THE HINDU EDITORIAL- September 16, 2017
a) The arc to Tokyo
Japanese Prime Minister Shinzo Abe’s visit to India, part of annual summits between the two countries, has set strategic ties on a fast track. This is best symbolised by the Ahmedabad-Mumbai bullet train project that was launched by Mr. Abe and Prime Minister Narendra Modi. India’s decision to partner with Japan for the 508-km, ₹1.1 lakh-crore project is as much about politics as it is about infrastructure: Japan has been keen to export its high-speed train technology along with rolling stock, and India’s move to confirm the Japanese contracts while China wins projects along its Belt and Road railway line is significant. The joint statement and comments by the two Prime Ministers in Gandhinagar also sent out a similar message that will be read closely in China on several counts. For example, Mr. Abe said North Korea was a “joint” challenge for India and Japan, and the statement contained a phrase about holding countries “that have supported North Korea’s nuclear and missile programmes” accountable, obviously aimed at Pyongyang’s benefactors in Beijing. The clause calling for zero tolerance on terrorism referenced China’s veto on the Jaish-e-Mohammad chief being put on the list of UN-designated terrorists. Both the title of the joint statement, “Toward a free, open and prosperous Indo-Pacific”, and substantive paragraphs on cooperation in the region, indicate a much closer alignment between India and Japan in countering China’s influence in the South China Sea, its forays into the Indian Ocean, and investments in South Asia and Africa. The coming into force of the India-Japan nuclear deal and more military and maritime exercises will buttress such efforts. India has also extended to Japan an offer denied to any other country, which is to assist in infrastructure development in the Northeast. It is clear that the Modi government has set India-Japan ties on an accelerated geopolitical course that will be a major factor in its dealings with the rest of the world, especially China, at a time when the U.S. is perceived to be retreating from the region. Having made this leap, it is imperative that India and Japan also look beyond their lofty geopolitical aims, at the more basic aspects of bilateral engagement. While Japan is India’s largest donor and the third largest provider of FDI, bilateral trade has steadily declined since 2013, and is down to $13.61 billion in 2016-17 from $14.51 billion the year before. The contrast with India-China trade, at $71 billion a year, and Japan-China trade, at $279 billion, is stark, and the decision to finalise four new locations for special Japanese industrial townships may be only one way of addressing the difficulties businessmen face in India. With the opulent pageantry and 8-km roadshow in Gujarat over, it is time to get down to brass tacks and address some of the issues in order to facilitate closer ties between India and Japan, even as the two leaders and militaries forge closer bonds.
- b) Understanding the slowdown
India’s economy is slowing down: GDP growth has lost momentum in each quarter since the one ending March 2016. With every passing quarter, the slowdown is explained away either as a transitory phenomenon or as happening for reasons beyond the government’s control: deficient rains, the sluggish world economy, or lately due to demonetisation and the goods and services tax (GST). The reasons offered change. The economic trend does not.
All four engines slacking
In the boom years during the United Progressive Alliance’s (UPA) tenure, four engines powered the economy: exports, government investments, private consumption, and private investments. Of these, government investments and private consumption were still running at the time the National Democratic Alliance (NDA) took office. The other two were, and remain, out of steam. Official numbers have captured the weakness consistently — in exports for the past three years, and in private investments for more than five years. Yet, the debilitating impact of these on growth has received inadequate policy attention. The pain has begun to spread to the rest of the economy: growth in government investments and private consumption started slowing down in the quarter ending June 2017. The economy’s four growth engines are stalling or slacking. Government investments and private consumption depend on how well the economy is doing. As incomes improve, private spending and tax collections pick up. Let’s look at exports and investments. The global economic downturn that followed the 2008 financial crisis dealt a body blow to exports, before which exports were growing smartly. Recovery in the global economy has lifted exports of most Asian countries, but Indian exports are stagnating, their competitiveness eroded by the overvalued rupee. India’s economic future can improve significantly with investments-led growth. The share of investments, the principal growth engine in the economy, in the GDP has declined steadily for the past five years. The decline in private investments is so sharp that it has off- set the increases in government investments. The steps taken for improving the ease of doing business and the foreign investments regime have proved insufficient in restarting the private investments cycle. As a result, new jobs are not getting created. Without new jobs, consumption will only grow up to a point. Why are investments on hold? The returns-risk projections of projects are not favourable. Companies are not convinced that new factories will be sufficiently protable. Among the variables that affect investment decisions are costs and availability of finance, land, labour, technology, logistics, and taxation. Market prices, or consumer prices inflation, is also a determinant of profitability. The government is politically sensitive. So, it has set a low target for consumer price inflation. For the same reason, it is unable to progress on land and labour reforms. The flow of credit in the economy has thinned to a trickle, as the government moved on bad bank loans belatedly and inefficaciously. Even if big companies can raise finance from alternative sources, the smaller ones cannot. Most of the other factors have escaped policy attention altogether. Additionally, in an environment of constant shocks and unanticipated policy changes, investment decisions tend to get postponed. If people feel unsettled, they are unlikely to invest.
Even though dark clouds loom over the economy, the situation is not irreversible. But the policy response so far has been feeble and misses urgency. It’s not as though there is policy paralysis. In fact, decision-making is speedy, perhaps too much so. The ill-informed idea of demonetisation and the GST rollout demonstrate the growing disconnect between policy tools and objectives. The provisional official statistics show demonetisation proved to be a drag on an already slowing economy, even as we wait for its full impact to be estimated. The damage to the (more vulnerable) informal economy is being measured, and will be plugged to GDP estimates. On revision, past quarters’ GDP growth may turn out to be even slower. The complicated design of the GST may have added to the vulnerabilities of the informal sector. The government insists these measures will prove beneficial over time. There is an inexplicable reluctance to take decisions that will deliver positive results quicker, such as reversing the investments slowdown and the exports stagnation. Politically difficult structural reforms have fallen off the agenda: liberalising land, labour, and agriculture. Part of the problem seems to be the inadequate regard for sound economics and trained economists. The government is inert even to the advice of its own economists; the analyses documented in successive editions of its own publication, the Economic Survey, influenced policy minimally. Chief Economic Adviser Arvind Subramanian has diligently raised red flags over damages to the economy: from bad bank loans to the slowdown of investments, the distorted signals to farmers on what to grow and how much, and the GST’s suboptimal design. The government must start paying heed.
Meaning: Relating to the identification of long-term or overall aims and interests and the means of achieving them.
Example: Strategic planning for the organization is the responsibility of top management.
Synonyms: Calculated, Deliberate
Meaning: Represent by means of symbols.
Example: A tendency to symbolize the father as the sun.
Synonyms: Represent, Exemplify
Meaning: Reinforce someone in (an opinion or feeling).
Example: He fuelled his misogyny by cultivating women who confirmed him in this view.
Synonyms: Verify, Validate
Antonyms: Contradict, Repudiate
Meaning: Required or expected to justify actions or decisions; responsible.
Example: Ministers are accountable to Parliament.
Synonyms: Responsible, Liable
Meaning: The ability or willingness to tolerate the existence of opinions or behaviour that one dislikes or disagrees with.
Example: The tolerance of corruption.
Synonyms: Sufferance, Liberality
Meaning: Bringing wealth and success.
Example: We wish you a Merry Christmas and a prosperous New Year.
Synonyms: Thriving, Buoyant
Antonyms: Depressed, Poor
Meaning: Having a firm basis in reality and so important, meaningful, or considerable.
Example: There is no substantive evidence for the efficacy of these drugs.
Meaning: A position of agreement or alliance.
Example: The uncertain nature of political alignments.
Synonyms: Adjustment, Order
Meaning: Increase the strength of or justification for; reinforce.
Example: Authority was buttressed by religious belief.
Synonyms: Strengthen, Reinforce
Meaning: The basic physical and organizational structures and facilities needed for the operation of a society or enterprise.
Example: The social and economic infrastructure of a country.
Synonyms: Base, Framework
Meaning: Increase in rate, amount, or extent.
Example: Inflation started to accelerate.
Synonyms: Rise, Increase
Antonyms: Decelerate, Drop
Meaning: Withdraw from enemy forces as a result of their superior power or after a defeat.
Example: The French retreated in disarray.
Synonyms: Withdraw, Escape
Meaning: Of vital importance; crucial.
Example: Immediate action was imperative.
Synonyms: Vital, Crucial
Antonyms: Optional, Unimportant
Meaning: A fight or battle between armed forces.
Example: The war’s most significant engagements were fought to keep these sea lanes open; an arrangement to do something or go somewhere at a fixed time.
Synonyms: Appointment, Action
Meaning: A division of a county with some corporate powers.
Example: A small town or village forming part of a large parish.
Meaning: Ostentatiously costly and luxurious.
Example: The opulent comfort of a limousine.
Synonyms: Lavish, Rich
Antonyms: Restrained, Ascetic
Meaning: Elaborate display or ceremony.
Example: The pageantry of George V’s jubilee.
Synonyms: Display, Flourish
Meaning: The impetus and driving force gained by the development of a process or course of events.
Example: The investigation gathered momentum in the spring.
Synonyms: Impetus, Energy
Meaning: A decline in economic activity.
Example: The drop in earnings was due to an extreme economic slowdown.
Synonyms: Decline, Drop
Antonyms: Rise, Increase
Meaning: Not permanent.
Example: Transitory periods of medieval greatness.
Synonyms: Temporary, Transient
Antonyms: Permanent, Perpetual
Meaning: Insufficient or inadequate.
Example: The documentary evidence is deficient.
Synonyms: Lacking, Defective
Antonyms: Excessive, Perfect
Meaning: Make (someone) very weak and infirm.
Example: He was severely debilitated by a stomach upset.
Synonyms: Exhausting, Tiring
Meaning: Decrease or reduce in intensity, quantity, or speed.
Example: The flow of blood slacked off.
Synonyms: Reduce, Slacken
Antonyms: Increase, Intensify
Meaning: The action of using up a resource.
Example: Industrialized countries should reduce their energy consumption.
Synonyms: Depletion, Use
Meaning: A decline in economic, business, or other activity.
Example: A downturn in the housing market.
Synonyms: Decline, Descent
Antonyms: Improvement, Increase
Meaning: Cease developing; become inactive or dull.
Example: Teaching can easily stagnate into a set of routines.
Synonyms: Decline, Deteriorate
Antonyms: Rise, Boom
Meaning: Gradually destroy or be gradually destroyed.
Example: This humiliation has eroded what confidence Jean has.
Synonyms: Abrade, Crumble
Meaning: Fix the value of (something, especially a currency) at too high a level.
Example: Sterling was overvalued against the dollar.
Meaning: (typically of something regarded as good) become smaller, fewer, or less; decrease.
Example: The birth rate continued to decline.
Synonyms: Decrease, Reduce
Meaning: A factor which decisively affects the nature or outcome of something.
Example: Pure force of will was the main determinant of his success.
Synonyms: Element, Motivation
Antonyms: Effect, Issue
Meaning: Later than should have been the case.
Example: The High Command had belatedly altered its tactics.
Synonyms: Slowly, Behind
Meaning: Lacking the power to produce a desired effect.
Example: Social conventions honed over thousands of years were suddenly inefficacious.
Synonyms: Impotent, Feeble
Meaning: Not expected or predicted.
Example: One of the unanticipated gains of the reforms has been the shift of emphasis to primary care.
Synonyms: Unexpected, Quick
Antonyms: Expected, Calm
Meaning: Clearly show the existence or truth of (something) by giving proof or evidence.
Example: Their shameful silence demonstrates their ineptitude.
Synonyms: Display, Indicate
Meaning: The quality or state of being exposed to the possibility of being attacked or harmed, either physically or emotionally.
Example: Conservation authorities have realized the vulnerability of the local population.
Synonyms: Blame, Compulsion
Antonyms: Aid, Help
Meaning: Unwillingness or disinclination to do something.
Example: She sensed his reluctance to continue.
Synonyms: Unwillingness, Disinclination
Antonyms: Willingness, Eagerness
37) Fallen off
Meaning: A decrease in something.
Example: A fall-off in work caused by the recession.
Synonyms: Decrease, Fall
Meaning: Lacking the ability or strength to move.
Example: She lay inert in her bed.
Synonyms: Still, Unmoving
Antonyms: Moving, Active
Meaning: Give a misleading or false account or impression of.
Example: Many factors can distort the results.
Synonyms: Misrepresent, Pervert
Meaning: Of less than the highest standard or quality.
Example: Suboptimal working conditions.
Synonyms: Minimal, Trivial
Antonyms: Excellent, Ideal
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