Sree Iyer: Hello and welcome to PGurus channel, I am your host Sree Iyer. Today is the 22nd of December episode number 58 of daily Global inside with Sri and Sree and I would like to welcome our guest SridharJi Chityalaji. SridharJi, namaskar and welcome to PGurus channel.
Sridhar Chityala: Namaskar and good morning to everybody
Sree Iyer: Sir, we have a lot of things to discuss today, first off, let us take a look at the details of the stimulus deal that was passed by the US Congress and Senate yesterday and a few salient points, perhaps you can touch upon and I have a few specific questions on why the stimulus deal which is meant for the US is being used to fling money around to many countries around the world. Sir, take it away, please.
Sridhar Chityala: Great. Thank you so much I think the much-awaited deal, which is the 900 billion dollars deal is now done. The 900 billion dollars deal came with another 1.4 trillion dollars to effectively fund the government till September 30th. Nancy Pelosi has gone on to say that they would be another stimulus coming in, when Mr Biden, who is currently the President-elect comes into the office. The two principal objections that were raised which caused the delay of the budget namely the business insurance protection and the second, which is funding some of the local governments and administration. There seems to have been a compromise which begs the question why was this all delayed? Because if they were the two holding points, there is no fundamental change to what we have outlined in the earlier programs namely the 300 million dollars PPE for the small business then 600 dollars allowance, which Steve Mnuchin said will hit people’s accounts early next week in time. And then it also includes the 300 dollars per all dependents, including people who are in college and so on. It also includes the unemployment insurance extension the $300 that makes up another 200 to 283 million dollars. Then, there is a combination of little things which is directly related to the US, one is covid 10 billion or 14 billion dollars for covid testing. Then, you have close to 85 billion dollars for various programs to support hospitals and front-end healthcare workers and so on.
There are also 15 billion dollars for the airline, plus there are programs to support schools as kids come back and new rules come into effect as a result of the covid. So, this is the broad architecture which is consistent with what they have been debating. The 1.4 trillion perhaps is to make sure that there are enough time windows to fund the government given that the transition has not occurred. The elections are being contested in, you know, nothing will happen until January 20th, etc. etc. So, I think there is still room for discussion, so, they seem to have worked that out, which is the business, as usual, core governmental programs to run the administration. What’s also relevant is there did not discuss these 439 billion dollars Fed rollout, which got sent back to the treasury because they’re not going to be sent before December 31st. Overall, I would say rather than a lose-lose, it’s a win-win, some money is kind of getting in but, there are many questions to be answered. Whether Mr Biden takes over and Janet Yellen comes in, as is the current direction or whether Mr Trump, you know, reverses the current trend, there’s much to be kind of discussed. The fact that the market is lukewarm in terms of responses is a reflection that of the two things, one is the primary issue is this new covid variant that has come from the UK, but more importantly, how that is going to be responded and whether the stimulus is adequate. They keep referring to two categories of people, the 9 million people who are now below the poverty line, how they’re going to be addressed. The second one that is likely to be these 12 million illegal people now as you know, the Supreme Court has exceeded and passed that they will not form part of the Census because that was the contention between the two sides. So, I’ve given you a map of what the outlay is. It is still being digested. It is a pipe 5580-page document which people have to absorb in six hours to pass this budget.
Sree Iyer: Some of the things that stand out for me, sir, are 700 hundred million dollars to Sudan, whether it is an aid or loan, I don’t know. Another,15 million dollars to Pakistan for democracy and a further 10 million dollars to Pakistan for gender programs. And there’s also a vague statement such as $600 for some Americans, who are these some Americans. What blows my mind is the stimulus is supposed to be for American citizens and why is the government then splaying money around to Sudan and to Pakistan after all this is taxpayer money. We have to pay it sometime down the future and what exactly is the government thinking this pork spending where you keep on attaching some vested interest requests into a bigger bill, this is got to stop anyway, this is just my rant, sir.
Let’s move on to what is happening with covid and then we’ll go to global topics – politics after that. So, on covid one point, it’s called what B117 now, the new strain that is around in the United Kingdom. There are some reports in media that it originated from Sydney, Australia, I don’t know how true they are. I have no idea whether it is a verifiable or not. But, clearly, this seems to have shown up its face in many places. What are your thoughts, sir?
Sridhar Chityala: Well, I think it’s quite intriguing that it originated from Sydney in Australia, all kinds of rumours that fly around and people make comments and statements, I don’t want to comment not knowing the facts and not being established. The fact is that this variant was discovered. The fact is that it rapidly expands. It seems to be different from the current kind of strains of the virus. So, immediately it was communicated over the weekend by Prime Minister Boris Johnson. So, most of the countries have reacted and responded to that. The medical community have reacted and responded as well which is to state that the current vaccine programs based on what they have seen as an initial, remember that we are only on Tuesday and this was discovered over the weekend. They feel it is quite adequate to deal with the program. But, certainly, it is causing a tremendous concern amongst the minds of everyone because of the rapidity of the rate of contraction or the rate of absorption of this virus and the spreading of the disease.
Sree Iyer: Sir, one important addition to what you just said, I have learned from reliable sources in England that Boris Johnson will not be going for the Republic Day Parade function in India on January 26th, that is as of today as things stand today, it could change but, this is what I have reliably learned. I just wanted to share that thought. The other thing that I wanted to ask you, sir, looks like the B117 also has surfaced in other countries. It is not just the United Kingdom, isn’t it?
Sridhar Chityala: Well, I think Asia seems to be now engulfed in this way. We have been covering this topic, by way of daily updates. Almost every country Japan, Korea, Vietnam, Thailand, Myanmar, Malaysia, Singapore, Indonesia. Almost every country is now reporting Hong Kong has reported, a new Province adjacent to Wuhan, I think you know in China is reporting cases. I think it’s three provinces or three states have been encircled and kind of lockdown because of the rising corona the covid cases even in China. The details have been sketchy, but, in Asia, people are reporting that there is there seems to be new cases that are emerging in China as well. Okay. So, whether in the case of Japan many countries have now put a ban around travel bans around to the UK in and out. In fact, Japan has even put a Transit ban, that is those who have spent six hours in UK airports, they need to come and go through the kind of the testing process but, they could be, in a much more significant kind of quarantine. As a result, most of these countries including India as put travel ban in and out till December 31st, the only two countries which have made an exception to this rule are the United States and Australia have not placed any ban. They say that quarantine procedures can take care of. So, in terms of specific question whether these same traces have been observed. The answer is yes, in Asia as well, there is also I think either in Vietnam or Thailand they have observed a specific case, they’re tracing the origin to some wet Market, which is the new strain of the virus which they picked up in that respective country.
So, I think again, we are in a grouping in the dark in terms of the cause and the trigger but, based on all the anecdotal evidence, it seems to point out that the cause is not known but it is a new stain and it is growing at a much more rapid rate relative to the rest. Then, when you look at the stats around the world, either the stats are fudged or the stats are delayed. I spent an hour with one of the leading doctors in the US of a major hospital here and you know, what they’re saying is that the data is still a little bit sketchy and second, it seems to be like a moving target. So, they are not able to get their hands around, what is the kind of specific stains? And what is the molecular structure of this specific virus? What is kind of triggering this explosive implosion? So there’s still, a lot of discovering process that needs to evolve but they are applying this vaccine principles based on what they have seen in the data ranges from 40,000 to 45,000 to 60,000 initial tests that they’ve conducted using the vaccines. So I think there’s a lot more to be done. We expect I think 1st quarter, 2nd quarter to be turbulent as we evolve, what does it say that there is not the third category that pops up in January after Christmas, we don’t know.
Sree Iyer: Yes indeed. There are lots of unknowns and let’s take a look at the global news now. An interesting development, not too long ago Pakistanis, even the lawmakers were demanding action especially against French president for his moves on trying to tighten some of the laws around what was happening in and around France and then today according to social media and these have been retweeted by some reliable sources. So I’m going to read out what I have read that ‘the French have a deal. France and Pakistan have signed The First Agreement as part of the debt service suspension initiative taken by the G20 creditor countries and Paris Club. Because of this about $1.8 billion debt to Pakistan has been rescheduled. You may remember that the EU has done several such things with Greece, with Italy, with Spain. So this is not something new when the country cannot afford to pay when they are not even able to make their interest payment and leave alone principle, the Creditor doesn’t have much of a choice in terms of what they can and what they cannot demand after all you can’t go and occupy the land for non-payment of Loans. That is still not been figured out in the clauses, I guess. Sridharji, what are your thoughts on this?
Sridharji Chityala: Well, I think you have in many ways responded to the question. It’s a broad restructuring of the debt program that the G20 has to do with the countries. This has been in discussion almost for close to, it started with about 700 million now, it has probably enveloped itself into your 1.2 billion programs. I’m sure that few countries in G20 raised the issue which is to say if you want to be transparent and pulls up a nation then it’s important that the programs are viewed as consistent across all the nations. By the way, both Vietnam and Indonesia have been also raising questions to G20 to look at the lending programs for the second and third-tier economies to be much more palatable, so that the recovery from these countries can be faster post covid situation. So I would look at this restructuring of the deal with Pakistan, the $1.2 billion or $1.4 billion as you say, by the way as another kind of a program that is done adjacent to the other programs.
Sree Iyer: Thank you, sir. And looks like China’s spat with Australia is beginning to pinch them more. Now, there is news of power cuts being imposed across various Chinese cities because they are running low on coal imports, which they used to do always from Australia. Where do you see this thing going? Is China trying to line up some other vendor after all China has problems in terms of food production? They don’t have any cows. They don’t have many animals in fact, so that’s another challenge. Now, you’re talking about basic problems like power not being made available 24/7. Where do you think China is headed, sir? These are not something new. We don’t know if 117 also is afflicting China. What are your thoughts, sir?
Sridhar Chityala: Well, I think my response to your question would be, China has an enormous amount of muscle power, has an enormous amount of power to impose its will on the people. What China is saying that it will not yield to Australian demands of apology with regard to the soldiers, it will not yield to some other measures that Scott Morrison has put in place in response to Chinese agenda within Australia including defence. So, that is one of the reasons why China is saying, ‘what am I going to do?’ Australia is a mining economy. Australia is reliant on its coal, iron ore as well as it’s rich in Uranium deposits. Besides energy, it’s also an oil exporter. So these are the big energy and mining which powers Australian exports and economy. So what China is doing which is typically the way, ‘you are a small economy. I have the capacity. I’m going to hurt you, which is to say I can withstand the pain and my people will put up with it if you don’t throw the light. So the question is who is going to blink? Is China going to blink or Australia is going to blink? Or some heavy concessions are going to be demanded? This is where Australia for the first time has been looking outside China and their deals with India, their deals with Japan, and also their deals with ASEAN and they may also do some more stuff with Indonesia and to see how they can soften the cushion without yielding to this significant imposition that is being made by the Chinese.
Sree Iyer: So interesting times again as to how this is also going to play out, but we have not heard about B117 instances from China yet, have we?
Sridhar Chityala: No, we have not, we have not. By the way, I just stand corrected. I think it’s more than 12 to 14 provinces which are affected by the virus rather than three that I mentioned. So 3 is old, it now seems to have spread, that’s the breaking news. So we’ll never get will never get any transparent information from China. It will only trickle, for example, covid itself. Now you get to know that WHO knew, the world knew, everybody knew, but everybody didn’t know either.
Sree Iyer: So, as a long-term replacement for coal, where do you see the alternatives? What do you think should be the alternatives? I mean there is always, what will be the alternatives, that could be more coal. But what do you think should be the alternatives? I think India is demonstrating can already which is namely that, nuclear energy is one factor that people looked at, now we’re all moving to this what you call alternate sources of energy or, green energy, which is your solar and your wind, as well as a lot of other fuels, seems to be the way it is going. India has demonstrated, it is one of the largest producers of solar, Australia has enormous, it’s a huge desert and it has enormous types of capabilities. But of course, it is driven by distances and space and so on and so forth, but Australia will go down that specific, but Australia doesn’t need, I mean, it’s energy sufficient in many ways. The problem that Australia faces specifically if you ask the question is around capital because you require a huge amount of capital to continue to drive the program and you need to have a huge consumer base, which Australia doesn’t have. So capital and consumer base may drive it to look, continue to look at the traditional, which is traditional forms of energy. So the way I see is that India has demonstrated, I am told I don’t know the unit price, but they have again further dip the unit price which used to be $10 – $11, which is come to $7 per unit, now it’s almost less than $2 per unit of the energy produced from the alternate sources.
One of the largest solar plants is also in the United States. If you take Europe, Europe is very big in wind energy. They have huge wind energy farms in Scandinavia as well as in some of the German as well as Holland. So I think that the world will move towards, they are less reliant on coal, more on hydro and alternate fuels.
Sree Iyer: Thank you, sir. With that our program comes to an end. If there’s anything you would like to add sir because I think we are at the end of our program today.
Sridhar Chityala: No, I think the only observation that I would make to your earlier point is that the Sudan deal which, all these that is why it is, it’s clearing the swamp is what President Trump has said, Sudan if you remember, did a deal with Israel, the peace deal was done. So there must be some amount of aid, so they quit proco, Democrats have a soft corner for Pakistan. And yes, there’s a large representation of their membership within the party, so these things go as a barter system, whether you actually take a stimulus and allocate the capital is a very very contentious issue and the fact that both the sides have agreed makes it even more alarming.
Sree Iyer: Well, the last word has not been said about this and I expect people writing to their congressmen and Senators if they don’t they ought to because these are some of the things that are pressing needs when the average American is going penniless and foodless and they’re being constrained to stay in their homes. And now you are trying to spread this largesse around the world, for God’s sake if you want to do it, do it under a separate bill. So this pork attachment is something that I am vehemently opposed to but that’s just me. Thank you very much Sridharji and we’ll be back tomorrow same time, same spots. Namaskar.
Sridhar Chityala: Thank you and Namaskar ji.