Is Trump’s Presidency Good for India?
I am an ardent fan of Donald Trump and have read his book “Why We Want You to Be Rich” co-authored with Robert Kiyosaki. Trump is the best thing to happen to America because he puts his country first. Any patriot should do exactly that — put their country first.
Today we will discuss how his presidency will impact India. These are my independent views and I reserve the right to be wrong :).
1. Tax cuts in the US — In the build-up to the elections, Trump thought that the taxes in the US were high and should be slashed. I think he was referring to direct taxes like Income tax. The revenue loss via direct tax collection was proposed to be compensated via import duties.
Both the diagnosis as well as the medicine will hurt India.
Firstly, slashing tax rates in the US is very bad for emerging markets and tax havens like UAE and Singapore as more and more American citizens would prefer to bring back their wealth to the US. The assets they purchased abroad may lose its sheen in the years to come and investors would prefer to migrate back to their home country. This applies to foreign investments in India as well, slowly the investors would prefer to exit them and find better opportunities in their mother market.
Secondly, Trump plans to compensate for the revenue loss in direct taxation by increasing the taxes on imports. All the items imported from India will be under the lens and the price of them will definitely go up. Since it is the tax that is going up, the spike in prices will not help the Indian exporters. As it stands, China has a bigger trade share than India, so naturally the quantum of restrictions will be higher there.
2. Strengthening of the Dollar — Undoubtedly US dollar would be prioritized and Trump administration would do everything it takes to keep it as the global currency reserve. BRICS had a plan to introduce a currency and peg it against gold, I guess they missed the window.
A strengthening US dollar is bad for India. People here think that INR depreciating against the USD is good for exporters, but that is just what they see as an iceberg. India is an import dependent nation, especially crude oil — a higher dollar means we end up paying more rupee for the same barrel of oil.
Secondly, FIIs (Foreign Institutional Investors) would be hesitant to invest in India if the currency depreciates. Let me illustrate with an example.
If an American invests 100000 USD in the Indian stock market when the USDINR = 80, he invests 100000×80 = 80,00,000 rupees.
If the currency goes up to 87 after a year and the ROI from the stock market is 13% (Nifty’s 10-year average returns), then his new portfolio value in rupees = 8000000+13% = 90,40,000.
The moment he converts it back to USD, he gets 9040000/87 = 103908.04
So his net returns were 103908.04–100000 in percentage = 3.9%
Honestly, why would a foreigner take that much risk to make 4% in the overseas market when his mother market has given him a better return at a lower risk?
3. Immigration Laws — If you ask any graduate student today, they would either want to go for higher studies or work in the US. Such is the craze for emigration here. Partly because the living standards are much better in the US and then there is a higher bang for your buck when you earn.
Trump considers immigration as the biggest threat to democracy and he is right. If you look at your society right now and if more than 5% of the population is from the migrant working class — the level of insecurity it brings is deep. The authentic culture of the society will be lost if the migrants are unchecked because they never respect the values and traditions that you follow. The migrants have no concern for public goods and mostly they end up damaging them. The civic sense and hygiene need not be explicitly mentioned either.
When strong immigration laws come into place, the influx of people will reduce. Only the creamy and talented people will get a place and that too after rigorous interviews. This will definitely make the US a better place and we Indians will be left with the rejects.
Even people who migrated there for jobs may face issues in getting their kids to be raised as local American citizens.
4. Lowering Inflation — Inflation, is the general rise of prices. The main contributor to that is money printing and giving free handouts to the lowest tier of the population.
Just like you visit a casino and its owner gives you 100000 free cash, you end up spending it at the same casino itself. You wouldn’t even care if you bought a coffee for 1000 rupees even if the actual price was just 100. If it was not for Trump, the people forming the government would have done the same thing — give money, perks, and benefits to the poor.
Trump will definitely work towards lowering inflation by cutting off its head i.e. money printing. This should make the products more affordable and enjoyable for a broader class of citizens. If the local products are getting more affordable — then it will exert pressure on the Indian cheaper equivalent. SMEs here may prefer to sit out than manufacture the 2nd or 3rd quality items if they do not have a price advantage.
5. Peace Treaties — We have 2 internationally recognized wars going on. One in Ukraine and the other in Israel. Wars are the brainchild of military industrial complexes — they see it as a means to sell their arms and ammunition. The main threat to peace is from the benefactors of the war and the money they laundered.
The moment a peace treaty gets worked out, the entire defense industry will be impacted and India is not insulated from it. Many contractors are providing direct and indirect support to many international alliances.
Peace is the right solution even though it is known to impact a minority of contractors and their employees.