News Wrap


On 14 December 2018, India's Supreme Court dismissed four petitions, seeking a court-monitored investigation, into the 36 Rafale fighter jets deal between India and France. The apex court maintained there were no irregularities in the fighter jet deal, and no need for any Special Investigation Team probe into the matter. The decision of the Union Government was not in doubt, and the court cannot go into the question of pricing and choice of offset Indian partner by the French Aircraft Manufacturer Dassault. The defence need of the aircraft and the quality of the aircraft was not in doubt. The earlier deal of 23 September 2016 was taking too long, and was not concluding. Nothing was called into question till former French president Francois Hollande, in an interview alleged pressures from Indian government, on the choice of offset partner. The court maintained that it is upto the vendor, and not the central government to decide on the same. It is not the job of the court to compare pricing details, where 36 aircrafts, instead of 126, are being purchased. The Union Government of India has ruled out the possibility of Joint Parliamentary probe into the contract.

Ghost Village
700 villages, especially those in the hills, are totally depopulated in seven years, in India's Himalayan state of Uttarakhand. Migration from development starved villages has rendered ghost villages. Not a soul lives in 734 villages, which are totally depopulated, of nearly 16500 villages, mostly in hilly areas. With houses lying in ruins and fields overgrown with vegetables, such ghost villages abound in Pauri district and Almora district. Data with the Uttarakhand Rural development and Migration Commission covers a period of seven years after the 2011 census. The total depopulation of villages is unique to Uttarakhand. While migration from less developed states like Bihar and Uttar Pradesh is of a temporary and seasonal nature, the outflux from the hill villages of Uttarakhand, is of a permanent nature. Those who migrate from Uttarakhand hills are often educated people, who do so in search of better employment opportunities and prospects for setting down. The rate of migration is estimated at 50%. Only better income avenues and eco-temple tourism could retard migration.

Yamuna river Pollution
76% of the river Yamuna's pollution is accounted for by a small stretch of less than 2.1% of the river. Although the Yamuna river flows only for 54 km from Palla to Badarpur, through Delhi, the 22 km stretch from Wazirabad to Okhala, which is less than 2% of the river length of 137 km, from Yamunotri to Allahabad, accounts for about 76% of the pollution level in the river. This 2% stretch from Wazirabad to Okhala sees maximum discharge of untreated industrial and domestic wastes. A monitoring committee overseeing its cleaning feels that it would not be possible to rejuvenate Yamuna river, unless minimum environmental flow is provided, as it is virtually reduced to a trickle, and remains dry in some stretches for almost nine months of the year. There is no team of scientists to investigate the risks and benefits of an alternative way of routing the same quantity of water, which can help in reducing the pollution level. The capacity utilisation of Common Effluent Treatment Plant (CETP), is as low as 25%. There are 28 industrial clusters in Delhi. 17 of these are connected to 13 CETPs. Ammonia in Yamuna river at Palla and Wazirabad is a recurrent problem affecting drinking water supply to Delhi. Industries and residences are directly discharging completely unregulated waste into the river.

China Taking Risk
With China's economy slowing, and the trade war with USA intensifying, Chinese officials are pushing banks to lend more, and allowing indebted local governments to spend money on big projects again. They have moved to shore up the value of China's currency. The authorities have helped out the stock market, as the government works to avert a stock market collapse, like the one nearly 40 months ago that shook the world. United States has formally enacted tariffs on $16 billion in Chinese-made goods. Beijing has retaliated with its own tariffs, and filed a complaint with the World Trade Organisation. The intensifying trade war has already affected more than $100 billion of goods. A shadow has been cast over growth prospects for China and the world. So far, the trade war has had a minor impact on China's $12 trillion economy. China's most recent quarterly economic figures suggest growth is continuing at a steady pace. Infrastructure spending, which encompasses up to one-sixty of the Chinese economy, has slowed sharply in 2018. Many provincial capitals like Harbin in north eastern China, run out of money to pay pensioners, and rearrange its finances to pay them later. Corporate bond defaults have increased in 2018, although they are still low by international standards. With tighter auditing standards, China's banks acknowledged in September 2018, a fairly sharp rise in non-performing loans. In August 2018, China's central bank announced measures that would make sure enough credit reached companies. Also China's banking regulator announced in August / September 2018, that it wanted the country's state-controlled banking sector to provide ample credit to exporters, small and medium sized businesses, and infrastructures projects. Since October 2018, banks have been allowed to keep practically limitless holdings of local government bonds, without including them in their calculations of their ability to endure hard times. The move does free up money for banks to lend.

China's central planners have allowed a series of big local government projects, that includes the construction of five subway and light rail lines in Changchun, a big industrial city in north-eastern China, where Toyota, the Japanese automaker has extensive facilities. Data from the Bank of International Settlements shows Beijing has clamped down on some banks lending to state-owned enterprises over the last few years. During 2018, the share prices slid into a bear market, and China's currency the renminbi dropped nearly 10%, against the dollar. The middle class are more than 400 million strong. With China's economy slowing, shopping has slowed with it. "Consumption upgrade" has been replaced by "Consumption downgrade". Many young Chinese are increasingly reluctant to have children. Retail sales in 2018 have grown at their slowest pace, in more than a decade. Wages in the private sector are growing at their slowest pace since the global financial crisis. The stock market has fallen by one-fifth. Long term factors are driving down spending among young people in particular. The cost of education is going up. Housing in rich cities like Beijing has become unaffordable for many. High earners who enjoyed pay raises of 15% to 20% in private enterprises in the past decades, now expect the raises to be 5%, if at all.

Vol. 51, No.31, Feb 3 - 9, 2019