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CEA Arvind Subramanian much less hopeful now of RBI rate cuts

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Arvind Subramanian

New Delhi, Jan 31 : Sounding a clear note of caution on rising crude oil prices pushing inflation, Chief Economic Advisor (CEA) Arvind Subramanian has toned down his earlier vocal expectation of a rate cut by the Reserve Bank of India (RBI) ahead of the central bank’s final bi-monthly monetary policy review of the fiscal due to be annouced next week.

In an interview here with CNBC TV18 following the release of the Economic Survey 2017-18 authored by him, Subramanian said that with retail inflation edging past the RBI’s median target of 4 per cent, the “cycle has turned”.

“Relative to the last 18 months when we consistently undershot our inflation target, now we are at or close to that. So clearly, the case for easing is now less persuasive…we seem to be close to the inflation target,” he said.

At the fiscal’s penultimate policy review in Mumbai last month, the RBI maintained the status quo on its key lending rate for the third time in succession at 6 per cent, citing concerns on the rising trajectory of inflation. The central bank also raised the inflation forecast for the remainder of the current fiscal to 4.3-4.7 per cent.

The continuing rise in food and fuel prices pushed India’s annual retail inflation rate over the five per cent mark in December, to 5.21 per cent, from 4.88 per cent in November.

In this connection, the CEA hinted that the government’s fiscal deficit target of 3.2 per cent of the gross domestic product (GDP) could be exceeded this year in the lead up to the 2019 general elections.

“May involve a bit of a (fiscal) slippage, may not, we will have to see but that is for this year. For next year, I have said three things. One the fact that it is an election year does not mean fiscal populism and I think everyone is on board, no fiscal populism,” he said.

“The second point made very clearly is that if you look at the pure economic cycle now, you would in-principle and I would argue for an ambitious fiscal consolidation on economic grounds because inflation is higher, output is higher, output gaps are closing, and there is more volatility and external uncertainty and therefore, consolidation,” he added.

The Economic Survey cautioned that ambitious targets of fiscal consolidation for the pre-election year be avoided.

“Reflecting largely fiscal developments at the Centre, a pause in general government fiscal consolidation relative to 2016-17 cannot be ruled out,” it said.

On the most disruptive measure since Independence — demonetisation, which, along with GST, “decoupled” the Indian economy from the rest of the world for around four to six quarters — the Survey said that carrots rather than sticks should be the mainstay of government policy in cleaning up the economy.

“I think both in terms of the informal sector, of exports, also GST, there were transitional costs (of demonetisation). I think no one can deny that, but let us see the other side of the ledger, what the benefits are going to be,” Subramanian said.

IANS

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HC notice on woman’s plea seeking fresh passport for son stranded abroad for 8 yrs

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Delhi High Court

The Delhi High Court has sought the Centre”s reply on a woman”s plea seeking directions to the government to provide a passport to her son, who is stuck abroad for the last eight years as he does not have a valid travel document.

Justice Navin Chawla issued notice to the Ministry of External Affairs (MEA) seeking its stand on the plea which claims that her son”s passport was damaged when he was in Italy and had applied for a duplicate one in 2012 which has not been issued to him.

He moved to Paris for work as without a valid passport he was finding it tough to get work in Italy, her plea has said.

The Indian consulate in Italy had refused to issue him a passport as a dowry case was pending him here, she has said in her plea.

The woman has said that she, her husband and her son were falsely implicated in a dowry case by her then daughter-in-law in 2009.

Her husband passed away during the pendency of the case and her son was declared a proclaimed offender as he could not come back to India due to lack of a valid passport, the petition has claimed.

She was acquitted in the case in 2016 and meanwhile, her ex-daughter-in-law obtained a divorce in 2011 and got married again, the plea said.

It has also claimed that the divorce was granted by way of an ex-parte order as her son could not come to India to defend himself.

The high court has listed the matter for further hearing on December 7. PTI HMP SKV SA

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Sensing MP bypolls’ defeat, BJP indulging in horse-trading: Cong

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congress

A day after one of its MLAs in Madhya Pradesh resigned from the Assembly to join the BJP, the Congress on Monday cried foul and alleged that the BJP was “indulging in horse-trading” after sensing its impending defeat in the November 3 bypolls.

“The BJP knows that they are going to lose the bypolls; so again, doing the same thing to remain in power in Madhya Pradesh. Congress chief Sonia Gandhi has already said that they are making the democracy hallow and this is the latest example,” Congress spokesperson Gourav Vallabh told a press conference here.

Congress MLA Rahul Lodhi from Damoh on Sunday resigned from the Assembly and joined the BJP in the presence of Chief Minister Shivraj Singh Chouhan in Bhopal.

Earlier this year, 22 Congress MLAs had resigned from the Assembly and joined the BJP under the leadership of Jyotiraditya Scindia, which led to the collapse of the then Kamal Nath-led Congress government.

Three more Congress MLAs later resigned from the Assembly. Now, the latest blow to the Congress has come with the resignation of Rahul Lodhi.

The 28 Assembly segments in Madhya Pradesh will see by-elections on November 3.

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SC stays HC order to parties to go virtual for MP bypolls

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Supreme Court

The Supreme Court on Monday stayed a Madhya Pradesh High Court order to political parties to campaign virtually for the November 3 Assembly bypolls in the state, but pulled up the parties for creating a situation that compelled the HC to act.

The top court stayed the High Court order, but noted that the situation would not have arisen if health protocols were followed in the backdrop of COVID-19 pandemic.

Staying the High Court order, the bench also asked the Election Commission of India to take an appropriate decision in connection with political rallies as per the law in the backdrop of COVID-19 guidelines.

The bench noted that the High Court would not have interfered if the political parties had done their job better. “Take charge, ensure you discharge your duties in a manner that are in the best interest of everyone,” noted the bench.

The top court’s order came during the hearing on pleas by the Election Commission and Madhya Pradesh Energy Minister Pradyuman Singh Tomar against the High Court order of October 20.

The bench asked Senior Advocate Mukul Rohatgi, appearing for Tomar, to make a representation to the Election Commission for the loss of time in electioneering due to the High Court order.

The poll panel, represented by Senior advocate Rakesh Dwivedi, assailed the High Court order and citing Article 329 of the Constitution said that the conduct and management of elections was overseen by it and there was an express bar on judicial interference in the middle of the electoral process.

Tomar, a BJP candidate for Gwalior Assembly seat bypoll in Madhya Pradesh, pleaded that the High Court committed an error as it overlooked that the Election Commission under Article 324 had issued COVID-19 guidelines in September-end to permit physical public gatherings albeit with restrictions.

The bypolls to 28 Assembly seats in the state are slated for November 3. The plea said that as per the guidelines and the state government SOPs, political gatherings of over 100 people with safety measures could be allowed.

Source: IANS

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