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Axios
9 hours ago
- Business
- Axios
The ratio that explains trade war economics
America buys a lot of cotton T-shirts from China — $277 million worth in 2023. We also buy a lot of fireworks — $465 million. But buyers of cotton T-shirts will have a lot more options to avoid the burden of tariffs than buyers of fireworks. The big picture: That's the implication of revelatory new data from consulting firm McKinsey, which calculated a "rearrangement ratio" for hundreds of different goods the U.S. imports from China. The ratio captures in a single number how hard (or easy) it will be for importers to find alternate, lower-tariff suppliers. That, in turn, helps answer the question of whether 55% tariffs on Chinese imports are likely, for any given product, to result in higher prices or cause importers to switch up and import from elsewhere. Zoom in: The ratio captures the value of U.S. imports of a good from China, relative to the total export volume for the product, excluding the U.S. and China. So a very low number, like 0.04 ratio for cotton T-shirts, indicates that there are plenty of supplies available on the global market, which allows importers lots of flexibility to shift to producers with lower tariffs. A number above 1, like the 1.25 ratio for fireworks, indicates that U.S. imports from China exceed exports for the rest of the world — meaning simply rerouting supply chains is impossible, and importers face high tariffs that they will need to pass on to customers and/or suffer lower profit margins. A number in between, like the 0.59 ratio for gas grills, suggests a product where importers might be able to find alternate supplies, but could struggle to do so, at least in the short run. After all, if U.S. imports from China account for more than half of total available market from the rest of the world, "that's an awful lot of available market to go and capture and try to rearrange," said McKinsey's Olivia White, particularly if those suppliers are locked into existing long-term contracts. Zoom out: The ratio helps capture the reality that not all products are created equal, and a one-size-fits-all analysis of trade economics doesn't capture what's happening on the ground. Goods with low rearrangement ratios are likely to be less affected by the trade war, as importers simply reroute supply chains. Consumer goods with high rearrangement ratios tend to be discretionary purchases that account for a low share of total spending (plastic ornaments, for example, with a ratio of 1.11). Importers are likely to pass on high tariffs, and consumers are likely to buy less. Business inputs, like industrial pumps and precursor chemicals for pharmaceuticals, are a trickier question, as they tend to be essential for U.S. companies producing higher-value products. What they're saying:"Imported consumer goods are going to be more discretionary and have higher price elasticity," White, director of the McKinsey Global Institute, tells Axios. "So to the degree that rearrangement is tricky, people might prefer to buy a little bit less."
The Print
18 hours ago
- Business
- The Print
India has the fastest growing number of billionaires. This isn't a good thing: Veerappa Moily
McKinsey Global Institute has quoted in its report—'India needs to increase the relatively low participation of its citizens in labour markets and sustain fast productivity growth as the country has just 33 years until it is as 'old' as advanced economies. 'India still has some time to benefit from its demographic dividend for economic growth but is aging faster than many realize.' Despite very fast progress, India is still a low-income country. If India is to achieve the status of being the fourth-largest economy by the end of 2025 and to be a real powerhouse in the world, our policies must be transformative. Citing IMF data, NITI Aayog CEO BVR Subrahmanyam has expressed confidence that India could become the third-largest economy in two and a half to three years. The 2024-25 Economic Survey stated, India will need to improve its global competitiveness through grassroots-level structural reforms and deregulation to reinforce its medium-term growth potential. The survey pitched for less state control and easier rules, stating that lowering the cost of business through deregulation will make a significant contribution to accelerating economic growth and employment amid unprecedented global challenges. It also said that India is projected to reach the same support ratio (number of working-age individuals per senior 65 or older) in the 2050s as seen in advanced economies, but its GDP per capita is just 18 per cent of the World Bank's high-income threshold. Also, in per capita terms, we are still near the bottom of the global scenario tables—136 in nominal GDP and 119 in PPP terms. India still has the lowest GDP per capita among G20 nations. Human Development Indicators are still poor, with challenges in education, healthcare, and poverty reduction. Referring to the reports that India is set to pass Japan as the fourth largest economy, Alicia Garcia-Herrero, chief economist for the Asia-Pacific region at Hong Kong investment bank Natixis, said. 'Inequality is also an issue, certainly compared to Japan.' As of 2023, nearly 45 per cent of India's workforce was still employed in agriculture, while Japan's was at around 3 per cent, with a considerable rise in employment in industrial and service sectors. The share of salaried workers with formal employment contracts was just 23.9 per cent in India, while that of Japan is around 91 per cent. Apart from these criteria, the life expectancy in India is 72, while that of Japan is 84. India's Human Development Index is just 0.685 out of a highest possible of 1. Japan's HDI has crossed the 0.9 mark. India needs to increase the relatively low participation of its citizens in labour markets and sustain fast productivity growth. Additionally, India is ranked 142 out of approximately 190 countries in terms of press freedom, with a nominal per capita GDP of around $2700. India's GDP growth of 6.5 per cent in FY 2025 is the lowest since the Covid-19 pandemic of 2020-21. The risk is that a GDP growth of 6.5 per cent will not be able to generate enough jobs to fully absorb the labour force growth. The most worrying factor is that industries are not adding capacity that will generate more jobs. Creating more jobs in the organised sector is also seen as the biggest challenge to the government. Considering the magnitude of joblessness, there is an urgent need to incentivise state governments to improve the business environment and investments, which in turn will augment the labour force and sustain growth. A growing gap Surprisingly, India is also home to the largest and fastest growing number of billionaires—India has around 200 billionaires today—third globally in billionaire count. The Economic Survey has also warned of the disproportionate rise in corporate profits concentrated largely among a few large corporations. No wonder the gap between the rich and the poor, economic inequality and wealth distribution are widening day by day. The imbalance between profit growth and declining wages will have major macroeconomic consequences. If household earnings do not increase, consumer demand will weaken, undermining the very growth of GDP. This depicts the dark side of India's growth story that we are celebrating! Again, the share of manufacturing in India's GDP in 2023-24 is the same as it was in 2013-14. Where does the PM's favourite 'Make in India' sloganeering stand today? More so, as per the RBI's KLEMS database, the contribution of manufacturing to job creation is lower at 10.6 per cent compared to 11.6 per cent in 2013-14. As per the data from the PRICE ICE 360 survey, the richest 20 per cent of households, which account for Rs 155 trillion in income, save Rs 57 trillion and consume just 63.6 per cent. The bottom 20 per cent earn Rs 22 trillion but spend Rs 23 trillion, resulting in negative savings and the highest debt-to-income ratio of 15.4 per cent. The middle 60 per cent, earning Rs 159 trillion and saving Rs 28 trillion, are the backbone of consumption but remain economically vulnerable, highlighting a macro-micro disconnect. To bridge the gap, we need to shift focus from redistribution to empowerment of the bottom 20 per cent—creating job opportunities and skilling youth, affordable insurance, pension schemes, and tax-friendly saving instruments. The bottom 20 per cent must live without the fear of debt traps or income loss. We also need to look at rationalising GST. The GST council should work out a roadmap for levying petroleum products, electricity and real estate and bring it into the GST regime. Both slabs and rates have to be rationalised. Liberate financial markets to ensure adequate and reasonable business borrowing rates. RBI should also create a roadmap to phase out the Statutory Liquidity Ratio (SLR), which compels commercial banks to buy government bonds. Tariffs on intermediate goods and inputs are too high to push manufacturing in India Roadblocks to growth The harsh reality faced by millions in the country, with rising inequality, stagnating wages, and weak job creation, should prompt serious introspection by the government. The benefits of the so-called economic growth have been concentrated among a minuscule segment of the population, while the wage earners and informal sector workers continue to struggle. India's ascension to the fourth position in global GDP ranking is masked by foundational cracks in the economy. According to the International Monetary Fund's 'World Economic Outlook' released in April 2025, India's GDP is projected at $3.91 trillion for FY 25, while Japan is estimated at $4.03 trillion for FY 25. These figures put India in the fifth spot for now. Niti Aayog CEO saying India has overtaken Japan to become the world's fourth-largest economy is premature. And if India has to overtake Germany to become the third-largest economy in the world, we need to have faster, sustainable, and inclusive growth at all levels. India needs to fast-track the infusion of new technologies and infuse greater investment in research and development both in the government and private sector along with upgradation of human capital with training, skilling and employability. The current trend is dangerous unless growth translates into better livelihood for people and reduces inequalities. M Veerappa Moily is former Chief Minister of Karnataka & former Union Minister. Views are personal. (Edited by Theres Sudeep)
Hans India
19 hours ago
- Business
- Hans India
Critical thinking: Rethinking the school curriculum for the digital age
As automation and AI reshape the future of work, technical skills alone are no longer enough. What students truly need is the ability to think critically, solve complex problems, and adapt to rapid change. A growing body of research—from Harvard to the OECD—shows that critical thinking enhances academic performance, fosters creativity, and builds resilience. With 375 million workers projected to switch careers by 2030, the demand for adaptable, emotionally intelligent innovators is rising. It's time education evolved beyond rote learning to empower students not just to survive the future, but to shape it—with confidence, empathy, and a mindset built for innovation. The rapid evolution of technology highlights that while technical skills may shift, foundational abilities like critical thinking and problem-solving remain essential. McKinsey Global Institute projects that by 2030, up to 375 million workers, or 14% of the global workforce, will need to switch jobs due to automation. Alongside digital skills, resilience, adaptability, and self-management will be crucial. Employers increasingly prioritize creativity, leadership, and collaboration, with IBM estimating that 120 million workers globally will need reskilling as AI and automation rise. Schools must teach students how to think, not just how to code. For instance, critical thinking is vital in financial planning students who learn to evaluate investment options and risks can make informed decisions as adults. Beyond workforce preparation, critical thinking and problem-solving offer cognitive benefits that enhance academic performance. Research from Harvard Graduate School of Education shows that students trained in critical thinking excel across all subjects, not just STEM. Problem-based learning fosters resilience, creativity, and collaboration, qualities critical for success in any field. Studies from the National Bureau of Economic Research reveal that students engaged in critical thinking exercises show greater adaptability in dynamic environments, vital for navigating rapid technological advancements. While technical skills may open doors, critical thinking keeps them open, equipping students to solve novel problems and embrace lifelong learning. Inspiring innovation: Cultivating an innovative mind set While digital skills are essential, the ultimate goal is to cultivate a mindset that embraces innovation, adaptability, and resilience. Research from the National Education Association shows that students in problem-based learning environments are 1.5 times more likely to develop creativity and innovation skills in STEM fields. Partnerships with tech companies, such as Google's Applied Digital Skills Program, illustrate how technical education can foster adaptability and teamwork, while OECD studies confirm that combining digital skills with social-emotional learning best prepares students for diverse career paths. As educators, we must go beyond teaching the latest tools, developing students' capacity to shape future technologies through creativity and critical thinking. Schools that integrate project-based learning, design thinking, and collaborative problem-solving enable students to see obstacles as opportunities. By rethinking the K-12 model to blend technical and cognitive skills, we prepare students for both today's roles and the unknown careers of tomorrow equipping them as digital natives, problem-solvers, and innovators. Redesigning education: Drawing inspiration from innovative learning models Some of the most innovative education systems in the world recognize the importance of balanced skill development. For instance, Finland, often lauded for its progressive education model, emphasizes cross-disciplinary learning over rote memorization. Its curriculum integrates critical thinking and problem-solving into STEM subjects, encouraging students to ask questions, test hypotheses, and learn from failure. Finnish students consistently rank among the best in the world in terms of adaptability and problem-solving skills, underscoring the impact of this balanced approach. Similarly, Singapore's '21st Century Competencies' framework integrates civic literacy, global awareness, and critical thinking within its STEM education. Singapore has shown that it's possible to foster technical proficiency while also preparing students for the broader challenges of a globally connected, tech-driven society. The result? Singaporean students consistently exhibit high levels of readiness for both academic and professional challenges. The heart of learning: How emotional intelligence shapes well-rounded students In today's rapidly changing educational landscape, it's essential to incorporate emotional intelligence alongside academic curriculum to ensure holistic student development. Progressive education models, such as those in Finland and Singapore, understand the importance of nurturing students' emotional well-being as part of their intellectual growth. Educators in these systems actively weave emotional touch into the fabric of their teaching strategies, emphasizing empathy, self-awareness, and emotional regulation alongside critical thinking and problem-solving skills. These skills empower students to navigate complex social interactions and enables students to manage stress, stay motivated, and work effectively in teams, all of which are crucial in an increasingly interconnected and fast-paced world. Conclusion An effective 21stcentury curriculum does more than teach coding; it nurtures a generation of thinkers ready to tackle life's challenges with agility, creativity, and resilience. Imagine a child who uses problem-solving skills to help their family navigate financial hardships or a young innovator designing a solution to bring clean water to their community. This is the power of education that goes beyond textbooks. In a world where change is constant, the educator's role is to ignite curiosity, inspire innovation, and empower students to create meaningful impact. A well-rounded education isn't just about mastering technology, it's about cultivating the courage to dream big, the mind-set to lead with empathy, and the determination to make a difference. (The author is the CEO of Globeducate India)
Hindustan Times
18-06-2025
- Business
- Hindustan Times
Unfinished business of gender parity in India
Here is a truth that often goes unnoticed: India needs women to be at parity to progress. Or it will get left behind. It is already getting left behind. This is the sad inference that emerges from the dry statistics in the World Economic Forum's Global Gender Gap Report 2025, released recently. It ranks India a dismal 131st out of 148 countries — below every other Brics nation and trailing most of its South Asian neighbours. The fall is not so much due to regression as because other countries are closing their gender gaps faster. Our catch-up pace needs acceleration. There is good news and bad news. The good news is that there have been visible gains in education and political visibility. At 97%, women's educational attainment is approaching parity. India's political empowerment score is higher than China's and close to Brazil's — thanks perhaps to the panchayati raj laws that insisted on 33% women's representation. Women have 45% participation in panchayati raj institutions — a genuine contribution to deepening democracy. But, in Parliament, they account for just 14% of members — sadly, the highest it's ever been. Poor economic participation drags India down to among the world's bottom five. In a scenario of high unemployment, men win: The historical female labour force participation rate, the World Bank points out, has declined considerably over the decade, and women contribute less than 20% to the Gross Domestic Product (GDP), earn under a third of what men do, and hold only a sliver of decision-making roles. This is not merely a gender issue but one aligned with economic ambition. The McKinsey Global Institute estimates that gender parity in employment could add $770 billion to India's GDP by 2025. At current rates, that could take another 135 years. This isn't just a missed opportunity — it's an economic liability. It should alarm every policymaker into signalling a radical and urgent shift in national priorities to privilege women's participation. No less a person than the Prime Minister has repeatedly acknowledged that progress depends on women-led development. But recognition is only a beginning. Policy and practice designed to ensure women's equal participation in economic, political, and social life must be maximised by both the state and the private sector. Everyone has a role. But, the State has the primary responsibility to showcase transformation. At present, the commitment looks hesitant. In recent years, the pace of inclusion has indeed accelerated, but inclusion is reluctantly conceded. Women made up 41% and 38% of recent recruits to the elite Indian Administrative Service and Indian Foreign Service, respectively — an encouraging uptick. However, their overall representation across both services remains unclear. With less than 3% women in the armed forces and 12% across all police, the bastions of defence and security remain hard to breach. Even apex institutions — tasked with ensuring equality — struggle to show commitment. At its 2021 high, the Supreme Court briefly had four women out of 33 judges; now, it is back to one. The National Human Rights Commission, in all its history, has never had more than one substantive woman member at a time. Even its law requires only 'at least one woman'. There are many pathways to inclusion — some already at work. The expansion of women-led Self-Help Groups, targeted savings schemes, and access to low-interest credit have begun to shift the economic ground. State-backed programmes, from Kerala to Uttar Pradesh, have helped lakhs of rural women move from subsistence to enterprise. Political inclusion too is poised for a jump, pending the census and delimitation needed to activate the long-promised 33% reservation for women in Parliament and assemblies. With millions of women already serving as panchayat representatives, the feeder line already exists. In the UK, Labour's insistence on all-women shortlists drove female representation from under 10% to over 30% in two decades. Systems shape society — and carry its values and biases. Stubborn patriarchal cultures and inherited procedures block inclusion. Institutions often assume male-dominated environments are neutral, fair, and meritocratic. When women demand their social and biological realities be taken into account, it is seen as seeking indulgences. A man's merit is assumed; a woman's presence is often chalked up to tokenism or reservation. That refusal to acknowledge difference is one reason so few women rise to the top. Women make up 38% of subordinate court judges, but only 14% in high courts. In the police, women make up just 8% at the officer level. In the private sector, while women hold around a respectable percentage of positions at the middle management level, fewer than 2% of India's Fortune 500 companies are led by women. Parity is about equality and balance, about agreeing that no one gender should hold more than 50–60% of any space. But the national discourse remains stuck at a ceiling of 33%, as if the demand for equal space and place is itself an impertinence. This comfort with 33% betrays grudging acceptance as well as a settled comfort with unfairness. The slow, incremental pace, often called progress, actually reflects a reluctance to reconfigure spaces for women. The onus is on institutions to change. Inclusion demands that all institutions evolve — urgently and intentionally — to reform today's deficits and create environments that include women. Not partially, not temporarily but fully. Not as a concession but as recompense for a long-denied right. Maja Daruwala is chief editor, India Justice Report. The views expressed are personal.
Mint
22-05-2025
- Business
- Mint
Seven reform pathways to bridge India's urban investment gaps
A 2010 McKinsey Global Institute report estimated that India needed capital investment of $1.2 trillion over 15–20 years to meet its urban requirements. At ₹2,701 per capita, our current urban investment falls short of the required ₹7,884. This, despite larger outlays by states as well as a staggering 932% increase in the budget allocation for the ministry of housing and urban affairs since 2009-10. This gap in the financing of urban infrastructure adversely impacts the ease of living and doing business in our cities. A roadmap ensuring adequate medium- and long-term financing for city infrastructure and services is critical for India to meet its Viksit Bharat goal by 2047. Given the shrinking fiscal space of the Union and state governments and competing claims on resources, budgetary support for urban financing can only go so far. Municipalities must explore bank loans, public-private partnerships, bonds, finance leases, climate finance and other mechanisms. China exemplifies this strategy, having powered its urban growth through a transformative municipal bond market, one that evolved from opaque local government financing vehicles to the world's largest formal municipal debt system, with local government bonds forming 28% of its domestic bond market. Also Read: Urban renewal: Indian cities need a governance overhaul In China, municipal bonds are now the primary vehicle for funding urban infrastructure, with local governments leading build-ups. In India, on the other hand, most urban infrastructure is funded by Union and state government grants. Municipal bonds contribute little; they account for only about 0.012% of the country's total bonds. Just ₹3,840 crore was raised over the period from 2017 to 2021. Indian cities, particularly our medium and small ones, have not sufficiently addressed the challenge of raising market funds. This conversation needs to be broader than just municipal bonds, given that these require cities to acquire credit maturity (and worthiness ratings) while other forms of raising funds exist. We outline a seven-point reform agenda for financing urban infrastructure in India's smaller cities and towns. First, we must estimate the infrastructure gap in our cities for both current and future needs. We then need to estimate the financing requirements city by city, based on credible unit costs and current data. This complex exercise will require leadership from both Union and state governments, with statistical systems offering city-level data. Also Read: Local government reforms can create a new vision for India's cities of the future Second, we need a differentiated approach by city type and size. India has 40-plus cities with a population of over a million, over 400 cities with a population of over 100,000, and more than 4,000 cities with fewer people. Our one-size-fits-all approach to the planning, infrastructure and governance of cities will not work. We must move to a context-specific, place-based approach. Third, state-level urban infrastructure development financing companies (UIDFCs) must be established where absent or rehabilitated where they have deviated from their original mandate. Rather than functioning merely as procurement and contract management arms of state governments, UIDFCs should focus on project preparation and developing financing models that match the typologies of sectors and projects (water supply, sanitation, roads, etc) with sources of finance (grant funding, scheme funding, term loans, municipal bonds, climate finance, public-private projects, etc). They should also facilitate reforms of financial reporting that cover budgeting and accounting in urban local bodies. For the success of UIDFCs, they need specialized professional management teams with functional autonomy, as with the National Bank for Infrastructure Development or National Infrastructure Investment Fund. Also Read: Finance Commission and Indian cities: A blueprint for municipal finance Fourth, smaller cities need City Action Plans (CAPs) accompanied by City Investment Plans (CIPs) to surmount our flawed master planning process. We need actionable five-year plans prepared through citizen participation and coordinated across all city and state agencies—the urban equivalent of Gram Panchayat Development Plans. These plans should reflect citizen priorities while yielding a pipeline of projects that can inform the budgeting process. Early experiments in Assam as part of its Doh Shaher Ek Rupayan convergence programme appear promising. Fifth, CIPs should optimize spatial agglomeration effects. Not every city and ward needs every type of urban infrastructure. Waste management plants and other such facilities, or even personnel, can be shared among cities based on a 'municipal shared services' or 'municipal capability centre' model Also Read: Karnataka's bike taxi standoff shows how not to regulate urban transport Sixth, an inventory of public land and market valuations of the same can catalyse municipal financing. Currently, no city has a comprehensive database of all public land, with ownership fragmented across multiple government entities. Valuations of such holdings, with differential development control regulations taken into account for different areas in a city, will unlock value and optimize land use. Lastly, the timeliness, cost and quality of urban infrastructure are directly and adversely impacted by the least-cost procurement model. Even as the Centre has shown willingness to embrace the superior quality and cost-based system, states and cities have not adopted it, except where funding is from bilateral or multilateral agencies. Unless we undertake procurement reforms, urban infrastructure will continue to be beset by time, cost and quality problems. More importantly, we will not create an ecosystem of builders and contractors that can operate at the scale and quality we need. Also Read: Updating urban definitions could optimize our resource allocation With some states already taking leadership on these reforms, India needs a coordinated push to establish CAPs and CIPs, develop robust project pipelines and publish market valuation data for public land. Such a concerted approach can potentially build a municipal infrastructure pipeline that complements the National Infrastructure Pipeline and enables Indian cities to become engines of sustainable growth and prosperity. The authors are, respectively, IAS officer, government of Assam, and CEO, Janaagraha.
