There are two aspects to the news- knowing the headline and understanding the intricacies of it. We at The Connectere focus on both. While The First Forum edition gives a brief about the headlines, The Weekly Analysis Edition is meant to educate the reader on what do various news mean and what are their intricacies. This initiative is meant to educate the reader on how to understand the important news. In the Forty Third Edition we are covering the following news:
- Google threatens to exit Australia over new code
- Biden signs ‘Buy American’ order, vows to strengthen the manufacturing sector
- The shift in the regulatory approach of NBFC
- Government plans to impose green tax on old polluting vehicles
- IMF boosts world growth outlook as Covid-19 vaccines outweigh the uncertainty
Google has threatened to shut down its search engine in Australia if the government there passes new legislation. The move would mean the 19 million Australians who use Google every month would no longer be able to use Google Search, and 17 million Australians who log into Facebook every month would not be able to see or post any news articles on the social media site. Let’s see what is the new legislation all about.
The proposed Australian legislation, known as the News Media Bargaining Code, is the first of its kind in the world, and it is being seen as a test case of the government power to regulate big tech firms. Under this proposed law, Google and Facebook would be forced to pay news publishers for their content and agree on a fair price or the matter would be settled by an independent arbitration body that would decide the amount.
Australia is pushing this law because Google is the dominant search engine and has been described by the government as a near-essential utility, with little market competition. Just because of this, news organizations around the world have been struggling financially over the last decade or two.
Many have blamed Internet companies like Google and Facebook for diverting advertising revenue that once went to news organizations. Some in the news industry argue that Google benefits from including news stories in its search results and should compensate news sites for the privilege of doing so. Also, it has argued that financial support is needed for Australia’s embattled news industry because a strong media is vital to a democracy and the tech giants should pay newsrooms a “fair” amount for their journalism.
Tech giants had called the code ‘unworkable’ and argued that the media industry was already benefiting from traffic routed to them by the digital platforms and that the proposed rules would expose them to “unmanageable levels of financial and operational risk”. Moreover, this is not the first time Google is facing increasing pressure to pay news sites. Last week, Google announced it had negotiated a framework to pay French news sites for the right to include them in its search results.
President Joe Biden vowed on 25th January to leverage the purchasing power of the U.S. government, the world’s biggest single buyer of goods and services, to strengthen domestic manufacturing and create markets for new technologies. The Democratic president signed an executive order aimed at closing loopholes in existing “Buy American” provisions, which apply to about a third of the $600 billion in goods and services the federal government buys each year. The order will make any waivers more transparent and create a senior White House role to oversee the process. Biden reiterated plans announced on the campaign trail to replace the fleet of federal cars with U.S.-made electric vehicles. Revitalizing the manufacturing sector, which accounts for about 12% of the U.S. economy, is a key part of Biden’s broader push to drive up wages, create more union jobs, support minority-owned businesses, and strengthen U.S. supply chains, White House officials say.
Manufacturers have been attracted by lower wages and weaker environmental standards in China and other countries in recent decades. This exodus has resulted in critical gaps that have been laid bare during the COVID-19 pandemic, such as the making of medical equipment. China overtook the United States as the world’s top manufacturer in 2010 and was responsible for 28% of global output in 2018, according to United Nations data. Major U.S. retailers, including Walmart Inc, have launched high-profile “Made in America” campaigns, only to court foreign manufacturers afterward.
Rebuilding supply chains and developing new ones is key to U.S. economic growth, trade experts say. The U.S. trade deficit surged to $68 billion in November, its highest level in 14 years, as businesses filled shelves with foreign goods and supplied domestic factories reliant on foreign parts, offsetting a rise in exports. Biden’s order directs federal agencies to re-evaluate the threshold used to determine U.S. content, to prevent companies that sell to the government from importing largely foreign-made goods and selling them as U.S.-made after making minor tweaks. After a win at the elections, Biden is aware of his popularity in the country and this type of following is what he needs in his backpack for a motion like “Buy American” to progress. No matter how we analyze this, in every way the prosperity of America is confirmed.
The Reserve Bank of India has proposed a tighter regulatory framework for Non-Banking Financial Companies (NBFCs) by creating a four-tier structure with a progressive increase in the intensity of regulation. NBFCs are engaged in the business of loans and advances, acquisition of shares/stocks/bonds/debentures/securities that are issued by Government or local authority, leasing, hire-purchase etc.
Currently, these companies are under light-touch regulation and bestowed greater powers. And now, the proposed regulatory and supervisory framework of NBFCs will be based on a four-layered structure: Base Layer, Middle Layer, Upper Layer and a possible Top Layer. NBFCs in the lower layer will be known as NBFC-Base Layer and in this layer least regulatory intervention is warranted and will have a laissez-faire approach for smaller NBFCs. In the middle layer, it will be known as NBFC-Middle Layer. The regulatory regime for this layer will be stricter compared to the base layer or mild regulations for mid-sized NBFCs. NBFC-Upper Layer will invite a new regulatory superstructure. This layer will be populated by NBFCs which have a large potential of systemic spill-over of risks and can impact financial stability.
Ideally, the top layer of the pyramid will remain empty unless only when a certain large player poses ‘extreme risks.’ This proposed framework is aimed at protecting financial stability while ensuring that smaller NBFCs continue to enjoy light regulations and grow with ease.
A significant shift in a regulatory approach if implemented this could be the biggest overhaul of the regulatory framework for such finance companies over two decades. It is hoped that the blueprint for the regulation will be a complete reboot of the oversight mechanism for NBFCs and banks is critical to retain confidence and maintain financial stability. This would ensure the fledgeling economic recovery is not hampered by funding constraints.
In a bid to curb pollution and motivate people to switch to environment-friendly alternatives, the road transport ministry decided to impose additional taxes on old vehicles that are unfit for roads as ‘green taxes’. The proposal will now go to the states for consultation before it is formally notified. The revenue collected through the green tax will be kept in a different account and will only be utilised for tackling pollution.
The main principles to be followed while levying the Green Tax are transport vehicles older than 8 years could be charged Green Tax at the time of renewal of fitness certificate, at the rate of 10-25% of road tax, while personal vehicles to be charged Green Tax at the time of renewal of Registration Certification after 15 years. Other than this differential tax t in tax based on the city, fuel, and type of vehicle like higher Green tax will be levied in highly polluted cities. While vehicles like strong hybrids, electric vehicles, and alternate fuels like CNG, ethanol, LPG etc as well as those used in farming, such as tractor, harvester, tiller etc to be exempted.
A green tax will sensitize the citizens towards ever-increasing pollution and its harmful effects and moreover make the polluter pay for pollution. Maintaining and getting vehicles serviced on time and discarding them responsibly after a designated period can help in protecting the environment in the long run.
To effectively implement this tax, there will be a need to update vehicle registration databases for all States, to reflect true numbers of old vehicles on the road, eliminating those scrapped as still a huge number of cars, which are older than 15 years, still, run. Such data will help target scrappage policy benefits better.
However, it is believed this might not be a sufficient trigger to switch away from older vehicles and additional incentives would be needed to promote replacement. This scheme relies on penal taxation to persuade owners to scrap their old vehicles, with no cash-for-trade-in arrangement. For this approach to work efficiently, the additional tax proposed should exceed the resale value of the polluting motor, making its disposal more attractive, with enough safeguards to ensure that it is indeed scrapped and recycled under a monitored system. Moreover, many transport vehicles are operated by small entrepreneurs who lack the resources to transition to newer ones and need help as loans and grants. But it is time states see the value of operationalising it as planned. New vehicles and cleaner fuels should help clear the toxic air in cities and towns and make roads safer and less polluted. The policy will come into effect from April 1, 2022.
The International Monetary Fund raised its forecast for global growth this year, betting the rollout of coronavirus vaccines and more fiscal stimulus will offset the immediate challenge posed by the resurgent pandemic. The global gross domestic product will soar 5.5 percent this year, faster than the 5.2 percent projected in October, the fund said. It credited the improvement in the US for much of the upgrade, which was offset by cuts to its predictions for the euro area and the UK. Such an expansion would match 2007 as the best in four decades of data and follow an upwardly revised 3.5 percent contraction last year, which would still be the worst peacetime decline since the Great Depression. The IMF projected a 4.2 percent global expansion for 2022.
“Much now depends on the outcome of this race between a mutating virus and vaccines to end the pandemic, and on the ability of policies to provide effective support until that happens,” IMF Chief Economist Gita Gopinath wrote in a blog post accompanying the World Economic Outlook. The pandemic is worsening inequality, with close to 90 million people likely to fall into extreme poverty in 2020 and 2021, the fund said. It sees the global economy losing $22 trillion in output from 2020-2025. The fund sees major central banks holding their policy-rate settings through 2022, with financial conditions remaining at current levels for advanced economies and improving for emerging-market and developing nations.
The US saw one of the biggest upgrades after approving a $900 billion relief plan. The IMF forecasts the world’s largest economy may grow 5.1 percent this year, versus 3.1 percent in October. The projection does not incorporate President Joe Biden’s proposal for $1.9 trillion more in aid, which the IMF estimates would add another 1.25 percent to output this year.
While the fear continues even after the vaccine is out and is being used, there is no guarantee about the side effects or there could be a whole new covid virus type like has been found in many countries recently. Although the predictions rely much on facts, there also is faith needed by the people in the government bodies all over the globe as it is critical that the public maintains its calms and the virus bids its farewell now. With every day passing, while the hope of the economy improving increases, the recent setbacks in the stock markets are constantly creating chaos in the pockets of investors facing daily losses, and no market is prepared for a drop like in March last year. So, it is safe to assume that the growth this year will stay a mystery till the end itself.