Photo: Mint
Photo: Mint

Exports decline, Greece gets a lifeline and IPL in jeopardy

Sluggish global demand drags on Indian exports; Greece strikes deal for critical bailout; IPL's future bleak after suspension of CSK, RR

1. Retail inflation picks up

Retail and wholesale inflation continued to diverge. While the Consumer Price Index (CPI) rose for the eighth straight month in June, the Wholesale Price Index (WPI) fell. The divergence between the two measures of inflation is partly owing to the difference in relative weights of commodities in both indices. Food has a much higher weight in consumer price indices. Higher prices of vegetables and pulses had pushed retail inflation higher in June. With the Reserve Bank of India looking at the retail measure, this dents hopes of an interest rate cut next month.

2. India’s exports plunge again

India’s exports continued to decline in June, unlike China’s, which reported a surprise recovery. Sluggish global demand has been the main factor. Petroleum product exports suffered because of the fall in crude oil prices. Exporters have blamed the lack of competitiveness as well. This has happened despite the rupee depreciating against currencies such as the dollar, euro and yuan over the past year. Imports, too, contracted for the month by 13.4%.

3. A bailout for Greece

After a long and difficult battle, Greece struck a deal on Monday morning for a third bailout from its European creditors, averting, at least for now, a collapse of its banking system and possible expulsion from the single-currency euro zone. On Thursday morning, the reform bill that will pave the way for financial aid was approved by Greece’s parliament with 229 votes in the 300-seat chamber. In exchange for funding worth up to €86 billion (Rs5.95 trillion), Greece has accepted reforms including significant pension adjustments, increases to value-added tax, an overhaul of its collective bargaining system, measures to liberalize its economy and tight limits on public spending.

4. Iran, world powers reach nuclear agreement

Iran and six world powers—the US, the UK, Russia, China, France and Germany—agreed to curb the Islamic republic’s nuclear programme in return for the lifting of sanctions, thus capping two years of tough diplomacy. It promises to end a 12-year stand-off over Iran’s nuclear activities that has at times drawn threats of military action from the US as well as Israel. With new flows of Iranian oil expected to hit an oversupplied market, the price of Brent crude oil has declined significantly. India primarily imports oil from Iran, but this has been hampered by the restrictions placed by global powers.

5. Skill India Mission launched

Prime Minister Narendra Modi on Wednesday launched yet another ambitious scheme—the National Skill Development Mission, which aims to train 500 million Indians by 2022. Of these, at least 110 million workers are required in over 25 select sectors, including textiles, automobiles, construction, banking and retail. Noting that India will have a surplus manpower of 40-50 million over the next decade, Modi emphasized the need to provide this manpower with the skills and ability required to tackle global challenges, warning that the demographic dividend would otherwise become a hindrance.

6. CSK, RR suspended from IPL

A Supreme Court-appointed panel on Tuesday suspended Chennai Super Kings (CSK) and Rajasthan Royals from the Indian Premier League (IPL) for two years. The panel, headed by former chief justice of India R.M. Lodha, suspended Gurunath Meiyappan, team principal of CSK, and Raj Kundra, co-owner of RR, for life from all cricket-related activities for betting and bringing the IPL and the game of cricket into disrepute. This makes the IPL’s future uncertain, with analysts fearing a hit to the cricket tournament’s brand value as the number of teams is reduced to six.

7. Fed rate hike likely this year

Federal Reserve chief Janet Yellen on Wednesday signalled that the US central bank might raise short-term interest rates later this year. This comes on the back of a number of encouraging signs that the US economy is reviving after a brutal winter. Yellen, however, added that the importance of the first rate hike should not be over-emphasized because interest rates are likely to remain at very low levels “for quite some time after the first increase". The Fed’s benchmark rate has been at a record low near zero since December 2008.

8. Minuscule growth in the middle class

While a fast-growing middle class is supposed to be the driving force for growth, a new survey by Pew Research Centre shows growth of this category has been insignificant. While the poverty rate in India fell by 15 percentage points to 20% in the decade to 2011, the share of the middle class rose to only 3% from 1%. In contrast, China’s poverty rate fell 29 percentage points to 12%, while its middle-class population rose from 3% to 18%.

9. Govt expands drug price control list

The government has extended price caps to an additional 39 drugs, ranging from a commonly used diabetes treatment to antibiotics. The current price control list covers more than 500 drugs. Drug makers have opposed price cuts and say drug prices in India are already among the lowest in the world. The move comes after a parliamentary committee in April said that the scope of price control needs to be enlarged further as a majority of people in India live on less than $2 a day, thus making health insurance scarce.

10. Telecom panel backs regulating Skype, WhatsApp calls

A department of telecom panel on Net neutrality has recommended that local voice calls made using apps such as Skype and WhatsApp be regulated, thus favouring arguments made by telecom operators. The move has been criticized by Net neutrality advocates as protectionist and in violation of the idea of a free and open Internet. While the report has suggested regulating calls made over the Internet within the country, it suggests exceptions for text messages and voice calls to overseas destinations.

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