Today's Hot Stories – February 08 2013 - PT education

Today's Hot Stories – February 08 2013

Today’s Top 10 Headlines

(1) At Harvard, CAG slams government, netas 
(2) Muslim convert can’t get backward class status: HC
(3) Snowstorm threatens northeast US, over 2,600 flights cancelled
(4) Irked by LIC agents, HDFC Life shoots off legal notice
(5) NTPC share sale: Govt to get about Rs 11,400cr
(6) US challenges India's solar program restrictions at WTO
(7) WC: Mithali's ton helps India save face
(8) SFL: Shyam wins welter weight title in style
(9) AITA rejects players' fresh demands
(10) Google doodles for Jagjit Singh's 72nd birthday

5 Top Stories

(1) UPA policies leading to jobless growth: Study by govt body
(2) All aboard as millions race home for China's biggest holiday
(3) Savings rate to dip to 30% this fiscal: India Ratings
(4) ECB says will monitor impact of euro strength
(5) India's per capita income rises to Rs 5,729 per month

(1) UPA policies leading to jobless growth: Study by govt body

Not only has India witnessed jobless growth during the UPA's tenure, it has also seen millions pushed to become casual labour with little social security, the Institute of Applied Manpower Research (IAMR), a think-tank of the Planning Commission, has said in a recently published research paper, 'Joblessness and Informalization: Challenges to Inclusive Growth in India'.

The report by the government body comes as a scathing comment on the character of economic growth under the UPA. The authors said despite clocking phenomenal growth which has made India the world's fourth biggest economy, "employment in total and in non-agricultural sectors has not been growing. This jobless growth in recent years has been accompanied by growth in casualization and informalization".

The report noted that 15 million workers shifted out of agriculture and into the manufacturing and services sector during 2005-10, leading to agriculture's share in total employment falling from 57% to 53%. In the same period, the construction sector added 18 million people as workers as the government made huge investments in infrastructure.

Most of those moving out of agriculture (during a period in which farm productivity was on the decline) ended up being casual labour in the construction industry with little or no social security, the study said.

"Out of 44 million total employment in construction by 2010, 42 million (informal labour) hardly have any kind of social security benefit attached with it. In other words, 95% of workers in construction sector hardly have any kind of social security coverage," the study said.

This explains why the report is not gung ho about the shift in employment away from agriculture towards manufacturing and services, a development that economists would normally see as positive and as an indicator of an economy in transition.

The authors from the government think-tank warned that a "daunting and complicated task confronting the policy makers is to address the issue of informal employment within the organized sector. This issue of informalization of employment poses a serious challenge in achieving decent work and thereby achieving more inclusive growth and sustainable development".

The research paper said in the period 2005-10, the manufacturing sector saw the loss of 5 million jobs. The services sector, which saw a massive growth of jobs during 2000-2005 of 18 million jobs, witnessed only 4 million additional jobs in 2005-2010. This, the report said, was odd considering the growth period is often called that of 'service-led' growth.

The study by IAMR has a cautionary word for anyone who may proclaim that farm labour was doing better by coming to the cities as migrants to be part of an emerging India. "Undoubtedly, construction driven by significant expansion of infrastructure investment during the 11th five year plan has helped in absorbing surplus workers from agriculture sector. However, ensuring decent employment for those moving out of agriculture remains a big challenge," it said.

India's track record on this front seems to be one of the worst among the developing countries. The study said "what makes India different is that the share of informal workers in the total workforce is well above the other emerging market economies - 93% of all workers compared to 55% in Brazil".

IAMR calculated that the prevalence of informal or casual labour has been increasing not only in the small and medium scale unorganized sector but also in the kind of labour big manufacturers hire. "While the informal nature of employment is predominant in the unorganized sector of the economy, its prevalence is increasing even within the organized segment as well," it said. Almost half of the organized sector labour too is of casual nature, the think tank added.

By 2010, 60% of the organized manufacturing employment was in the nature of informal contracts and 80% of the organized non-manufacturing employment was in the nature of informal contract, the study said.

Source: The Times of India

(2) All aboard as millions race home for China's biggest holiday

Pushing through scores of passengers in the aisle of a cramped train at Beijing West station, Chen Guolan could barely contain her excitement at joining the world's largest annual human migration.

"I have been so busy working away all year, and now I will soon be seeing my family," she said to a group of strangers sitting alongside her as she began an epic 2,000 kilometre journey back to the quiet backwater she calls home.

Chen is one of China's hundreds of millions of migrant workers, who together make most of the 220 million train rides taken during the 40-day travel season before and after the Lunar New Year.

Around 7:30am she left the high-rise apartment where she works as a domestic worker for a family of seven in the capital, a city of more than 20 million people enduring sub-zero February temperatures and heavily polluted air.

Within 48 hours she would be beside her husband and son in the family home in a quiet, rugged area of the warmer south-western province of Sichuan, where the tree-capped mountains are hugged by mist, rather than toxic haze.

Chen had bought her 229 yuan ($37) ticket for the 10.35am to Chongqing two weeks earlier, joining millions who have clogged internet travel sites and queued at train stations to ensure they will be home for China's main national holiday.

Demand is phenomenal. For China's 236 million migrant workers, it is the only time of year they can see their families.

Chen, 50, failed to secure a bed in the train's sleeping compartment but had a seat for the 30-hour journey from Beijing West railway station to Chongqing North.

"I will be OK, I will just get my head down on the table when it is bedtime," she said.

Many were less fortunate, with 40 to 50 passengers forced to stand in each of the carriages, which seat about 120 people in total.

"I do not expect to sleep tonight. But then at least I got a ticket," said one heading for a village on the outskirts of Chongqing, crouching on the floor with two friends.

A group of four young men playing cards in a washing area between the carriages said they had not even contemplated how they would sleep.

"No problem. No problem," repeated one, laughing as he perched on the rim of a sink, cards in hand.

Meanwhile, Chen was in deep conversation with her neighbours. "We are speaking Sichuan dialect," she said, still grinning. "It is so nice to be able to speak my local dialect."

Chen speaks standard Mandarin Chinese during her working life in Beijing, where a typical salary for her job is around 2,500 yuan ($400) a month.

The train pulled into Chongqing on schedule at 4.27pm the following day, but she still had a five-hour bus journey to the city of Yibin ahead of her, followed by another 70 kilometres to the small rural town of Gongxian, and home.

In the moments before she finally arrived at 3am, her son and husband prepared a late-night dinner, the traditional Chinese welcome for a loved one returning from afar.

"I am so happy in my heart. My wife is returning home," said her 59-year-old husband Yuan Youjun, taking a break from cooking pork meatball soup and sliced pork cold-cuts with chilli seeds.

Chen's 23-year-old son Yuan Jinhao was also home from his job at a karaoke venue in a nearby town to welcome his mother.

"Chinese New Year is so important because we'll all be able to spend time together," he said, as he took a break from preparing steamed Chinese bread.

Meanwhile, clearly tired after almost two full days of travelling, Chen pulled her luggage up the hilly street to her home as the moment she had been waiting for all year neared.

With a warm hug she was welcomed inside, before being herded to the dinner table for the local delicacies her family had lovingly prepared.

After spending the year making food for others, it was a meal she had been warmly anticipating.

"The best thing about New Year is being with family. The old, the young. Everyone. I'm so happy," she said.

Source: The Times of India

(3) Savings rate to dip to 30% this fiscal: India Ratings

India Ratings on Thursday warned that the national savings rate will slip further to 30 per cent or so this fiscal, from 30.8 per cent of the GDP last fiscal, if the advance estimates of national income is anything to go by.

Earlier in the day, the Central Statistical Organisation (CSO) said the national savings rate may plunge to a decade year low this fiscal, which had slipped to an eight year low of 30.8 per cent last fiscal.

According to India Ratings chief economist and public finance head Devendra Kumar Pant, the gross domestic savings will slip by 80 basis points to 30 per cent this fiscal.

"The estimates portray a weak picture of stabilizing twin deficits. While the estimated investment rate this fiscal is likely to be similar to FY12, an 80 bps rise in the share of consumption expenditure (private and government) will reduce the savings rate further, leading to further widening of the current account deficit," Pant said in a note.

The domestic saving rate had touched a high of 36.9 per cent in FY08 but since then has steadily fallen. It fell to 33.8 per cent in FY10 and rose a tad in FY11 to 34 per cent but again fell to 30.8 of GDP in FY12.

A major impact of a low savings rate, considered as one of the biggest economic strengths, will be a higher current account deficit (CAD), which is already burgeoning to historic high of 5.3 per cent in Q2.

The CSO, in its advance estimates, pegged GDP growth at a low 5 per cent this fiscal, much lower than consensus estimate of over 5.5 per cent, as the economy is expected to grow only by 4.6 per cent in the second half, against 5.4 per cent in the first half.

The CSO said while the manufacturing sector growth is estimated to increase to 3.1 per cent in H2 from 0.5 per cent in H1, growth of construction, and finance, insurance, real estate and business services is expected to slow down considerably in H2 to 3.3 per cent and 7.3 per cent respectively from 8.8 per cent and 10.1 per cent respectively in H1.

The projected GDP readings this fiscal will be the lowest after FY03 numbers when GDP had grown at 4 per cent. Since then, the economy has been expanding at over 6 per cent, the highest rate being 9.6 per cent in 2006-07 and 9.3 per cent in FY10.

India Ratings said the projection indicates that the economy has not yet bottomed out.

Since the third quarter every analyst was saying that the economy has bottomed out and that FY13 will see the economy clipping at over 7 per cent or thereabout.

These very low growth numbers have implications for fiscal situation, said Pant.

Source: The Times of India

(4) ECB says will monitor impact of euro strength

The European Central Bank will monitor the impact of a strengthening euro on the currency bloc's economy but said it was not a policy target and showed growing confidence in the region.

After the ECB left its main interest rate at 0.75 percent on Thursday, ECB chief Mario Draghi said the exchange rate was near to its long-term average but went further than many analysts had expected.

"The appreciation is, in a sense, a sign of return of confidence in the euro," Draghi told a news conference.

"The exchange rate is not a policy target, but it is important for growth and price stability and we certainly want to see whether the appreciation is sustained and will alter our risk assessment as far as price stability is concerned."

The euro hit a 15-month peak of $1.3711 on February 1. It traded below that level on Thursday.

French President Francois Hollande said on Tuesday the euro zone must develop an exchange rate policy to protect the currency from "irrational movements". Germany has been cooler to any thoughts of exchange rate action.

"Since the last policy meeting the euro exchange rate has gone up as have short-term money market rates, which the ECB cannot ignore completely," said Citi economist Juergen Michels.

Even if it wanted to, the ECB's statutes mean it is ill-equipped to join a currency "race to the bottom".

Furthermore, the world's top central banks are expanding their balance sheets by printing money, or at least not reversing course, while the ECB's balance sheet is tightening, partly due to banks paying back early cheap money the central bank doled out last year.

A by-product of that could be to drive the euro yet higher.

Irish debt deal

Although it took no monetary policy action, sources said the ECB and Ireland reached a compromise on a long-standing dispute over the cost of servicing money borrowed for a failed bank.

Dublin rushed through emergency legislation early on Thursday to liquidate failed Anglo Irish Bank as part of a compromise to avoid paying 3.1 billion euros a year until 2023 on money it took for the stricken lender during a meltdown of the main Irish banks in 2008.

Draghi merely said that the ECB "took note of the Irish operation" but a source close to the negotiations said that was tantamount to approval given the constraints of what he could say. That could go a long way to allowing Ireland to quit its bailout program this year.

Draghi gave a similar view on the state of the euro zone economy to the one he gave in January. Economic weakness was "expected to prevail in the early part of 2013" but later in the year, activity should gradually recover.

He said the move by banks this month to pay back early about 140 billion euros of cheap three-year money the ECB gave them last year was a positive sign.

"This reflects the improvement in financial market confidence," Draghi said, adding that the ECB would watch to see if the money market tightened conditions by stealth.

"We will closely monitor conditions in the money market and their potential impact on the stance of monetary policy, which will remain accommodative," he said.

A Reuters poll of economists last week suggested it would not change rates until at least July 2014.

Bank scandal

Draghi was pressed about how much he knew of the derivatives scandal at Siena's Monte dei Paschi bank, and what he did about it when he headed Italy's central bank from 2006 to 2011.

Italy's third largest and oldest bank has been at the centre of a financial and political storm, facing losses of about 1 billion euros from a series of derivatives and structured finance trades and after a 9-billion-euro acquisition of smaller rival Antonveneta which left it badly weakened.

Draghi said there was no implications for the ECB's future role as a European bank regulator.

"The IMF has publicly stated that their preliminary view is that the Bank of Italy took timely and appropriate action within the limits of legal framework to address problems at (Monte dei Paschi)," he said. "Oversight was close and supervisory action escalated appropriately as (Monte dei Paschi's) problems became acute."

A senior Italian central bank source told Reuters this week that Draghi was informed of doubts raised by Bank of Italy inspectors but had little control over what has been widely criticized as ineffective oversight of the stricken lender.

He has already faced criticism with former Italian economy minister Giulio Tremonti said it was "stupefying" that in his role as supervisor of Italy's banking system Draghi failed to discover or prevent loss-making derivatives trades at Monte dei Paschi. 

Source: The Times of India

(5) India's per capita income rises to Rs 5,729 per month

India's per capita income, a gauge for measuring living standard, is estimated to have gone up 11.7 per cent to Rs 5,729 per month in 2012-13 at current prices, compared with Rs 5,130 in the previous fiscal.

The estimated rate of growth in per capita income for the current fiscal, however, is lower than the previous fiscal when it grew by 13.7 per cent.

"The per capita income at current prices during 2012-13 is estimated to be Rs 68,747 as compared to Rs 61,564 during 2011-12, showing a rise of 11.7 per cent," an official release by the Central Statistics Office (CSO) on Advance Estimate of National Income, 2012-13 showed on Thursday.

The per capita income in real terms (at 2004-05 constant prices) during 2012-13 is likely to attain a level of Rs 39,143 as compared to the first revised estimate for the year 2011-12 of Rs 38,037, it said.

The gross fixed capital formation (GFCF) at current prices is estimated at Rs 29.94 lakh crore in 2012-13 as against Rs 27.49 lakh crore in 2011-12, the release said.

However, at 2004-05 constant prices, the GFCF is estimated at Rs 19.44 lakh crore in the current fiscal as against Rs 18.97 lakh crore in the previous fiscal, it added.

The data also estimated an increase of 13.8 per cent in the government final consumption expenditure (GFCE) to Rs 11.87 lakh crore at current prices for 2012-13 against Rs 10.43 lakh crore in 2011-12.

On private final consumption expenditure (PFCE) for the current fiscal, it has estimated an increase of 12.8 per cent to Rs 57.06 lakh crore at current prices as against Rs 50.56 lakh crore in the previous fiscal.

"These advance estimates are based on anticipated level of agricultural and industrial production, analysis of budget estimates of government expenditure and performance of key sectors like railways, transport other than railways, communication, banking and insurance, availbale so far," said the data.

These estimates have been compiled using the data on indicators available from the same sources as those used for compiling GDP estimates by economic activity, detailed data available on merchandise trade in respect of imports and exports, balance of payments, and monthly accounts of central government, it added further.

Source: The Times of India

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