📰 New Delhi announces $450 mn to Colombo
Sri Lanka to get $50 mn to fight terror
•India and Sri Lanka agreed to cooperate on counter-terrorism during talks between Prime Minister Narendra Modi and visiting President Gotabaya Rajapaksa here on Friday. As part of this common strategy, India announced a special Line of Credit of $50 million for strengthening Sri Lanka’s abilities to counter terror threats.
•This was in addition to the $400 million Line of Credit that India announced for infrastructure development in the island nation.
•“On the occasion of Easter this year, terrorists in Sri Lanka launched brutal attacks on the diversity of mankind and the valuable heritage of symbiosis. I went to Sri Lanka immediately after the elections in India to express India’s unwavering support in the Sri Lankan fight against terrorist and extremist forces. Sri Lankan police officers in major Indian institutions are already receiving the benefit of counter terrorist training,” said Prime Minister Modi.
•The April 21 Easter bombings, blamed on IS-inspired Sri Lankans, left at least 259 dead and hundreds of others injured.
•Mr. Rajapaksa thanked India for inviting him soon after being elected to the office of the President in the latest election.
•“PM Modi and I discussed several important issues this morning. Among these, security of our two countries took priority. India has always assisted Sri Lanka to enhance our capabilities in intelligence and counter terrorism and we look forward to continued support (from India) in this regard,” he said.
•In 2009 Sri Lanka waged a controversial war against the Tamil rebels in the east and the north of the country that ended decades of ethnic insurgency.
•Following the Easter bombings Sri Lanka had to ‘rethink’ its national security strategy, said the visiting dignitary urging for both sides to continue cooperation, saying, “The Prime Minister’s assurances are most encouraging.” He also said that both sides want to maintain the Indian Ocean region as a “zone of peace.” The Sri Lankan leader addressed the issue of the fishing community and said that Colombo will take steps to release the boats of Indian fishermen that are in Sri Lankan custody.
•Following the discussions between the two leaders, Mr. Rajapaksa said in a social media post “mutual respect and shared values” will strengthen bilateral ties between Colombo and New Delhi.
Housing projects
•Mr. Modi pointed out that India has been building housing units in the Northern and Eastern parts of Sri Lanka to assist the people who were displaced during the war of 2009. “We are delighted that under the Indian Housing Project, 46,000 houses have been constructed for the internally displaced in the Northern and Eastern Provinces of Sri Lanka. There is good progress in the construction of 14,000 houses for Tamils of Indian origin in the Up-Country region,” said the Indian leader.
•Mr. Rajapaksa extended an invite to Mr. Modi to visit Sri Lanka as the first foreign head of government to be hosted by the new presidency.
Vaiko moves resolution to do away with post of Governor
•Pushing for greater autonomy for States and protecting federalism, several Rajya Sabha members on Friday hit out at the Centre for what they termed encroachment on the rights of States. Some of them demanded that the post of Governor be abolished.
•Marumalarchi Dravida Munnetra Kazhagam leader Vaiko moved a resolution in the House seeking the return of subjects shifted to the Concurrent List from the State list, including education, and doing away with the post of Governor. He said the residuary powers should be vested with the States, which should be empowered financially and given a corpus to “mitigate the sufferings of the people”.
•“India being a multi-region and multilinguistic nation with people of different hues and colours, decentralisation is the need of the hour,” he said.
•During the discussion on Mr. Vaiko’s resolution, Congress MP Jairam Ramesh said though he had sympathy with the spirit of the resolution, some aspects of it would be “detrimental to the national interest”.
•He said the 42nd Constitutional Amendment, which was passed during the Emergency, had moved population control, forests, education and administration of justice to the Concurrent List from the State list. These items, he said, should remain in the Concurrent List, while he agreed with the demand for greater administrative powers and funds for States to deal with natural disasters.
•Speaking in Bengali, Derek O’Brien of the Trinamool Congress said while Governors were supposed to be appointed in consultation with the elected government of a State, today, they were being appointed like “branch managers of banks”. He said the situation in West Bengal and Maharashtra were “dangerous signs”, adding that some occupants of high offices were “making a mockery of their chairs”. Mr. O’Brien and AIADMK MP Vijila Sathyanath supported moving education to the State List.
📰 Bill to amend Arms Act tabled in LS
‘Only 2 licensed firearms per person’
•Union Minister for State for Home Affairs G. Kishan Reddy introduced a Bill in the Lok Sabha on Thursday that seeks to enhance the punishment for illegally possessing and making prohibited arms.
•The Arms Act (Amendment) Bill prescribes that a person can have a maximum of two licensed firearms and will have to deposit the third one (allowed under the present norms) with authorities or authorised gun dealers for de-licensing within 90 days of Parliament passing the amended Act.
•The government has also proposed to amend Section 25 (1AA) of the Arms Act, 1959, thereby enhancing punishment from the usual life term of 14 years to imprisonment for the remainder of that person’s life” for manufacturing, selling, repairing and possessing prohibited arms.
Nirbhaya fund
•Union Minister for Women and Child Development Smriti Irani informed the Lok Sabha that the government has set up anti-trafficking units across the country to deal with human trafficking in vulnerable areas.
•The Minister also informed the Lower House that the government has earmarked an overall budget of Rs. 9,046 crore under the ‘POSHAN Abhiyaan’ to fight malnutrition.
📰 GDP growth plunges to 4.5%, lowest since 2012
Official says fundamentals are strong, numbers will pick up
•Growth in the gross domestic product (GDP) in the July-September quarter hit a 25-quarter low of 4.5%, the government announced on Friday.
•The lowest GDP growth in six years and three months comes as Parliament has been holding day-long discussions on the economic slowdown, with Union Finance Minister Nirmala Sitharaman assuring the Rajya Sabha that the country is not in a recession and may not ever be in one.
GVA dips to 4.3%
•Growth in gross value added (GVA) also dipped to 4.3% in Q2 of 2019-20 from 4.9% in Q1, and 6.9% in the Q2 of last year.
•According to the data released on Friday, the manufacturing sector contracted 1% in the second quarter of the current financial year, compared with a robust growth of 6.9% in the same quarter of the previous year. The manufacturing sector saw an overall contraction of 0.2% in the first half (April to September) of the current financial year compared to a growth of 9.4% in the first half of last year.
•“We take note of announcement of the rate of GDP growth,” Economic Affairs Secretary Atanu Chakraborty told the media following the data release. “The fundamentals of the Indian economy remain strong and GDP growth is expected to pick up from the third quarter of FY 2019-20.”
•He further highlighted the fact that the International Monetary Fund has projected India’s GDP growth at 6.1% in financial year 2019-20 and 7% in 2020-21 in its October 2019 report.
📰 Government needs to recognise real fiscal deficit, put more cash in people’s hands, say economists
Non-government sector in a tailspin, govt. needs to realise problem is on demand side and conduct expenditures to prop it up, say economists
•The government needs to acknowledge its true fiscal deficit so that it can increase its expenditure and put money in people’s hands in order to stimulate demand and investments in the economy, economists said in reaction to the 25-quarter low GDP growth figure.
•The government on Friday announced that GDP growth for the second quarter of the 2019-20 financial year was at a dismal 4.5%. Within this, the data showed that private final consumption expenditure (PFCE), a measure of consumption demand, grew 5.06% in Q2, significantly lower than the growth of 9.79% recorded in the second quarter of the previous year.
•On the investments side, gross fixed capital formation, which measures investments by both the government and the private sector, grew only 1.02% in the second quarter of this financial year, compared with a growth of 4.04% in the first quarter, and drastically lower than the growth of 11.8% seen in the Q2 of last year.
•“There is scope for lower growth than even this,” Pronab Sen, former Chief Statistician of India told The Hindu. “At the end of the day, the non-government sector is in a tailspin. It’s not going to correct by itself. The government has to step in. They need to recognise that there is a real, genuine problem on the demand side, and there is a problem with people’s incomes, and they need to conduct expenditures that will prop this up.”
•One major structural problem that the government has created for itself, Dr. Pronab Sen said, is the non-recognition of the true fiscal deficit, which has tied up expenditure, which could otherwise have been released.
•“This was pointed out by the CAG for 2017-18 and it has only become worse subsequently,” he said. “The first step is to recognise this problem so that you can start paying your bills and making the expenditures that you have committed to make. The moment you recognise the fiscal deficit, you can tell the RBI that it must start buying bonds, so that this will open up space for the government to issue new bonds. But if you say that you are going to issue bonds as per a 3.3% fiscal deficit, it’s not going to cut it.”
•Increasing the ability of the government to spend will help if it is used to put more money in people’s hands, both as a way to spur demand but also encourage investments.
•“The role of putting cash into the economy is relevant, but relevant only for the unorganised sector,” said Abhijit Sen, former member of the Planning Commission. “For them, it is quite important because they are a cash economy. They are currently feeling all the problems of a cash economy without cash.”
•“As far as the overall growth impetus is concerned, even there, getting the unorganised sector going is important because in the past Indian slowdowns, what has led us out of it has been the unorganised sector,” Dr. Abhijit Sen added.
•When the big companies are doing badly, he said, it has been the smaller companies that have been able to secure credit from the banks and invest. “But that is not happening this time around because the banks have not been lending to anyone and the smaller players do not have the cash to invest,” Dr. Abhijit Sen added. “If there is more cash in the economy, they will kick-start something.”
•“India is not facing a slowdown, but is in recession,” Arun Kumar, a noted economist and Malcolm S. Adiseshiah Chair Professor at the Institute of Social Sciences said earlier on Friday before the release of the latest GDP figures. “If one includes the unorganised sector, India’s GDP is negative.”
•Anubhuti Sahay, economist with Standard Chartered Bank, said, “Whichever way you dissect the data, there is board based slowdown. Whether you look at services or industry, or government versus private, slowdown is pretty evident. In fact the number would have been even worse had the net exports not contributed.
•India is a trade deficit economy; whenever it is wider, it takes away a few percentage points from our GDP. But this time, because the trade deficit reduced on the back of lower import and weaker demand, it actually contributed to GDP growth.”
•While there is consensus among market participants that growth may have bottomed out, the recovery is expected to be prolonged.
