Dr. Susmit Kumar, Ph.D.

In my last week paper Coronavirus - India’s $40 Billion Spending vs Trillions by China, Germany, Japan and US - Part I, I explained why India is able to come up with only up to $40 - $60 billion stimulus as compared to several trillions by four economic superpowers, namely the US, Japan, China and Germany to mitigate the effects of Coronavirus on their economies. Recently, Dr Abhijit Banerjee, the Indian-born Nobel prize winner on economy, asked the Modi government for stimulus to the level of the US stimulus (India should put in large enough stimulus package to revive demand: Abhijit Banerjee, Economics Times, May 6, 2020). It is worth noting that Indian stimulus is about only 1% of its GDP whereas right now the US stimulus is 10% of its GDP, and also US can spend as much as it wants as discussed in my above paper without thinking about any repercussion on its currency and also on its economy. To overcome the devastating effects of 2008 Great Recession which caused massive NPAs resulting in insolvency of large banks like Citibank, the US Federal Reserve had to provide $29 trillion (twice of then US GDP) to large banks, to save the US economy from the collapse ($29,000,000,000,000: A Detailed Look at the Fed’s Bailout by Funding Facility and Recipient, Working Paper No. 698, James Andrew Felkerson, University of Missouri–Kansas City, December 2011).

On the other hand, if India spends too much on stimulus, its currency will collapse, and in just few years it will have to print new currency after trimming 3 or 4 zeros, which Iran is doing right now due to hyperinflation (Iran's currency is set to get a new name — and lose four zeros, CBSNews, May 4, 2020). It is worth noting that after two stimulus packages during the 1930s Great Depression, the FDR administration in US did not want to go for further stimulus as it was afraid of becoming Weimar Republic which is synonymous with hyperinflation. It was only the massive spending in arms and armaments during World War II (WWII) which brought the US out of the 1930s Great Depression otherwise till then the US had double-digit unemployment rate. It is worth noting that during the WWII and thereafter, the US did not have had any fear of having to face external economic forces, i.e. trade imbalances (it has trade surplus year after year till 1971 when it delinked the value of the US dollar from the gold price).

Except the US, the three other aforementioned economic superpowers have had trade surpluses for more than the last three decades whereas India never had. The US economic superpower is based on its (please read my paper by clicking on the weblink) “Dollar Ponzi Scheme”. In any global economic forum, only these four countries have a say and none else, not even UK and France because UK and France are no longer economic superpower. It is worth noting that both UK and France have trade deficits year after year. During the 2008 crisis, the UK was included in PIIGGS (Portugal, Italy, Ireland, Greece, Great Britain (UK) and Spain) countries (PIIGGS, wiki)

From early 2016 to 2018, I wrote several articles on Indian, US and Global Economy. I proved to the Modi administration that in the past, all the countries, which included the Soviet Union also (Communism Collapsed Due to Collapse in Oil Price in Late 1980’s and German Banks – Not Due to Reagan), collapsed as they did not have had enough hard currency, i.e. US dollar. Hence before even dreaming about becoming an (economic) superpower, India has to generate trade surplus for at least 10 to 15 years to accumulate $1.5 trillion to $2 trillion FOREX.

 

Here are some of the papers

 

India Needs to Treat Its Foreign Trade Same as Defense Sector, Part-1 (May 2016)

 

India Needs to Treat Its Foreign Trade Same as Defense Sector, Part-2 (May 2016)

 

My papers on economy also led to the Indian administration to be mukt (free) of the US-based Indian-origin economist. My paper Niti Aayog: Why does it need new direction and a new leadership? (published on May 20, 2017) led to the resignation of Niti Aayog Vice-Chairman Dr Arvind Panagariya.

 

Please see the tables at the bottom of my this paper “Think Twice Before Accepting Any Statement of a US Economist/MBA” (May 8, 2017) where I compared the budget and trade deficits of (PIIGS) Portugal, Italy, Ireland, Greece, and Spain countries which suffered during the 2008-9 Euro Crisis and other Euro-Nations which did not suffer. These tables clearly show that the PIIGS countries had trade deficits in the last 10+ years whereas others did not although all the countries, including PIIGS countries had similar budget deficits. On March 1, 2018, when I gave a talk on my 2018 book on Indian economy at Vivekananda International Foundation, New Delhi, Dr Arvind Gupta, its Director, introduced me by saying that sometimes an outsider could analyze data better than experts in the field. [It is worth noting that I have a PhD in Engineering from The Pennsylvania State University, US and I work in the Information Technology area in the US. I have done extensive work in several fields, not only in economics, like say scientific research, international affairs, history, political science and science and spirituality also.]

 

By providing massive amount of data, I proved that the Modi administration needed to work towards achieving the trade surplus/balance at the earliest on the war footing. I also gave the example of how the US was able to come up with the atom bomb under the Manhattan Project to win World War II and then within eight years in 1969 (when in 1961, the then US President Kennedy pledged to send an American to the Moon and bring back him safe), the US was able to do so after the USSR was able to defeat the US in space race by sending its Satellite Sputnik in 1957 and then its cosmonaut Yuri Gagarin to space in 1961 (please read my papers: India, China and Growth Rate, April 16, 2017; China’s OBOR and Niti Aayog, May 15, 2017; India's Niti Aayog's New Electric Vehicle Policy – Implementation of Dr Susmit Kumar's April 2017 Recommendation, June 29, 2019).

 

After the ravaging of economy by the Corona virus, Prime Minister Modi said, “It has taught us that we have to be self-reliant and self-sufficient. It has taught us that we should not look for solutions outside the country. This is the biggest lesson we have learnt” (Self-reliance India’s biggest lesson from Covid, says PM, Hindustan Times, April 25, 2020).

 

In my 2018 book on Indian economy, I gave importance to the same self-sufficiency and self-reliance for India. Here are 2 pages from the Conclusion Chapter of my 2018 book “India is a Country, not a Company - How Anglo-US 'Imported' Economists Misled and Mismanaged the Indian Economy”, Susmit Kumar, Munshiram Manoharlal Publishers Pvt. Ltd., New Delhi