Chindia Alert: You’ll be Living in their World Very Soon
aims to alert you to the threats and opportunities that China and India present. China and India require serious attention; case of ‘hidden dragon and crouching tiger’.
Without this attention, governments, businesses and, indeed, individuals may find themselves at a great disadvantage sooner rather than later.
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Image copyright PRESS INFORMATION BUREAUImage caption The area has become a hotspot in part because of a road India has built
The armies of the world’s two most populous nations are locked in a tense face-off high in the Himalayas, which has the potential to escalate as they seek to further their strategic goals.
Officials quoted by the Indian media say thousands of Chinese troops have forced their way into the Galwan valley in Ladakh, in the disputed Kashmir region.
Indian leaders and military strategists have clearly been left stunned.
The reports say that in early May, Chinese forces put up tents, dug trenches and moved heavy equipment several kilometres inside what had been regarded by India as its territory. The move came after India built a road several hundred kilometres long connecting to a high-altitude forward air base which it reactivated in 2008.
The message from China appears clear to observers in Delhi – this is not a routine incursion.
“The situation is serious. The Chinese have come into territory which they themselves accepted as part of India. It has completely changed the status quo,” says Ajai Shukla, an Indian military expert who served as a colonel in the army.
China takes a different view, saying it’s India which has changed facts on the ground.
Reports in the Indian media said soldiers from the two sides clashed on at least two occasions in Ladakh. Stand-offs are reported in at least three locations: the Galwan valley; Hot Springs; and Pangong lake to the south.
India and China share a border more than 3,440km (2,100 miles) long and have overlapping territorial claims. Their border patrols often bump into each other, resulting in occasional scuffles but both sides insist no bullet has been fired in four decades.
Their armies – two of the world’s largest – come face to face at many points. The poorly demarcated Line of Actual Control (LAC) separates the two sides. Rivers, lakes and snowcaps mean the line separating soldiers can shift and they often come close to confrontation.
The current military tension is not limited to Ladakh. Soldiers from the two sides are also eyeball-to-eyeball in Naku La, on the border between China and the north-eastern Indian state of Sikkim. Earlier this month they reportedly came to blows.
And there’s a row over a new map put out by Nepal, too, which accuses India of encroaching on its territory by building a road connecting with China.
Why are tensions rising now?
There are several reasons – but competing strategic goals lie at the root, and both sides blame each other.
“The traditionally peaceful Galwan River has now become a hotspot because it is where the LAC is closest to the new road India has built along the Shyok River to Daulet Beg Oldi (DBO) – the most remote and vulnerable area along the LAC in Ladakh,” Mr Shukla says.
India’s decision to ramp up infrastructure seems to have infuriated Beijing.
Image copyright AFPImage caption There have been protests in Nepal against Indi’s new road link
“According to the Chinese military, India is the one which has forced its way into the Galwan valley. So, India is changing the status quo along the LAC – that has angered the Chinese,” says Dr Long Xingchun, president of the Chengdu Institute of World Affairs (CIWA), a think tank.
Michael Kugelman, deputy director of the Asia programme at the Wilson Center, another think tank, says this face-off is not routine. He adds China’s “massive deployment of soldiers is a show of strength”.
The road could boost Delhi’s capability to move men and material rapidly in case of a conflict.
Differences have been growing in the past year over other areas of policy too.
The new federally-administered Ladakh included Aksai Chin, an area India claims but China controls.
Senior leaders of India’s Hindu-nationalist BJP government have also been talking about recapturing Pakistan-administered Kashmir. A strategic road, the Karakoram highway, passes through this area that connects China with its long-term ally Pakistan. Beijing has invested about $60bn (£48bn) in Pakistan’s infrastructure – the so-called China Pakistan Economic corridor (CPEC) – as part of its Belt and Road Initiative and the highway is key to transporting goods to and from the southern Pakistani port of Gwadar. The port gives China a foothold in the Arabian Sea.
In addition, China was unhappy when India initially banned all exports of medical and protective equipment to shore up its stocks soon after the coronavirus pandemic started earlier this year.
How dangerous could this get?
“We routinely see both armies crossing the LAC – it’s fairly common and such incidents are resolved at the local military level. But this time, the build-up is the largest we have ever seen,” says former Indian diplomat P Stobdan, an expert in Ladakh and India-China affairs.
“The stand-off is happening at some strategic areas that are important for India. If Pangong lake is taken, Ladakh can’t be defended. If the Chinese military is allowed to settle in the strategic valley of Shyok, then the Nubra valley and even Siachen can be reached.”
In what seems to be an intelligence failure, India seems to have been caught off guard again. According to Indian media accounts, the country’s soldiers were outnumbered and surrounded when China swiftly diverted men and machines from a military exercise to the border region.
This triggered alarm in Delhi – and India has limited room for manoeuvre. It can either seek to persuade Beijing to withdraw its troops through dialogue or try to remove them by force. Neither is an easy option.
“China is the world’s second-largest military power. Technologically it’s superior to India. Infrastructure on the other side is very advanced. Financially, China can divert its resources to achieve its military goals, whereas the Indian economy has been struggling in recent years, and the coronavirus crisis has worsened the situation,” says Ajai Shukla.
What next?
History holds difficult lessons for India. It suffered a humiliating defeat during the 1962 border conflict with China. India says China occupies 38,000km of its territory. Several rounds of talks in the last three decades have failed to resolve the boundary issues.
China already controls the Aksai Chin area further east of Ladakh and this region, claimed by India, is strategically important for Beijing as it connect its Xinjiang province with western Tibet.
Image copyright GETTY IMAGESImage caption India and China have a long history of border disputes
In 2017 India and China were engaged in a similar stand-off lasting more than two months in Doklam plateau, a tri-junction between India, China and Bhutan.
This time, too, talks are seen as the only way forward – both countries have so much to lose in a military conflict.
“China has no intention to escalate tensions and I think India also doesn’t want a conflict. But the situation depends on both sides. The Indian government should not be guided by the nationalistic media comments,” says Dr Long Xingchun of the CIWA in Chengdu. “Both countries have the ability to solve the dispute through high-level talks.”
Chinese media have given hardly any coverage to the border issue, which is being interpreted as a possible signal that a route to talks will be sought.
Pratyush Rao, associate director for South Asia at Control Risks consultancy, says both sides have “a clear interest in prioritising their economic recovery” and avoiding military escalation.
“It is important to recognise that both sides have a creditable record of maintaining relative peace and stability along their disputed border.”
Beijing’s Chaoyang district remains the last high-risk area in China, with virus preventive measures continuing to impact on travel and shopping plans
China faces the dilemma of preventing a re-emerge of the pandemic, while also pushing to get its economy back to normal
China’s continued pandemic prevention measures, coupled with still hesitant consumer demand, will inevitably lead to persistent limitations on the nation’s economic recovery, analysts said. Photo: Bloomberg
After nearly three months of being quarantined by herself in Beijing, Mary Zhao was looking forward to the upcoming long weekend at the start of May to be able to finally reunite with her parents.
But Zhao was forced to abandon her plan for the Labour Day holidays as Beijing’s upmarket Chaoyang district, where she lives, remains the only high-risk zone for coronavirus in the entire country.
If she travelled the five hours by car, or two hours via bullet train, to the neighbouring Hebei province, she would first have to undergo a 14-day quarantine before seeing her parents. Her parents would also have the same two week quarantine to look forward to once they returned home if they came to visit their daughter in Beijing.
These strict controls to prevent a re-emergence of the coronavirus outbreak are making a return to normal life impossible for many, and mean the final economic and social cost
from China’s draconian preventive measures could be much larger than expected.
Wuhan declares ‘victory’ as central Chinese city’s last Covid-19 patients leave hospital
It underscores the dilemma facing China’s leaders on how to balance the need to
and to avoid a fresh outbreak. On the surface, China may be able to declare victory as even Wuhan, the city where the virus was first detected, announced that the last Covid-19 patient had left hospital on Sunday. But fears of a renewed outbreak have kept the country’s cinemas and most schools closed, with travel between provinces discouraged.
China’s national borders also remain largely closed, with flights being cut to a minimum, and a mandatory 14-day quarantine for every arrival. In the number of places where new cases have been reported, quarantine requirements have been tightened, including Harbin and a few other cities near the border with Russia.
Chaoyang, the home to one of Beijing’s main business districts and most foreign embassies, changed its risk rating to high from low in the middle of April after three new cases were reported, dealing a fresh blow to the district’s
and forcing many of the 3.5 million residents to cancel their travel plans.
On the outskirts of Beijing, near Beijing Capital International Airport, returning migrant workers to Picun village were ordered to stop at entrance and could only be escorted inside by their landlord, with many villages and residential compounds remaining closed to outsiders.
In the high-end shopping district of Guomao, some shops also remain closed as there are few potential customers, while over in the popular Sanlitun area, metal barriers restrict access and temperature checkpoints are still required.
The landmark Apple Store in the popular Taikoo shopping centre is open, but with limited customers allowed inside, there are long queues outside. Customers are required to scan a QR code to check their movements over the last few days before entering.
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“Why do I have to spend 20 minutes just to get into the Apple Store? The sun has almost melted me down,” one visitor complained to the security guards at the front of the shop.
China’s continued pandemic prevention measures, coupled with still hesitant consumer demand, will inevitably lead to persistent limitations on the nation’s economic recovery, analysts said.
Ernai Cui, an economist at research firm Gavekal Dragonomics, said on Monday that China’s cautious approach to lifting restrictions “points to a weak second quarter for consumer services”, adding additional pressure to the economic recovery.Mao Zhenhua, a researcher at the China Institute of Economics at Renmin University, said China’s preventive measures will inevitably be a drag on production, employment and exports.
Image copyright GETTY IMAGESImage caption Delhi’sair quality has improved remarkably during the shutdown
When India shut down last month and suspended all transport to contain the spread of coronavirus, the skies over its polluted cities quickly turned an azure blue, and the air, unusually fresh.
As air pollution plummeted to levels unseen in living memory, people shared pictures of spotless skies and even Himalayan peaks from cities where the view had been obscured by fog for decades.
On one social messaging group, a resident of the capital, Delhi, which regularly records some of the foulest air in the world, celebrated the city’s “alpine weather“. Politician and author Shashi Tharoor wrote that the “blissful sight of blue skies and the joy of breathing clean air provides just the contrast to illustrate what we are doing to ourselves the rest of the time”.
Media caption India coronavirus lockdown cleans up Ganges river
Less than six months ago, Delhi was gasping for breath. Authorities said air quality had reached “unbearable levels”. Schools were shut, flights were diverted, and people were asked to wear masks, avoid polluted areas and keep doors and windows closed.
Delhi and 13 other Indian cities feature on a list of the world’s 20 most polluted. It is estimated that more than a million Indians die every year because of air pollution-related diseases. Industrial smoke, vehicular emissions, burning of trash and crop residue, and construction and road dust are the major contributors.
As urban Indians gazed at the skies and breathed clean air inside their homes, researchers hunkered down to track data on how the grinding lockdown – now extended to 3 May – was impacting air pollution across the country.
Image copyright GETTY IMAGESImage caption Lucknow is another city on the top 20 world’s most polluted list
“This was an unprecedented opportunity for us to take a close look at how air pollution levels have responded to an extraordinary development,” Sarath Guttikunda, who heads Urban Emissions, an independent research group that provides air quality forecasts, told me.
Dr Guttikunda and his team of researchers looked at the data spewed out by the 100-odd air quality monitoring stations all over India. They decided to concentrate on the capital Delhi and its suburbs – a massive sprawl called the National Capital region, where more than 20 million people live. Last winter, air pollution here had reached more than 20 times the World Health Organization’s safe limit.
Image copyright HINDUSTAN TIMESImage caption The financial capital Mumbai also seems very different
The deadliest particle in Delhi’s foul air is the tiny but deadly PM 2.5, which increases the likelihood of respiratory and cardiovascular diseases. They primarily come from combustion – fires, automobiles and power plants.
Urban Emissions found the levels of PM 2.5 in Delhi during the lockdown plummeted to 20 micrograms per cubic metre with a 20-day average of 35.
To put this into context, between 2017 and 2019, the monthly average of PM 2.5 in the capital was up to four times higher. (The national standard is set at 40, and the WHO has an annual average guideline of just 10 micrograms per cubic metre.)
“If 35 is the average lowest available PM2.5 with limited local emissions, it means that at least 70% of the pollution is locally generated,” Mr Guttikunda told me.
Media caption India coronavirus lockdown cleans up Ganges river
His study also found a marked dip in PM 10, caused mainly by road and construction dust, and nitrogen dioxide, which comes mainly from vehicular emissions, and nearly 90% of vehicles are off the road.
“The current crisis has shown us that clear skies and breathable air can be achieved very fast if concrete action is taken to reduce burning of fossil fuels,” says Sunil Dahiya, of the Centre for Research on Energy and Clean Air, which has also been tracking air pollution levels during the lockdown.
But will this prompt change? After all, urban Indians’ and the media’s panic and outrage during the deadly winter pollution every year soon gets lost in the fog of summer heat and concerns over monsoon rains and droughts.
“We don’t yet have a democratic demand for clean air,” Arunabha Ghosh, Chief Executive Officer of the Council on Energy, Environment and Water, a leading climate think tank, told me. Orders to clean up the air have almost always come from the courts, responding to pleas by NGOs.
Image copyright GETTY IMAGESImage caption Pollution in Delhi peaks during winter
However, Dr Ghosh still hopes that “the experience of blue skies and fresh air could be a trigger to create a democratic demand for clean air in India”.
Crises often trigger life changing reforms. A fatal four-day “pea-souper” that engulfed London in 1952 and killed thousands provoked the passing of the Clean Air Act to reduce the use of smoky fuels.
China tried to clean up its air several times before hosting marquee international events – like the Beijing Olympics in 2008, the World Expo in Shanghai and the Guangzhou Asian Games in 2010 – before sliding back to grey, smoky skies.
But many believe the 2014 Apec meeting in Beijing, when China hosted 21 heads of Asia-Pacific economies, was a turning point. The rare blue skies over Beijing spawned the phrase ‘Apec blue‘. In a rush to clean its air, China introduced a set of far-reaching measures. Over the next four years, this resulted in a 32% drop in average pollution across major Chinese cities.
So could a lockdown to prevent the spread of a pandemic, which has imperilled the health and livelihoods of millions, trigger similar policy changes to clean up India’s air?
Image copyright GETTY IMAGESImage caption The movement for clean air has been sporadic and mainly pushed by NGOs
Could it move to a shift in reducing traffic on the road by asking people to work from home in shifts now that millions have experienced clean air for the first time in years? (Facing energy shortages after the loss of the Fukushima nuclear power plant, Japan unleashed a Cool Biz campaign to cut down air conditioning in workplaces and reduce carbon emissions by asking office workers to shed their suits.)
Or can India use some of the money from an inevitable stimulus to help kick-start the economy go towards helping green industries? Renewables, experts say, creates more jobs than coal: India has already created nearly 100,000 jobs in solar and wind energy firms.
Can the country use the windfall revenues accruing from the steep decline in oil prices – most of India’s oil is imported – to provide rebates to polluting factories to set up much-needed emission control equipment?
“We have to learn lessons to deploy the economic recovery from the pandemic. We need growth, jobs and sustainable development,” says Dr Ghosh. Cleaning up the air could be the key. For too long, India – and Indians – have ignored their right to breathe easy.
What’s more, if China can reduce air pollution by 32% in four-and-a-half years, why can’t India pledge to reduce pollution by 80% in 80 cities by 2027, which is our 80th anniversary of Independence? asks Dr Ghosh.
Faced with a backlash from the West over its handling of the early stages of the pandemic, Beijing has been quietly gaining ground in Asia
Teams of experts and donations of medical supplies have been largely welcomed by China’s neighbours
Despite facing some criticism from the West, China’s Asian neighbours have welcomed its medical expertise and vital supplies. Photo: Xinhua
While China’s campaign to mend its international image in the wake of its handling of the coronavirus health crisis has been met with scepticism and even a backlash from the US and its Western allies, Beijing has been quietly gaining ground in Asia.
Teams of experts have been sent to Cambodia, the Philippines, Myanmar, Pakistan and soon to Malaysia, to share their knowledge from the pandemic’s ground zero in central China.
China has also held a series of online “special meetings” with its Asian neighbours, most recently on Tuesday when Premier Li Keqiang discussed his country’s experiences in combating the disease and rebooting a stalled economy with the leaders of the Association of Southeast Asian Nations (Asean), Japan and South Korea.
Chinese Prime Minister Li Keqiang speaks to Asean Plus Three leaders during a virtual summit on Tuesday. Photo: AP
Many Western politicians have publicly questioned Beijing’s role and its subsequent handling of the crisis but Asian leaders – including Philippine President Rodrigo Duterte and Japanese Prime Minister Shinzo Abe – have been reluctant to blame the Chinese government, while also facing criticism at home for not closing their borders with China soon enough to prevent the spread of the virus.
An official from one Asian country said attention had shifted from the early stages of the outbreak – when disgruntled voices among the public were at their loudest – as people watched the virus continue its deadly spread through their homes and across the world.
“Now everybody just wants to get past the quarantine,” he said. “China has been very helpful to us. It’s also closer to us so it’s easier to get shipments from them. The [medical] supplies keep coming, which is what we need right now.”
The official said also that while the teams of experts sent by Beijing were mainly there to observe and offer advice, the gesture was still appreciated.
Another Asian official said the tardy response by Western governments in handling the outbreak had given China an advantage, despite its initial lack of transparency over the outbreak.
“The West is not doing a better job on this,” he said, adding that his government had taken cues from Beijing on the use of propaganda in shaping public opinion and boosting patriotic sentiment in a time of crisis.
“Because it happened in China first, it has given us time to observe what works in China and adopt [these measures] for our country,” the official said.
Experts in the region said that Beijing’s intensifying campaign of “mask diplomacy” to reverse the damage to its reputation had met with less resistance in Asia.
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“Over the past two months or so, China, after getting the Covid-19 outbreak under control, has been using a very concerted effort to reshape the narrative, to pre-empt the narrative that China is liable for this global pandemic, that China has to compensate other countries,” said Richard Heydarian, a Manila-based academic and former policy adviser to the Philippine government.
“It doesn’t help that the US is in lockdown with its domestic crisis and that we have someone like President Trump who is more interested in playing the blame game rather than acting like a global leader,” he said.
Shahriman Lockman, a senior analyst with the foreign policy and security studies programme at Malaysia’s Institute of Strategic and International Studies, said that as the US had withdrawn into its own affairs as it struggled to contain the pandemic, China had found Southeast Asia a fertile ground for cultivating an image of itself as a provider.
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Beijing’s highly publicised delegations tasking medical equipment and supplies had burnished that reputation, he said, adding that the Chinese government had also “quite successfully shaped general Southeast Asian perceptions of its handling of the pandemic, despite growing evidence that it could have acted more swiftly at the early stages of the outbreak in Wuhan”.
“Its capacity and will to build hospitals from scratch and put hundreds of millions of people on lockdown are being compared to the more indecisive and chaotic responses seen in the West, especially in Britain and the United States,” he said.
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Lockman said Southeast Asian countries had also been careful to avoid getting caught in the middle of the deteriorating relationship between Beijing and Washington as the two powers pointed fingers at each other over the origins of the new coronavirus.
“The squabble between China and the United States about the pandemic is precisely what Asean governments would go to great lengths to avoid because it is seen as an expression of Sino-US rivalry,” he said.
“Furthermore, the immense Chinese market is seen as providing an irreplaceable route towards Southeast Asia’s post-pandemic economic recovery.”
Aaron Connelly, a research fellow in Southeast Asian political change and foreign policy with the International Institute for Strategic Studies in Singapore, said Asian countries’ dependence on China had made them slow to blame China for the pandemic.
“Anecdotally, it seems to me that most Southeast Asian political and business elites have given Beijing a pass on the initial cover-up of Covid-19, and high marks for the domestic lockdown that followed,” he said.
“This may be motivated reasoning, because these elites are so dependent on Chinese trade and investment, and see little benefit in criticising China.”
China and Vietnam ‘likely to clash again’ as they build maritime militias
12 Apr 2020
The cooperation with its neighbours as they grapple with the coronavirus had not slowed China’s military and research activities in the disputed areas of the South China Sea – a point of contention that would continue to cloud relations in the region, experts said.
Earlier this month an encounter in the South China Sea with a Chinese coastguard vessel led to the sinking of a fishing boat from Vietnam, which this year assumed chairmanship of Asean.
And in a move that could spark fresh regional concerns, shipping data on Thursday showed a controversial Chinese government survey ship, the Haiyang Dizhi 8, had moved closer to Malaysia’s exclusive economic zone.
The survey ship was embroiled in a months-long stand-off last year with Vietnamese vessels within Hanoi’s exclusive economic zone and was spotted again on Tuesday 158km (98 miles) off the Vietnamese coast.
Wuhan, where the first cases of the novel coronavirus were detected, is ending a 76-day lockdown
A day before the lockdown was fully lifted, Tencent announces a slew of initiatives focused on helping to revive the digital industry in the city
Passengers leaving Wuhan city are pictured at the Hankou Railway Station in Wuhan city, central China’s Hubei province, on Wednesday morning, April 08, 2020. Photo: SCMP/Simon Song
A day before China lifted a months-long lockdown of Wuhan city, the initial epicentre of the coronavirus pandemic, Chinese internet giant Tencent Holdings pledged to invest in digital government, online education and artificial intelligence (AI) in the city, among other fields.
“During the epidemic, Tencent has been supporting Hubei and Wuhan’s fight against the virus through funds and technology,” the company best known for its gaming business said in a statement posted on Tuesday on WeChat. “In the future, we will also fully support Wuhan’s post-pandemic reconstruction and continue to support the development of Wuhan’s digital industry.”
China’s major tech companies have played a big role in the fight against the coronavirus, and are now playing their part in the economic recovery of Wuhan and other areas that have suffered under extended travel restrictions and business closures.
and Pinduoduo each announced their own initiatives to help revive sales of farm goods from Hubei as the province emerges from its months-long lockdown.
Popular mobile payments app Alipay also created a dedicated section for Wuhan merchants to allow users to buy from merchants in the city, and offered loans to small local merchants in need of financial support, according to an Alipay statement. Alipay is operated by Ant Financial, an affiliate of Alibaba, which owns the South China Morning Post.
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23 Mar 2020
Wuhan, an industrial powerhouse for the steel, semiconductors and automotive sectors, is emerging from an unprecedented lockdown which began on January 23 and prevented people from moving in and out of the city.
Since restrictions began easing gradually in late March, business activity has shown signs of recovery: Tencent’s mobile payment platform WeChat Pay recorded a 162 per cent increase in offline transactions in a 10-day period from March 25, compared to the same period the previous month, according to a separate statement by Tencent on Wednesday.
Searches for “work resumption certificates” – which businesses need to submit to local authorities to prove their staff can safely restart work – also increased 320 per cent on Baidu, China’s biggest search engine, in the past month, Baidu said in a report on Wednesday.
Tencent declined to provide specific details regarding the size of its latest investment in Wuhan or a timeline for its implementation, but said in the statement that it will involve closer cooperation with city authorities in the areas of digital government, education, smart mobility, AI and cybersecurity to help the city with its digital industries.
Among these initiatives, it will push ahead with a plan to build a headquarters focusing on digital industries in Wuhan, specifically digitalisation for the government and smart city initiatives.
It will also establish a base in Wuhan for its online education initiatives, set up an AI lab and cybersecurity academy and build a school focusing on smart mobility in collaboration with Chinese carmaker Dongfeng Motor Corporation, the company said in the statement.
NEW DELHI (Reuters) – India sought to boost growth in a federal budget on Saturday that raised spending on farms and expressways and offered cuts inpersonal taxes, but the measures fell short of market expectations and battered stocks.
Prime Minister Narendra Modi’s government is grappling with the country’s worst slowdown in a decade, with falling employment, consumption and investment ratcheting up the pressure to revive growth.
The government estimates growth this year to March 31 will slip to 5%, the weakest pace since the global financial crisis of 2008-09. It also warned an expected rebound the following year might entail a blow-out in fiscal deficit targets.
Finance Minister Nirmala Sitharaman, presenting the budget for the financial year beginning April 1, said 2.83 trillion rupees ($39.8 billion) will be allocated toward agriculture and allied activities, up 5.6 percent on the previous year.
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The funds will be deployed to help farmers set up solar power generation units as well as establish a national cold storage system to transport perishables.
Sitharaman also vowed to spend $50.7 billion in coming years on a federal water scheme to address challenges facing one of the world’s most water-stressed nations.
Agriculture accounts for near 15% of India’s $2.8 trillion economy and is a source of livelihood for more than half of the country’s 1.3 billion population.
Sitharaman announced a new personal tax system including cuts for those ready to give up a myriad of tax breaks. She also abolished payment of dividend distribution tax by companies to spur investment.
“People have reposed faith in our economic policy,” Sitharaman said to the thumping of desks in parliament. “This is a budget to boost their income and enhance their purchasing power.”
Opposition parties slammed the budget, saying it had failed to address the slowdown in consumer demand and investment. “The government is in complete denial that the economy faces a grave macro economic challenge,” said former finance minister P. Chidambaram.
But higher government spending has put pressure on public finances, prompting caution from rating agencies. Sitharaman said the fiscal deficit for the current year would widen to 3.8% of GDP, up from 3.3% targeted for the current year.
Gene Fang, associate managing director, sovereign risk at Moody’s, said: “India’s 2020/21 budget highlights the challenges to fiscal consolidation from slower real and nominal growth, which may continue for longer than the government forecasts.”
GOVERNMENT SPENDING
For fiscal 2020/21 Sitharaman set the fiscal deficit at 3.5 percent. Moody’s said India’s government debt is already significantly higher than the average for Baa-rated sovereigns, a product of persistent fiscal deficits.
To help finance government spending, Sitharaman set a target for selling stakes in state firms at 2.1 trillion rupees for 2020/21, more than three times the amount expected this year.
She said the government will sell a part of its holding in state-run Life Insurance Corp, the country’s biggest insurance company.
But many experts said the measures did not go far enough to address the slowdown and structural flaws.
“In a normal scenario this budget would have been considered as good providing tax benefit to the common man, corporate and focus on farmers’ incomes, but the situation required more,” said Vinod Nair, head of research at Geojit Financial Services in Kochi.
Indian shares slid to a more than three-month low after a special trading session on Saturday, dented by what analysts said was a lack of sufficient stimulus measures. The NSE Nifty 50 index .NSEI closed 2.5% lower while the benchmark S&P BSE Sensex .BSESN fell 2.4%
“Markets had very high expectations from the budget … these expectations have not been met,” said Deepak Jasani of HDFC Securities.
The government also announced higher duties on a host of imports from walnuts to phone parts. Taxes on imports of pre-assembled printed circuit boards were raised to 20% from 10% and there were new taxes on mobile phones ringers and display panels in a bid to boost local manufacturing.
In its annual economic report released on Friday the government predicted growth would rebound to 6.0% to 6.5% in the fiscal year beginning April 1.
Some economists say global trade tensions and the outbreak of coronavirus in China pose a new risk to economic recovery by hitting cross-border commerce and supply chains.
Image copyright PRESS INFORMATION BUREAU
Image copyright AFP
Image copyright GETTY IMAGES
CHINDIA ALERT: You'll be living in their world, very soon 