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Business News/ Mint-lounge / Mint-on-sunday/  Cabinet reshuffle, surplus rainfall and cheaper houses
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Cabinet reshuffle, surplus rainfall and cheaper houses

Prime Minister Narendra Modi adds 19 ministers to cabinet; India records 35% surplus rainfall; and house price index slows in March quarter

Nineteen lawmakers were inducted to the Union cabinet last week, taking the total count to 78. Photo: PTIPremium
Nineteen lawmakers were inducted to the Union cabinet last week, taking the total count to 78. Photo: PTI

1. India’s services PMI falls for third straight month

India Nikkei services purchasing managers index (PMI) fell to a seven-month low of 50.3 in June, down from 51 in May, as new orders declined. The new business sub-index eased to an 11-month low of 50.5 in June from May’s 50.9. The weakness in the services sector can be attributed to fragile global economic conditions and the subdued pace of domestic activity. Moreover, important services sectors such as real estate and financial services are reeling, with the latter coming under pressure due to large provisioning by banks, as was reported by Mint.

2. US Fed minutes indicate rate hikes on hold

The US Federal Reserve released the minutes of its July monetary policy meeting last week, which revealed that Fed officials remained divided on the interest rate path amid an uncertain economic outlook. The global economic uncertainty caused by the UK’s exit from the European Union appears to have significantly reduced the chances of imminent interest rate hikes, after the Fed had raised interest rates last year. The interest rate swaps on dollar-denominated loans suggests that markets are also confident that recent events have pushed back prospects of a Fed rate hike.

3. Jaypee sells cement business to UltraTech

Debt-strapped Jaypee Group managed to salvage a deal that involved the sale of its cement assets to Aditya Birla Group-owned UltraTech Cement Ltd. The total enterprise value agreed upon is Rs16,189 crore, which is slightly higher than the original deal value. The sale of the cement business is crucial for Jaiprakash Associates, which is seeking to reduce debt by raising money through asset sales. As of 31 March, Jaiprakash Associates had a consolidated debt of Rs58,250 crore. Meanwhile, lenders took control of the debt-laden company, invoking strategic debt restructuring norms to convert Jaiprakash Associates’s debt into equity.

4. Modi government inducts 19 new ministers

The NDA government at the centre expanded the number of ministers and reshuffled portfolios, taking the total number of ministers to 78, just three short of the constitutional limit. Notably, former environment minister Prakash Javadekar was promoted to cabinet rank and given the human resource development ministry, while outgoing minister Smriti Irani has been shifted to the textiles ministry. Most of the new ministers sworn in hailed from Madhya Pradesh, Rajasthan, Uttar Pradesh and Gujarat. As of the now, the most number of ministers, whether of cabinet rank or ministers of state, hail from Uttar Pradesh, Madhya Pradesh and Bihar.

5. Spate of terror attacks mar holy month

The last week of the Muslim holy month of Ramzan witnessed terror attacks across the world. Dhaka faced yet another attack on Eid following the 1 July attack on a restaurant. Meanwhile, a massive car bombing in Baghdad reportedly killed more than 250 people. Saudi Arabia was rocked by three bombings in a single day, with one of them in the holy city of Medina, claiming at least four casualties. Meanwhile, media reports indicate that geopolitical rivals US and Russia might be considering increasing cooperation in civil war-ravaged Syria, to jointly fight the Islamic State.

6. India saw 35% surplus rainfall last week

All-India rainfall in the week ended 6 July exceeded the long-period average by 35%, according to the India Meteorological Department. This comes as welcome news following the 11% rainfall deficit in June. The north-west, central and east-north-eastern regions of the country received 57%, 56% and 15% excess rainfall last week, respectively, while the southern peninsula received slightly less than normal rains. The monsoon is reportedly expected to bring heavy rainfall in central India next week. The June to September monsoon season is crucial to India’s rain-fed agricultural economy, with its onset launching the sowing season for summer crops.

7. House price growth slowest in six years

The Reserve Bank of India last week reported that the growth in the all-India house price index (HPI) slowed to 5.2% year-on-year in the quarter ended March, a sharply lower rate of price rise compared to 9.7% y-o-y in the December quarter. On an annual basis, Chennai house prices witnessed maximum increase of 12.1% y-o-y in the March quarter, whereas Jaipur saw maximum contraction (-10.3%). However, as a caveat, the Chennai index is based on both residential and commercial properties. Meanwhile, house price growth rates slowed sharply in Mumbai and New Delhi.

8. India’s air travel market sees fast growth

The International Air Transport Association (IATA) last week announced that among the world’s largest domestic markets, India had the fastest domestic passenger growth in 2015. With annual growth of 18.8% (in a market of 80 million domestic passengers), India’s performance surpassed that of Russia, China and the US. The figures were revealed in the 60th edition of the World Air Transport Statistics. The top five airlines ranked by total passengers carried (domestic and international) were American Airlines (146.5 million), Southwest Airlines (144.6 million, Delta Air Lines (138.8 million), China Southern Airlines (109.3 million) and Ryanair (101.4 million).

9. Centre likely to name Rajan’s successor this month

Reports indicate that the government is likely to appoint RBI governor Raghuram Rajan’s successor after Prime Minister Narendra Modi returns from his four-nation Africa tour. Reportedly, former RBI deputy governors Subir Gokarn and Rakesh Mohan are front-runners to succeed Rajan. Rajan had recently opined that the three-year term for the governor is too short. Comparison shows that the term of the RBI governor remains one of the shortest when compared to other major central banks.

10. India lags behind in the global digital economy

India was ranked 91 out of 139 countries on the Networked Readiness Index, down two places, according to the World Economic Forum’s The Global Information Technology Report. The index reportedly indicates a country’s preparedness to reap the benefits of emerging technologies and capitalize on the opportunities presented by the digital transformation in the global economy. The 2016 edition finds Singapore as the top-ranked country when it comes to networked readiness. Finland, which topped the ranking in 2014, remains in second place for a second year in a row.

Graphics by Ajay Negi

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Published: 10 Jul 2016, 02:08 AM IST
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