The Covid-19 pandemic has afflicted India with its biggest economic shock since the oil crises of the 1970s. The Indian economy, among the world’s fastest growth emerging markets four years ago, contracted by a ghastly 24% in Q2 2020 and could even end the year shrinking by 7%, among its worst performances since the Great Depression when my Daddy was born in Calcutta and my friend Andy Hoptoun’s great grandfather Lord Linlithgow was the viceroy for the King Emperor George V.

It is tragic that the pandemic hit India at a time when its financial sector faced a credit malaise, social unrest had erupted in Delhi and UP and the economic reform momentum had stalled.

India’s draconian lockdown has amplified social cleavages in a vast, complex society of 1.4 billion people which had managed to raise almost 300 million human beings out of extreme poverty in the preceding decade. This economic fall from grace gives India’s pandemic experience a tragic, even Sophoclean, dimension. India’s lockdown resulted in an estimated 150 million job losses, trauma and megadeath for its untold millions of urban poor and the collapse of several hundred thousand small businesses in an economy unsettled by the NBFC/PSU banking crisis, botched rupee demonetization program and the introduction of GST.

India’s Covid cases are now 8 million, second only to the United States. Its fiscal stimulus has not been sufficient to address its tragic public health, social and economic dilemmas. The March 24 lockdown triggered a 45-50% collapse in private consumption, investment, construction and manufacturing output.

India’s public finance black hole, gutted by four consecutive years of decelerating GDP, has been exacerbated by the national and state lockdowns. This could lead to a potential sovereign, bank, state and corporate credit risk rating downgrade even as the economy emerges from the lockdown. Any sustainable improvement in discretionary consumption or public finance is hostage to the containment of the coronavirus curve – which has not happened as I write.

Hopefully Finance Minister Nirmala Sitharaman’s new $10 billion fiscal stimulus scheme will ameliorate India’s socio-economic trauma, though most global economists feel the BJP government’s policy response on the fiscal front is too little and too late. The RBI’s projection that Indian GDP will contract by a staggering 9.5% in the current March to April financial year is itself a de facto indictment of the government’s inadequate policy response.

This is a time for a dramatic fiscal stimulus, not symbolic packages and cosmetic reform. Prime Minister Narendra Modi needs to channel the ghost of American President Franklin D. Roosevelt, whose New Deal was based on his conviction that “the only thing we have to fear is fear itself.” A $10 billion fiscal stimulus will provide a pathetic 0.4% boost to the Indian GDP, nowhere near sufficient to address the national economic trauma.

The ratings agencies will downgrade India’s debt in any case since the combined fiscal budget deficit is projected to be a horrific 13% as state tax revenues collapse. While the Finance Minister’s commitment to fiscal prudence is laudable, India’s immediate sword of Damocles is deflation, not a resurgence in inflation.

India also needs to embrace privatization of state enterprises – okay, as an ex-Wall Street banker, I know the polite term in Bharat Mata is “divestment.” It is too much to hope for a geopolitical rapprochement with Pakistan and an end to the surreal confrontation in Ladakh/Askai Chin with China. South Asia definitely needs a peace dividend and a rupture from the communal demons that have poisoned its history since the fateful August 1947 Partition.

I feel inspired by Mahatma Gandhi’s observation “an eye for an eye only leaves everyone blind.”

(Disclaimer: The opinions expressed in this article are the personal opinions of the author. The facts and figures in the article do not reflect the views of The Public India.)

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From Russia – with all my love!

Everyone belongs to two countries – the country of their birth and the country of their imagination. A place and time that their soul simply cannot let go. In my case, that country is Russia and that place is St. Petersburg sometime in the late nineteenth century. My love affair with Russia started when I won the first prize in a children’s art contest organized by the Soviet consulate in Karachi. The first prize was six books of Russian fairy tales – which I devoured every night even as I trembled in fear for a nocturnal visit by the witch Baba Yaga. The ten-year-old Matt had a political DNA even then. I could sketch Lenin’s face because of his high cheek bones and bald scalp very easily as I knew his silhouette from my stamp collection. So, I painted Lenin in an art competition with the caption “Sovietski-Pakistani bhai bhai” in Urdu. Naturally, I won. This picture won me my first public accolade in life. Then there was the 1972 summer Olympics in Munich, the world remembers the Munich Olympics for the massacre of 11 Israeli athletes by Black September terrorists at Fürstenfeldbruck airfield. I remember Munich because Pakistan beat India 2 – 1 in the field hockey semifinals (but then lost the gold to West Germany, thanks to Herr Wolfgang Baumgart) as well as an elfin teenage girl who bewitched me named Olga Korbut who won four gymnastics gold medals for the USSR.

I faithfully watched the serial War and Peace on television with my aunts and cousin sisters while the love scenes between Natasha and Prince Andrei Volkonsky bored me stiff, but I was absolutely fascinated with the battle scenes at Borodino and the sight of Napoleon pacing in the Kremlin while Moscow burnt, waiting for a message from Tsar Alexander that never came. So, I entered the secret world of imperial Russia as a teenager, glittering balls in St. Petersburg palaces, the crowning and murders of successive Romanov emperors, the grandeur of an empire symbolized by the double headed eagle that extended from Finland in the west to Manchuria in the east. Comrade Brezhnev’s USSR was taboo on my family’s summer vacation spots which ranged from Dubai to Cyprus to London. So I traveled to Russia, via Gogol, Chekhov, Pushkin, Dostoevsky, Count Tolstoy and above all, Boris Pasternak.

I begged my parents to take me to the movie Dr. Zhivago at Bambino cinema in Karachi, even though ostensibly it was for adults only. I had zero interest in the romantic scenes between Omer Shariff and Julie Christie. My fascination was with the great battles between Trotsky’s Reds and the Kolchak’s Whites during the 1917 Bolshevik revolution, arguably the seminal geopolitical disaster of the 20th century. Even though I knew nothing about politics then, I just fell in love with this strange country and its eerie winter landscapes, so vast and unfathomable, so different from my arid Karachi and Dubai habitat. My late mother, an artist, loved Pasternak and the movie Dr. Zhivago. On the marble headstone of her grave in Islamabad, my father and I decided to etch the first words from Lara’s theme song in the movie – “somewhere my love, there is a song to sing”. I miss my Mom viscerally since she died in September 2018 but am comforted with the thought that Pasternak’s poetry of love accompanies her through eternity.

I was in college in America in the 1980’s at the height of the Cold War, when President Reagan maligned the Soviet Union as the “evil empire” and the Red Army fought a brutal war of attrition in Afghanistan under the notorious Brezhnev doctrine. Hollywood propaganda brainwashed me into thinking Russian women were all heavyset Amazon babushkas from Tractor Factory Number Forty-Nine. Yet when I returned to Dubai from New York after a broken engagement, the lovesick Matt discovered that the Russian women he met here were some of the most beautiful, charming and educated ladies he had ever met in his adult life and several could even discuss Anna Karenina and Count Vronsky’s doomed love affair with me in minute detail. My parents were stunned to see their son adapt so well from his old life in Greenwich Village in Manhattan to the demi-monde of Deira and Rolla Road, Bur Dubai.

I also discovered the Russian financial markets in the 1990’s, like so many of my EM junkie friends at Wharton and J.P Morgan Chase. I was mesmerized by the awesome potential of post-Soviet Russia. Yet the 1990’s were a chronicle of economic horror stories for the rodina. The privatization and looting by the oligarchs in 1996, the speculative mania and ruble devaluation of August 1998, Yeltsin’s alcoholic fall from grace, the gruesome wars in Chechnya and the collapse in oil prices. I was horrified when a friend I knew was gunned down in Moscow in a contract killing ordered by a Chechen warlord in Grozny. Russia just seemed too dangerous a place for a man who had just fathered twins and who refused to visit his beloved Moscow surrounded by armed gorillas.

Vladimir Putin’s ascent to power in the Kremlin coincided with a spectacular tenfold rise in crude oil prices and a resurrection of my financial Russophilia. I made millions of dollars in trading profits for an Abu Dhabi sheik’s private office, where I was CIO and even convinced him to come to Moscow with me to go deal hunting in Russia’s restructuring gas sector. I finally even visited the St. Petersburg I had got to know so well from Russian literature in 2007. The Venice of the North bewitched me in real life as she once did in my imagination all those decades ago in my father’s house in Karachi and Jumeirah. All those familiar friends from century’s past were still intact – the Winter Palace, the Hermitage, Nevsky Prospekt, Kazan Cathedral, St. Isaac’s, the Church of The Spilt Blood (built on the exact spot where Tsar Alexander the 2nd’s carriage was gutted by an assassin’s bomb in March 1881), the Admiralty, Mariinsky Theatre (where I watched ballet in the same balcony that held Romanov grand dukes a century earlier), and Vasilyevsky Island (which I had first visited in spirit with Fyodor Dostoevsky’s Crime and Punishment).

I left a seminar hosted by a Russian investment bank at my hotel and walked with my wife, Farah, without a map to visit the famous Yusupov Palace on the Moika Canal where AC/DC Prince Felix and Grand Duke Dimitri Pavlovich murdered the monk Rasputin in December 1916. The Bolshevik Revolution was born in St. Petersburg and so was Vladimir Vladimirovich Putin.

Russia still haunts my imagination and pervades my professional life. My most respected contact in Silicon Valley is a Russia born partner in a venture capital firm in San Fran. I have great friends in Londongrad who specialize in Russian capital markets. Arif Ahmed, my old Grammarian chum from Karachi, an emerging markets maestro who once ran Habib Bank AG Zurich and HBL’s wealth management units, has just joined a Russian investment bank. I have promised my twins and my protégé Manju that our dream holiday will be to visit the St. Petersburg and Moscow I once knew when the Romanov Tsars and Tsaritsas lived in the Winter Palace. You see, its all about love – and somewhere my love, there is a song to sing.