Friday, November 28, 2014

Modi Your Icecream is Melting

Modi Your Icecream is Melting Q2 GDP growth slips on ...
4 days ago - Modi Your Icecream is Melting Q2 GDP growth slips on weak manufacturing, investments ENS Economic Bureau | New Delhi | Posted: November 29, 2014 1:49 ...
Q2 GDP growth slips on weak manufacturing, investments

ENS Economic Bureau | New Delhi | Posted: November 29, 2014 1:49 am

Economic growth slowed in the second quarter of the fiscal, dragged down by negligible expansion in manufacturing and no investment activity, raising the clamour for a rate cut by the Reserve Bank in its policy review next week.

Data released by the Central Statistics Office on Friday revealed that gross domestic product (GDP) grew 5.3 per cent in the quarter ended September 30, 2014, as against 5.7 per cent growth clocked in the first quarter of the fiscal. This is almost in line with the 5.2 per cent growth recorded in the second quarter last fiscal.

In a worrying development for the government, which has announced a slew of policies to attract investments including the ‘Make in India’ campaign, gross fixed capital formation (GFCE) — a barometer of investment activity —  did not register any growth in the second quarter of the fiscal. GFCE, which grew 7.2 per cent in the first quarter expanded by only 0.01 per cent in the second quarter.

The data is the last set of inputs for the RBI ahead of its monetary policy review on December 2. Finance minister Arun Jaitley had earlier said that reduction in the cost of capital by the RBI could give a “fillip to the economy”.

In a statement, the finance ministry said, “The Economic Survey 2013-14 had predicted that the growth of GDP to be in the range of 5.4 to 5.9 per cent. In the first half of the year the growth has been 5.5 per cent, which is broadly in line with the projections….”

Commenting on the data, former finance minister P Chidambaram said, “When the government rushed to take credit for the first quarter growth rate of 5.7 per cent, I had cautioned them. All the signs of a sluggish economy were there….” He suggested that the government should identify a few proposed big-ticket investments, foreign or Indian, and resolve all issues and also use the Centre’s “persuasive powers to convince the RBI Governor that a rate cut is an imperative.”

While the farm sector grew 3.2 per cent in Q2 as against 3.8 per cent in the Q1, manufacturing grew a mere 0.1 per cent as against 3.5 per cent in the first quarter. “It was expected that investment activity would take time to pick up but the flat growth is a matter of concern,” said DK Pant, chief economist, India Ratings, warning that a cut in rates by the RBI is unlikely next week.

Industry chambers once again called for a rate cut. CII said, “The RBI should review its status quoist approach….”

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    The Brookings Institution
    SiDevilIam • 8 minutes ago Hold on, this is waiting to be approved by The Brookings Institution.
    Emerging World Order?
    From Multipolarity to
    Multilateralism in the
    G20, the World Bank,
    and the IMF*
    Robert H. Wade1
    Many developing and transitional countries have grown faster than advanced countries in the past decade, resulting in a shift in the distribution of world income in their favor.China is now the second largest economy in the world, behind the United States and ahead of Japan. As the relative economic weight of China and several others has come to match or exceed that of the middle-ranking G7 economies, the world economy has shifted from “unipolar” toward “multipolar,” less dominated by the G7. How is this change being translated into changes in authority and influence within multilateral organizations like the G20, the World Bank, and the International Monetary Fund (IMF)? Alarm bells are ringing in G7 capitals about G7 loss of influence. According to a WikiLeaks cable from the senior U.S. official for the G20 process, from January 2010, “It is remarkable how closely coordinated the BASIC group of countries [Brazil,
    South Africa, India, China] have become in international fora, taking turns to impede US/EU initiatives and playing the US and EU off against each other.”
    This essay suggests that the shift in power is much smaller than the headlines
    or private alarm bells suggest. The United States remains the dominant state, and the G7 states together continue to exercise primacy, but now more fearfully and defensively. China is split between asserting itself as “the wave of the future” and defending itself as too poor to take on global responsibilities (it is roughly 100th in the per capita income hierarchy). The combination of G7 defensiveness and emerging states’ jealous guarding of sovereignty produces a spirit of Westphalian assertion in international fora, or “every state for itself.” On the assumption that the world economy is in a transitional period, the article suggests reforms in the G20 and the World Bank that would boost their role and legitimacy as multilateral organizations in a more multipolar world.
    SiDevilIam • 11 minutes ago Hold on, this is waiting to be approved by The Brookings Institution.
    Politics & Society
    Emerging World Order? From Multipolarity to Multilateralism in the G20,
    the World Bank, and the IMF
    Robert H. Wade
    1775 Massachusetts Ave, NW, Washington, DC 20036
    © 2014 The Brookings Institution
    ...and I am Sid Harth


    SiDevilIam • 5 minutes ago
    Until the lions have their own historians, the history of hunting will glorify the
    hunters. Swahili proverb
    Growth has gone south; debt has gone north.
    Quip about the long Atlantic slump In April 2010, Robert Zoellick, president of the World Bank, gave a speech hailed by some as the most important speech of a World Bank president since Robert McNamara’s in 1973, when McNamara set poverty reduction as the Bank’s new mission. Zoellick’s main point was the end of the Third World—the end of the distinction between developed and developing countries. If 1989 saw the end of the “Second World” with Communism’s demise, then 2009 saw the end of what was known as the “Third World.” We are now in a new, fast-evolving multipolar world economy—in which some developing countries are emerging as economic powers; others are moving towards becoming additional poles of growth; and some are struggling to attain their potential within this new system.1
    Zoellick was in effect saying that the distribution of material power in the interstate system has become more fluid in the past decade than at any time since the beginning of the Cold War, and that we are finally at the end of the Truman era, which began in the early postwar years when President Truman called on the West to take up the challenge of using “our” knowledge and resources to deliver development to the rest of the noncommunist world. From a largely unipolar (noncommunist) world, with the United States as hegemon, we have moved to “a new, fast-evolving multipolar world economy”
    as economic weight and political power has flowed east and south. Zoellick went
    on to indicate how this multipolar world economy requires changes in the governance


    SiDevilIam • a minute ago
    and operations of the World Bank to make it more multilateral, and less dominated by the Western states. Zoellick implied a hopeful answer to a basic question: Will the international system be able to induce rule-bound cooperation between states, given the falling concentration of economic activity and political power in the West and the growing number and importance of “global problems” (including global warming, regulation of cross-border trade and finance, migration, criminal networks, nuclear proliferation, cyberwar, and many more)? Will the aging post–World War II legacy organizations, like the World Bank and the International Monetary Fund (IMF), be able to reform themselves so as to reflect the new multipolarity, while also strengthening their ability to provide public goods to their borrowers and the world economy at large? Will Southern states—on the other side of the Truman divide—become sources of initiative in interstate organizations, not just participants and takers? While Zoellick implied a yes, it is equally plausible that the growing number and diversity of states with enough weight in the world economy to exercise voice about international governance has a centrifugal effect, intensifying assertions of Westphalian sovereignty, and that Southern states show no more inclination to take on leadership roles than in the past, even as they claim a larger presence. In other words, economic weight and influence in governance are different things. The “rise of (some of) the rest,” combined with surging global problems, may not induce the established states to compromise with the newcomers and may not induce the newcomers to compromise with the established states or among themselves. All the more so for those countries in economic slump, with populations facing interrupted rising expectations, whose governments like to respond to accumulating social anger by blaming outsiders. And all the more so for fast-growing China, with hundreds of millions of people experiencing relative deprivation as millions of fellow citizens become superrich, while an authoritarian government tries to suppress news of domestic abuses of power and bristles at criticism from other states, interpreting it as infringement of sovereignty.2 The outcome may be “multipolarity without multilateralism,” as newly empowered states go their own way. Respect for the dissenting views of the now more numerous players may shrink the scope of cooperative solutions to global issues and tend toward stalemate. The G20 and the Bretton Woods organizations have their very identities rooted in inclusion of both Northern and Southern states. Governance reforms in all three since 2008 have been heralded as major advances in multilateralism. When the G20 was upgraded from finance ministers level to heads-of-government level in November 2008 (in the wake of the fall of Lehman Brothers and the onset of the global financial crisis), President Nicolas Sarkozy of France enthused, “The G20 foreshadows the planetary governance of the twenty-first century.” Stewart Patrick of the U.S. Council on Foreign Relations describes the G20 as “the most significant advance in multilateral policy coordination since the end of the Cold War.”3 Similar enthusiasm greeted the governance reforms at the World Bank and IMF announced in 2010. How should we
...and I am Sid Harth

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