Time to Heed Nobel Lessons for India's Stressed Banking Sector; Data Paints Sorry Picture of RTI

Worries on current account & liquidity fronts, departments stores to sell beer in J&K, Madhuri on playing lesbian housewife, MP minister attacks Aamir Khan

A newsletter from The Wire & Galileo Ideas | Contributors: MK Venu, Seema Chishti, Siddharth Varadarajan, Sidharth Bhatia, Sushant Singh and Tanweer Alam | Editor: Pratik Kanjilal

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Snapshot of the day

October 12, 2022

Pratik Kanjilal

Oxfam’s Commitment to Reducing Inequality (CRI) Index 2022, released yesterday, is the first detailed analysis looking at governments’ policies and actions to fight inequality during the first two years of the pandemic. Of 161 countries, India is overall, at a low 123. In South Asia, India is in the bottom three, along with Pakistan and Afghanistan. Nepal, Bangladesh, Sri Lanka are all ahead. Maldives tops South Asia. There are many metrics that constitute the commitment to reduce inequality. India is in the list of the bottom ten countries, of spenders on public services, which is something known to mitigate inequalities. South Sudan, Afghanistan and Timor Leste are amongst other countries in the bottom on that score, with India. It is also notable, says the Report, “that India features among the lowest performers on health spending again; it has dropped a further two places in the rankings, to 157th (or 5th lowest in the world) and made small cuts between 2019 and 2021 – at a time of unprecedented health need and crisis.” On Labour Policy indicators, its rank is 159 of 161. India is in the bottom ten, down, minus 19. It is classified amongst the few countries in the world, with no minimum wage. 

The worst is yet to come, says the International Monetary Fund (IMF). According to its latest World Economic Outlook, out yesterday, India’s projections have been downgraded, it will grow at a lower rate than estimated by it earlier. The IMF now says that India is likely to grow only at 6.8% in 2022- 23 instead of 7.4% which it estimated in July. The 60 basis points downgrade is blamed on a weaker- than-expected second quarter and subdued external demand in the coming months. India’s official data released in August showed that the economy grew well below expectations in the April-July quarter due to dismal performance of the manufacturing sector. Also, the World Bank last week has lowered India’s growth forecast to 6.5% for 2022-23, and the Asian Development Bank and the Reserve Bank of India have cut the projection to 7%.

Meta responded to The Wire’s explosive publication of an internal email by claiming the email was fake. Andy Stone, the Meta communications chief whose email was reproduced, does uses a meta.com email address and not an fb.com the company claimed. Not true, says a reporter from Intercept, who received a Stone mail from an fb.com address. The Wire has also doubled down on its original claims and is promising more revelations.

India is doing worse than many emerging market peers amid the widening current account balances globally. The current account balance is a measure of the money flowing into the country through trade and other means versus similar outflows. The IMF projects that India will have a current account deficit equal to 3.5% of its GDP in 2022. This is among the highest that the country has seen. India’s current account balance is worse than that of Brazil, China, Russia and emerging markets as well as developing market peers in Asia and Europe, besides Latin America and the Caribbean. 

A sharp uptick in credit demand, higher consumption during the festival season, and dollar sales by the RBI in the foreign exchange market have led to liquidity in the banking system tightening sharply. If government spending falls short of estimates and liquidity in the banking system consistently remains in deficit, the pressure on banks to garner deposits goes up further, says Business Standard. “The weighted average call rate (WACR), which is the operating target of the RBI’s monetary policy, is currently at its highest since April 30, 2019, reflecting the shrinking liquidity in the system. The spread between the WACR and the repo rate, too, is at its highest since February 7, 2019 — the day when the RBI started a monetary easing cycle, which saw the repo rate being reduced by a total of 250 bps to a historic low of 4% during the Covid-19 crises.”

Reflecting a degree of anxiety if not panic about continual historic lows being touched by the Rupee, the Reserve Bank of India has changed some of its guidelines for banks to manage their foreign currency exposure, in an attempt to reduce the risk of unhedged exposure on the banking system during extreme volatility in forex markets. The rupee has lost 11% value against the dollar so far this year. The past few weeks have been especially a matter for concern.

Liz Truss’s flagship trade deal with India is on the “verge of collapse” after Indian ministers reacted furiously to comments by Suella Braverman criticising migrants from their country, the Times in London notes. Last week the home secretary said she had “concerns” about the trade deal because it would increase migration to the UK and Indians represented the largest group of visa overstayers. The Indian government, which reacted strongly to Braverman, wants Truss to publicly “disassociate” herself from her minister’s words.

With India awaiting the World Health Organisation’s report on a direct causal link between the deaths of 66 Gambian children and the cough syrups manufactured by Sonepat-based Maiden Pharmaceuticals, the global body has said it was difficult to establish a firm link, but the contaminants flagged by it on October 5 were known toxins and could prove fatal. The WHO, however, said it had shared with India the lab analysis results of the contaminated cough syrups manufactured by the firm in question. Public health activists Dinesh Thakur and T Prashant Reddy here break down the Gambia cough syrup deaths, fake drugs, and the issue with drug regulations in India.

Direct passenger flight services between India and China – disrupted ever since coronavirus was first reported in Wuhan in late 2019 and turned into a global pandemic – are unlikely to resume in the near future unless Beijing modifies its policy of sudden cancellation of scheduled flights every time some passengers are tested positive for Covid on arrival in Chinese airports.

Despite warnings, especially the latest alert put out by the Indian Embassy in Ukraine, many medical students from India were learnt to have already returned to Ukraine. Many more are planning to return in the coming weeks, even as tension in the country mounts. A final year Ukraine medical student hailing from Kerala told Deccan Herald that he knew of at least 90 students who have returned to Ukraine and many more, including girls, were planning to return in the coming weeks. Final year students are mostly opting to return at their own risk as they want to ensure that they get an offline education certificate on completion of the course. 

Pakistan's Railways and Aviation Minister Khawaja Saad Rafique said yesterday that no proposal is under consideration to resume air and rail links between Pakistan and India. These links were suspended following India's move to revoke the special status of Jammu and Kashmir in 2019. The train — Samjhauta Express — and Lahore-Delhi bus service were also suspended. "Currently, no proposal to resume air and rail traffic between Pakistan and India is under consideration at the moment," the minister said in a reply to a question by the media.

Jagadeesha Gowda, a Bharatiya Janata Party (BJP) supporter, has been accused of assaulting and keeping 16 people from the Dalit community locked up for several days in his coffee plantation in Karnataka’s Chikkamagaluru district, NDTV has reported. A case has been registered against Gowda and his son Tilak under the SC/ST (Prevention of Atrocities) Act, 2015 and some sections of the Indian Penal Code.

In a jolt to the Enforcement Directorate, the Supreme Court has refused to interfere with the Bombay HC order granting bail to former Maharashtra home minister Anil Deshmukh in an alleged money laundering case. The ED had moved the top court seeking cancellation of the bail granted to Deshmukh on October 4 by the Bombay high court. 

Senior Congress leader Shashi Tharoor is set to become the chairman of the Parliamentary Standing Committee on Chemicals and Fertilizers. Congress interim president Sonia Gandhi proposed the name of Tharoor for the post. This comes at a time when the diplomat- turned-politician is set to take on Gandhi’s confidante Mallikarjun Kharge in the party presidential election. The chairmanship of the Parliamentary Standing Committee on Chemicals and Fertilizers is among the very few panels allotted to the Congress party. 

Start-ups manufacturing electric two- and three-wheelers have alleged they are not getting subsidies under the second phase of the Faster Adoption and Manufacturing of Electric Vehicles (FAME II) scheme even though some established, large manufacturers are receiving them. Subsidies of Rs 200-300 crore remain unpaid, said executives of various start-ups. Players like TVS Motor Co, Bajaj Auto, Ola Electric, and Mahindra Electric continue to enjoy benefits, they said. BS

The Daily Beast points to news that must concern us on subvariants of COVID-19 that have emerged and are set to affect the developing world much more. As the wave of COVID infections from the highly-contagious BA.5 subvariant finally subsided in late July, new subvariants were already competing for dominance, such as the highly contagious BQ.1.1

The J&K administration has authorised departmental stores in the Union Territory to sell beer and other Ready to Drink (RTD) beverages in urban areas. It is the first time that departmental stores would be selling beer in J&K. Among the requirements put forth, such stores must have a total carpet area of minimum 1,200 sq ft, an annual turnover of minimum Rs 5 crore in Jammu and Srinagar cities and Rs 2 crore for stores in other urban areas will be eligible under the scheme. Besides, departmental store chains with annual turnover of over Rs 10 crore will also be eligible to apply for separate licenses for each of its outlets. 

The Eknath Shinde group has been given two swords and a shield as its election symbol by the Election Commission. 

India Spend reports that the country is developing an early warning system for landslides, but it is likely to be operational not before 2025.

The High Court in London yesterday began hearing evidence from two leading experts in the field of psychiatry to determine the level of suicide risk faced by Nirav Modi if he is extradited to India to face charges of fraud and money laundering, amounting to an estimated $2 billion in the Punjab National Bank loan scam case. 

Spam messages have crept into WhatsApp with 95% Indian users getting unsolicited messages regardless of their registration on the do-not-disturb or DND list, according to a survey by Localcircles based on 57,000 responses from users located in 373 districts of the country. The survey noted that 32% of the respondents admitted receiving 1-3 such messages, 36% have been receiving 4-7 messages and 32% an average of 8 or more unwanted messages. 

Sourav Ganguly is out of the BCCI after reportedly declining the post of the IPL chairman. The BCCI won’t back him for the ICC chairman’s post. Roger Binny is set to take over as president and Jay Shah, also son of Home Minister Amit Shah, will continue as BCCI secretary. Rajeev Shukla is set to be vice-president.

In the US, the controversial Tulsi Gabbard has left the Democratic Party, terming it run by an “elitist cabal.” The Caravan in 2019 had called out how Gabbard’s fortunes “had risen with Modi’s in 2014. Over the year, $123,000 of Gabbard’s itemised individual donations—24%—came from Sangh and pro-Modi sources. There were calls to finance her campaign at three separate BJP victory parties.”

After director Vivek Agnihotri trolled a banking ad for suggesting an inversion of the ‘griha pravesh’ wedding ritual, Madhya Pradesh’s verbal trigger happy home ministry Narottam Mishra has attacked Aamir Khan for ‘hurting Hindu sentiments’.