Donald Trump repeats threat to take U.S. out of WTO- Sriram Lakshman #GS2 #IR
U.S. President Donald Trump on Tuesday said the U.S. would leave the World Trade Organization (WTO), the world’s largest multilateral trade forum, if it had to.
Referring to trade disputes, Mr. Trump said, “We were losing all our cases in the World Trade Organization. Almost every case, we were — lost, lost, lost. They thought we were stupid. They were the ones ruling. And then I came along. Now we’re winning a lot of cases because they know that they’re not on very solid ground. We will leave, if we have to.”
At the end of July, the President directed the Office of the United States Trade Representative (USTR), asking it to convince the WTO to rethink its classification of developing countries (which can avail of special trade protections).
In his speech, Mr. Trump named India and China as examples of countries that had taken advantage of the U.S. “But people have taken advantage… Like, for instance, they view certain countries — like China, India, many countries — for a long time, they viewed them as ‘they’re growing’.
Mr. Trump was meant to speak on ‘America’s Energy Dominance and Manufacturing Revival’, as per the White House, but the President rambled through a range of topics, including jibes at his potential opponent for the White House in 2020, former Vice-President Joe Biden.
Chilika faces oil spillage threat from stuck ship #GS3 #Environment
The Indian Coast Guard has issued a warning about possible oil spillage into the ecologically sensitive Chilika lake — the largest brackish water lagoon in the country — from a Malaysian cargo vessel which is stuck in the Bay of Bengal near the lake since August 7.
In an urgent message dispatched to the Odisha government, the Director General of Shipping and the State Pollution Control Board, the Deputy Inspector General of ICG (North Eastern), I.J. Singh, said: “The barge contains 30,000 litres of diesel, 1,000 litre of lube oil and 200 litres of hydraulic oil. Hence spillage of oil from the aground vessel cannot be ruled out.”
Under Section356 (J) 1(B) of Indian Merchant Shipping Act, 1958, all necessary measures should be undertaken to prevent any leakage of oil from the vessel causing pollution to the area.
The Coast Guard also advised to undertake action on priority basis either through a local agent or any professional salvor. According to reports, a salvage team from Singapore-based Smit Salvage Pte limited had reached Odisha on Sunday.
The vessel — Jin Hwa 32 — with deadweight tonnage of 7,500 had sailed from Mongla Port on August 2 and was heading towards Visakhapatnam Port. It was caught in stormy waters and drifted towards Odisha.
“We have visited the spot where the vessel is stuck. Though the place is far from Chilika’s jurisdiction, it is apprehended that in the event of spillage, the oil could drift towards Chilika
Swachh Survekshan looks beyond toilets #GS2 #Governance
In a nascent effort to look beyond toilets and kick off its ODF+ phase — that is, Open Defecation Free Plus — focussing on solid and liquid waste management, the Swachh Bharat Abhiyan (SBA) has included the prevalence of plastic litter and water-logging in villages as indicators of cleanliness in its 2019 rural survey.
For the last five years, ever since the SBA was launched on Gandhi Jayanti in 2014, its main focus has been on eliminating open defecation by constructing toilets and promoting their usage through widespread behaviour change programmes. With the October 2, 2019 deadline looming near, and the original goal almost achieved according to government data, the mission is moving on to its next phase.
ODF+ will have four main verticals — solid waste management divided into biodegradable waste and plastic waste, and liquid waste management divided into grey water, or kitchen waste water, and faecal waste.
A senior official explained that the protocol for plastic waste would call for bans on single use plastic, as well as the collection and sorting of waste at the Block level. If possible, plastic waste would be sent for recycling, or baled and shredded. “There are also proposals to use it in cement plants and brick kilns.
There is potentially a profitable market available for this waste if handled correctly.
The survey aims to cover 18,000 sample villages — approximately 30 per rural district — and take feedback from over 2.5 crore villagers. In fact, citizen feedback will account for 35% of the ranking of districts.
Another 30% weightage is being given to direct observations by surveyors from third party Ipsos, who will look at the prevalence of plastic litter and water-logging as well as the availability and usage of toilets. The remaining 35% will be drawn from service-level progress measuring the final activities of the original Swachh Bharat mission.
To aid mining, Environment Ministry will provide ‘temporary’ forest clearances-Jacob Koshy #GS3 #Environment
The Union Environment Ministry plans to provide “temporary” forest clearances to prospective bidders for mines whose leases are set to expire in March 2020. The bulk of such mines are located in Odisha and Karnataka.
The traditional process has been for mine developers to be responsible for obtaining necessary clearances to prospect at mines. Officials said that the Environment Ministry would enable clearances to avoid a potential drop in iron production between 2020 and 2022, and catalyse moribund mining auctions.
This relaxation was necessary because of a change in the Mines and Minerals (Development and Regulation) Amendment Act, which was amended in 2015. The key change is that, unlike in previous years when mining leases were extended every 20 years, new leases would be issued for 50 years and they would be made available via an auction.
Since 2015, when auctions became the norm for leasing out mineral mines, the number of blocks auctioned out has roughly been about 15 a year, which is far fewer than previous years, when allocations ran into the hundreds. The delay in getting environment and forest clearances led to delays in production from mines, according to industry analysts, and hence were leading to a lack of enthusiasm for auctions.
Most of the mines up for renewal are in Odisha. The State has seen delays of over a year in conducting auctions for a sliver of blocks due to expire after 50 years in March 2020. Fresh tenders are out and prospective bidders can apply until September 11, according to the Ministry of Mines. These mines account for 50%-55% of Odisha’s production.
Previously, mine developers were aware that their leases were due for renewal and could therefore initiate the process for forest clearances. However, the change in law has meant that the winner of an auction could begin the process of applying for clearances only after the lease expires, and this could mean a delay in production.
The new lessee may be allowed to operate an already broken-up mine for a period of one year, during which they can take fresh clearances. During that period, they will be given a temporary permit. This has been necessitated due to a change in the Act. In FY19, India produced 207 million tonnes of iron ore, 65%-70% of which was by merchant miners and the rest by steel-makers.
Chandrayaan-2 leaves Earth’s orbit, moving towards moon #GS3 #SnT
India’s lunar lander- orbiter craft ‘Chandrayaan-2’ was put in the path of moon, some 3.84 lakh km away, in the wee hours of Wednesday. Its orbit was raised for the sixth and last time on the earth side from ISRO Telemetry Tracking and Command Network (ISTRAC) in Bengaluru at 2.21 a.m.
Today (August 14, 2019) after the Trans Lunar Insertion (TLI) maneuver operation, #Chandrayaan2 will depart from Earth’s orbit and move towards the Moon (sic),” the ISRO tweeted.
It will travel for the next seven days and get close to moon on August 20, when its orbit will be altered frequently to make it revolve around moon. The spacecraft carries lander Vikram and rover Pragyan on it. The mission is the country’s first lunar soft-landing attempt. The landing itself is slated for September 7.
The Bengaluru-headquartered space agency said it has carried out a manoeuvre called ‘Trans Lunar Insertion’ (TLI) following which the spacecraft has successfully entered the Lunar Transfer Trajectory.
The health of the spacecraft is being “continuously monitored” from the Mission Operations Complex (MOX) at ISRO Telemetry Tracking and Command Network (ISTRAC) with support from Indian Deep Space Network (IDSN) antennas at Byalalu, near Bengaluru
The spacecraft will approach the moon on August 20 and then the spacecraft’s liquid engine will be fired again to insert it into lunar orbit, the ISRO said. Following this, there will be four orbit maneuvers to make the spacecraft enter its final orbit, passing over the lunar poles at a distance of about 100 km from the moon’s surface.
In a giant leap for the country’s ambitious low-cost space programme, ISRO’s most powerful three-stage rocket GSLV-MkIII-M1 had launched the spacecraft into the orbit of the Earth on July 22 from the spaceport of Sriharikota, Andhra Pradesh.
According to ISRO, after 13 days of Moon-bound orbit phase, the lander ‘Vikram’ carrying rover ‘Pragyan’ will separate and after another few days of orbiting will soft land on September 7 in the South Pole region of the Moon, where no country has gone so far, according to the ISRO.
If successful, the mission will make India the fourth country after Russia, the U.S. and China to pull off a soft landing on the Moon.
The orbiter carries eight scientific payloads for mapping the lunar surface and study the exosphere (outer atmosphere) of the Moon while the lander carries three scientific payloads to conduct surface and subsurface science experiments.
The rover carries two payloads to enhance the understanding of the lunar surface. A passive experiment from NASA will also be carried onboard Chandrayaan-2, ISRO has said.
Following the landing, the rover will roll out from the lander and carry out experiments on the lunar surface for one lunar day, which is equal to 14 earth days. The mission life of the lander is also one lunar day, while the orbiter will continue its mission for a year.
According to the ISRO, the mission objective of Chandrayaan-2 is to develop and demonstrate the key technologies for end-to-end lunar mission capability, including soft-landing and roving on the lunar surface.
It also aims to further expand the knowledge about the moon through a detailed study of its topography, mineralogy, surface chemical composition, thermo-physical characteristics and atmosphere, leading to a better understanding of the origin and evolution of the moon, the space agency had said.
Naga national flag’ hoisted across Naga-inhabited areas on ‘Independence Day’ #GS2 #Governance
The influential Naga Students’ Federation (NSF) on Wednesday hoisted the ‘Naga national flag’ to celebrate the 73rd ‘Naga Independence Day’ across the Naga-inhabited areas, including Myanmar.
On August 14, 1947, leaders belonging to various Naga tribes came together to unfurl their ‘national flag’ in Kohima, now the capital of Nagaland which attained statehood in December 1963. This was to ‘assert their right to independence’ after the transfer of power from the British to ‘Indians’.
The ‘Naga Independence Day’ has been an annual event, but the celebration this year attained significance in the wake of the withdrawal of special status to Jammu and Kashmir making the former State’s red flag with three vertical stripes and a plough redundant.
State government instructed the deputy commissioners of all the 11 districts to make the NSF units “aware of the legality of their action [hosting the flag]” that could “create unwanted situation and may lead to grievous law and order problem”.
Mr. Awomi said the flag unfurled on Wednesday was the “common Naga flag’. The flag – blue with a whitish star and a rainbow running almost diagonally – is similar to that used by the Isak-Muivah faction of the National Socialist Council of Nagaland, which has been seeking a separate flag as part of the peace deal.
But the Naga National Council (NNC), the first extremist group of the Naga Hills, said the original ‘Naga national flag’ should ideally be hoisted to mark the show of rebellion in 1947. There is clarity on the colour and design of the flag unfurled that year.
The first Naga flag is considered to be the one that the NNC, formed by the legendary Angami Zapu Phizo in 1946, hoisted on March 22, 1956.
Register of indigenous inhabitants: Naga groups assail rethink on cut-off date #GS2 #Governance
A joint committee of Naga civil society groups has warned the Nagaland government against changing
the cut-off date for including people in the Register of Indigenous Inhabitants of Nagaland (RIIN).
The Nagaland government had, through a notification on June 29, decided to undertake the exercise to update the RIIN with December 1, 1963, as the cut-off date for inclusion of people in the register. Some organisations have, however, demanded that the cut-off date be changed to April 28, 1977.
Nagaland was carved out of Assam as a State on December 1, 1963. The State government had in April 1977 issued a notification that laid down the criteria for issuing indigenous inhabitant certificates to the residents when the State was formed. The notification did not say whether those to be granted such a certificate would have to be a Naga.
The cut-off date of December 1, 1963, is only for identifying non-Nagas and Nagas from other States who may be qualified to be called indigenous inhabitants of Nagaland. The idea of changing the cut-off date to 1977 under pressure from certain quarters is not acceptable,” a spokesperson of the Joint Committee on Prevention of Illegal Immigrants (JCPI) said.
He added that the committee would be on a collision course with the State government if it thinks of such a move.
The Naga Political Leaders’ Forum (NPLF) of Manipur had a few days ago said it had submitted a memorandum to Nagaland Chief Minister Neiphiu Rio opposing the 1963 date as the cut-off date. Demanding April 28, 1977, as the cut-off date, the Forum said RIIN would otherwise “create great havoc to the unity and fraternity” of Nagas residing in Arunachal Pradesh, Assam, Manipur, Nagaland and Myanmar.
It will displace most of the Nagas from Manipur, Assam, Arunachal Pradesh and other neighbouring areas who settled in Nagaland after 1963. The JCPI has dismissed this argument, insisting that the Nagaland government must adhere to the 1963 date in implementing RIIN.
Trade deficit narrows to $13.43 billion in July #GS3 #Economy
India’s exports grew by 2.25% to $26.33 billion in July, government data showed on Wednesday.
Imports, however, slipped by 10.43% to $39.76 billion, narrowing trade deficit to $13.43 billion in July.
The deficit was $18.63 billion in July last year.
Export sectors that recorded positive growth in the last month include chemical, iron and pharmaceuticals. Shipments of gems and jewellery, engineering goods, petroleum products recorded negative growth, according to the data. Oil imports declined 22.15% to $9.6 billion, and non-oil slipped by 5.92% to $30.16 billion.
Cumulatively, during April-July 2019, exports dipped 0.37% to $107.41 billion, while imports were contracted by 3.63% to $166.8 billion. Gold imports dipped 42.2% to $1.71 billion in July.
Separately, India’s annual wholesale price inflation in July eased to a 25-month low of 1.08%, indicating manufacturers are losing their power to raise prices as an economic slowdown deepens.
Manufacturing inflation, which contributes around 64% to the wholesale price index, rose just 0.34% in July from a year earlier, compared with 0.94% in June and 4.53% in July 2018. As a result, headline WPI inflation weakened more than expected from 2.02% in June. Analysts had expected it to dip to 1.93%.
The vehicle industry—which represents 60% of the country’s manufacturing output once components-makers are included—is in a deep crisis. Domestic passenger vehicle sales in July dived at the steepest pace in nearly two decades, an auto industry body said on Tuesday, as a financing crunch helped to choke demand.
The weak wholesale inflation data reinforced views that the Reserve Bank of India (RBI) will cut interest rates for a fifth straight time at its next policy meeting in October in a bid to stimulate consumption. However, while acknowledging another easing is likely, London-based economic research consultancy Capital Economics believes the underlying inflation will rise before long, highlighting the risks of aggressive monetary loosening.
Food prices could go up in coming months, while core consumer inflation has started to rise again, the consultancy said in a note.
Wholesale food prices in July rose 4.54% year-on-year, compared with a 5.04% jump a month earlier, the data showed, while wholesale prices of fuel products, including petrol, diesel and cooking gas, fell. That could help the economy as India meets nearly 80% of its oil demand through imports.
India’s retail inflation, the main gauge used by the central bank to monitor prices and decide on whether to change its benchmark repo rate, eased in July to 3.15%, data showed on Tuesday, remaining below the central bank’s 4% medium-term target for a 12th straight month.
Govt. asks PSBs to find out reasons for rise in NPAs in last 5 years- Manojit Saha #GS3 #Economy
The Finance Ministry has initiated a comprehensive consultative process with public sector banks (PSBs) to find out the reasons for the sharp rise in bad loans in the previous five years, apart from outlining national priorities with which these banks have to align themselves.
Touted as a ‘bottom-up consultative process,’ the Ministry will review the performance of these entities in the last five years. This will be the first comprehensive review of PSBs after Nirmala Sitharaman took charge of the Finance Ministry in May, that will also provide a direction to the PSBs for the next five years.
The government also wants to know the reasons for the decline in credit flow in the last five years. In particular, the Ministry wants to know if credit to manufacturing has dropped, and if so, why it had, as the IIP has risen from 2.8% in 2014-15 to 4.6% in 2017-18.
Banks also have to dwell on the number of loan applications they received between April 2014 and March 2019 and as to how many were accepted and rejected. The consultative process will start from branch level upwards to the State-level and then to the national level.
The consultation will cover eight thematic papers prepared by domain experts and will also include a review of the banks’ performance during the last five years…” a letter from the Finance Ministry to the CEOs of PSBs said.
The consultative process will be aimed at alignment of banking with national priorities, stimulating ideas and inculcating a sense of involvement among bankers down to the branch level. One of the themes of the consultative exercise is ‘enabling bank credit towards a $5 trillion economy.
Some of the thematic papers on which the consultation will take place are — increasing digital payments, corporate governance, credit to MSMEs and farm loans among others.
Some national priorities to which PSBs need to align are doubling farm income, Jal Shakti, housing for all, education loans, ease of living and corporate social responsibility, among others.
Wholesale inflation eases to 1.08% in July #GS3 #Economy
Inflation at the wholesale level eased for the fourth consecutive month to a 25-month low of 1.08% in July, on lower inflation in the manufacturing and fuel sectors.
Growth in the Wholesale Price Index slowed in July from 2.02% in June. Within the index, the manufacturing sector saw inflation slipping to 0.34% in July from 0.94% in the previous month.
The fuel and power sector witnessed a contraction in prices for the second consecutive month, contracting 3.64% in July compared with a contraction of 2.2% in June. The crude petroleum and natural gas sector saw prices contracting for the third consecutive month, by 8.43% in July, compared with a contraction of 1.7% in the previous month.
The decline in the wholesale inflation can be attributed to deflation in the fuel and power group for consecutive two months and decline in inflation in manufactured group to a nearly three-year low,” Care Ratings said in a report.
Inflation in primary articles continues to increase in July 2019, albeit at a slower pace compared with the previous month. However, it continues to rise when compared with the corresponding period last year.
Nudging banks to lend to NBFCs increases risk #GS3 #Economy
The Reserve Bank of India’s decision to take several steps that are aimed at encouraging banks to lend to non-banking finance companies could increase risks in the financial sector. Risks in India’s banking sector may rise as a result of the central bank’s recent steps encouraging banks to lend more to non-banking financial institutions (NBFIs) and retail borrowers, Fitch Ratings said.
These measures could push up banking sector risk if they make banks accept higher credit risk than they previously had the appetite for, Fitch said. India’s constant nudging of banks to lend more to non-banks is in contrast to the global trend of authorities trying to break the linkages between banks and NBFCs.
“India’s overarching approach across the financial system is aimed at achieving a more inclusive financial system in which bank savings can support lending to parts of the economy that are beyond the banks’ distribution network or risk appetite.
However, it increases the potential of risks in the NBFI sector spilling over to banks, exacerbated by the limited capacity of India’s capital markets to provide extra funding to NBFIs.
NASA tests new Mars rover on Iceland’s lava field #GS3 #SnT
To prepare for the next mission to Mars in 2020, NASA has taken to the lava fields of Iceland to get its new robotic space explorer ready for the job.
With its black basalt sand, wind-swept dunes and craggy peaks, the Lambahraun lava field at the foot of Iceland’s second biggest glacier, Langjokull, was chosen as a stand-in for the Red Planet’s surface. For three weeks, 15 scientists and engineers sent by the U.S. space agency descended on the site, 100 kilometres from the capital, Reykjavik, last month to develop a prototype.
Experts say that Iceland, a volcanic island in the middle of the North Atlantic, is in many ways reminiscent of Mars.
It’s a very good analogue for Mars exploration and learning how to drive Mars rovers,” said Adam Deslauriers, manager of space and education, at Canada’s Mission Control Space Services. The company
has been commissioned by NASA to test a rover prototype as part of the SAND-E (Semi-Autonomous Navigation for Detrital Environments) project.
The prototype is a small, electric vehicle with white panels and an orange chassis. It has a four-wheel drive propelled by two motors and is powered by 12 small car batteries stacked inside.
“This rover we have… (is) basically indestructible,” Deslauriers told AFP. “The rovers that we have on Mars and the Moon would be a lot more sensitive to the environment and conditions of Iceland. A Moon rover is completely unprepared for rain,” he added, just as a rain shower swept in.
Equipped with sensors, a computer, a dual-lens camera and controlled remotely, the rover moves its approximately 570 kilograms at a leisurely speed of about 20 centimetres per second.
The speed needs to be slow to enable the rover to collect data and imagery properly, Mark Vandermeulen, a robotics engineer at Mission Control Space Services, said. The meagre pace on the lava field is still two to four times faster than the speed it will be driving at its extraterrestrial destination.
Utilising its sensors and camera, the rover gathers and classifies data from its environment and sends back the findings to the engineers’ trailer. The engineers then package the data and forward it to a tent where the scientists are huddled, to simulate how the data would be sent from Mars to Earth.
The rover exploring Iceland is just a prototype for the one that will be going to Mars next year. That one, which has yet to be named, will also be able to collect samples and store them in tubes to be brought back to Earth by future missions.
As the prototype isn’t capable of doing this, researchers walk to the area studied, armed with radiometers and other equipment, to collect all the data samples that the finished rover would be able to do.
The sites are selected to study how the chemical composition and physical properties of the sand and rocks change as they move from the glacier to a nearby river.
Before Mars became an inhospitable frozen desert with an average temperature of minus 63 degrees C, scientists believe that the planet shared many of the characteristics of the subarctic island.
The mineralogy in Iceland is very similar to what we would find on Mars,” Ryan Ewing, associate professor of geology at Texas A&M University, said. In particular, Ewing referred to minerals such as olivine and pyroxenes, both dark so-called mafic rocks, which have also been found on Mars.
In addition to that, we don’t have much vegetation, it’s cold and we have some of the environments like sand dunes and rivers and glaciers that Mars has evidence of in the past,” Ewing said. Iceland has previously been used as a training ground for NASA missions.
During the Apollo mission years, 32 astronauts in the mid-1960s received geological training in the Askja lava fields and near the Krafla crater in the north of the country. The setting allows NASA to test equipment and procedures, as well as the people performing them, in extreme environments while remaining on terra firma. Mission Control says it is planning to return to Iceland next summer before the launch of the next Mars rover mission, scheduled between July 17 and August 5, 2020.
FMCG companies red-flag gathering rural slowdown #GS3 #Economy
The impact of the deepening consumption slowdown is being felt beyond discretionary purchases such as vehicles and durables with fast-moving consumer goods (FMCG) companies manufacturing small-ticket items such as soaps, biscuits and other daily essentials reporting a steady slide in consumer sentiment.
There is an emerging consensus among FMCG majors that, like their automobile counterparts, the impact of the slump is more evident in rural India and that, in geographical terms, the north is the worst hit.
The volume growth, or the increase in number of units sold, of FMCG companies has slowed down perceptibly over the last one year and this trend is evident across companies.
For Hindustan Unilever Ltd, the country’s biggest FMCG company, there was a 7 percentage point dip in volume growth between the June quarter this year versus the same period last year. Britannia Industries, India’s second largest biscuit company, also recorded a 7 percentage point drop while for
Dabur India, the slide in volume growth on a year-on-year basis during the April-June quarter was 15 percentage points.
The annual wholesale price inflation in July, according to data released Wednesday, eased to a 25-month low of 1.08 per cent, indicating manufacturers are losing their power to raise prices as the slowdown in the broader economy worsens.
Srinivas Phatak, Executive Director, Finance and IT and Chief Financial Officer of Hindustan Unilever Ltd said at the company’s earnings call after the June quarter results that the FMCG major has “taken price reductions across-the-board in the range of about 4 per cent to 6 per cent” in the soaps section in a bid to counter the slowdown and also pass on the benefits of lower input costs to consumers.
Mohit Malhotra, Dabur India’s CEO & Whole Time Director said that while the month of April and May were good for the company, they are seeing “a little bit tapering off on the secondaries in the marketplace” in June and “that’s got to do with the headwind of the economic slowdown”.
The worry is that the slowdown in June is “getting exaggerated… as we are going along… They are feeling the impact of the liquidity crunch in rural because of the agrarian crisis and the rural consumer doesn’t have money and it’s impacting the consumer staple sector as well,” Malhotra told investors in an earnings call on July 19.
There’s a geographical split too — while south followed by east is doing better, the west is tailing these two regions and the north is the worst impacted.
However, unlike the automobile sector – where the consumption slump is accentuated by the inability of companies to drive demand by cutting prices on account of regulatory reasons – FMCG firms have been able to pass on price reductions on account of softened raw material costs in an attempt to push demand.
This demand-led slowdown has been attributed to a possible reduction in household savings – a result of declining urban and rural wage growth. “We find that for the Indian economy there are clearly a host of structural factors that are holding back current consumption.
A substantial decline in wage growth (both rural and urban wages) in recent times resulting in lower household savings (a result of conscious policy decisions to correct macro imbalances) has possibly slowed down the growth in real per capita income that is holding back demand,” a study by SBI noted.
It added that corporate wages – a proxy for urban wages – used to expand in high double digits is now down to single digits “as corporates are more conscious of cost in the midst of a massive de-leveraging cycle”. Similarly, it pointed out, rural wages also declined from double-digit growth till 2014-15 to less than 5 per cent in the last three financial years.
Going ahead, while FMCG companies expect a demand pickup in the festive season, they are also implementing cost efficiency measures to rein in profitability. “With a focus on tightening our belt in this phase of low growths, we have accelerated the cost efficiency initiatives to maintain the shape of
business. As we move forward, we are quite hopeful that the Government will take requisite measures to boost the economy and get it back on a high growth trajectory,”
Rural India has historically been growing around 3 to 5 percentage points faster than urban on account of increasing affordability, availability and demand. However, rural growth is slowing down at double the rate of urban in recent quarters. This has brought rural growth closer to urban growth in Q219,” Nielsen noted in its quarterly update.
The rural slowdown is most pronounced in north India, followed by the west. Haryana, Madhya Pradesh, Uttar Pradesh, Maharashtra, and Assam are among the states leading the slowdown.
Nielsen has lowered its 2019 growth forecast for the FMCG sector to 9-10 per cent from its previous forecast of 11-12 per cent, citing macroeconomic factors such as slowing growth and the impact of a deficient monsoon.
What’s behind recession fears #GS3 #Economy
The global economy continues to be hit by bad news as one big economy after another falters on economic growth. On Wednesday, data from Germany, the world’s fourth-biggest economy, showed that its GDP contracted by 0.1% in the April-June quarter (Q2).
Ongoing trade tensions between the US and China, and the uncertainty due to Brexit have impacted German exports badly. Germany is the world’s third-biggest trader after the US and China.
The two biggest economies are already in some trouble. The US has grown by just 2.1% in Q2 of 2019 as against 3.2% in Q1. China’s growth has been decelerating for longer.
According to The Wall Street Journal, the unemployment rate in Chinese cities is now at the highest recorded level, and other key metrics such as factory production (which is the lowest since the 2008 financial crisis) have worsened. The Japanese economy may have surprised everyone by growing at an annualised rate of 1.8% in Q2, but it, too, is fighting to ward off a recession.
Investor sentiment is so bad that even the decision by the Trump administration to defer imposing a new set of tariffs on Chinese imports from September to December could not hold back the US bond (Treasury) yields from plummeting. The 30-year bond yield fell to its historic low as US markets opened Wednesday, even as the 10-year bond yields fell below the two-year bond yields.
An inversion in bond yields such as this points to the likelihood of a recession in the near future. Simply put, investors are looking for safe options, and since US bonds are one of the safest bets, more of those are being bought. This has led to a spike in their prices, and a fall in their yields.
So, is a global recession likely?
Earlier this month, researchers at Morgan Stanley, a leading investment bank, warned that if the US and China continue to raise tariff and non-tariff barriers over the next four to six months, the global economic growth rate will fall to a seven-year low of 2.8% (chart 1), and worse still, the world economy could enter a recession within the next three quarters (that is, nine months).
The last massive downward spiral in the global economy happened in the wake of the great financial crisis of 2008, and continued until 2010.
What is a global recession?
In an economy, a recession happens when output declines for two successive quarters (that is, six months). However, for a global recession, institutions such as the International Monetary Fund tend to look at more than just a weakness in the economic growth rate; instead, they look at a widespread impact in terms of employment or demand for oil, etc. The long-term global growth average is 3.5%. The recession threshold is 2.5%.
What has triggered the alarm?
Earlier this month, the US declared China a “currency manipulator”. In other words, Washington accused Beijing of deliberately weakening the yuan to make Chinese exports to the US more attractive and undercut the effect of increased US tariffs.
The intensifying trade war between the two has the potential to derail already weak global growth, and the signs are evident. For instance, the global manufacturing Purchasing Managers’ Index (chart 2) and new orders sub-index have contracted for the second consecutive month in July; they are already at a seven-year low.
Further, the global capital expenditure cycle has “ground to a halt” (chart 3); since the start of 2018, there’s been a sharp fall-off in nominal capital goods imports growth. (That is, there’s a decline in capital investment in anticipation of reduced demand.)
How can this lead to a global recession?
The German slowdown is a very good example. The absolute volume of global trade has stagnated and, in terms of percentage change, trade is contracting. What is worse is the composition of trade that is being hit — and is likely to be hit further. According to Morgan Stanley, two-thirds of the goods being lined up for increased tariffs are consumer goods.
Higher tariffs are not only likely to douse demand but, crucially, hit business confidence. The apprehension is global trade uncertainties could start a negative cycle, wherein businesses do not feel confident enough to invest more, given the lower demand for consumer goods.
Reduced capital investment would reflect in fewer jobs, which, in turn, will show up in reduced wages and, eventually, lower aggregate demand in the world.
What makes this scenario trickier is the fact that monetary policy is already loose — that is, borrowing money is cheap. A recession now will be more difficult to salvage.
What about India?
As chart 4 shows, India’s trade is already suffering, and jobs are being lost. For an economy that is struggling to find a domestic growth lever — government and businesses are overextended and household (that is, private family-level) consumption is down — exports could have provided a respite.
What can India do to boost exports?
A 2016 analysis by HSBC global research showed that domestic bottlenecks were more responsible for India’s lack of competitiveness in exports than the lack of global demand and the overvalued rupee put together. In other words, addressing bottlenecks such as better roads, more electricity, easier rules of doing business etc., will go a long way in boosting exports.
Who notifies a disease, and how does it help? #GS3 #SnT
A notifiable disease is any disease that is required by law to be reported to government authorities. The collation of information allows the authorities to monitor the disease, and provides early warning of possible outbreaks. The World Health Organization’s International Health Regulations, 1969 require disease reporting to the WHO in order to help with its global surveillance and advisory role.
Making a disease legally notifiable by doctors and health professionals allows for intervention to control the spread of highly infectious diseases. Registered medical practitioners need to notify such diseases in a proper form within three days, or notify verbally via phone within 24 hours depending on the urgency of the situation. This means every government hospital, private hospital, laboratories, and clinics will have to report cases of the disease to the government.
The process helps the government keep track and formulate a plan for elimination and control. In less infectious conditions, it improves information about the burden and distribution of disease.
The Centre has notified several diseases such as cholera, diphtheria, encephalitis, leprosy, meningitis, pertussis (whooping cough), plague, tuberculosis, AIDS, hepatitis, measles, yellow fever, malaria dengue, etc. The onus of notifying any disease and the implementation lies with the state government.
Any failure to report a notifiable disease is a criminal offence and the state government can take necessary actions against defaulters.
U.S. Treasury bond curve inverts for first time since 2007 in recession warning #GS3 #Economy
The U.S. Treasury bond yield curve inverted on Wednesday for the first time since 2007, in a sign of investor concern that the world’s biggest economy could be heading for recession. The inversion — a situation where shorter-dated borrowing costs are higher than longer ones — saw U.S. 2-year note yields rise above the 10-year bond yield.
Such an inversion, considered a classic recession signal, occurred last in June 2007 when the U.S. sub-prime mortgage crisis was gathering pace US2YT=RR US10YT=RR. The U.S. curve has inverted before every recession in the past 50 years, offering a false signal just once in that time.
Weak economic data and inflation, global trade tensions and risks such as the consequences of Brexit have driven concern about world growth, fuelling market expectations of central bank rate cuts and sparking hefty falls in government bond yields.
The U.S. 30-year Treasury yield tumbled to a record low of 2.05% on Wednesday. In Germany, the 10-year bond yield fell to a record low of -0.64% after data showed the euro zone’s powerhouse economy shrank in the second quarter.
“Inversions in crucial segments of the yield curve have always heralded recessions. However, typically central banks ignore the warning signal. They often cut too little or too late.” Elsewhere, yield curves have been less accurate in predicting downturns but Germany’s was at its flattest since 2008 DE2YT=RR DE10YT=RR.
Britain’s bond yield curve also inverted on Wednesday for the first time since the global financial crisis GB2GB10=RR. In March, the inversion of the U.S. yield curve hit 3-month T-bills for the first time in about 12 years when the yield on 10-year notes US10YT=RR dropped below those for 3-month securities.
That metric reverted back and then inverted again in May. Over that period, the 2-/10-year curve did not invert. Some have cast doubt on how accurate the yield curve remains as a recession predictor after a decade of multi-trillion dollar central bank money-printing stimulus.
Graf said the backdrop now was not a “perfect apples to apples comparison” to the last curve inversion episode, which happened just over a year before the collapse of Lehman Brothers sent the world economy into a tailspin.