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Even in this age of transparency and connectivity, there are different standards for the developed world and the developing world; for the stronger countries and the weaker countries. Might is right still rules the economic jungle.

When the US revises its gross domestic product (GDP) numbers upwards to take into account theatrical movies, original songs and recordings, books and long-running television programmes, commercial stock photography, and greeting card designs, it is hailed as an innovation in correctly measuring GDP. I am not sure if the same will be the case if India revises its GDP upwards to estimate our parallel economy, which we all feel but don’t measure. Rules for judging a Hollywood movie is different than those for a Bollywood movie, even though Gone With The Wind evokes similar responses as Mughal-e-Azam.

When the developed world accounts for inflation, it takes into consideration improvements and enhancements. An increase in price is negated in inflation if the improvements can justify the price increase. Most developing markets follow the numerical way of calculating inflation, and core inflation becomes the norm. Food and fuel are an integral part of the developing world’s inflation. Taxes are excluded when calculating inflation based on the Producers Price Index, but included when we calculate inflation based on the consumer price index.

When the developed world serves a notice to gather information on tax avoidance or money stashed away in secret accounts, vaults of tax havens open up as if Alibaba has pronounced “khul ja sim sim". Information and cash flow out immediately. When a developing country tries to gather information, complex law processes and client confidentiality stonewall every attempt.

When the developed world takes recourse to information obtained through morally correct but legally not-so-appropriate means, it becomes admissible evidence. When the developing world tries to use the same information, the evidence is unacceptable.

When a financial crisis hits the developing world, torch bearers of global financial systems preach sharp reduction in fiscal deficit, significant devaluation of currency, raising interest rates to attract global capital, opening the economy to attract foreign investments, cost cutting including lay-offs to gain competitiveness and reduction in government debt through privatization. Such a crisis is called country or region specific. When a similar crisis hits the developed world, the remedy suggested is altogether different. The government bails out everyone, irrespective of the resultant surge in fiscal deficit. The central bank’s balance sheet is used to flood markets with liquidity and to lower interest rates, yield curve is flattened to induce growth, currency is supported through interventions and the government takes majority stakes in troubled companies, though it is not called nationalization. And, such a crisis is invariably called a ‘global’ crisis.

In trade negotiations, a subsidy given by the developed world is for maintaining environmental balance, encouraging innovation, and maintaining equilibrium in the economy, but subsidy given by the developing world is wasteful and needs to be controlled. The purpose and quantum of subsidy becomes inconsequential for the developing world.

In controlling pollution, the norm is absolute quantum of emission and not the per head quantum of emission. There is no accountability for the historical contribution to emission on an absolute basis or per capita basis.

The developed world and the torch bearers of global financial system preach free market for capital flows. They want instant and convenient access to capital markets around the world. They want ease of entry as well as exit. They want tax exemption, incentives and red carpet treatment.

Land, labour and capital are the three factors of production. Of these, only labour and capital can be moved. Since the developed world has excess capital, it is appropriate for them to demand free and open markets. But the developing world, which has excess labour, can’t demand free and open market for its labour. The developing world’s labour force can’t move freely in the developed world the way developed world’s capital moves freely in the developing world.

When the developed world’s currency moves into the developing world, it is neither debt, nor is it part of trade deficit. It is the consequence of facilitating global trade. When Indians buy gold and silver (and it stays in India), it becomes part of trade deficit.

When the developed world buys oil, there is a need for discount and favourable credit terms. When the developing world buys oil, it has to pay a premium for the assurance of long-term supply.

When the US goes back on its promise of converting dollar into a specific quantum of gold, it is about discarding an outdated gold standard. It is not considered a default, even though dissenting dollar holders were not given any option of withdrawing. If a developing world borrower defaults, it is a shame for the country, and the risk premium goes up.

The world’s largest holders of foreign exchange reserves (majority from developing world) are rated below the countries that have issued such debt (majority from the developed world). Countries that have defaulted at regular intervals, over centuries (Greece, for example), have remained at a much higher level of rating than countries like India, which has never defaulted.

There is no end to such examples of dual standards. In the 17th century, Sant Tulsidas had said, “Samrath ko nahi dosh gosai." (A strong person can do no wrong). This holds true even in present day’s economic jungle.

Nilesh Shah, managing director and chief executive officer, Axis Capital.

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