Archive for ‘Economics’

27/07/2016

India’s farmers seize offer of free registration of land sold on ‘plain paper’ | Reuters

When Telangana announced a three-week window for free registration of land that had exchanged hands via handwritten notes on plain paper, the offer triggered more than a million applications.

All over the state the sale of land on notes known as “sada bainamas” has been customary because of widespread inability to pay the registration fees, illiteracy or ignorance of the law.

Around a million farmers in Telangana lack secure title to land bought this way, according to a 2014 survey carried out in the state by Landesa, a U.S. based charity .

Guram Muttaya is a beneficiary of the registration drive and one of many farmers who occupy land they have been cultivating for 30 to 40 years on the strength of informal documents.

“Registering the land will bring me government agriculture loans, compensation for crop damages and crop insurance too,” Muttaya told the Thomson Reuters Foundation, holding up a torn piece of paper bearing a signature.

The piece of paper is his only proof of ownership of a fifth of a hectare of land he bought in Kannayapally village 27 years ago for $67 and whose market value has risen to $3,000.

Studies have shown that broadly distributed secure land rights for farmers can help to pull families out of poverty and boost sustainable economic development.

Source: India’s farmers seize offer of free registration of land sold on ‘plain paper’ | Reuters

27/07/2016

China’s Fosun to sign agreement for $1.4 billion Gland Pharma buy – paper | Reuters

Shanghai Fosun Pharmaceutical (Group) Co (2196.HK) will sign a definitive agreement on Wednesday to buy a controlling stake in India’s Gland Pharma in a $1.4 billion deal, the Economic Times newspaper reported, citing a source with direct knowledge.

In May, Shanghai Fosun had made a non-binding proposal to buy Gland Pharma, which is backed by KKR & Co (KKR.N), to boost its drug manufacturing and research and development capacity.

Fosun did not immediately comment, when contacted by Reuters. Gland Pharma made no immediate comment on the report.

The paper said KKR declined to comment.

Source: China’s Fosun to sign agreement for $1.4 billion Gland Pharma buy – paper | Reuters

27/07/2016

Parliament passes controversial child labour bill | Reuters

Parliament on Tuesday approved a controversial law that would allow children to work for family businesses, despite widespread concern by the United Nations and other rights advocates that it will push more children into labour.

A week after the bill was passed by the Rajya Sabha, the Lok Sabha approved the measure that brings a raft of changes to a three-decade-old child labour prohibition law. The bill now goes for the President’s assent before becoming law.

The U.N. Children’s Agency (UNICEF) as well as many others have raised alarm over two particular amendments – permitting children to work for their families and reducing the number of banned professions for adolescents.

A 2015 report by the International Labour Organization (ILO) put the number of child workers in India ages 5 to 17 at 5.7 million, out of 168 million globally.

More than half of India’s child workers are employed in agriculture and more than a quarter in manufacturing – embroidering clothes, weaving carpets or making match sticks. Children also work in restaurants, shops and hotels and as domestic workers.The new legislation extends a ban on child labour under 14 to all sectors. Previously, only 18 hazardous occupations and 65 processes such as mining, gem cutting and cement manufacturing were outlawed.

It also stiffens penalties for those employing children, doubling jail terms to two years and increasing fines to 50,000 rupees ($740) from 20,000 rupees ($300).

While child rights groups have welcomed such changes, there has been concern over other amendments proposed by Prime Minister Narendra Modi‘s government.

For example, children will be allowed to work in family businesses, outside of school hours and during holidays, and in entertainment and sports if it does not affect their education.

Also, children 15 to 18 will be permitted to work, except in mines and industries where they would be exposed to inflammable substances and hazardous processes.

The government says the exemptions aim to strike a balance between education and India’s economic reality, in which parents rely on children to help with farming or artisanal work to fight poverty or pass on a family trade.

“The purpose of this very act is that we should be able to practically implement it,” Labour and Employment Minister Bandaru Dattatreya told parliament. “That’s why we are giving some exemptions.”UNICEF had urged India to exclude family work from the proposed law and include an “exhaustive list” of hazardous occupations.

“To strengthen the Bill and provide a protective legal framework for children, UNICEF India strongly recommends the removal of ‘children helping in family enterprises’,” it said in a statement on Monday.

“This will protect children from being exploited in invisible forms of work, from trafficking and from boys and girls dropping out of school due to long hours of work,” it said.

Source: Parliament passes controversial child labour bill | Reuters

26/07/2016

Could India Become a Cashless Economy? – India Real Time – WSJ

Cash is set to lose currency in India, as an explosion in smartphone usage drives a digital payments boom, according to a new report.

By year 2020, nearly $500 billion worth of transactions in India will happen digitally, using online wallets and other digital-payment systems, 10 times the level currently, according to a report by Google India and The Boston Consulting Group.

Indians traditionally prefer to save and spend in cash, and a vast majority of the more-than 1.2 billion population doesn’t have a bank account.

Last year, 78% of all consumer payments in India were made by cash, whereas in developed countries like the U.S. and U.K., only 20% to 25% of such payments were made that way, the report said.

But the reliance on notes and coins in India is likely to diminish, as spending habits change and financial services reach more people, said the Google-BCG report. It expects cash-based consumer payments to fall to 40% to 45% by 2025.

A sharp increase in the use of mobile phones with internet connectivity will help drive the move to digital payments, said the report.

India has more than 1 billion mobile subscribers, a quarter of whom use smartphones, according to the report. By 2020, the number of smartphone users in the country will likely be 520 million, and the number of internet users 650 million, twice the number currently, according to the report.

Personal internet banking has become more popular in India over the past few years along with digital payment options that allow users to settle mobile phone, electricity and even taxi bills.

The recent spurt of growth has come from non-bank companies offering payment services. Cellphone companies like Airtel and Vodafone offer facilities to transfer money using phones, while “wallet” companies like One97 Communications’ Paytm unit, and MobiKwik, allow users to store money digitally and pay through their systems.

The next level of growth will come when local mom-and-pop grocery stores start accepting digital payments, said the report.However, there are plenty of consumers and merchants who still feel skeptical of digital payments, or find them too complicated, said the report. And others just don’t want to give up using cash, it added.

Source: Could India Become a Cashless Economy? – India Real Time – WSJ

25/07/2016

ASEAN breaks deadlock on South China Sea, Beijing thanks Cambodia for support | Reuters

Southeast Asian nations overcame days of deadlock on Monday when the Philippines dropped a request for their joint statement to mention a landmark legal ruling on the South China Sea, officials said, after objections from Cambodia.

China publicly thanked Cambodia for supporting its stance on maritime disputes, a position which threw the regional block’s weekend meeting in the Laos capital of Vientiane into disarray.

Competing claims with China in the vital shipping lane are among the most contentious issues for the Association of Southeast Asian Nations, with its 10 members pulled between their desire to assert their sovereignty while finding common ground and fostering ties with Beijing.

In a ruling by the U.N.-backed Permanent Court of Arbitration on July 12, the Philippines won an emphatic legal victory over China on the dispute.

The Philippines and Vietnam both wanted the ruling, which denied China’s sweeping claims in the strategic seaway that channels more than $5 trillion in global trade each year, and a call to respect international maritime law to feature in the communique.

Backing China’s call for bilateral discussions, Cambodia opposed the wording on the ruling, diplomats said.

Manila agreed to drop the reference to the ruling in the communique, one ASEAN diplomat said on Monday, in an effort to prevent the disagreement leading to the group failing to issue a statement.

The communique referred instead to the need to find peaceful resolutions to disputes in the South China Sea in accordance with international law, including the United Nations’ law of the sea, to which the court ruling referred.

Source: ASEAN breaks deadlock on South China Sea, Beijing thanks Cambodia for support | Reuters

25/07/2016

Ways India Has Changed Since Liberalization 25 Years Ago – WSJ

Twenty-five years ago this week, India unshackled private industry and embraced foreign investment, ending four decades of socialist self-reliance and making a major bid to reclaim its place as an economic power.

The finance minister at the time, Manmohan Singh, had a keen sense of the moment’s place in history. Presenting the budget before Parliament on July 24, 1991, he framed the new economic policies as a means of eliminating “the scourge of poverty, ignorance and disease,” and of realizing the full potential of the Indian people. In the famous closing flourish of his speech, he invoked Victor Hugo: “No power on Earth can stop an idea whose time has come.”

But even Mr. Singh, who later served a decade as the country’s prime minister, could not have foreseen all the changes that this set of ideas would bring about.

1 Economic Liftoff

By every measure, India has grown more economically prosperous. National output last year was nearly five times what it was in 1991. Indians sell more to the world, and enjoy more of the outside world’s products and services, know-how and technology. A country that was once a byword for famine is today one of the planet’s biggest exporters of rice, cotton and other agricultural products.Not all sections of Indian society have risen as much as others: The country is still home to more of the world’s poorest people than any other nation. And much of the growth has been in the informal economy, where companies don’t pay taxes or have access to large-scale finance, and where workers don’t receive benefits or protection from unfair treatment. That suggests the deterrents to doing business above-board, such as government regulations and enforcement, are still too many.ANUPAM

2 People Power

Indians are living longer, and fewer are dying at or shortly after birth. More are literate, more receive schooling and more go to college. Still, the nation badly lags its neighbors on many of these human indicators. Women fare worse than men. And despite recent government sanitation campaigns, more people in India have cellphones than have access to decent toilets, according to the United Nations.

3 Consumer Explosion

In 1991, Indians had two television channels to choose from, and both of them were produced by Doordarshan, the state broadcaster. In much else, too, from sweets to cosmetics to butter, autarky meant the choices for the average consumer were very limited. Today’s riot of options makes pre-liberalization India seem, as the writer Mukul Kesavan wrote recently, like “another country.

4 Car Crazy

It isn’t quite true that Indians had only one car available to them, the Hindustan Motors Ltd. Ambassador, before 1991. But their options have certainly multiplied since then. Almost every major international maker has tried to enter the market; not all have succeeded. The industry in India churned out nearly 24 million vehicles in the year that ended in March.

5 A Flailing State

Over the last quarter-century, as India’s economy has grown more complex, it has arguably loped ahead of the government’s capacity to manage it and provide essential services. That’s why the Harvard economist Lant Pritchett in 2009 called India a “flailing state”: The top institutions of government are sound, but they don’t deliver reliably on the ground.Public health facilities are understaffed and underfunded. Schoolteachers don’t show up for their own classes. Unlike in 1991, “India’s problem is not what the state does wrong now,” says Manish Sabharwal, chairman of TeamLease Services Ltd., a Bangalore-based staffing company. “It is what the state does not do.”

Source: Ways India Has Changed Since Liberalization 25 Years Ago – WSJ

25/07/2016

More Than 100 Chinese Firms on Global Fortune 500, but Not Alibaba – China Real Time Report – WSJ

More than 100 Chinese companies made the Fortune Global 500 list this year, with the U.S. the only country with more names on the list.

China power giant State Grid jumped from seventh place last year to the No. 2 spot, after Wal-Mart Stores Inc., followed by oil giants China National Petroleum Corp. and Sinopec Group, in third and fourth place, respectively.

Dubbed “the world’s most profitable lender,” Industrial & Commercial Bank of China–China’s biggest bank by assets–was No. 15 on the list, up from 18th last year even after a year of nearly flat profit.

Among the 13 Chinese companies that made their debuts on the list were three home builders: China Vanke Co.(356th), Dalian Wanda Group (385th) and Evergrande Real Estate Group (496th), which all benefited from the property-market recovery in China last year after the government loosened restrictions on home purchases.

Ranked at 366th, China’s second-largest online retailer, JD.com Inc., also entered the list for the first time.

One notable absence: China’s perhaps most famous company, e-commerce giant Alibaba Group Holding Ltd., which as an online platform doesn’t have massive revenue, the basis for the list’s rankings.Investors and analysts have focused on a different metric to chart its growth — gross merchandise volume, or the total value of third-party sellers’ transactions on its platforms — because it shows how fast an e-commerce company is growing relative to competitors.

Earlier this year, Alibaba said that transaction volume on its sites hit 3 trillion yuan ($463 billion) in the fiscal year ended in March, which it said meant that by that measure it had overtaken Wal-Mart to become the world’s biggest retail network.

Source: More Than 100 Chinese Firms on Global Fortune 500, but Not Alibaba – China Real Time Report – WSJ

25/07/2016

China Unveils ‘World’s Largest Amphibious Aircraft’ – China Real Time Report – WSJ

Chinese media said the AG600 giant aircraft, which rolled off a production line in Zhuhai in southern China on Saturday, will be used for marine rescue missions and forest fire fighting.

Source: Video: China Unveils ‘World’s Largest Amphibious Aircraft’ – China Real Time Report – WSJ

01/07/2016

Our bulldozers, our rules | The Economist

THE first revival of the Silk Road—a vast and ancient network of trade routes linking China’s merchants with those of Central Asia, the Middle East, Africa and Europe—took place in the seventh century, after war had made it unusable for hundreds of years. Xi Jinping, China’s president, looks back on that era as a golden age, a time of Pax Sinica, when Chinese luxuries were coveted across the globe and the Silk Road was a conduit for diplomacy and economic expansion. The term itself was coined by a German geographer in the 19th century, but China has adopted it with relish. Mr Xi wants a revival of the Silk Road and the glory that went with it.

This time cranes and construction crews are replacing caravans and camels. In April a Chinese shipping company, Cosco, took a 67% stake in Greece’s second-largest port, Piraeus, from which Chinese firms are building a high-speed rail network linking the city to Hungary and eventually Germany. In July work is due to start on the third stage of a Chinese-designed nuclear reactor in Pakistan, where China recently announced it would finance a big new highway and put $2 billion into a coal mine in the Thar desert. In the first five months of this year, more than half of China’s contracts overseas were signed with nations along the Silk Road—a first in the country’s modern history.

Politicians have been almost as busy in the builders’ wake. In June Mr Xi visited Serbia and Poland, scattering projects along the way, before heading to Uzbekistan. Last week Russia’s president, Vladimir Putin, made a brief visit to Beijing; he, Mr Xi and Mongolia’s leader promised to link their infrastructure plans with the new Silk Road. At the time, finance ministers from almost 60 countries were holding the first annual meeting in Beijing of an institution set up to finance some of these projects, the Asian Infrastructure Investment Bank (AIIB). Like a steam train pulling noisily out of a station, China’s biggest foreign-economic policy is slowly gathering speed.

Chinese officials call that policy “One Belt, One Road”, though they often eviscerate its exotic appeal to foreigners by using the unlovely acronym OBOR. Confusingly, the road refers to ancient maritime routes between China and Europe, while the belt describes the Silk Road’s better-known trails overland (see map).

OBOR puzzles many Western policymakers because it is amorphous—it has no official list of member countries, though the rough count is 60—and because most of the projects that sport the label would probably have been built anyway. But OBOR matters for three big reasons.

First, the projects are vast. Official figures say there are 900 deals under way, worth $890 billion, such as a gas pipeline from the Bay of Bengal through Myanmar to south-west China and a rail link between Beijing and Duisburg, a transport hub in Germany. China says it will invest a cumulative $4 trillion in OBOR countries, though it does not say by when. Its officials tetchily reject comparison with the Marshall Plan which, they say, was a means of rewarding America’s friends and excluding its enemies after the second world war. OBOR, they boast, is open to all. But, for what it is worth, the Marshall Plan amounted to $130 billion in current dollars.

Next, OBOR matters because it is important to Mr Xi. In 2014 the foreign minister, Wang Yi, singled out OBOR as the most important feature of the president’s foreign policy. Mr Xi’s chief foreign adviser, Yang Jiechi, has tied OBOR to China’s much-touted aims of becoming a “moderately well-off society” by 2020 and a “strong, prosperous” one by mid-century.

Mr Xi seems to see the new Silk Road as a way of extending China’s commercial tentacles and soft power. It also plays a role in his broader foreign-policy thinking. The president has endorsed his predecessors’ view that China faces a “period of strategic opportunity” up to 2020, meaning it can take advantage of a mostly benign security environment to achieve its aim of strengthening its global power without causing conflict. OBOR, officials believe, is a good way of packaging such a strategy. It also fits with Mr Xi’s “Chinese dream” of recreating a great past. It is not too much to say that he expects to be judged as a leader partly on how well he fulfils OBOR’s goals.

Third, OBOR matters because it is a challenge to the United States and its traditional way of thinking about world trade. In that view, there are two main trading blocs, the trans-Atlantic one and the trans-Pacific one, with Europe in the first, Asia in the second and America the focal point of each. Two proposed regional trade deals, the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership, embody this approach. But OBOR treats Asia and Europe as a single space, and China, not the United States, is its focal point.

Source: Our bulldozers, our rules | The Economist

01/07/2016

India factory growth at 3-month high in June on strong demand | Reuters

Indian manufacturing activity edged up to a three-month high in June, driven by stronger demand, but firms barely raised prices, a private survey showed, leaving the door open for another rate cut by the central bank this year.

The Nikkei/Markit Manufacturing Purchasing Managers’ Index (PMI) rose to 51.7 in June from May’s 50.7, its sixth month above the 50 mark that separates growth from contraction after it fell below that level in December for the first time in more than two years.

“The domestic market continues to be the main growth driver, as the Indian economic upturn provides a steady stream of new business,” said Pollyanna De Lima, economist at Markit.

“There were also signs of an improvement in overseas markets, as new foreign orders rose. However, it looks as if lackluster global demand remains a headwind for Indian manufacturers.

“While retail inflation hit a near two-year high in May, the survey’s output prices sub-index fell to a three-month low of 50.1 in June versus 50.5 the previous month, as input costs rose at a weaker pace.

There was also broadly no change to manufacturing employment in India during June, the survey showed.

“This lack of inflationary pressures provides the Reserve Bank of India (RBI) with further leeway to boost economic growth through cutting its benchmark rate,” said De Lima.

According to a Reuters poll, RBI Governor Raghuram Rajan could deliver another rate cut before his term ends in September. After cutting rates in April, he has left the key interest rate unchanged at a five-year low of 6.50 percent.

However, at the June policy meeting he signalled another rate cut later in the year if monsoon rains were sufficient enough to dampen upward pressure on food prices.

Rains are expected to be above average this year which could keep prices in control and give the government room to focus on key economic reforms in tandem with low interest rates.

Source: India factory growth at 3-month high in June on strong demand | Reuters

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