Vitamin D impact on Covid-19 Mortality and What China wants

Covid-19 crisis may be going to change the world as we know as of now. I still hope that India will emerge stronger from this crisis though there may be some complications due to migrant labours on virus infections and economy front in the near time and we need to plan for normalizing this migration as early as possible. On infection front, I still think our demography and better immune system may help us in controlling the severity and mortality though I think infections can run high as due to novelty of this virus it is highly contagious. But I am very hopeful of finding a cure of this virus very soon because of the advancements in the fields of genomics and DNA mapping.

Covid mortality and Vitamin D

I am a great devotee of Sun and believe in the power of Sun for our well-being. Every day in office, i take sunshine for 20 minutes at the roof of our office. For me Vitamin D is a miracle molecule for our health and longevity. When Covid began spreading in India in March i was of the view that Vitamin D is vital for covid immunity. Because Vitamin D inhibits inflammatory response of our bodies which is the main cause of death in covid.

Coronavirus is not killing us...in most cases it is the inflammatory (immune) response of our bodies. Coughing is our immune response- to throw out the pathogens so is diarrhea and vomiting....it is our body's immune response. Fever is a common immune response to an infection because a higher body temperature can provide a hostile environment for pathogens. That’s why I never take medicines for fever, throat infections etc. because I want my body’s immune system to fight with these infections and this further strengthens the response time and impact of immune system.

There is always a debate whether to treat fever or not. But fever is not a disease but a sign of fighting against the disease. That day I was reading about Wagner von Jauregg who in 1900 (before invention of antibiotics for bacterial infections) injected malaria parasites into the bloodstreams of people with syphilis which caused high fevers for many days. Then he treated the malaria with quinine.  But then he found that the high fevers caused by malaria cured syphilis. For this achievement, von Jauregg won the Nobel Prize in 1927. That’s why I always try not to treat the fever. Also at higher temperatures, our immune cells like white blood cells (neutrophils), B cells, and T cells work better.

Inflammation is the immune response of our bodies where white blood cells (like neutrophils) along with other chemicals fight against bacteria and virus. These white blood cells are equipped with weapons like enzymes to break the structure of the infectious organisms. This inflammatory response has two stages- first, “pro-inflammatory” where cells and other chemicals are produced for attacking and neutralizing the harmful pathogens/substances by releasing the enzymes and anti-bacterial products. So this is the first part of the battle where many cells and bacteria/virus will die which are required to be removed from the battle field and to rebuild the recovery (healing).

This healing of the tissue starts after the end of pro-inflammatory stage. Then “pro-resolving” forces take charge and they are the ones tasked with the task of tissue repair after the elimination of the disease-causing bacteria/virus. The discovery of existence of “pro-resolving” factors revolutionized the treatment of inflammation which earlier was mainly focused on “treating” (or hindering) pro-inflammatory factors by trying to reduce the action of the pro-inflammatory components but now they are focusing on to increase the action of the pro-resolving factors to start the healing process more quickly. Medicine world is getting the understanding that if we try to stop pro-inflammatory factors by using strong anti-inflammatory medicines (like aspirin, paracetamol, ibuprofen) then this will also hinder the signals for “pro-resolving” factors to come up and start healing process.

So when our lungs are attacked by virus then our immune system comes for the fight to eliminate the virus and clear away the damage and then to repair the lung tissue. When our immune system is working properly then it is very strictly regulated so as to only impact or attack the infected area. So our immune response to the virus causes inflammation in the lungs but in some cases it can also cause significant lungs tissue damage and this is the why covid is deadly. Thus this tissue damage and inflammation can cause difficulty in breathing and that’s why the role of ventilators are so big and so is the role of a robust healthcare system. This can also explain the high death rates of elders whose lung tissue is already weak due to old age.

It has been observed that in some individuals this virus may only cause mild symptoms but in some cases it causes an overactive inflammatory response in the form of massive release of “pro-inflammatory” cytokine cells. And this overactive inflammatory response is the only difference between survival and death from Covid. Virus is not at the core. Virus has the role in infection. In march when I was discussing this with some of my doctor friends; there were suggestions that this can be due to genes. But I told them that there can be a possibility of role of Vitamin D deficiency also because Vitamin D inhibits the production of pro-inflammatory cytokines.

Coronavirus is suggested to have come from Bats though it is not proved as yet but still lessons from Bats are important. It is surprising that bats are responsible for the spread of all the deadly viruses like Ebola, Nipah, SARS and MERS. Actually Bats are wonderful creatures as they can live safely along with the presence of these deadly viruses in them. This is due to their remarkable ability to limit inflammation…better to say their anti-inflammatory ability. 

Bats are the only mammals that can fly and this requires massive amount of energy for long period of time. So no surprise these Bats have very high metabolic rate (Metabolism is the biochemical process whereby our bodies create energy with oxygen for carrying out various functions) to enable the functioning of higher muscle activity for flight. We humans also do physical activity but only for short duration of time whereas Bats do this for much longer period of time. This high metabolic activity raises the temperature and in Bats this high temperature state persists for much longer time (to be considered as Fever state as per our benchmarks) so this leaves Bats with much higher body temperatures than human beings (41 degree vs 37 degree).

Due to this high metabolic activity and high temperature the result is the significant breakage of cells and DNA structure and this result in massive release of DNA bits floating around freely. Our bodies’ immune system identify and recognize these free DNA fragments as Viruses and this trigger our immune system to activate inflammatory response (release white blood cells (T cells ) ) which as explained above sometimes goes into over drive and releases massive number of cytokine cells which damages healthy tissue along with infected tissue. So same should have been the case with Bats also and they should have very short lives. But Bats have developed a remarkable ability to suppress this inflammatory response to minimum. In order to survive the massive release of cells damage, Bats might have lost some genes via mutation over generations related to high inflammatory response.

So the inflammatory sensors which work in our bodies to trigger inflammatory response but these react barely in Bats. So Bats do not survive due to inflammatory (fighting) response but because they have high tolerance for any infection. So this fierce and swift response from Bats makes viruses on their bodies replicate and mutate much faster and this is why they are so deadly for weak immunity system human beings. Also, as Bats have higher body temperatures so technically they are in fever state most of the times and this fever stops the infection from deadly pathogens. Further, as the viruses from Bats’ bodies already have exposure to high temperatures so they are more deadly for humans.

I am a hard core gym man for more than 20 years and also like jogging and sprinting. Many times friends and relatives have questioned this madness for physical workout and strength as they feel that career is more important than this. When I was doing Chartered accountancy many doubted on me as they perceived this gym etc.as wastage of time and declared that CA and Gym are not made for each other and I’ll be a failure. But I did pass the CA that too without any sort of coaching. I have seen the children of our relatives and friends doing study all the time. so many times I have told them that as you have never done intense workouts so you don’t have the ability to feel the massive inflow of power, energy and rhythm in your body. I told them that when we regularly stretch our bodies to the maximum (by intense physical activity) then our bodies release large amounts of testosterone (a hormone) which is what makes a man a MAN. It is vital for sex drive, bone mass, muscle building, fat burning and sperm count. Its production drops as we age. So one can see why our current generation is so weak, fatty and powerless. It always surprises me how a real MAN can derive happiness from owning an Apple mobile phone rather than having a strong and powerful body. But sadly this is what our current generation is and many times I have to tell them that you surprise at my madness but I pity you for your weakness.

Many times I have told my friends the impact of high temperature on the health of our bodies. Like if you are doing gym/sports/intense aerobic activity 4-5 times a week then you are taking your bodies into higher temperature for longer periods of time and this will save you from many infections. Many times, in winters in Punjab whenever I caught with flu I would simply do intense sprints in the morning for around 1 hour and most of the times it cured the flu. The reason may be the high temperature. Further, my body remains hot most of the times and in winters if I do intense workouts it emits steam just like a pot of boiling water. Many people get terrified to see the steam oozing out of my body. It took me long time to understand that this may be due to higher metabolic rate of my body.

I studied about the remarkable bodies of Bats while I was searching for the answers for steam coming out of my body and then I found the reason from the Bats- it is high metabolic rate and higher base body temperature. So taking the clue from Bats I always have the belief that ability to fight off the Covid may be derived mainly from the regulated inflammatory response of our bodies and hence Vitamin D may play vital role.

So few days back, there are reports which confirm the important role of Vitamin D in controlling the deadliness of Covid (Not preventing as most people are reading it wrong). The association is the role of Vitamin D in inhibiting/regulating the production of cytokines. The study was able to find that this is also why countries like Spain and Italy suffered so much since the people there had lower Vitamin D levels as compared to most other Northern countries. Scientists who have done this research are of the view that the impact of Vitamin D might be as high as cutting the mortality rate in half. The government health agencies of UK have recommended taking vitamin D supplements during this pandemic. Some links:

https://www.sciencedaily.com/releases/2020/05/200507121353.htm

https://www.nutraingredients.com/Article/2020/04/28/Clear-link-between-vitamin-D-deficiency-and-severity-of-coronavirus-say-researchers

https://www.indiatoday.in/coronavirus-outbreak/story/is-vitamin-d-a-shield-against-coronavirus-researchers-study-covid-19-connection-1681736-2020-05-25

I also think that the mortality rates are defined by the robustness of healthcare system because in the worst cases there will be stress on healthcare system in the form of ventilators etc. But it is possible that Vitamin D has also one of the factor affecting mortality rates.

So the threat of covid is here but it would be better to look after our Vitamin D intake. The perfect way is to absorb sunshine on bare body when sun is at maximum height (around 12 am to 1 pm). Then there are cod liver oil capsules, eggs and mushrooms. Also, studies have found that by exposing Mushrooms to sun for almost an hour results in the massive increase of Vitamin D levels, almost equal to Vitamin D supplements. Just take the mushrooms out of packing and place them in sun uncovered. Whether vitamin D is effective against Covid or not but it is great for our strong bones and overall health.

(Disclaimer: I do not belong to medical profession in any capacity so please discuss with your doctor before moving ahead with anything)

But how high is the mortality rate of Covid-19

I was trying to get the answer of this question as this will have the most significant bearing on our response and length of lockdown in the country as lockdowns have massive economic impact.

Death rates across the world seem to vary too much but as the timing and strain of the virus is almost same so the death rate should almost be the same. Virus is not mutating very fast as of now and also it shouldn’t be more deadly in one place than another. But still there is way too much variation.

The likes of Italy, Spain, France, UK and Netherlands have death rates in the range of 10-15%which is very high while the likes of Russia, Germany, south Africa, south korea, Chile, Qatar has low rates of 1%-2%. Even worse affected US has death rate of 6%. But there is a pattern to this variability. Like, first countries with elders have suffered the most like Spain and Italy. Italy has the largest population in the world at 65 or older and this also defines the high death rate because these elders were already suffering from many other life threating diseases. So there is high chance that the death is not due to Virus but due to other reasons but as they were Covid infected so it is treated as covid death but this may not be the case. Still, the elders are almost 80-90% of the dead in high death rates countries including USA.

But I checked the life expectancy of Italy, Germany, USA,  Spain & France and the same is 82.5, 80.6 , 78.6, 83 and 82  years. So Italy, Spain and France’s populations are equally or better equipped to fight the virus. So there are other factors at play than the virulence (deadliness) of the Covid alone.

Germany has lowest death rate due to robustness of its healthcare and one of the reasons is that large proportions of infected in Germany were aged between 35 to 59 which has very lower death rates. Russia also has low death rates due to fairly young population but there were accusations that it hide the actual death cases. But there is no visible increase in the overall death rate in the country as compared to previous years. Further, Russia has done very extensive testing (some 6 million) and I think this is one of the reasons. Avg age of people died in Italy is above 70. Germany also had much lower infections in older people (20%, Spain and Italy 50%).

I tried to find out the number of deaths in Italy, spain in the same period in the previous years so as to check how many deaths are actually due to covid. Actually, in my view this data should have been taken for all the countries because too many people are questioning the data where they want to or where they find the death rate low but they wanted the same to be higher (Ego bias) like they have questioned the data for countries like India/pakistan which have low death rates but in my view one of the biggest reasons is the young population of these countries. But still, having the data of normal death rates of previous periods (excluding accidents as now there are lower accidents due to lockdown) would have given some valuable insights because too many deaths might have been recorded as Covid deaths when the underlying reason is not covid related complications.

Also, the method of counting deaths due to covid in Russia is important as Russia has counted only those deaths due to covid which are actually due to underlying covid symptoms like pneumonia not where people have dies due to heart attack but they were infected from Covid. I think this will have profound impact on mortality rates. Also, as explained above Vitamin D may also have a role on the death rates.

Testing is the main reason which can artificially inflate the death rates. Because due to limited testing capacity, in most of the high death rates countries testing is only done on those with severe symptoms. But as per the experience there are many people who don’t even show any symptoms (asymptomatic) or show very mild symptoms so they are n tvot been tested at all. So there is a selection bias of only counting symptomatic people in high death rate countries. Estimates put asymptomatic people at some 40%-50% of all the infected people.

Iceland is one such country with high testing rate of almost 13% of total population and so far it has only reported 1800 cases with just 10 deaths. It has tested everybody quite opposite to what every other country is doing- testing only the sick persons with symptoms and large numbers of people were asymptomatic. Iceland has no lockdown as of now. Even schools are opened. Germany also has done more extensive testing including those with no symptoms. So testing only on the basis of symptoms may be giving inadequate data for doing any reliable analysis and drawing inferences. Current conclusions about death rate of covid do not take into account that only a fraction of infected people are actually tested (selection bias).

But one of the best case for us is the cruise ship Diamond princess where some 700 people were tested positive out of 3500. So this ship is like a closed environment test in a laboratory. The ship was quarantined in Japanese waters on 3rd feb with 3711 people so almost two months have been passed. Japan has tested all the people on the ship. The ship has more elderly people. The ship was perfect for the spread of virus as infected crew was cooking and cleaning the rooms, all the people were eating together in closed places, close living spaces, many old people, much higher social interactions. So that ship had the worst environment. Infection started from foodservice crew members which put all of the ship into the virus risk. Out of 3711 people some 712 were found infected but 651 have recovered with only 13 dead (all elderly). So, almost 83% were never infected at all in spite of being in such a dangerous place for virus spread. Almost 50% infected people do not show any symptoms at all…the same is 100% for Children below 10.

It is surprising to see such a high % of asymptomatic people for a virus considered so deadly. So if we can extrapolate these findings on our current death rates then these rates should be fallen by 50% because as of now our data and study is based on symptomatic persons when 50% do not show any signs.  One can say that cruise passengers generally are rich & otherwise healthier people so this ship data may also be biased. But still in any case, we can very well count and rely on the data of recovery and asymptomatic patients. Also, it shows that this virus is not at all deadly when it encounters healthy people even if they are elderly people.

But still, the attack rate of this virus is relatively high as there is no immunity to it as of now. So in case infections are high then there will be heavy stress on the healthcare system which is very dangerous for countries like India with less robust healthcare system. Hence, until more data about its mortality rate is found or there is a medicinal cure for it, it is better to follow social distancing. It is particularly important for the safety of elders in our homes and people with compromised immunity due to underlying diseases as they are more vulnerable. So i think India is doing right by locking down as our healthcare system may not be as robust. Further, sometimes over-reaction is much better response than over-confidence.

What China wants

If you ask this question to any Chinese, ultimately the finger will be pointed towards only one man- Xi Jinping. Welcome to the world of Autocracy. Some people believe that authoritarian governments are better for planning a great strategy and its implementation and so they are more likely to lead a country into economic growth. They cite the reasons like fewer regulations, prompt and timely implementation, power to make bold and big decisions etc. This logic may look better on the paper but real life is always very different because of its multi-dimensionality. First, for this to succeed a superman like human being is required like Maharaja Ranjit singh, Samrat Ashok, Shivaji, Akbar, Maharana Pratap etc. But persons like these are very few and stretched over centuries. So collective consciousness has better chance to perform under democracy than when autocracy is the slave of someone average like Xi Jinping. Democracies due to their public answerability are much better in planning strategically to the core and implementation if successful is maintained even if there is a change of leadership like BJP in place of Congress. Further, democracies due to freedom and openness promotes innovation & creativity which are the main forces fostering economic growth (quite contrary to the Chinese model where debt is given to states for spending and Voila!! GDP growth is here). That’s why I always say that GDP growth is not economic growth.

And China needs a superman now. But the problem is that there are some people who think that superman is superman because he wears his “underwear” over his pant (this is Underwear syndrome). China has so many like them. Recently, British economist Jim O'Neill remarked he was thankful the coronavirus outbreak started in China and "not somewhere like India”. If one can see these are the persons who suffer from “Underwear syndrome”. Look at the wisdom of this man…he can’t see the conspiracy and poor governance levels of china in handling the virus but he is so sure of India’s incapability to control.  Now this man should see the pathetic response and condition of UK in fighting with the virus.

There are many such “underwear syndrome” people in India also who shout “Bhakat” at everything which can question their intellect. Being in stock analysis stream, I normally want to have free discussions without being tagged as a follower of BJP or Congress like I was critical of the timing of Demonetization but still PM Modi ji is doing a fantastic job. Look at the fear he has instilled in the minds of Pakistan and China. After very strategic Balakot strikes, Modi Ji has ended the pakistan's madman theory of using nukes...Balakot strikes called the bluff out of Pakistan's Madman theory. And now both Imran khan and Pak army is trying to bring India into talks. Now they are saying nuclear weapons are very dangerous. Look at the alliances he is building with all the global powers of the world. Indian Economic growth and PM Modi ji- I’ll further touch this topic in some other post but let me bring a perspective. India and China had almost same GDP in or around 1988-89 and they had the similar defense spending but today China GDP is almost 5 times of India and defense budget is some 6-7 times bigger. And in all this period from 1989-2019 when for most of the time congress was in command. 

Further, there was high growth phase during 2004 to 2012 but that was the time of great IT and Pharma export story which happened mainly because of some great maverick and visionary individuals and there was not much role of govt. They supported it once it was put into act by these individuals. And then these two sectors set the tone for the demand for cars/bikes which set the tonefor the growth of Auto Industry in India. It also developed real estate and wealth distributed from these rich IT/Pharma people to common man. But when Modi government took charge in 2013, the growth started to slow down in these sectors due to competition and global slowdown. So India is in need of new sectors which can be the torch bearers of growth for next 10-15 years.

So there were many people around me with whom I used to do free and long discussions but then I noticed some of them using “Bhakat” jibes in social media and I left them completely after that. They are not worthy of a talk leave alone brain storming discussions. Recently, one such fellow brought the topic of RBI giving the dividend to central Government. One of my friend replied that central govt might needed this money to which that fellow used “you are a Bhakat” Jibe and was smiling. But then I asked him whether he tried to understand the inner working of RBI and the impact of this dividend. He only had a wry smile and murmured that ex RBI governor was also against it. But I told him where is his intellect and why you want to believe this man Raghu Ram only…why he has better credibility. Why can't Ex RBI governor Bimal Jalan who has advised for this dividend? Why it is that you people only find value in someone who is Anti-Modi? In some cases i have seen these people supporting pakistan and china also!!!

I told him that earlier Raghu ram had also hailed Modi Govt to initiate the bank loan cleanup and blamed the seeds of this crisis on reckless lending in UPA regime.

But the main reasons for not re-electing him was more about his attacks on Govt policies and less on his RBI operations. When he was not lowering the int rates in spite of Govt pressure he expressed that the prime mandate of RBI is financial stability/inflation not economic growth. But then on other hand he was criticizing govt heavily in public over Make in india, Jan dhan Yojna, Tolerance which was never his mandate and he was giving his comments as RBI Governor. I think he was crossing the line.

Raghu was also advising for privatization of PSU banks which was easy to say at his position not at the Govt level and the time needed for this was massive while economy/banks needed urgent support. PSU banks are not bad per se it is the managing power. UPA mismanaged but this does not mean that BJP would do the same. PSU banks have social responsibilities of taking banking to poor masses in rural area. I have seen SBI branch in remotest villages of India but not a single private bank. So another view to see PSU banks as social and economic growth driving entities as a whole not from the micro view of the profitability of these banks.

Even Jalan panel advocated the dividend out of revaluation reserves. The panel is chaired by former Governor of RBI Bimal Jalan who is an institute in itself and a very credible fellow. So I tried to explain to him the logic behind the RBI dividend. I am explaining the same here also. Please keep in mind these are just my views:

1. First of all, RBI has a very different type of balance sheet. It has liabilities in the form of money issued but it is the only one who can issue interest free liabilities. So RBI has this superhuman ability-it issues zero interest liabilities and earns interest from the assets purchased from it. Due to its capability to create money it’ll never default on its liabilities.

2. So due to the nature of its function-zero interest liab which earns interest-it’ll always earn net income so due to almost nil risk the requirement of capital is not high. In fact there are some countries like Israel whose Central bank has even operated with –ve capital. So we can afford to be conservative with central banks.

3. Then, RBI balance sheet is a part of big macro level balance sheet of Government so it can’t ignore the fragile balance sheet of govt while maintaining high levels of capital. RBI is part of Govt. But it is also true that to give autonomy to RBI they should have adequate levels of capital.

4. So as we can see now the issue is what is this adequate level? If we take the global standards, then RBI is way over capitalized. Against the median ratio of capital to assets of 8% RBI had 27% in 2017-18.

5. As we know reserves are part of retained earnings. Same is true for RBI but almost 3/4th of the reserves of RBI are revaluation reserves. Foreign currency assets are some 70% of total assets as this is the prime role of RBI to have foreign reserves. Then there is Gold and local currency G-Sec…so most of the reserves comprise of the fluctuations in these foreign currency reserves and Gold/G-Sec.

6. As rupee is falling forever so these reserves are only rising. So prudence says that RBI should keep reserves in case there is rupee appreciation. But RBI keeps most of the revaluation reserves in the contingency reserves not available for dividend (although commercial banks can show valuations gains as profits).

7. Now there is big secret about RBI needing these reserves. Actually RBI has limited ability to influence Rupee depreciation i.e. it can’t sell all its USD reserves to support the rupee as it needs USD for country. But strangely, RBI has unlimited ability to support the appreciation of rupee as it can buy any amount of USD by creating money at will. So due to this, the chance that Rupee will appreciate massively is remote as RBI can control that.

8. Also, at the current levels of contingency reserves RBI can support the appreciation of rupee to the levels of 45 which is highly unlikely.

9. So all this means that RBI can part away some of the revaluation reserves to support the government without affecting and risking its existence and autonomy. As per Jalan committee, RBI has excess reserves to the tune of 50%-60% (some 5-6 lac cr) which it can transfer in 3-4 years.

10. Now the next important question is-how this will be done and where the money will be spent. But here are many combinations to do this and each one has its own repercussions like public spending of this money will be inflationary and dangerous. To channelize for the economic growth and to avoid high inflation the excess dividend should go to bank re-capitalization.

But I was sure that that fellow could not grasped the essence of this explanation. I told him not to act like a fool. But when they use “Bhakat” jibes I actually find this very funny and laugh a lot as it just shows that they have nothing much to say or offer on the subject though I want to say to them, “come on!! you can be better than this.” But when these people use "Bhakat" jibes they think that they are a superman with underwear on the pant.

But I don’t expect foolish jibes from intellectual people. These are only for the use of average people who can’t think much so all this buzz and noise is created for these brain dead people. But I again want to say I expect much better from intellectual class.

Coming back to China- So there is no doubt that China has done a big blunder in handling Covid and spreading it in the entire world and there is massive global backslash and US is using this opportunity to trap, sideline and destroy China. So a normal human with average wisdom would have tried to reach other countries with helping hand using soft power. Just like what Taiwan did- Taiwan has distributed large quantity of medical assistance to the countries across the globe just to create a positive environment for them so that they can throw away the Chinese takeover threat. But what is China doing?? Just the opposite. They have tried to trap small countries into debt for medical supplies, imposed duties on Australia imports for asking for Covid inquiry, showing aggressiveness in south china sea, taking away autonomy of Hong kong and now they are creating troubles with India at borders. 

There may be a chance that Xi wants to portray the strength and power of China in the wake of local and global backslash. He wants to show that china is still tough and will take hard stance. But this is expected from average fellow like Xi and it is good that this is happening because at least now the world will be able to recognize the threat of autocratic and irresponsible country like china. The threat is not new and global powers had in them to recognize this much earlier when china was stealing technology, when they were ring fencing their economy but wanted to be largest exporter, when they killed innocent in Tiananmen square in 1989,when they killed Tibetan soul, when they are forcing millions of Uyghur muslim in detention camps. But all kept quiet due to their economic reasons as China was a massive market for them or they needed china money like Pakistan. But now all of a sudden, the world has got a massive slap from the china behavior and I feel world will never be the same for chinese.

India has also crafted their China strategy carefully now and all of a sudden India is getting into the game. India has made string alliances with China adversaries like US, Japan, Australia. Also i think, we need to play the economic card well because china can't afford to loose such a large market like India. In the past, India never tried to avoid One China policy and never recognized Taiwan as separate but recently two BJP MP’s virtually attended the swearing-in ceremony of Taiwan President Tsai Ing-wen and even sent her congratulatory messages. India avoided the same in 2016. India also supported Covid inquiry proposal at WHO. So now China by creating tensions at border areas is trying to give a warning to India. But I think India now is well prepared and well assured of itself. And even this plan of China to hit the psyche of India may backfire because this will further strengthen the purpose and need of strong alliance of India with US. China can’t afford the US alliance with India because this will hit its interests very hard both from India and US.

So China has done a grave mistake in letting India to go to US to balance the threat of China. China has done a foolish thing by posing themselves as a threat to India when it was certain that India would always wanted to settle the disputes with china and move forward. There is not much at stake with border disputes with India and both china and India could have settle the disputes by keeping something and giving something for the mutual benefit. China has nothing much to gain from any war against India now as this will hit China very hard both physically and economically and this will give US the chance the pounce at south china sea, Hong kong and Taiwan. Even Tibet will be in danger. But strangely China has chosen Pakistan which itself is very unstable and opportunistic. So wisdom would have advised China to befriend a democracy and responsible power like India for long term benefits. With Pakistan, China can’t even be sure of the safety of nuclear weapons. Some says that with Pakistan China may benefit from the expansion of BRI initiative via CPEC. But had china formed a friendship with India then india would not have opposed the same and in fact may have even partnered with them. 

Right now amid current border tensions there is high chance of a small scuffle between India and China though both may want to avoid it as no one knows for sure whether it could remain low intensity fight. Both may be apprehensive of each other (game theory) and may even decide to forego it for some other time. But China is giving India the reason to change their strategy and target where it hits china the most- by supporting Taiwan and south china sea and forming alliance with US for defense strengthening. There is a big tactical difference in the focus of both- India considers China as prime enemy whereas China considers US. So China has to cross US for its global ambitions and it is not in its interests to create a strong enemy in the form of India. Here, it is better if India behaves or create its image as someone very unpredictable because this makes formulating a definitive strategy against India very hard. Though i feel that India's Balakot strike and tough stance during Doklam is enough to create an aura of unpredictability. But China after facing humiliation at Doklam may want to avenge the same by having a low intensity fight...so India also need to create unpredictability. Also, there are always doubts on the combat qualities of chinese forces...they are timid and corrupt. One of the reason is the one child policy of china due to which some 70-80% of chinese army men are only son of their families and this make them combat averse. I think China knows this especially keeping in view the brave stories of indian army right upto kargil war where they snatched the victory from the jaws of defeat.

China foolishly tried to blackmail countries to stop questioning covid handling by stopping the supply of essential medical and other supplies. This has led many countries across the globe to think about their mistake in creating their supply centers in China. And I have no doubt that there will be flight of supply chain from China. Whether this will come to India or not is another thing which I’ll discuss in another post on economic revival and growth of India. China may try to stop this forcefully but now they have already committed the grave mistake and now there is no stopping.

I have seen some commentaries these days which say that China growth is much internal now and share of exports have fallen to some 20% of GDP. So they mayn't worry that much about Exports. But if you ask me this is not the case and there is a need to do some fine tuning. First, Investment is one of the biggest components of the China’s GDP (some 40%) and this investment is controlled by the Communist Party. Massive funds in the form of Debt is given to state run enterprises, local governments via state run banks and this debt is used to construct roads, bridges, large real estate projects. So for them it is very easy to grow GDP. By increasing debt for investment by some 10% they can create GDP growth of 4% (10% of 40%).

But most of these investments are waste and bad as they do not contribute anything for GDP growth because they are in excess of their requirements. Nobody use these bridges, real estate projects…these are ghost cities. So these investments does not do anything for the economy…no factory uses the road and bridges to move their goods faster, no farmer benefits from them and save his agri produce. So these are just bad investments and needs to be written off so as to correct the GDP figure. But this is not done in China and as per estimates some 10-15% GDP is reported higher due to fake numbers and bad investments like this. In my view this can even be higher. China has one of the highest debt to GDP ratio ( 317% as of now) and most of the debt is bad.

So if one takes into account this excess reporting of GDP by some 15% then all of a sudden 20% share of exports becomes 30% and this is very significant because share has fallen but absolute value has gone only bigger and bigger and then further there is a question of distribution pattern of local growth and export income.

I am leaving this topic here now due to length of this article but will touch this issue in much detail in the next post on economic growth.

IND AS 115: Whether Covid Lockdown expenditures at Project sites are abnormal costs?

Covid lockdown has inflicted a very severe damage on the businesses (may be short time impact for most of the businesses). But in some cases, the hit is like a double edged sword where they have lost the revenue but can’t avoid the expenses. Project sites are one such casualty. Infrastructure projects generally recognize revenues under percentage completion method (Input method) as per the guidelines of IND AS 115. Here the issue is whether the expenditure incurred by any company at a project site during the covid lockdown is abnormal expenditure without having any impact on contract performance and these are not reflected in the contract price. So these covid period costs should be charged off into the profit and loss account directly and should not be considered as part of contract costs and to evaluate the percentage completion of the contract. This view has been stemmed from the following Para from IND AS 115:-

Para 98: An entity shall recognise the following costs as expenses when incurred:

(b) costs of wasted materials, labour or other resources to fulfill the contract that were not reflected in the price of the contract;

First of all, wasted material and labour cover the cases like when we supply some wrong dimension steel to site which is not used at all for the work and so this is wasted material and an abnormal cost as this incurred cost of steel will not impact the work progress neither there is any clause for the reimbursement of the same in the contract. Same is the case for a transmission tower erected at wrong location with material given by customer so the labour is wasted and the entire tower will be required to be erected again. So we can see abnormal costs are those whose incurrence does not have any impact on the future work progress and contract price.

But can we say that the costs incurred for minimum site running expenditures like labour retention costs, crane rent, electricity bill, car hire charges are abnormal and have no bearing on the progress of the work like abnormal costs we have explained above. But this is not the case because if the management had decided to cancel these contracts (clause in the contract?) to save these costs and then re-arrange these resources after the end of lockdown but in that case they would have incurred much higher costs due to demobilization and mobilization costs and labour would have been more difficult to rearrange and that would have impacted the work progress very badly after the lockdown. So we can see that these expenditures are incurred in order to save the contract from over costs and delays which can result into penalties (even after considering lockdown period as force majeure). So this expenditure is not abnormal as non-incurrence of this expenditure will hinder the objectives of the contract (costs and timely completion) and by this way it is different from the two cases we have mentioned above where non-incurrence of wrong steel and labour will not have any impact on future work progress. By incurring these costs, the contractor keeps the project site ready for functioning after the end of the lockdown and so these costs have do have a bearing on future work progress.

Further, in many contracts there is a clause for reimbursement of minimum expenses incurred during force majeure period (over run charges, ORC). This lockdown is a force majeure event (due to an act of Government). Hence we can see that if there is such clause of ORC payment o to contractors during force majeure period then these expenditures incurred during lockdown is taken care by contract revenue in the form of ORC payment and one can say that these are not abnormal. But force majeure events are not abnormal events in the sense that even though they are difficult to foresee but still these can be taken care in the contracts by having adequate clauses in the contracts. It is just like we take project insurance because loss/damage events are impossible to foresee and prevent so these are taken care in the form of insurance and insurance has a cost to the contract. And when insurance is in the scope of the contractor then he builds the same into his bid price. Hence, if insurance is in the scope of contractor then even if there is no explicit price mentioned against insurance cost but it is treated as if insurance cost is built into the contract price. Hence, when there is a damage or theft of a material the same is not considered as abnormal cost because it is insured although in many cases firms do not get any insurance claim from the insurance company for the loss.

Same thing is true for force majeure costs also. Force majeure event can be in the form of flood also. In the areas prone to heavy rains there are always chances of heavy flooding (force majeure). So if there is no ORC clause in the contract for taking care of extra costs due to floods then the contractor will have no choice but to build the same into the price. So it all depends upon the judgment and assessment of the contractor in each case because the events like lock down are once in a century type of events and if contractor decides to build the probable costs in the contract price there is every chance for his bid to be lost. So inclusion or non-inclusion of force majeure costs becomes a commercial or business decision and so this is not an abnormal event. Like if management specifies a clause in the crane rental contract that they can cancel the contract any time then the same will result in higher cost because some people will not bid as they would settle for somewhat lower price for a fixed period contract elsewhere with some other customer. So this firm may either get sub-standard crane or higher price due to less competition. In order to avoid this management may continue without mentioning such a clause in the contract just to save the force majeure period costs because this can become counterproductive. So as we can see not having a contract cancellation clause is a commercial and business decision. The risks of force majeure events are well known but not taking care of the same in the contract does not make them abnormal events instead these are business decisions only.

But buying a large quantity of wrong dimension steel or erecting a transmission tower at wrong location are abnormal events because firms do not bid for contracts (building these mistakes in the price) thinking that they will do these types of mistakes which are in fact the essence and purpose of their business. Hence as we can see there is this fundamental difference between abnormal costs and business decision. So incurring unavoidable costs to keep the project sites ready for functioning after the end of the lockdown is not abnormal costs not having any impact on the future work progress but in fact these costs will ensure the timely completion of the contract along with avoiding heavy mobilization and demobilization costs and penalties due to delay in the contract completion.

Hence expenditures incurred during covid lockdown should be considered as part of total estimated cost to fulfill the contract and be treated as incurred for the purpose of revenue recognition.

Further, due to increase in the cost of labour and material due to lockdown a contract may become onerous. An onerous contract is a contract in which the aggregate cost required to fulfill the contract obligations exceed the economic benefits expected to be received from it. In such cases, the contract shall be accounted for as per IND AS 37 and a provision/liability is to be provided in the books.

( Views are Personal)

GST Issues: ITC of prepaid Insurance premium

Doubts have been raised on the availment of ITC on prepaid insurance because in conditions provided for claiming ITC (section 16(2)) under GST act, one of the conditions for availing ITC is the receipt of goods and services. So there are apprehensions that insurance service is not received to the extent of prepaid insurance hence ITC is not available. However there is nothing in GST act which disallows the ITC of GST paid on full insurance premium regardless of the periodicity of the premium paid.

1. No financial year and Prepaid expenses concept in GST Act: First of all, the figure of prepaid insurance is calculated as per matching concept which is one of the accounting conventions whereby firms recognize revenues and their related expenses (relative to revenues not independently) in the same accounting period i.e. financial year. Income tax act also recognizes the financial year concept. But there is no such financial year concept in GST. In GST, there is no concept of prepaid expenses and carry forward of ITC in the next accounting period based on periodical benefits. The condition of receipt of goods/services as per clause (b) of section 16(2) provides:

b) he has received the goods or services or both.

As one can see, above clause does not say “receipt of goods and services in the given accounting year” i.e. the receipt of goods and services is not further associated with accounting period nor any such restriction/condition related to accounting period is provided in this section (section 16). The clause (b) only provides for the receipt of service in substance. Hence under GST, Insurance service for the entire underlying policy period is supplied and received when insurance policy (invoice) is issued by the Insurance Company. Insurance service is duly received for the purpose of section 16(2) when invoice or policy document is issued but prepaid insurance is calculated not because the service to that extent is not received but as under accounting/income tax revenue is accounted for in the books only of a particular period (fin Year) so accordingly expenditure is also required to be accounted for that particular period only. So periodical accounting does not define the “receipt” of services. Service for the purpose of GST is received instantly on receipt of invoice.

Further, benefits of capital assets are also enjoyed in more than one accounting period but there is no such restriction in GST act to avail the ITC of capital assets periodically. Full ITC is available in GST against capital assets. However, in service tax regime the same was available in two yearly installments and this restriction was duly provided in the service tax act. But as we can see, no such periodical restriction is provided in the GST act. Similarly, in accounting/income tax advance receipt is not recognized as income under matching concept but GST is payable on the same (so there is no matching concept for revenues and accordingly no matching concept for expenses) hence GST act is more like a cash flow phenomenon.

2. Explanation to Section 13(2) of CGST Act: Further, Explanation to Section 13(2) (Time of supply of services) of CGST Act provides:

the supply shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment;

So as per the above if supply is deemed to be provided to the extent it is covered by invoice then the same can also be deemed to have been received for the purpose of section 16(2). Further, section 16(2) starts with non-obstante clause “Notwithstanding anything contained in this section” so some have opined that this non-obstante clause restricts the application of any other contradictory clause in any other section on the conditions specified in this section for availment of ITC. But non-obstante clause in this section only protects the actions provided under this clause from any other over-lapping clause provided only under this “section” (section16) not under the entire act. So explanation to Section 13(2) of CGST Act also covers the section 16(2) and service can be deemed to have been received to the extent covered by the invoice.

Hence, as per the above it can be concluded that the ITC of GST paid on insurance premium (regardless of periodicity) can be availed provided the invoice has been issued and payment has been made.

(Views are personal)

Covid-19 crisis and The Way of Tao

Coronavirus spread has devastated the entire globe. The devastation has not just created a healthcare crisis but also economic and existential. But most horrific thing about this crisis is that it has, with its global spread at fast pace, turned much adorable “globalization” into a curse. This curse is not limited to the spread of virus across borders but with the closure of international boundaries it has stopped the flow of goods across the globe because globalization has resulted into vast distances in demand centers and supply centers like USA is facing extreme troubles in procurements because China is its main supplier although many supply centers in china are in fact owned by American companies. It is not that these products can’t be manufactured in USA or something near but these are being manufactured in china and then travelled to thousand kilometers just because of profit or lower costs. But all this has really rendered our world an extremely complex place.

But amid all this chaos, one day I happened to remember one great piece of wisdom about state of utopia…the ideal place to live life and it describes Utopian state is a small country of few people who love their homes so much that they do not like to travel, they are content with healthy food and useful clothes, they enjoy the labor of their hands. These words are from the great Chinese mystic Lao Tzu (Laozi) and are taken from verse 80 of his book “Tao Te Ching”. His words continued to come into my mind all the time recently. It is strange that I am missing this great man now in most difficult times but the wisdom of Lao Tzu was never more relevant than it is now. It is quite ironic that china is the epicenter of current covid crisis which is the birth place of Lao Tzu and Taoism. Let me reproduce this great Verse:

Imagine a small country with few people:
they have weapons and do not employ them;
they enjoy the labour of their hands and
do not waste time inventing labor-saving machines.

They take death seriously and do not travel far.
Since they dearly love their homes, they are not interested in travel.
Although they have boats and carriages, no one uses them.

They are content with healthy food, pleased with useful clothing,
satisfied in snug homes, and protective of their way of life.

Although they live within sight of their neighbours,
and crowing cocks and barking dogs can be heard across the way,
they leave each other in peace while they grow old and die.

Actually Utopia is not a physical state (and quite possible that it may never be created but going near is possible) but it is related to mental state first. So Utopia is not a place of vast flashy palaces, no work, vast variety of food…not at all. But Utopia is when we live our lives in simplicity (without striving too hard for everything and thus missing the present moment of bliss), harmony with nature (No over exploitation of natural resources) and contentment with what we have.

But let me clear some things about Lao Tzu. People often take him as supporter of laziness (doing nothing and sitting silently). But when I read him I did not find anything like this. In fact, Lao Tzu does not talk about fixed dogmas…fixed rules to live life. He feels everyone shall find his own path. In my view, this misunderstanding of Lao tzu is due to our misunderstanding of simplicity and contentment. We think simplicity happens when someone wears plain white clothes (not costly), eats vegetables and rice and no meat, and rides on a cycle. But this is not the meaning. Simplicity and contentment happens when we do not strive madly for achieving and getting something because in this madness we’ll miss the present moment which we can enjoy. So we are simple when we enjoy what we have or can have without resorting to “over-doing” because this “over-doing” is going to break the balance of our lives and natural resources.

Many authors have accused Lao Tzu for supporting backwardness and boring life. But I think there is tremendous amount of misunderstanding of this great man mainly because Lao Tzu was way ahead of us in the understanding of subtle forces of life and then cryptic language of his book has made people to interpret it as per their level of consciousness and wisdom. But Lao Tzu was not backward or anti-growth. In this verse, he is not asking to not to produce weapons and boats. He is asking for having these but people shall not feel the need of using these. There is no doubt about the weapon use. About boats, Lao Tzu is not asking for abandoning (doing) them because he is not a person to enforce doing something. He is a believer of the happening. Actually in this verse, he is mentioning the signs of an ideal state. First, state does not exist on its own i.e. it does not have any consciousness or collective consciousness. So contentment and enjoyment at individual level of what one is having is the first pre-condition of an ideal state. Hence, people should first enjoy their current state. If they do not like their home, their city then there is no value in going for a vacation travelling afar. Lao Tzu does not see any value in this…for him this is not ideal. He is not abstaining from travelling but first one should make his home an ideal place for living.

 I know many people who have left farming for a job in big cities where they are living a very nasty life…in crowded places, terrible pollution and traffic. And then they go back to their villages or hill stations for taking a break for this nasty life. Lao Tzu does not advocate this nonsense life just to earn more money. We can enjoy 10-20 days vacations in our village but we can enjoy this forever if we leave our greed for money and name. If we can see, we all want to go to Switzerland, hills, sea shore and forests because we do not derive happiness from our present way of life. We show other people that we are successful with all our money but deep inside only we feel the void…there is no real happiness. Lau Tzu knows that happiness is not relative just like most of our things (truths) are…happiness is not relative to the views of other people about me. Lao Tzu knows that it originates from our within…from our actions only for ourselves. So Lao Tzu wants people not to be guided and motivated by money and social success because there is no end to this greed.

Remember Lao Tzu belonged to a period which is almost dated back 2700 years so one just can’t juxtapose his words into present physical world and declare him anti-growth. His physical world was different from our world but much advanced from Stone Age. So Lao Tzu could have told to go back to Stone Age nomadic life but he had not. He had not asked people to wear clothes made of skin or tree leaves. He was saddened not by the growth in physical world but by the moral decay of humans at that time due to excessive greed and longing for physical life avoiding simplicity and natural harmony. So when he tells for doing labor with hands in farms, one can’t conclude that Lao Tzu would have wanted the same thing at present. He just wants people to involve in physical work because even now we all have realized how our sedentary life style has created havoc with our health by giving rise to dreaded life style diseases like Diabetes and BP.

In our quest for physical growth, we have destroyed and polluted nature and natural resources at massive scale. And without any further explanations, we all know that we are over-doing our lives for long time and we have destroyed everything which can turn this earth into a Utopia.

Lao Tzu- The wise old man

Lao Tzu was the greatest thing that happened with China but drifting away from the path of Lao Tzu was the biggest mistake committed by China. Lao Tzu (which means wise old man in Chinese) was the father of Taoism (Daoism in Chinese) in china. He summarized his experiences and views on how to live a perfect balanced life in harmony with nature in his book “Tao Te Ching”. If you ask me, Lao Tzu was rare among all the mystics ever born onto this earth. Quite unlike most others, Lao Tzu found that the life on earth can really be worthy, having purpose and true happiness. He did not denounce this life by regarding it as worthless but a chance to experience blissfulness during this short journey on this earth. But what we regard as happiness is the first on the list of Lao Tzu which according to him makes our life miserable and worthless. Main reason- our happiness is in the eyes of others and to make matter worst these eyes value gold more than the experience. We value what others think about ourselves not what we want to do for ourselves and as this is happening for ages we take this as part of our life…we never question this nonsense. We think that this is the only “way” to live this life- the way which only makes our life miserable…it is only about for how long our bodies can tolerate this nonsense which we regard as life. That’s why the likes of Lao Tzu had to come forward to show us the correct path, the Tao. Tao means “the way”.

As per the legends, Lao Tzu was eighty years old when he retired feeling extreme sadness by seeing people living life full of corruption, hatred and misery in complete isolation from the path of natural goodness. Lao Tzu lived in modern day Tibet around 606 to 530 B.C and before leaving the place forever he was requested by one of his friend who was the custom officer to write his teachings which resulted in this wonderful book- Tao Te Ching and perhaps this has been the most translated book after The Bible and The Gita. But still I think that most of these efforts have still failed to catch the glimpse of the soul of Lao Tzu, the Tao. I think he is one of the least understood mystics. I often hear that he was a great philosopher. But I do not think that he was a Philosopher…Philosophy does not require experience…it is the vision of the mind….contemplation. And Spiritualism begins at the fall of mind. Lao Tzu was a spiritual man (not religious)…a true mystic who felt the divine forces governing life and most of all been able to express it in most subtle way.

I think this misinformation about Lao Tzu stems from the fact that his masterpiece “Tao Te Ching” does not talk about God, his personality or his reasons for creating this world. But that’s exactly why I found this book rare…a true masterpiece. The Great Lao Tzu talks of life on this earth. Tao Te Ching is about man not superman (God). Lao Tzu was able to observe the universal law behind all the forces of nature and this book talks of this law with reference to man’s life not about the nature and origin of this universal law. It just accepts the presence of this law and then moves forward to assess its relationship with the happiness of human beings.

But the language used by Lao Tzu is pure magic. It is unimaginable that he could understand the nature of universe with such perfection 2700 years ago and most of it he could express the same in human language in most perfect way. When you read this book…in every Verse you can feel the presence of quantum mechanics. Derivation of non-dualism from dualism (Yin and Yang) is unimaginable. Lao Tzu looks like a person living for thousand years…fought countless wars and recognizes every grain of sand on this earth.  Most people take China as a land devoid of any religion but if you ask me then Taoism is the most advanced religion in the world. Buddhism is very similar to Taoism and that’s why it could spread to Far East after it left India.

After Lao Tzu, it was the great Chuang-tzu (Zhuang Zhou) who carried forward the Taoism to great heights. People doubt on the existence of Lao Tzu but Chuang Tzu did happen and he was the man of massive wisdom. It was because of Chuang Tzu that Buddhism is transformed into another unique religion in China/japan- Zen.

What is the Path of Lao Tzu-The TAO

But what is this Tao? Lao Tzu was a very keen observer of the nature. He watched trees, breeze blowing, the warmth of sun, flowing river. Very soon he realized that except human beings nothing strives (please note strive is more aggressive than doing or wanting) for power and fame. Things are just “are”…there is no attempt to break the natural harmony. Lao Tzu was quick to understand that this madness and hunger for power and money is the root cause of all the misery of humanity. Instead of being happy at what we have naturally; human beings want to grasp more and more just to earn the jealousy (not praise and value as we think) of others. Like when i compose music or draw a painting I do not feel happiness at this great piece of creation because I want to create a great noise for my creation…to earn money and name…nothing else. It was a shock for the people like Lao Tzu that how someone can’t feel happiness at his creation and quite contrary he feels happy only when his creation is rewarded with money and fame…otherwise he feels miserable.

I have seen many creative persons who are always full of despair and emptiness because they could not earn name, fame and money with their art. They were always taught the value of money and name since their birth and they believed this to such an extent that they just can’t enjoy the gift of creativity given by Mother Nature to them. If they have the eyes they should see that they are the chosen ones because I have always felt that creativity is the best way to feel happiness….in fact extreme happiness. In fact not just happiness but feeling close to Almighty because if you ask any creative person how he creates music or draw a great painting or a great story then he can vouch that in some sacred moments these creations unfold onto them from somewhere. But it is shocking that these fellows can’t value and feel the bliss at these rare moments when Mother Nature visits them.

I know a person who has been blessed with a great voice (for singing) by Mother Nature but due to some reasons that he couldn’t touch the heights of name and fame and I have always seen him miserable in all his life. He could not enjoy his own singing because he strived for name in the society…the only aim was to rise high in the eyes of others. So in place of feeling bliss at this amazing capability he has wasted his life so far in grief. And if you ask me singing and music is amazing…it is the language of emotions…best way to express joy and pain. When you sing or hear music the sound resonates with something in you (Vedas say “Shabdaikagunamakasham” which means that Shabad (Sound) is the guna (Property) of Akasha) and you become a sound only….time disappears…eyes stand still…hours pass like minutes. I told him to start teaching a small group and enjoy but he does not want a small group of people to know him, value him…he wants the entire sky.

For Lao Tzu, this is not the way to live life…this is not natural. Happiness and peace for Lao Tzu come from one’s within and do not depend upon worldly success and wealth. Lao Tzu wants people to observe nature to understand how all the things in nature follows the natural path…natural law which guides all the things in this entire universe…the Tao.

Taoism: A cosmic interplay of opposites

Lao Tzu’s Tao is about the universal law…the nature of reality…the regulation which holds together entire universe…all the existence…and everything. That’s why lao Tzu tells that Tao existed before everything. The most remarkable thing about Taoism is that there is not personified God…they just talk about the universal regulation. And this is why Taoism is so special. Almost all mystics have talked about, described the Supreme Being called God in their writings or teachings. They have tried to personified him for our understandings and if we can see this has created so much of religious anarchism among humans because all have tried to declare that their God (personification) is most authentic.

But if you ask me then this non-personification is the biggest contribution of Taoism to the mankind. But why non-personification? Just see what Lao Tzu says:

Verse1: The Tao that can be told is not the eternal Tao. The name that can be named is not the eternal name. (Just look at the poetic beauty of this…wisdom…just incredible…I read this and I have teary eyes)

Verse 2: All can see beauty as beauty only because there is ugliness.

All can know good as good only because there is evil.

Being and nonbeing produce each other. The difficult is born in the easy.

Long is defined by short, the high by the low. Before and after go along with each other.

So the sage lives openly with apparent duality and paradoxical unity.

The sage can act without effort and teach without words.

Lao Tzu understands the inherent limitations of our language and senses. That’s why he refrains from using words for the ultimate doctrine because of the limitations of our language this can lead to very wrong interpretations. Our words/truths are relative…relative to the point of reference and they are defined by opposites. Truth is not defined or confined by time and space…truth is absolute When we say good then this points towards existence of bad also.

The great PD Ouspensky in his book “The Tertium Organum” (one of the best books I have ever read and will ever read) explains:

“We cannot define one unknown by means of another unknown. The result is nothing but the identity of two unknowns: x = y, y = x.

Matter is that in which the changes called motion take place: and motion is those changes which take place in matter”.

And you realize the relativity of our facts and concepts. Our words are incomplete and hollow. Like health…we do not have any positive or independent definition of health. It says health is when we do not have any disease/illness so health is defined by the opposite (although I feel health is when we do not feel our bodies…so light). So when we say someone is healthy then that also means illness.

That’s why lord Buddha became silent when asked about God. Some says he denied God but he had not…he was silent and silence does not mean denial. He was silent because of stupidity of human beings. This earth has seen countless enlightened beings who have tried hard to make us understand the nature of supreme existence so that we can see the meaninglessness and worthlessness of life we are living. But just look at the following what we have understood so far about the supreme existence or God:

Our God wants us to acknowledge his gratitude for giving us this life and so he seeks submission and continuous songs/reciting of praise. And when we drift away or avoid his pre-described path or directions he cursed us with sufferings in hell.

This is what we have made of him…only in the image of human  being…and this is what precisely the essence of religion for most of the humanity. To be a follower of this type of religion one only needs one thing- Low IQ. It is not surprising that most of these so called religious people have low IQ. These are the religious people who feel content just by offering a thing or words as prayer, who feel being religious will end all their worldly problems, who feel just by listening verses, by fasting they are touching the supreme divine. You will not see any sort of religion in their eyes, their actions…they indulge in all type of nonsense but they think they are religious. In fact, they do not have their religion by their choice. They are born into it.

But this happens when we have a personified God who is kind and desires for our happiness. So I can offer one coconut or flowers or fasting for twice a week and I will be delighted that I have made God aware of my religiousness and he’ll take care of me. It is shameful that we still seek the world from religion. But if you go near a person like Buddha or Lao Tzu they will first of all destroy the world for you so that you can see the real world beyond. They will not do this in most pleasing way; in fact they will kill you and your ego.

If you ask me about God and religion, then creativity is the thing which takes us near to the supreme divinity. When Supreme created this universe, he had done the greatest piece of creativity. So when we create something- a new music, new piece of an art, new invention...every new creation is his mirror image, his idea of being in bliss, his idea of purpose, happiness and Joy. We are moving ahead the wave started by him...the realm of creation. That’s why creative people are rare. That’s why creative people always feel that in their creation they are guided by the divine. Every new song, new painting, new story, new idea is an addition to this world.every song is unique...not created before.That’s why the world value creativity so dearly. So being creative and by creating something new we are worshiping the Supreme in reality. At times, creative people looks eccentric but they are the happiest if guided properly to not to seek money and fame. That’s why I have always felt that an ideal society will motivate and support the creativity.

That’s why I feel for today’s world, Lao Tzu is the person to follow.

Lao Tzu sees the perfect harmony in opposites…it is the inherent design of nature….unity of opposites. It shows that the visible separate or opposite systems are united and one can’t exist without the other. Universe is one single cosmic event or existence but it is human who differentiates between life and death, old and young, good and bad, male and female energy, light and darkness, joy and sorrow because they can’t see the oneness of the existence. The opposite forces do not kill each other but they are complementary forces balancing the life for its nurturing. So those who understand the Tao and paradoxical forces of life they know that due to very nature of life being balanced out by opposing forces so there will be good and bad times but the follower of Tao does not try to avoid this but he accepts this as part of life and by doing so he transcends this. This is most basic teaching of Taoism- the Yin and Yang symbol.

Lao Tzu observes that this unity of opposites exist in both natural and human world. Love and hate coexists. Happiness and grief coexists. For example, I love my beloved and this feeling of love gives me great happiness and joy but in the end one day she will be dead or she would leave me for someone else and this will turn all the happiness into pain and all the love into hatred (if she leaves me). But Lao Tzu tells us to accept this as nature of phenomenon as it follows the universal Tao of balance in opposites.

(Yin and Yang)

One day, a young man was telling me about himself and he claimed that he is very brave and has no fear. I told him that actually a brave man does not know that he is brave. He is just “what he is” and when someone says he is brave than that means he also has his share of fear. I asked him a question about three persons who on a dark night visited a haunted graveyard. One person believes in Ghosts but still he went to the graveyard. Second fellow does not believe in ghosts (but he knows the concept) but still he went and the third does not even know the concept of ghosts and he also went to the graveyard. Now tell me who among three is brave or bravest of three? This is paradoxical life. And if we can see the first & second fellows are brave but they have the element of fear in them but the third fellow is not having any fear at all but whether he is brave or not?? I leave this to readers. But if we can see nature- the lion who is the king is very brave but still he also has the element of fear in himself. Sometimes an angry buffalo makes him run. This fear is necessary for his survival. So if we can see then fear is the Yin and courage is the yang. Courage is not the “absence of fear” but acting on the face of your fear. But a lion is never good or bad, a human being is. So the courage can make a good human die for the cause of highest good.

In many commentaries on Tao Te Ching, I have seen authors explaining this unity in paradoxes (verse 2) that Lao Tzu wants us to see the contradictions in life and wants us to avoid any action on these opposites like Lao Tzu will not take any “action” when he loves somebody; he won’t tell that person that Lao Tzu loves him because love will “lead” to hatred in the end. Lao Tzu will be silent. First, I do not think that telling somebody that I love him is “action” and falling in love is not. Love has already happened but it coexists with hate. But not telling love is not the way of Tao.  Lao Tzu is not denying the opposites that if you say love then hate will come. No. He is just saying that both these coexist just like all the things in our life and nature…they are balanced by opposites. So we should accept them just as they are in whole. No need for any action in denial of this. This is the meaning of Lao Tzu when he says that sage manage affairs without action…it is the innate nature of Tao.

I need to stop here because Taoism is so vast that it is not possible to cover the entire vision here.

Covid-19 has given us a perspective to stop and look back

In our quest for growth in the form of money and power we have wreaked havoc on this earth and destroyed so much of delicate ecosystem. Every country wants GDP growth and so they are just tearing earth for minerals, cutting forests, polluting rivers, making public consume more and more. The end result of this nonsense is our devastated lives and highly polluted cities and rivers. If you ask Lao Tzu then he would say that human has tried to hit the balance of yin and yang and so earth will take its action.

Sometimes back, I was sharing this with my wife that mother earth is a living being and it is not possible that “they” (the creators) will leave the destiny of earth in the hands of foolish human beings so we may see some “cleansing” action from mother earth and that can bring devastation and chaos in our lives. But now with the onslaught of Covid-19, I think nature has given us a chance to sit back and observe the peace prevailing in our lives and at earth these days. Cities are having fresh clear air…pollution levels are reducing greatly. This covid crisis is going to phase out soon but I really hope and pray that this will give us much more in the form of understanding the importance of living in harmony with mother earth and importance of simplicity and contentment in our life.

I hope that this will serve as a perspective for us to bring necessary changes in our view towards growth. First change which I feel we need is to include balance sheet in our calculation of GDP growth. In our GDP calculations we only have profit & loss account where we measure the goods and services produced in a given period of time. But we never account for the damage inflicted by our GDP growth actions on environment i.e. deforestation, soil degradation, air and water pollution. These natural resources are part of natural capital which is most important for any sort of productive activities. We can’t run our factories alone on machines and labor. These factories needs air, water, soil, forests etc….everything we regard as natural resources. All these natural resources are vital for our existence, so if I destroy a forest and extracts iron ore from it we add this iron ore to GDP but we never deduct the damage caused to Natural capital by this activity which is as real as iron ore. So if we inflict any permanent damage to this natural capital then the same should be reduced from the total goods/services produced. Hence our GDP figures are overstated. And unless we design a way to calculate this damage we will never understand the value of Natural capital. So we need to have a balance sheet of an economy comprising Natural Capital (its value will be massive…no doubt) and any diminution in the value of this natural capital should be adjusted against National Income account to present the true state of our economic activities.

I am not surprised to see economists declaring the onslaught of global recession. But I think recession is much more fundamental than fall in GDP rates alone. Recession is about significant misallocation of productive resources whose course correction is not possible in short term. Like a country, where massive resources have been put for manufacture of Automobiles (for local and exports) and then all of a sudden there is global oil scarcity due to peak oil and oil prices shoot up which hit the demand for automobiles very hard. In this situation, it is very hard to do a fast course correction by creating new product manufacturing centers and also absorbing the massive loss of automobile capacity.

If we can see the situation now, after Covid-19 crisis there are high chances that people may not go to cinemas, amusement parks, Tourism, restaurants or even shared taxis (ola/uber)….i mean all public places. But whether this curtailment of demand for these products will be permanent? Actually, the crowd is not only at cinemas or restaurants alone. It is and will be everywhere- whether it is schools/colleges, factories, sports events, hospitals, businessmen going for air and railway travel. So avoidance of crowded means stoppage of all and everything. But deep inside we all understand that this is not going to happen so similarly there is a chance that when factories, schools etc. will be opened first then the same will dissipate the fear of crowded places gradually and this demand curtailment of cinemas etc. may not be permanent. Even at the times of Spanish flu in 1918-20 cinemas etc. were survived. So we’ll see this recession fear in detail in the next post as this post is only for the reverence of the great Lao Tzu.