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Four years of NDA: has Modi fulfilled job creation promise? here’s what people’s verdict says

“The great Indian election: it’s about jobs,” read a Reuters report just a few days ahead of the first leg of the polling in 2014. And it was: The manifesto of BJP was filled with promises of jobs across sectors. In fact, even BJP’s Prime Ministerial face Narendra Modi, the then 63-year-old three-term successful state chief minister, at a rally in Agra in 2013 promised to create 100 million jobs. He was voted to power with an absolute majority.

Four years later, even as 56% Indians still have faith in Narendra Modi that he will fulfil his poll promises before 2019 elections, they are simply not convinced that enough jobs have been created yet. Of 49 different ministries, Indians gave the lowest score to the Labour and Employment ministry in performance, namely, creating employment.

“Although the extension of maternity leaves was received well by the citizens, not enough new jobs being created for the youth was a major point of discontent among citizens,” LocalCircles said in a survey report on four years of the Narendra Modi government. Labour and Employment ministry got a score of 2.1 on the scale of 5, followed by agriculture which too received 2.1. In the same survey, people gave a stellar score of 4.9 to the Defence ministry for surgical strike and handling of Pakistan.

“With the rate of unemployment being high, citizen rating of the Labour and Employment ministry was almost obvious,” the survey added.

Job creation has been a matter of debate lately. The government and its think tank Niti Aayog contend that jobs have been created in the form of entrepreneurship and in the informal sector. Niti Aayog is expected to release a report based on comprehensive jobs data.

For now, the CMIE data show that unemployment has significantly risen to 6% in last one year. However, the Chief Statics Office data show that the unemployment rate dropped significantly from about 10% to 5.9% between April 2015 and April 2018.

Speaking to FE Online recently Madan Sabnavis of CARE Ratings said that the jobless growth was a bit of an exaggeration. However, job creation has been slow and limited to certain sectors. He explained that in public sector, vacancies were for replacements, and not new posts, while a lot of jobs were lost in the construction sector when housing projects got stuck.

Analysts are also of the opinion that due to two consecutive drought years, jobs in the agriculture sector also suffered. In India, nearly half of India’s workforce is dependent on agriculture and jobs usually suffer due to the volatility in the sector — drought, unseasonal rains, bad crop et al.

Raghuram Rajan rules himself out for job of Bank Of England governor; says, ‘i have a very good job, i am happy’

Raghuram Rajan said he doesn’t plan to apply for the job of Bank of England governor, which Mark Carney will leave in just over a year.

Rajan, a former India central bank governor who is now at the University of Chicago, has been mentioned in connection with the position. Speaking to reporters in London after delivering a speech, the topic was the first question he was asked about.

“I have a very good job at the University of Chicago. and I am actually an academic, not a professional central banker. So I’m very happy where I am.”

U.K. Chancellor of the Exchequer Philip Hammond has indicated a willingness to look abroad for a new governor. In addition to Rajan, other potential foreign candidates could include former Mexican central bank chief Agustin Carstens, who now runs the Bank for International Settlements.

Still, the favorite for the job remains FCA Chief Executive Andrew Bailey, while other names linked to the role include BOE Deputy Governors Ben Broadbent and Dave Ramsden. The U.K. Treasury hasn’t yet advertised for the role.

Rajan was also asked if he was ruling out applying. His response: “I’ve said all I can say — I’m very happy where I am. I’m not going to apply for a job anywhere, absolutely.”

Given the buildup to Carney’s appointment, such denials may not carry much weight for those trying to figure out who takes over at the BOE.

Karnataka’s new CM announces farm loan waiver; here’s why it’s a bad idea

Hours after swearing-in as chief minister of Karnataka BS Yeddyurappa announced a farm loan waiver to the tune of Rs 1 lakh as his first decision. The decision was taken in the first Cabinet meeting chaired by BS Yeddyurappa even as the Bharatiya Janata Party (BJP) is yet to prove majority.

Amid the intense agrarian crisis, farm loan waivers are popular political move, which experts see merely as a ‘quick-fix’. Speaking with FE Online recently Sameer Narang, Chief Economist, Bank of Baroda said that farm loan waivers help, but temporarily. Moreover, it affects the credit system in the country.

The latest RBI data showed that outstanding bank advances to agriculture and allied activities have risen from about 13% of GDP in 2000-01 to around 53% in 2016-17. RBI governor Urjit Patel said that there was the risk of domino effect, which means that one event sets off a chain of similar events.

The agrarian crisis in Karnataka is severe. Over 35,000 farmers committed suicide between April 2013 and November 2017, of which nearly 2,500 were suffering from crop failure and drought. The number of farmers’ suicide in Karnataka was second highest after Maharashtra, according to NCRB data.

Last year too, the Congress government in Karnataka announced loan waivers, joining the Uttar Pradesh, Punjab, Maharashtra, Rajasthan. Ind-Ra calculated that the farm loan waivers announced by these five states together will widen the combined fiscal deficit by Rs 1,07,700 crore or 0.65% of GDP this financial year. What experts say is that there is a need to have other solutions such as giving income support and providing insurance cover to crop failure.

Other policies of the government such as eNAM, the Pradhan Mantri Fasal Bima Yojana (insurance), the Pradhan Mantri Krishi Sinchai Yojana (irrigation) and the Paramparagat Krishi Vikas Yojana are good policies which, if implemented properly and inclusively, could help the distressed agriculture sector.

Since India’s agriculture sector is highly dependent on Monsoon, Chief Economic Advisor Arvind Subramanian vehemently advocated for building a robust irrigation system in the country as climate change is threatening the agriculture sector.

 

Trade deficit widens to $13.72 billion in April; is Nirav Modi fraud behind India’s falling exports?

The trade deficit in the month of April widened to $13.72 billion as exports grew only by 5.17%. After registering a healthy growth of 9% in January this year, exports took a hit. Following the Rs 13,000 crore Nirav Modi fraud, RBI’s decision to withdraw Letters of Understanding (LoUs) and Letters of Credit (LCs) spelt troubles for exporters especially in labour-intensive sectors of export including gems and jewellery, leather and leather products.

On the April trade data, FIEO President, Ganesh Kumar Gupta said that some sectors are still facing the problem of liquidity as banks and lending agencies have continuously been tightening their lending norms and the flow of GST refund has also slowed down.

“Almost all the labour-intensive sectors of export including gems & jewellery, leather & leather products, RMG of all textiles, jute manufacturing including floor covering, carpets, handicrafts, agri products and many other sectors of exports, dominated by MSMEs are into negative territory,” Ganesh Kumar said.

Only 16 out of 30 major product groups were in positive territory during April 2018 including engineering, organic & inorganic chemicals, drugs & pharmaceuticals, cotton yarn/fabs/made-ups, electronic goods, plastic and linoleum and rice have shown positive exports growth during April 2018.

Assocham had earlier expressed concern over withdrawal of LoUs and LCs. The industry body had said that the LCs and LoUs are an internationally accepted system of global trade. “While we need to ensure safe and sound functioning of the system and not allow loopholes like those in the PNB system of money or guarantee transfer, let banks not over-react and hit the trade and industry,” Assocham had said in February.

Moreover, the cushion that came from the exports of petroleum sector to exports as it declined by 4.5% in April. However, the biggest reason for wider trade deficit is understood to be swelling crude imports bill, which was up by a whopping 41.5%.

Imports grew 4.60% to $39.63 billion in the month on yearly basis. While oil imports were up in the month of April, non-oil imports dipped by 4.3% to $29.21 billion in April 2018. Engineering, chemicals and pharmaceutical exports recorded a growth of 17.63%, 38.48% and 13.56% respectively during the month.

India’s trade data is “indicative of India-specific factors determining the export slowdown, possibly through a loss of competitiveness or deteriorating external conditions for India’s export basket”, the World Bank had said in its latest India Development Report.

“India has experienced a positive export growth, but it remains to be seen whether it is indicative of a definite reversal of this pattern,” the report added.

India shows to the world how digitisation is done! here’s what IMF has to say

India is one of the two countries in the world that has been lauded by the International Monetary Fund for their push to digitisation. “…the experiences of India and South Africa show how digitalization can help improve social protection and the delivery of public services,” said IMF in its April Fiscal Monitor report.

Digital tools can improve the quality and delivery of public services, such as communicating with beneficiaries and monitoring public servants. In this regard, use of Biometric technology to “identify and authenticate” individuals can help reduce leakages and improve coverage of social programs, the IMF said.

While digitisation is less common in low-income groups, IMF said, “With more than 1.2 billion registered citizens in India’s biometric identification system, Aadhaar, the country stands out as a leader in this area.” India has applied digital tools in the distribution of social benefits, IMF said, adding, Estonia and Kenya have taken the advantage of new technologies and pursued digital strategies that fundamentally affect the delivery of public services.

In 2012, an estimated 36% of total spending on the Indian Public Distribution System never reached intended households because of ghost beneficiaries and the illegal diversion of subsidized goods by intermediating dealers. The report said that India’s biometric system also helped in reducing subsidies in LPG leakages.

Before 2015, the subsidy on liquefied petroleum gas (LPG) in India was subject to substantial leakages because of corruption and fraud resulting from dual pricing system that allowed dealers to sell LPG cylinders to households at a subsidised price and to commercial users at market price and the government’s inability to authenticate program beneficiaries. Limited authentication also led to the proliferation of ghost beneficiaries and duplicate claims.

Digitalisation helped reduce leakages in two ways, IMF said. By starting Aadhaar system, the government was able to prevent claims of benefits for ghost beneficiaries or multiple claims of the same benefit. And, the government eliminated the dual pricing system and made electronic transfers of the subsidy directly to the Aadhaar-linked bank account of beneficiaries, bypassing dealers.

On South Africa, the IMF said that the biometric system in the country also helped in decreasing ghost-recipients of social benefits.

Four years of Modi: these 5 ministries get stellar score from people, and finance is not among them

After a 10-year-long United Progressive Alliance (UPA) government, Narendra Modi offered a refreshing change to India’s 81.45 voters in the world’s biggest election in 2014. Whether it was the promise of ‘Achhe Din’, or ‘Minimum Government or Maximum Governance’, India stood behind the three-time state chief minister and voted him to power with a thumping majority. Four years on, even as Narendra Modi’s charisma has deteriorated marginally, his work in some areas score well with the people of the country.

Ironically, while the Narendra Modi government was often lauded globally for implementation of the Goods and Services Tax (GST) and Insolvency and Bankruptcy Code (IBC) along with a big leap on ease of doing business index, the work done by the Finance Ministry is not among the top performers. The Finance Ministry was ranked 12th with a score of 3.8 on the scale of 5.

The top five ministries of the Modi government is Defence, External Affairs, New and Renewable Energy, Coal, and Road Transport and Highways, a survey conducted by LocalCircles showed. Indians have given a stellar score to the Defence Ministry — 4.9 on the scale of 5. The government has been applauded for “taking some bold steps like the surgical strikes against Pakistan,” LocalCircles said.

The External Affairs ministry stood second with a score of 4.2 on the scale of 5 especially due to Sushma Swaraj’s proactive role in getting help to Indians in emergency situations using the social media. From India’s win of the prized seat at the International Court of Justice (ICJ) to a safe participation of 19 Pakistani school girls in a Youth Festival in India, External Affairs ministry has got thumbs-up from people even as Sushma Swaraj recently received flak on the issue of 39 Indians who died in Iran.

The third and fourth best ministries are New and Renewable Energy and Coal with scores 4.1 and 4. India’s coal sector has witnessed a robust growth in production, while Narendra Modi’s push for clean renewable energy has got the country to achieve its target four years ahead of the deadline. In fact, even World Bank recently said that India has the potential to become a solar global super-power.

Among the top five ministries is Road, Transport and Highways with a score of 4 on the scale of 5. The Narendra Modi government, like the previous NDA government under the leadership of Atal Bihari Vajpayee, has given a lot of impetus to infrastructure development in the country. As per latest data, in first three years of the government, the road construction was up 122%. The pace of building highways picked up and touched 21.46 km a day in the April-January period of 2017-18.

Narendra Modi was sworn-in as the 15th Prime Minister of India on 26 May 2014.

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