✌✌✌✌ THE HINDU ✌✌✌✌
✌✌ A dampening of economic activity ? ✌✌
Prime Minister Narendra Modi’s decision to abruptly withdraw legal tender status for Rs.1,000 and Rs.500 notes to save the country from “the grip of corruption and black money” has had one predictable side effect: a dampening of economic activity. With cash availability significantly impaired as a result of the sudden withdrawal of the high-value banknotes that constituted more than 86 per cent of the currency in circulation as of March 31, a palpable impact has been felt across the entire economy. A snapshot of manufacturing from the Nikkei India Manufacturing Purchasing Managers’ Index released on December 1 revealed that demonetisation had slowed buying activity and production across the board, and led to the weakest expansion in orders in four months. The survey indicated that producers of consumer goods are among the worst hit, a signal that a key engine of India’s world-leading pace of economic growth — private consumption demand — appears to be sputtering on account of the cash shortage. That the impact is likely to extend beyond the current quarter appears certain, according to the downward revisions of growth projections announced by brokerages and credit rating agencies. The median reduction in GDP growth estimate for the year by the 13 forecasters indicates that the pace of growth will be slower by at least 50 basis points, with two of them dialling back the number by one percentage point or more.
Data released by the government on November 30 put GDP growth in the July-September period at 7.3 per cent, as the agriculture sector’s performance was buoyed by an almost normal south-west monsoon. That this came after two successive years of drought helped boost the area sown. Still, a moot question relates to gauging the impact the cash shortage is likely to have had in rural areas both from a consumption perspective and in terms of the potential disruption caused to farming operations. Given the less-than-adequate penetration of formal banking channels, economic activity in small towns and villages is largely cash-based, and it remains to be seen how the agrarian economy will recover in the short to medium term from this disruption. While the biggest contributor to gross value added, the services sector, is expected to sustain a hit, small and micro enterprises that conduct a sizeable part of their business through cash transactions are also bound to be impacted. And with the external environment yet to revive, the RBI and the government have their task cut out to ensure that the economy doesn’t slide into a protracted slowdown.
✌✌ Right vs far right in France ✌✌
French President François Hollande’s decision to not make a bid for a second term in office is unsurprising. In the last leg of a term marred by economic uncertainty, high unemployment rates, workers’ strikes, infighting within the ruling party and personal scandal, Mr. Hollande’s approval ratings are abysmally low — as low as 4 per cent in some polls. Moreover, several former cabinet colleagues have said they would run against him in the Socialist Party primaries. It would have been humiliating for a sitting President to go through the primaries to win party nomination. Now, with Mr. Hollande deciding to keep out, the Socialists have the opportunity to put up a united fight under another candidate, most likely Prime Minister Manuel Valls, in the April presidential elections. Still, the left is likely to find it difficult to win back popularity in a campaign in which the agenda is largely being set by the conservatives and the far right. Mr. Hollande’s administration must share some blame for this. In 2012 he campaigned as an aggressive socialist, aligning himself with the unions and promising a left alternative to conservative Nicolas Sarkozy’s unpopular regime. But in office, he drifted to economic liberalism, offering tax breaks to corporations and setting out to overhaul labour laws, which pitted him against his allies on the left. His policies failed to revive the economy; he is also seen to have failed on the security front, with massive terrorist attacks in several French cities over the past year.
Mr. Hollande could neither retain his support base nor win over the other side of the spectrum, shifting the political mood in the country to the right. But the question is, who will cash in on this? Polls suggest Francois Fillon of the Republican Party and Marine Le Pen of the National Front will emerge the leading candidates out of the first round of the election, to face each other in the May 7 run-off. Mr. Fillon is a social conservative with a liberal economic agenda, and wants to overhaul the public sector, rein in unions and sack civil servants. He has the backing of a large organisational machinery, whereas Ms. Le Pen is an insurgent candidate. But so was Donald Trump. Over the past few years, Ms. Le Pen has transformed the NF from a fringe far-right group to an almost mainstream party with some grass-roots support. It now controls at least a dozen town halls and is consolidating support among the white working class, especially in the rust belt of the north and east. Like Mr. Trump, she presents herself as an anti-establishment outsider with a protectionist economic agenda. With the left in disarray and established conservatives divided, Ms. Le Pen’s chances cannot be ruled out.
✌✌✌✌ THE ECONOMIC TIMES ✌✌✌✌
✌✌ Let facts flow, and dispel conspiracies ✌✌
On Friday night, India witnessed a standoff between a state, Bengal, and New Delhi perhaps never seen since after the Emergency of 1975. The details, so far, are vague and political jargon has muddied the waters. Two facts are, however, irrefutable. One is that the chief minister of Bengal was kept circling Kolkata airport on a flight with a private airline, respected for its adherence to schedules, while the aircraft ran out of fuel. This prompted Trinamool Congress (TMC) legislators to ask whether this was a plot to assassinate Banerjee in the air. The other fact, also irrefutable, is that military was mobilised along highways, toll plazas and — most sensitive — on the road to Banerjee’s office and home on Friday night.
Bengal’s fiery — and populist — chief minister has linked these developments to her opposition to the demonetisation project of Prime Minister Narendra Modi, announced on November 8. Mamata Banerjee has not just taken up cudgels on behalf of those whose livelihoods have been disrupted and otherwise majorly inconvenienced by the demonetisation project, but also used her opposition to the central government to claim the Opposition limelight. Who would lead the Opposition charge against the incumbent BJP at the Centre is a question that has been engaging several Opposition leaders, who sense Rahul Gandhi might not quite cut it as the rallying figure.
It is only natural that a leader like Mamata would use any opportunity to attack the Centre. While this much is fair game in politics, dragging the army into a political controversy is not a good idea. The army must maintain disciplined equanimity and dispel any notion that it plays any role other than purely professional. The DGCA, too, must be vocal and voluble in its clarification, rather than reticent.
✌✌ A dampening of economic activity ? ✌✌
Prime Minister Narendra Modi’s decision to abruptly withdraw legal tender status for Rs.1,000 and Rs.500 notes to save the country from “the grip of corruption and black money” has had one predictable side effect: a dampening of economic activity. With cash availability significantly impaired as a result of the sudden withdrawal of the high-value banknotes that constituted more than 86 per cent of the currency in circulation as of March 31, a palpable impact has been felt across the entire economy. A snapshot of manufacturing from the Nikkei India Manufacturing Purchasing Managers’ Index released on December 1 revealed that demonetisation had slowed buying activity and production across the board, and led to the weakest expansion in orders in four months. The survey indicated that producers of consumer goods are among the worst hit, a signal that a key engine of India’s world-leading pace of economic growth — private consumption demand — appears to be sputtering on account of the cash shortage. That the impact is likely to extend beyond the current quarter appears certain, according to the downward revisions of growth projections announced by brokerages and credit rating agencies. The median reduction in GDP growth estimate for the year by the 13 forecasters indicates that the pace of growth will be slower by at least 50 basis points, with two of them dialling back the number by one percentage point or more.
Data released by the government on November 30 put GDP growth in the July-September period at 7.3 per cent, as the agriculture sector’s performance was buoyed by an almost normal south-west monsoon. That this came after two successive years of drought helped boost the area sown. Still, a moot question relates to gauging the impact the cash shortage is likely to have had in rural areas both from a consumption perspective and in terms of the potential disruption caused to farming operations. Given the less-than-adequate penetration of formal banking channels, economic activity in small towns and villages is largely cash-based, and it remains to be seen how the agrarian economy will recover in the short to medium term from this disruption. While the biggest contributor to gross value added, the services sector, is expected to sustain a hit, small and micro enterprises that conduct a sizeable part of their business through cash transactions are also bound to be impacted. And with the external environment yet to revive, the RBI and the government have their task cut out to ensure that the economy doesn’t slide into a protracted slowdown.
✌✌ Right vs far right in France ✌✌
French President François Hollande’s decision to not make a bid for a second term in office is unsurprising. In the last leg of a term marred by economic uncertainty, high unemployment rates, workers’ strikes, infighting within the ruling party and personal scandal, Mr. Hollande’s approval ratings are abysmally low — as low as 4 per cent in some polls. Moreover, several former cabinet colleagues have said they would run against him in the Socialist Party primaries. It would have been humiliating for a sitting President to go through the primaries to win party nomination. Now, with Mr. Hollande deciding to keep out, the Socialists have the opportunity to put up a united fight under another candidate, most likely Prime Minister Manuel Valls, in the April presidential elections. Still, the left is likely to find it difficult to win back popularity in a campaign in which the agenda is largely being set by the conservatives and the far right. Mr. Hollande’s administration must share some blame for this. In 2012 he campaigned as an aggressive socialist, aligning himself with the unions and promising a left alternative to conservative Nicolas Sarkozy’s unpopular regime. But in office, he drifted to economic liberalism, offering tax breaks to corporations and setting out to overhaul labour laws, which pitted him against his allies on the left. His policies failed to revive the economy; he is also seen to have failed on the security front, with massive terrorist attacks in several French cities over the past year.
Mr. Hollande could neither retain his support base nor win over the other side of the spectrum, shifting the political mood in the country to the right. But the question is, who will cash in on this? Polls suggest Francois Fillon of the Republican Party and Marine Le Pen of the National Front will emerge the leading candidates out of the first round of the election, to face each other in the May 7 run-off. Mr. Fillon is a social conservative with a liberal economic agenda, and wants to overhaul the public sector, rein in unions and sack civil servants. He has the backing of a large organisational machinery, whereas Ms. Le Pen is an insurgent candidate. But so was Donald Trump. Over the past few years, Ms. Le Pen has transformed the NF from a fringe far-right group to an almost mainstream party with some grass-roots support. It now controls at least a dozen town halls and is consolidating support among the white working class, especially in the rust belt of the north and east. Like Mr. Trump, she presents herself as an anti-establishment outsider with a protectionist economic agenda. With the left in disarray and established conservatives divided, Ms. Le Pen’s chances cannot be ruled out.
✌✌✌✌ THE ECONOMIC TIMES ✌✌✌✌
✌✌ Let facts flow, and dispel conspiracies ✌✌
On Friday night, India witnessed a standoff between a state, Bengal, and New Delhi perhaps never seen since after the Emergency of 1975. The details, so far, are vague and political jargon has muddied the waters. Two facts are, however, irrefutable. One is that the chief minister of Bengal was kept circling Kolkata airport on a flight with a private airline, respected for its adherence to schedules, while the aircraft ran out of fuel. This prompted Trinamool Congress (TMC) legislators to ask whether this was a plot to assassinate Banerjee in the air. The other fact, also irrefutable, is that military was mobilised along highways, toll plazas and — most sensitive — on the road to Banerjee’s office and home on Friday night.
Bengal’s fiery — and populist — chief minister has linked these developments to her opposition to the demonetisation project of Prime Minister Narendra Modi, announced on November 8. Mamata Banerjee has not just taken up cudgels on behalf of those whose livelihoods have been disrupted and otherwise majorly inconvenienced by the demonetisation project, but also used her opposition to the central government to claim the Opposition limelight. Who would lead the Opposition charge against the incumbent BJP at the Centre is a question that has been engaging several Opposition leaders, who sense Rahul Gandhi might not quite cut it as the rallying figure.
It is only natural that a leader like Mamata would use any opportunity to attack the Centre. While this much is fair game in politics, dragging the army into a political controversy is not a good idea. The army must maintain disciplined equanimity and dispel any notion that it plays any role other than purely professional. The DGCA, too, must be vocal and voluble in its clarification, rather than reticent.
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