DAILY SUMMARY AND ANALYSIS OF hat conidence n The billionsire Mr Bentusconl whe boastad earlier yetealay that markets trast hitm because he sa tyeiont, told trowth nade in New withtheonwetct igitot 6 TH SEPTEMBER, 2017 AMIT BAGHE
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Sept 16, 2017 EDITORIAL Understanding the slowdown India's economy is slowing down: GDP growth has lost momentum in each quarter since the one ending March 2016 2016-17 2017-18 (01) (Growth rates,per cent) Governmentexpenditure 20.76117 4.51 121 2.38 1.61 8.696.66 . With every passing quarter, the slowdown is explained away either as a transitory phenomenon or as happening for reasons bevond the government's control: deficient rains, the sluggish world economy, or lately due to demonetisation and the goods and services tax (GST) The reasons offered change. The economic trend does not The economy's four growth engines are stalling or slacking Exports Private investment Private consumption
Of these, government investments and private consumption were still running until 2013. The other two were, and remain, out of steam. Let's Understand the four engines Exports and investments Official numbers have captured the weakness consistently- in exports for the past three years, and in private investments for more than five years. Reasons for low growth in export - The global economic downturn that followed the 2008 financial crisis dealt a body blow to exports, before which exports were growing smartly Recovery in the global economy has lifted exports of most Asian countries, but Indian exports are stagnating, their competitiveness eroded by the overvalued rupee. Reasons for low private investments The share of investments, the principal growth engine in the economy, in the GDP has declined steadily for the past five years. The decline in private investments is so sharp that it has offset the increases in government investments.
The steps taken for improving the ease of doing business and the foreign investments regime have proved insufficient in restarting the private investments cycle. As aresut, newjiobs are not gtting ceated. Widhout new jobs,consumption willoly grow up to a point. Why are investments on hold? The returns-risk projections of projects are not favourable Companies are not convinced that new factories will be sufficiently profitable v Among the variables that affect investment decisions are costs and availability of finance, land, labour, technology, logistics, and taxation. The government is politically sensitive. So, it has set a low target for consumer price inflation. For the same reason, it is unable to progress on land and labour reforms. V Additionally, in an environment of constant shocks and unanticipated policy changes, investment decisions tend to get postponed. If people feel unsettled, they are unlikely to invest.
Government investments and private consumption Government investments and private consumption depend on how well the economy is doing. - As incomes improve, private spending and tax collections pick up Growth in government investments and private consumption started slowing down in the quarter ending June 2017 Reasons? At the end of July 2017, the government had exhausted 92.4 per cent of the annual target of fiscal deficit. Demonitisation and Pre-GST Govt Side . The government insists these measures will prove beneficial over time. There is an inexplicable reluctance to take decisions that will deliver positive results quicker, such as reversing the investments slowdown and the exports stagnation
Sept 16, 2017 NEWS Unions toughen stand on reforms Labour Ministry to discuss five proposals in the Code on Industrial Relations Bill with trade unions What are the proposals? 1 Allowing bigger companies to retrench (B workers without the government's permission, 2.Increasing the severance (lay-off) pay by three times, 3.Restricting outsiders' role in trade union leadership, 4.Changing the definition of 'workers' and procedure for recognition of trade unions. Trade Unions stand . The government should discuss the industrial relations Bil in full detail. It should not interfere [with] the trade union composition and [not] allow lesser factories to retrench workers without the government's nod.
CONTD Background The Central government has proposed similar provisions in the Code on Industrial Relations Bill. The proposed Bill will combine the Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946, and the Industrial Disputes Act, 1947, into a single code. . With the Centre's plans to amend the Industrial Disputes Act 1947 taking time, States are going ahead with their own labour law changes to ease retrenchment norms in a bid to attract business locally with Assam joining the race recently Since labour is a concurrent subject, the Assam Assembly passed amendments to the Industrial Disputes Act to allow companies with a staff of up to 300 to retrench workers without government permission, up from the present requirement of up to 100 workers . Till date, apart from Assam, Madhya Pradesh, Haryana, Rajasthan, Andhra Pradesh, Uttarakhand and Jharkhand have allowed larger firms to retrench workers without seeking its permission by bringing their own amendments to the Industrial Disputes Act.
Sept 16, 2017 NEWS Will push Myanmar on refugees, India tells Dhaka Rupee, gold widen current account gap India's continuing dilemma of balancing its interests between two neighbours Bangladesh and Myanmar-over the issue, which has seen Delhi shift its position several times India and Bangladesh are "in close touch" over the issue, but that it was "too early" to say whether India and Bangladesh will present a united front at the UNGA, where Bangladesh has made it clear it will call for international pressure on Myanmar. . A stronger rupee, in addition to gold imports before the Goods and Services Tax regime kicked in, has led to a sharp widening of the current account deficit (CAD) to $14.3 billion in the April- June period, which was 2.4% of the GDP. In the year earlier period, the CAD was $0.4 billion, which was 0.1% of GDP. Reason? The widening of the CAD on a year-on-year basis was primarily on account of a higher trade deficit ($41.2 billion) brought about by a larger increase in merchandise imports relative to exports. The current account is defined as the sum of the balance of trade (goods and services exports less imports), net income from abroad and net current transfers.
Sept 16, 2017 NEWS 'Recurving' cyclones dried August rains . A strange pattern of tropical cyclones (TC) in the Western Pacific appear to be the reason for the drying up of monsoon rains in August across India. The India Meteorological Department (IMD) had predicted normal monsoon rains in August. . This re-curving frequently happens during the El Nino years but this time it inexplicably occurred when an El Nino hasn't yet taken shape. El Nino years are those when sea surface temperatures in the east equatorial Pacific rise, and often dampen the monsoon. While several international meteorological agencies had raised concerns about a likely El Nino forming in August or September this year, it didn't happen.
Sept 16, 2017 NEWS SC issues notice on student safety . Plea seeks implementation of guidelines to protect children from sexual abuse and murder. A Bench of SC sought the responses within three weeks from the Union Human Resource Development Ministry and all State governments and union territories on the plea filed by two women lawyers. What's in PlL v Raised the issue of children "being exploited and subjected to child abuse repeatedly within the boundaries of the schools" and demanded that Central and State governments notify a set of "non- negotiable" child safety conditions for schools. Protection of Child Rights (DCPCR) on prevention of child abuse in schools. understood, explained and signed by all employees or recruits". protection within a month of their joining, the plea said referring to the guidelines to Referring to the guidelines, it said every school is required to have a "child protection policy which should be V All new employees must go through a day-long orientation programme on issues relating to child
Sept 16, 2017 NEWS North Korea fires missile over Japan on Tuesday .It "crossed the sky above Indigenous artillery gun sets new record in range An indigenous artillery gun, Advanced Towed Artillery Gun System (ATAGS), being jointly developed by the Defence Oshima peninsula of Hokkaido and Cape Erimo of Japan along the pre-set flight track and accurately hit the pre-set target waters in northern Pacific". accurately hitResearch and D Organisation (DRDO) and the private sector has set a new world record in range by hitting targets at a distance of 48 km. It had travelled around 2,700 kilometres (1,700 miles) and ' reached a maximum altitude of 550 kilometres. Last November India signed a contract for 145 M-777 Ultra-Light Howitzers from the US.
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