The Earth Song

J Mulraj | Updated on August 14, 2020

Despite a deadly, ongoing, pandemic, which ought to grab everyone’s attention, and despite increasing signs of the fury of Mother Nature against her ill treatment, political leaders still find time to destroy the environment.

In the words of Michael Jackson’s ‘Earth Song’: Did you ever stop to notice; All the blood we’ve shed before; Did you ever stop to notice; This crying Earth, these weeping shores.

Mother Nature is crying, and hitting back with fury. Floods in China have already displaced millions, after release of water from, and in order to save from collapse, the Three Gorges Dam. The area around Wuhan has been submerged, destroying a lot of the wheat crop which feeds China. The Yangtse river is the main river transport hub to send export goods to, and get imports from, the port of Shanghai; its infrastructure is damaged.

Despite this, it is confronting so many nations, picking territorial fights with Japan (Senkuku Islands), Russia (Vladivostok), India, Australia, several nations in the South China Sea, clamping down over Hong Kong and ratcheting up tensions over Taiwan.

What have we done to the World; Look what we’ve done; What about all the peace; That you pledge your only son

In the midst of all these conflicts and devastation inflicted by an irate Mother Nature, all nations are striving to revive their economies, which have been battered by the Covid lockdown. Almost all countries have learnt the risks of overdependency on one country for their supply chains, and are striving to relocate them. Japan pays its companies to relocate their manufacturing facilities away from China.

Few of these companies have yet relocated to India. Government of India, especially the bureaucracy, ought to introspect the reasons, and take corrective actions. Some course correction has taken place e.g. corporate tax rates have been brought down and some changes in labour laws have been made. Much more needs to be done.

The biggest stumbling block is uncertainty of policy. Businessmen can deal with delays, with corruption and other bugbears, by factoring in the additional cost, usually measurable. But uncertainty of policy cannot be measured and included in an XLS. Retrospective changes in law is one such hurdle; the absence of Bilateral Investment Treaties is another. India wants a clause in its model BIT stating that international arbitration can be resorted to only after domestic judicial remedies have been exhausted.

Looking at the pace of judicial remedy (slower than a tortoise with gout), it is unsurprising that FDI is slow to come to India. This clause should get a re-look.

There is also the lackadaisical approach to enforcement of contracts, and the surprising, often criminal, leeway given to white collar criminals. These criminals borrow money from banks much beyond their means; the sanctioning officers are duped/bribed/coerced/directed by Delhi into granting them. Ultimately it is the depositors who suffer.

The stock market rally is largely based, in the wake of natural disaster, continuing conflicts and the devastation of economies by the Covid virus and the lockdown, on easy money. Central banks have injected $24 trillion (around 30 per cent of global GDP) to save economies . Central Bank balance sheets by end 2020 are expected to range from 16 per cent of GDP (Australia) to 134 per cent (Japan).

Interestingly, and not widely known, US has invested in China Government bonds, which are not being serviced. China owns some $1.08 t of US bonds on which it gets its interest. But, very interestingly, according to the American Bond Holders Foundation, China owes USA $1.6 trillion and has not been servicing its bonds bought by Americans.

What about flowering fields; Is there a time; What about all the dreams; That you said were yours and mine.

The writer is India-Head-Finance, Asia, Haymarket. The views are personal

Published on August 14, 2020

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor