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Demonetisation Fallout: IMF cuts India’s FY17 growth forecast

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United Nations/Washington, January 16: India is no longer the world’s fastest growing economy for 2016 as International Monetary Fund on Monday cut India’s growth estimate for the current fiscal year by one percent to 6.6 percent.

Citing demonetisation as the factor behind the fall, IMF official, Maurice Obstfeld, said he expects a bounce back after the 2017 fiscal year.

The IMF’s World Economic Outlook Update released was on Monday said the cut was “primarily due to the temporary negative consumption shock induced by cash shortages and payment disruptions associated with the recent currency note withdrawal and exchange initiative”.

Earlier, October outlook report projected India’s growth at 7.6 percent for both 2016 and 2017 fiscal years. The update that was released yesterday cut the 2017 projection to 7.2 percent and the 2016 projection to 6.6 per cent. Crushed by cashban, India’s performance is mainly pulled down by the fourth quarter projection for 2016, which is estimated at 6.2 percent.

Crushed by cashban, India’s performance is mainly pulled down by the fourth quarter projection for 2016, which is estimated at 6.2 percent.

The Economic Counsellor and Director of Research Obstfeld said, Indian government needs to ensure that cash supplies are adequate for the transactions the economy needs to carry out so as to get growth back on track.

 

Overall, the world economy was expected to grow by 3.4 percent in 2017 and 3.6 percent in 2018. For 2016, the estimate was 3.1 percent.

It should be noted here that just a few days ago World Bank also cut the projection for the current fiscal year by 0.6 percent to 7 percent, while US firm Fitch Ratings has also reiterated its late November downgrading of India’s growth outlook.

Growth in India is estimated to reach 7 per cent in financial year (FY)2017 … reflecting a modest downgrade to India’s expansion,” the multilateral lender said in its Global Economic Prospects report released in Washington last week.

“Unexpected demonetisation — the phasing out of large denomination currency notes — weighed on growth in the third quarter of FY 2017,” it said.

“Weak industrial production and manufacturing and services purchasing managers’ indexes further suggest a setback to activity in the fourth quarter of FY 2017,” the report added.

Earlier this month, India’s official statistician in New Delhi also lowered the country’s gross domestic product growth estimates for 2016-17 to 7.1 per cent, compared with the 7.6 per cent growth in 2015-16.

While announcing its monetary policy review last month, the Reserve Bank of India, acknowledging the demonetisation factor, lowered its gross value added growth estimates for the current fiscal to 7.1 per cent from 7.6 per cent forecast earlier.

A bright spot in the IMF Update is the US, whose economy was expected to grow by 2.3 percent in 2017, up 0.1 percent from earlier report, and 2.5 percent in 2018, up 0.4 percent.

These projections were based on President-elect Donald Trump’s stimulus plans that call tax cuts and infrastructure spending.

Wefornews Bureau (with IANS inputs)

Analysis

Saab is interested in Indian fighter jet deal: Swedish official

The Saab Gripen will be contesting with the likes of the Russian MiG 35, Dassault Rafale, Eurofighter Typhoon, Boeing F/A 18 and Lockheed Martin F-16 for the upcoming deal.

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Amid the raging controversy over the Defence Ministry’s procurement of the Rafale fighter aircraft from French firm Dassault Aviation, a senior Swedish official has said that his country’s firm Saab, in its Gripen aircraft, has the requisite experience to contest for the upcoming Indian deal for manufacturing 110 new fighter jets under the Make in India programme.

“I know that Saab is interested, they want to be a part of this procurement,” Teppo Tauriainen, Director General for Trade in the Swedish Foreign Ministry, told IANS in an interview here.

“They think they have something good to offer that will be of interest to India,” Tauriainen said.

“They, of course, know what the expectations of the government is in terms of local production and cooperation with a local partner.”

India is expected to select by the end of this year one fighter aircraft that will be manufactured by the private sector under the Make in India programme for supply to the Indian Air Force.

The Saab Gripen will be contesting with the likes of the Russian MiG 35, Dassault Rafale, Eurofighter Typhoon, Boeing F/A 18 and Lockheed Martin F-16 for the upcoming deal.

While MiG has already said that it will have state-owned Hindustan Aeronautic Limited (HAL) as its local partner, Indian companies like Tata, Reliance Defence, Mahindra and Adani are in the fray for local partners in the project that is expected to be worth over $20 billion (Rs 1.44 lakh crore).

Tauriainen said that for Saab, contesting for the deal will be nothing new as it has signed a similar deal for Gripen with the Brazilian government with Embraer as its local partner.

“I have myself visited the Brazilian partner, Embraer, and seen there are a lot of spin-offs locally in the Brazilian economy from this fighter jet deal,” he said.

“So, I think for Saab, as a company, it won’t be unusual to do it the way the Indian government wants it to happen.”

During his visit to Sweden in April this year, Prime Minister Narendra Modi had said that defence and security have emerged as an important pillar of the India-Sweden bilateral partnership.

“Sweden has been a partner of India in the defence sector for a long time. I am confident new opportunities for cooperation in this sector will arise in the future, especially in defence production,” Modi said.

During that visit, an India-Sweden Partnership was also announced with a fund of 50 million Swedish kronor (around $5.6 million) for innovation cooperation in the fields of smart cities and sustainability.

Asked what steps have been taken in this connection, Tauriainen said that the dialogue for these projects has started though none of these projects have started operating.

“But we have come quite far to identify areas where we think there is a potential to do cooperation,” he said.

He said that sustainable technology is a broad area and is very much related to how cities are built in terms of transport, energy, waste and waste water.

“There we have some interesting experiences and I hope that is of relevance to India,” Tauriainen said.

“Some technologies we have already tested in Sweden. Other technologies will have to be adapted to Indian conditions,” he added.

In Sweden, waste is actually used to generate power and only one per cent of the waste goes to the landfill.

Asked about the presence of around 180 Swedish companies in India and their role in the Indian economy, Tauriainen said these are doing good business despite “some limitations”.

“They wouldn’t mind if those limitations are taken away. But they are interested in the Indian market and most of them are interested in expanding,” he said.

(Aroonim Bhuyan can be contacted at [email protected])

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Supreme Court to monitor CBI probe into Muzaffarpur rape case

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Supreme Court of India

New Delhi, Sep 20: The Supreme Court on Thursday decided to monitor the CBI probe in the case of Muzaffarpur shelter home rapes and sought a status report from the central agency in four weeks. The top court asked the media to exercise caution while reporting the case.

A bench of Justice Madan B. Lokur and Justice Deepak Gupta also vacated a Patna High Court order restraining the media from reporting the case. The apex court clarified that “there can’t be a blanket ban but the media needs to be cautious and diligent while reporting”.

Earlier, the Patna High Court was monitoring the case.

The apex court also reiterated that the media can’t telecast or publish images of the victims of sexual offences even in morphed or blurred form.

“The media is requested not to sensationalise such events,” the apex court said.

Clarifying that the victims of sexual abuse can’t be interviewed or their identity revealed in any manner, the court said that even their families should not be identified.

The sexual abuse of at least 34 girl inmates at the shelter home in Muzaffarpur came to light during a social audit by the Tata Institute of Social Sciences, Mumbai.

IANS

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Imran Khan writes to PM Modi, seeks resumption of dialogue

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Imran Khan

Islamabad, Sep 20: Pakistan Prime Minister Imran Khan wrote a  letter to his Indian counterpart Narendra Modi, seeking for the resumption of dialogue between New Delhi and Islamabad.

Last month, Modi had written to Khan congratulating him on taking charge as Pakistan’s 22nd prime minister.

Responding to this, the Pakistani Minister in September 14  dated letter, said “I endorse your sentiment that the only way forward for our two countries lies in ‘constructive engagement.’ It was in this spirit that Pakistan’s Minister of Law and Information attended the funeral of Mr Atal Bihari Vajpayee in New Delhi”.

On India-Pakistan relations, Khan wrote ” Pakistan and India have an undeniably challenging relationship. We, however, owe it to our peoples, especially the future generations, to peacefully resolve all outstanding issues, including the Jammu and Kashmir dispute, to bridge differences and achieve a mutually beneficial outcome. Siachin and Sir Creek also need close attention towards resolution”.

“Pakistan remains ready to discuss terrorism. Discussion on trade, people to people contacts, religious tourism, humanitarian issues are also important”, he added.

The letter also stated “Building on mutual desire for peace between our two countries, I wish to propose a meeting between Foreign Minister, Makhdoom Shah Mahmood Qureshi and External Affairs Minister, Ms. Sushma Swaraj, before the informal meeting of the SAARC Foreign Ministers at the sidelines of the upcoming UN General Assembly in New York. They can explore the way forward, especially the holding of the SAARC Council of Ministers followed by the SAARC Summit in Islamabad. The summit will offer an opportunity for you to visit Pakistan and for us to restart the stalled dialogue process. I look forward to working with you for the benefit of the people of both our countries.”

The outreach by the cricketer-turned-politician has come ahead of the UN General Assembly (UNGA), which is slated to be held in New York for next week.

The dialogue between the two neighbouring countries remains suspended since 2015 due to incidents of cross-border terrorism and  ceasefire violations by the Pakistani troops along the Line of Control and International Border in Jammu and Kashmir.

WeForNews 

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