Business News

AS XI STEPS OUT OF CHINA, POPULIST POLICIES LOOM

Modi is no political novice; he has his cards close to his chest and would not be cowered by dragon. If communism has steeled Xi, democracy has bolstered Modi

Published

6:56 am IST

September 16, 2022

ANI

AS XI STEPS OUT OF CHINA, POPULIST POLICIES LOOM

Chinese President Xi Jinping has stepped out of the country for the first time since the outbreak of the Covid-19 pandemic that originated in his country in early 2020 and forced global lockdowns, clobbered large economies and caused death of thousands across the world, not to forget the millions who fell sick and escaped death but paid with lifetime of infirmities.

But, we won’t discuss the pandemic here even though any discussion in the world today is incomplete without mentioning the affliction that has acquired a universal character.

Xi, wearing a face mask, landed in Nur-Sultan, the capital of Kazakhstan, to a red carpet welcome by his Kazakh counterpart Kassym-Jomart Tokayev on Tuesday. The Central Asian republic is celebrating 30 years of the establishment of diplomatic relations with China.

Central Asian countries are of strategic interest to China not only because they can help the second largest economy deepen its economic footprint in the region but because they also provide a diplomatic perch to ride on as Beijing faces increasing isolation from the West.

Later in the evening, Xi flew to Samarkand in Uzbekistan where he will attend the Shanghai Cooperation Organisation (SCO) Summit from Thursday to Friday. Beyond the security implications of the meeting of the strategic group of eight countries, the spotlight on Samarkand this fall is on bilateral talks.

Though Xi is thousands of kilometres from home, his heart would be in Beijing as the Chinese leader who would be virtually crowned for the third term to lead the nation of 1.5 billion is just two months away from the grand event – the upcoming Congress of the Communist Party of China (CPC).

Xi carries loads of baggage on his shoulders. The baggage is made of political pledges and expectations, declarations of social and cultural resuscitation of the nation and the promise of reuniting Taiwan with mainland China.

Xi is in Samarkand not only as the President of his country but as a reservoir of hope for the millions of Chinese of his generation who want to live by the ideals of communist leader Mao Zedong and believe in the revival of an ethos that the China of today may have strayed away from amid lapping waves of globalisation and the unnerving war cry of capitalism over communism.

AS XI STEPS OUT OF CHINA, POPULIST POLICIES LOOM

The presence of Prime Minister Narendra Modi and Russian President Vladimir Putin at the summit adds to the precariousness of Xi’s situation. While northern neighbour Russia is seen as a renegade by the West for attacking Ukraine and bringing the region to a military ferment, India has to speak its mind to Beijing that was behind the Galwan standoff which brought two nuclear powers quite close to a full-blown war.

A Xi-Putin summit will see the Chinese President trying to leverage the opportunity to buy more support from Moscow for its stance on Taiwan. President-for-life he may be, but nothing prevents Xi from catalysing more support from a country that again stands isolated among most nations of a community comprising mainstream international politics.

Ahead of the 20th CPC National Congress on October 16, Xi has to show his constituents (Chinese people) that he is capable of standing tall in the Great Hall of the People.

In Modi, Xi will find an adversary who straddles the eastern and western hemispheres with equal ease. In the summit with Modi, Xi will try his best to turn the tables on India over the spy ship Beijing sent to Sri Lanka or have the upper hand on border disputes with New Delhi. After all, the delegates at the 20th Congress need to see their leader unfazed.

But Modi is no political novice. He surely has his cards close to his chest and would not be cowered by the flaming dragon. If communism has steeled Xi, democracy has strengthened Modi.

“We should join hands to combat terrorism, separatism, extremism, drug trafficking and transnational organised crimes, and ensure the security of oil and gas pipelines and other large cooperation projects and their personnel. We should resolutely oppose interference by external forces and work together for lasting peace and long-term stability of our region,” Xi said in a signed article published on Tuesday in the Kazakhstanskaya Pravda.

If words were horses, all politicians would ride them. Let’s see which way the dragon sits and the elephant trumpets.

• IANS

China emerged as the world’s second-largest economy by registering exceptional growth in the last four decades but at the cost of widespread corruption, environmental degradation, food safety issues and income disparities.

Prof Justin Yifu Lin, formerly senior vice-president and chief economist of the World Bank (2008-12), in an analysis explained the institutional price China paid for its economic success, reported Financial Post.

In 2018, China celebrated the 40th anniversary of its transition from a planned economy to a market economy. And it was an astounding success. In 1978, the country was closed and suspended to the world. It was a poor country, if not among the world’s poorest.

Its per capita was less than a third of even sub-Saharan African nations. Over 80 per cent of its people lived in rural areas, as many were living below the international poverty line and China had a closed economy where trade made less than 10 per cent of its GDP.

But in the last 40 years, the annual GDP growth rate was 9.4 per cent on average and trade grew at an average rate of 14.8 per cent. In no time, China was the world’s second-largest economy overtaking Japan. It was the largest exporter, beating Germany. It even surpassed the US to become the largest economy, measured by ‘purchasing power parity,’ and the largest trading economy.

But China paid a price for its unprecedented success. In addition to environmental degradation and food safety issues, which have attracted many public complaints and are the results of rapid industrialization and lack of appropriate regulations, the main issue during the transition is widespread corruption and the worsening of income disparities, said Prof Lin.

“Before 1978, China had a rather disciplined and clean bureaucratic system and an equalitarian society. According to the Corruption Perception Index published by Transparency International, China ranked No. 79 among all the 176 countries or territories in 2016,” added the professor.

The negatives are attributed by economics experts to China’s “dual-track transition strategy”. At one level, “the government provided transitory protection and subsidies to the nonviable state-owned enterprises (SOEs) in the old, capital-intensive sectors to maintain stability”.

At another, it “liberalized and facilitated the entry to the new, labour-intensive sectors which were consistent with China’s comparative advantages to achieve dynamic growth,” reported Financial Post. Prof Lin points out that one of the most essential “costs of investment and operation for the old capital-intensive sectors was the cost of capital”.

Before the transition in 1978, the “government used fiscal appropriation to pay for investments and cover working capital, so SOEs did not have to bear any cost for capital. After the transition, the fiscal appropriation was replaced by bank loans.”

The Chinese government set up four large state banks and a stock market to meet the capital needs of large enterprises and to “subsidize SOEs, the interest rates and capital costs were artificially repressed”.

The research shows, “When the transition started, almost all firms in China were state-owned. With the dual-track transition, private-owned firms grew and some of them become large enough to get access to bank loans or list in the equity market.”

“As interest rates and capital costs were artificially repressed, whoever could borrow from the banks or list in the stock market was therefore subsidized. These subsidies were paid for by the low returns to savings in the banks or in the stock market made by individual households. Those people providing the funds were poorer than the owners of the large firms they financed.”

“The subsidization of the operation of the rich’s firms by poorer people was one reason for increasing income disparities. Moreover, the access to bank loans and equity market generated rents, leading to bribery and corruption of the officials who control the access.”

The analysis argues that some natural monopoly industries, such as power and telecommunication, were operated by state-owned enterprises and the government “liberalized the entry to those industries gradually”, adding that “those monopoly rents were also sources of inequality and corruption,” reported Financial Post.

Business News

Rupee fell 11% in 2022, its worst since 2013

Published

5 months ago

January 2, 2023

ANI

Monetary policy tightening by various central banks to contain inflation, the war in Ukraine leading to price rise for crude oil and subsequent realignment in the global energy supply chain, and strengthening of the US dollar index kept the Indian currency under pressure in 2022. The Indian Rupee has been in the news cycle for a considerable part of 2022 for its steady depreciation. In 2022, the Rupee depreciated over 11 per cent on a cumulative basis, its poorest performance since 2013 and the worst drubbing among Asian currencies — as the US Federal Reserve’s aggressive monetary policy propelled the greenback. data showed. It breached the 83-mark against the US dollar in mid-October, to hit an all-time low. It has, however, performed better than most Asian peer currencies, including the Chinese Renminbi, Indonesian Rupiah, Philippine Peso, South Korean Won, and Taiwanese Dollar during the current financial year. The US Federal Reserve policy rate is now at a target of 4.25- 4.50 per cent, the highest level in 15 years, which was near zero in the early part of 2022. An increase in policy rates in the US and other advanced economies typically leads to a depreciation of the emerging markets currency such as the Rupee. “Indian Rupee has had a mixed year in 2022, as far as relative performance is concerned. During the first three months it was an underperformer due to higher oil prices. However, it came back strongly during the mid of this year, due to fall in the energy prices and aggressive intervention from the RBI. But since October, we have seen Rupee underperform its peers once again, but this time due to larger than usual demand from oil importers,” said Shrikant Chouhan, Head Equity Research at Kotak Securities. Chouhan added 2023 can be a year of two halves. In explanation, he said “the seeds of a global economic slowdown could germinate” in the first half due to tightening monetary policies and fiscal policies and the alarming situation from Covid in China. “During the second half, we expect (US) Fed and other central bankers take notice of dramatic fall in inflation and growth and lower interest rates. Interest rate cut from Fed can boost inflows into emerging markets during the second half of 2023,” Chouhan of Kotak Securities said, adding that he sees Rupee versus the US dollar in a broad range of 80.00- 85.00/8.50 in 2023. However, everything is not gloom and doom for the Rupee fundamentals as the US Dollar index has fallen from the peak of 114 to around 105 currently. According to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said: “The Dollar will stabilize and start weakening when the (US) Fed pauses by Q2 of 2023. RBI has done a good job in intervening in the forex market to stabilize the rupee and manage the forex reserves.” Typically, the RBI from time to time intervenes in the markets through liquidity management, including through the selling of dollars, with a view to preventing a steep depreciation in the rupee. At the start of 2022, the overall forex reserves were at USD 633.61 billion, which is currently at USD 563.499 billion. Much of the decline can be attributed to RBI’s intervention and a rise in the cost of imported goods. “The RBI intervention in forex spot market will curb any upside momentum in USD/INR rates. This will help to stabilize exchange rates around 83 – 87 in 2023,” said Sumeet Bagaria, Executive Director at Choice Broking, adding that it would be interesting to see how the RBI tackles the situation. Going ahead, much of the Rupee’s movement will also depend on the monetary policy action by the US Federal Reserve. “If we look ahead to 2023, the first half will still be unpredictable because the USA’s terminal rate is still unknown, and the RussiaUkraine war has not yet ended. As a result, the first half of 2023 may see some additional weakness, but the second half may be better for the rupee because US interest rates may reach their peak,” said Santosh Meena, Head of Research at Swastika Investmart. For 2023, Meena sees Rupee in a tight range of 80.0-83.5.

Another breather may come from the decline in international crude oil prices, which currently is trading at about USD 78-80 per barrel. It touched as high as around USD 130 per barrel earlier this year. “We expect rupee to trade on a negative note moving between 84 to even hit as low as 85 mark against the US dollar as deteriorating global risk sentiments may put downside pressure on rupee. The rupee is currently around 82.8 against the US currency. Weak global markets may lead safe haven flows towards US dollar. However, sharp fall in crude oil prices may prevent sharp downside in rupee,” said Mohit Nigam, Fund Manager and Head – PMS, Hem Securities. A depreciation in Rupee too has its own share of advantages as it typically raises exporters’ earnings. What is India doing to reduce the over-dependence of the US Dollar and subsequent internationalization of the Rupee? The RBI had announced various measures recently to diversify and expand the sources of forex funding to mitigate exchange rate volatility and dampen global spillovers. Of them, the major one is that the RBI has put in place an additional arrangement for invoicing, payment, and settlement of exports/imports in Indian currency in mid-July, 2022. If the mechanism fructifies then it may go a long way in internationalizing the Indian currency rupee in the long run. Talks between India and UAE are already on for a RupeeDirham-denominated bilateral trade.

Business News

RBI: Global spillovers, financial market, general risks increased

Published

5 months ago

January 2, 2023

ANI

The Reserve Bank of India’s latest Systemic Risk Survey (SRS) showed that global spillovers, financial market and general risks have increased, while macroeconomic risks have moderated. The survey also showed respondents’ confidence in the Indian financial system further improved with 93.6 per cent of them remaining fairly or highly confident of the stability of the Indian financial system. No change is perceived in institutional risks. Monetary tightening in advanced economies, tightening of financial conditions, geopolitical risks, global growth uncertainty and growing risks from private cryptocurrencies and climate change are cited as the major contributors to the rise in the global, financial market and general risks.

The majority of the respondents saw further improvement in credit prospects for the Indian economy and remained confident about the stability of the Indian banking sector, according to RBI survey which was released on Thursday. Nearly ninety per cent of the respondents assessed that the prospects of the Indian banking sector are likely to improve or remain unchanged over a one-year horizon. The 23rd round of the RBI’s Systemic Risk Survey was conducted in November 2022 to solicit the perceptions of experts, including market participants and academicians, on major risks faced by the Indian financial system. The survey also captured respondents’ perception on risk to financial stability from external sector developments; segments of the Indian financial system — likely to be impacted by aggressive monetary policy tightening by advanced economies and their views on the likelihood of a global recession in 2023. More than half of the respondents assessed that the prospects of the Indian banking sector over a one-year horizon have improved. According to the survey, confidence in the stability of the global financial system marginally declined during the last six months. In contrast, confidence in the Indian financial system further improved with 93.6 per cent of the respondents remaining fairly or highly confident of the stability of the Indian financial system. Whereas, as much as 52.1 per cent of the respondents expected that the Indian economy will be impacted somewhat/to a limited extent from global spillovers. Despite global headwinds posing risks to domestic macro-financial conditions, the impact of external sector developments remained moderate as 53.2 per cent of the respondents perceived it of medium impact, RBI said in the survey. More than three-fourths of the respondents perceived that the aggressive monetary policy tightening by advanced economies would adversely impact the exchange rate, capital flows, foreign exchange reserves and bond yields.

Business News

At Rs 1.50L cr, December GST kitty 3rd-highest ever

Published

5 months ago

January 2, 2023

ANI

The gross revenue from goods and services tax (GST) rose 15 per cent year-on-year to Rs 1,49,507 crore in December 2022, according to government data released on Sunday. This was the third-highest monthly collection since the tax was introduced in July 2017. Experts feel with this trend, the government will be able to collect through GST more than budget estimate. The government collected Rs 1,29,780 crore as gross GST revenue in December 2021. Of the total GST collected in December, CGST was Rs 26,711 crore, SGST was Rs 33,357 crore, IGST was Rs 78,434 crore (including Rs 40,263 crore collected on import of goods) and cess was Rs 11,005 crore (including Rs 850 crore collected on import of goods), data revealed. Notably, monthly GST revenues have been more than Rs 1.4 lakh crore for 10 straight months in a row now.In November, gross GST revenue collection was Rs 145,867 crore, an increase of 11 per cent over last year’s corresponding month.

Business News

CENTRE BEGINS GIVING FREE GRAINS TO 81.35 CR PEOPLE

Published

5 months ago

January 2, 2023

TBG network

The Centre launched a new integrated food security scheme on Sunday, which would give 5 kg of free food grain per month to 81.3 crore people nationwide. The scheme will provide free foodgrains beneficiaries under NFSA for the year 2023 and aims to ensure effective and uniform implementation of the National Food Security Act (NFSA). The Cabinet decided to launch a new central sector scheme to fulfil the vision of One Nation-One PriceOne Ration under Prime Minister Narendra Modi. This is a commitment of the government to the most vulnerable 67 per cent of the population which is 81.35 crore people covered under NFSA, according to the ministry’s statement. Under the scheme, the government will provide free foodgrains to all NFSA beneficiaries namely Antyodaya Ann Yojana (AAY) households and Priority Household (PHH) persons for one year through the wide network of 5.33 lakh fair price shops across the country, according to the statement of the ministry of consumer affairs, food and public distribution. The decision will strengthen the provisions of NFSA, 2013, in terms of accessibility, affordability and availability of foodgrains for the poor. T h e n e w i nt e g r at e d scheme will subsume two current food subsidy schemes of the department of food and public distribution (DFPD) namely food subsidy to Food Corporation of India (FCI) for NFSA, and sops for decentralised procurement states, which deal with procurement, allocation and delivery of free foodgrains under NFSA.

Free foodgrains will concurrently ensure uniform implementation of portability under One Nation One Ration Card (ONORC) across the country and will further strengthen this choice-based platform. This means the ration card could be used anywhere in the country. The Centre will bear the food subsidy of more than Rs 2 lakh crore for 2023. The new scheme is aimed at bringing uniformity and clarity on food security under NFSA at beneficiary level, the ministry statement said. For implementing this scheme, the ministry had said that the secretary of DFPD had taken a meeting with all state food secretaries on December 29, 2022. The issues related to distribution of free foodgrains were discussed including technical resolutions. All states and Union Territories assured to implement the free foodgrain scheme from January 1, 2023, according to the statement. The government had issued an order to all general managers of FCI to visit three ration shops every day in different areas of their jurisdiction mandatorily from January 1 till 7 and submit a report to the DFPD nodal officer on a daily basis, in the given format for review and taking corrective action. In view of free foodgrains, an advisory is issued to the states/UTs on the mechanism to provide dealer’s margin for distributing foodgrains to the beneficiaries, the ministry said.

Business News

Post 370, investment climate brightens in J&K

Published

8 months ago

September 16, 2022

jayanta.biswas@itvnetwork.com

Post 370, investment climate brightens in J&K

After witnessing decades of violence, the Union Territory of Jammu and Kashmir has witnessed tremendous changes in economic activities after the abrogation of Article 370.

After Article 370 was repealed, Jammu and Kashmir became subject to 890 central laws, while 250 unfair state legislation were eliminated. Additional 130 state legislation have undergone changes. The elimination of certain hurdles has led to a conducive business atmosphere. Due to the country’s strong leadership and increased stability in the region, foreign businesses are considering investment opportunities here.

The Lulu Group, Apollo, EMAAR, and Jindal are among the few commercial organizations that have investments in Jammu and Kashmir. The UT has inked five more Memorandum of Understandings (MoUs) with Al Maya Group, MATU Investments LLC, GL Employment Brokerage LLC, Century Financial, and Noon E-commerce, respectively. Magna Waves Pvt. Ltd. and Emaar Group, and Lulu International have also signed a single Letter of Intent.

In 2021, the Union Territory attracted investments of USD 2.5 billion, showcasing the region’s vast opportunities and business potential.

Even Indian Prime Minister Narendra Modi met with delegates from the United Arab Emirates seeking business opportunities in Jammu and Kashmir, noting that private investment bids in the Union Territory have topped Rs 38,000 crore.

The government is fully aware that investments play a crucial role in economic development because they lead to the accumulation of public wealth as well as advancements in science and technology. As a result, a framework for increasing the region’s manufacturing viability and economic growth is established.

The Jammu and Kashmir government established a five-person committee on June 23 to communicate with the Minister of External Affairs regarding the G20 meetings. India is starting to get ready for the big event.

In order to promote fresh investment and bring industrial development to the block level, the J&K administration introduced a new industrial development scheme with an outlay of Rs 28,400 crore in January of last year. The new regulation, valid until 2037, also made it possible for more prominent investors to invest in J-K.

Before the repealing of Article 370, there were not many investments in Jammu and Kashmir.

The Indian government is aware that investments play a key role in the economic development of any region. Hence, it is no letting stone unturned to establish a framework for increasing the region’s manufacturing viability and economic growth.

Infrastructure development in the Union Territory got a big push after the abrogation of Article 370.

After the abrogation of Article 370, the execution of new roads, tunnels and other basic Infrastructure has gained momentum to ensure the overall development of J&K.

Noting that roads are now being built at twice the speed as before, the Lt Governor of the Union Territory Manoj Sinha had said there has been a radical change in its progress under Pradhan Mantri Gram Sadak Yojana.

Business News

Raise retirement age of SC, HC judges: BCI

Published

8 months ago

September 16, 2022

ANI

Raise retirement age of SC, HC judges: BCI

The Bar Council of India (BCI) in a joint meeting that was held last week has unanimously reached a conclusion that there should be an immediate amendment to the Constitution and the retirement age of Judges of Supreme Court and High Courts.

“There should be an immediate amendment in the Constitution and the retirement age of Judges of High Court should be enhanced from 62 to 65 years and the age of superannuation of the Judges of Supreme Court should be enhanced to 67 years,” stated BCI in a press statement. The copy of the resolution was decided to be communicated to the Prime Minister of India and Union Minister for Law and Justice for immediate action on the resolution, stated press statement by BCI.

Moreover, the joint meeting has also resolved to propose to the Parliament to consider to amend the various Statutes so that even the experienced advocates could be appointed as the Chairpersons of various commissions and other Forums.