#everydayquiz #the hindu #business Standard #indian Express
THE
HINDU: Stagflation risk ahead
BUSINESS STANDARD: Design in India
INDIAN EXPRESS: For
the farmer
THE HINDU: Return of terror in Indonesia
The multiple terror attacks in Jakarta,
the Indonesian capital, which left at least seven dead, mark the return of
organised Islamist violence to the country after a brief period.
The Southeast
Asian country witnessed several terror attacks during the last decade,
including the 2002 Bali bombing that killed over 200 people. Most of such
attacks were carried out by the home-grown terrorist group,Jemaah Islamiyah,
which has links with al-Qaeda. An effective military campaign against the JI by
the government, along with U.S.-model counter-terror strategies, helped
Indonesia break up the extremist network and arrest the tide of terror strikes.
But Thursday’s attack, the first major terror assault in the country in six
years, has rekindled fears that extremists are regrouping themselves at a time
when it is going through a tough economic phase. Indonesia has blamed Islamic
State for the attack. The apparent target of the attackers was a downtown mall
with outlets of Starbucks and Burger King, as well as a diplomatic quarter in
Jakarta. It’s evident that the attackers wanted to inflict maximum damage, much
the same way the Bali tourist hotspot was attacked. But the plan didn’t
succeed, according to initial reports, as the gunmen were stopped at the mall
and sent back to a police post, where they opened fire.
Though major attacks
were halted after the Malaysian leader of the JI was killed in a shootout in
rural Indonesia in 2009, Jakarta has stepped up security measures in recent
times in the wake of growing Islamist challenges. If militants radicalised at
home and trained in Afghanistan posed security challenges in 2000-09, now
radicalised youth get military training in Syria and Iraq. Up to 700
Indonesians are estimated to have travelled to Syria and Iraq to join Islamic
State. The government has expressed concern that their return would reinforce
the broken extremist networks, bringing back another phase of organised
violence. There was a massive crackdown on suspected Islamists on New Year's
eve. For the Islamists, Indonesia has always been a high-stakes game. Though
their influence among Indonesian society is negligible and their networks were
broken up by the state, the latest attacks show they still possess the
capability to hit life. It is bad news for the government of President Joko
Widodo, which faces the challenge of rejuvenating an economy hit by a slowdown
and falling commodity prices. Mr. Widodo, who came to power in 2014, has been
trying to portray Indonesia as a peaceful, stable place to attract investments
to fund growth. Terror attacks would certainly make his job harder. A bigger
challenge is to prevent the return of attacks along the model of the last
decade. To stop Islamists making inroads into the world’s largest Muslim society,
the government has to take on both the extremist organisations and the
extremists’ ideas. President Widodo should not let Islamists have their way.
tide
The
alternate rising and falling of the sea, usually twice in each lunar day at a
particular place, due to the attraction of the moon and sun.
as·sault
Make a
physical attack on.
re·kin·dle
Relight
(a fire).
ap·par·ent
Clearly
visible or understood; obvious.
in·flict
Cause
(something unpleasant or painful) to be suffered by someone or something.
halt
Bring
or come to an abrupt stop.
rad·i·cal·ize
Cause
(someone) to become an advocate of radical political or social reform.
re·in·force
Strengthen
or support, especially with additional personnel or material.
crack·down
Severe
measures to restrict or discourage undesirable or illegal people or behavior.
re·ju·ve·nate
Make
(someone or something) look or feel younger, fresher, or more lively.
THE
HINDU: Stagflation risk ahead
The latest Index of
Industrial Production data, showing a contraction in factory output in
November, should set alarm bells ringing in North Block, especially when read
along with the acceleration in
retail inflation. While the reasons for the slump in industrial production,
including the festival holidays, were broadly known, the magnitude of overall
decline as well as the drops in specific industries are cause for concern. Both
basic goods and capital goods – proxies for manufacturing and investment demand
– contracted 0.7 per cent and 24.4 per cent, respectively. The government’s IIP
figures also come close after the Nikkei India Manufacturing Purchasing
Managers’ Index, where the survey revealed a drop in output in December when
companies scaled back production on a decline in new orders. The gathering
consensus among economists is that, save a few bright spots like automobiles
and consumer durables, demand is precariously placed. Two key drivers, the
overseas export markets and the rural economy, are both facing independent
challenges. Global trade growth has been becalmed by China’s slowdown and is now being roiled by the yuan’s depreciation, while back-to-back deficient monsoons have sapped rural consumption
capacity. The economy’s momentum, thus, is threatened by the prospect of a
sustained slowdown that may need to be countered urgently by corrective fiscal
interventions. With the Consumer
Price Index (CPI)-based reading rising
for a fifth straight month in December to 5.6 per cent, the accelerating retail
inflation could end up posing a significant risk, of combining with the
faltering growth to produce stagflation.
Some economists,
including the Chief Economic Adviser Dr. Arvind Subramanian, have mooted the
idea of the government temporarily straying from its fiscal consolidation path
in order to enable it to step up spending on infrastructure to pump prime the
economy, especially given the low levels of private investment. Any additional
public expenditure, when coupled with the increased payouts for salaries and
pensions as part of the implementation of the Seventh
Pay Commission’s recommendations and
the One Rank, One Pension scheme, will in turn fuel price pressures at the
retail level and could complicate the Reserve Bank of India’s inflation
targeting agenda and monetary policy calculus. While oil prices remain in free fall,
offering succour, food prices continue to climb pushing food inflation to 6.4
per cent in December. And the outlook on that front is hardly reassuring, with
reports that unseasonal weather conditions including an El Nino-induced milder
winter could lead to the rabi crop yield ending up well below expectations in
several regions. With the RBI’s bi-monthly monetary policy and the annual
Central budget set to bookend February, all eyes will be on the next set of
monthly IIP and inflation data to see if the price gains will plateau, as the
central bank had predicted in December, or continue to trend up, and whether
output growth recovers or not.
stag·fla·tion
Persistent
high inflation combined with high unemployment and stagnant demand in a
country's economy.
con·trac·tion
The
process of becoming smaller.
pre·car·i·ous
Not securely
held or in position; dangerously likely to fall or collapse.
be·calm
Leave
(a sailing vessel) unable to move through lack of wind.
roil
Make (a
liquid) turbid or muddy by disturbing the sediment.
sap
Gradually
weaken or destroy (a person's strength or power).
fal·ter
Start
to lose strength or momentum.
moot
Raise
(a question or topic) for discussion; suggest (an idea or possibility)
stray
Move
away aimlessly from a group or from the right course or place.
suc·cor
Assistance
and support in times of hardship and distress.
re·as·sure
Say or
do something to remove the doubts and fears of someone.
BUSINESS STANDARD: Design in India
Private defence companies are rightly pleased
about the Defence Procurement Procedure of 2016 (DPP-2016), the eighth version
of the DPP, which Defence Minister Manohar Parrikar outlined on Monday, but
will take another two months to be promulgated. Private industry chiefs believe
that the central issues that have dogged equipment acquisition have finally
been addressed. Besides recommendations from the private sector, the new policy
also reflects many ideas offered by the Dhirendra Singh Committee that
submitted its recommendations last year.
Perhaps the most far-reaching change in DPP-2016 is the recognition of indigenous design and development as more important than manufacturing components as per blueprints given by foreign vendors. While manufacturing indeed creates blue-collar jobs, and a manufacturing ecosystem is essential for a defence industry; it is the design and development of systems and weapons platforms that create strategic and technological autonomy, and long-term self-sufficiency in defence. It is one thing to manufacture aerospace and defence components for global defence supply chains, and quite another to design and develop a fighter aircraft, even one with many foreign components, systems and sub-systems. Besides strategic autonomy, indigenous design and development create intellectual property and white-collar jobs for India's large scientific and technological community. The incorporation of a new procurement category into DPP-2016 - termed Indigenous Design, Development and Manufacture (IDDM) - and the top priority it will enjoy in the procurement hierarchy, signals new intent.
In the past few years, a vibrant procedure to encourage indigenous manufacturing, with the government funding indigenous design and development of specific platforms to the extent of 80 per cent of the project cost, has been recognised as central for developing the defence industry. Yet, cumbersome procedures and inefficient implementation have so far allowed only two manufacturing projects to be awarded. Now DPP-2016 intends to revitalise indigenous manufacturing by creating three separate categories. In the first, government funding has been increased to 90 per cent of the project cost. In the second category, companies would put their own money into a project (and thus be spared the ministry's oversight), while being assured of orders for a successful development. The third category reserves projects worth less than Rs 3 crore for the small-scale industry, which is where high-technology innovation traditionally occurs in defence. The key to success in indigenous manufacturing lies, first, in choosing projects wisely and then, secondly, in letting companies focus on their projects without government interference. Allowing industry to fund its own design and development, while providing assurances that its expenses would be met, is an ingenious solution for this.
What the government would do well to change before DPP-2016 comes into force is the defence ministry's decision to raise the offset threshold from Rs 300 crore to Rs 2,000 crore. There will be few buyers for the ministry's rationale that offsets raise the cost of equipment by 20 per cent. If that were indeed so, why have offsets been imposed on contracts worth more than Rs 2,000 crore? The reality is that the defence ministry has not been able to formulate suitable offset demands, contract them effectively and account for the fulfilling of offsets obligation. It would be a pity if defence manufacturers are denied orders because of this inefficiency.
Perhaps the most far-reaching change in DPP-2016 is the recognition of indigenous design and development as more important than manufacturing components as per blueprints given by foreign vendors. While manufacturing indeed creates blue-collar jobs, and a manufacturing ecosystem is essential for a defence industry; it is the design and development of systems and weapons platforms that create strategic and technological autonomy, and long-term self-sufficiency in defence. It is one thing to manufacture aerospace and defence components for global defence supply chains, and quite another to design and develop a fighter aircraft, even one with many foreign components, systems and sub-systems. Besides strategic autonomy, indigenous design and development create intellectual property and white-collar jobs for India's large scientific and technological community. The incorporation of a new procurement category into DPP-2016 - termed Indigenous Design, Development and Manufacture (IDDM) - and the top priority it will enjoy in the procurement hierarchy, signals new intent.
In the past few years, a vibrant procedure to encourage indigenous manufacturing, with the government funding indigenous design and development of specific platforms to the extent of 80 per cent of the project cost, has been recognised as central for developing the defence industry. Yet, cumbersome procedures and inefficient implementation have so far allowed only two manufacturing projects to be awarded. Now DPP-2016 intends to revitalise indigenous manufacturing by creating three separate categories. In the first, government funding has been increased to 90 per cent of the project cost. In the second category, companies would put their own money into a project (and thus be spared the ministry's oversight), while being assured of orders for a successful development. The third category reserves projects worth less than Rs 3 crore for the small-scale industry, which is where high-technology innovation traditionally occurs in defence. The key to success in indigenous manufacturing lies, first, in choosing projects wisely and then, secondly, in letting companies focus on their projects without government interference. Allowing industry to fund its own design and development, while providing assurances that its expenses would be met, is an ingenious solution for this.
What the government would do well to change before DPP-2016 comes into force is the defence ministry's decision to raise the offset threshold from Rs 300 crore to Rs 2,000 crore. There will be few buyers for the ministry's rationale that offsets raise the cost of equipment by 20 per cent. If that were indeed so, why have offsets been imposed on contracts worth more than Rs 2,000 crore? The reality is that the defence ministry has not been able to formulate suitable offset demands, contract them effectively and account for the fulfilling of offsets obligation. It would be a pity if defence manufacturers are denied orders because of this inefficiency.
prom·ul·gate
Promote
or make widely known (an idea or cause).
dog
Follow
(someone or their movements) closely and persistently.
in·dig·e·nous
Originating
or occurring naturally in a particular place; native.
incorporation
Consolidating
two or more things; union in (or into) one body
pro·cure·ment
The
action of obtaining or procuring something.
en·cour·age
Give
support, confidence, or hope to (someone).
cum·ber·some
Large
or heavy and therefore difficult to carry or use; unwieldy.
INDIAN EXPRESS: For
the farmer
The Narendra Modi government’s new Pradhan Mantri Fasal
Bima Yojana (PMFBY) is worth commending for bringing crop insurance
centrestage. Farmers, unlike most other economic agents, are exposed to
production (weather) as well as price (market) risks. Given the extent of risk
involved in growing any crop — ranging from prolonged dry spells and pest
attacks to price crash at the time of harvesting — no insurer would normally
want to enter this segment. Even if they do, most farmers cannot afford to fork
out the huge premiums based on actuarial or statistical risk assessment. There
is a case, therefore, for the government to subsidise crop insurance
premiums that will ultimately also encourage farmers to invest in productivity
improvements and new technologies. Such subsidy is any day preferable to those
on fertiliser, electricity or water, which only promote inefficient resource
use. The fact that even farmers in a country like the US pay just 35 per cent
of the average premium on crop insurance policies — entailing
annual federal subsidies of $10 billion — only proves the point.
Under the PMFBY, farmers
would pay only 2 per cent premium for all kharif crops, while it would be 1.5
per cent for rabi and 5 per cent for horticultural crops. The gap between the
premiums they would pay and actuarial rates will be met by the government
without any upward limit on this subsidy. From a farmer’s perspective, this
represents significant improvement over the existing Modified National
Agricultural Insurance Scheme. Under the latter, the government subsidised a
maximum of 75 per cent of the actuarial premium. Moreover, the premium rate on
which the sum insured was calculated was itself capped, so as to limit both the
farmer’s claim and the government’s outgo. But now, there will be no such
indirect capping of the sum insured.
The question that
naturally arises is, what would be the fiscal implications of the new scheme?
The Modi government is planning to launch it from the coming kharif season,
which, going by statistical probability, should be relatively better for
agriculture, following two back-to-back monsoon failures. But in a drought year
like the current one, the outgo from the PMFBY — assuming it is implemented in
the manner proposed — may not be small. That price may still be worth paying for
a country where only a fifth of farmers have crop insurance coverage.
Subsidised premiums and prompt claims settlement enabled by remote sensing and
GPS technology — as opposed to patwaris and crop-cutting experiments — should
help substantially expand coverage. An increase in the area insured should also
bring down premium rates, through spreading of risks across more farmers. That
would also help contain the government’s subsidy burden.
com·mend
Praise
formally or officially.
fork
An
implement with two or more prongs used for lifting food to the mouth or holding
it when cutting.
prompt
(of an
event or fact) cause or bring about (an action or feeling).
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