BLOGS
India’s GDP data for the first quarter of 2020
Due to a strict national lockdown due to the novel coronavirus (COVID-19) during most of the first quarter of fiscal year 2020-21, gross domestic product India’s GDP for the April-June quarter (Q1) fell 23.9%, according to provisional estimates released Monday by the Ministry of Statistics and Program Implementation (MoSPI).
- GDP grew 5.2% in the corresponding quarter of 2019-2020.
- According to economists polled by Bloomberg, India’s GDP shrank by 18% in the quarter that ended in June.
- Earlier this month, the State Bank of India (SBI) Ecowrap report said the country’s GDP would contract by 16.5% in the first quarter.
- GDP data for the June quarter is the worst contraction in Indian economic history, mainly because the central government on March 25 ordered a complete lockdown of most manufacturing and service sectors due to the spread of COVID-19.
- During that time, only essential services, such as food and medicine, were allowed as the country tried to curb the spread of the virus across the country. GDP in the previous quarter from January to March (fourth quarter) of 2019-2020 increased by 3.1%.
- According to government data, gross value added (GVA) at basic price in constant terms during the June quarter contracted by 22.8%.
- The GVA at basic prices at current prices fell by 20.6% in the first quarter of 2020-2021.
- According to data from the National Bureau of Statistics (NSO), all key sectors except agriculture saw 3 % while contractions, with construction dropping a considerable 50.3 percent.
- Outside of these two industries, electricity, gas, water supply and other utilities fell 7%. Services related to trade, hotels, transport, communications and broadcasting contracted 47.0%.
- Only the agriculture, forestry and fishing sector recorded growth of 3.4 percent in the June quarter, the data showed.
India’s foreign exchange reserves
India’s foreign exchange reserves, hit by Covid, jumped from a record $ 11.9 billion during the week ends July 31 to a new high of $ 534.5 billion, which makes it the fifth largest reserve holder in the world. During the 10-month period from September 27, 2019 to July 31, 2020, foreign exchange reserves increased by $ 100 million. At a time when the economy is under strain and expected to be contracted in 2020-2021, , the rising forex reserves have come as a breather as it can cover India’s import bill of more than one year.
India’s Reserves of Change: How Has It Been?
- The trend for change began after Finance Minister Nirmala Sitharaman announced a sharp reduction in the corporate tax on September 20, 2019.
- All investor sentiment is weakened after the announcement of Budget in July of the imposition of a higher surtax, the government’s decision to cancel its budget The decision concerning a higher impact of the surtax on REITs, including a reduction in the corporate tax rate in September played an important role in the renewal of the investment humidity and the incentive to invest in Indian economic growth.
- Between September 20, 2019 and July 31, 2020, reserves increased by $ 106 billion, and since the beginning of April they have increased by $ 60 billion.
- Thus, in ten months, India added 25% of the reserves it had until September 20, 2019.
- India is now fifth in the world ranking behind China ($ 3.298 million), Japan (1.383 million dollars). dollars) and Switzerland (896 billion dollars) and Russia (591 billion dollars).
What is driving this increase in foreign exchange reserves?
The hike is being done in several stages and has been driven by different factors over the past ten months. Experts have disputed that the rise in vises inflows through Foreign Portfolio Investment (FPI) and Directed Foreign Investment (FDI) to has also been supported by the decline in the import bill over the past 4 to 5 years due to falling crude prices and the impact on trade Covid19 pandemic.
Some of the key factors include
- FPI Tickets: So that celebrates the start of a surge in the FPI following entries to the government’s September decision to cut the corporate tax rate. Between April and December 2019, the REIT injected $ 15.1 billion net, it was the RBI.
- Declining crude oil prices: India’s oil import bill has as the global spread of the coronavirus since February 2020 has not only rocked the stock markets, but has led to a collapse in Brent crude oil prices. While crude accounts for 20% of India’s total import bill, the price of Brent crude oil has fallen to $ 20 will see the end of March, they have fallen further and traded between $ 9 and $ 20 in April. In January 2020, Brent was trading between $ 60 and $ 70 in Barrel.
- Import economics: lockdown in all countries in response to the Covid-19 pandemic to impact global trade and to enter sharply lower import spending – electronics, or and crude oil prices, among others .
- FDI inflows: between September 2019 and March 2020, foreign direct investments amounted to 23.88 billion dollars and in April and May, to 5.9 million dollars. Market experts disagree that a lot of ideas also came in June and July, especially the amount of Rs 1 lakh plus the investment of the tech worlds giants in Jio platforms. Thus, the inflows of FDI have widened I have contributed to the increase in reserves of change.
- Declining Gold Imports: Gold, which is an important component of imports for India, saw a sharp decline in the firm quarter in June 2020 following high prices and the panemia-induced foreclosure of COVID-19 [FEMALE. According to the World Gold Council (WGC), gold imports fell 95 percent to 11.6 tonnes in the quarter, from 247.4 tonnes in the same period there and a reason for logistics and demand issues. ineffable. The value of trading during the June quarter is Rs 26,600 crore, at a rate of 57% for Rs 62,420 crore and a year, a WGC statement.
- FDI inflows: between September 2019 and March 2020, foreign direct investment amounted to 23.88 billion dollars and in April and May it was 5.9 billion dollars. Market experts say that a large amount of FDI also occurred in June and July, especially Rs 1 lakh crore plus investment from global tech giants in Jio platforms. Therefore, FDI inflows have contributed greatly to the increase in foreign exchange reserves.
- Decline in gold imports: Gold, which was a major component of India’s imports, experienced a sharp decline in the quarter ending June 2020 following high prices and lockdown caused by the COVID-19 pandemic . According to the World Gold Council (WGC), gold imports fell 95 percent to 11.6 tonnes in the quarter from 247.4 tonnes in the same period a year ago due to logistical problems and low demand. The value of gold traded in the June quarter fell to 26,600 crore rupees, down 57% from 62,420 crore a year ago, WGC said.
What does the increase in foreign exchange reserves mean?
- The increase in foreign exchange reserves offers the government and the Reserve Bank of India much comfort in dealing with India’s external and internal financial problems at a time when economic growth is expected to contract by 5, 8% in 2020-2021.
- It is a great cushion in an economic crisis and enough to cover the country’s import bill for a year. The increase in reserves also helped the rupee to strengthen against the dollar.
- The ratio of foreign exchange reserves to GDP is around 15 percent. The reserves will give the markets a level of confidence in the ability of a country to meet its external obligations, they will demonstrate support for the national currency through external assets, they will help the government to satisfy its foreign exchange needs and debt obligations. and maintain a reserve for national disasters or emergencies.
- “Adequate foreign exchange reserves should allow the RBI to cut rates and support the recovery. We estimate that the RBI can sell $ 50 billion to defend the rupee in the event of a speculative attack. It should be noted that the RBI’s action to support growth should attract the flow of capital from REIT, ”said a Bank of America report.
What does the RBI do with foreign exchange reserves?
- The Reserve Bank functions as a custodian and administrator of foreign exchange reserves and operates within the framework of the general policy agreed with the government.
- The RBI allocates dollars for specific purposes. For example, under the liberalized remittance program, people can send up to $ 250,000 per year.
- The RBI uses its forex kitty for the orderly movement of the rupee. Sell the dollar when the rupee weakens and buy the dollar when the rupee strengthens.
- Recently, the RBI bought dollars in the market to consolidate foreign exchange reserves. When the RBI absorbs dollars, it releases an equal amount in rupees.
- This excess liquidity is sterilized through the issuance of bonds and securities and LAF operations to avoid an increase in inflation.
Are Foreign Reserves Profiting India?
- Only the gold reserves gave India great benefits. Although the RBI did not disclose actual returns on foreign exchange reserves, experts believe that India is likely to get only negligible returns, with interest rates in the United States and the Eurozone around about 1%.
- On the contrary, India could face a cost to retain reserves abroad. Of the total foreign exchange holdings, 59.7% were invested in securities abroad, 33.37% were deposited with other central banks in other countries and the BIS, and the remaining 7.06% included deposits in banks commercials abroad in March 2020.
- Also, at the end of March 2020, the RBI had 653.01 tons of gold, of which 360.71 tons were abroad in a safe place with the Bank of England and the Bank for International Settlements. while the remaining gold remains at the national level.
- With gold prices soaring 40 percent to over 55,000 rupees per 10 grams this year, the value of gold holdings has skyrocketed.
India’s foreign exchange reserves
India’s foreign exchange reserves crossed the $ 500 billion mark for the first time in the week ending June 5, 2020. Unlike 1991, when India had to compromise its gold reserves to avoid an important financial crisis, the country can now depend on growing reserve currencies to deal with any crisis on the economic front.
While it increased $ 8.2 billion in the week ending June 5, 2020, it’s important to note that since the announcement of the lockdown in March, it has increased $ 31.8 billion.
With a record $ 501.7 billion as of June 5, 2020, India has come a long way from its $ 5.8 billion foreign exchange reserves in March 1991.
What are foreign Exchange reserves?
Foreign exchange reserves are external assets in the form of gold, SDRs (IMF special drawing rights) and foreign currency assets (capital inflows on capital markets, FDI and external commercial loans) accumulated by the India and controlled by the Reserve Bank of India.
The International Monetary Fund says official foreign exchange reserves are maintained in support of a number of objectives, such as supporting and maintaining confidence in monetary and exchange management policies, including the ability to intervene to support the national currency or the Syndicate.
It will also limit external vulnerability by maintaining the liquidity of the foreign currency to absorb shocks in times of crisis or when access to loans is restricted.
The main reason for the increase in foreign exchange reserves is the increase in investment in foreign portfolio investors in Indian stocks and foreign direct investment (FDI).
Foreign investors had acquired stakes in various Indian companies in the past two months. According to data released by RBI, while FDI inflows were $ 4 billion in March, they were $ 2.1 billion in April.
After removing Rs 60 billion rupees from each of the debt and equity segments in March, foreign portfolio investments (REITs), which expect a change in the economy later this fiscal year, are now returned to Indian markets and bought stocks for more than $ 2.75 billion in the first week of June.
The inflows of foreign currency will further increase and cross $ 500 billion while the subsidiary of Reliance Industries, Jio Platforms, has experienced a series of foreign investments totaling Rs 97,000 crore.
On the other hand, the fall in crude oil prices has reduced the import bill for oil, saving precious foreign exchange.
Similarly, international remittances and international travel fell sharply, up 61% in April from $ 12.87 billion. The months of May and June are expected to show a larger drop in dollar outflows.
The sharp increase in reserves seen over the past nine months began with the announcement by Minister of Finance Nirmala Sitharaman to cut corporate tax rates on September 20. Since then, foreign exchange reserves have increased by $ 73 billion.
What are the significances of rising forex reserves?
- The rise in foreign exchange reserves provides much comfort to the government and the Reserve Bank of India in dealing with India’s internal and external financial problems at a time when economic growth is expected to contract by 1, 5% in 2020 -2021.
- It is a great mattress in an economic crisis and enough to cover the country’s import bill for a year.
- The increase in reserves also helped the rupee to strengthen against the dollar.
- The ratio of foreign exchange reserves to GDP is around 15%.
- The reserves will provide markets with a level of confidence that a country can meet its external obligations, demonstrate the support of the national currency to external assets, help the government meet its needs for foreign exchange and external debt obligations, and maintain a reserve for national disasters or emergencies.
“So far (until May 15), India’s foreign exchange reserves have increased by 9.2 billion US dollars in 2020-21 they will reach US $ 487.0 billion, the equivalent of 12 months of imports. “
In his monetary policy statement of May 22, RBI Governor Shaktikanta Das said.
What does the RBI do with the forex reserves?
- The Reserve Bank operates as depositary and administrator of foreign exchange reserves and operates within the framework of the general policy agreed with the government.
- The RBI allocates dollars for specific purposes. For example, under the remittance liberalization program, people can pay up to $ 250,000 a year.
- The RBI uses its forex kitty for the orderly movement of the rupee. He sells the dollar when the rupee weakens and buys the dollar when the rupee strengthens.
- Recently, the RBI bought dollars from the market to consolidate foreign exchange reserves.
- When the RBI deletes dollars, it releases an equal amount in rupees. This excess liquidity is sterilized through the issuance of bonds and securities and the operations of LAF.
Where are India’s forex reserves kept?
The RBI Act – 1934 provides the general legal framework for the deployment of reserves in various foreign currency and gold assets in the general parameters of currencies, instruments, issuers and counterparties.
Up to 64% of foreign exchange reserves are held in treasury bills of foreign countries, mainly the United States, 28% are deposited with foreign central banks and 7.4% are also deposited with commercial banks at stranger, according to RBI dates.
India also held 653.01 tonnes of gold in March 2020, of which 360.71 tonnes abroad were held by the Bank of England and the Bank for International Settlements, while the rest of the gold remained in the country.
In value terms (USD), the share of gold in total foreign exchange reserves increased from around 6.14% at the end of September 2019 to around 6.40% at the end of March 2020.
Maintaining forex reserves?
The performance of India’s foreign exchange reserves at central banks and foreign commercial banks is negligible. Although the RBI has not published the return on investment in foreign currency, analysts estimate that it could be around 1% or even less given the fall in interest rates in the United States and in the euro region.
Some circles have requested that foreign exchange reserves be used for infrastructure development in the country. However, the RBI had opposed the plan.
Several analysts recommend a greater weighting of the performance of assets in foreign currencies than of liquidity, thus reducing the potential net costs of holding reserves.
Another problem is the high proportion of volatile flows (portfolio flow and short-term debt) to reserves, which is around 80%. This money can come out at a rapid rate.
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India’s Fiscal deficit
Led by a sharp drop in tax revenue, India’s Fiscal deficit increased sharply to 4.6% of GDP in 2019-2020, from a last time revised target of 3.8%. The Fiscal deficit as a percentage of GDP exceeded 4.5% was in 2012-13, when it was recorded at 4.8%.
Data released by the Comptroller General, the chief accounting officer of the Indian government, showed on Friday that India’s Fiscal deficit was Rs 9.36 lakh crore in 2019-20 against the revised estimate of Rs 7, 67 lakh crore.
This was mainly due to tax revenues below almost Rs 1.5 lakh crore from the revised tax estimates. Tax revenue was Rs 13.55 lakh crore in 2019-20 against revised estimates of more than Rs 15 lakh crore.
On Friday, separate data released by the Central Bureau of Statistics showed that India’s nominal GDP grew only 7.2% to Rs 203 lakh crore. Together, these two factors increased the budget deficit as a percentage of GDP.
During her budget presentation on February 1, Finance Minister Nirmala Sitharaman invoked a safeguard clause in the Fiscal Responsibility and Budget Management Act for 2019-20 and 2020-21. This allowed the government to deviate from the budget deficit targets for these two years by 0.5 percentage points, to 3.8% and 3.5%, respectively.
The deficit, which signifies the gap between public revenue and expenditure, is higher than the revised estimate of 3.8% for the 2019-2020 fiscal year, which translated into 4.59% of GDP, while the revenue deficit which signifies the deficit between current income and current expenses was at 3.27% against 2.4 per cent in the revised estimates. The revenue receipts during the year worked out to be only 90 per cent of the revised estimate.
India’s first participation in the final of the
India’s first participation in the final of the Chess Olympiad is undoubtedly proof of its growing stature internationally. But warnings accompany glory. The feat is undoubtedly historic, but India is still far from living up to the performance of chess superpowers like Russia, China or the United States.
What is the relevance of the Chess Olympiad?
- The biennial Chess Olympiad, the world’s largest team tournament, is to play what the Davis Cup is to tennis, a celebration of team spirit. But like its tennis counterpart, the Chess Olympiad is not seen as the pinnacle of greatness in the game. Rather, it is a testament to a country’s depth of talent; It’s ironic that Norway is hardly a force despite world champion Magnus Carlsen.
- The world n ° 5 Maxime Vachier-Lagrave from France or Anish Giri from the Netherlands did not reach the knockouts. Also missing the American couple of Fabiano Caruana and Hikaru Nakamura, ranked respectively No. 2 and No. 18 in the world.
- In the past, Viswanathan Anand has skipped the Olympiad to focus on the World Championship.
- For these reasons, chess, like tennis, is above all an individual activity, the Olympiad does not have the same brilliance as a World Championship or the Candidates. In the past, big chess has given priority to Linares and Tata Steel in the Chess Olympiad.
- With 163 teams in the fray, it’s the biggest chess tournament in the world, but not the biggest. The game itself fundamentally celebrated individual glory more than team triumphs. The only time the Chess Olympiad has been followed with enthusiasm is during the height of the Cold War.
- It is not surprising that the USSR won it more often (18 times), and even after its fragmentation, Russia won the gold medal six times. Former Soviet states like Armenia and Ukraine have successfully broken Russia’s monopoly in recent years.
What is the format of the Olympiad?
- The large number of participants in an Olympiad only makes the fast format viable. The classic format will last too long, while the blitz does not feel suitable for a tournament called “Olympiad”.
- The format has further shortened this duration due to the online participation mode; it is played for 15 minutes and with an increase of five seconds per game, compared to 25 plus 10 in previous editions.
- It also made structural changes, such as the rules that at least half of the squad must be made up of young male and female players. Until this year, they were the top four players plus a substitute.
- The logic of FIDE is that it brought more diversity, even though it upset several teams that had disproportionate male-to-female ratios like the United States and Iran.
- So, in fact, the Olympiad juxtaposed the Regular Olympiad, a Women’s Olympiad and a Junior Olympiad, which according to the chess world diluted the level of competition of the tournament.
- The addition of the junior segment benefited India when it met China. The tough clashes between senior men and women ended in draws.
- But the Indian juniors proved to be better than China’s as R Praggnanandhaa edged out Yan Liu and Divya Deshmukh edged out Jiner Zhu to give India a 4-2 victory.
How to put in perspective the career of dreams in India?
- Now is the perfect time to check the reality out. Although five-time world champion Anand sparked a chess boom in the country throughout the 1990s and 1990s, no Indian player has looked good enough to be considered a suitable successor.
- There have been flashes of talent, but none with Anand’s global potential, which only widens the halo around him.
- WGMs Koneru Humpy and Harika Dronavalli have endured mixed tournaments: they were strong against China but broke under relentless aggression from the Armenians.
- However, there is hope for the future as Praggnanandhaa (who has lost only one of their matches) and Deshmukh performed well. Nihal Sarin, who was in good shape this year.
- India were also lucky, for example, in the quarterfinals against a formidable Armenia. Haik Martirosyan lost network connectivity and wasted time as he went to make his 69th move against Nihal Sarin.
- FIDE firmly asserts that if a player’s internet connection is lost, for two minutes or less, they will not only lose the match, but will also be expelled from the tournament. Armenia appealed to FIDE for Sarin’s victory, but was rejected.
- By the time Martirosyan lost connection, the party was on a razor’s edge.
How should you put India’s dream run in perspective?
- This is an ideal time for a reality check. Although five-time World Champion Anand did trigger a chess boom in the country throughout the 90s and the noughties, no Indian player has looked good enough to be called a fitting successor.
- There have been glimpses of talent, but none with the world-beating potential of Anand – which only enlarges the halo around him.
- WGMs Koneru Humpy and Harika Dronavalli endured mixed tournaments — they were solid against China but cracked under the relentless aggression of the Armenians.
- There, though, is hope for the future, as both Praggnanandhaa (who lost just one of his games) and Deshmukh have put in strong performances. So has Nihal Sarin, who has been in fine form this year.
- India has enjoyed slices of luck as well – for example, in the quarterfinal against a formidable Armenia. Haik Martirosyan lost Net connectivity and lost time when he was to make his 69th move against Nihal Sarin.
- The FIDE sternly states that if a player’s Internet connectivity is lost, for two minutes or less, they will not only lose the match, but also be banned from the tournament. Armenia appealed to FIDE on Sarin’s win, but it was rejected.
- At the time Martirosyan lost connection, the match was on a knife’s edge. An angry Levon Aronian tweeted:“In our match against India Haik Martirosyan lost on time due to disconnection from http://chess.com. We proved that our connection was stable. It was a problem with access to http://chess.com, not on our side. All we asked for was to continue that game from the same position and same time.
Is it too much to ask?”
So, rather than seeing the achievement as a definitive sign of India’s emergence as a chess powerhouse it would be helpful to see it as an indicator of the potential it has to be a powerhouse. The result could thus be a catalyst to the end result.
India: Divided in zones united against pandemic
- 33% population in red zone, 43% in orange.
- The 284 districts falls in the orange zone account for about 43 per cent of the population,
- There are 319 districts in the green zone, this form 44 per cent of the total districts, but account for only about a quarter of the population.
- While 17 percent of the population in the red zone is in Maharashtra, 16 per cent are in Uttar Pradesh and 12 per cent in West Bengal.
- The 130 districts in the red zone form 17 per cent of the total districts in the country, but account for about 33 per cent of the population (2011 Census).
- The 284 districts in the orange zone — 39 per cent of the total districts — account for about 43 per cent of the population.
- The 319 districts in the green zone form 44 per cent of the total districts, but account for only about a quarter of the population.
- While 17 percent of the populations in the red zone are in Maharashtra, 16 per cent are in Uttar Pradesh and 12 per cent in West Bengal.
- According to the revised guidelines, green zones are those which have not reported any fresh case in the last 21 days, down from the 28 days earlier.
- Red zones are defined by taking into account the total number of active COVID-19 cases, doubling rate of confirmed cases, and extent of testing & surveillance feedback.
- The new classification means that some districts which have not reported cases for 14 days can still be listed in the red zone.
- Earlier, just two criteria for these classifications i.e. total cases and doubling rates. But as the cases increase, the recovery rates change, sampling requirement increases, and we need to change sampling and identification criteria.
- It should be more broad-based, multi-factorial so that every eventuality for identifying critical areas for intervention is identified and no zone which can go on to become a problem area in the future should be missed out.
- This is how red and orange zones are defined now. It is critical to preempt an undercurrent of cases that can become unmanageable for the district tomorrow.
- The list is dynamic – there were 170 red zones on April 15, there are 130 now. However, 42 districts that used to be orange zones are now red zones.
- A comparison with an Integrated Disease Surveillance Programme (IDSP) list from April 27 shows that 48 districts that had reported no fresh cases for the last 14 days have now been listed as orange or red.
- Lakhisarai in Bihar had reported no new case in 28 days on April 27, but is now an orange zone.
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India: A lower-middle-income country
The World Bank divides the world’s economies into four income groups: low-income countries, lower-middle, upper-middle and high income countries. The rankings are updated each year on July 1 and are based on the current GNI per capita in USD (using the exchange rates of the Atlas method) of the previous year (i.e. 2019 in this case).
The classifications change for two reasons
- In each country, factors such as economic growth, inflation, exchange rates and population growth influence GNI per capita. Reviews of national accounts methods and data can also affect GNI per capita.
- To maintain the income classification thresholds set in real terms, they are adjusted each year according to inflation. The special drawee rights (SDR) deflator is used, which is a weighted average of the GDP deflators of China, Japan, the United Kingdom, the United States and the euro area.This year, the thresholds have increased in line with this measure of inflation.
Highlights of this Classification
- National accounts reviews played an important role in the upward review of Benin, Nauru and Tanzania.
- For Sudan, the GNI series for 2009-2018 has been revised following the exchange rate revisions. The 2018 GNI per capita has been revised to $ 840 from the previously published $ 1,560.
- Algeria, Indonesia, Mauritius, Nepal, Sri Lanka and Romania were very close to the respective thresholds last year.
- Until last year (fiscal year 2019), the income classifications were for analytical purposes and did not influence the terms of the World Bank loans.
- However, since the last fiscal year, the high income threshold has also been a determining factor for interest rates.
- Surcharges apply to the interest rates of countries that have been classified as high income for two consecutive years.
- New thresholds are determined at the start of the World Bank’s fiscal year in July and remain fixed for 12 months regardless of subsequent revisions to estimates.
- The thresholds for income classification have increased from last year due to SDR inflation.
As of July 1, 2019, the new thresholds for classification by income are:
| Threshold | July 2019/$ (new) | July 2018/$ (old) |
| Low income | ||
| Lower-middle income | 1,026 – 3,995 | 996 – 3,895 |
| Upper-middle income | 3,996 – 12,375 | 3,896 – 12,055 |
| High income | > 12,375 | > 12,055 |
The following countries are assigned to new income groups
| New group | Old group | GNI/Capita/$ (2018) as of July 1, 2019 | GNI/Capita/$ (2017) as of July 1, 2018 | |
| Comoros | Lower-middle income | Low income | 1,320 | 760 |
| Georgia | Upper-middle income | Lower-middle income | 4,130 | 3,790 |
| Kosovo | Upper-middle income | Lower-middle income | 4,230 | 3,890 |
| Senegal | Lower-middle income | Low income | 1,410 | 950 |
| Sri Lanka | Upper-middle income | Lower-middle income | 4,060 | 3,840 |
| Zimbabwe | Lower-middle income | Low income | 1,790 | 910 |
| Argentina | Upper-middle income | High income | 12,370 | 13,040 |
India is in lower – middle class
India continues to be a lower-middle-income country along with 46 others, while Sri Lanka has climbed to the upper-middle-income group for the fiscal year 2020, according to the World Bank’s classification of countries by income levels, released on July 1.
- Sri Lanka entered the lower-middle-income group in the fiscal year 1999, from the low-income category and continued for over two decades, before moving to the upper-middle-income group this year.
- India became a lower-middle-income nation from low-income in the fiscal year 2009.
- Of 218 economies, 80 are in the high-income group, 60 in the upper-middle, 47 in the lower-middle and 31 in the low-income group.
- The classification is updated on the first day of July every year. The gross national income per capita used for this year’s classification is based on 2018 data.
- Besides Sri Lanka, in 2019 six other countries – Argentina, Comoros, Georgia, Kosovo, Senegal and Zimbabwe – have seen classification changes based on income levels.
- Argentina is the only country that slipped from the high-income to upper-middle-income group. The rest moved up.
India and BRICS
- The Maldives with a gross national income of $9,310 or Rs 6,36,432 and Sri Lanka with a gross national income of $4,060 or Rs 2,77,542, are the only two countries in South Asia in the upper-middle-income group.
- India with a gross national income of $2,020 or Rs 1,38,087; Bangladesh with a gross national income of $1,750 or Rs 1,19,630; Bhutan with a gross national income of $3,080 or Rs 2,10,549 and Pakistan with a gross national income of $1,580 or Rs 1,08,009 fall in the lower-middle-income group.
- Meanwhile, Afghanistan with a gross national income of $550 or Rs 37,598 and Nepal with a gross national income of $960 or Rs 65,626 are among the low-income group economies.
- Among fellow developing economies – BRICS – India is the only country in the lower-middle-income group.
- The others: Brazil at $9,140 or Rs 6,24,810; Russia at $10,230 or Rs 6,99,323; China at $9,470 or Rs 6,47,369 and South Africa at $5,720 or Rs 3,91,019 are in the upper-middle-income group.
- The high-income threshold is also a deciding factor for lending rates since 2018-19, before which income classifications did not influence lending terms.
- “Surcharges are applied for lending rates of countries which have been categorized as high income for two consecutive years,” a World Bank release said.
India records largest reduction in number of people living
About 273 million Indians moved out of multidimensional poverty between 2005-06 and 2015-16, according to a UN report, which noted that India has recorded the largest reduction in the number of people living in this category.
Released Thursday, the study titled ‘Charting pathways out of multidimensional poverty: Achieving the SDGs’ was based on a global multidimensional poverty index (MPI) which measures the complexities of poor people’s lives, individually and collectively, each year. The MPI was observed in 75 countries from the East, Central and South Asia, Europe, Latin America and the Caribbean, Sub-Saharan Africa as well as the Pacific. The report was meant to provide a comprehensive picture of global trends in multidimensional poverty covering five billion people.
- The data, released by the United Nations Development Programme (UNDP) and the Oxford Poverty and Human Development Initiative (OPHI), shows that 65 out of 75 countries studied significantly reduced their multidimensional poverty levels between 2000 and 2019.
- Of these 65 countries that reduced their Multidimensional Poverty Index (MPI) value, 50 also reduced the number of people living in poverty.
- The report said that four countries—Armenia (2010-2015/2016), India (2005/2006-2015/2016), Nicaragua (2001-2011/2012) and North Macedonia (2005/2006-2011) halved their global MPIT value and did so in 5.5-10.5 years.
- These countries show what is possible for countries with very different initial poverty levels. They account for roughly a fifth of the world’s population, mostly because of India’s large population, the report said.
- As four countries halved their poverty, one of them India (2005/2006-2015/2016) did so nationally and among children and had the biggest reduction in the number of multidimensionality poor people (273 million).
- The report noted that India saw the most people moving out of multidimensional poverty some 270 million people between 2005/06 and 2015/16.
- In a footnote related to the number of 273 million people moving out of poverty, the report said that the number of people living in multidimensional poverty in India is based on population data from United Nations Department of Economic and Social Affairs (UNDESA) (2019), which imply a larger number of multidimensional poor people in 2006; previous estimates were based on UNDESA (2017).
- The report additionally notes that India and Nicaragua’s time periods cover 10 and 10.5 years respectively, and during that time both countries halved their MPIT values among children. So decisive change for children is possible but requires conscious policy efforts, it said.
- Fourteen countries reduced multidimensional poverty in all their sub national regions: Bangladesh, Bolivia, the Kingdom of Eswatini, Gabon, Gambia, Guyana, India, Liberia, Mali, Mozambique, Niger, Nicaragua, Nepal and Rwanda.
- The report stressed that while the new figures released show that before the COVID-19 pandemic hit, progress was being made in tackling multidimensional poverty that progress is at risk. COVID-19 is having a profound impact on the development landscape.
- But this data – from before the pandemic – is a message of hope. Past success stories on how to tackle the many ways people experience poverty in their daily lives, can show how to build back better and improve the lives of millions, Director of OPHI at the University of Oxford Sabina Alkire said.
- While data is not yet available to measure the rise of global multidimensional poverty after the pandemic, simulations for 70 countries in the developing world, based on the anticipated impacts of the virus on just two components of the global MPI nutrition and school attendance suggests how much impact the crisis could have unless it is addressed.
- In three scenarios of varying deterioration in which 10, 25 and 50 per cent of people who are multidimensionally poor or vulnerable become undernourished, and half of primary school-aged children no longer attend school, poverty levels could be set back 8 to 10 years.
- “But even if we look only at the impact on nutrition, if anticipated increases in undernutrition are not prevented or swiftly reversed, the setback could range between 36 years,” it said.
- The data shows that across 107 developing countries, 1.3 billion people, or 22 per cent, live in multidimensional poverty. The data also reveals that the burden of multidimensional poverty disproportionately falls on children. Half of the 1.3 billion poor (644 million) have not yet turned 18, while 107 million are 60 or older, a particularly important figure during the COVID-19 pandemic. About 84.3 per cent of multidimensionally poor people live in sub-Saharan Africa. The report also said that 10 countries account for 60 per cent of unvaccinated children, and 40 per cent of children unvaccinated for DTP3 live in just four countries: Nigeria, India, Pakistan and Indonesia.
- Approximately 273 million people moved out of multidimensional poverty in India, the study noted. It also states that three South Asian nations — India, Bangladesh and Nepal — were among the 16 fastest countries to reduce their MPI value.
“India remains the country that has the largest reduction in number of poor, with over 270 million persons leaving poverty 2005-6 to 2015-16.” The study also addresses the coronavirus pandemic, stating how the global crisis had unfolded in the middle of the analysis. While the study could not gauge the rise of worldwide poverty after the pandemic, it has predicted that if left unaddressed the Covid crisis could set back global progress across 70 developing countries by 3-10 years.
OPHI director Sabina Alkire, who led the development of the multidimensional poverty index (MPI) in 2010, said,
Calculating multidimensional poverty
- Multidimensional poverty encompasses the various deprivations experienced by poor people in their daily lives such as poor health, lack of education, inadequate living standards, poor quality of work, the threat of violence, and living in areas that are environmentally hazardous, among others.
- MPIT is the Multidimensional Poverty Index estimate that is based on harmonized indicator definitions for strict comparability over time.
- The MPI is calculated based on these indicators — deprivation of nutrition, schooling, cooking fuel, sanitation, drinking water, housing and assets.
- According to the study, it is the poor and disadvantaged people who suffer the most from climate change and environmental degradation, which is why they carry a “double burden”.
- They are the most vulnerable to environmental degradation, air pollution, lack of clean water, and unhealthy sanitation conditions and also the ones who don’t get sufficient nutrition or proper housing.
- The 75 nations in the study were given an intensity of deprivation percentage based on their MPI values. According to the study, 55.1 per cent of the population in India lived under multidimensional poverty in 2005-06.
- In 2015-16, it came down to 27.9 per cent. As of 2015-16, the intensity of deprivation was 43.9 per cent, while the population under severe multidimensional poverty was 8.8 per cent.
- According to the study, 37.7 crore people in India lived under multidimensional poverty as of 2018.
- As of 2016, the percentage of people in India who were deprived of nutrition was 21.2 per cent.
- People who were deprived of cooking fuel was 26.2 per cent.
- Those deprived of sanitation and drinking water were 24.6 per cent and 6.2 per cent respectively.
- Deprivation of electricity and housing figures stood at 8.6 per cent and 23.6 per cent for the year.
- The study also highlights the correlation between multidimensional poverty and immunisation.
- The percentage of children receiving three doses of diphtheria, tetanus and pertussis (DTP3) vaccines had been used as an indicator of how well countries were providing routine immunisation.
- According to the study, 10 countries accounted for 60 per cent unvaccinated children.
- Around 40 per cent of the children who were not vaccinated for DTP3 lived in four countries — India, Nigeria, Pakistan and Indonesia.
- The report also stated that populated developing countries could contribute considerably to a large number of unvaccinated children despite achieving high immunisation coverage.
- The study cited India as an example where 2.6 million children were “undervaccinated”.
- New figures released today show that before the COVID-19 pandemic hit, progress was being made in tackling multidimensional poverty, according to the global Multidimensional Poverty Index (MPI), a measure that looks beyond income to include access to safe water, education, electricity, food and six other indicators.
- Now that progress is at risk. The data, released by the United Nations Development Programme (UNDP) and the Oxford Poverty and Human Development Initiative (OPHI), shows that 65 out of 75 countries studied significantly reduced their multidimensional poverty levels between 2000 and 2019.
- Sierra Leone made the fastest progress in reducing their global MPI value. It is one of seven Sub-Saharan African countries in the top ten fastest-moving countries, alongside Côte D’Ivoire, Guinea, Liberia, Mauritania, Rwanda and Sao Tome and Principe.
- India saw the most people moving out of multidimensional poverty – some 270 million people between 2005/6 and 2015/16. 70 million people in China left multidimensional poverty between 2010 and 2014. In Bangladesh, numbers declined by 19 million between 2014 and 2019.
Addressing Multidimensional Poverty in a post-COVID-19 world
- While data is not yet available to measure the rise of global multidimensional poverty after the pandemic, simulations for 70 countries in the developing world, based on the anticipated impacts of the virus on just two components of the global MPI – nutrition and school attendance – suggests how much impact the crisis could have unless it is addressed.
- In three scenarios of varying deterioration in which 10, 25 and 50 percent of people who are multidimensionally poor or vulnerable become undernourished, and half of primary school-aged children no longer attend school, poverty levels could be set back 8 to 10 years.
- But even if we look only at the impact on nutrition, if anticipated increases in undernutrition are not prevented or swiftly reversed, the setback could range between 3–6 years.
- Among the 1.3 billion people still living in multidimensional poverty today, more than 80 percent are deprived in at least five of the ten indicators used to measure health, education and living standards in the global MPI.
- The data also reveals that the burden of multidimensional poverty disproportionately falls on children. Half of the 1.3 billion poor have not yet turned 18. While 107 million are 60 or older.
- For instance, in Sub-Saharan Africa, 55 percent of the population (558 million people) is multidimensionally poor. Of these, 98 percent (547 million people) do not have access to clean cooking fuel, 84 percent (470 million people) lack access to electricity and 66 percent (366 million people) do not have access to clean drinking water.
India – Nepal border dispute
Nepal’s parliament is expected to formally approve a revised map of the country this week, which includes three areas; Lipulekh pass, Kalapani and Limpiyadhura in western Nepal competing with its giant neighbor India.
Nepal and India share an open border of about 1,880 km (1,168 miles). The two countries have finalised maps covering 98% of the boundary, but these three areas cover about 370 sq km (140 square miles).
The strategic Lipulekh pass connects the Indian state of Uttarakhand with the Tibet region of China. Nepal and China have been irritated by India’s recent initiatives, as Delhi launched its new map of the border region in November after dividing Indian-administered Kashmir into Jammu and Kashmir and Ladakh. The map incorporated some of the territories in dispute with Nepal within the borders of India.
Nepal surrendered part of its western territory in 1816 after the defeat of its forces by the British East India Company. The subsequent Sugauli treaty defined the origin of the Kali River as the border point of Nepal with India.
But the two countries differ in the source of the Kali River. India argues that the exact coordinates of the river were not mentioned in the treaty and claims that better surveying techniques have redesigned the map in the following years.
In reality, the three disputed areas have been firmly under the control of India for some sixty years and the inhabitants of these areas are now Indian citizens, taxpayers in India and voting in Indian elections. Nepalese politicians argue that while the country was going through decades of political crisis followed by a Maoist-led insurgency, they were unable to raise the border dispute with India.
As a landlocked nation, Nepal has been dependent on Indian imports for many years, and India has played an active role in Nepal’s affairs.
But in recent years, Nepal has moved away from the influence of India, and China has gradually filled the space for investment, aid and loans. China sees Nepal as a key partner in its Belt and Road Initiative (BRI) and wants to invest in Nepal’s infrastructure as part of its grand plans to boost global trade.
Last year, President Xi Jinping became the first Chinese leader to visit Nepal since Jiang Zemin in 1996. During his visit, the two countries decided to strengthen their ties in a “strategic partnership”.
For India, the Lipulekh Pass has security implications. After his disastrous 1962 border war with China, India was concerned about a possible Chinese intrusion across the pass and wanted to maintain the strategic Himalayan route to protect himself from future incursions. Since then, the pass has proven to be a subject of contention.
In May this year, Indian Defense Minister Rajnath Singh launched an improved 80 km (50 mi) route through the pass. These improvements will reduce the travel time of Hindu pilgrims who use it, but it was this decision that sparked the diplomatic dispute with Nepal.
The road connects the Pithoragarh of Uttarakhand with the Lipulekh Pass, which Nepal considers part of its own territory, with the Indochinese border. Nepal subsequently delivered a diplomatic note to the Indian envoy to Kathmandu, Vinay Mohan Kwatra, on May 11, asking India to hold virtual talks at the level of foreign ministers, which was also rejected. Finally, on May 20, the Oli government released a new map showing the disputed territories of Limpiyadhura, Lipulekh and Kalapani within its borders, which India has categorically rejected.
The 80 km road leads to the Lipu Lekh pass in LAC, through which the pilgrims from Kailash Mansarovar leave India for China to reach the mountain and the revered lake as the abode of Siva. The last 4 km section of the road leading to the pass is not yet finished.
As Nepal reaches the final stage of amending its constitution to adopt a controversial new map, it shows the disputed territories of Limpiyadhura, Lipulekh and Kalapani within its borders. The bill, which seeks to amend Schedule 3 of the Nepalese Constitution to reflect the new map in its national emblem, will be considered on Tuesday by the House of Representatives (HoR) or the lower house of the Nepalese parliament. It will also be discussed in the upper house or the National Assembly. Members of the Nepalese parliament will have 72 hours to respond, after which the bill will be approved.
Building roads to the disputed FTA with China has been a difficult exercise for the government. The border routes of India and China, as they are called, were conceptualized in the late 1990s by an advisory group called China Study Group, approved at the highest level of the Cabinet Security Committee and set on fire green for construction in 1999.
But deadlines were moving targets, and it was only after the 70-day deadlock between Doklam and China in 2017 that India realized with surprise. that most of these routes remained on the drawing board. In all these years, only 22 have been completed.
The Standing Committee on Defense, in its 2017-2018 report, declared that “the country, surrounded by difficult neighbors, is a vital necessity to follow, the construction of roads and the development of adequate infrastructure along the borders”.
The parliamentary committee called for an increase in budgetary allocations for the BRO. Another report on border routes, presented by the Standing Committee in March 2019, noted that CRICs are crucial for “effective border management, security and infrastructure development in inaccessible areas adjacent to the Chinese border”.
Nepal’s objection was the inclusion of Kalapani on the map, indicating that it is part of Uttarakhand. The area is located at the junction between India, China and Nepal.
The publication of the map took protesters to the streets. The ruling Nepalese Communist Party and the Nepalese Opposition Congress also protested. The Nepalese government called India’s decision “unilateral” and said it would “defend its international border”, while the Department of External Affairs said the map “faithfully reflected the country’s sovereign territory.” India”.
The border between Nepal and India was delimited by the Sugauli Treaty of 1816, by virtue of which it renounced the entire territory west of the Kali River, also known as the Mahakali River or the Sarada River.
The river has become the limit. The terms were reiterated by a second treaty between Nepal and Briitsh India in 1923. Rival land claims focus on the source of the Kali.
The case of Nepal is that the river comes from a stream in Limpiyadhura, northwest of Lipu Lekh. Thus Kalapani, Limpiyadhura and Lipu Lekh fall east of the river and are part of the Far West province of Nepal in the Dharchula district.
New Delhi’s position is that Kali comes from sources well below the pass, and that if the Treaty does not delimit the area north of these sources, administrative and income records dating back to the 19th century show that Kalapani was from the Indian Side and counted as part of the Pithoragarh district, now in Uttarakhand. Both sides have their own maps of the British era as proof of their positions.
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