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Important for India to keep fiscal deficit in check: IMF chief economist

Agencies
October 16, 2019

Washington, Oct 16:  It is important for India to keep fiscal deficit in check, even though its revenue projections look optimistic, Chief Economist of the International Monetary Fund or IMF Gita Gopinath has said.

As against India's real growth rate of 6.8 per cent in 2018, the IMF in its latest World Economic Outlook, released on Tuesday, projected the country's growth rate at 6.1 per cent in 2019 and noted that the Indian economy is expected to pick up at 7 per cent in 2020.

In India's case, there has been a negative impact on growth that has come from financial vulnerabilities and the non-bank financial sector, and the impact on consumer borrowing and borrowing of small and medium enterprises, Gopinath said.

The prominent Indian-American economist was speaking to reporters ahead of the annual meeting of the IMF and the World Bank.

On the projections in the World Economic Outlook report, Gopinath said appropriate steps have been taken.

Appreciative of the recent steps being taken by Finance Minister Nirmala Sitharaman to address the economic challenges being faced by India, she said there is still a lot more that needs to be done.

Prominent among these include cleaning up of balance sheets of regular commercial banks, Gopinath said.

In our projections we have that India will recover to 7 per cent growth in 2020. And the premise is that these particular bottlenecks will clear up, she said.

On the fiscal side for India, there have been some recent measures, including the corporate tax cut. There has not been an announcement about how that will be offset to revenues at this point, Gopinath said.

It looks optimistic, the revenue projections going forward. But it is important for India to keep the fiscal deficit in check, she said.

Responding to a question, Deputy Director in the IMF Research Department Gian Maria Milesi-Ferretti said the overall growth remains very strong in India by the standards of the world economy.

Even though it's lower than the very high standards at which the world was accustomed to looking at India, he said.

India's growth rate above 6 per cent is still notable and extremely important in a country that has such a large population. We have a forecast for further pick up the next year, also helped by tax cuts on the corporate trunk, Milesi-Ferretti said.

At the same time, there are many macroeconomic challenges the deputy director said as he emphasised the need to keep fiscal deficit under control.

Of course, India and Pakistan are not immune to global geopolitical tensions and to trade tensions that can take a toll on their manufacturing activity and demand for their exports, said the IMF official when asked about the economic impact of India-Pakistan tensions.

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Agencies
August 4,2020

Washington, Aug 4: US President Donald Trump gave popular Chinese-owned video app TikTok six weeks to sell its US operations to an American company, saying Monday it would be "out of business" otherwise, and that the government wanted a financial benefit from the deal.

"It's got to be an American company... it's got to be owned here," Trump said. "We don't want to have any problem with security."

Trump said that Microsoft was in talks to buy TikTok, which has as many as one billion worldwide users who make quirky 60-second videos with its smartphone app.

But US officials say the app constitutes a national security risk because it could share millions of Americans' personal data with Chinese intelligence.

Trump gave the company's Chinese parent ByteDance until mid-September to strike a deal.

"I set a date of around September 15, at which point it's going to be out of business in the United States," he said.

Whatever the price is, he said, "the United States should get a very large percentage of that price because we're making it possible."

Trump compared the demand for a piece of the pie to a landlord demanding under-the-table "key money" from a new tenant, a practice widely illegal including in New York, where the billionaire president built his real estate empire.

"TikTok is a big success, but a big portion of it is in the country," he said. "I think it's very fair."

But Trump also threw a surprise new condition in any deal, saying the sale of TikTok's US business would have to result in a significant payout to the US Treasury for initiating it.

"A very substantial portion of that price is going to have to come into the Treasury of the United States, because we're making it possible for this deal to happen," Trump told reporters.

"They don't have any rights unless we give it to them," he said.

Sell or shut down

The pressure for a sale of TikTok's US and international business, based in Los Angeles, left the company and ByteDance facing tough decisions.

Trump has made TikTok the latest front in the ongoing political and trade battles between Washington and Beijing.

The app has been under formal investigation on US national security grounds because it collects large amounts of personal data on all its users and is legally bound to share that with authorities in Beijing if they demand it.

Both its huge user base and its algorithm for collecting data make it hugely valuable.

But being forced by the US government to sell at least its US business or be shut down -- and to then split the sale price with the US Treasury as Trump is demanding -- was an almost unheard-of tactic.

Shutting down could force users to switch to competitors, and many content creators are already encouraging followers to follow them on other social media platforms.

"The most obvious beneficiaries are Snapchat, Facebook and Twitter, with Snapchat likely being the biggest beneficiary," said investment analysts at Lightshed Partners.

Earlier Monday, ByteDance founder Zhang Yiming acknowledged the hefty pressure and said in a letter to staff, reported by Chinese media, that they were working around-the-clock "for the best outcome."

"We have always been committed to ensuring user data security, as well as the platform neutrality and transparency," Zhang said.

However, he said, the company faces "mounting complexities across the geopolitical landscape and significant external pressure."

He said the company must confront the challenge from the United States, though "without giving up exploring any possibilities."

According to Britain's The Sun newspaper Monday, as a possible consequence of the pressure, ByteDance is planning to relocate TikTok's global operations to Britain.

Pushing back

China's foreign ministry pushed back Monday, calling Washington hypocritical for demanding TikTok be sold.

"The US is using an abused concept of national security and, without providing any evidence, is making presumptions of guilt and issuing threats to relevant companies," said spokesman Wang Wenbin.

"This goes against the principle of market economy and exposes the hypocrisy and typical double standards of the US in upholding so-called fairness and freedom," he added.

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News Network
January 13,2020

Jan 13: For the first time in years, the government of India’s Prime Minister Narendra Modi is playing defense. Protests have sprung up across the country against an amendment to India’s laws — which came into effect on Friday — that makes it easier for members of some religions to become citizens of India. The government claims this is simply an attempt to protect religious minorities in the Muslim-majority countries that border India; but protesters see it as the first step toward a formal repudiation of India’s constitutionally guaranteed secularism — and one that must be resisted.

Modi was re-elected prime minister last year with an enhanced majority; his hold over the country’s politics is absolute. The formal opposition is weak, discredited and disorganized. Yet, somehow, the anti-Citizenship Act protests have taken hold. No political party is behind them; they are generally arranged by student unions, neighborhood associations and the like.

Yet this aspect of their character is precisely what will worry Modi and his right-hand man, Home Minister Amit Shah. They know how to mock and delegitimize opposition parties with ruthless efficiency. Yet creating a narrative that paints large, flag-waving crowds as traitors is not quite that easy.

For that is how these protests look: large groups of young people, many carrying witty signs and the national flag. They meet and read the preamble to India’s Constitution, into which the promise of secularism was written in the 1970’s.

They carry photographs of the Constitution’s drafter, the Columbia University-trained economist and lawyer B. R. Ambedkar. These are not the mobs the government wanted. They hoped for angry Muslims rampaging through the streets of India’s cities, whom they could point to and say: “See? We must protect you from them.” But, in spite of sometimes brutal repression, the protests have largely been nonviolent.

One, in Shaheen Bagh in a Muslim-dominated sector of New Delhi, began simply as a set of local women in a square, armed with hot tea and blankets against the chill Delhi winter. It has now become the focal point of a very different sort of resistance than what the government expected. Nothing could cure the delusions of India’s Hindu middle class, trained to see India’s Muslims as dangerous threats, as effectively as a group of otherwise clearly apolitical women sipping sweet tea and sharing their fears and food with anyone who will listen.

Modi was re-elected less than a year ago; what could have changed in India since then? Not much, I suspect, in most places that voted for him and his party — particularly the vast rural hinterland of northern India. But urban India was also possibly never quite as content as electoral results suggested. India’s growth dipped below 5% in recent quarters; demand has crashed, and uncertainty about the future is widespread. Worse, the government’s response to the protests was clearly ill-judged. University campuses were attacked, in one case by the police and later by masked men almost certainly connected to the ruling party.

Protesters were harassed and detained with little cause. The courts seemed uninterested. And, slowly, anger began to grow on social media — not just on Twitter, but also on Instagram, previously the preserve of pretty bowls of salad. Instagram is the one social medium over which Modi’s party does not have a stranglehold; and it is where these protests, with their photogenic signs and flags, have found a natural home. As a result, people across urban India who would never previously have gone to a demonstration or a political rally have been slowly politicized.

India is, in fact, becoming more like a normal democracy. “Normal,” that is, for the 2020’s. Liberal democracies across the world are politically divided, often between more liberal urban centers and coasts, and angrier, “left-behind” hinterlands. Modi’s political secret was that he was that rare populist who could unite both the hopeful cities and the resentful countryside. Yet this once magic formula seems to have become ineffective. Five of India’s six largest cities are not ruled by Modi’s Bharatiya Janata Party in any case — the financial hub of Mumbai changed hands recently. The BJP has set its sights on winning state elections in Delhi in a few weeks. Which way the capital’s voters will go is uncertain. But that itself is revealing — last year, Modi swept all seven parliamentary seats in Delhi.

In the end, the Citizenship Amendment Act is now law, the BJP might manage to win Delhi, and the protests might die down as the days get unmanageably hot and state repression increases. But urban India has put Modi on notice. His days of being India’s unifier are over: From now on, like all the other populists, he will have to keep one eye on the streets of his country’s cities.

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Agencies
July 29,2020

Dubai, Jul 29: Muslim pilgrims on Wednesday begin the annual Haj, downsized this year as the Saudi hosts strive to prevent a coronavirus outbreak during the five-day pilgrimage.

The Haj, one of the five pillars of Islam and a must for able-bodied Muslims at least once in their lifetime, is usually one of the world's largest religious gatherings.

But this year only up to 10,000 people already residing in the Kingdom will participate in the ritual, a tiny fraction of the 2.5 million pilgrims from around the world that attended last year.

"There are no security-related concerns in this pilgrimage, but (downsizing) is to protect pilgrims from the danger of the pandemic," said Khalid bin Qarar Al Harbi, Saudi Arabia's director of public security.

Pilgrims will be required to wear masks and observe social distancing during a series of religious rites that are completed over five days in the holy city of Makkah and its surroundings in western Saudi Arabia.

Those selected to take part in the Haj were subject to temperature checks and placed in quarantine as they began trickling into Makkah at the weekend.

State media showed health workers sanitising their luggage, and some pilgrims reported being given electronic wristbands to allow authorities to monitor their whereabouts.

Workers, clutching brooms and disinfectant, were seen cleaning the area around the Kaaba, the structure at the centre of the Grand Mosque draped in gold-embroidered cloth towards which Muslims around the world pray.

Haj authorities have cordoned off the Holy Kaaba this year, saying pilgrims will not be allowed to touch it, to limit the chances of infection.

They also reported setting up multiple health facilities, mobile clinics and ambulances to cater to the pilgrims.

Saudi authorities said only around 1,000 pilgrims residing in the Kingdom would be permitted for the Haj. Some 70 per cent of the pilgrims are foreigners residing in the Kingdom, while the rest will be Saudi citizens, authorities said.

All worshippers were required to be tested for coronavirus before arriving in the holy city of Makkah and will also have to quarantine after the pilgrimage as the number of cases in the Kingdom nears 270,000.

They were given elaborate amenity kits that include sterilised pebbles for a stoning ritual, disinfectants, masks, a prayer rug and the Ihram, a seamless white garment worn by pilgrims, according to a Haj ministry programme document.

"I did not expect, among millions of Muslims, to be blessed with approval," Emirati pilgrim Abdullah Al Kathiri said in a video released by the Saudi media ministry.

"It is an indescribable feeling... especially since it is my first pilgrimage."

The Haj ministry said non-Saudi residents of the Kingdom from around 160 countries competed in the online selection process but it did not say how many people applied.

Despite the pandemic, many pilgrims consider it safer to participate in this year's ritual without the usual colossal crowds cramming into tiny religious sites, which make it a logistical nightmare and a health hazard.

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