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 Sixth Edition we are covering the following news:
- Decoding the Puducherry political puzzle
- Indian alternative to Twitter-Koo
- Govt shortlists four mid-sized state-run banks for privatization
- China overtakes the US, becomes European Union’s biggest trading partner
- Rising brent crude oil prices and its impact on India
Chief Minister V Narayanasamy’s government plunged into a crisis with resignation of two more MLAs from the party and have pushed the Congress-DMK government below the majority mark in the Union Territory. At present, the Congress government has the support of 14 MLAs, while the opposition also has 14 MLAs including the three nominated MLAs of the BJP in the house which has 28 MLAs at present. The peculiar nature of Puducherry politics and the size of each assembly seat explains what makes it easier for legislators to shift their loyalties in this territory.
The latest developments are similar to the strategies that BJP had been applying in other states like Kerala and Tamil Nadu, ahead of the upcoming polls. BJP has been the beneficiary in the latest Puducherry crisis too like the earlier ones. Two MLAs that resigned have already joined BJP and one more is soon going to join. However, Narayansamy claimed that his government continues to enjoy the majority. The opposition in Puducherry said they would be meeting the governor soon seeking action if the Congress government refused to step down.
The entry of Kiran Bedi’s as Lt. Governor has been a factor to shake the status quo in Puducherry. Narayanasamy’s running feud with Kiran Bedi all through his stint as chief minister. He accused the L-G of overstepping her jurisdiction on several occasions. The fact that Bedi would summon ministers and officials during her surprise visits and issue directions did not go down well with the CM. The turf war deteriorated to such an extent that the CM even went to the extent of sitting on a dharna outside Raj Niwas.
Hours after the MLAs resigned, Bedi was replaced as the Lieutenant Governor of Puducherry, with the Telangana governor being given the additional charge of the UT. The reason is linked to the assembly polls due by May. Sources in the BJP say with this move just before the Puducherry election, the Congress has been robbed of its single biggest election issue. The Congress accuses Kiran Bedi of blocking every move of its government and putting up hurdles in its way. But now with her out of the way, the BJP can give a fight to Congress and win. But V Narayanasamy said that it is a victory in their fight for secularism. It is a victory for the people of Puducherry who are celebrating the removal of Kiran Bedi.
As for the only Congress government in South India right now, the future remains uncertain, multiple sources have said either they will manage the majority using the same resources used by BJP to weaken them or they will continue to rule the state until the government is dissolved by Delhi.
The government had asked Twitter to remove some accounts and controversial hashtag that spoke of an impending ‘genocide’ of farmers for allegedly promoting misinformation about the protests, adversely affecting public order. But the micro-blogging site reinstated the accounts and tweets on its own and later refused to go back on the decision, contending that it found no violation of its policy and it would violate the free speech of the people. Responding to the ongoing free speech debate between Twitter and the Indian government, it said that India has a robust mechanism for protection of freedom of speech and expression as this fundamental right is not absolute and it is subject to reasonable restrictions as mentioned in Article 19 (2) of the Constitution of India. It further said that non-compliance with government policies would invite penal action against Twitter. The stakes of Twitter are high in a country of 1.3 billion where it has millions of users and is ardently used by the Prime Minister, his cabinet ministers and other leaders to communicate with the public across the globe.
But when the largest microblogging site in the world has not responded favourably to the Government’s terms, the Indian Government then pushed an alternative in the market against Twitter. Koo app, an Indian alternative to Twitter, is creating a lot of buzzes lately. Recording more than 3 million downloads in just 24 hours, it has suddenly become the talk of the town with many big-ticket politicians and celebrities joining the platform in the wake of the government’s ongoing stand-off with Twitter. Most importantly, Koo has been recognised in a prestigious competition held by the Indian government itself under the Made-In-India initiative in August 2020 and won the Atma Nirbhar Bharat App Innovate Challenge which brought it under the limelight.
This move was taken to curb the way the platform Twitter allowed fake, unverified, anonymous content that raised doubts about its commitment to transparency and healthy conversation on that platform. Hence, Indian politicians are excited about the newly introduced Indian version of a microblogging site and are inviting everybody else to join the platform. But the only concern is using the Indian version of the microblogging site is being cut off from the rest of the world because the domestic audience would shift to this alternative app and the Indian audience may not be able to connect with the global audience in case they do not use other bigger microblogging sites.
India’s government has shortlisted four mid-sized state-run banks for privatization, under a new push to sell state assets and shore up government revenues. Privatization of the banking sector, which is dominated by state-run behemoths with hundreds of thousands of employees, is politically risky because it could put jobs at risk. The four banks on the shortlist are Bank of Maharashtra, Bank of India, Indian Overseas Bank, and the Central Bank of India. Two of those banks will be selected for sale in the 2021-2022 financial year. The government is considering mid-sized to small banks for its first round of privatization to test the waters. In the coming years, it could also look at some of the country’s bigger banks. The government, however, will continue to hold a majority stake in India’s largest lender State Bank of India, which is seen as a ‘strategic bank’ for implementing initiatives such as expanding rural credit.
India’s deepest economic contraction on record caused by the pandemic is driving the push for bolder reforms. New Delhi also wants to overhaul a banking sector reeling under a heavy load of non-performing assets, which are likely to rise further once banks are allowed to categorize loans that soured during the pandemic as bad. Bank of India has a workforce of about 50,000 and Central Bank of India has 33,000 staff, while Indian Overseas Bank employs 26,000 and Bank of Maharashtra has about 13,000 employees, according to estimates from bank unions.
The government hopes that the Reserve Bank of India, the country’s banking regulator, will soon ease lending restrictions on Indian Overseas Bank after an improvement in the lender’s finances that could help its sale. Some economists said there could be a few takers for weak and small banks – saddled with bad assets – but that Modi should consider the sale of bigger banks like Punjab National Bank or Bank of Baroda. While past has proven that many times privatization helps improve the efficiency of the enterprises so it is expected that the customers can expect better service and better returns for investors both short term and long term.
China last year overtook the United States as the EU’s biggest trading partner, the EU statistics agency Eurostat said. According to news agency AFP, Britain which is no longer part of the European Union, was the third-largest trading partner for the bloc, behind China and the United States. The supremacy of China came after it suffered from the coronavirus pandemic during the first quarter but recovered vigorously with consumption even exceeding its level of a year ago at the end of 2020, AFP said. This helped drive sales of European products, particularly in the automobile and luxury goods sectors, while China’s exports to Europe benefited from strong demand for medical equipment and electronics.
The dethroning of the US comes as the EU and China are seeking to ratify a long-negotiated investment deal that would give European companies better access to the Chinese market. Eurostat said the trade volume with China reached 586 billion euros ($711 billion) in 2020, compared to 555 billion euros ($673 billion) for the US. The EU exports rose by 2.2 percent to 202.5 billion euros while at the same time, imports from the People’s Republic of China increased by 5.6 percent to 383.5 billion euros. EU exports to the United States fell by 13.2 percent in the same period and imports by 8.2 percent. In addition to the Covid-19 crisis, transatlantic trade has been impaired by a series of tit-for-tat feuds that have resulted in tariffs being on steel and products such as French champagne or Harley-Davidson motorcycles. Eurostat said trade with the UK plummeted in 2020, the year Britain officially left the bloc, though it was in a transition period to blunt the effects of Brexit until December 31. EU exports to the UK fell by 13.2 percent, while imports from across the channel dropped by 13.9 percent. While the Covid-19 can be given a reason to have had a rigged response on the entire global economy, but with the improving global condition different regions have different recovery rates so we can expect improving results everywhere apart from the export affected by Brexit in the European Union.
The price of Brent crude crossed the $60 per barrel mark after over a year. The price of Brent Crude has risen by over 50 per cent since the end of October after prices had remained around $40 per barrel for five months. The rise in prices is because major oil-producing countries had cut oil production last year amid a sharp fall in demand due to the Covid-19 pandemic. However oil-producing countries have continued to limit production despite an increase in prices with Saud Arabia cutting its oil production by 1 million barrels per day to strengthen crude oil prices. Expectations of strong improvements in demand with the global rollout of the Covid-19 vaccine have also put upward pressure on crude oil prices. Let’s see how this will impact India?
Rising crude prices may have a cascading impact on petrol and diesel prices in India, which have now hit a new record high which will further increase the fuel bill of the consumers. The increase in oil prices will increase the country’s import bill, and further, disturb its current account deficit (excess of imports of goods and services over exports). India imports 80 per cent of its crude oil requirements and the average price of Indian basket of crude oil has already risen to $54.8 barrel for January. This could also increase inflationary pressures that have been building up over the past few months and will decrease the space for the monetary policy committee to ease policy rates further. The government had hiked central taxes on petrol and diesel in 2020 to boost revenues amid lower economic activity. The increase in taxes had prevented consumers from getting the benefit of low fuel prices as international prices crashed during the first quarter of this fiscal and are now contributing to record high prices as international prices have recovered. Petrol and diesel prices in India are pegged to the international prices of the two products. If oil prices continue to increase like this, the government shall be forced to cut taxes on petroleum and diesel which may cause loss of revenue and deteriorate its fiscal balance. However, there could be a positive side to the oil price hike as the value of Indian oil and gas companies could be positively impacted. The government could get greater value from disinvestment in Bharat Petroleum Corporation Limited and remittances from the Persian Gulf could increase.