise. But this shift is likely to be temporary. Trump’s stewardship of the American economy and deeply divisive politics are guaranteed to corrode the dollar’s standing as the anchor currency of the global financial system.
The US government shutdown continues. Trump is stepping up attacks on Venezuela and on Democrat-run cities in the US. Such political instability and economic fragility in the US boost the demand for a safe-haven asset as an alternative to the dollar, and gold glitters, especially for central banks.
The Chinese have soured on their decades-long obsession with real estate as the primary form of household saving. Excess capacity and excess leverage in real estate are what drag the Chinese economy down these days. At the same time, a full range of financial savings products has neither emerged nor won over the Chinese saver. The Chinese are saving in gold, instead. Gold demand is likely to sustain for some years to come.
Google has announced major advances in quantum computing, with an algorithm that is replicable and not just significantly faster than conventional computing.
Very low-tech is also making news, simultaneously. A few thieves have made away with about $100 million worth of jewels from the Louvre Museum, in Paris.
Diwali Chokes Delhi
In India, the run-up to Diwali saw retail sales pick up after a prolonged anaemic phase. The Supreme Court, in its wisdom, chose to allow a plea to lift the ban on crackers and other fireworks in the national capital region, and permitted the use of so-called green crackers for brief periods on two days. The well-heeled have taken this as the green signal for crackers in general, and filled the Delhi sky with noxious fumes to such an extent that most air quality monitors fail to measure the full extent the pollution unleashed. The only saving grace has been that there has been a mild breeze, unlike around previous Diwalis, to blow the pollution over an extended area beyond Delhi and its neighbourhood.
Air purifiers have taken the place of battery-inverter combos and power generators as the vulture industry that feasts on governance failure. The rich, who can afford them, pollute the sky with their fancy fireworks, and leave the poor to breathe in the unfiltered poison and suffer cognitive decline, enhanced cancer risk, pulmonary disease and pre-term births.
One way to dampen the enthusiasm for Diwali crackers might be to hold all major entrance and recruitment examinations on the day after Diwali, while publicising the medically established fact that exposure to high levels of air pollution impairs cognitive abilities to a degree that affects performance in tests.
