ISSUE: SLOWDOWN IN THE GDP
WHY IT IS BEING SAID?
Growth has sunk to an over six-year low of 4.5 per cent in the second quarter of the current financial year, falling well below the psychological 5 per cent mark.
The headline number, largely propped up by higher government spending, is well below the RBI’s estimate of 5.3 per cent, signaling the severity of the slowdown.
Nominal GDP growth came in at 6.1 per cent, almost half of what was expected in the Union budget.
WILL THIS SLOWDOWN CONTINUE?
Editorial highlights that growth in the second quarter was largely driven by higher government spending.
However this might come under new pressure due to revenues falling well short of expectations.
Its gross tax revenues have grown by a mere 1.2 per cent so far (April to October), while the budget had pegged revenue growth at 18.3 per cent.
The stress in government finances is already evident with the fiscal deficit (April to October) standing at 102.4 per cent of the full year target of Rs 7.04 lakh crore.
Sticking to the fiscal deficit target would mean cuts in spending, further intensifying the slowdown.
WHY THIS SLOWDOWN IS DIFFERENT?
Since Independence, there have been at least eight episodes of significant GDP growth rate declines over two years or more — 1961-62 and 1962-63, 1965-66 and 1966-67, 1971-72 and 1972-73, 1984-85 to 1987-88, 1990-91 to 1992-93, 2000-01 to 2002-03, 2012-13 and 2013-14, and the current one from 2018-19.
The slowdowns till the Eighties were mostly a result of drought-induced agricultural contractions, wars or balance of payments (BoP) pressures. Shortage of foreign exchange for imports, even of essential materials or components and spares used in capital goods, besides austerity measures introduced after the 1962 Sino-Indian War, caused the first growth dip episode.
Back-to-back droughts and a BoP crisis leading to the 36.5 per cent rupee devaluation of June 1966, likewise, precipitated the second downturn, while it was a combination of the 1971 Indo-Pakistan War and the 1972 famine in the case of the third.
The Eighties saw three consecutive drought years — 1985, 1986 and 1987. Its impact on the broader economy was predictable, given the farm sector had a roughly one-third share in India’s GDP even at this point in time.
The current slowdown — GDP growth has dropped in every quarter from January-March 2018 down to July-September 2019 and showing little signs of recovery — is unique by contrast.
Firstly, it has taken place amidst remarkable political stability, with the unquestioned leader of a single-party majority government at the helm.
Secondly, this slowdown isn’t courtesy the usual “F” suspects — food, foreign exchange and fisc. Not only does agriculture account for hardly 15 per cent of India’s GDP now, annual consumer food price inflation, too, has averaged a mere 1.59 per cent between October 2016 and October 2019. There has been no BoP crisis either; foreign exchange reserves were, in fact, at a record $448.60 billion as on November 22.
What we are now experiencing is more of a “western-style” slowdown exacerbated by internal policy misadventures. At the heart of it has been the twin balance sheet (TBS) problem — of debts accumulated by private corporates during the investment binge of 2004-11 turning into non-performing assets of mainly public sector banks.
Sector specific interventions will alleviate some of the pain, but for steady, and sustainable, growth, the deeper structural issues plaguing the economy need to be addressed.
ISSUE: SECURITY OF WOMEN
BACKGROUND: The gang rape of the law student in Ranchi and the grisly murder and assault of a 27-year-old vet in Hyderabad.
WHAT COULD BE DONE TO AVOID THIS?
As more and more women turn out to work, study and simply occupy public and private spaces with assertion, both governments and the larger society must be forced to a reboot.
For LAW ENFORCEMENT AGENCIES, that means the culprits must be brought to book, that the process of justice should not doubly punish the Ranchi survivor.
For THE STATE GOVERNMENTS, it implies that the push to make cities and towns safe for women’s mobility, their entertainment, their freedom to simply be becomes the priority.
For THE LARGER SOCIETY, the violence is a reminder to continue the difficult conversation about power and patriarchy, to not just train girls in self-defence but to teach boys empathy.
Re-imagine women’s freedoms beyond curfews, dress codes and propriety.
ISSUE: GLOBAL MIGRATION REPORT 2020
Released by the UN-affiliated International Organization for Migration (IOM).
MAJOR FINDINGS OF THE REPORT
India accounts for the highest share with 17.5 million Indians living outside the country
According to the IOM report, roughly two-thirds of international migrants are labour migrants.
International remittances in 2018 (2020 report) reached $689 billion, out of which India received $78.6 billion from the 17.5 million living abroad.
Remittances received by India have consistently increased between the 2005 and 2020 reports, sharply from $22.13 billion in 2005 to $53.48 billion in 2010 and then gradually to $68.91 billion in 2015 and $78.6 billion in the latest report.
The United States was the top remittance-issuer, at $68 billion, followed by the United Arab Emirates ($44.4 billion) and Saudi Arabia ($36.1 billion).
The top destinations for international migrants is the US where, as of September 2019, there were 50.7 million international migrants. The US is followed by Germany, Saudi Arabia, Russian Federation and the UK.
The top migration corridors for Indians are the United Arab Emirates, the US and Saudi Arabia. Conversely, the highest number of migrants entering India come from Bangladesh. The US is also the top choice for migrants from China.
ISSUE: CLIMATE SUMMIT COP-25
The annual two-week climate change conference, known by the abbreviation COP25, began in Madrid.
Prime objective of meeting in Madrid is completing the rule-book to the 2015 Paris Agreement so that it starts getting implemented from next year.
The rulebook, which contains the processes, mechanisms and institutions through which the provisions of the Paris Agreement would be implemented, had been finalised in Katowice last year. But some of the issues had remained unresolved and had left for negotiators to settle over the next one year. The most important one relates to the tussle over new carbon markets to be created under the Paris Agreement.
WHAT IS A CARBON MARKET?
A carbon market allows countries, or industries, to earn carbon credits for emission reductions they make in excess of what is required of them. These credits can be traded to the highest bidder in exchange of money. The buyers of carbon credits can show the emission reductions as their own and use them to meet their own emission reduction targets
A carbon market already existed under the 1997 Kyoto Protocol, the earlier climate agreement that will expire next year and get replaced by Paris Agreement
OTHER POINT OF CONCERN
The conference will be most keenly watched for the resolve that countries show in scaling up their efforts to fight climate change. Over the last few months, there has been growing pressure on countries to do more, especially the big emitters.