THE HINDU EDITORIAL -8, June 2017
a) Holding the rate
The Reserve Bank of India’s decision to keep the policy interest rate unchanged, and reaffirm its “neutral” policy stance, clearly indicates that policymakers at the central bank are singularly focussed on their primary remit of ensuring price stability while supporting economic growth. That the RBI’s Monetary Policy Committee has chosen to do so in the face of clamour for a rate cut, and Consumer Price Index data and the bank’s own survey of households’ inflation expectations appearing benign, points to the MPC’s determination to reassert the central bank’s independence, especially in the rate-setting realm. Laying out its reasoning for opting to remain “watchful”, the RBI has raised pertinent questions relating to the outlook for price stability, the foremost being whether the “unusually low momentum in the reading for April will endure”. It posits that the easing trend in inflation, excluding food and fuel, may be transient given its vulnerability to rising rural wage growth and strong consumption demand. And the elephant in the room, in the MPC’s opinion, is the real prospect of inflationary spillovers from the rising risk of fiscal slippages caused by farm loan waivers — Uttar Pradesh has set the stage, and Maharashtra’s government has vowed to come up with the State’s largest-ever. Observing that inflation has fallen below 4% only since November 2016, the RBI has reiterated its commitment to keeping the headline reading close to that figure on a “durable basis”. The MPC acknowledges that the latest monsoon forecast augurs well for the agriculture sector, and when viewed in conjunction with continuing robust government spending, it ought to help undergird overall momentum in the economy. The RBI’s business expectations index based on its industrial outlook survey of April points to upbeat prospects for the manufacturing sector in the second quarter of the current fiscal year, spurred by rising rural and overseas demand. However, on the growth front too the RBI’s policy panel has opted for caution given that the Central Statistics Office’s GDP and GVA (gross value added) data released last month suggest that the effects of demonetisation have lingered on. The RBI has accordingly cut its GVA growth forecast for the year ending in March 2018 by 10 basis points to 7.3% and flagged the risks that global political uncertainties, rising input costs and wage pressures and the twin balance sheet problem (an over-leveraged corporate sector and stressed lenders) pose to a revival in private investment demand and a more durable economic expansion. Spelling out the priorities, the MPC has said monetary policy can be effective only when private investment has revived, the banking sector’s health is restored and infrastructure bottlenecks are removed. To do otherwise “risks disruptive policy reversals later and the loss of credibility” of the RBI.
b) The PM-in-waiting
Leo Varadkar, the son of an Indian immigrant, is set to be Ireland’s Prime Minister after he won an internal contest to lead the centre-right Fine Gael, the senior coalition partner in the Republic’s minority government. The outspoken Mr. Varadkar, the incumbent Social Protection Minister, is to take over the reins of the party and country from Enda Kenny, who is stepping down after heading the party for 15 years and the country for six. Mr. Varadkar will be Ireland’s first-ever openly gay Prime Minister with minority and immigrant roots. He is just 38 years old, and thus in a club of young world leaders with France’s Emmanuel Macron and Canada’s Justin Trudeau. While it is indeed remarkable that a person of Mr. Varadkar’s background has been elected to lead Ireland, what is even more striking is that during the ruling party’s elections voters focussed not on his background but on his policies. This speaks volumes for how far the country has come on its social attitudes. Ireland is deeply religious. Catholicism, the state religion, has a far-reaching influence on many aspects of Irish life, including birth, death and marriage. Abortions, except to save the mother’s life, are illegal; divorce, legalised in the 1990s, requires a four-year separation; and gay marriage was legalised just recently. As Prime Minister, Mr. Kenny steered Ireland out of the financial collapse of 2008-2010 and campaigned, successfully, for the European Union (EU) to recognise Ireland’s unique position during the forthcoming Brexit negotiations between Brussels and London. The Republic of Ireland is contiguous with Northern Ireland, and therefore the only EU country that shares a land border with the U.K. Mr. Kenny leaves office having convinced the EU to address the fallout for Ireland during Brexit negotiations. He also leaves Mr. Varadkar a vastly improved economy, with an unemployment rate close to 7%, about half of what it was in 2012. Mr. Varadkar will now have to build on his predecessor’s success and address his failures, including a severe housing shortage and a police service that has demonstrated an ability to collude with other public agencies to punish whistle-blowers and cover up corruption. As regards Brexit, Mr. Varadkar will have to ensure that the Common Travel Area, a mechanism by which British and Irish citizens can live and work in the two countries, is maintained, and that the border between the Republic of Ireland and Northern Ireland is not reinstated. He will also have to manage the economic impact of Brexit on trade and jobs in the event that the negotiations diminish Britain’s access to the European single market. Finally, as Prime Minister, he will be expected to shepherd further reforms in laws relating to divorce and abortion if he wishes to further align the Republic’s values with those of the EU and other liberal democracies.
Meaning: To give your support to a person, plan, idea, etc. for a second time; to state something as true again.
Example: The government yesterday reaffirmed its commitment to the current peace process.
Synonyms: Affirm, Assert, Reassert
Meaning: The force that keeps an object moving or keeps an event developing after it has started.
Example: Once you push it, it keeps going under its own momentum.
Synonyms: Impetus, Energy, Force
Meaning: To suffer something difficult, unpleasant, or painful.
Example: We had to endure a nine-hour delay at the airport.
Synonyms: Undergo, Tolerate, Last, Bide
Meaning: A general increase in prices and fall in the purchasing value of money.
Example: Failure to adjust benefits for inflation was a favorite strategy in Latin America.
Synonyms: Increase, Gain, Growth, Rise, Mounting, Escalation
Meaning: Lasting for only a short time; temporary.
Example: A glass of whisky has only a transient warming effect.
Synonyms: Temporary, Fleeting
Antonyms: Permanent, Perpetual
Meaning: A reduction in the rate, amount, or standard of something.
Example: The party leader is said to be concerned at the slippage in the recent opinion polls.
Synonyms: Shortfall, Deficiency, Shortage
Meaning: To make a determined decision or promise to do something.
Example: The guerrillas vowed (that) they would overthrow the government.
Synonyms: Oath, Promise, Swear
Meaning: To say something again, once or several times.
Example: The government has reiterated its refusal to compromise with terrorists.
Synonyms: Repeat, Recapitulate
Meaning: To be a sign of especially good or bad things in the future.
Example: The company’s sales figures for the first six months augur well for the rest of the year.
Synonyms: Portend, Foretell, Seer
Meaning: Secure or fasten from the underside, especially by a rope or chain passed underneath.
Example: Until there are some real human institutions undergirding their society, they need a semi-authoritarian center.
Meaning: To encourage an activity or development or make it happen faster.
Example: Rising consumer sales have the effect of spurring the economy to faster growth.
Synonyms: Stimulus, Incitement, Fillip
Meaning: To take a long time to leave or disappear.
Example: After the play had finished, we lingered for a while in the bar hoping to catch sight of the actors.
Synonyms: Wait around, Loiter, Procrastinate
Antonyms: Leave, Vanish
Meaning: A problem that delays progress.
Example: Is there any way of getting around this bureaucratic bottleneck?
Synonyms: Traffic jam, Constriction
Meaning: Causing trouble and therefore stopping something from continuing as usual.
Example: His teacher described him as a noisy, disruptive influence in class.
Synonyms: Troublemaking, Unmanageable, Disturbing
Antonyms: Well Behaved, Conservative
Meaning: A temporary alliance for combined action, especially of political parties forming a government.
Example: His party failed to win an overall majority and a coalition government was formed.
Synonyms: Alliance, Federation, Amalgamation, Conjunction
Meaning: Officially having the named position.
Example: The incumbent president faces problems which began many years before he took office.
Synonyms: Binding, Obligatory, Current
Antonyms: Optional, Past
Meaning: A person who has come to a different country in order to live there permanently.
Example: The churches offered support and shelter to Central American immigrants.
Synonyms: Newcomer, Non-native
Meaning: An object or undertaking that is unpleasant or badly made or carried out.
Example: He didn’t bring up one single argument in respect to the abortion of a budget that was tabled this year.
Synonyms: Failure, Disaster, Mess
Meaning: A piece of advice or information concerning the development of a situation.
Example: The need for the NHS to be given a clear steer as to its future direction.
Synonyms: Guide, Direct
Meaning: Someone who had a job or a position before someone else, or something that comes before another thing in time or in a series.
Example: My predecessor worked in this job for twelve years.
Synonyms: Ancestor, Forerunner
Antonyms: Successor, Descendant
Meaning: To act together secretly or illegally in order to deceive or cheat someone.
Example: It was suspected that the police had colluded with the witnesses.
Synonyms: Conspire, Machinate, Intrigue