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Mechanism of consumer redressal in India

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Consumer protection in India has a rich history with its desirability being felt through ages. Consumer movements in India have evolved over many centuries and were finally institutionalised in 1986 with the enactment of the Consumer Protection Act, 1986. The first and foremost responsibility of the government is to ensure smooth and easy redressal of consumer grievance. If the government is futile in rectifying the atrocities of the consumers it results in consumers moving to courts and forums for their demands. To study the consumer movements in India it is important to look at the mechanism of consumer redressal present in the country which is briefly discussed in the first section of this article.

Consumers are the backbone of the economy of every country and it is the government’s job to keep the producers in check so that the consumers don’t suffer. The consumer protection laws in India are still a little vague and complex that makes them ineffective. To make the laws more effective the consumers should be made aware of their rights and obligations because the major hindrance in effectiveness of consumer protection is consumers’ obliviousness towards their rights.

Consumption has always been an integral part of any society. With the advent of hyper industrialization, there are bound to be some shortcomings that the producers have to address. To effectively make their damage good, people have to mobilize together and speak as a community.

The Consumer Protection Act, 1986 was enacted a benevolent legislation that states the rights of consumers and address the consumer redressal mechanism. It has enabled ordinary consumers to opt for speedy and less expensive redressal of their complaints.[1] Although there has been many legislations protecting consumers before independence like the Sale of Goods Act, 1930, Contract Act, 1872, this is the first time that specific attention has been given to general consumers.

The National Consumer Disputes Redressal Commission (NCDRC) was set up under Consumer Protection Act, 1986. It’s a quasi-judicial body with a President and eleven members. It has 3 types of jurisdiction i.e. Original, Appellate and revisional.[2] Under the Consumer Protection Act, NCDRC is entitled to entertain cases from Central and State governments because they qualify as “complainant” under section 2(b)(iii) of the Act. The complaints are processed under the supervision of Registrar by officers of NCDRC before placing them before the Hon’ble benches for hearing. The president is the head of the body and can distribute judges at each bench according to his discretion. Under section 23 of the Consumer Protection Act the complainant can file a review petition before the Hon’ble Supreme Court of India. The discharge of functions is governed under Consumer Protection Rules, 2017. Dept. Of Consumer Affairs allocates budget to NCDRC and the same is reflected in the Demand for Grants of Dept. Of Consumer Affairs. All the information regarding the cases, commission, statutes and workings of the Courts is available on NCDRC’s website in accordance with the Right to Information Act. All the information regarding National Commission is supplied within 30 days.

The NCDRC has the authority to entertain cases where the claimed compensation is above one crore and any appeal against state commission. It can also pass orders against the cases judged by any state commission where it feels that the proper procedure is not followed or where it feels that the court has exercised a power ultra vires.

Role Of NGOs Towards Consumer Protection

Consumer protection is of superlative importance in India as the population if India is ever increasing. They demand variety of goods and services every day, and there is an ever-increasing demand. Here we can see the number of cases filled by the consumers in the year 2017-18. This drastic improvement in the filing of the cases is because the awareness which is being spread through various forums, like advertisements, booklets, rallies, social media, and various other platforms. Here we take a brief look at what consumer protection entails in India.

NGOs have always been an integral part of the consumer movements in India and all over the world. They have paved the path for generating the awareness towards consumer rights violations as well as instilled the sense of justice in the people for claiming compensation for the same. The role of NGOs or consumer organizations is of paramount importance because, a general consumer is not always aware of his rights and even if they are, they don’t have enough means or understanding of the working of the various procedures laid by the law. The Consumer Protection Act 1986 has made it very opportune for the consumers to file cases and claim damages but this is mostly unknown to the actual consumer population, hence keeping them in the dark. NGOs come into play here. There are various NGO throughout India who work toward consumer protection. Some of the famous NGOs are VOICE, Common Cause, Consumer Awareness, Protection and Education Council of Karnataka, Consumer Guidance Society India.The need for NGO and self-regulatory authorities in the implementation of consumer rights is of supreme standing. They are needed because:

Awareness

One of the main reasons for the lack of awareness regarding consumer protection is the lack of education and vigilance. Education facilitates awareness. Due to the lack of education the consumers suffer silently without claiming for the implementation of their rights. The graph of the survey undertaken by CUTS International, depicts the lack of awareness among the consumer population.[3]

A survey was done by CUTS International to test the awareness of the Indian consumer, followings were the findings:[4]

  • Awareness regarding the various government schemes.
  • 20% were aware about the consumer protection act.
  • More than 50% were not even aware of the “Jago Grahak Jago” campaign.
  • 40% were aware about the food safety act.
  • TARI was recognized by 27% of the people, Electricity Regulatory Commission was recognized by 26%.

Urban dwellers are more aware about their rights, hence NGOs should work at the ground level with the villagers to spread awareness regarding their rights.

Research:

For representation of their grievances efficiently in the consumer court, consumers need to have the sufficient knowledge and skill for conducting the research. Many if the consumer grievances can be resolved with various surveys and studies. Now certain organization is researching the lead content in the children toys. These types of studies can only be conducted with proper research and skill. This is a skill which needs practice to be developed. Hence with the help of NGOs consumers can file and contest cases resourcefully. a consumer cannot always conduct various lab tests or advanced research which needs capital as well as the knowledge, here the NGOs can do this and help pace the implementation the consumer rights. In the graph below, it represents the awareness of the consumers regarding various laws in place. Given that the consumers are not well acquainted with any of them comprehensively, the need for NGOs to help them regarding research is imperative. 

Counselling:

The consumers are not always aware of the laws designed for them; with NGOs the legal aid becomes more accessible to the general public. NGOs can find and appoint people who are well conversant with the laws of the land and can represent and help them file cases. Additional to this, they observe the implementation of laws by the local authorities which were passed by the legislators. They can file public interest litigation cases and work towards representing the common sentiment of the people in the court.

Publication and media:

The consumer movement gained traction due to the various awareness drives organized by the NGOs. They pressurize the government on spreading awareness. We see advertisements like “Jago Grahak Jago” on television and we see numerous booklets, reports etcetera. Through these the consumers can communicate their grievances and raise their voice against the mal practices. In today’s digital and tech savvy world they operate blogs and online portals to keep in touch of the ground level reports and encourage the consumers to use this means to contact them for help. They also conduct various public meeting to advocate for consumerism and conduct open negotiations where the consumer community can meet and discuss their concerns. Some sources state that the consumers are more likely to be educated about their consumer rights through the televisions.[5]

Unanimous representation of the NGOs

There are many NGOs in across India. If all the NGOs will unanimously come under a same banner and take the consumer movement forward, then the movement will be more effective than it is today due to the region-specific approach of the NGOs. Along with addressing the problems of the people at the ground level, they should come together and file PILs which will gain traction and impose pressure on the government to take swift action.

PILs filled by the NGOs’:

The most efficient way to make the voice of the consumer heard is through the means of law. There are many cases filled daily, here we will discuss some of the landmark judgments of the PILs filled by the NGOs.

Afcons Infrastructure Ans Ors.v. Cherian Verkay Construction And Ors.– In this case, the court held that arbitration agreement is mandatory for dispute adjudication. At any point in the suit, the court cannot force the parties to go for necessary adjudication. The consent of both the parties is important for arbitration under section 89 of CPC.

Indian Medical Association vs V.P. Shantha & Ors.– In this case, it was held that doctors will come under the purview of Consumer Protection Act even though they are regulated by Indian Medical Association. So, medical negligence was made inexcusable.

Lucknow development authority v. MK Gupta – In this case, the Supreme Court held that all the functions rendered to consumers come under the definition of Consumer Protection Act. Even if the service is provided by statutory authorities the consumers are entitled to compensation.

Role of the government

The beginning of the consumer movement in India dates back to 1960s and the 1970s when there were rampant practices of unprincipled and unfair trade practices like food shortages, black marketing, hoarding, adulteration of food materials and edible oil. All of it led to a consumer movement being propagated, till then the limited consumer organizations were just involved in writing articles and booklets. There was no legal system in place to hold the seller accountable and the maxim “caveat venditor” has no legal standing. It was always the responsibility of the consumer to be aware of the product or service they are subscribing to. The consumer movement around the world took acceleration and India was behind. Due to the pressure and active pursuing of the NGOs and self-regulating authorities a monumental step was taken by the Indian government and it passed the Consumer Protection Act 1986 in the 1986 Session of the Parliament. This legislation became a milestone in the societal and commercial legislations in the country. In addition to this many laws were legislated to cater to the interests of implementing the consumer rights, some include Standards of Weights and Measures Act, MRTP Act, Essential Commodities Act and Prevention of Food Adulteration Act. But these laws were neither penal nor preemptive in approach and did not make availableprompt trials and disposalof the grievances of the pained consumers.

National consumer chair:

For the first time in history the Ministry of Consumer Affairs of India, Food and Public Distribution, Department of Consumer Affairs Government of India has set up a Consumer chair which is being headed by Prof. Ashok Patil.[6] He will be heading the chair for 3 years. This step, taken by the central government, will be monumental for the prolongation of the Consumer Movement in India. This chair has been set up to provide the consumer an efficient mode to access justice which they are entitled to.

Jago Grahak Jago:

This was an initiative started by the government of India in the year 1983.[7]This was an initiative to spread awareness among the consumers regarding various goods and services they use in their day to day life. Through this portal consumers can register complains. They also showcase numerous advertisements on the television to make the consumers aware of the unfair trade practices. The Jago Grahak Jago campaign was known to 51% of the population, due to its use of media to communicate the various remedies under the Consumer Protection Act.

National consumer helpline

13 years back, on March 2005, as a part of the “JagoGrahakJago” campaign the Department of Consumer Affairs started a consumer helpline to provide assistance to the consumers. This is to make the implementation of COPRA more efficient. The consumers can seek help regarding their grievances by just making a call to the National Consumer Helpline.

Even after much efforts by the self-regulatory authorities and the government intervention the responses received is just 21%. Hence, in India we need more efforts to spread vigilance regarding the consumer rights and their violation and the mode which need to be taken to address the concerns of the consumers. 

This is the breakdown of the areas of various consumer grievances.[8] Most complains registered by the NCH was for the E-commerce sector, 19%. Let’s look at it in detail.

Working Towards Reducing Delays And Improving Consumer Satisfaction:

Among the many items on the agenda of the government, it should also give substantial importance in reducing delays in the Consumer Court. Due to the delays the willingness of the consumers to file complains is deteriorating.

Working towards improving consumer satisfaction

The below graphs depicts the level of consumer satisfaction with the griveance redressal mechanisms, and reflects on their experience in the Consumer forum.[9] A huge proportionate of people are not completely satisfied with the mechanism at place, which gives the government sufficient reason to improve it.

E-commerce grievances

Now a days the grievances regarding the online consumer market is on a high. This is because the 21st century is pacing towards the digital age. The below graph specifies the increase in the consumer complains in the year 2015-16 and 2016-17.[10] The government can set up another helpline which will deal with these cases unambiguously.

We have a case which was filled by the Telecom Watchdog against the online giants Amazon and Flipkart. The approved that these e-commerce giants were violating the Foreign Direct Investment norms. They circumvented the FDI norms by steering popular goods at much discounted rates through proxy ‘controlled sellers’ and this cause the pushing out of the small businesses off the market. The New Delhi High Court has recently issued a notice to the two companies.

Cross National Comparison Of Consumer Attitudes

Different countries have different mechanisms in place to deal with consumer movements. While the more developed economies have an established institution regarding consumer protection, developing countries like India are still in the nascent stages to develop their consumer forums. In this section, we’ll study this same distinction and how it came into being.

The paramount step in ensuring that the rights of the consumers are protected is for the consumers to know what their rights are and how they can be enforced. In this regard, the dept. Of Education, Pennsylvania, U.S. had published a handbook titled ‘Consumer Education Organisation and Implementation’. In the context of the said Consumer Awareness, a very little literature is provided in India.[11] This difference is awareness is of prime importance in regards to improving the consumer culture in India.

Another aspect of difference between U.S. and India is the enforcement of the statutes regarding Consumer Protection. Where in the U.S. the Federal Trade Commission’s sub-unit, Bureau of Consumer Protection, is using latest technology to easily facilitate consumer protection India is still left behind in addressing the complaints. The West has developed a highly developed Artificial Intelligence systems like Robocalls and automated answering protocols that help the consumer file a complaint easily and effectively. This again ties back to the issue of the awareness of citizens about consumer rights.

Disposition of cases is another factor that plays an important role in consumer protection. Speedy disposal of cases is a must in cases of consumer protection so that the consumer doesn’t suffer. While in the United States a lot of stress is placed upon the speedy disposal of cases, in India unfortunately the process is delayed by numerous complexities such as lab tests, unavailability of dates, etc. While the specified period of disposal is three to five months in the statutes, the dates of two subsequent hearings is this much apart in India.

Consumer protection in US focuses on economics of information.  Under right information, competition would force sellers to produce high quality products which meet the safety standards in all the aspects. In India, because the right information about the safety standards is still vague and complex, most of the times there is a conflict between different laws.[12] An instance of dissemination of information is regarding an automobile’s mileage. The manufactures have to disclose the actual mileage that an automobile can give and not the mileage that the automobile would grant in the ideal condition.

Right to choice is another matter of concern for Indian consumer market. Right of choice means the availability of products at the competitive and fair price at all the places. The competitive culture of the west has developed over the centuries while in India it is still in its nascent stages. By 1969 comparative analysis of magazines had become the norm in the west. Consumer reports held a lot of stake in right to choice with led the way in the sales of magazines. In India this revolution is being brought by online platforms where the prices are constantly scrutinized and kept in check.

To maintain the pressure on the government it is important to have some consumer organisations. While there are more than 100000 registered consumer organisations in the US[13], there are about 8000 consumer organisations in India. This shows that India is far behind U.S. in terms of consumer redressal. Because of the gap between the consumer and the redressal system, most of the consumer protection doesn’t get filed. While the consumer organisations in US are making sure that all the aggrieved get justice, for the limited number of organisations in India it is difficult to get all the consumers under the spectrum of consumer protection.

Consumer forums have not been successful in tackling the increasing consumer disputes. More than 4.5 lakh cases are pending in courts that suggests the miserable condition of consumer redressal in India. To tackle this issue, the govt. have to take immediate steps such as keeping vigil on availability of judges, contribute to R&D so that lab tests doesn’t waste time of the courts, establishing more benches in each part of state throughout the country. There have been many landmark cases under the Consumer Protection Act some of which are:

  • Chief Administrator, H.U.D.A. & Anr. v. Shakuntla Devi : In this case the Supreme Court held that for entitlement to compensation it’s necessary to prove damage.
  • Charan Singh v. Healing Touch Hospital and Others: The supreme court held that damages depend on facts of each case. No rigid rule can be set for universal application.
  • Om Prakash v. Reliance General Insurance : The supreme court held that insurance company cannot reject liability on technical grounds.
  • Manjeet Singh v. National Insurance Company Ltd. & Anr.: It was held that insurance company is liable to accept liability for hijacked vehicle.
  • Shri Rajendra Agarwal v. Shoppers Stop Limited: The CCI held that individual consumer grievances cannot be treated as competition concern.
  • New India Assurance Co. Ltd. v. Hilli Multipurpose Cold Storage Pvt. Ltd.: It was held that the respondent party have to reply within 15 days.
  • Dr. M. Kochar vs Ispita Seal: NCDRC said that No cure is not medical negligence.
  • M/S Emaar MGF Land Limited & Anr. v. Aftab Singh: Supreme court held that arbitration clause does not restrict consumer from filing a complaint with consumer forum.
  • Karnataka Power Transmission Corporation v. Ashok Iron Works Private Limited: Supreme Court held that supply of electricity is not considered ‘sale’ under the Act.
  • State of U.P. and Ors. v. All U.P. Consumer Protection Bar Association: Supreme court directed all the states to draft rules and regulations for better implementation of the Consumer Protection Act.

Consumer Movements in different areas

Telecom

Usually, consumer protection in Telecom sector is imposed by licensing arrangements or telecom act. The main provisions of the act aim at improving choices for consumers, to reduce prices, achieve better quality and avoid exploitation. In JK Mittal v Union of India the Delhi high court held that the respondent is not a telegraph authority under the telegraph act, 1885. The Supreme Court had given a broad interpretation in which it said that the consumer protection act is in addition and not in derogation to any law for the time being in force. The high court of Delhi held the suit maintainable in consumer forums. Through this case it was established that the suits against private telecom companies are maintainable in consumer forums.[14]

Health Care

Health care is one of the most controversial sectors where consumer rights have to be protected. In the Consumer Protection Act, 2019 the government of India has removed the word ‘healthcare’ which was added in the draft bill. There was a huge consumer movement about the removal of word healthcare because medical negligence is an integral part of consumerism in India and by removing the word it was being interpreted that the liability of doctors is diminished, but as was expounded in the Indian Medical Association vs V.P. Shantha & Ors case, the word includes medical negligence in the new definition of services as well.[15]

Food Industry

Food industry is the 5th largest industry in India. The Food Safety and Standards Authority of India has started the Food Smart campaign to raise awareness among consumers about food safety. The landmark case of Nestle Noodles, Maggie, was a testament to right to knowledge and the right to healthy food. In the case it was reported that the noodles were not harmful to health and the lead content was well within limits.[16] This case serves as an instance where consumer movements are most effective and provide the society a perspective of the justice for consumers.

Conclusion

Through the course of this article we have seen how Consumer Movements have evolved from being just conceptualized to being institutionalized. Consumer Protection is a necessity in a consumer dominated country like India. Consumer Movements go a long way in tacking the problem of consumer protection. When the people of a country stand up against a lazy government only then can the voice of consumers be strengthened.

This article focused on the mechanism of consumer redressal in our country. Different agencies have different roles to play and the government has the duty to duly resolve all the disputes. Studying the consumer redressal mechanism in other countries we saw where we lag behind. Although our government has taken various measures to resolve Consumer Disputes, there is still a long way to go in case of consumer protection.

The role of NGOs in eradicating a social evil is of eminent importance and this is the case with consumer protection also. A lot of NGOs are striving towards providing justice to consumers. To make the work of NGOs more impactful the government has the duty to provide them with necessary funds to do so.

While the government is doing its bit, it is equally necessary for the consumers to be aware of their rights and act on them. The government can’t do anything if the consumers do not take active steps to control the problem of Consumer exploitation. Hence, it is the moral duty of both the government and the consumer to act towards Consumer Protection.


[1] National Consumer Disputes Redressal Commission, ‘History’ (NCDRC) <http://ncdrc.nic.in/history.html> accessed 29 November 2019.

[2] National Consumer Disputes Redressal Commission, ‘Details Under Right To Information Act-2005’ (NCDRC) <http://ncdrc.nic.in/rti.html> accessed 29 November 2019.

[3]CUTS International, ‘Report: State of Consumer Affairs India’(CUTS International, 2012) <http://lms.nls.ac.in/pluginfile.php/1146/mod_page/content/8/Report_State_of_the_Indian_Consumer-2012.pdf>accessed 28 November 2019.

[4]CUTS International, ‘Report: State of Consumer Affairs India’(CUTS International, 2012) <http://lms.nls.ac.in/pluginfile.php/1146/mod_page/content/8/Report_State_of_the_Indian_Consumer-2012.pdf>accessed 28 November 2019.

[5] CUTS International, ‘Report: State of Consumer Affairs India’(CUTS International, 2012) <http://lms.nls.ac.in/pluginfile.php/1146/mod_page/content/8/Report_State_of_the_Indian_Consumer-2012.pdf>accessed 28 November 2019.

[6]Apurva Singh,‘Prof. Ashok R Patil, Professor of Law, NLSIU nominated as a member of the Central Consumer Protection Council’ (SSC Online, 19 November 2018)

<https://www.scconline.com/blog/post/2018/11/19/prof-ashok-r-patil-professor-of-law-nlsiu-nominated-as-a-member-of-the-central-consumer-protection-council/>accessed 27 November 2019

[7]Government of India, ‘Jago Grahak Jago complains portal’

<http://www.jagograhakjago.com/register-complaint/>accessed 27 November 2019

[8]Government of India, ‘Consumer helpline’<https://consumerhelpline.gov.in/nch.php>accessed 29 November 2019

[9]CUTS International, ‘Report: State of Consumer Affairs India’(CUTS International, 2012) <http://lms.nls.ac.in/pluginfile.php/1146/mod_page/content/8/Report_State_of_the_Indian_Consumer-2012.pdf>accessed 28 November 2019.

[10]Government of India, ‘Consumer helpline’<https://consumerhelpline.gov.in/nch.php>accessed 29 November 2019

[11] Sanjay Kaptan, ‘Consumer Movement in India: Issues and Problems’ (Sarup & Sons, 1st edn, 2013) accessed 30 November 2019.

[12]Journal of Institutional and Theoretical Economics, ‘Regulation: Analysis and Experience in West Germany and the U.S.A.: A Symposium’ (October 1983), pp. 527-544 accessed 26 November 2019.

[13] Yakoob C., ‘A study on the impact of the consumer protection act 1986 on consumer movement, with special reference to northern districts of Kerala’ (Department of Commerce and Management Studies , University of Calicut, 1998) accessed 25 November 2019.

[14] Ashok R. Patil, ‘Consumer Protection Law’ (Annual Survey of Indian Law, The Indian Law Institute, 2016) pp. 319-346 accessed 24 November 2019.

[15]Dipak Dash, ‘Consumer bill draft removes healthcare from Services’ (Times of India, 2 June 2019) <https://timesofindia.indiatimes.com/india/consumer-bill-draft-removes-healthcare-from-services/articleshow/69935129.cms> accessed 29 November 2019.

[16] Samanwaya Rautray, ‘Maggi Controversy: SC revives govt’s case against Nestle India in NCDRC’ (Economic Times, 4 January 2019) <https://economictimes.indiatimes.com/industry/cons-products/food/supreme-court-revives-governments-case-in-ncdrc-against-nestle-india/articleshow/67363564.cms> accessed 24 November 2019.

Economy

Finding Fulcrum to Move the World Economics

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Domenico Fetti / Wikimedia Commons

Where hidden is the fulcrum to bring about new global-age thinking and escape current mysterious economic models that primarily support super elitism, super-richness, super tax-free heavens and super crypto nirvanas; global populace only drifts today as disconnected wanderers at the bottom carrying flags of ‘hate-media’ only creating tribal herds slowly pushed towards populism. Suppose, if we accept the current indices already labeled as success as the best of show of hands, the game is already lost where winners already left the table. Finding a new fulcrum to move the world economies on a better trajectory where human productivity measured for grassroots prosperity is a critically important but a deeply silent global challenge. Here are some bold suggestions

ONE- Global Measurement: World connectivity is invisible, grossly misunderstood, miscalculated and underestimated of its hidden powers; spreading silently like an invisible net, a “new math” becomes the possible fulcrum for the new business world economy; behold the ocean of emerging global talents from new economies, mobilizing new levels of productivity, performance and forcing global shifts of economic powers. Observe the future of borderless skills, boundary less commerce and trans-global public opinion, triangulation of such will simply crush old thinking.

Archimedes yelled, “…give me a lever long enough and a fulcrum on which to place it, and I shall move the world…”

After all, half of the world during the last decade, missed the entrepreneurial mindset, understoodonly as underdog players of the economy, the founders, job-creators and risk-taker entrepreneurs of small medium businesses of the world, pushed aside while kneeling to big business staged as institutionalized ritual. Although big businesses are always very big, nevertheless, small businesses and now globally accepted, as many times larger. Study deeply, why suddenly now the small medium business economy, during the last budgetary cycles across the world, has now become the lone solution to save dwindling economies. Big business as usual will take care of itself, but national economies already on brink left alone now need small business bases and hard-core raw entrepreneurialism as post-pandemic recovery agendas.

TWO – Ground Realities:  National leadership is now economic leadership, understanding, creating and managing, super-hyper-digital-platform-economies a new political art and mobilization of small midsize business a new science: The prerequisites to understand the “new math” is the study of “population-rich-nations and knowledge rich nations” on Google and figure out how and why can a national economy apply such new math. 

Today a USD $1000 investment in technology buys digital solutions, which were million dollars, a decade ago.Today,a $1000 investment buys on global-age upskilling on export expansion that were million dollars a decade ago.  Today, a $1000 investment on virtual-events buys what took a year and cost a million dollars a decade ago. Today, any micro-small-medium-enterprise capable of remote working models can save 80% of office and bureaucratic costs and suddenly operate like a mini-multi-national with little or no additional costs.

Apply this math to population rich nations and their current creation of some 500 million new entrepreneurial businesses across Asia will bring chills across the world to the thousands of government departments, chambers of commerce and trade associations as they compare their own progress. Now relate this to the economic positioning of ‘knowledge rich nations’ and explore how they not only crushed their own SME bases, destroyed the middle class but also their expensive business education system only produced armies of resumes promoting job-seekers but not the mighty job-creators. Study why entrepreneurialism is neither academic-born nor academic centric, it is after all most successful legendary founders that created earth shattering organizations were only dropouts.  Now shaking all these ingredients well in the economic test tube wait and let all this ferment to see what really happens.

Now picking up any nation, selecting any region and any high potential vertical market; searching any meaningful economic development agenda and status of special skills required to serve such challenges, paint new challenges. Interconnect the dots on skills, limits on national/global exposure and required expertise on vertical sectors, digitization and global-age market reach. Measuring the time and cost to bring them at par, measuring the opportunity loss over decades for any neglect. Combining all to squeeze out a positive transformative dialogue and assemble all vested parties under one umbrella.

Not to be confused with academic courses on fixing Paper-Mache economies and broken paper work trails, chambers primarily focused on conflict resolutions, compliance regulations, and trade groups on policy matters.  Mobilization of small medium business economy is a tactical battlefield of advancements of an enterprise, as meritocracy is the nightmarish challenges for over 100 plus nations where majority high potential sectors are at standstill on such affairs. Surprisingly, such advancements are mostly not new funding hungry but mobilization starved. Economic leadership teams of today, unless skilled on intertwining super-hyper-digital-platform-economic agendas with local midsize businesses and creating innovative excellence to stand up to global competitiveness becomes only a burden to growth.

The magnifying glass of mind will find the fulcrum: High potential vertical sectors and special regions are primarily wide-open lands full of resources and full of talented peoples; mobilization of such combinations offering extraordinary power play, now catapulted due to technologies. However, to enter such arenas calls for regimented exploring of the limits of digitization, as Digital-Divides are Mental Divides, only deeper understanding and skills on how to boost entrepreneurialism and attract hidden talents of local citizenry will add power. Of course, knowing in advance, what has already failed so many times before will only avoid using a rubber hose as a lever, again.  

The new world economic order: There is no such thing as big and small as it is only strong and weak, there is no such thing as rich and poor it is only smart and stupid. There is no such thing as past and future is only what is in front now and what is there to act but if and or when. How do you translate this in a post pandemic recovery mode? Observe how strong, smart moving now are advancing and leaving weak, stupid dreaming of if and when in the dust behind.

The conclusion: At the risk of never getting a Nobel Prize on Economics, here is this stark claim; any economy not driven solely based on measuring “real value creation” but primarily based on “real value manipulation” is nothing but a public fraud. This mathematically proven, possibly a new Fulcrum to move the world economy, in need of truth

The rest is easy  

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Economy

Evergrande Crisis and the Global Economy

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China’s crackdown on the tech giants was not much of a surprise. Sure, the communist regime allowed the colossus entities like Alibaba Group to innovate and prosper for years. Yet, the government control over the markets was never concealed. In fact, China’s active intervention in the forex market to deliberately devalue Yuan was frequently contested around the world. Ironically, now the world awaits government intervention as a global liquidity crisis seems impending. The Evergrande Group, China’s largest property developer, is on the brink of collapse. Mounding debt, unfinished properties, and subsequent public pressure eventually pushed the group to openly admit its financial turmoil last week. Subsequently, Evergrande’s shares plunged as much as 19% to more than 11-year lows. While many anticipate a thorough financial restructuring in the forthcoming months, the global debt markets face a broader financial contagion – as long as China deliberates on its plan of action.

The financial trouble of the conglomerate became apparent when President Xi Jinping stressed upon controlled corporate debt levels in his ongoing drive to reign China’s corporate behemoths. It is estimated that the Evergrande Group currently owes $305 billion in outstanding debt; payments on its offshore bonds due this week. With new channels of debt ceased throughout the Mainland, repayment seems doubtful despite reassurances from the company officials. The broader cause of worry, however, is the impact of a default; which seems highly likely under current circumstances.

The residential property market and the real estate market control roughly 20% and 30% of China’s nominal GDP respectively. A default could destabilize the already slowing Chinese economy. Yet that’s half the truth. In reality, the failure of a ‘too big to fail’ company could bleed into other sectors as well. And while China could let the company fail to set a precedent, the spillover could devastate the financial stability hard-earned after a strenuous battle against the pandemic. Recent data shows that with the outbreak of the delta variant, the demand pressure in China has significantly cooled down while the energy prices are through the roof. Coupled with the regulatory crackdown rapidly pervading uncertainty, a debt crisis could further push the economy into a recession: a detrimental end to China’s aspirations to attract global investors.

The real question, therefore, is not about China’s willingness to bail out the company. Too much is at stake. The primal question is regarding the modus operandi which could be adopted by China to upend instability.

Naturally, the influence of China’s woes parallels its effect on the global economy. A possible liquidity crisis and the opaque measures of the government combined are already affecting the global markets: particularly the United States. The Dow Jones Industrial Average (DJIA) posted a dismal end to Monday’s trading session: declining by more than 600 points. The 10-year Treasury yields slipped down 6.4 basis points to 1.297% as investors sought safety amid uncertainty. The concern is regarding China’s route to solve the issue and the timeline it would adopt. While the markets across Europe and Asia are optimistic about a partial settlement of debt payments, a take over from state-owned enterprises could further drive uncertainty; majorly regarding the pay schedule of western bondholders amid political hostility.

Economists believe that, while a financial crisis doesn’t seem like a plausible threat, a delayed response or a clumsy reaction could permeate volatility in the capital markets globally. Furthermore, a default or a takeover would almost certainly pull down China’s economy. While the US has already turned stringent over Chinese IPOs recently, a debt default could puncture the economic viability of a wide array of Chinese companies around the world. And thus, while the global banking system is not at an immediate threat of a Lehman catastrophe, Evergrande’s bankruptcy would, nonetheless, erode both the domestic and the global housing market. Moreover, it would further dent Chinese imports (and seriously damage regional exchequers), and would ultimately put a damper on global economic recovery from the pandemic.

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Economy

Economy Contradicts Democracy: Russian Markets Boom Amid Political Sabotage

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The political game plan laid by the Russian premier Vladimir Putin has proven effective for the past two decades. Apart from the systemic opposition, the core critics of the Kremlin are absent from the ballot. And while a competitive pretense is skilfully maintained, frontrunners like Alexei Navalny have either been incarcerated, exiled, or pushed against the metaphorical wall. All in all, United Russia is ahead in the parliamentary polls and almost certain to gain a veto-proof majority in State Duma – the Russian parliament. Surprisingly, however, the Russian economy seems unperturbed by the active political manipulation of the Kremlin. On the contrary, the Russian markets have already established their dominance in the developing world as Putin is all set to hold his reign indefinitely.

The Russian economy is forecasted to grow by 3.9% in 2021. The pandemic seems like a pained tale of history as the markets have strongly rebounded from the slump of 2020. The rising commodity prices – despite worrisome – have edged the productivity of the Russian raw material giants. The gains in ruble have gradually inched higher since January, while the current account surplus has grown by 3.9%. Clearly, the manufacturing mechanism of Moscow has turned more robust. Primarily because the industrial sector has felt little to no jitters of both domestic and international defiance. The aftermath of the arrest of Alexei Navalny wrapped up dramatically while the international community couldn’t muster any resistance beyond a handful of sanctions. The Putin regime managed to harness criticism and allegations while deftly sketching a blueprint to extend its dominance.

The ideal ‘No Uncertainty’ situation has worked wonders for the Russian Bourse and the bond market. The benchmark MOEX index (Moscow Exchange) has rallied by 23% in 2021 – the strongest performance in the emerging markets. Moreover, the fixed income premiums have dropped to record lows; Russian treasury bonds offering the best price-to-earning ratio in the emerging markets. The main reason behind such a bustling market response could be narrowed down to one factor: growing investor confidence.

According to Bloomberg’s data, the Russian Foreign Exchange reserves are at their record high of $621 billion. And while the government bonds’ returns hover at a mere 1.48%, the foreign ownership of treasury bonds has inflated above 20% for the second time this year. The investors are confident that a significant political shuffle is not on cards as Putin maintains a tight hold over Kremlin. Furthermore, investors do not perceive the United States as an active deterrent to Russia – at least in the near term. The notion was further exacerbated when the Biden administration unilaterally dropped sanctions from the Nord Stream 2 pipeline project. And while Europe and the US remain sympathetic with the Kremlin critics, large economies like Germany have clarified their economic position by striking lucrative deals amid political pressure. It is apparent that while Europe is conflicted after Brexit, even the US faces much more pressing issues in the guise of China and Afghanistan. Thus, no active international defiance has all but bolstered the Kremlin in its drive to gain foreign investments.

Another factor at work is the overly hawkish Russian Central Bank (RCB). To tame inflation – currency raging at an annual rate of 6.7% – the RCB hiked its policy rate to 6.75% from the all-time low of 4.25%. The RCB has raised its policy rate by a cumulative 250 basis points in four consecutive hikes since January which has all but attracted the investors to jump on the bandwagon. However, inflation is proving to be sturdy in the face of intermittent rate hikes. And while Russian productivity is enjoying a smooth run, failure of monetary policy tools could just as easily backfire.

While political dissent or international sanctions remain futile, inflation is the prime enemy which could detract the Russian economy. For years Russia has faced a sharp decline in living standards, and despite commendable fiscal management of the Kremlin, such a steep rise in prices is an omen of a financial crisis. Moreover, the unemployment rates have dropped to record low levels. However, the labor shortage is emerging as another facet that could plausibly ignite the wage-price spiral. Further exacerbating the threat of inflation are the $9.6 billion pre-election giveaways orchestrated by President Putin to garner more support for his United Russia party. Such a tremendous demand pressure could presumably neutralize the aggressive tightening of the monetary policy by the RCB. Thus, while President Putin sure is on a definitive path of immortality on the throne of the Kremlin, surging inflation could mark a return of uncertainty, chip away investors’ confidence: eventually putting a brake on the economic streak.

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