PM Modi's cashflow woes just got more bearable thanks to RBI switch

Agencies
December 18, 2018

Dec 18: Facing cash flow problems just months before a national election, India’s Prime Minister Narendra Modi could have a savior in the country’s new central bank chief.

India’s spending is exceeding its revenue, leaving the government looking for funds to help an ailing banking sector -- key to boosting loans and investment and creating jobs. Finance ministry officials estimate the Reserve Bank of India has at least 3.6 trillion rupees ($50 billion) more capital than it needs, which they say can be used to help bolster the banks.

“It will be difficult for the government to meet its targets absent substantial new revenue from asset sales or as a transfer from the RBI,” said Sasha Riser-Kositsky, an analyst with Eurasia Group. “The government could also seek to defer some payments into the next fiscal year in order to paper over the deficit.”

Keeping the economic engines firing ahead of a general election next year is crucial for Modi, whose party was rocked by defeats in key regional elections last week. While using the RBI’s surplus capital to support the banks was a point of contention with former governor Urjit Patel, it may not be the case now.

Shaktikanta Das, a former bureaucrat picked by Modi to steer the RBI after Patel’s exit, is open to hearing the government out on its concerns about the economy -- whose growth slowed in the three months through September. Getting the RBI to share its capital will help the government boost growth without missing its budget deficit goal of 3.3 percent of gross domestic product.

While the government has denied having asked for any specific amount from the RBI, the central bank has agreed to form an expert panel to decide on the appropriate level of reserves it should hold.

The government plans to infuse about 420 billion rupees ($5.9 billion) to recapitalize some state-run banks this month. It also has to pay for a health care program and purchase crops from farmers at guaranteed prices.

Everyone agrees that more needs to be done to recapitalize state-run banks, but not all approve of how the administration is going about it. The government’s increasing involvement in the central bank’s affairs could undermine gains in the country’s banking system, S&P Global Ratings said.

Still, with the fiscal deficit having touched 104 percent of budget estimate in October and revenue from tax and asset sales trailing estimates, the RBI may be Modi’s best hope of swaying voters. Here’s why:

Revenue

With total revenue in April to October accounting for 45.7 percent of the full-year target and lower than last year’s 48.1 percent, pressure is mounting on tax authorities and the asset sales department to make good on goals.

Monthly collections of the new goods and services tax have trailed the 1.1 trillion rupees target, and the finance ministry is banking on direct tax to make up for the shortfall. Sales of stakes in state-run companies have also lagged, with only 42 percent of the targeted revenue realized so far.

Expenditure

Spending in April to October was 59.6 percent of the budget estimate. A program to provide guaranteed prices to farmers for crops is expected to add to the food subsidy bill, while fuel subsidy has risen on higher oil prices.

The cost of a 120 billion-rupee health care program, which kicked off in September, is expected to be reflected in the fiscal second half.

Meeting budget goals may require cutting expenditure, but that may be easier said than done in an election year.

"With an election on the horizon, I suspect sparking a bit more growth will take precedence over meeting fiscal obligations," said Richard Rossow, an Indian policy expert at the Washington-based Center for Strategic and International Studies. "Modi thinks he has a very real chance at serving a second term, so he may moderate any inclination to break the bank too severely."

Comments

Add new comment

  • Coastaldigest.com reserves the right to delete or block any comments.
  • Coastaldigset.com is not responsible for its readers’ comments.
  • Comments that are abusive, incendiary or irrelevant are strictly prohibited.
  • Please use a genuine email ID and provide your name to avoid reject.
News Network
March 15,2024

yemen.jpg

The leader of Yemen’s Houthis has said that the Yemeni armed forces will continue their retaliatory operations against Israeli-affiliated commercial vessels, preventing the passage of the ships even through the Indian Ocean and through the Cape of Good Hope.  

About 34 Houthi fighters have been killed since the Yemeni armed forces began to attack shipping lanes in solidarity with the people of Palestine under attack in Gaza by Israel, Ansarullah leader Abdul Malik al-Houthi said in a televised speech on Thursday.

Yemeni forces have repeatedly launched drones and missiles against Israeli and Israel-bound ships since mid-November, saying they are acting in solidarity with Palestinians against Israel's war on Gaza.

Al-Houthi said 73 ships have been targeted in Yemeni operations in support of Gaza so far, adding rarely does any ship associated with the Israeli enemy pass through Bab al-Mandab.

“This week, support operations included 12 operations targeting ships and barges, executed with a total of 58 ballistic and cruise missiles and drones in the Red Sea, the Arabian Sea, and the Gulf of Aden,” he said.

“Our operations this time reached unprecedented ranges, with 3 operations reaching the Indian Ocean, by the grace of Allah,” he added. “The total number of targeted ships and barges reached 73.”

Al-Houthi said that the operations will continue as long as the aggression and siege on Gaza persist.

The United States and Britain began striking Yemen in January in order to dissuade the country from targeting Israeli ships which carry arms and logistics for the onslaught on the besieged Gaza Strip.

Al-Houthi said the Americans and the British have received “painful blows” from the Yemeni armed forces in retaliation.

The American-British “aggression will not affect the escalating course of our operations in terms of range, momentum, precision, and strength,” said Al-Houthi.  

“What can stop the Yemeni military’s maritime operations is only the cessation of aggression and siege on Gaza,” he noted.

The American stubbornness and escalation of aggression result in only one outcome: the expansion of the conflict, the widening of the circle of war and events, and the tension of the situation at the regional level in general, he stated.

He went on to say that the Yemeni armed forces will continue and effectively expand the range of the operations to reach areas and locations that the enemy never expected.

Al-Houthi said what insures the navigation security in the Red Sea is for any country not to participate in the Israeli aggression against Gaza.

He said the Americans and those who drag the United States towards the militarization of the Red Sea are the ones who undermine international navigation.

“By the grace of Allah and His assistance, we aim to prevent the passage of ships associated with the Israeli enemy even through the Indian Ocean and from South Africa towards the Cape of Good Hope,” he stated.

“For this important, advanced, and significant step, we have begun to implement our operations related to it through the Indian Ocean and from South Africa towards the Cape of Good Hope,” he said.

There is absolutely no choice for the American and the British but to stop the aggression on Gaza and stop starving the people in Gaza, he declared.

“Our human conscience, our religion, our morals, our dignity, our pride, our belonging to Islam, prohibit us from watching the oppression of Palestine or remaining silent about it,” said Houthi.

He added that the Yemeni military is in continuous development of capabilities and in constant expansion of the stance in its range, effectiveness, and impact.

“The American's actions this week, involving aerial bombings and naval shelling, amounted to 32 bombing raids and strikes, which, as usual, were unsuccessful,” he revealed.

“The impact of the American raids and bombings is negligible regarding our missile and drone capabilities and in terms of continuing operations effectively to counter it, and in preventing ships associated with the Israeli enemy,” he stated.

He concluded by saying that the Yemeni armed forces are continuously escalating, and increasing capabilities to attack enemy ships. “No matter what the Americans do, they will not be able to stop us from supporting the Palestinian people in Gaza.”

Yemenis have declared their open support for Palestine’s struggle against the Israeli occupation since the regime launched a devastating war on Gaza on October 7 after the territory’s Palestinian resistance movements carried out the surprise Operation Al-Aqsa Storm.

The Yemeni Armed Forces have said they won’t stop retaliatory strikes.

The maritime attacks have forced some of the world’s biggest shipping and oil companies to suspend transit through one of the world’s most important maritime trade routes.

Tankers are instead adding thousands of miles to international shipping routes by sailing around the continent of Africa rather than going through the Suez Canal.

Since the start of Israel's genocidal war following Operation al-Aqsa Storm by Gaza-based resistance movements on October 7, 2023, more than 31,000 Palestinians, including many women and children, have lost their lives.

The Israeli military offensive has left a trail of destruction in Gaza, leaving hospitals in ruins and displacing around half of its 2.4 million residents.

Israel has additionally enforced a comprehensive blockade on the coastal sliver, severing the supply of fuel, electricity, sustenance and water to the population residing there.

Comments

Add new comment

  • Coastaldigest.com reserves the right to delete or block any comments.
  • Coastaldigset.com is not responsible for its readers’ comments.
  • Comments that are abusive, incendiary or irrelevant are strictly prohibited.
  • Please use a genuine email ID and provide your name to avoid reject.
News Network
March 15,2024

modiPM.jpg

Bengaluru: Prime Minister Narendra Modi would formally kickstart the BJP's Lok Sabha election campaign in Karnataka on Saturday from Congress President Mallikarjun Kharge's home turf— Kalaburagi.

He is scheduled to address a mega public meeting at the district headquarters town's N V Ground at 2 pm.

Kharge, who had represented Kalaburagi (Gulbarga Lok Sabha segment) twice in the past, lost to BJP's Umesh Jadhav by a margin of 95,452 votes in the 2019 general elections here— the octogenarian leader's first electoral loss in his political life spanning several decades.

BJP has once again fielded Jadhav from the segment.

Speculations are rife that the Leader of Opposition in Rajya Sabha, who has the role of managing the party nationally and coordinating with the opposition I.N.D.I.A bloc, may not contest the coming polls and, instead, the Congress is likely to field his son-in-law Radhakrishna Doddamani, a businessman, who also manages educational institutions.

On March 18, Modi will be in Shivamogga, the home district of veteran BJP leader B S Yediyurappa, and is scheduled to address a huge public meeting at 2 pm.

Yediyurappa's son B Y Raghavendra is the sitting MP from Shivamogga and has been re-nominated by the party. Yediyurappa's other son B Y Vijayendra, who represents Shikaripura assembly constituency in the district, is the state BJP President.

BJP has announced candidates for 20 seats in the State, which has a total of 28 constituencies.

After being ousted from power by the Congress in the 2023 Assembly polls, the BJP now is making a strong bid to regain the lost ground in Karnataka.

The BJP won 25 out of total 28 seats in the previous elections, and had ensured the win of a party supported independent candidate in Mandya. The then ruling Congress-JD(S) alliance had come a cropper winning just one seat each.

It is a role reversal of sorts for JD(S), which joined the NDA last September and has forged an electoral alliance with the BJP. The regional party is expected to contest in three seats— Mandya, Hassan and Kolar.

Sharing details of Modi's visit, state BJP General Secretary Sunil Kumar on Wednesday said BJP National President J P Nadda, Union Home Minister Amit Shah, Chief Minister of Uttar Pradesh Yogi Adityanath along with other leaders will visit different Lok Sabha constituencies for campaigning in the coming days.

Speaking about the party's poll preparations, he said: "We have divided 28 Lok Sabha constituencies into eight clusters for Lok Sabha elections. Keeping in view the local political and geographical background, programmes and strategies are being worked out in those eight clusters."

Several senior leaders including Shah and Nadda have already visited one of these clusters, Kumar said, adding, "Workers' convention, well-wishers' contacts have been made and election preparations are on in all these eight clusters. In the second phase, large public meetings will be held."

Comments

Add new comment

  • Coastaldigest.com reserves the right to delete or block any comments.
  • Coastaldigset.com is not responsible for its readers’ comments.
  • Comments that are abusive, incendiary or irrelevant are strictly prohibited.
  • Please use a genuine email ID and provide your name to avoid reject.
News Network
March 28,2024

russiaattack.jpg

Russia says it is "extremely hard to believe" that Daesh could have staged the recent hugely deadly attack on a Moscow concert hall that the country's intelligence and security officials have blamed on Ukraine and its Western backers.

Four gunmen burst into the Russian capital's Crocus City Hall on Friday and began shooting at the people, who were attending an event. The Takfiri terrorist group has allegedly claimed responsibility for the massacre that killed at least 143.

Speaking on Wednesday, however, Russian foreign ministry spokeswoman Maria Zakharova cast that claim into serious doubt.

"In order to ward off suspicions from the collective West, they urgently needed to come up with something, so they resorted to ISIS (Daesh), pulled an ace out of their sleeve, and literally a few hours after the terrorist attack, the Anglo-Saxon media began disseminating precisely these versions," she said.

The chief of the Russian internal intelligence (FSB), Alexander Bortnikov has suggested that not only Ukraine, but also the United States and Britain might have been behind the shooting.

The Russian Federal Security Service has also said the gunmen planned to travel to Ukraine, where they were to be welcomed as "heroes." The FSB said Western intelligence services aided the attackers.

Russian President Vladimir Putin has also suggested that Ukraine stood to derive benefit from the attack and that Kiev might have played a role.

He has said that someone on the Ukrainian side had prepared a "window" for the gunmen to escape across the border before they were captured in western Russia on Friday night.

Comments

Add new comment

  • Coastaldigest.com reserves the right to delete or block any comments.
  • Coastaldigset.com is not responsible for its readers’ comments.
  • Comments that are abusive, incendiary or irrelevant are strictly prohibited.
  • Please use a genuine email ID and provide your name to avoid reject.