1 China central bank cuts rates (San Francisco
Chronicle) China's central bank has cut interest rates for the second time in
three months, adding to signs the country's leaders are worried the economic
slowdown is deepening too sharply. The People's Bank of China announced a rate
cut on one-year loans by commercial banks by 0.25 percentage point to 5.35
percent. The interest rate paid on a one-year deposit was lowered by 0.25 point
to 2.50 percent.
Last year, China's economic growth fell to 7.4
percent — the lowest since 1990. It is expected to decline further this year,
and a steep economic decline can raise the risk of politically dangerous job
losses. The latest round of cuts follow a string of tax reductions and other
measures aimed at propping up growth. The government cut business taxes last
week and has announced a pay hike for civil servants.
The lower rates are expected to reduce financial
costs for state companies and are a signal to state-owned banks to boost
lending to them. Economic growth in the world's second-largest economy has
slowed down steadily over the past two years, mostly as a result of government
efforts to steer the economy to more self-sustaining growth based on domestic
consumption and to reduce reliance on trade and investment.
The impact of the slowdown will vary depending on a
country's exposure to China. In the US, most people won't notice the impact at
all. While US exports to China total about $100 billion a year, that's less
than 1 percent of the gross domestic product of the US, which has a $17 trillion
economy.
2 India budget tries to have it both ways (Geeta
Anand in The Wall Street Journal) India Prime Minister Narendra Modi’s budget
balanced the need for fiscal responsibility with the imperative of greater
public-sector investment to lay the groundwork for economic growth. As he
unveiled next year’s budget in Parliament, Finance Minister Arun Jaitley said
the government would hit its deficit target of 4.1% of gross domestic product
for the year ending March 31.
But Mr. Jaitley said that in following years, the
administration would give itself more latitude to spend than it had originally
promised. It would “not be pro-growth to stick to fiscal consolidation,”
following the government’s earlier, aggressive plan, Mr. Jaitley said. So, instead
of aiming for 3.6% in the coming fiscal year, it will shoot for 3.9%. “The
additional fiscal space will go toward funding infrastructure investment,” he
said.
That is a welcome change. In recent years, capital
expenditures have been trimmed to meet fiscal deficit targets – with serious
consequences. India needs better transport, power, sanitation, health and
education to facilitate business expansion. The young country’s demographic
dividend will be a liability, not a boon, if India can’t create enough jobs and
give its youth the training needed to do them.
Mr. Modi should also have given himself additional
room for spending by expanding the country’s tax revenues, something he shied
away from doing – at least in a big way. India is massively undertaxed, with
total tax revenue as a percentage of GDP at 10%, a far lower ratio than among
its peers. Instead, Mr. Jaitley announced a reduction in the corporate tax rate
to 25% from 30% over the next four years.
On the positive side, the Modi government avoided
the politically expedient move of exempting more people from paying the income
tax. That is welcome, considering only about 3 percent of Indians get an income
tax bill, far less than in most countries, including China, where the income
tax is levied on 20 percent of the population.
3 Life is a big deal (Asha Iyer Kumar in Khaleej
Times) I am becoming increasingly aware of the ‘mutual back-scratching’
phenomenon that dictates relationships. We may hurry to deny it, but how many
times have we taken a person’s card and coordinates because it might be of use
sometime! How many times have we extended help in the expectation that it will
be returned when we have a need! And how many times we have dropped people out
of our lives because we have no more use for them! Bare it, folks, we do it
quite regularly.
The imperatives of our connections are based on a
simple question — what’s in it for me? At least three people have told me in
the days following the recent publication of my book that they will buy mine if
I bought theirs. Fair enough, because, as writers we are all struggling, and if
we can get buyers for our books even if by conning and cajoling, why not? We
are after all in the business of life, aren’t we? So let us put our ethics
aside and talk commerce.
Why, after all, should we do favours? What’s the
value addition to my life and my economy if I use my influence to your benefit?
Favours need to be reciprocated, buddy, so tell me what my incentive is. Be my
friend, by all means, but not with the sole intention to further your cause.
Let us exchange good turns in the course of our friendship, and let not motives
govern our ties.
We are all victims of this indiscretion in equal
measure, and culprits in varying degrees. It is preposterous that we inflict
the same wounds that we ourselves nurse. We are caught in our own web of
delinquencies. It will take immense effort for us to break the shackles of
self-love that reduces our personal alliances to mere marriages of
conveniences. Relations without reasons — how quixotic that sounds to my own
ears in this age of love bartered for business!
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