It is a well known fact that substantial sums of money are used in elections, with cash being used on a much larger scale than ever before. And, unless immediate steps are taken, we may find that huge amounts of fake money in circulation that will create chaotic economic conditions
This will be the seventh straight year when the withdrawal of monsoon, which normally begins in the first week of September, has been delayed to third week of the month
After steering the country away from a drought, the late rally of south-west monsoon is likely to continue for at least another week thus delaying its withdrawal, reports PTI.
"Southwest monsoon will continue to bring rains for a little more time, for a maximum of one week. Withdrawal of monsoon is delayed," Swati Basu, officiating
She said monsoon was still active in the northwest region which spans across Jammu & Kashmir,
However, she said this would be the last phase of seasonal rains as monsoon would begin withdrawing from
This will be the seventh straight year when the withdrawal of monsoon, which normally begins in the first week of September, has been delayed to third week of the month.
Even in 2005, when the withdrawal had started on 2nd September, the progress had stalled after the initial phase with the next push taking place towards month end.
Usually monsoon withdraws from the entire country by September end, but in the past eight years this has been delayed till as long as 11th October.
Copious rains in August and the first half of September has helped dispel fears of a widespread drought, which seemed imminent after deficient rains in June and July.
The remarkable August rally saw 22 of the 36 meteorological sub-divisions get excess or normal monsoon.
However, monsoon was still 8% short of the average rains for the country which are pegged at 89 cm.
The country as a whole has received 739.5 mm rainfall between 1st June and 13th September as against the normal of 801.3 mm for the period.
The month of August saw the country receive 264.7 mm rainfall as against the normal of 261 mm, showing an excess of about 1%.
In June, the country received 31% deficient rains than normal while July saw a monsoon deficiency of 13% which had prompted the government to roll out a slew of measures to tackle the then impending drought-like situation.
Till yesterday as much as 64% of the country has received normal or excess rain this season, while the rest have had deficient rainfall, IMD data showed.
Saurashtra and Kutch, Punjab, Gujarat region, Haryana, West Uttar Pradesh, Marathwada and
Nagaland, Manipur, Mizoram and Tripura have also received 33% deficient rainfall since the delayed onset of monsoon this season.
The benefits of QE3 for India could be an increase in flows into India, thereby boosting the equities market, says a Kotak research note. But QE3 is also likely to boost commodity prices, including global crude oil prices
India is unlikely to benefit much from QE3 (third round of quantitative easing), says a Kotak Research note. Further liquidity is likely to boost commodity prices, including global crude oil prices—a negative for the import bill. Export growth is unlikely to be boosted significantly as Kotak does not expect major economic benefits out of QE3. Thus, there is every chance that the CAD (current account deficit) will stay at an elevated level while the fiscal correction tends to be a moving goal-post even after the hikes in the administered fuel prices, says the Kotak Research note.
Kotak predicts that in the near term enhanced global risk appetite could lead to an increase in flows into India, thereby boosting the equities market and tending to appreciate the currency. However, given continued risks of policy implementation on the European side and with the ‘Fiscal Cliff’ in the US, sustained risk appetite is unlikely. Consequently Kotak expects the Euro-US dollar conversion rate to ultimately correct.
Kotak sticks to its range on the dollar of about Rs54-Rs57, given lasting weakness in domestic fundamentals in India.
Kotak sums up the developments in US, in the context of QE3, as Fed delivers market’s “wish list”. The FOMC (Federal Open Market Committee, which is the policy-making arm of the US Federal Reserve) is committed to expanding the Fed’s balance sheet, basing its arguments on poor labour-market conditions and inflation being below the 2% target.
The Fed will buy MBS (mortgage-based securities) securities worth $40 billion a month, continue with its Operation Twist until the end of the year and maintain near zero rates until mid-2015. Even as economic returns of the QEs are likely to have diminished at the margin, the hope is to attempt to re-flate the economy.
According to the Kotak Research note, the Fed action suggests open-ended monetary easing. Fed’s QE3 is focused mainly on buying $40 billion of agency mortgage-backed securities a month rather than the conventionally close-ended QE1 and QE2. However, the nature of QE3 differs from past QEs, as for the first time the Fed tied the scale, timing and quantum of its asset purchase policy to the progress of the economy on a monthly basis, especially the unemployment rate. It is not clear as to what unemployment rate the Fed is targeting but its own forecasts suggest the unemployment rate might not fall to 7% even by the end of 2014.
Kotak says that as a consequence, the Fed’s purchases of $40 billion of MBS a month could continue for long, given that the long-term comfort level of unemployment rate for the Fed is about 6%. The Fed would also continue to reinvest principal payments from its holdings of agency debt and agency MBS in agency MBS. Effectively, the Fed would be purchasing about $85 billion a month.
Kotak predicts diminishing economic returns of the QE. The Fed has done all that the market had been expecting. However, the fear is that, like the earlier QE, this round might also not translate into much benefit in kick-starting economic activity. The clogged monetary transmission, owing to the liquidity trap, has resulted more in market outcomes than economic ones.
Going ahead, with global growth remaining low and with European debt problems looming, the Euro-US dollar conversion rate could correct to 1.18-1.24 over the next three months, especially as the implications of the “Fiscal Cliff” looms large in the US.