#India's emerging twin #deficit problem: Rising fiscal deficit & growing trade deficit. If unchecked, both deficits could cause a serious #economic crisis, including Balance of Payments crisis. #poverty #unemployment #hunger #Modi #BJP https://indianexpress.com/article/explained/everyday-explainers/ind... via @IndianExpress

In its latest ‘Monthly Economic Review’, the Ministry of Finance has painted an overall optimistic picture of the state of the domestic economy. “The World is looking at a distinct possibility of widespread stagflation. India, however, is at low risk of stagflation, owing to its prudent stabilization policies,” it states.

The economic growth outlook is likely to be affected by several factors owing to the trade disruptions, export bans and the resulting surge in global commodity prices —all of which will continue to stoke inflation — as long as the Russia-Ukraine conflict persists and global supply chains remain unrepaired. “However, the momentum of economic activities sustained in the first two months of the current financial year augurs well for India continuing to be the quickest growing economy among major countries in 2022-23,” states the Finance Ministry report.

But, given the uncertainties, the report highlights two key areas of concern for the Indian economy: the fiscal deficit and the current account deficit (or CAD).

The report states that “as government revenues take a hit following cuts in excise duties on diesel and petrol, an upside risk to the budgeted level of gross fiscal deficit has emerged”.

The fiscal deficit is essentially the amount of money that the government has to borrow in any year to fill the gap between its expenditures and revenues. Higher levels of fiscal deficit typically imply the government eats into the pool of investible funds in the market which could have been used by the private sector for its own investment needs. At a time when the government is trying its best to kick-start and sustain a private sector investment cycle, borrowing more than what it budgeted will be counter-productive.

The report underscores the need to trim revenue expenditure (or the money government spends just to meet its daily needs). “Rationalizing non-capex expenditure has thus become critical, not only for protecting growth supportive capex but also for avoiding fiscal slippages,” it states. “Capex” or capital expenditure essentially refers to money spent towards creating productive assets such as roads, buildings, ports etc. Capex has a much bigger multiplier effect on the overall GDP growth than revenue expenditure.

Current account deficit

The current account essentially refers to two specific sub-parts:

* Import and Export of goods — this is the “trade account”.

* Import and export of services — this is called the “invisibles account”.

If a country imports more goods (everything from cars to phones to machinery to food grains etc) than it exports, it is said to have a trade account deficit. A deficit implies that more money is going out of the country than coming in via the trade of physical goods. Similarly, the same country could be earning a surplus on the invisibles account — that is, it could be exporting more services than importing.

If, however, the net effect of a trade account and the invisibles account is a deficit, then it is called a current account deficit or CAD. A widening CAD tends to weaken the domestic currency because a CAD implies more dollars (or foreign currencies) are being demanded than rupees.

The Ministry’s worry is that costlier imports such as crude oil and other commodities will not only widen the CAD but also put downward pressure on the rupee. A weaker rupee will, in turn, make future imports costlier. There is one more reason why the rupee may weaken. If, in response to higher interest rates in the western economies especially the US, foreign portfolio investors (FPI) continue to pull out money from the Indian markets, that too will hurt the rupee and further increase CAD.

#Indian Stock market in bear territory. Its value is already down nearly 20% from its January peak of about $3.7 trillion. Foreign investors have been selling Indian stocks at a record pace, withdrawing about $32 billion since September 2021. #Modi #BJP https://www.business-standard.com/article/markets/three-charts-show...

As surging inflation and the end of global easy-money policies send Indian stocks spiraling down from all-time highs, three charts show the pain is unlikely to end anytime soon.

The S&P BSE Sensex Index has fallen more than 15% from its October high, nearing the 20% loss that denotes a bear market. The selloff comes as climbing costs and a record plunge in the rupee have forced the nation’s central bank to join global peers in raising interest rates.

The Indian stock market’s value is already down nearly 20% from its January peak of about $3.7 trillion dollars. The unsupportive economic backdrop combined with an unprecedented exodus of foreign investors and earnings estimates that appear poised to tumble cloud the outlook for a rebound.

“We expect the markets to further correct from here,” said Benaifer Malandkar, chief investment officer at Raay Global Investments Pvt. “Expectation is that by the second quarter, most negative news, the outcome of the Fed’s actions will get priced in.”

Foreigner Flight

Overseas investors have been selling Indian stocks at a record pace, withdrawing about $32 billion from the market since September. The retreat of foreigners is part of a wave hitting nations including South Korea and Taiwan as well.

“India is not in isolation since it’s part of the emerging market basket, and clearly the EMs are out of favor,” said Raay Global’s Malandkar. “Until the US Fed rate is at its peak, we will see redemptions happening across EMs.”

Rosy Estimates

The drop in Indian equities has mainly been caused by valuation contraction so far. Earnings estimates for the NSE Nifty 50 Index are yet to clock a meaningful decline like that seen in MSCI Inc.’s broadest measure for Asian equities.

Over the past few weeks, strategists at Sanford C. Bernstein Ltd., Bank of America Corp. and JPMorgan Chase & Co. have expressed concerns about the earnings optimism that has surrounded India. Pending any rebound in valuations, estimate cuts are likely to pull stocks down further.

Suffering Small-Caps

Smaller stocks have been hit harder by investor risk aversion, with gauges of small and mid-cap Indian shares having already entered bear markets. Market breadth has weakened, with just 16% of S&P BSE 500 Index stocks trading above their 200-day average level, the lowest level in two years.

Explained: What FPIs’ market exit means
Foreign portfolio investors have pulled out Rs 42,000 crore this month amid rising inflation and monetary policy tightening in the US. How does this impact the market and the rupee, and what should you do?

https://indianexpress.com/article/explained/fpi-exit-stock-market-g...

Sustained capital outflows from the capital market have unnerved the stock markets and led to a weakening of the rupee amid rising inflation across the globe. With the US Federal Reserve set to hike rates further, outflows are likely to continue, putting pressure on the Indian currency.

---------------

Aggressive rate hike by the US Federal Reserve, coupled with elevated inflation and high valuation of equities continued to keep foreign investors at bay from the Indian stock market as they pulled out Rs 31,430 crore in this month so far. With this, net outflow by Foreign Portfolio Investors (FPIs) from equities reached Rs 1.98 lakh crore so far in 2022, data with depositories showed. Going forward, FPI flows to remain volatile in the emerging markets on account of rising geopolitical risk, rising inflation, tightening of monetary policy by central banks, among others, Shrikant Chouhan, Head - Equity Research (Retail), Kotak Securities, said. According to the data, foreign investors withdrew a net amount of Rs 31,430 crore from equities in the month of June (till 17th).

http://www.millenniumpost.in/business/fpis-withdraw-rs-31430-crore-...

The massive selling by FPIs continued in June too as they have been incessantly withdrawing money from Indian equities since October 2021. Shrikant attributed latest selling to rising inflation, tight monetary policy by global central banks and elevated crude oil prices. Global investors are reacting to increased risks of a global recession as the US Federal Reserve was forced to raise interest rates by 75 basis points due to persistently elevated inflation. Moreover, it also indicated to continue its aggressive stance to contain stubbornly high inflation. "Strengthening of the dollar and rising bond yields in US are the major triggers for FPI selling. Since the Fed and other central banks like Bank of England and Swiss central bank have raised rates, there is synchronised rate hikes globally, with rising yields. Money is moving from equity to bonds," V K Vijayakumar, Cheif Investment Strategist at Geojit Financial Services, said.

On the domestic side as well, inflation has been a cause for concern, and to tame that, RBI has also been increasing rates

#Indian startups laid off over 10,000 #employees in the first 6 months of 2022. At least 27 startups fired workers across #India. As investors put pressure on #startups in India to cut costs, employees are collateral damage. #Ola #Blinkit #Modi #BJP https://qz.com/india/2181236/ola-blinkit-and-others-laid-off-10000-...


In a widely-circulated 2020 memo, marquee investor Sequoia had warned portfolio companies to keep their staffing levels sustainable. US-based startup accelerator, Y Combinator, also asked founders of its portfolio companies to “plan for the worst.”

The startups, though, seem to have botched it up. They have mostly cited cost-cutting and extended cash runways as reasons for slashing headcount. Macroeconomic uncertainties surely didn’t help.

“War in Europe, impending recession fears, and Fed rate hikes have led to inflationary pressures with massive correction in stocks globally and in India as well,” Vamsi Krishna, CEO of e-learning platform Vedantu, wrote in a May 18 blogpost. “Given this environment, capital will be scarce for upcoming quarters.”

There are myriad other ways to curb spending—a hiring freeze, curtailed marketing, saving on real estate—but laying off is evidently quick and easy. This is particularly so at tech startups which typically tend to over-hire while business is brisk.

Worryingly, the correction is far from over. Experts estimate that the layoff count will rise to 60,000 in the next six-to-nine months.

India’s Fintech Reckoning Arrives
Regulators are cracking down on financial technology firms—many backed by foreign capital—that were flourishing in the gray areas

https://www.wsj.com/articles/indias-fintech-reckoning-arrives-11655...

After a period of unbridled growth, India’s fintech industry faces a regulatory reckoning.

Things may not get as bad as they did in India’s rival China—but investors should still proceed with extreme caution until the dust settles.

On Monday, India’s central bank banned the loading of so-called prepaid payment instruments (PPIs)—essentially prepaid purchasing cards—using credit lines, jeopardizing several fintech buy-now-pay-later business models. Players such as Slice and Uni Cards—which are funded by Tiger Global, Accel, General Catalyst and Insight Partners—are likely to be affected.

Fintech players have issued hundreds of thousands of such cards with the aid of PPI licenses, and then loaded them using credit lines from banks and nonbanking financial institutions, according to brokerage Macquarie. These new-age credit cards—essentially a way to make an end run around strict credit card regulations—were targeted toward younger Indians, many of whom don’t have a long credit history.

Monday’s move indicates that the Reserve Bank of India is solidly against such a rent-a-license model where fintech startups tie up with banks and nonbanking financial institutions to sell products—a common practice in India.

In the past 18 months, the country’s financial technology sector—which has become systemically important to India—has absorbed about $14 billion of investment capital, according to data shared by Tracxn. The top global venture-capital firms have exposure—including Sequoia Capital, Y Combinator, AngelList, Accel and LetsVenture.

The RBI has in fact been advocating for tighter regulations for months: Earlier in 2022 it said it had formed a new fintech department. Monday’s circular is probably the beginning of a wider crackdown on fintech. And protecting vulnerable borrowers at a time of high inflation, tight liquidity and slowing growth is high on the RBI’s agenda. Companies in good standing with the regulator will likely emerge in better shape.

In the coming months, the Bank will likely introduce formal rules for India’s loosely regulated digital-lending ecosystem, including collection practices, data privacy, disclosures and capital-adequacy requirements. Fintech lending companies doubled disbursements in the financial year ending in March 2022 to a total of $2.3 billion, according to a report by the Fintech Association for Consumer Empowerment (FACE). Needless to say, all this will probably weigh on profitability.

Amid India’s tech IPO boom, shares of India’s top fintech company Paytm continue to languish. This is due not only to the lack of a sustainable and profitable business model but also to the RBI’s scrutiny. Several of Paytm’s peers will now appear likely to face much more scrutiny, too.

As investors in Chinese fintech recently discovered, once your industry gets on the bad side of regulators—even if a given company isn’t an initial target—things can go downhill fast. Investors would be wise to steer clear of any Indian fintech firms which have been bending the rules until there is more clarity on how far this crackdown will run.

India Can’t Be a Superpower If It Can’t Create Jobs
The country’s military can serve as a tool to project power or a scheme to generate employment, but it’s going to be very difficult to do both.

https://www.bloomberg.com/opinion/articles/2022-06-30/modi-s-attemp...

India’s attempt to reform military recruitment — which has set off political convulsions that show no signs of abating — once again shows that its aspirations to superpower status are no match for a below-par economy.

India’s military — particularly its army — is antiquated in organization and manpower-heavy. After some ill-advised, populist and expensive tinkering with pensions early in its tenure, the government found it was spending all its military budget on personnel, leaving very little for modernization or for hardware.

Meanwhile, for more than two decades, its own strategists have been calling for a leaner and younger army. The average Indian soldier is 32 or 33, making its army one of the oldest in the world.

And so, after two years in which the army suspended its typical annual enlistment of 60,000 young men on 20-year contracts, the government announced it was shifting to a tour-of-duty type system in which new recruits will be taken on for four years and then sent off with a handsome and tax-free discharge bonus of $15,000.

This has set off a firestorm of protest. Literally, in some cases, as angry would-be army recruits set trains — a very visible symbol of the central government even the most remote parts of India — alight.

The problem is that, for many young men in the most economically disadvantaged parts of India, the army is their only hope of a career ‑ or, for that matter, of getting married, given that years of sex-selective abortions have caused the gender ratio in those parts of India to skew heavily male. These men — or boys, since they’re mostly teenagers — have spent years running and practicing drills in hopes of getting selected.

Before the new recruitment system was announced, a typical applicant told a reporter for the Print: “If I don’t get a job in the army, my chances of living with dignity in my society are very low. My chances of marrying go down. People will mock me at every function.” Those who do return to their villages after their 20 years of service, on the other hand, tend to be respected and wind up in positions of local leadership.

It’s telling that the protests, and the anger, have largely been limited to the poorest parts of India, where other employment opportunities are scarce. The government has tried to emphasize the $15,000 payout the four-year men will receive and claimed that army training will make them more attractive on the job market. That argument holds less sway in areas where there’s little prospect of finding a good job today or four years from now.

The government has done itself no favors by obscuring its real motivations. Everyone knows this is about reducing the amount the military spends on salaries and creating an army that is younger and more agile technologically. At the same time, the government won’t reveal its plans for military transformation. Forget about detailing how much money the program would save; we don’t even know for certain how many people are currently employed by India’s military. For some reason, that’s treated as a state secret. (It’s estimated to be around 1.4 million, about half as many again as in China.)

Indian Prime Minister Narendra Modi is generally credited with having an instinctive understanding of what voters want. Yet it’s astounding how often his government designs policies in secret that then elicit a furious public reaction. While military reform was inevitable and overdue, surely it could have been discussed in public so that at least the current generation of aspirants would have known better than to run kilometers a day to get themselves in shape.

India Can’t Be a Superpower If It Can’t Create Jobs
The country’s military can serve as a tool to project power or a scheme to generate employment, but it’s going to be very difficult to do both.

https://www.bloomberg.com/opinion/articles/2022-06-30/modi-s-attemp...


As with farmer-led protests last year, there’s a chance the government will be forced to retreat in the face of this unwavering hostility in areas that remain politically powerful, if economically weak.

A reversal would carry its own costs, however. In an aspiring superpower the military should be an instrument designed to project power, ensure domestic security and respond to emerging threats. What India is learning is that, given its failure to create jobs, its army must also remain something of an employment generation scheme. If the country wants to play a bigger role in its region and in the world, it will first need to fix its economy.

#India's #manufacturing activity hits 9-month low in June 2022. S&P Global India Manufacturing Purchasing Managers’ Index (PMI) fell to 53.9 in June from 54.6 in May, the weakest pace of growth since last September. #unemployment #jobs #Modi #BJP #economy https://www.business-standard.com/article/economy-policy/india-s-ma...

India’s manufacturing sector activity eased to a nine-month low in June as growth of total sales and production moderated amid intense price pressures, a monthly survey said on Friday.

The seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) fell to 53.9 in June from 54.6 in May, the weakest pace of growth since last September.



The June PMI data pointed to an improvement in overall operating conditions for the twelfth straight month. In PMI parlance, a print above 50 means expansion while a score below 50 denotes contraction.

“The Indian manufacturing industry ended the first quarter of fiscal year 2022/23 on a solid footing, displaying encouraging resilience on the face of acute price pressures, rising interest rates, rupee depreciation and a challenging geopolitical landscape,” said Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence.

Factory orders and production rose for the twelfth straight month in June, but in both cases the rates of expansion eased to nine-month lows. Increases were commonly attributed to stronger client demand, although some survey participants indicated that growth was restricted by acute inflationary pressures, the survey said.

According to the survey, monitored firms reported increase for a wide range of inputs — including chemicals, electronics, energy, metals and textiles — which they partly passed on to clients in the form of higher selling prices.

Lima further said there was a broad-based slowdown in growth across a number of measures such as factory orders, production, exports, input buying and employment as clients and businesses restricted spending amid elevated inflation.

According to the survey, inflation concerns continued to dampen business confidence, with sentiment slipping to a 27-month low. Elsewhere, input delivery times shortened for the first time since the onset of Covid-19.

“Fewer than 4 per cent of panellists forecast output growth in the year ahead, while the vast majority (95 per cent) expect no change from present levels. Inflation was the main concern among goods producers,” the survey said.

On the job front, employment rose for the fourth successive month, albeit at a slight pace that was broadly in line with those seen over this period.

Meanwhile, the Reserve Bank of India (RBI) in its financial stability report released on Thursday said persistently high inflation globally is to stay longer than anticipated as the ongoing war and sanctions take a toll on economies, threatening a further slowdown to global trade volumes.

The global economic outlook is clouded by the ongoing war in Europe and the pace of monetary policy tightening by central banks in response to mounting inflationary pressures, the RBI report said.

Foreign #investors flee #India, putting pressure on #Indian #currency. #Modi government raises #import taxes on #gold to preserve #forex reserves, support #INR, amid rising #inflation and twin current account and fiscal deficits. #BJP #Hindutva #economy
https://economictimes.indiatimes.com/news/economy/indicators/india-...

Investors reeling from the brutal emerging markets selloff over the past six months again fled the rupee as India’s currency hit new lows, prompting the government to curb gold imports and oil exports to arrest a widening deficit.

The government raised import taxes on gold, while increasing levies on exports of gasoline and diesel in an attempt to control a fast-widening current account gap. The moves sent Reliance Industries Ltd NSE -7.20 %. and other energy exporters tumbling, bringing down the benchmark index by as much as 1.7%. The rupee fell again.

The actions underscore how emerging economies, specially with twin current account and fiscal deficits, are increasingly facing pressures on their currencies as forceful rate hikes by the Federal Reserve accentuate outflows. Despite having the world’s fourth-biggest reserve pile, the rupee has hit a succession of record lows in recent weeks. The Indonesian rupiah, the other high-yielder in Asia, fell to its lowest in two years on Friday.

Policy makers in many emerging markets face stark choices as they battle soaring inflation and capital flight as the Fed tightens policy: raise rates and risk hurting growth, spend reserves that took years to build to defend currencies, or simply step away and let the market run its course.

New Delhi’s move also underscores the economic challenges faced by Prime Minister Narendra Modi’s government as inflation in the world’s sixth-largest economy accelerates and external finances worsen. The central bank has been battling to slow the currency’s decline, and runaway rupee depreciation will worsen price pressures, and may spur more rate hikes that weigh on growth.

The measures “aim to reduce the impending pressure on the current account deficit and thus the currency,” said Madhavi Arora, lead economist at Emkay Global Financial Services. “Complementary policy efforts from both fiscal and monetary side essentially reflects the looming pain on the balance of payments deficit this year.”

While the Reserve Bank of India has been seeking to smooth out the rupee’s 6% decline this year, banks have reported dollar shortages as investors and companies rushed to swap the rupee for other assets or to pay for imports. The latest measures were spurred by a sudden surge of gold imports in May and June, the Finance Ministry said Friday.

The government raised the import duty on gold to 12.5%, reversing a cut last year. The higher taxes on shipments of gasoline and diesel sent shares of Reliance Industries, a key exporter, down by as much as 8.9%.

India is the world’s second-biggest gold consumer and local futures rose as much as 3% in Mumbai, the biggest intraday jump in almost four months, due to the higher import costs.

Finance Minister Nirmala Sitharaman said on Friday that India is seeking to discourage gold imports as it helps preserve foreign exchange. She added “extraordinary times” require such measures including the imposition of a windfall tax on fuel exports.
“The challenges are emanating from the same source, which is higher commodity prices,” said Rahul Bajoria, senior economist, Barclays Bank Plc. “India can neither find supply onshore nor we will be able to cut back the consumption of oil. That makes the whole situation a lot more unpredictable both in terms of how this plays out and how long this continues for.”

For the broader fuel market, a drop in Indian exports could further tighten global markets that are grappling with reduced supply from Russia and rising post-pandemic demand.

Sonam Srivastava of Wright Research sees slowdown in IT, infra, but bets on auto, FMCG


https://www.moneycontrol.com/news/business/markets/daily-voice-sona...


The mood in the market has improved in the last couple of weeks, but this could be a short-term rebound. We did see a slight easing in European inflation. While the recession in the west is more of a reality, many expect the pain to be over sooner. Nevertheless, we cannot rule out another correction.

Sonam Srivastava, founder of Wright Research, expects some early signs of a slowdown in the quarterly earnings from next week with margin pressure intensifying in IT and infrastructure. She, however, is bullish on auto and FMCG companies.

The recent tax hike on oil exports is a harsh step by the government, but it is warranted by their commitment to controlling the excessive inflationary pressures the economy is facing. "It might impact ONGC and Oil India earnings for FY23 by 36 percent and 24 percent, so we could see more pain in these scrips in the medium term," she shares in an interview to Moneycontrol.

Q: Do you think the consistent consolidation and possibility of another round of major market correction can spoil the mood of domestic institutional investors and retail investors?

A: The mood in the market has improved in the last couple of weeks, but this could be a short-term rebound. We did see a slight easing in European inflation. While the recession in the west is more of a reality, many expect the pain to be over sooner. Nevertheless, we cannot rule out another correction.

I believe that while a minority of new investors will get discouraged and quit, the equity market has gained a large set of sticky long-term investors in the past few years who will continue to support the market.


Q: Any themes that you are buying aggressively?

A: We are excited about the rising consumer demand and reopening themes. We expect FMCG to keep reaping the benefit of good monsoons and easing crude prices. On the other hand, hotels, multiplexes and travel stocks also look attractive.

Auto has been a powerful theme in the last few months, but we are cautiously optimistic given that there has already been a strong rally. IT, which has corrected massively, has started to look exciting, and we are picking some stocks in this basket.

We are also excited about the new India stocks gaining from the government production linked incentive (PLI) schemes, which we expect to outperform as soon as the switch happens towards growth.

Q: Do you think the market has made the final bottom by hitting lows in June and waiting for a trigger to see a sharp move?

A: It is tough to say we have reached the bottom. Many in the market are calling for the worst time to be over, but you can never confidently say that, given the type of uncertainty we have seen in the last year. The Fed rate hikes are priced in, and we are now just waiting for positive triggers like the easing of inflation or the end of the conflict in Ukraine.

A triangular pattern formation on the charts and the price movement in the subsequent few trading sessions will be essential and confirm either a positive breakout or a negative trend.


Q: Is there any possibility of another round of correction in the metal sector/stocks before any bottom formation?

A: Metal prices are increasingly governed by the Chinese economy, which has started showing signs of recovery after a long time. If the recovery in China persists, we could see some strength in the Metal prices at rock bottom right now.

A sustained long-term recovery in meal prices will only come after the current global environment calms down and focus shifts to infrastructure spending.

Sonam Srivastava of Wright Research sees slowdown in IT, infra, but bets on auto, FMCG


https://www.moneycontrol.com/news/business/markets/daily-voice-sona...


Q: Among commodities, do you think oil is the last to collapse?

A: In an inflationary environment, there is a supply-side constraint on commodities, and the bankers are trying to bring down demand to match that. So while the recent correction in commodity prices might end with oil, we can see commodity inflation revive again while inflation is roaring. So the short term might be negative for commodities, but we could see a resurgence in the prices in the medium term.


Q:Companies will start releasing their first-quarter earnings scorecard in the current month. What are your general expectations?

A:We expect early signs of a slowdown in the earnings from next week. The IT sector will show margin pressure, high attrition and low hiring patterns. Infrastructure, realty and other cyclical might show early signs of a slowdown.

On the other hand, the auto sector could show good numbers, and FMCG could also show encouraging numbers. We expect the commentary for most companies to become more cautious and sombre given the global situation.

#India Hit By Emerging Market #Investor #Exodus As #India #Rupee Tumbles. Investors reeling from the brutal emerging markets selloff over the past six months again fled the rupee as India's currency hit new lows. #Modi #BJP #Hindutva #economy https://www.ndtv.com/business/indian-economy-hit-by-selloff-in-emer...

Investors reeling from the brutal emerging markets selloff over the past six months again fled the rupee as India's currency hit new lows, prompting the government to curb gold imports and oil exports to arrest a widening deficit.
The government raised import taxes on gold, while increasing levies on exports of gasoline and diesel in an attempt to control a fast-widening current account gap. The moves sent Reliance Industries Ltd. and other energy exporters tumbling, bringing down the benchmark index by as much as 1.7%. The rupee fell again.

The actions underscore how emerging economies, specially with twin current account and fiscal deficits, are increasingly facing pressures on their currencies as forceful rate hikes by the Federal Reserve accentuate outflows. Despite having the world's fourth-biggest reserve pile, the rupee has hit a succession of record lows in recent weeks. The Indonesian rupiah, the other high-yielder in Asia, fell to its lowest in two years on Friday.

Policy makers in many emerging markets face stark choices as they battle soaring inflation and capital flight as the Fed tightens policy: raise rates and risk hurting growth, spend reserves that took years to build to defend currencies, or simply step away and let the market run its course.


New Delhi's move also underscores the economic challenges faced by Prime Minister Narendra Modi's government as inflation in the world's sixth-largest economy accelerates and external finances worsen. The central bank has been battling to slow the currency's decline, and runaway rupee depreciation will worsen price pressures, and may spur more rate hikes that weigh on growth.

The measures “aim to reduce the impending pressure on the current account deficit and thus the currency,” said Madhavi Arora, lead economist at Emkay Global Financial Services. “Complementary policy efforts from both fiscal and monetary side essentially reflects the looming pain on the balance of payments deficit this year.”

While the Reserve Bank of India has been seeking to smooth out the rupee's 6% decline this year, banks have reported dollar shortages as investors and companies rushed to swap the rupee for other assets or to pay for imports. The latest measures were spurred by a sudden surge of gold imports in May and June, the Finance Ministry said Friday.

Commodity Pressures

The government raised the import duty on gold to 12.5%, reversing a cut last year. The higher taxes on shipments of gasoline and diesel sent shares of Reliance Industries, a key exporter, down by as much as 8.9%.

India is the world's second-biggest gold consumer and local futures rose as much as 3% in Mumbai, the biggest intraday jump in almost four months, due to the higher import costs.

Finance Minister Nirmala Sitharaman said on Friday that India is seeking to discourage gold imports as it helps preserve foreign exchange. She added “extraordinary times” require such measures including the imposition of a windfall tax on fuel exports.

“The challenges are emanating from the same source, which is higher commodity prices,” said Rahul Bajoria, senior economist, Barclays Bank Plc. “India can neither find supply onshore nor we will be able to cut back the consumption of oil. That makes the whole situation a lot more unpredictable both in terms of how this plays out and how long this continues for.”

For the broader fuel market, a drop in Indian exports could further tighten global markets that are grappling with reduced supply from Russia and rising post-pandemic demand.

#India Hit By Emerging Market #Investor #Exodus As #India #Rupee Tumbles. Investors reeling from the brutal emerging markets selloff over the past six months again fled the rupee as India's currency hit new lows. #Modi #BJP #Hindutva #economy https://www.ndtv.com/business/indian-economy-hit-by-selloff-in-emer...

Big Reserves

Friday's measures highlight the central bank has a tough fight on the external front in coming months. RBI Governor Shaktikanta Das has said the central bank uses a multi-pronged intervention approach to minimize actual outflows of dollars and won't allow a runaway rupee depreciation.

And while investors have been put on watch over emerging-market stress by Sri Lanka's struggle with a dollar crunch leading to hyperinflation, the RBI has close to $600 billion of foreign-exchange reserves. But those reserves are depleting as the central bank steps up its fight to stop the slide in the rupee amid capital outflows and a current account gap that is expected to double this year.

“Investors should expect the currency to still depreciate,” said Arvind Chari, chief investment officer at Quantum Advisors Pvt. in Mumbai. “Will more taxes on exports impact corporate activity? Maybe not in the short term but it could in the medium to long term.”

#India’s World-Beating Growth Isn’t Creating #Jobs. #Unemployment rate is hovering around 7% or 8%, up from about 5% five years ago. The labor force participation rate has dropped to just 40% of the 900 million #Indians of legal age. #Modi #BJP #Hindutva

https://www.bloomberg.com/news/articles/2022-07-15/why-india-s-worl...


No other major economy has been expanding as fast as India lately, beating both China and the US. But beyond the headlines lies the grim reality of rising unemployment. The nation of 1.4 billion people isn’t creating enough jobs for its growing workforce, despite campaign promises by Prime Minister Narendra Modi to make it a priority. Output is increasing as a result of pandemic-related government spending while the private sector sits on the fence, deterred by dim conditions for new investment. Meanwhile, pandemic-related disruptions and rising inflation are making it harder for everyone to get by. Tensions boiled over in June when angry youth facing bleak job prospects blocked rail traffic and highways in many states for days, even setting some trains on fire.

The unemployment rate in India has been hovering around 7% or 8%, up from about 5% five years ago, according to the Centre for Monitoring Indian Economy, a private research firm. At the same time, the workforce shrank as millions of people dejected over weak job prospects pulled out, a situation that was exacerbated by Covid-19 lockdowns. The labor force participation rate -- meaning people who are working or looking for work -- has dropped to just 40% of the 900 million Indians of legal age, from 46% six years ago, according to the CMIE. By comparison, the participation rate in the US was 62.2% in June.

#India’s #Employment Rate in June Lowest in Last One Year, Says CMIE. Employment shrank by 13 mln, including 10 mln staying out
Shrinkage entirely in rural areas, should improve with monsoon - Bloomberg

https://www.bloomberg.com/news/articles/2022-07-05/june-employment-...

India’s labor market showed fresh signs of weakness in June, with the employment rate falling to its lowest in two years, as patchy monsoon rains may have delayed deployment of agricultural workers in rural areas, the head of a private research firm said.

Writing in the Business Standard newspaper on Tuesday, Mahesh Vyas, who is chief executive officer at the Centre for Monitoring Indian Economy Pvt, said the employment rate fell to 35.8% in June, from 37.07% in May. The jobless rate climbed to 7.8% of the total workforce in June, from 7.1% in May.

The rise in the jobless rate was entirely led by a rise in rural unemployment, data showed. The unemployment rate in rural India increased to 8.03% from 6.62% in May, while in urban areas, the jobless rate eased to 7.30% in June from 8.21% a month ago.

Overall, employment shrank by 13 million to 390 million in June, against a gain of 8 million jobs in April and May, Vyas said. While around 13 million jobs were lost during the month, the count of the unemployed increased by only 3 million as the rest exited the labor force, Vyas wrote.

This shrinkage brought down labor force participation rate to 38.8%, against 40% in the preceding two months. While this drop in employment and an equally sharp deterioration in other labor market ratios were alarming, the jobs picture was not completely dire across the country, Vyas wrote.

He said that since monsoon rains were 32% below normal last month, it could have “slowed the deployment of labor into the fields.” Labor participation may improve as rainfall picks up in coming weeks, he added.

The agriculture sector shed nearly 8 million jobs in June, mostly connected to plantations, while crop cultivation added 4 million jobs, according to Vyas.

The data also pointed toward growing vulnerabilities for salaried workers with 2.5 million losing their jobs in June. The government shrunk the demand for armed forces while opportunities in private equity-funded new-world jobs have also started to shrink, Vyas wrote.

Ex #RBI Gov R. Rajan: Turning #Muslims Into "2nd Class Citizens" Will Divide #India. Warning against majoritarianism, he cited #SriLanka as an example of what happens when politicians try to deflect a job crisis by targeting minorities. #Modi #Islamophobia https://www.ndtv.com/india-news/turning-minority-into-2nd-class-cit...

Former Reserve Bank of India Governor Raghuram Rajan on Saturday said India's future lies in strengthening liberal democracy and its institutions as it is essential for achieving economic growth.
Warning against majoritarianism, he said Sri Lanka was an example of what happens when a country's politicians try to deflect a job crisis by targeting minorities.

Speaking at the 5th conclave of All India Professionals Congress, a wing of the Congress party, in Raipur, he said any attempt to turn a large minority into "second class citizens" will divide the country.

Mr Rajan was speaking on the topic 'Why liberal democracy is needed for India's economic development'.

".What is happening to liberal democracy in this country and is it really that necessary for Indian development? ... We absolutely must strengthen it. There is a feeling among some quarters in India today that democracy holds back India ... India needs strong, even authoritarian, leadership with few checks and balances on it to grow and we seem to be drifting in this direction," Mr Rajan said.

"I believe this argument is totally wrong. It's based on an outdated model of development that emphasizes goods and capital, not people and ideas," said the former chief economist of the International Monetary Fund.

The under-performance of the country in terms of economic growth "seems to indicate the path we are going on needs rethinking," he said.

The former RBI governor further said that "our future lies in strengthening our liberal democracy and its institutions, not weakening them, and this is in fact essential for our growth."

Elaborating on why majoritarian authoritarianism must be defeated, he said any attempt to "make second class citizens of a large minority will divide the country and create internal resentment." It will also make the country vulnerable to foreign meddling, Me Rajan added.

Referring to the ongoing crisis in Sri Lanka, he said the island nation was seeing the "consequences when a country's politicians try to deflect from the inability to create jobs by attacking a minority." This does not lead to any good, he said.

Liberalism was not an entire religion and the essence of every major religion was to seek out that which is good in everyone, which, in many ways, was also the essence of liberal democracy, Mr Rajan said.

Claiming that India's slow growth was not just due to the COVID-19 pandemic, Mr Rajan said the country's underperformance predated it.

"Indeed for about a decade, probably since the onset of the global financial crisis, we haven't been doing as well as we could. The key measure of this underperformance is our inability to create the good jobs that our youth need," the former RBI governor said.

Ex #RBI Gov R. Rajan: Turning #Muslims Into "2nd Class Citizens" Will Divide #India. Warning against majoritarianism, he cited #SriLanka as an example of what happens when politicians try to deflect a job crisis by targeting minorities. #Modi #Islamophobia https://www.ndtv.com/india-news/turning-minority-into-2nd-class-cit...

Citing the strident protests against the Centre's 'Agniveer' military recruitment scheme, Mr Rajan said it suggested how hungry the youths were for jobs.

"Just a while ago you saw 12.5 million applicants for 35,000 railway jobs. It is particularly worrisome when India has a scarcity of jobs even when so many women are not working outside their homes. India's female labour force participation is among the lowest in G-20 at 20.3 percent as in 2019," he pointed out.

Talking about the "vision of growth" of the current government led by Prime Minister Narendra Modi, he said it centres around the term 'atmanirbhar' or self-reliance.

"Now, to the extent it emphasizes better connectivity, better logistics, better roads and devotes more resources to it, in some way this (atmanirbhar vision) seems the continuation of the past reformed decades. And that's good," he said.

But, the former RBI governor said, in many ways a look at what 'atmanirbhar' is trying to achieve takes one back to an early and failed past where the focus was on physical capital and not human capital, on protection and subsidies and not on liberalization, on choosing favourites to win rather than letting the most capable succeed.

Asserting that there was a misplaced sense of priorities, Mr Rajan said the nation was not spending enough on education, with tragic consequences.

"Many (children) not having been to school for two years are dropping out. Their human capital, which is their and our most important asset in the coming years, is something we are neglecting. We are failing them by not devoting enough resources to remedial education," Mr Rajan said.

Kaushik Basu
@kaushikcbasu
IMF's just-released World Economic Outlook shows, over 3 years, 2020-2, India's annual growth is 2.9%, behind China (4.5%) & low-income country average (3.1%). This is not where India was; its economy has enough strength. This is the price of divisive politics & erosion of trust.

https://twitter.com/kaushikcbasu/status/1552926615662985216?s=20&am...

India is experiencing a job market crisis. Applicants for preferred jobs outnumber vacancies by numbers that make the process a lottery. The qualifications of applicants for many jobs far exceed the skills or knowledge required. Attempts to influence or rig the appointments process to monetise scarcity are common. And the response to perceived malpractice or suspect policy shifts can be violent, as recently seen in the case of appointments to the railways and the military.

https://frontline.thehindu.com/columns/economic-perspectives-the-jo...

The argument that the same crisis afflicts most market economies, including many developed ones, mitigates for some people the disquiet the crisis should evoke. What is missed is that the nature and intensity of the jobs crisis is not similar across the board. India seems especially hard hit. What is more, a rather expansive definition of what constitutes employment and the varying definitions adopted by different sources make the picture fuzzy and lead to an underestimation of the problem.

Disturbing ‘facts’
The stylised “facts” the available data yield are, however, disturbing enough. Despite questions regarding method and coverage, the National Statistical Organisation’s annual Periodic Labour Force Survey (PLFS) is the best source of information on employment and unemployment trends. According to the latest report, 7.5 per cent of the labour force was unemployed in 2020-21 (July to June), even when a person is defined as employed if he/she worked for at least one hour on at least one day during the seven days preceding the date of survey (current weekly status).

India Jobs Crisis

https://frontline.thehindu.com/columns/economic-perspectives-the-jo...

With about 40 per cent of India’s 1.41 billion population in the labour force, this implies that about 42 million people who were available for work were not employed. If computed on a usual status basis (or based on the activity of a person for a relatively long time in the 365 days preceding the date of survey), the unemployment rate fell to 4.2 per cent. That amounts to around 25 million unemployed on a usual status basis. Around 21 million of these unemployed people were in the 15-29 years age group. The crisis is not of absent jobs in general but of employment among the youth in particular. A youthful population swells the number in the age group where people are capable of and wanting to work. But they find it difficult to get into the workforce.

The PLFS is the more recent version of the government’s effort to track the employment and unemployment situation in the country. Before 2017-18, the official statistical system undertook detailed surveys of the employment situation once in five years. On the grounds that an annual assessment was needed for effective policymaking, which has been a complete failure when it comes to employment generation, the government has carried out the PLF surveys since 2017-18. They yield quarterly and annual estimates. Annual estimates are as of now available for the four years ending 2020-21. Since results from these surveys can be compared, the government has taken credit for the apparent rise in employment over these four years when the labour force participation rate rose from 35.9 to 39.2 per cent and the unemployment rate declined from 8.9 to 7.5 per cent on a current weekly status basis. The corresponding figures for usual status employment were labour force participation rates of 36.9 per cent to 41.6 per cent and unemployment rates of 6.1 and 4.2 per cent. The aggregate figures do seem to point to an improvement, however marginal, on the employment front.

This improvement may seem surprising because of the well-recognised adverse employment generation consequences of India’s development path and the policy moves that have made a bad situation worse. Among the many features of the development path that determined employment outcomes, three in particular are worth noting. The first is that the non-agricultural sector has proved incapable of absorbing, at least in decent jobs, the multitudes that have had to move out of agriculture because it could no longer serve as the sink for a growing volume of the unemployed.

India Jobs Crisis

https://frontline.thehindu.com/columns/economic-perspectives-the-jo...

The second is that manufacturing growth has been so disappointing that the structural transition away from agriculture to manufacturing in terms of shares in total GDP and employment, expected in the early stages of development, has remained incomplete in India. The slow growth of manufacturing meant that the much-needed shift in employment and worker distribution away from low-productivity agriculture to high-productivity manufacturing, which could ensure decent non-agricultural employment, did not occur.

And finally, although construction and services proved to be the much-needed outlets for India’s excess labour force, they proved inadequate to the task of making up for the shortfall in manufacturing. This is especially so because the more dynamic, modern services (including software and information technology–enabled services) have been characterised by a revenue growth that is much faster than employment growth, resulting in lagging employment generation even in India’s high-growth years led by a services boom. Workers must settle wherever jobs are available, irrespective of pay and the conditions of work.

One consequence of these trends is that “regular” and “formal” employment—or employment that is based on a formal contract, offers a degree of security of tenure, includes paid leave, and is associated with some form of social protection—is more the exception than the rule. In 2020-21, only 21 per cent of those employed were in regular employment. Another 23 per cent were engaged as casual labourers. The remaining 56 per cent were “self-employed”. For most of these workers, being at work does not mean being employed for most of the days or hours a person is available for work. A range of indicators captures the poor quality of even the employment afforded to most workers. Around 64 per cent of regular workers had no written job contract, 48 per cent were not eligible for paid leave, and 54 per cent were not eligible for any social protection. Regular male workers in all occupational categories, who are paid much more than female workers, earned on average between Rs.18,238 and Rs.19,103 over 30 days in 2020-21, or around Rs.608-637 a day.

India Jobs Crisis

https://frontline.thehindu.com/columns/economic-perspectives-the-jo...

Despite the extreme inequality that characterises the country, that average for the population as a whole is just around two and a half times the income that supports a family at the official poverty line. The corresponding figures for the self-employed were Rs.11,184–11,976, or Rs.373–399 a day. The average daily earnings of a casual worker, when employed, varied between Rs.311 and Rs.327. What is more, in real terms, or after having adjusted for inflation, these earnings declined between 2017-18 and 2020-21.

The difficulty of finding even a half decent job has discouraged many from seeking work and kept them out of the labour force. The labour force participation rates in India of 58 per cent for men and 25 per cent for women in 2020-21 are striking for two reasons: first, they are extremely low by global and even South Asian standards (excluding Afghanistan and Pakistan), and second, the participation rates for women, who are forced by patriarchal norms to focus on unpaid household work, are appallingly low. Given the absolute levels of female participation rates, the evidence that it rose from 17.5 per cent in 2017-18 to 25.1 per cent in 2020-21 is no cause to celebrate. In fact, as argued below, this is likely the result of household distress.

During the years when the annual labour force surveys were conducted and published (2017-18; 2020-21), the Indian economy moved out of its high-growth trajectory, which meant that the poor job-generation record resulting from the weak relationship between output growth and employment growth was made worse by the slowdown in GDP growth. This was aggravated by three “external” factors that devastated the economy during these years.

The first is the damage wrought by demonetisation, which shrank economic activity and led to closures of firms and loss of livelihoods. The second is the badly designed and poorly implemented goods and services tax, which both imposed compliance costs and set operational constraints on economic agents with attendant adverse impacts on both production and incomes. The third is the COVID-19 pandemic and the government’s handling of it, characterised by brutal lockdowns and measly stimulus measures, which too severely damaged economic activity and livelihoods. All these shocks affected more severely the “informal” sector, which is where the majority of working Indians are employed.

Question of survival
Given these long- and short-term trends, it may appear surprising that the PLFS figures for the four years ending 2020-21 point to an increase in the number of workers and a fall in the unemployment rate. However, those trends may be in keeping with what one should expect in a period when growth has been slowing and economic shocks have devastated large sections of the working poor. In a context in which social security or social protection is more the exception than the rule, an unemployed person must, for survival, rely as a dependent on an already underpaid earning member of the family. That option being absent, she or he can only starve. When economic conditions worsen, as they clearly have over the last four years, the ability of earning members to support dependents is considerably eroded. The only option then is for every able person to seek out whatever work is available for however many days even if the terms are poor.

India Jobs Crisis

https://frontline.thehindu.com/columns/economic-perspectives-the-jo...

This implies that in difficult times “distress employment” will rise, inflating the figures on those reported as being in the workforce and of those employed, when identified using the rather weak definitions adopted in the employment surveys. This is corroborated by the fact that much of the increase in employment over these four years is of female employment and employment in agriculture. A corollary of this distress-driven turn to any available job is a rise in labour force participation and in the number of workers and a fall in the unemployment rate. This is what seems to be happening in recent years. A similar tendency was observed over 1999-2000 to 2004-05—which was a period of extreme distress—when total employment as measured by the National Sample Surveys registered an increase of around 60 million.

What this implies is that using aggregate employment and unemployment numbers to assess intertemporal changes in the employment situation in the country is not warranted. “Improvements” in the number of people employed and the extent of unemployment could be as much a reflection of distress as they could be of advance; it all depends on the economic circumstances. What is clear as far as the Indian labour market is concerned is that the years of high growth have done little to improve a dismal employment picture, and the conditions of work only deteriorated after those heady growth days came to end. The jobs crisis is real.

https://theprint.in/opinion/not-just-global-hunger-index-indias-own...

Not just Global Hunger Index, India’s own govt data shows how worried we should be
The Modi government has questioned the methodology of the Global Hunger Index. But undernutrition is one of the leading factors of child mortality in India. https://theprint.in/opinion/not-just-global-hunger-index-indias-own...

GHI scores are calculated using a three-step process that draws on available data from various sources to capture the multidimensional nature of hunger (Figure A.1).

First, for each country, values are determined for four indicators:

UNDERNOURISHMENT: the share of the population that is undernourished (that is, whose caloric intake is insufficient);

CHILD WASTING: the share of children under the age of five who are wasted (that is, who have low weight for their height, reflecting acute undernutrition);

CHILD STUNTING: the share of children under the age of five who are stunted (that is, who have low height for their age, reflecting chronic undernutrition); and

CHILD MORTALITY: the mortality rate of children under the age of five (in part, a reflection of the fatal mix of inadequate nutrition and unhealthy environments).

Second, each of the four component indicators is given a standardized score on a 100-point scale based on the highest observed level for the indicator on a global scale in recent decades.

Third, standardized scores are aggregated to calculate the GHI score for each country, with each of the three dimensions (inadequate food supply; child mortality; and child undernutrition, which is composed equally of child stunting and child wasting) given equal weight (the formula for calculating GHI scores is provided in Appendix B).

This three-step process results in GHI scores on a 100-point GHI Severity Scale, where 0 is the best score (no hunger) and 100 is the worst. In practice, neither of these extremes is reached. A value of 0 would mean that a country had no undernourished people in the population, no children younger than five who were wasted or stunted, and no children who died before their fifth birthday. A value of 100 would signify that a country’s undernourishment, child wasting, child stunting, and child mortality levels were each at approximately the highest levels observed worldwide in recent decades. The GHI Severity Scale shows the severity of hunger—from low to extremely alarming—associated with the range of possible GHI scores.

BOX 1.1
WHAT IS MEANT BY “HUNGER”?
The problem of hunger is complex, and different terms are used to describe its various forms.

Hunger is usually understood to refer to the distress associated with a lack of sufficient calories. The Food and Agriculture Organization of the United Nations (FAO) defines food deprivation, or undernourishment, as the consumption of too few calories to provide the minimum amount of dietary energy that each individual requires to live a healthy and productive life, given that person’s sex, age, stature, and physical activity level.

Undernutrition goes beyond calories and signifies deficiencies in any or all of the following: energy, protein, and/ or essential vitamins and minerals. Undernutrition is the result of inadequate intake of food in terms of either quantity or quality, poor utilization of nutrients due to infections or other illnesses, or a combination of these factors. These, in turn, are caused by a range of factors, including household food insecurity; inadequate maternal health or childcare practices; or inadequate access to health services, safe water, and sanitation.

Malnutrition refers more broadly to both undernutrition (problems caused by deficiencies) and overnutrition (problems caused by unbalanced diets, such as consuming too many calories in relation to requirements with or without low intake of micronutrient-rich foods).

In this report, “hunger” refers to the index based on four component indicators. Taken together, the component indicators reflect deficiencies in calories as well as in micronutrients.

https://www.globalhungerindex.org/about.html#:~:text=The%20average%....

The Global Hunger Index 2021 is basically about undernutrition. It provides us an opportunity to introspect on why India’s performance is not as good as what our economic growth should have ensured. Rather than doing that, the Narendra Modi government has chosen to question the methodology of one particular indicator used in the report to assess the level of undernourishment. It is true that at its core, the Hunger Index is primarily an indicator of child undernutrition and mortality. While it does estimate the prevalence of undernourishment (PoU), its weightage in the index is only one third. The other three components of the index relate to the percentage of children under five years who show wasting, stunting, and child mortality (percentage of children who die before reaching five years of age). Dipa Sinha has explained the methodology of index in this article in The Hindu.

India collects its own data on health and nutrition that is widely considered to be credible and extremely useful. The fifth round of the National Family Health Survey was conducted in 2019-20 and its findings were released in December 2020. However, data for Uttar Pradesh, Punjab, Jharkhand, and Madhya Pradesh was not included in the first phase so the all-India performance is not yet known. The survey found that the progress is worse than expected, and stunting, reflective of chronic malnutrition, has increased in 11 out of the 17 states surveyed. Wasting, indicative of acute malnutrition, has also increased in 13 of these 17 states. Such malnourished children are more vulnerable to illness and disease. The percentage of underweight children has gone up in 11 of the 17 states. In Bihar and Gujarat, 40 per cent of children under the age of five, were underweight.

Undernutrition is one of the leading risk factors for child mortality in India, accounting for 68.2 per cent of total under-five deaths (10.4 lakh) in 2017. Children with severe undernutrition are at high risk of dying from diarrhoea, pneumonia, and malaria.

https://theprint.in/opinion/not-just-global-hunger-index-indias-own...

Releasing targets for curbing malnutrition in the country, specifically among children, Union Women and Child Development Minister Smriti Irani on Wednesday said in a written statement tabled in Rajya Sabha said that it aims at reducing stunting and under-nutrition (underweight prevalence) among children under 6 years by 2% per annum.

https://indianexpress.com/article/india/over-35-5-kids-stunted-govt...

The (Indian) ministry stated that it aims to reduce low birth weight by 2% per annum, and anaemia among children between six and 59 months, as well as women and adolescent girls from 15 to 49 years, by 3% per annum.

According to findings of the 2019-21 National Family Health Survey (NFHS-5), nutrition indicators for children under 5 have improved over NFHS-4 (2015-16).

Stunting (in India) has reduced from 38.4% to 35.5%, wasting from 21.0% to 19.3% and underweight prevalence is down from 35.8% to 32.1%, according to the data. Women (15-49 years) whose BMI is below normal has reduced from 22.9% in NFHS-4 to 18.7% in NFHS-5. Despite the decrease, nutrition experts have said that India has one of the highest burdens of malnutrition in the world.


According to data released on Wednesday, Meghalaya has the highest number of stunted children (46.5%), followed by Bihar (42.9%). Assam, Dadra and Nagar Haveli, Gujarat, Jharkhand, Madhya Pradesh and Uttar Pradesh have stunted children higher than the national average of 35.5%.

Puducherry and Sikkim have the lowest percentage of stunted children, data shows.

Explained |India’s role in UN Peacekeeping Missions over the years
Maharashtra has 25.6% wasted children (weight for height) — the highest — followed by Gujarat (25.1%).

Assam, Bihar, Dadra and Nagar Haveli, Karnataka and West Bengal have a higher percentage of wasted children than the national average of 19.3%.

Bihar has the highest number of underweight children (41%), followed by Gujarat (39.7%), and Jharkhand at (39.4%).

Assam, Dadra and Nagar Haveli, Karnataka, Madhya Pradesh, Maharashtra and Uttar Pradesh have a higher percentage of underweight children than the national average of 32.1%.

The NFHS-5 data shows that Jharkhand has the highest percentage of women, between 15 and 49 years, who have a below-normal Body Mass Index (BMI), a value derived from mass and height of a person, and an indicator of under-nutrition. More than 26% Jharkhand women have below-normal BMI, the national average being 18.5%.

Bihar, Chhattisgarh, Gujarat, Madhya Pradesh, Maharashtra and Odisha also have high percentages of undernourished women.

The Supplementary Nutrition Programme under Anganwadi Services and POSHAN Abhiyaan have been converged to form the ‘Saksham Anganwadi and POSHAN 2.0’ (Mission Poshan 2.0), which seeks to address the challenges of malnutrition in children, adolescent girls, pregnant women and lactating mothers.

A comparison of international and national references to measure the prevalence of stunting in Pakistani school-age girls

• Rizwan Qaisar & 
• Asima Karim 

https://www.nature.com/articles/s41598-022-09511-3

Epidemiology of stunting in < 5 years old is well characterized; however, its prevalence in adolescence is inconsistent in different geographical locations. We estimated the prevalence of stunting in schoolgirls of Punjab, Pakistan, to standardize local references according to international and national references. In this population-wide cross-sectional study, 10,050 schoolgirls aged 8–16 years from 12 different districts of northern, central, and southern Punjab were analyzed. The prevalence of stunting was calculated by applying Centres for Disease Control and Prevention (CDC) and World Health Organisation (WHO) height-for-age references and the local reference for the study population. We used Cohen’s kappa statistics to analyze the agreement of our data with reference values, and chi-square test was used as the test of trend. Marked overestimation of the prevalence of stunting was observed (22.72% and 17.49% according to CDC and WHO, respectively) in comparison to local reference (4.94%). According to CDC and WHO references, there was an increasing trend of prevalence of stunting with higher age; however, data was comparable across all the age groups when local references were applied. We recommend that the prevalence of stunting in school-age girls should be determined by applying local height references rather than international ones to plan health strategies and treatments in the local population.

--------

The mean age of 10,050 schoolgirls included in this study was 12.7 ± 2.29 years (Mean ± SD). The overall prevalence of stunting in the study population using two international references is described in Fig. 1A. Overall, the percentage of girls with normal height in different age groups under study was quite similar (77.28% and 82.51%, respectively). The prevalence of stunted girls in our study cohort was 22.72% and 17.49%, according to CDC and WHO, respectively. The prevalence of stunting was similar for younger girls (8, 9 years) according to CDC and WHO, higher among girls of 10–12 years according to WHO compared to CDC and highest among girls of 13–16 years of age according to CDC compared to WHO reference (Table 1, Fig. 1A). When we applied the local height-for-age cut-offs obtained from our study population, a significantly higher percentage of the girls had standard height (95.06%, p ˂ 0.05, Table 1). The overall prevalence of stunting was markedly lower (4.94%, p ˂ 0.05, Fig. 1A) in all age groups when using the local reference, compared to CDC and WHO references. However, among 8-year-old girls, the prevalence of stunting was comparable to all the three references applied. A notable finding was the increasing trend of prevalence of stunting with increasing age when CDC and WHO references were applied. However, no such trend was observed when the local cut-offs were applied (Fig. 1A). We compared the height values obtained from our cumulative study cohort with CDC and WHO references and used kappa correlation to assess the degrees of agreement between these references and local references. There was poor agreement between the local reference in comparison with CDC and WHO (κ = 0.163, 0.325 respectively) references.

‘Diet of Average Indian Lacks Protein, Fruit, Vegetables’
On average, the Indian total calorie intake is approximately 2,200 kcals per person per day, 12 per cent lower than the EAT-Lancet reference diet's recommended level.

https://www.india.com/lifestyle/diet-of-average-indian-lacks-protei...

Compared to an influential diet for promoting human and planetary health, the diets of average Indians are considered unhealthy comprising excess consumption of cereals, but not enough consumption of proteins, fruits and vegetables, said a new study.Also Read - Autistic Pride Day 2020: Diet Rules For Kids With Autism

The findings by the International Food Policy Research Institute (IFPRI) and CGIAR research program on Agriculture for Nutrition and Health (A4NH) broadly apply across all states and income levels, underlining the challenges many Indians face in obtaining healthy diets.

“The EAT-Lancet diet is not a silver bullet for the myriad nutrition and environmental challenges food systems currently present, but it does provide a useful guide for evaluating how healthy and sustainable Indian diets are,” said the lead author of the research article, A4NH Program Manager Manika Sharma. Also Read - Experiencing Hair Fall? Include These Super-foods in Your Daily Diet ASAP

“At least on the nutrition front we find Indian diets to be well below optimal.”

The EAT-Lancet reference diet, published by the EAT-Lancet Commission on Food, Planet, and Health, implies that transforming eating habits, improving food production and reducing food wastage is critical to feed a future population of 10 billion a healthy diet within planetary boundaries.

While the EAT-Lancet reference diet recommends eating large shares of plant-based foods and little to no processed meat and starchy vegetables, the research demonstrates that incomes and preferences in India are driving drastically different patterns of consumption.

#Modi says bhajans (#Hindu religious songs) will cure #malnutrition. Over 35% of #Indian children are stunted, 19.3% wasted & 32.5% underweight.
BJP rule has seen undernourished population increase from 14.9% to 15.5% of population https://science.thewire.in/health/narendra-modi-malnutrition-bhajan/ via @TheWireScience


In the 92nd episode of ‘Mann ki Baat’, Prime Minister Narendra Modi said conducting bhajans can be part of the solutions to reducing malnutrition.
Cultural and traditional practices are not harmful. But it is in bad faith to make them part of habits that sideline tested and approved solutions to crucial welfare issues.
The statement also distracts from the fact that in Modi’s time as prime minister, India has come to account for a quarter of all undernourished people worldwide

There is much evidence in the public domain that says the availability, accessibility and affordability of good-quality food is crucial to improve the nutritional and health status of India’s people. There is nothing, however, about bhajans.

Many scholars and scientists have often criticised Prime Minister Modi for his irrational claims on many occasions. Reminiscent of his “taali, thali and Diwali” campaign as the COVID-19 pandemic was gaining strength, Modi’s comment on bhajans only distracts from the dire importance of effective public health measures – even as the rate of improvement of some important indicators have slid in his time at the helm.

Cultural and traditional practices are not harmful. But it is in bad faith to make them part of habits that sideline tested and approved solutions to crucial welfare issues.

In his monologue, Modi narrated a story of how people of a community in Madhya Pradesh each contribute a small quantity of grains, using which a meal is prepared for everyone one day a week. However, he shifted the focus at this point to devotional music in bhajan–kirtans – organised under the ‘Mera Bachha’ campaign – instead of dwelling on the role of Indigenous food cultures. This is counterproductive.

More malnourished children

India’s National Family Health Surveys (NFHS) and Comprehensive National Nutrition Surveys have documented the high prevalence of malnutrition and micronutrient deficiency among India’s children, adolescents and women. The recently published NFHS-5 results reported a high prevalence of stunting, wasting and underweightedness among children younger than five years and that they have declined only marginally in the last five years.

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A public-health approach to malnutrition requires us to pay attention to a large variety of socioeconomic conditions. In this regard, while many of Prime Minister Modi’s other comments in his monologue are well-taken, especially about public participation, neither the need for context-specific interventions nor for evidence-based policies are served by misplaced allusions to bhajans and kirtans.

Ritesh Kumar Singh
@RiteshEconomist
We shouldn't get carried away by 13.5% #GDPgrowth in Q1 FY2022/23.
Q1FY2020/21: INR 35.5 trillion
Q1FY2022/23: INR 36.85 trillion
The increase in 3 years: INR 1.35 trillion or 3.9% in 3 years.
#economy #India #IndiaAt75
@EconomicTimes

https://twitter.com/RiteshEconomist/status/1564989770966523905?s=20...

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Q1 GDP growth misses estimates despite low base; govt spending subdued
13.5% expansion in June QTR despite low base; GVA at basic prices up 12.7%

https://www.business-standard.com/article/economy-policy/q1-gdp-gro...

Keeping the two pandemic years of 2020 and 2021 out, Q1 real GDP in 2022-23 is only 3.8 per cent higher than in the equivalent quarter of 2019-20. Gross value added (GVA) at basic prices grew at 12.7 per cent in the June quarter while nominal GDP was up 26.7 per cent, reflecting elevated inflationary pressures in the economy.

Growth in private final consumption expenditure, or private spending, grew at a robust 25.9 per cent with pent-up demand kicking in as consumers felt confident to spend. Government spending, however, grew only 1.3 per cent, signalling that both the Central and state governments kept their expenditure in check during the quarter.

Gross fixed capital formation (GFCF), which represents investment demand in the economy, grew at a robust 20.1 per cent. However, compared to the pre-pandemic period of FY20, GFCF grew only 6.7 per cent.

On the supply side, manufacturing grew by a disappointing 4.8 per cent. Despite 25.7 per cent growth in trade, hotel, transport services, the sector, with the highest contribution to GDP, is still 15.5 per cent below the pre-pandemic level of the equivalent quarter in FY20.

The labour-intensive construction sector grew 16.8 per cent but it is barely above the pre-pandemic level, growing 1.2 per cent.

Madhavi Arora, lead economist, Emkay Global Financial Services, said. “We maintain growth may remain at 7 per cent for the year, albeit with downside risks. Going ahead, even as recovery in domestic economic activity is yet to be broad-based, global drags in the form of still elevated prices, shrinking corporate profitability, demand-curbing monetary policies and diminishing global growth prospects weigh on the growth outlook.”

Nikhil Gupta, chief economist of Motilal Oswal, said assuming no change in projections by the RBI for the rest of the year, the first-quarter data suggested the central bank’s FY23 growth forecast would be revised to 6.7 per cent from 7.2 per cent.

The RBI expected 16.2 per cent growth in Q1, with 6.2, 4.1, and 4 per cent growth in the subsequent quarters.

Aurodeep Nandi, India economist and vice-president at Nomura, said even if one were to discount the low base, this marked a stellar rise in sequential momentum with post-pandemic tailwinds lifting GDP growth in the June quarter.

Why Is Urban India Hungry For Nutrition

http://bwhealthcareworld.businessworld.in/article/Why-Is-Urban-Indi...

More than two billion people globally suffer from ‘hidden hunger’, simply put, micronutrient deficiencies. Protein, calcium, iron, zinc and essential vitamins such as Vit D, Vit B12 that the body requires to function

For the longest time, hunger has been associated with the poor. Malnutrition is a term, we are all used to by now, especially in developing nations. However, the sound of ‘urban hunger’ may ring an unfamiliar bell in most ears. The urbanites or city dwellers are known for access and affordability yet there is a growing hunger for nutrition being cited in research today.

As per the comprehensive National Nutrition survey (CNNS 2016-2018) conducted by the Ministry of Health and Family Welfare, the percentage of the population with iron deficiency has been reported to be highest at 27 per cent in the richest sector for both 5-9 and 10-19 years of Indian children and adolescents. Same is the case with Folate, Vit D, Vit B12, and Zinc deficiency.

More than two billion people globally suffer from ‘hidden hunger’, simply put, micronutrient deficiencies. Protein, calcium, iron, zinc and essential vitamins such as Vit D, Vit B12 that the body requires to function. To put it in a closer-home perspective, it could be 7 out of 10 Indians. India has recorded a triple burden of malnutrition with 189 million suffering from undernutrition, 135 million impacted by over nutrition and a whopping 700 million lacking some form of micronutrient deficiency.

Despite being highlighted as one the most cost-effective investments for human development, progress on addressing micronutrient deficiencies or mind has not shown an upward trend in recent years.

Hidden hunger does not allow children to reach their growth potential. 22 per cent of children and adolescents remain affected by stunting or low height for age and 24 per cent by wasting or low weight for height. The key micronutrient gap is not only a problem of the poor but also a big problem for middle and rich households; the problem deteriorates as kids grow older. This is also one of the reasons for instances of non-communicable diseases (NCDs) like diabetes, cardiovascular diseases, and hypertension is on the rise among adolescents.

India is a predominantly cereal-consuming nation and lacks a balanced diet. Keep in mind that Indian meals are big but not balanced, with big gaps in nutrient density. Fussy eating in younger children and unhealthy eating habits in older children are fueling gaps in nutrient intake, leading to poor nutritional status and early onset of NCDs.

Some more facts or key nutrition concerns cited by national data sets:

5 vital micronutrient deficiencies reported in both urban and rural children between 1-

19 years

One in 2 adolescents suffer from at least 2/5 micronutrient deficiencies – (Iron,

Folate, B12, Vitamin D, Vitamin A and Zinc)

Protein intake, especially in terms of quality, is still a big concern. Diets are

predominantly carbohydrate centric and lack diversity from dairy, pulses etc.

Bioavailability especially of minerals like iron, zinc is poor from a plant-based diet

Consumption of animal-based foods- milk, meat, eggs still low in the country leading

to poor nutritional status in nutrients like protein, iron, zinc, vitamin B12 etc.

Also, there is increased consumption of salt and sugar in the country along with junk foods or packaged foods, or outside food. Data shows increased consumption of 119 per cent more salt than the WHO recommendation and 180 per cent more sugar than the prescribed limit. The world of nutrition is still greek to Indian consumers which hinders their purchase choices.

The impact of this unsolved burden of malnutrition is huge. It leads to loss of productivity, illness, and increased healthcare costs, even may prove to be fatal with a loss of a minimum of 1 per cent of India’s GDP, approximately Rs.160K cr.

Food Sources
Meats, poultry, and seafood are richest in heme iron. Fortified grains, nuts, seeds, legumes, and vegetables contain non-heme iron. In the U.S. many breads, cereals, and infant formulas are fortified with iron.

https://www.hsph.harvard.edu/nutritionsource/iron/#:~:text=Food%20S....


Iron is an important mineral that helps maintain healthy blood. A lack of iron is called iron-deficiency anemia, which affects about 4-5 million Americans yearly. [1] It is the most common nutritional deficiency worldwide, causing extreme fatigue and lightheadedness. It affects all ages, with children, women who are pregnant or menstruating, and people receiving kidney dialysis among those at highest risk for this condition.

Iron is a major component of hemoglobin, a type of protein in red blood cells that carries oxygen from your lungs to all parts of the body. Without enough iron, there aren’t enough red blood cells to transport oxygen, which leads to fatigue. Iron is also part of myoglobin, a protein that carries and stores oxygen specifically in muscle tissues. Iron is important for healthy brain development and growth in children, and for the normal production and function of various cells and hormones.

Iron from food comes in two forms: heme and non-heme. Heme is found only in animal flesh like meat, poultry, and seafood. Non-heme iron is found in plant foods like whole grains, nuts, seeds, legumes, and leafy greens. Non-heme iron is also found in animal flesh (as animals consume plant foods with non-heme iron) and fortified foods.

Iron is stored in the body as ferritin (in the liver, spleen, muscle tissue, and bone marrow) and is delivered throughout the body by transferrin (a protein in blood that binds to iron). A doctor may sometimes check blood levels of these two components if anemia is suspected.

--------

Sources of heme iron:
Oysters, clams, mussels
Beef or chicken liver
Organ meats
Canned sardines
Beef
Poultry
Canned light tuna
Sources of non-heme iron:
Fortified breakfast cereals
Beans
Dark chocolate (at least 45%)
Lentils
Spinach
Potato with skin
Nuts, seeds
Enriched rice or bread

Kaushik Basu
@kaushikcbasu
India’s unemployment rate in August shot up to 8.3%. This is the highest in 12 months, according to CMIE data. This is causing extra hardship because it is happening amidst high inflation. This is where we need to focus all policy attention.

https://twitter.com/kaushikcbasu/status/1565898149415321603?s=20&am...

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https://unemploymentinindia.cmie.com/

-----------------

India's unemployment rate surged to a one-year high of 8.3 per cent in August as employment sequentially fell by 2 million to 394.6 million, according to data from the Centre for Monitoring Indian Economy (CMIE).

During July, the unemployment rate was at 6.8 per cent and the employment was 397 million, the CMIE data added.

"The urban unemployment rate is usually higher at about 8 per cent than the rural unemployment rate, which is usually around 7 per cent. In August the urban unemployment rate shot up to 9.6 per cent and rural unemployment rate also increased to 7.7 per cent," CMIE managing director Mahesh Vyas told PTI.

Vyas further stated that erratic rainfall affected sowing activities and this is one of the reasons for the increase in unemployment in rural India.

The unemployment rate in rural India rose from 6.1 per cent in July to 7.7 per cent in August. More importantly, the employment rate fell from 37.6 per cent to 37.3 per cent.

"Going forward, the rural unemployment rate may come down as delayed monsoon will increase agricultural activities towards the end of the monsoon season. However, it is not clear how the urban unemployment rate will play out in the coming months. Currently, it is quite elevated," Vyas added.

During August, the unemployment was the highest in Haryana at 37.3 per cent followed by Jammu and Kashmir at 32.8 per cent, Rajasthan at 31.4 per cent, Jharkhand at 17.3 per cent and Tripura at 16.3 per cent, according to the data.

While the unemployment was the lowest in Chhattisgarh at 0.4 per cent followed by Meghalaya at 2 per cent, Maharashtra at 2.2 per cent and Gujarat and Odisha at 2.6 per cent each, the data showed.

https://www.business-standard.com/article/current-affairs/india-s-u...

Protests in #India over rising #food and #fuel bills, as #unemployment soars. Opposition leader Rahul Gandhi has accused Prime Minister Narendra #Modi of allowing food and fuel prices to rocket by up to 175%. #BJP #Hindutva #economy #Islamophobia #hunger https://news.sky.com/story/protests-in-india-over-rising-food-and-f...

Mr Gandhi suggested the price of petrol, diesel, cooking gas and essential food items including wheat have rocketed between 45% and 175% since Mr Modi took control eight years ago in 2014.

The politician - whose father, Rajiv, was a former prime minister of India - addressed crowds at a rally in Ramlila Maidan, traditionally used to hold religious festivals and events, in capital New Delhi on Sunday.

He told his 21.4million Twitter followers: "Congress party unites the country. Only Congress can bring the country on the path of progress.


"We will go straight to the public and tell them the truth, whatever is in their heart, they will understand."

Earlier, he had tweeted: "Today, people have to think ten times before buying what they need.

India's Economic Situation 'Bleak'; We Know the Issue but Not the Solution: Pronab Sen
In an interview with Karan Thapar, the country's former chief statistician said that India will miss the RBI's target of 7.2% growth for this financial year and that it'll come around 6-6.5%. (real growth going forward will be around 4%)

Pranab Sen: Demonetization and COVID lockdown dried up the informal credit and killed a large percentage of small and medium enterprises.

https://thewire.in/video/watch-indias-economic-situation-bleak-we-k...

https://youtu.be/p3avEIThSN8

In an interview where he paints a bleak and disturbing picture of the state of the economy, India’s former chief statistician professor Pronab Sen has said that we can identify the problems that are retarding growth but we don’t know how to tackle them.

Worse, professor Sen says he is not sure if the government has diagnosed the problems because it has not spoken about them and its silence can be variously interpreted. Consequently, he says that India will miss the RBI’s target of 7.2% growth for this financial year and that it will growth will only come in somewhere around 6-6.5%.

However, he points out, in real terms growth will actually be just 4% which, he adds, is at least 2.5% below the growth India needs to create jobs for its population. This means, professor Sen points out, we can boast of being the fastest growing economy but it’s equally true that we are considerably falling short of the rate of growth we need (6.57%) to create sufficient jobs for our people which, in turn, will boost consumption and spending and create incentives for investment.

In these circumstances, professor Sen said that first quarter growth of FY23 at 13.5% is clearly disappointing.

In a 42-minute interview to Karan Thapar for The Wire, professor Sen, who is currently the country director of the International Growth Centre, identified two critical areas where the Indian economy faces serious problems about which we are not sure what we should do.

The first is the MSME sector which, he added, has undoubtedly shrunk in size over the last two years. The problem is not a question of encouraging and helping existing MSMEs so much as creating the environment for new MSMEs to emerge. The specific problem is that the informal credit line on which they depend has dried up and we don’t know how to revive that credit line. The government does not have a clear way of doing so.

And, the problem afflicting MSMEs, professor Sen says, is the reason why manufacturing has only grown year-on-year by 4.8% and why joblessness and unemployment are an increasing concern. Most jobs are created by MSMEs or the wider unorganised sector and that seems to have stopped or, at least, is not happening in sufficient measure.

The second problem professor Sen identified is the critical services sector of trade, hotel, transport, communication and broadcasting services, which represent 30.5% of employment but is still 15.5% below pre-pandemic levels. Once again, he said we don’t know what we need to do to boost this sector back to pre-pandemic levels. He pointed out that many MSMEs work in this sector and its future is, therefore, directly linked to MSMEs.

Professor Sen also pointed out that the global situation will not be of much help to India. Interest rates are likely to remain high and exports, which have been a support to the economy until recently, will face problems in markets like Europe and America and, therefore, fail to provide the boost to growth they have previously given. However, he believes oil prices could come down.

He believes India is clearly locked into a K-shaped recovery and the arms of the K are moving further and further apart.

Whilst scoffing at commentators and newspapers that have called for broad-based reforms, without identifying what they would be, professor Sen said that the key reform needed would be credit lines that would service MSMEs and provide funds for new MSMEs to start up.

Ian Hall
@DrIanHall
"India's economic growth is expected to decline to 5.7 per cent this year from 8.2 per cent in 2021...India's GDP will further decelerate to 4.7 per cent growth in 2023."
https://www.newindianexpress.com/nation/2022/oct/03/indias-gdp-grow...

https://twitter.com/DrIanHall/status/1577052582769758208?s=20&t...

"India experienced an expansion of 8.2 per cent in 2021, the strongest among G20 countries. As supply chain disruptions eased, rising domestic demand turned the current account surplus into a deficit, and growth decelerated," the report said.

It noted that the Production-Linked Incentive Scheme introduced by the government is incentivising corporate investment, but "rising import bills for fossil energy are deepening the trade deficit and eroding the import coverage capacity of foreign exchange reserves."

As economic activity is hampered by higher financing costs and weaker public expenditures, GDP growth is projected to decelerate to 5.7 per cent in 2022," it explained.

"Going forward, the government has announced plans to increase capital expenditure, especially in the rail and road sector, but in a weakening global economy, policymakers will be under pressure to reduce fiscal imbalances, and this may lead to falling expenditures elsewhere. Under these conditions, the economy is expected to decelerate to 4.7 per cent growth in 2023," the report forecasted.

UNCTAD said it expects the South Asia region to expand at a pace of 4.9 per cent in 2022, as inflation increases on the back of high energy prices, exacerbating balance of payment constraints and forcing several governments (Bangladesh, Sri Lanka,) to restrict energy consumption.

Moreover, the limited and delayed progress in relaxing vaccine-related intellectual property (IP) rights continues to leave the region vulnerable to future outbreaks.

For 2023, UNCTAD expects the region's growth rate to decelerate slightly to 4.1 per cent, it noted.

Various developments in the wake of Russia's invasion of Ukraine, including the US ban on oil imports from Russia, and prohibition of shipping insurance for Russian oil exports, have exerted more pressure on oil markets, it said.

However, the release of 180 million barrels from the United States' strategic petroleum reserves as well as the readiness of both China and India to receive Russian oil exports – proved sufficient to ensure that global oil supplies did not tighten further, it said.

The report noted that after a rapid but uneven recovery in 2021, the world economy is in the midst of "cascading and multiplying" crises, with incomes still below 2019 levels in many major economies.

UNCTAD projects that the US economy will grow at 1.9 per cent in 2022, a decline from 5.7 per cent in 2021, and will further slow down to 0.9 per cent in 2023.

Meanwhile, China's economic growth is projected to be 3.9 per cent in 2022, a decline from 8.1 per cent in 2021, and a 5.3 per cent growth next year.

"India's economic growth is expected to decline to 5.7 per cent this year from 8.2 per cent in 2021...India's GDP will further decelerate to 4.7 per cent growth in 2023."
https://www.newindianexpress.com/nation/2022/oct/03/indias-gdp-grow...

https://twitter.com/DrIanHall/status/1577052582769758208?s=20&t...


The report added that the share of commodities in China's and Egypt's imports is 38 per cent, and more than 50 per cent of India's imports are (primary) commodities including food and fuel.

As a result, higher commodity prices have a strong impact on domestic prices via imports.

Recent estimates covering the past five decades suggest a 50 per cent increase in oil prices (approximately the increase in 2021) is associated with an increase in inflation of between 3.5 and 4.4 percentage points, with a lag of about two years.

These findings suggest that in emerging economies, as in advanced economies, a considerable part of the inflation experienced in 2021-2022 has been caused by higher commodity (oil) prices, it said.

It added that in the wake of the pandemic, higher spending on social protection and lower revenues from taxation led to higher public budget deficits in some emerging economies.

Government deficits in 2020 (2021) ranged from 4.5 per cent (4.2 per cent) of GDP in Mexico to 12.8 per cent (11.3 per cent) of GDP in India.

“The poverty in the country is standing like a demon in front of us. It is important that we slay this demon. That 20 crore people are still below poverty line is a figure that should make us very sad. As many as 23 crore people have less than Rs 375 income per day. There are four crore unemployed people in the country. The labour force survey says we have an unemployment rate of 7.6 per cent,” said Dattatreya Hosabale. Also Read - 23 Crore Indians Pushed Below Poverty Line Amid COVID-19 Pandemic, Says Study

https://www.india.com/business/23-cr-people-with-income-less-than-r...

He also spoke about the rising levels of economic inequality that the country is witnessing today. Acknowledging that India is among the top six economies of the world, he said top 1 per cent holds 1/5th (20 per cent) of the nation’s income. He added that 50 per cent of the country’s population has only 13 per cent of the country’s income. Hosabale went on to quote United Nations’ observations on the poverty and development in India. Also Read - Today Will be Your Last Working Day With Uber: Ride-hailing Firm Lays Off Nearly 3,700 Employees Via Zoom

“A large part of the country still does not have access to clean water and nutritious food. Civil strife and the poor level of education are also a reason for poverty. That is why a New Education Policy has been ushered in. Even climate change is a reason for poverty. And at places the inefficiency of the government is a reason for poverty.”


In his speech, Hosabale also stressed on the importance of creating an entrepreneurship-friendly environment apart from the need to carry skill-training from the urban to rural India.

“During Covid, we learnt that there is a possibility of generating jobs at the rural level according to local needs and using local talent. That is why the Swavalambi Bharat Abhiyan was launched. We don’t just need all-India level schemes, but also local schemes. It can be done in the field of agriculture, skill development, marketing etc. We can revive cottage industry. Similarly, in the field of medicine, a lot of Ayurvedic medicines can be manufactured at the local level. We need to find people interested in self-employment and entrepreneurship,” Hosabale said.

Kaushik Basu
@kaushikcbasu
India’s doing very poorly in terms of job creation. I’m not sure why but my conjecture is: An economy’s biggest driver is the investment rate. This has fallen sharply in India from 39.3% in 2009 to 30.7% in 2019 (GOI data). Why are people not investing? That’s the next question.

https://twitter.com/kaushikcbasu/status/1577481003865722881?s=20&am...

In the 2022 Global Hunger Index, Pakistan ranks 99th out of the 121 countries with sufficient data to calculate 2022 GHI scores. With a score of 26.1, Pakistan has a level of hunger that is serious.

https://www.globalhungerindex.org/pakistan.html

In the 2022 Global Hunger Index, India ranks 107th out of the 121 countries with sufficient data to calculate 2022 GHI scores. With a score of 29.1, India has a level of hunger that is serious.

https://www.globalhungerindex.org/india.html

-------------------

India also ranks below Sri Lanka (64), Nepal (81), Bangladesh (84), and Pakistan (99). Afghanistan (109) is the only country in South Asia that performs worse than India on the index.


https://www.thehindu.com/news/national/india-ranks-107-out-of-121-c...


India ranks 107th among 121 countries on the Global Hunger Index, in which it fares worse than all countries in South Asia barring war-torn Afghanistan.

The Global Hunger Index (GHI) is a tool for comprehensively measuring and tracking hunger at global, regional, and national levels. GHI scores are based on the values of four component indicators — undernourishment, child stunting, child wasting and child mortality. Countries are divided into five categories of hunger on the basis of their score, which are ‘low’, ‘moderate’, ‘serious’, ‘alarming’ and ‘extremely alarming’.



Based on the values of the four indicators, a GHI score is calculated on a 100-point scale reflecting the severity of hunger, where zero is the best score (no hunger) and 100 is the worst.

India’s score of 29.1 places it in the ‘serious’ category. India also ranks below Sri Lanka (64), Nepal (81), Bangladesh (84), and Pakistan (99). Afghanistan (109) is the only country in South Asia that performs worse than India on the index.



Seventeen countries, including China, are collectively ranked between 1 and 17 for having a score of less than five.

India’s child wasting rate (low weight for height), at 19.3%, is worse than the levels recorded in 2014 (15.1%) and even 2000 (17.15), and is the highest for any country in the world and drives up the region’s average owing to India’s large population.

Prevalence of undernourishment, which is a measure of the proportion of the population facing chronic deficiency of dietary energy intake, has also risen in the country from 14.6% in 2018-2020 to 16.3% in 2019-2021. This translates into 224.3 million people in India considered undernourished.

But India has shown improvement in child stunting, which has declined from 38.7% to 35.5% between 2014 and 2022, as well as child mortality which has also dropped from 4.6% to 3.3% in the same comparative period. On the whole, India has shown a slight worsening with its GHI score increasing from 28.2 in 2014 to 29.1 in 2022. Though the GHI is an annual report, the rankings are not comparable across different years. The GHI score for 2022 can only be compared with scores for 2000, 2007 and 2014..



Globally, progress against hunger has largely stagnated in recent years. The 2022 GHI score for the world is considered “moderate”, but at 18.2 in 2022 is only a slight improvement from 19.1 in 2014. This is due to overlapping crises such as conflict, climate change, the economic fallout of the COVID-19 pandemic as well as the Ukraine war, which has increased global food, fuel and fertiliser prices and is expected to "worsen hunger in 2023 and beyond."



The prevalence of undernourishment, one of the four indicators, shows that the share of people who lack regular access to sufficient calories is increasing and that 828 million people were undernourished globally in 2021.

There are 44 countries that currently have “serious” or “alarming” hunger levels and “without a major shift, neither the world as a whole nor approximately 46 countries are projected to achieve even low hunger as measured by the GHI by 2030,” notes the report.

The International Monetary Fund (IMF) on Thursday said the strong recovery in South Asia is expected to take a breather with India's economy expanding at 6.8% in FY23, revised down by 1.4 percentage points since the April 2022 World Economic Outlook, due to a weaker-than-expected recovery in the second quarter and subdued external demand.

https://economictimes.indiatimes.com/news/economy/indicators/imf-on...

A further slowdown of India's growth to 6.1% is expected in FY24 as external demand and a tightening in monetary and financial conditions weigh
on growth, the IMF said in its Regional Economic Outlook.

Noting that there have been "significant" portfolio outflows from Asia so far this year, it said at a regional level the scale of the outflows from Asian emerging markets is comparable to previous episodes such as the 2013 taper tantrum and the 2020 onset of the Covid-19 pandemic.

While strong outflow pressures have been focused on a handful of economies such as India, it said that recent data point to outflows having stabilised and partially reversed. "In the countries facing the most volatility in net portfolio flows, these seem predominantly driven by equity instead of debt flows (India, Thailand). These flows and the differentiation of equity prices have responded to changes in growth expectations," the IMF said.

As per the report, several Asian emerging market and developing economies have seen a decumulation of their international reserves-between 3-10% of their holdings in the first half of 2022 in India, Indonesia, the Philippines and Thailand-especially during periods of intense external financial shocks.

Most economies in Asia and Pacific, including Australia and India, are consolidating fiscal policy alongside monetary policy following substantial support during the pandemic, according to the outlook.

On the Russia-Ukraine war, it said the rise in crude oil, natural gas, coal and agricultural commodity prices in the first half of 2022 has been a negative terms-of-trade shock for most of the region and placed strain on the external accounts of large net importers in India.

The IMF also said India would need to spend 6.2% of gross domestic product each year to achieve the Sustainable Development Goals in 2030, and these resource requirements are compounded by less ess favourable debt dynamics.

Crypto currency
On crypto currency, the IMF said policy response should include investments to modernize digital payment systems-including cross-border integration-and the eventual issuance of central bank digital currencies.

India introduced a 30% tax on income derived from crypto trading and is currently developing a regulatory framework like many countries in the region.

"An important aspect of the policy response should include investments to modernize digital payment systems-including cross-border integration-and the eventual issuance of central bank digital currencies, which could offer consumers many of the benefits of crypto without the risks," it said.

The pandemic has accelerated digitalization around the world, including in many Asian emerging markets and developing economies, and e-commerce revenues have increased, with particularly rapid expansion in some emerging markets such as India and Indonesia.

#Indian #rupee marks biggest monthly losing streak since 1985, its slide for this year is nearly 11% against #USD. #India's currency has declined in each of the 10 months this year to notch its biggest losing streak in almost 4 decades. https://finance.yahoo.com/news/indian-rupee-marks-biggest-monthly-1... via @YahooFinance

The Indian rupee has declined in each of the ten months this year to notch its biggest losing streak in almost four decades as the U.S. Federal Reserve's hawkish stance on monetary policy catapulted the dollar to two-decade highs.

The dollar index is up 16% this year, having scaled 114.8-levels last month to trade near its 2002 peak. Its ascent has pressured currencies globally, especially ones in emerging Asian markets.

The Indian rupee fell 1.8% against the dollar in October, taking its slide for the year to nearly 11%.

Surging oil prices due to the Russia-Ukraine conflict and weakness in the Chinese yuan have only piled on more pressure on the rupee and helped send it to a record low of 83.29 per dollar earlier this month.

The rupee's losses have been deeper in the past two months, with market participants reckoning that the Reserve Bank of India let the currency slide after having helped hold it at the 79-80 levels for a long time.

Almost all traders and economists expect there will be no let-up in the pressure on the rupee for the rest of the year as the Fed stays on its aggressive rate-hike path after making fighting inflation its priority.

"This week, the Fed's upcoming meeting would be crucial for the rupee outlook. It could come under pressure in case Fed indicates aggressive tightening path in the future," HDFC Bank economists wrote in a note.

"Broadly, 81.80 to 82.00 seems a strong support zone for the USD/INR pair. As long as it trades above this convincingly, one can expect a U-turn towards 82.80 to 83.00 levels," said Amit Pabari, managing director at consultancy firm CR Forex Advisors.

India’s entrenched north-south divide is growing as its population changes, with serious social and political consequences

Hannah Ellis-Petersen in Delhi
Mon 14 Nov 2022 01.30 EST


https://www.theguardian.com/world/2022/nov/14/india-faces-deepening...

The cry of a baby born in India one day next year will herald a watershed moment for the country, when the scales tip and India overtakes China as the world’s most populous nation.

Yet the story of India’s population boom is really two stories. In the north, led by just two states, the population is still rising. In the richer south, numbers are stabilising and in some areas declining. The deepening divisions between these regions mean the government must eventually grapple with a unique problem: the consequences of a baby boom and an ageing population, all inside one nation.

India is currently home to more than 1.39 billion people – four times that of the US and more than 20 times the UK – while 1.41bn live in China. But with 86,000 babies born in India every day, and 49,400 in China, India is on course to take the lead in 2023 and hit 1.65 billion people by 2060.

On 15 November the world’s population will reach a total of 8 billion people. Between now and 2050, over half of the projected increase in the global population will happen in just eight countries: the Democratic Republic of the Congo, Egypt, Ethiopia, Nigeria, Pakistan, the Philippines, the United Republic of Tanzania – and India.

The growth will place huge pressure on India’s resources, economic stability and society, and the repercussions will reach far beyond its borders. As a country on the forefront of the climate crisis, already grappling with extreme weather events 80% of the year, diminishing resources such as water could become decisive factors in what India’s future population looks like.

One country, two stories
Fears of “population explosion” in India – where development caves in beneath the weight of an uncontrollably expanding population and the country’s resources are overrun, leaving millions to starve – have abounded for over a century.

Post independence, India’s population grew at a significant pace; between 1947 and 1997, it went from 350 million to 1 billion. But since the 1980s, various initiatives worked to convince families, particularly those from poorer and marginalised backgrounds who tend to have the most children, of the benefits of family planning. As a result, India’s fertility rate began to fall faster than any of the doomsday “explosion” scenarios had predicted.

A small family is now the norm in India, and with the annual population growth rate less than 1%, fears of population-driven collapse are no longer seen as realistic. In the 1950s, a woman in India would give birth to an average of over six children; today the national average is just over two and still continuing to fall.

Nonetheless, the curbs on population growth have not been uniform across India, and India’s entrenched north-south divide has played out significantly in demographics, with ongoing social and political consequences.

For the next decade, one-third of India’s population increase will come from just two northern states, Bihar and Uttar Pradesh. Bihar, the only state in India where women still typically have more than three children, is not expected to hit population stability – 2.1 children per woman – until 2039. Kerala, India’s most educated, progressive state, hit that figure in 1998.

India’s entrenched north-south divide is growing as its population changes, with serious social and political consequences

Hannah Ellis-Petersen in Delhi
Mon 14 Nov 2022 01.30 EST


https://www.theguardian.com/world/2022/nov/14/india-faces-deepening...

In Bihar’s poverty stricken area of Kishanganj, which has one of the highest rates of fertility in India, women said they had only recently begun to learn about the benefits of a having fewer children.

The urge to have sons, who in parts of India are still considered much more desirable than daughters, remained a key motivator for women in the village. Surta Devi, 36, said she had six children in order to make sure she had two sons to “carry on our lineage”.

“It was only after I gave birth to all my children that doctors told me about family planning,” said Devi.

Phullo Devi, 55, an illiterate labourer who had six children before she opted for sterilisation, said she wished she had done things differently. “If I had less children, I would have been able to raise them better and been able to educate them,” she said.

But Devi said things were slowly changing in the village. “Now health workers campaign house-to-house and make people aware about contraception and condoms. I absolutely want my sons and daughters to have less children so they don’t have to live in poverty,” she said.


The ‘youth bulge’
A particular demographic challenge, widespread across India but particularly concentrated in poorer northern states, is that of the “youth bulge”. The median age of an Indian is 29 and the country is grappling with a vast, ambitious and increasingly restless young population, the majority of whom are unskilled, and for whom there are not enough schools, universities, training programmes and most of all, not enough jobs. Across India, youth unemployment is 23% and only one in four graduates are employed. While female literacy is growing, only 25% of women in India participate in the workforce.

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In Uttar Pradesh, where the median age is 20, there are over 3.4 million unemployed young people. Earlier this year, riots broke out in Bihar after more than twelve million people applied for 35,000 positions in the Indian Railways.

Vishu Yadav, 25, from Ghazipur district in Uttar Pradesh, has a masters degree, an education diploma and passed a teacher eligibility test, but is unemployed, with teaching jobs scarce and over a million people now applying for officer positions in the state civil service. “It’s a depressing, hopeless situation. I am eligible to become a teacher but I can not secure a position. There are too many young people with qualifications and not enough jobs,” he said.

Poonam Muttreja, the executive director of Population Foundation India, said there was still time for this young population to work to India’s benefit.

“India has a fantastic window of opportunity but it will only be there for approximately the next two decades,” said Muttreja. “We have the capacity to tap into the potential of the youth population but we need to invest in adolescent education, health and sexual health right away if we want to reap the benefits.

“Otherwise, our demographic dividend could turn into a demographic disaster.”

Muttreja said India’s youth risk fuelling population growth unless contraception and family planning services are improved, describing the situation as “woefully inadequate”.

Female sterilisation is still the most widely used contraceptive method in India, and that’s mostly by older married women. Of India’s tiny health budget, only 6% is put aside for family planning, and just 0.4% of that is invested in temporary methods such as the contraceptive pill or condoms.

“Currently we have almost 360 million young people, the majority of whom are at a reproductive age, and that number is only going to increase over the next few decades,” Muttreja said.

India will become the world’s most populous country in 2023
China is now suffering from a demographic slump

https://www.economist.com/the-world-ahead/2022/11/14/india-will-bec...


China has been the world’s most populous country for hundreds of years. In 1750 it had an estimated 225m people, more than a quarter of the world’s total. India, not then a politically unified country, had roughly 200m, which ranked it second. In 2023 it will seize the crown. The un guesses that India’s population will surpass that of China on April 14th. India’s population on the following day is projected to be 1,425,775,850.

The crown itself has little value, but it is a signal of things that matter. That India does not have a permanent seat on the un Security Council while China does will come to seem more anomalous. Although China’s economy is nearly six times larger, India’s growing population will help it catch up. India is expected to provide more than a sixth of the increase of the world’s population of working age (15-64) between now and 2050.

China’s population, by contrast, is poised for a steep decline. The number of Chinese of working age peaked a decade ago. By 2050 the country’s median age will be 51, 12 years higher than now. An older China will have to work harder to maintain its political and economic clout.

Both countries took draconian measures in the 20th century to limit the growth of their populations. A famine in 1959-61 caused by China’s “great leap forward” was a big factor in persuading the Communist Party of the need to rein in population growth. A decade later China launched a “later, longer, fewer” campaign—later marriages, longer gaps between children and fewer of them. That had a bigger effect than the more famous one-child policy, introduced in 1980, says Tim Dyson, a British demographer. The decline in fertility, from more than six babies per woman in the late 1960s to fewer than three by the late 1970s, was the swiftest in history for any big population, he says.

It paid dividends. China’s economic miracle was in part the result of the rising ratio of working-age adults to children and oldsters from the 1970s to the early 2000s. With fewer mouths to feed, parents could invest more in each child than they otherwise would have. But having more parents than children, an advantage when the children are young, is a drawback as the parents age. The country will now pay a price as the economic-boomer generation retires and becomes dependent on the smaller generation following behind it.

India’s attempt to reduce fertility was less successful. It was the first country to introduce family planning on a national scale in the 1950s. Mass-sterilisation campaigns, encouraged by Western donors, grew and were implemented more forcefully during the state of emergency declared by Indira Gandhi, the prime minister, in 1975-77. Under the direction of her son Sanjay, the government forced men into vasectomy camps on pain of having their salaries docked or losing their jobs. Policemen nabbed poor men for sterilisation from railway stations. Around 2,000 men died from bungled procedures.

India will become the world’s most populous country in 2023
China is now suffering from a demographic slump

https://www.economist.com/the-world-ahead/2022/11/14/india-will-bec...


Forced sterilisations ended after Indira Gandhi lost an election. Though brutal, the campaign was not thorough enough to cause a dramatic drop in India’s birth rate. India’s fertility has dropped, but by less, and more slowly than China’s. With a median age of 28 and a growing working-age population, India now has a chance to reap its own demographic dividend. Its economy recently displaced Britain’s as the world’s fifth-biggest and will rank third by 2029, predicts State Bank of India. But India’s prosperity depends on the productivity of its youthful people, which is not as high as in China. Fewer than half of adult Indians are in the workforce, compared with two-thirds in China. Chinese aged 25 and older have on average 1.5 years more schooling than Indians of the same age.

That will not spare China from suffering the consequences of the demographic slump it engineered. The government ended the one-child policy in 2016 and removed all restrictions on family size in 2021. But birth rates have kept falling. China’s zero-covid policy has made young adults even more reluctant to bear children. The government faces resistance to its plans to raise the average retirement age, which at 54 is among the lowest in the world. The main pension fund may run out of money by 2035. Yet perhaps most painful for China will be the emergence of India as a superpower on its doorstep.

India's growth to slow in 2023 on fading reopening impact-Goldman Sachs

https://www.reuters.com/world/india/indias-growth-slow-2023-fading-...

Goldman Sachs expects India's economic growth to slow to 5.9% next year, from an estimated 6.9% growth in 2022, as the boost from the post-COVID reopening fades and monetary tightening weighs on domestic demand.

"We expect growth to be a tale of two halves in 2023, with a slowdown in the first half (due to dwindling reopening effects)," Santanu Sengupta, India economist at Goldman Sachs, said in a note on Sunday.

India's growth in the seven months since March 2022, which Goldman Sachs considers the post-COVID reopening, was faster than most other emerging markets in the first seven months after they reopened, the U.S. investment bank said.

"In the second half, we expect growth to re-accelerate as global growth recovers, the net export drag declines, and the investment cycle picks up," Sengupta said.

The Reserve Bank of India (RBI), last week, pegged the domestic growth rate at 7% for 2022-23.

Sengupta expects the government to continue its focus on capital spending and sees signs of the nascent investment recovery continuing, with conducive conditions helping the economy pick up in the second half.

Goldman Sachs expects headline inflation to drop to 6.1% in 2023, from 6.8% in 2022, saying government intervention was likely to cap food prices and that core goods inflation had probably peaked.

"But upside risks to services inflation are likely to keep core inflation sticky around 6% year-on-year," Sengupta added.

Goldman expects the RBI to hike the repo rate by 50 basis points (bps) in December 2022 and by 35 bps in February, taking the repo rate to 6.75%. The forecast is more hawkish than the market consensus of 6.50%.

On India's external position, Sengupta reckons the worst is over, with the dollar likely near the peak. He expects the current account deficit to remain wide due to weak exports, but said growth capital may continue to chase India.

Sengupta pegs the USD/INR INR=IN at 84, 83, and 82 over 3-, 6- and 12-month horizons, respectively, compared with 81.88 currently.

From Times of India:


The decline in India’s rankings on a number of global opinion-based indices are due to "cherry-picking of certain media reports" and are primarily based on the opinions of a group of unknown “experts”, a recent study has concluded.
A new working paper titled "Why India does poorly on global perception indices" found that while such indices cannot be ignored as "mere opinions" since they feed into World Bank’s World Governance Indicators (WGI), there needs to be a closer inspection on the methodology used to arrive at the data.

https://timesofindia.indiatimes.com/india/indias-declining-rank-in-...

The findings were published by Sanjeev Sanyal, member of the Economic Advisory Council to the Prime Minister and Aakanksha Arora, deputy director of (EAC to PM).

In the report, the authors conducted a case study of three o ..

In the report, the authors conducted a case study of three
opinion-based indices: Freedom in the World index, EIU
Democracy index and Variety of Democracy.
They drew four broad conclusions from the study:
1) Lack of transparency: The indices were primarily based on
the opinions of a tiny group of unknown “experts”.

2) Subjectivity: The questions used were subjective and
worded in a way that is impossible to answer objectively
even for a country.

3) Omission of important questions: Key questions which
are pertinent to a measure of democracy, like “Is the head of
state democratically elected?”, were not asked.

4) Ambiguous questions: Certain questions used by these
indices were not an appropriate measure of democracy
across all countries.

Here's a look at the three indices examined by the study:
Freedom in the World Index

India’s score on the US-based Freedom in the World Index —
an annual global report on political rights and civil liberties
— has consistently declined post 2018.

It's score on civil liberties was flat at 42 till 2018 but dropped
sharply to 33 by 2022. It's political rights score dropped from
35 to 33. Thus, India’s total score dropped to 66 which places
India in the “partially free” category – the same status it had
during the Emergency.

The study found that only two previous instances where
India was considered as Partially Free was during the time of
Emergency and then during 1991-96 which were years of
economic liberalisation.

"Clearly this is arbitrary. What did the years of Emergency,
which was a period of obvious political repression,
suspended elections, official censoring of the press, jailing of
opponents without charge, banned labour strikes etc, have
in common with period of economic liberalisation and of
today," the study asked.
It concluded that the index "cherry-picked" some media
reports and issues to make the judgement.
The authors further found that in Freedom House's latest
report of 2022, India’s score of the Freedom in the World
Index is 66 and it is in category "Partially Free".
"Cross country comparisons point towards the arbitrariness
in the way scoring is done. There are some examples of
countries which have scores higher than India which seem
clearly unusual. Northern Cyprus is considered as a free
territory with a score of 77 (in 2022 report). It is ironical as
North Cyprus is not even recognised by United Nations as a
country. It is recognised only by Turkey," the authors noted.
Economist Intelligence Unit
In the Economist Intelligence Unit (EIU) Democracy Index,
published the research and consulting arm of the firm that
publishes the Economist magazine, India is placed in the
category of “Flawed Democracy”.
Its rank deteriorated sharply from 27 in 2014 to 53 in 2020
and then improved a bit to 46 in 2021. The decline in rank
has been on account of decline in scores primarily in the
categories of civil liberties and political culture.
The authors found that list of questions used to determine
the outcome was "quite subjective", making objective

India needs to jump-start manufacturing. Here’s how to do it.
By Dhiraj Nayyar

https://www.washingtonpost.com/opinions/2022/11/24/modi-india-econo...

If the Indian economy has an Achilles’ heel, it is the country’s manufacturing sector. Despite rapid economic growth since pro-market reforms began in 1991, the share of manufacturing in India’s gross domestic product has remained stubbornly low, at about 15 percent. (In China, it has been about 30 percent in recent years.) Indian growth has been driven by services, most famously in information technology.

The lack of a large, competitive manufacturing sector has consequences. One statistic more than any other captures the consequence of an underdeveloped manufacturing sector: Just over 40 percent of India’s total workforce is still employed in agriculture and allied activities that account for only 18 percent of GDP. Unlike advanced economies, India does not have an unemployment problem; instead, it struggles with underemployment. In the absence of significant social security, people cannot afford to go without jobs, so they are forced to content themselves with low-productivity, low-wage jobs in farming. Services have not been able to absorb this excess low-skill workforce. In fact, they have not done so in any country that has become rich.

Now that three decades of rapid growth have raised the expectations of the population, there are increasing calls for high-quality jobs. Ironically, China might lend a helping hand. Beijing’s strict “zero covid” policy is severely disrupting global supply chains. The recent shortage of iPhone supplies is just the most prominent example. China now poses a bigger risk to supply chains than at any point during its rise as the factory of the world over the past three decades. Xi Jinping’s consolidation of unchallenged control at last month’s Chinese Communist Party congress marks a firm break with the moderate era initiated by Deng Xiaoping. The deepening authoritarianism in Beijing translates into great unpredictability in the actions of the world’s second-largest economy. The world looks on with growing concern.

The problems don’t end there. Many critical supply chains outside China, for example, are in the neighboring East Asian region, where China has outsize influence. Over 80 percent of leading-edge technology semiconductors are manufactured in just two locations: Taiwan and South Korea, both of which face permanent threats in the form of China and North Korea.

The United States seems to have recognized the risks. Last month, the Biden administration announced what is in effect a “tech war” on China by banning the export of semiconductor chips as well as the technology and equipment used to manufacture them. U.S. allies that have access to similar know-how might follow suit. Given that the Trump administration also cracked down on trade with China, it is fair to assume there is now a bipartisan consensus in the United States on the need to contain Beijing and diversify critical supply chains.