US says it could remove India from currency monitoring list
Washington, Oct 18: The US could remove India from its currency monitoring list of major trading partners, the Treasury Department has said, citing certain developments and steps being taken by New Delhi which address some of its major concerns.
India for the first time was placed by the US in its currency monitoring list of countries with potentially questionable foreign exchange policies in April along with five other countries China, Germany, Japan, South Korea and Switzerland.
The Department of Treasury maintained the same monitoring list in its latest report released on Wednesday but said if India continues with the same practices as in the last six months, it would be removed from its next bi-annual report.
"India's circumstances have shifted markedly, as the central bank's net sales of foreign exchange over the first six months of 2018 led net purchases over the four quarters through June 2018 to fall to USD 4 billion, or 0.2 per cent of the GDP," the Treasury said in its latest semi-annual Report on Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the US.
This represented a notable change from 2017, when purchases over the first three quarters of the year pushed net purchases of foreign exchange above two per cent of the GDP, it said.
Recent sales have come amidst a turnaround in foreign portfolio flows, as foreign investors pulled portfolio capital out of India (and many other emerging markets) over the first half of the year, it said.
The rupee depreciated by around seven per cent against the dollar and by more than four per cent on a real effective basis in the first half of 2018, the report said.
India has a significant bilateral goods trade surplus with the US, totalling USD 23 billion over the four quarters through June 2018, but India's current account is in deficit at 1.9 per cent of the GDP.
"As a result, India now only meets one of the three criteria from the 2015 Act. If this remains the case at the time of its next report, Treasury would remove India from the monitoring list," the Treasury said.
Observing that India's current account deficit widened in the four quarters through June 2018 to 1.9 per cent of the GDP, following several years of narrowing from its 2012 peak, the Treasury said the current account deficit has been driven by a large and persistent goods trade deficit, which has in turn resulted from substantial gold and petroleum imports.
The goods trade deficit has widened out in the first half to 6.4 per cent of the GDP as oil prices have risen.
The IMF projects the current account deficit to be around 2.5 per cent of the GDP over the medium term as domestic demand strengthens further and favourable growth prospects support investment.
India's goods trade surplus with the US was USD 23 billion for the four quarters through June 2018, it said, adding that India also had a small surplus in services trade with the US of USD 4 billion over the same period.
"India's exports to the US are concentrated in sectors that reflect India's global specialisation (notably pharmaceuticals and IT services), while US exports to India are dominated by key service trade categories, particularly travel and higher education," the report said.
The Treasury praised India for being "exemplary" in publishing its foreign exchange market intervention.
The Reserve Bank of India (RBI) has noted that the value of the rupee is broadly market-determined, with intervention used only during "episodes of undue volatility," it said.
According to the authorities' data, India was generally a net purchaser of foreign exchange from late 2013 to the middle of 2017, as the RBI sought to gradually build a stronger external buffer in the aftermath of the May 2013 "taper tantrum".
Purchases accelerated in the first half of 2017 amidst strong portfolio inflows to India (and many other emerging markets); as a result, cumulative net purchases of foreign exchange exceeded two per cent of the GDP over 2017, it said.
Noting that foreign exchange purchases generally declined in the second half of 2017, and the RBI shifted to selling foreign exchange in the first half of 2018, the Treasury said net purchases of foreign exchange over the past four quarters through June totalled USD 4 billion (0.2 per cent of the GDP), including activity in the forward market.
"Sales of foreign exchange in the first half of this year came in the context of foreign portfolio outflows of USD seven billion, as India experienced outflows (particularly of foreign portfolio debt) that were witnessed across many emerging markets in the second quarter," it said.
This mirrored the pattern of the last few years, in which intervention has typically tracked institutional portfolio flows. India maintains ample reserves according to the IMF metrics for reserve adequacy, particularly given that India maintains some controls on both inbound and outbound flows of private capital.
As of June 2018, foreign currency reserves stood at USD 380 billion, equal to 3.7 times gross short-term external debt, 8 months of import cover, and 14 per cent of the GDP.
"The rupee depreciated 7 per cent against the dollar in the first half of the year, while the real effective exchange rate also reversed its general uptrend from the last few years, depreciating by four per cent," it said.
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MP HC sets up judicial commission to probe water contamination in Indore
Indore (PTI): The Indore bench of Madhya Pradesh High Court on Tuesday set up a commission of inquiry comprising a former HC judge to probe the issue of water contamination in city's Bhagirathpura, saying the matter requires probe by an independent, credible authority and "urgent judicial scrutiny".
It also directed the commission to submit an interim report after four weeks from the date of commencement of proceedings.
A division bench of Justices Vijay Kumar Shukla and Alok Awasthi constituted the commission while hearing several public interest litigations (PILs) filed simultaneously regarding the deaths of several people in Bhagirathpura due to the consumption of contaminated water.
The HC reserved the order after hearing all the parties during the day, and released it late at night.
The state government on Tuesday told the HC that the deaths of 16 people in Indore's Bhagirathpura area was possibly linked to a month-long outbreak of vomiting and diarrhoea caused by contaminated drinking water.
The government presented an audit report of 23 deaths from the current gastroenteritis epidemic in Bhagirathpura before the bench, suggesting that 16 of these fatalities may have been linked to the outbreak of vomiting and diarrhoea caused by contaminated drinking water.
The report, prepared by a committee of five experts from the city's Government Mahatma Gandhi Memorial Medical College, stated that the deaths of four people in Bhagirathpura were unrelated to the outbreak, while no conclusion could be reached regarding the cause of death of three other people in the area.
During the hearing, the high court sought to know from the state government the scientific basis behind its report.
The division bench also expressed surprise at the state government's use of the term "verbal autopsy" in relation to the report, sarcastically stating that it had heard the term for the first time.
The HC expressed concern over the Bhagirathpura case, stating that the situation was "alarming," and noted that cases of people falling ill due to contaminated drinking water have also been reported in Mhow, near Indore.
In its order, the HC said the serious issue concerning contamination of the drinking water supply in Bhagirathpura area allegedly resulted in widespread health hazards to residents, including children and elderly persons.
According to the petitioners and media reports, death toll is about 30 till today, but the report depicts only 16 without any basis or record, it said.
It is averred that sewage mixing, leakage in the pipeline, and failure of civic authorities to maintain potable water standards have led to the outbreak of water-borne diseases. Photographs, medical reports, and complaints submitted to the authorities prima facie indicate a matter requiring urgent judicial scrutiny, the HC said.
"Considering the gravity of the allegation and affecting the right to life under Article 21 of the Constitution of India and the need for an independent fact-finding exercise, the Court is of the opinion that the matter requires investigation by an independent, credible authority," it said.
"Accordingly, we appoint Justice Sushil Kumar Gupta, former judge of the Madhya Pradesh High Court, a one-man commission of inquiry into the issues relating to water contamination in Bhagirathpura, Indore, and its impact on other areas of the city," the HC added.
As per the order, the commission shall inquire into and submit a report on the cause of contamination -- whether the drinking water supplied to Bhagirathpura was contaminated; and the source and nature of contamination (sewage ingress, industrial discharge, pipeline damage etc).
The panel will also probe the number of actual deaths of affected residents on account of contaminated water; find out the nature of disease reported and adequacy of medical response and preventive measures; suggest immediate steps required to ensure safe drinking water as well as long-term infrastructural and monitoring reforms.
It will also identify and fix responsibility upon the officers and officials found prima facie responsible for the Bhagirathpura water contamination incident, and suggest guidelines for compensation to affected residents, particularly vulnerable sections.
The commission shall have powers of a civil court for the purpose of summoning officials and witnesses; calling up records from the government department, hospitals, laboratories and civic bodies; ordering water quality testing through accredited laboratories; conducting spot inspections.
All state authorities involving district administration, Indore Municipal Corporation, public health engineering department and Madhya Pradesh Pollution Control Board shall extend full co-operation and provide records as sought by the commission, it said.
The state government shall provide office space, staff, and logistical support to the commission, it said.
During the hearing in the day, the state government also presented a status report to the court in this matter.
According to reports, a total of 454 patients were admitted to local hospitals during the vomiting and diarrhea outbreak, of whom 441 have been discharged after treatment, and 11 are currently hospitalised.
According to officials, due to a leak in the municipal drinking water pipeline in Bhagirathpura, sewage from a toilet was also mixed in the water.
