Macroscope by Andrew Leung

How China’s digital currency will thwart US dollar trap and help the world

The digital renminbi is a sovereign currency fully backed by the state, does not require a bank account and has full oversight by Chinese banking authoritiesDeveloping countries will embrace the convenience of China’s digital payment systems, which have great poverty-relief potential for the world’s unbanked poor

Andrew Leung

Published: 10:00pm, 28 Dec, 2020Why you can trust SCMP

A woman in Suzhou, China, shows a smartphone app that allows its user to buy things with the digital yuan. This is part of an ongoing trial of the new currency. Photo: Kyodo

The US dollar displaced the British pound as the world’s leading reserve currency at the beginning of the last century. Since the Bretton Woods Agreement in 1944 linked world currencies to the dollar, it has reigned supreme.

As China opened up and became integrated with the world trading and financial systems, it has been caught in a “dollar trap”, having to convert excess national savings into secure, internationally-convertible US treasuries.

Over the years, the US has enjoyed the dollar’s exorbitant privilege of almost unlimited money-printing, or “quantitative easing” in central bank parlance. As former US president Richard Nixon’s Treasury secretary John Connally famously said, “The dollar is our currency, but it’s your problem.”

Arvind Subramanian, senior fellow at the Peterson Institute for International Economics, pointed out in 2011 that the world was living in the shadow of China’s economic dominance. More national currencies were moving in tandem with the renminbi instead of the dollar. Nevertheless, the dollar is being increasingly weaponised to impose economic sanctions on China.

The US dollar has reigned supreme since the Bretton Woods Agreement in 1944 linked world currencies to the dollar. Photo illustration: Reuters

However, owing to America’s dwindling domestic savings and a gaping current account deficit, Stephen Roach has warned that the dollar’s “exorbitant privilege” is about to end.Now China is pursuing a national digital currency. Unlike a speculative cryptocurrency, the digital renminbi is China’s sovereign currency fully backed by the state. It’s a natural development as China has become by far the world leader in digital payment systems.

Driven by latest blockchain technology, China’s digital currency does not require a bank account. This has huge poverty-relief potential for the unbanked poor across the globe.DAILYOpinion NewsletterBy submitting, you consent to receiving marketing emails from SCMP. If you don’t want these, tick hereBy registering, you agree to our T&C and Privacy Policy

As Chinese banking authorities have full control, the digital currency will help combat illicit financial transactions. The financial data will facilitate the formulation and execution of monetary policies.As its transactions are instant and transnational, the digital currency would be attractive for international trade settlements with China, including projects in the digital Silk Road of the Belt and Road Initiative.

The latter faces increasing headwinds from host countries, such as debt unsustainability, ecological neglect, non-transparency and corruption. China’s authorities are learning fast, though. Working more closely with international organisations such as the World Bank and broader stakeholders in host countries and elsewhere, China is making significant headway with belt and road projects.

What is more, the digital currency does not depend on the US-controlled Society for Worldwide Interbank Financial Telecommunication (Swift) banking system. It is thus immune to dollar-based US sanctions.https://open.spotify.com/embed-podcast/episode/7pHWltfGBCSl66mcW7F9VtAccording to a July 2019 McKinsey report, China has become more self-sufficient while the rest of the world, particularly Asia and resource-rich countries across the globe, have grown more dependent on China for parts, components, materials, trade and investment. This supply-chain connectivity is not easy to shift, efforts at decoupling notwithstanding.While the United States and Western allies are not about to warm to China‘s digital currency any time soon, more countries in Asia, Africa and Latin America are likely to embrace the convenience and opportunities of China’s digital payment systems, made even easier and safer by its sovereign digital currency. This trend is likely to accelerate with the commencement of the Regional Comprehensive Economic Partnership, comprising a third of the world’s population and a third of world GDP.

With the Covid-19 pandemic under better control in China compared with other nations, China’s economy is surging ahead, including in exports, investment and domestic consumption. As China’s “Singles’ Day” e-shopping bonanza successes show, digital payments will continue to transform retail sectors in China and worldwide.

Additionally, China’s outbound tourism has occupied the world’s top spot since 2013. The digital sovereign currency is therefore well-timed.

In October, the dollar lost its top position as the world’s most used payment currency, falling behind the euro for the first time since 2013, thanks to the erosion of the dollar’s perceived value, emergence of more attractive euro and renminbi-denominated assets and aversion to US sanctions. With worsening US geopolitics, China is likely to park more of its savings in other assets, including its own bonds and some of the more viable belt and road projects.

Thanks to their vastly different performances during the pandemic, China’s economy is expected to overtake the United States’ five years earlier, by 2028, according to Britain’s Centre for Economics and Business Research.

All these developments will by no means dethrone the dollar all at once. No other sovereign currency, let alone the renminbi, can remotely compare with its global financial width and depth. Even falling by 10 per cent during the past two decades, the dollar still accounts for 62 per cent of global currency reserves.

However, China’s digital sovereign currency is now poised to mitigate the dollar trap, accelerate internationalisation of the renminbi and offer an escape route from dollar-based sanctions.Andrew K.P. Leung is an independent China strategist. andrewkpleung@gmail.com

Andrew Leung has had decades of experience as a senior Hong Kong government official in a variety of fields including finance, industry, social welfare and overseas representation. Since his retirement in 2005, he has built up a reputation as an international and independent China strategist. He features regularly in international TV channels and conferences.

https://37fbc63e42f7601f0ac69e1a9acb463b.safeframe.googlesyndication.com/safeframe/1-0-37/html/container.htmlRead moreChina’s digital yuan no threat to global monetary systems, ex-PBOC chief saysRead moreWhy the Fed may be forced to hit the brakes on US dollar slideRead moreForget decoupling. China’s economy is wedded to globalisationRead moreThree lessons from China’s Singles’ Day for a pandemic-hit retail world

As Dire Straits almost sang, “Money For (Almost) Nothing” but you have to pay fees.

With Central Banks keeping interest rates near or below zero, …

European bank deposit rates are still above zero, although close to zero which harm savers. A negative deposit rate is intended to encourage lenders to do something more useful with their money than park it with the ECB. But European banks are adding fees to already beleaguered savers.

(Bloomberg) In normal times, bankers who oversee assets exceeding $1 trillion wouldn’t be groping for loose change under the sofa.

But in the banking equivalent of hunting for pennies, European financial giants like Banco Santander SA and ING Groep NV are looking to squeeze more revenue from depositors. Wealth For YouHelp us deliver more relevant content for you by telling us about yourself. Answer 3 questions to tailor your experience.

Introducing charges and increasing fees show how a future of sub-zero interest rates is forcing euro-area banks to transfer more costs to clients. While the tactics could backfire by accelerating a shift of depositors into low-cost neobanks, they may help traditional lenders sell more lucrative products.

For a banker, “if you only have a current account with me, I lose money,” said Angel Corcostegui, former Santander CEO and founder of private equity firm Magnum Capital Industrial Partners. “Banks need to be a clearer about the costs that they assume.”

The move toward more fees will most likely have more impact on those who don’t have a steady paycheck or the means to buy financial products, said Patricia Suarez, president of financial consumer watchdog Asufin. “They’re separating more profitable clients from the less profitable ones,” she says.

In Spain, Santander will introduce a monthly charge in the new year of as much as 20 euros on current accounts for customers who don’t meet certain criteria, which include paying in salary and buying at least one other financial product. Banco Bilbao Vizcaya Argentaria SA is starting to charge customers over 29 years old who don’t pay in their salaries and use the account to pay bills. It will also begin charging 2 euros for using cashier services and 0.4% on transfers.

ING, which for many years advertised the appeal of no-fee current accounts in Spain, sent out an email to its customers there telling them it would begin charging 10 euros a month on holdings over 30,000 euros ($37,000) if the customer doesn’t use ING for their salary deposits or receive at least 700 euros a month in income.

A statement from ING cited “the unusual economic moment in which interest rates (which set the price of money) have been going down endlessly.” A Santander statement emphasized that “loyal” customers will avoid new fees.

At the other end of the spectrum, euro-area banks have also imposed new costs. Deutsche Bank AG and Commerzbank AG last year lowered the threshold to 100,000 euros for charging new retail depositors.

While Asian and American banks cans still count on positive rates, Europe’s half-a-decade experiment with negative interest rates has put pressure on lending revenue and burdened banks with billions of euros in penalties for parking cash with the central bank. In Denmark, where benchmark rates have been negative since 2012, most banks now charge clients on deposits exceeding a set amount.

Michael Soffe, a British expat who owns wedding and catering companies in Malaga, Spain, says he’s noticed a steady increase in fees on credit cards, debit cards and transfers. As an owner of a business account at Banco Unicaja SA, he was able to get some of those removed, although the charges he does pay have risen about fourfold in recent years. He’s also noticed a push to sell other products, such as house insurance.

“Bank charges have risen quite substantially,” Soffe said. “And they all want you to have insurance with the banks.”

The increase in fees and charges may represent an opportunity for digital-only banks such as Monzo Bank Ltd., Revolut Ltd. and N26 Bank GmbH, which thanks to lower cost structures may be able to lure new customers with the promise of no charges on services. Starling Bank Ltd., which also recently began lending, could prove an appealing alternative for consumers fleeing charges.

“Whenever there is a negative customer experience in a traditional bank, it opens the door for someone to come along and do it better,” said Joe Fielding, head of banking and payment practice for the Americas at Bain & Co. in New York. “’Better in today’s terms is inevitably digital.”

But with interest rates at record lows, a move to charging for those services makes sense, said Magnum Capital’s Corcostegui.

“What we’re going to see now is an unbundling of costs per service. We’ll move toward a pay-per-use system,” Corcostegui said in an interview. “Having a current account is a service that needs to be paid for, just like when you pay to catch a bus.”

So, European banks are now The Sultans Of Fees?

A German saver getting almost no interest on deposits but having to pay fees.

Dire Straits For European Banks? Banks Paying Near Zero On Deposits, Now Charging Fees

By Wouter van Eijkelenburg of Rabobank

Summary

• We have updated our emerging markets heatmap which provides a comprehensive overview of the relative vulnerability of 18 emerging markets
• Asian countries are in relatively good shape, while Latin American countries are most vulnerable, with Argentina ‘topping’ the ranking
• Emerging markets are recovering at different speeds, ranging from single digit growth (China, Vietnam) to double digit contractions (Chile, the Philippines) in Q3
• Public debt levels are surging in all economies, limiting future fiscal space
• In terms of currencies, Philippine Peso, Hungarian Forint and Chilean Peso are outperforming while the Russian Rouble and Indian Rupee are underperforming relative to their vulnerability
• Going forward we expect EM currencies to be relatively strong on the back of a weak dollar and global economic recovery
• But if downside risks materialize, the local currencies of countries that are vulnerable according to our heatmap will be most heavily impacted

The vulnerability of EMs after rollercoaster 2020

Concluding that 2020 was a turbulent year would be an understatement. In light of all recent developments we have updated our emerging market vulnerability heatmap (Table 1) to provide guidance on a range of economic indicators and present the relative performance of emerging markets in an intuitive manner.

Diverging economic recovery

Amid the reverberations of the global pandemic we observe different speeds of recovery among emerging markets. Countries like China and Vietnam showed positive growth figures while countries like the Philippines and Chile are still showing a double digit contraction y/y. Figure 1 presents the fastest growing economy in Q3 on the left and the slowest on the right. The difference in speed of recovery can be attributed to a number of factors. First and foremost, the level of containment of the virus, which, for example, explains why China is doing well (it has been relatively successful in containing the virus). But other factors also play into these developments. For example, countries like the Philippines and Thailand are very dependent on tourism and are hit hard by closed borders. Other countries like Malaysia and China are exporting medical or electronic equipment and could benefit from a rise in demand for these products rose as a result of the pandemic and lockdowns. On the flipside, this implies that countries suffering from closed borders in recent months can expect to rebound quickly whenever vaccines are widely available and international travel returns to pre-pandemic levels.

Rising debt levels

In order to limit the impact of the pandemic, governments reacted with large stimulus packages. In an earlier publication we elaborated in depth on COVID-19 monetary and fiscal stimulus packages among developed and developing countries. The additional fiscal stimulus has resulted in large increases of public debt. In Figure 2 we see the countries with the largest public debt as a % of GDP, ordered from left to right. Countries that stand out are Argentina, Brazil and India. These countries have increased their public debt as a result of large fiscal deficits in order to finance COVID-19 support packages: Argentina 6% of GDP, Brazil 8.4% of GDP and India 8.5% of GDP. Going forward, limiting large budget deficits helps governments to keep the public debt level sustainable and retain fiscal headroom to stimulate the economy if needed. High debt levels are a constraint to future economic growth. They limit future fiscal spending for a number of reasons: i) A higher share of the government budget needs to be allocated towards debt repayments and cannot be used to stimulate the economy ii) higher debts lead to higher default risks and iii) higher debt levels could increase interest rates on future government bond issuance.

Another important measure is how much of the debt is denominated in a foreign currency. Large shares of foreign-currency denominated debt increase the vulnerability to currency volatility. In Figure 3 we observe that Argentina, Turkey and Indonesia have the largest share of their debt denominated in foreign currency, which makes them the most sensitive to currency movements within their region. This dependence on foreign capital constrains the set of monetary or fiscal mechanisms that can be used to stimulate the economy. For example, cutting central bank interest rates depreciates the local currency, indirectly increasing government debt levels in terms of the local currency. On the other side of the spectrum we see that mainly Asian countries (Thailand, China, South Korea) are in good shape with regard to foreign currency-denominated debt.

Overall rankings

In Table 2 we show the aggregated rankings. The countries shown at the top are the most vulnerable according to our framework while countries at the bottom are least vulnerable. In general, we observe that Asian countries are performing quite well, while countries in Latin America are showing a higher degree of vulnerability. We already showed (Figures 2 & 3) that countries like Argentina, Turkey and Chile are relatively vulnerable with regard to their debt levels. At the same time, the Philippines, Chile, Colombia and Mexico are struggling to rebound from the economic dip caused by the pandemic. Alongside economic performance, institutional quality is another driver.

Zooming in on institutional indicators like political risk we note that Latin American countries are more vulnerable than countries in, for example, Asia (Figure 4). However, these are all relatively low with the highest score being around 3 on a 0-10 scale.

Finally, trade figures provide another important economic indicator. Figure 5 shows which countries have the largest trade surplus left to right and the vulnerability with regard to FX export cover, which indicates how many months of imports can be covered by current foreign reserves. The figures point out that a relatively solid trade position supports to a country’s relatively good position in the overall rankings, especially in the case of Thailand, South Korea and Russia.

Vulnerability heatmap vs. performance of local currencies

In figure 6 we compare the vulnerability rankings to the performance ranking of the local currencies since the start of 2020. Overall, we observe that the vulnerability is a good gauge of the relative performance of the local currencies. There is a decent fit between the vulnerability and depreciation of currencies. Currencies above the 45 degree line are relatively underperforming based on the relative vulnerability ranking, while currencies under the 45 degree line are relatively outperforming their relative vulnerability ranking. Although these indicators provide a comparison based on fundamentals, other very important factors must be considered when evaluating the value of these currencies, for instance current local economic circumstances, global events and global investor sentiment. In this way, the Philippine Peso’s strength can be attributed to the increase in remittances and collapsed imports during the pandemic and recovery from strong typhoons in November. The Rouble’s weakness could be attributed to foreign policy risks and associated risks for investors, constraining them from investing in Rouble-denominated assets.

The year ahead

The vulnerability heatmap provides an intuitive framework to assess the fundamental performance of emerging markets and their relative performance on a range of indicators. But we should not look at these in isolation. Next year the individual performance will be driven by economic recovery, virus containment, political stability, budget prudence and central bank policy as well as global investor sentiment.

In general, emerging market currencies have the opportunity to appreciate on the back of a weak dollar, as a result of ample liquidity provided by the FED and ECB. In turn, this provides governments and central banks of EMs to loosen their policy in order to stimulate their economies. The divergence in monetary and fiscal policies will be one of the main drivers in relative performance of the EM local currencies.

The economic recovery, spurred by the implementation of vaccines is another important factor. EMs will benefit from developed markets opening up, increasing the global demand for products and commodities, which will benefit production countries like China and Malaysia and commodity exporters like Indonesia and Brazil. Likewise, opening borders to tourism will benefit countries like the Philippines and Thailand.

On the flipside, downside risks like new outbreaks or a shift towards risk-averse investor sentiment will have a more severe impact on currencies of countries that are most vulnerable according to our vulnerability heatmap. Countries that are least vulnerable according to the heatmap will be less impacted by negative events and a risk-averse investor environment.

Uday Kotak, Asia’s richest banker and one of India’s premier industry captains, has laid bare the inner workings of the playbook China uses to give effect to its slow but certain capture of the Indian market.

To get an idea of the extent of Chinese industry’s reach, one needs only look at the size of India’s imports from China which currently stands at $60 billion, Kotak said in an interview with ET Now.

China has not only become the world’s factory in the last one decade or two, it has also seized large swathes of many countries’ local markets including India’s, data shows.

During the time China was rising to become a trade powerhouse, could Indian industry have done things differently?

In his exposition, the Kotak Mahindra Bank CMD shed light on how Chinese industry aced the global game while Indian industry was left languishing with the exception of a few sectors.

He brought up pricing to explain this: there is emerging a clear possibility that manipulative pricing by Chinese players may have long loaded the dice against Indian factories.

According to Kotak, if this actually was the case, it would then be grossly unfair to blame Indian businesses for failing to stand up to Chinese competition adequately, because they simply were not left with the wherewithal.

In the interview, Kotak further decoded the raw deal domestic businesses got from China: in sector after sector, segment after segment, China was able to dramatically under-price its goods, with the result that many Indian manufacturers went out of business.

And once Chinese suppliers captured the market this way, many of them could raise prices at will because there was no strong local competitor left.

Manipulative pricing is exactly the reason behind the raging US-China trade war, and India must put a premium on getting stronger so that such unfair competition could be kept at bay, Kotak cautioned.

Focus on execution is the the most critical need of the hour for India, and the government must focus on getting its policies right and making sure that they showed results on the ground, he added.

Execution is going to have major implications for Modi’s pet Atmanirbharta push too, Kotak insisted. India will need two Es to make itself truly self-reliant, exports being the other E apart from execution, he said.

How to grow net exports and how to cut down the time for policy execution — these two questions are going to decide the success or failure of India’s self-reliance mission, he added.

India must do whatever it takes to strengthen its exports because that is the true proof of a country’s ability to be competitive, and the government must send out a consisent message that it is willing to walk the talk on this, Kotak offered, along with the reminder that delay in payments or incentive by the government could hinder the export push seriously.

Kotak thinks that this government is largely on the right track so far, given Modi’s focus on infrastructure and the integrated — as opposed to bits and pieces — approach that he opted for. He reckons that with Rs 110 lakh crore to be spent in the next few years, there will be major job creation and demand stimulus.

Kotak points out two things that Modi government must tackle urgently — a) lockdown-related uncertainties have to end, and states must not leave a growth turnaround solely to the Centre; and b) India may not have enough supply, which will cause major problems with the eventual return of demand, much of which (70-80%) is already back.

“I genuinely believe we are no longer moving to a new normal, we are moving to a world in finance, technology and business to a never normal world,” he said

Link – https://economictimes.indiatimes.com/news/economy/foreign-trade/uday-kotak-deconstructs-the-story-behind-chinas-slow-systematic-capture-of-indias-markets/articleshow/77587935.cms?from=mdr

Bu Simon Black via sovereign Man

In deference to the 20^th century Danish Proverb– “predictions are hard, especially about the future”– I do think it’s possible to look at major trends to at least have a sense of direction.

So if you want to understand where things are going, just take a look at everyone’s priorities.

Most governments’ Covid reponses are an obvious example.

The economic destruction they’ve created is staggering. Tens of millions of people unemployed, countless businesses gone bust, trillions of dollars of wealth wiped out.

In the first wave back in March, they shut down the economy to protect us from the virus. Then they opened up again… but– shocker– the virus was still there.

What a surprise! Shutting down the economy did not eradicate a virus.

So what did a lot of these people do when the second wave hit? They started shutting down the economy again.

It didn’t work the first time, so let’s keep trying the same approach and expect a different result. It’s genius!

This is clearly economically destructive. But again, economic prosperity is no longer the priority. All that matters is force-feeding people a false sense of safety.

Governor Andrew Cuomo of New York probably captured this mentality the best when he said back in May,

“We don’t want to lose any lives [to reopen the economy]. We’ll figure out the dollars, and we’ll figure out the economic impact, but we’ll protect people in the meantime, and we’ll protect their health.”

This is total BS. The sad reality is that lives are lost all the time in the normal course of economic activity.

In New York City, two workers died during the construction of Freedom Tower. Plus there were dozens of life-altering injuries, like spinal fractures and paralysis.

The government knew the tower’s construction would likely cost human lives. But they approved the construction permit regardless, because they knew the benefit would outweigh the human cost.

Similarly, over 100 people died constructing the Hoover Dam in the early 1930s. The government knew that people would die. But the benefit outweighed the cost.

Today there can be no discussion of cost or benefit. There is one priority, and it’s no longer economic prosperity.

But the shift in priorities doesn’t stop there.

Basic fiscal responsibility is no longer a priority– and it hasn’t been for a long time.

Most western governments were racking up enormous debts even before Covid started.

In the US, even during the economic boom of 2015-2018, the federal government added at least $1 trillion to the debt each year.

Now the debt growth is completely insane: the US Treasury Department expects to add $5-$6 trillion to the debt this calendar year.

(That’s more than the entire national debt as recently as 2001!)

And not to be outdone, the Federal Reserve has conjured trillions of dollars out of thin air since the start of Covid and slashed interest rates, once again, to zero.

Plus, there’s a good possibility they’ll make interest rates negative. Just imagine how much prosperity you’ll achieve once you have to start paying your bank just to save money.

Of course, all of these tactics– printing money, going deeper into debt, negative interest rates, paying people $600/week to stay home and NOT work– are destructive to economic prosperity.

Then we have the rise of the Bolsheviks… a growing chorus of politicians (and voters) who despise capitalism.

Like Seattle city councilwoman Kshama Sawant, who claimed she wants to overthrow “the racist, sexist, violent, utterly bankrupt system of capitalism” and replace it with “a socialist world.”

A few years ago this was a fringe view. Now it’s mainstream fever.

They want to get rid of capitalism– the system that created the most prosperous nation in the history of the world– and replace it with the same economic model as Cuba and the Soviet Union.

And Joe Biden, of course, unveiled his economic plan last month, built around ending “the era of shareholder capitalism.”

He wants the government (and Twitter mob) to set the priorities and stakeholders in your business, rather than the market.

This, again, is an obvious reflection of priorities. And economic prosperity is clearly not on the list.

Economic prosperity also takes a backseat to social justice.

Yes, most reasonable people probably agree that the mistreatment of minority groups should change. But that’s not an excuse to go on a violent rampage.

Yet whenever angry mobs take to the streets and destroy private property, the media elite and their political allies justify criminality as necessary to end systemic racism.

Meanwhile, universities have turned into hotbeds of progressive radicalism to perpetuate white fragility and the evils of capitalism.

Corporate America has also caved. You can’t even sell beans anymore without things turning political.

Countless people who are talented, productive, and made valuable contributions to their companies have been fired because they used the wrong words or expressed some intellectual dissent from the Twitter mob.

Firing a rock-star employee because of his/her personal (and non-controversial) views would ordinarily be considered completely stupid. But now it’s the norm… because economic prosperity is no longer the priority.

This trend is obvious: several powerful movements have gripped the world… and most of them are economically destructive.

So it’s not terribly difficult to see where things are headed.

The decision to increase infrastructure spending comes at a time when the Indian economy is forecast to contract by more than 5 per cent in 2020-21.

Remya Nair and Moushumi Das Gupta 23 July, 2020 8:24 pm IST

ext Size: A- A+

New Delhi: The government is set to push spending by infrastructure ministries this year as it looks to revive economic growth and boost job creation.

The finance ministry has reached out to major infrastructure ministries like railways and roads and highways, asking them to step up spending to meet budgeted expenditures, two government officials confirmed.

The Covid-19 pandemic and the subsequent increase in expenditures and contraction in tax revenues forced the finance ministry to place expenditure curbs on many government departments. Ministries like health and family welfare, rural development, textiles and food and consumer affairs were some of the exceptions — they were allowed to spend freely as required. But infrastructure ministries like railways, housing and road transport and highways were allowed to spend only up to 40 per cent of the full year budgeted amounts in the first half of the fiscal.

However, with the pandemic, and the consequent lockdown and disruption in economic activity, leading to a sharp growth contraction in the first quarter of 2020-21, the government is keen to revive spending by infrastructure ministries.

Economists expect the Indian economy to contract between 5-12 per cent in 2020-21, but rebound in 2021-22.

---

Govt can borrow some more

Speaking at a FICCI event Thursday, Department of Economic Affairs Secretary Tarun Bajaj said the government could borrow “a little more” if needed to fund infrastructure spending.

My view

The multiplier impact of infrastructure spending is huge. S& P global writes  “We believe, for India, investments in infrastructure equal to 1% of GDP will result in GDP growth of at least 2% as infrastructure has a “multiplier effect” on economic growth across sectors.”