Current Affairs 30th July 2022

Core sector output expands by 12.7% #GS3 #Economy

India’s eight core sectors’ output growth moderated to 12.7% in June, from 18.1% in May, with all sectors except crude oil registering an uptick in production.

Coal, cement, electricity, and refinery products rose 15% or more, compared with the June 2021 output levels, while natural gas (1.2%), steel (3.3%), and fertilizers (8.2%) grew at a milder pace. Crude oil output dropped 1.7% from a year earlier, returning to the contractionary territory after recording the first uptick in several months this May.

The Commerce and Industry Ministry also revised the index of eight core industries for March and May. Core sectors’ growth in March was pared to 4.8% from 4.9% estimated earlier, while for May, it was revised higher at 19.3% from the previous estimate of 18.1%.

While June marks the second successive month of double-digit growth in core sectors, which constitute about 40% of the Index of Industrial Production (IIP), the overall core output shrank 4.08% compared with the previous month. Cement and fertilizers were the only sectors to record a sequential month-on-month growth in output in June of 6.9% and 0.32%, respectively.

Healthy performance

Compared to pre-COVID levels, the core sectors reported an 8% growth in June with a healthy performance in all the sectors, except steel and crude oil. The disaggregated trends are exceedingly mixed, she said, ranging from a contraction in crude oil to a robust expansion of 31% in coal.

The broad-based moderation in the growth rate to 12.7% from 19.3% in May, Ms. Nayar attributed to the ‘normalizing base’ effects from 2021 amid the second COVID-19 wave. “In line with the moderation in the year-on-year performance recorded by most high-frequency indicators as well as the core sector in June 2022, we expect the IIP growth to ease to about 11% to 13%,” Ms. Nayar averred. The IIP had grown 19.6% in May.

Rajani Sinha, chief economist at CARE Ratings, said the low base from last year helped prop up the growth rate in June, but added she expects further momentum in coming months for the core sectors with a pick-up in investment demand.

Kerala tops in holding Assembly sittings in 2021 #GS2 #Governance

Kerala, which slipped to the eighth slot in holding the sittings of the State Assembly during the first wave of the COVID-19 pandemic in 2020, got back to first place in 2021, with its House sitting for 61 days, the highest for any State.

The southern State’s showing in 2021 was impressive as the year saw the more virulent second wave of the COVID-19 pandemic. In fact, between 2016 and 2019, it had the distinction of remaining at the top with an average of 53 days.

Despite enjoying the record of having the highest number of sittings during 2021 for any State legislature, Kerala (where the Left Democratic Front is in power since May 2016) had promulgated 144 ordinances, also the highest in the country last year. Ordinances are promulgated by governments, which are required to take immediate action on any matter, during the intervening period of two sessions of the legislature.

Odisha follows Kerala

Making the findings in its study on the functioning of State Assemblies for 2021, the PRS Legislative Research (PRS), a New Delhi-based think tank, states that for the year in question, Odisha followed Kerala with 43 sitting days; Karnataka — 40 and Tamil Nadu — 34 days. But for the top three States, the average number of sitting days of State legislatures would have been far lower than the present figure of 21 days.

Of the 28 State Assemblies and one Union Territory’s legislature, 17 met for less than 20 days.

Dismal show

Of them, five — Andhra Pradesh, Nagaland, Sikkim, Tripura and Delhi — met for less than 10 days.

The National Commission to Review the Working of the Constitution (2000-02), headed by former Chief Justice of India M.N. Venkatachaliah, had prescribed that the Houses of State (/Union Territory) legislatures with less than 70 members — for example, Puducherry — should meet for at least 50 days a year and other Houses (Tamil Nadu), at least 90 days. (Ten fall under the first category and 20 under the second).

The Presiding Officers’ conference, held in Gandhinagar in January 2016, suggested State legislatures hold a minimum of 60 days of sittings in a year. Between 2016 and 2021, the PRS points out, 23 State Assemblies met for an average of 25 days.

States such as Manipur, Odisha, Punjab and Uttar Pradesh have laid down a minimum number of sitting days through the Rules of Procedure, varying from 40 days in Punjab to 90 days in Uttar Pradesh. In 2005, Karnataka even came out with a law — the Karnataka Conduct of Government Business in the State Legislature Act — with the stipulation of a minimum of 60 days, when the Congress-Janata Dal coalition was in power. However, the five States observed this norm more in the breach. In 2021, apart from 43 days of sittings in Odisha and 40 days in Karnataka, the figures for Uttar Pradesh, Manipur and Punjab were 17, 16, and 11 respectively.

As for the ordinance route, which should be, according to the Supreme Court, used under exceptional circumstances, 21 out of 28 States promulgated ordinances last year. Andhra Pradesh with 20 ordinances and Maharashtra with 15 followed Kerala, wherein Bills replacing 33 ordinances became Acts. Andhra Pradesh and Madhya Pradesh also promulgated ordinances to give effect to budget proposals.

A perusal of the manner of adoption of Bills by the State Assemblies would reveal that 44% of the Bills adopted by 28 State Assemblies were passed within a day of their introduction. Gujarat, West Bengal, Punjab and Bihar were among the eight States which passed all Bills on the day of introduction.

On the contrary, five States — Karnataka, Kerala, Meghalaya, Odisha and Rajasthan — took more than five days to pass a majority of their Bills. In Kerala, 94% of the Bills were passed after at least five days of their introduction in the legislature. In respect of Meghalaya, it was 80% and in the case of Karnataka, 70%.

Of the subjects covered by the Bills passed in 2021, education accounted for 21% followed by taxation – 12%, local government – 10%, and land and law and order – 4% each. For the purpose of this analysis, Appropriation Bills were not considered.

Modi unveils India’s first global bullion exchange #GS3 #Economy

Prime Minister Narendra Modi launched the India International Bullion Exchange (IIBX), a first in the country and NSE IFSC-SGX Connect at Gandhinagar’s GIFT city, an international financial services hub set up by the Gujarat government outside the State capital.

India is the world’s second-biggest consumer of gold and the move to set up the IIBX is seen as India’s effort to bring transparency to the market for the precious metal. Moreover, setting up of IIBX could lead to standard gold pricing in the country and make it easier for small bullion dealers and jewellers to trade in the precious metal.

India is a leading importer of metal and imported 1,069 tonnes of gold in 2021, up from 430 tonnes a year ago. The yellow metal is tightly regulated in the country and currently only nominated banks and agencies approved by the Reserve Bank Of India can import gold and sell it to dealers and jewellers across the country.

While launching the new exchange and laying the foundation stone for new projects in GIFT city, his pet project, Mr Modi said that India is among the biggest economies in the world and is now joining the league of global financial centres like the United States, the United Kingdom and Singapore.

Foundation stone laid

He laid the foundation stone of the headquarters building of the International Financial Services Centres Authority (IFSCA), the country’s first and only IFSC in line with those in UAE, Singapore and Hong Kong.

“Today in the 21st century, finance and technology are linked to each other. And when it comes to technology, science and software, India has an edge and experience. Today, India alone has a 40% share in real-time digital payments all over the world. India is one of the world’s leading economies and will become even bigger going forward; we should build institutions that can cater to our present and future roles.

Jaishankar pushes for Chabahar port #GS2 #IR

India welcomed the expansion of the Shanghai Cooperation Organisation (SCO) to include Iran next year, as External Affairs Minister S. Jaishankar shared a table with Foreign Ministers of China Wang Yi, Pakistan Bilawal Bhutto, Russia Sergey Lavrov and central Asian countries at the ministerial meeting in Tashkent.

While India pushed for Chabahar port to be a conduit for trade to central Asia, Pakistan’s Foreign Minister promoted the China-Pakistan Economic Corridor for trans-regional trade, including in a meeting with Taliban-appointed Acting Foreign Minister Amir Khan Muttaqi.

Help to Afghanistan

Mr Jaishankar highlighted India’s assistance to Afghanistan at the meeting. “Reiterated India’s position on Afghanistan and highlighted our humanitarian support: wheat, medicines, vaccines and clothing,” Mr. Jaishankar said after the meetings, adding that he had underlined the potential for Iran’s Chabahar for the “SCO’s economic future”.

The External Affairs Minister said he had also raised the problems of the energy crisis and food crisis arising from the “Ukraine conflict”, making no mention of Russia’s role in the conflict, as well as from the COVID pandemic.

“[The] response required includes resilient and diversified supply chains as well as reformed multilateralism, adding that “zero tolerance” for terrorism was a must. The External Affairs Minister also called on Uzbekistan President Shavkat Mirziyoyev along with the other Ministers, where he was seated next to Mr. Bhutto at the round table.

He said India, which would take over the SCO Presidency next year, would “give the fullest support for the success of the Samarkand Summit”, indicating Prime Minister Narendra Modi would attend the summit on September 15-16. If all the SCO leaders attend the summit in person, it will be the first time Mr. Modi will come face to face with Chinese President Xi Jinping, as well as Pakistan Prime Minister Shehbaz Sharif.

Meeting SCO Secretary General, senior Chinese diplomat Zhang Ming, Mr. Jaishankar said India’s Presidency next year would give SCO cooperation a “renewed thrust”.

Eurozone inflation hits another high #GS3 #Economy

Euro zone inflation rose to another record high in July and its peak could still be months away, keeping pressure on the European Central Bank to opt for another big interest rate increase in September. Consumer price growth in the region accelerated to 8.9% in July from 8.6% a month earlier, above expectations for 8.6% and well clear of the ECB’s 2% target.

Inflation was initially driven by post-pandemic supply bottlenecks but more recently the fall-out of Russia’s war in Ukraine has been the main culprit as it has raised energy, metals and food prices.