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New Delhi, June 1 : Global credit ratings agency Moody”s Investors Services on Monday downgraded India”s sovereign ratings as it sees challenges piled up on the country”s policymaking institutions to mitigate the risks of a sustained period of relatively low growth.

Besides, Moody”s said the Covid-19 pandemic amplifies vulnerabilities in India”s credit profile such as slower growth relative to the country”s potential, rising debt and further weakening of debt affordability and persistent stress in parts of the financial system.

Consequently, Moody”s downgraded India”s foreign-currency and local-currency long-term issuer ratings to Baa3 from Baa2.

It also downgraded India”s local-currency senior unsecured rating to Baa3 from Baa2, and its short-term local-currency rating to P-3 from P-2.

Furthermore, it kept the outlook as negative. Currently, the sovereign rating assigned to India is Baa2 with a negative outlook.

The ratings agency also lowered India”s long-term foreign-currency bond and bank deposit ceilings to “Baa2 and Baa3, from Baa1 and Baa2”, respectively.

“The short-term foreign-currency bond ceiling remains unchanged at Prime-2, and the short-term foreign-currency bank deposit ceiling was lowered to Prime-3 from Prime-2. The long- term local currency bond and bank deposit ceilings were lowered to A2 from A1,” Moody”s said.

The ratings downgrade assumes significance since it will hamper the government”s borrowing foreign programme and make the country less attractive for investment purposes.

According to Moody”s, India faces a prolonged period of slower growth relative to the country”s potential, rising debt, further weakening of debt affordability and persistent stress in parts of the financial system, all of which the country”s policymaking institutions will be challenged to mitigate and contain.

“The decision to downgrade India”s ratings reflects Moody”s view that the country”s policymaking institutions will be challenged in enacting and implementing policies which effectively mitigate the risks of a sustained period of relatively low growth, significant further deterioration in the general government fiscal position and stress in the financial sector,” Moody”s said.

“The negative outlook reflects dominant, mutually-reinforcing, downside risks from deeper stresses in the economy and financial system that could lead to a more severe and prolonged erosion in fiscal strength than Moody”s currently projects,” it added.

Moody”s had upgraded India”s ratings to Baa2 in November 2017 which was based on the expectation that effective implementation of key reforms would strengthen the sovereign”s credit profile through a gradual but persistent improvement in economic, institutional and fiscal strength.

“Since then, implementation of these reforms has been relatively weak and has not resulted in material credit improvements, indicating limited policy effectiveness,” the investors services said.

“While today”s action is taken in the context of the coronavirus pandemic, it was not driven by the impact of the pandemic. Rather, the pandemic amplifies vulnerabilities in India”s credit profile that were present and building prior to the shock, and which motivated the assignment of a negative outlook last year.”

As per Moody”s assetment, a slow reform momentum and constrained policy effectiveness have also contributed to a prolonged period of slow growth, compared to India”s potential, that started before the pandemic and that Moody”s expects will continue well beyond it.

“Real GDP growth has declined from a high of 8.3 per cent in fiscal 2016 (ending March 2017) to 4.2 percent in fiscal 2019,” the investors services said.

“Moody”s expects India”s real GDP to contract by 4 per cent in fiscal 2020 due to the shock from the coronavirus pandemic and related lockdown measures, followed by 8.7 per cent growth in fiscal 2021 and closer to 6 per cent thereafter.”

–IANS

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Sagging electoral prospects behind Trump’s H-1B action

The real impact of the presidential proclamation, therefore, will be two-fold. First, as long as Trump is President, it will undoubtedly cause many international students, who are looking at the US as a potential destination for higher studies to reconsider their decisions.

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On June 22, US President Donald Trump issued an executive order suspending the entry of a number of non-immigrant work visa holders into the US till the end of the year. The visa categories affected include, most notably, H-1B, which has been used by more than a million Indian information technology professionals since the 1990s and L1 visa used by US companies to bring in workers from their Indian offices.

During his campaign for President four years ago, candidate Trump consistently railed against the H-1B programme. However, after he moved into the White House, Trump left the visa programme untouched in the first 43 months of his presidency, even as he delivered on most of his controversial campaign promises, such as the Muslim ban and dumping of multilateral treaties like NAFTA and Paris Agreement, through executive actions.

There were two compelling reasons Trump didn”t act on the visa programme until now. The US economy had been doing very well until Coronavirus hit the American shores early this year. And, the tech industry, which employs three-fourths of the H-1B visa holders, has been doing even better.

The second reason is the formidable lobbying power of the industry. The four most valuable companies in the world, Amazon, Google, Apple and Microsoft, and Facebook have historically used the H-1B workforce to augment their profits. They were not going to let it go without a fight.

The influence these organizations wield was evident when Trump spared H-1B in his first executive order to curb nonimmigrant work visa holders issued on April 22. According to reports, H-1B was to be part of that proclamation but the White House was talked out of it by the industry.

So, what has changed between late April and today?

A number of things, but primarily it is Trump”s dimming re-election prospects. A steady stream of polls in the past few weeks has shown that the incumbent is trailing badly in the race against presumptive Democratic nominee Joe Biden. The President”s handling of the Covid-19 pandemic — his initial refusal to see it as a threat and then his inability to provide the leadership to contain it — has shaken people”s confidence in Trump”s presidency.

Prior to the onset of the Coronavirus, Trump was banking on making the election a referendum on his stewardship of the economy. But the pandemic, which has claimed more than 125,000 American lives, has also eliminated up to 40 million jobs.

Although some of the jobs have come back thanks to the multitrillion dollar stimulus package, the re-opening plans promoted by Trump have not produced substantial results. Now, with parts of the country closing down again, and the deadly virus spreading in southern and western states, there”s no sign of the economy turning the corner before the November election.

Consequently, Trump needs to be seen as doing something to save the economy and American jobs. H-1B, which has been a bogeyman for the protectionists and economic nationalists, is an easy target during this downturn, even though study after study has documented that the visa programme actually helps create jobs. The administration claims that the executive order is going to save more than half a million American jobs without giving details.

It should be noted that the order mainly impacts petitioners who are outside of the US who have not gotten their visas stamped on their passports yet. As a result, it will only have little impact in the short term on those seeking work in the US.

The US Citizenship and Immigration Service issues roughly 85,000 new H-1B visas annually of which 20,000 are for those with US master”s degrees. Most petitioners in this category are already in the US and they will not have any problem in starting their jobs in October, typically the time new visa holders enter the work force.

According to immigration attorneys, a significant percentage of the remaining 65,000 visas are claimed by dependents of H-1B and L-1 visa holders, as well as foreign students who have graduated from US schools, but did not get the visa under the master”s degree quota. These groups will also not come under the purview of the executive order, as they are already in the country.

The real impact of the presidential proclamation, therefore, will be two-fold. First, as long as Trump is President, it will undoubtedly cause many international students, who are looking at the US as a potential destination for higher studies to reconsider their decisions. During the Trump era, the US has already been losing potential students to nations such as Canada, Britain and Australia.

Second, despite the massive job losses in the broader economy, there are still vacancies in the tech industry that will have to be filled to move its economy forward. The US tech sector has said for years that the country doesn”t produce enough skilled workers and the industry will suffer without the intake of manpower through H-1B and L1 visa programmes. If it becomes more difficult for these companies to hire foreign workers, they would probably outsource more and more of these jobs to foreign destinations, including India.

It is an irony that, while Trump is trying to bring manufacturing jobs back to the US, his nonimmigrant worker visa policy could force more high-paying service jobs offshore. What makes it doubly ironic is that this action which Trump has taken to try to save his job as President will not do so.

Given the current state of affairs, it is likely that on election day November 4, the American people will fire Donald Trump. After that, the decision on what to do with information technology visas in 2021 and going forward will be in someone else”s hands. And, Trump will have to find a new place of employment for himself.

The good news is Biden has already stated that his administration will lift the H-1B ban.

(Frank F. Islam is an entrepreneur, civic and thought leader based in Washington DC. The views expressed are personal)

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Corona impact: CAIT demands de-sealing of Delhi shops

According to CAIT National Secretary General Praveen Khandelwal, estimates show that about 6,000 shops have been sealed in Delhi.

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New Delhi, July 4 : The Confederation of All India Traders (CAIT) on Saturday demanded that shops in Delhi be de-sealed immediately without further delay.

Accordingly, in a letter to the Union Urban Development Minister Hardeep Singh Puri, CAIT demanded that “Delhi sealed shops should now be de -sealed immediately without further delay”.

Besides, the traders’ body also called for the finalisation of Delhi Rent Act, “ending a long running dispute between the land lords and tenants in Delhi”.

Furthermore, CAIT demanded that traders should be allowed to participate in the consultation process of Master Plan 2041 which is being prepared for Delhi.

According to CAIT National Secretary General Praveen Khandelwal, estimates show that about 6,000 shops have been sealed in Delhi.

“Corona started since the beginning of the year 2020 and the traders of Delhi are faced with a big crisis of livelihood and in such a situation, it has become imperative that shops are immediately de-sealed,” he was quoted as saying in a statement.

“Keeping this in view, the Central government should take an initiative in this matter and pass an ordinance in which all sealed shops should be opened and all other problems related to sealing should be postponed for the time being thereby giving all traders a fair chance to do business.”

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Congress to PM Modi: Roll back imposition of tax on disability pension of defence forces

He cited that 20 Indian soldiers including commanding officer also had attained martyrdom on the fateful night of June 15. He insisted that some of them, god forbids, may also be disabled.

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New Delhi, July 5 : Leader of Congress party in the Lok Sabha, Adhir Ranjan Chowdhury, has written to Prime Minister Narendra Modi seeking a review and roll back the decision of the imposition of tax on disability pension of defence forces including Army, Navy, and Air Forces.

“I must appreciate your visit to the army hospital (crisis expansion capacity of 100 beds) at Leh where scores of Indian soldiers have been admitted who have sustained grievous injuries during their valiant fight against Chinese intruders at Galwan Valley,” said Chowdhury in a letter to the PM.

He cited that 20 Indian soldiers including commanding officer also had attained martyrdom on the fateful night of June 15. He insisted that some of them, god forbids, may also be disabled.

“In future how would those disabled army personals earn and run the livelihoods? Disability pension comes as succour to those brave soldiers,” he added in the letter.

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