ICCC Weekly Newsletter
17 April 2021
Federal Budget & Modern Monetary Theory
The first Liberal Government Budget in two years will be presented next week will deliver on its promise to spend big amid a fast-rising third wave of COVID-19 infections and ahead of an election expected in coming months. Finance Minister Chrystia Freeland has pledged to do “whatever it takes” to support Canadians, and in November promised up to C$100 billion in stimulus over three years to “jump-start” an economic recovery in what is likely to be a crucial year for her party.
It may be pertinent to understand the Modern Monetary Theory (MMT) in the context of what to many may seem like reckless public spending. The MMT is a fresh and important idea to have emerged in economics in decades. For its proponents, it delivers a radically different, bold, new understanding for how to build a just and prosperous society. The theory radically alters our understanding of how to optimally tackle crucial issues ranging from poverty and inequality to creating jobs, expanding health care coverage, climate change, and building resilient infrastructure.
Stephanie Kelton’s Modern Monetary Theory and the Birth of People’s Economy (2020) is a lucid and compelling exploration of the new theory. She says that any big-ticket public spending runs into resistance based on long-prevailing economic dogmas such as:
- Finding the financial resources to pay for the public need
- The federal government should budget like a household
- Deficits harm the next generation
- Deficits crowd out private investment
- Deficits undermine long-term growth
- Entitlements propel an economy toward a grave fiscal crisis
And contends that these notions are nothing more than that – dogmas that have lost their relevance and need to be set aside as governments globally embark upon implementing bold new initiatives such as a universal basic income. The onset of the pandemic and the necessity felt globally to help populations through vastly enhanced government spending compelled governments across the world to enhance public spending.
The new theory argues that so long as a government's debt is denominated in its own currency, there is no upper limit on the state’s monetary borrowing. Public debt is not of a major consequence; the central bank can print more money to avoid default. Moreover, the additional printing of currency doesn’t necessarily have inflationary consequences. MMT proponents encourage economists to overcome the fear of debt and for policymakers to unleash the full power of unlimited, risk-free government spending.
Read more:
US Treasury Secretary Janet Yellen calls for global minimum tax levy on corporations: (link)
MMT the key to unlocking Canada’s economic future (link)
MMT is not the future, it’s already here (link)
Post Pandemic Social Security Agenda (link)
The weakness of MMT (link)
A Serious Flaw in MMT - Farah Omran & Mark Zelmer (link)
President’s Views
Vijay Thomas
Here in Canada as the cold days of winter turn to spring and new green shoots begin to sprout all around, we have a lot happening and a lot in the works at the ICCC. The weekly Thursday Talks and Leaders Talks webinar series have been very well received and we had the good fortune of having some powerful Canadian leaders participate recently.
The Leaders Talks with Premier Scott Moe of Saskatchewan and High Commissioner Ajay Bisaria on Indian Farm reforms was a topic of great interest to Indo Canadians. The ICCC in a non-partisan manner was successful in having a discussion and earned praise from people on both sides of the issue.
I have also participated as a speaker in multiple events in the recent past especially around trade and technology and startups namely:
1) Spoke at IndiaSoft on opportunities for Indian technology companies and startups in Canada. https://www.indiasoft.org/program-schedule/
2) Spoke at Canada India Business Council (C-IBC) Tech Showcase -Opportunities in the bi-national corridor event along side Invest India https://www.canada-indiabusiness.com/tech-showcase-opportunity-in-the-bi-national-corridor
3) Spoke and participated as a panelist on an Ontario Ministry of Economic Development, Job Creation and Trade on how Ontario companies should look at the Indian market and strategies to be successful. I had the privilege and the honour of being on a panel and spoke of how we launched Tangentia India in the Indian marketplace and we heard from other SME Ontario companies that sell in the Indian market and have been successful doing it. https://www.ontario.ca/tradecalendar/ict-panel-india-ontario-perspectives
4) Will be speaking to a Nasscom Delegation alongside Minister Vic Fedelli attending the Collision conference early next week and let them know that Ontario is open for business.
As you can see, there is a lot happening in the India Canada corridor with regards to trade and investments. We at the ICCC will do our bit to amplify the messaging that the India-Canada corridor is open for business and tremendous opportunities on both sides with Connext 2021 https://www.iccconline.org/CONNEXT2021
Looking forward to all our members and ecosystem partners and sponsors to participate in CONNEXT 2021 and lets do our bit to make a vibrant India-Canada bilateral trade and investment relationship.
CONNEXT 2021
ICCC's Virtual Trade Mission to India
11 June 2021 to 25 June 2021
Indo Canada Chamber of Commerce is organizing the first ever 10 Days/10 States virtual trade mission from Canada to India.
The Mission is supported by Indian High Commission, the Consul General of India in Toronto, the Canadian Federal Government and other Provincial and City Governments.
The Mission will focus on KEY major sectors/industries that show maximum potential for growth for bilateral trade relations.
The Mission is a great opportunity to leverage the business opportunities in a post pandemic world and contribute to increasing trade and investments between Canada and India.
10 States
Key Sectors
Delegate Benefits
Sponsor Benefits
Click here for details: CONNEXT 2021
Click here to register: Delegate Registration
Technology Partner
Marketing & Branding Partner
Insight
India wants more mines
By Aditya Rebbapragada
India took steps in late March to encourage more private investment in mines.
A new "Mines and Minerals (Development and Regulation) Amendment Act, 2021" took effect March 28 that amends the existing regulatory framework for mining in India to make the sector more attractive to investors.
Mining in India currently contributes only about 2.2% to 2.5% of the national gross domestic product. The country imports natural resources such as coal and gold in large quantities, although assessments by the Geological Survey of India indicate substantial domestic reserves are untapped.
Mining law reform in India is a critical component of the Modi government's target of making India a US$5 trillion economy by the 2024-25 budget year.
Read more: India's Mining Reforms (link)
Aditya is Counsel at Norton Rose Fulbright, Singapore
Upcoming Programs & Events
ICCC Thursday Talks Webinar Series
Canada's Federal Budget:
High on expectations, but will it deliver?
Register now: Zoom or Facebook
Past Programs and Events
Indian Agriculture Reforms -
A Canadian Perspective
On 15 April 2021, as part of its continuing Knowledge on the Go Webinar Series, the ICCC organized a panel discussion on the hot-wire topic of Indian Agriculture Reforms with Hon. Scott Moe, Premier of Saskatchewan and His Excellency Ajay Bisaria, High Commissioner of India to Canada to provide a Canadian perspective to the reforms.
The session gave an opportunity have a fact-based debate to discuss the economic benefits that would potentially be derived by India, based on returns that came to Saskatchewan farmers after similar reforms a decade ago.
Read the summary of the discussion here: Agriculture Reforms
Watch the recording of the Webinar: Agriculture Reforms
In the News
Canada - Ontario
Ontario's New Red Tape and Burden Reduction Measures
The pandemic has reinforced the need for government to modernize regulations and reduce regulatory roadblocks. This package will benefit individuals, families and businesses by introducing measures that will create the conditions for investment and prosperity over the long term.
Vic Fedeli, Minister of Economic Development, Job Creation and Trade.
The Ontario government is proposing new red tape and burden reduction measures intended to minimize existing barriers on businesses and support a long-term recovery plan. Prabmeet Sarkaria, Associate Minister of Small Business and Red Tape Reduction, announced on 15 April Ontario’s Spring Red Tape Reduction Package and introduced the Supporting Recovery and Competitiveness Act.
The proposed legislative changes in the act, along with other measures in the package, include:
- Helping consumers save money on electricity by making it easier for them to track their energy usage
- Helping to ensure Ontario remains a global leader in the connected and automated vehicle industry by supporting innovative pilot programs - like consulting on adding new vehicle types such as automated farm vehicles, and removing certain restrictions around modified automated vehicles
- Modernizing Ontario by bringing more processes and services online, including developing new applications that will allow online sticker renewal for heavy commercial vehicle licence plates in mid-2022
- Enhancing protections for workers by strengthening policies that keep them safe - like reviewing the working at heights training program to improve standards for training content and delivery
- Supporting the not-for-profit sector and other corporations by allowing them to continue to hold virtual meetings during the pandemic.
“Our government is committed to keeping Ontario workers and families safe and healthy, while protecting the environment while laying the foundation for a strong recovery and an even stronger future in the years ahead,” said Minister Sarkaria. “That's why we've been focused on ending complex and duplicative rules that stifle the entrepreneurial spirit and make it harder for our businesses to compete, grow and prosper - our proposed legislation would help businesses rebound from this very difficult period.”
Read more: Ontario's New Measures (link)
List of new restrictions under revised
stay-at-home order
Effective from 17 April 2021
All outdoor social gatherings and organized public events are now prohibited except for with members of the same household or one other person from outside that household who lives alone or a caregiver for any member of the household.
All non-essential workplaces in the construction sector are now closed.
Capacity limits have been reduced to 25 per cent in all retail settings where in-store shopping is permitted. This includes supermarkets, grocery stores, convenience stores, indoor farmers' markets, other stores that primarily sell food and pharmacies.
All outdoor recreational amenities have been closed including golf courses, basketball courts, soccer fields, and playgrounds with limited exceptions.
Travel will be restricted into Ontario from the provinces of Manitoba and Quebec with the exception of purposes such as work, health care services, transportation and delivery of goods and services or exercising Aboriginal or treaty rights.
Police officers and other provincial offences officers will have the authority to require any individual to provide their home address and purpose for not being at their residence. In addition, police officers, special constables and First Nation Constables will have the authority to stop vehicles to inquire about an individual's reasons for leaving their home.
Effective from 19 April 2021
The capacity of weddings, funerals, and religious services, rites or ceremonies will be limited to 10 people indoors or outdoors.
Social gatherings associated with these services such as receptions are prohibited, except for with members of the same household or one other person from outside that household who lives alone. Drive-in services will be permitted.
Read more: Ontario Strengthens Enforcement of Stay-at-Home Order (link)
India
Chemicals in India: The Right Chemistry for Growth
SHIFTING GLOBAL VALUE CHAINS IN CHEMICALS
Global chemicals corporations have historically consolidated supply chains to a significant extent, with several products now getting sourced from only one or two countries. This concentration of supply chains was driven by the pressure to achieve lower costs, the need to produce larger volumes, and stricter environmental regulations in developed countries. However, over the last few years, Global Value Chains (GVCs) have evolved rapidly. The next wave of value migration in Chemicals, from China to markets like India, is being driven by global trade tensions, tightening environmental regulations and rising labor costs in China, a potential overall diversification in global manufacturing (‘China+1’), and the impact of the Covid-19 pandemic.
THE INDIA CHEMICALS OPPORTUNITY
India’s Chemicals sector is on strong growth trajectory for the coming decade. Drivers for this trajectory include a strong growth in domestic consumption, the emergence of a potential China + 1 strategy in global supply chains, the availability of cost-effective and skilled manpower, and India’s rapidly improving policy and regulatory environment. The COVID-19 pandemic did result in a short-term demand shock, but the long-term growth story continues to remain intact. In our assessment, India is a highly attractive destination for the Global Chemicals Industry on multiple key parameters when compared to other locations such as the Middle East, Latin America, and South East Asia.
WHERE TO INVEST IN INDIA
India offers attractive investment opportunities across all segments of the Chemicals industry. In Petrochemicals, India’s opportunity will be led by its large domestic demand, the need to build local capacity for key building blocks and intermediates, and a continued focus on import substitution. We anticipate that India’s domestic demand can support the addition of one world scale cracker every year. In Specialty and Agrochemicals, we see a substantial opportunity for both exports as well as domestic sales. In exports, India is fast emerging as a destination of choice for the sourcing/contract manufacturing of specialty and agrochemical ingredients and intermediates. In the domestic market, the low levels of Chemicals penetration across agriculture as well other end markets, combined with the accelerated growth and shifting demand patterns in these markets, help create a favorable demand outlook for manufacturers.
HOW TO WIN IN INDIA
We identify five key imperatives for Indian and Global Chemicals companies to win in India: place the right portfolio bets, embed sustainability into ways of working, adopt differentiated go-to-market models, undertake a digital-enabled P&L RESET, and strengthen M&A and partnership capabilities.
IN CONCLUSION
With the Indian economy projected to emerge as one of the Top 3 global economies, and with India projected to have largest working age population across the globe, the time is ripe for global Chemicals MNCs to look at the India opportunity with a fresh lens, and capitalize on the attractive opportunities presented by the nation.
Download report: Chemicals in India (link)
India's rice production needs adaptation to climate change to meet future needs
Researchers from University of Illinois conducted a study at the Borlaug Institute for South Asia's research farm in Bihar, India to estimate rice yield and water demand by 2050, and to evaluate how farmers can adapt to the effects of climate change. The researchers collected data on rice yield and climate conditions, then used computer simulations to model future scenarios based on four global climate models. The results show that the crop growth stage is shrinking and as a result the farmers do not get the full potential of the yield. If the farmers maintain current practices, then rice yield will decrease substantially by 2050. The study also provided a series of recommendations regarding management strategies like using direct-seeded rice instead of transplants, keeping crop residue on the ground to reduce water loss due to evaporation, reduction of post harvest loss etc. to mitigate the effects of climate change.
Read more: Rice cultivation & climate change (link)
Money Talk
By Rakesh Vijay
Blue Chips
In times of market uncertainty, many investors start looking for equity investments that represent stability and safety. Certainly one place to look is at so-called “blue chip” stocks.
What is a blue chip today?
Just being big and dominant is no longer a guarantee that a company is blue chip quality. A blue chip today is most often found in the mature investment sectors, such as banking, insurance, and the equities of large-cap, “old economy” industrial sector giants. The S&P TSX 60 or the Dow Jones Canada Titans 40 are indexes whose basket of stocks are largely blue in colour.
Their shared attributes are investment stability, the quality of their tangible assets and value measured by the strength of a relatively low debt balance sheet, their long and predictable revenue and earnings track record in good and bad times and competitive dominance in their respective markets. Such companies can usually show a long record of steady dividend payouts and a reputation for dependable (some might say conservative) management practices. Most blue chip investments are leaders in their industry and their products and services often possess wide “brand” recognition.
Read More: Blue Chips (link)
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