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Dear Readers,

The world is moving from globalisation to protection of national economy. The American Nobel laureate economist, Joseph Stiglitz had written about globalisation and its discontents. Growing population, increasing unemployment, and more revenue requirement are main factors for protection of a country’s production line.

The US President Donald Trump has imposed tariff on imports of steel and other items to save $ 60 billion. China is having a trade surplus of $ 375 billion with the US in 2017. In retaliation, China has also imposed tariff on imports of certain items. China says “trade war helps none”. It appeals for cooperation. China is unlikely to give significant concessions to the US. Economists are warning that the world is on the verge of an all-out trade war, featuring tit-for-tat reprisals. Trump has also blamed China for intellectual property theft. It is to be seen how far tariff will save local industries and create employment. Another American Nobel laureate and economist, Paul Krugman feels that 25% tariff on steel imports by the US will destroy some jobs in the auto industry, while few jobs will be added in steel industry. Tariff may not probably help much on trade deficit and employment. Some
experts feel that it is unlikely to help to resurrect the domestic industries. Collective and considered action of all other World Trade Organisation (WTO) members will become crucial. The total size of global trade is about $ 20.8 trillion.

India’s export subsidy schemes have been challenged by the USA at the WTO. India is giving certain exemption from certain duties, taxes to steel producers, chemical, pharmaceutical, textiles, information technology, and others. The US is telling that the WTO’s trade remedial action has not been conducive to local producers leading to the imposition of higher duties by the US. India’s domestic industry needs to be made global cost-effective. Labour cost is high and productivity is low. Industry should be allowed to right-size/rationalize its employee strength. Capital cost can be reduced greatly if government channels perform and are made accountable and responsible. Corruption is one aspect. To save India’s industries, the government should impose heavy tariff on all items, which are being imported. India need not fear of retaliation measures as its exports to China are marginal. India’s export of steel to the US is very low. A trade war on services through immigration policy will affect specially the IT and ITES sectors. India needs global trade and human capital-based exports. Some countries even need unskilled workers. Industry needs to run at optimal capacity. Otherwise, it will continue its march towards the ocean of stressed assets.

The current account deficit rose to 2% of the GDP at $ 13.5 billion in December quarter. India’s trade deficit stands at $ 12 billion in February 2018. The US’s decision to hike tariff on steel and aluminium will affect exports. However, exports grew at 4.5% to $ 25.8 billion and imports rose to 10.4% to $ 37.8 billion in February 2018. The government’s debt has risen. The cost of servicing debt is rising like corporates whose assets have become stressed.

The government should not depend on the flow of funds from disinvestment. Milch cow/national gold/silver should be preserved. It is a mixed economy of capitalism, socialism, and communism. The public sector units should be the barometer of private sector industries. Then there will be no stigma of ‘beimani’ or dishonesty attached to any enterprise. Back in 1963-64, J.R.D. Tata said that if the Government would have had steel plant of its own, it would have known the plight of private steel sector. Government should stop wasteful expenditure on populist schemes which defy economics, which makes the population lazy, averse to work and addicted to alcohol and drugs.

Restraining norms, delay in sanctions, GST, etc. have taken a toll on the realty sector. Home sales and
project launches have sharply dried up. Stressed assets are also increasing.

In March, during my visit to Gujarat, I found tomatoes were thrown on the roadside and tomato crops were
getting wasted on the fields. This is the state of our farmers! It is a pity that government and others in positions of power do not understand the pathetic condition of the farmers. Despite so many policies, this situation is due to lack of proper implementation of the policies. As opined earlier, farmers’ loan interest should be waived. Principal amount should be deferred to the boom time.

The prospect of slower economic growth has stock markets worldwide reeling. Prem Watsa, the Warren Buffett of Canada, said, “we are even more excited about India’s prospects today than what we were in 2014.” His Fairfax Financial Holdings has invested about $ 5 billion here. But FDI is slowing down. The global trade war has cast its shadow on the market. Across global markets, large quantities and equities have been sold. It may be an over-reaction. In India, domestic factors are also weak. Some market players expect for further corrections till about 9600 levels for Nifty.

The World Bank said that India’s growth is likely to rise from 6.7% to 7.3% in 2018-19. To achieve a growth rate of 8%, a sustained revival in private investment is needed. Global sentiment and industrial condition are heavily impacting the stock markets. Domestic institutions and foreign institutions are selling and seeking selectively.

Recession and boom are bound to be in cycle. History tells us this. Some industrialists are hounded and forced to flee from the country which they love due to unfounded accusations leveled against them. There might be few wrong doers. It is to be realised that so many factors govern the smooth flow of funds. In recession time, and due to global competition, dumping of goods, fall in demand, accumulation of inventory, industry will be in problem due to non-payment. But during boom time of the business, the payments become regular.

India is the second largest producer of cement in the world. Cement is one of the core industries, which plays a vital role in the growth and expansion of a country. It has important role in the Indian economy. It is linked to the development of real estate, infrastructure and other construction industries. The Indian cement industry produces several varieties of cement as per the Bureau of Indian Standards and their quality is comparable to the best in the world. Some of top cement companies are UltraTech Cement, ACC, Ambuja Cement, Jaiprakash Associates, India Cements, Shree Cement, Ramco, JK Lakshmi Cement. Large companies like LafargeHolcim, Heidelberg, and Vicat have also invested in the cement industry. India’s total cement production capacity is nearly 425 million tonnes as of September 2017. It is currently producing 280 metric tonnes, which is 65% of the capacity utilisation. The demand depends on the development of real estate, infrastructure, and industries. The investment in the real estate sector is low and industrial activity has slowed down. The Government is focusing on infrastructure. This will boost demand of Cement. Cement industry depends on limestone. Recently, the Government of Chhattisgarh auctioned one block of limestone. As the income of rural India grows and the smart city scheme takes off, the demand will grow. Import of cement will also have an effect. Government actions to impose tariff and tax relief will help the industries.

Input costs have been rising. Cement margin is at risk. Pet coke crisis is at a multi-year high. Industry depends on limestone. Limestone mines are controlled by the Government. However, the Government of Chhattisgarh has auctioned one block of limestone in the Raipur district. Entrepreneurs should do proper analysis before investing in the cement industry. The question is why 65% of the capacity is only being utilised. Why some cement units have fallen under streesed assets? Why despite curtail at tonnes cement industry margin fall?

May God give wisdom to Bharatwasi to work in the interest of Bharat and large population.