Parliament

Addressing the G20 Trade and Investment Ministerial summit, Prime Minister Narendra Modi emphasized the need for balanced competition between large and small e-commerce businesses. He called for empowering small enterprises to seamlessly integrate with global supply chains while highlighting India’s proposal to create a Generic Framework for Mapping Global Value Chains. The framework aims to assess vulnerabilities, minimize risks, and enhance resilience in the wake of the COVID-19 pandemic and geopolitical tensions.

With the world economy facing unprecedented challenges, PM Modi stressed the collective responsibility of G20 nations to restore confidence in international trade and investment processes. He underscored the significance of Micro, Small, and Medium Enterprises (MSMEs), which contribute 60% to 70% of employment and 50% of the global Gross Domestic Product (GDP).

In his address, Prime Minister Modi introduced the ‘Jaipur Initiative,’ designed to provide essential market information to MSMEs. He expressed confidence in the upgraded Global Trade Help Desk to bolster MSME participation in global trade. Additionally, PM Modi highlighted the growth of global cross-border e-commerce and its challenges for smaller players and consumers, emphasizing the need for equitable competition and improved grievance handling mechanisms.

PM Modi commended the efforts to establish ‘High-Level Principles for the Digitalization of Trade Documents,’ which can facilitate cross-border electronic trade measures and alleviate compliance burdens.

Concluding his address, Prime Minister Modi expressed confidence in the G20 Trade Ministers’ ability to guide the global trading system towards a more representative and inclusive future. The ministers are expected to collaborate on a communique during their two-day meeting.

Inflationary Tensions Expected to Linger in Upcoming Months, Caution Urged by Finance Ministry.

The finance ministry has issued a cautionary note, indicating that the persistent pressures of inflation might endure for the following months, necessitating heightened vigilance from both the Reserve Bank of India (RBI) and the government.

As the economy progresses, internal consumption and investment demand are projected to retain their roles as growth drivers. However, the interplay of global uncertainties and domestic disruptions casts a shadow over the inflation outlook in the coming months. The finance ministry’s Monthly Economy Review report for July, unveiled on August 22, underscores the importance of enhanced watchfulness from both the government and the RBI.

These comments from the financial realm follow closely in the wake of recent data revealing a surprising surge in vegetable prices, propelling India’s headline retail inflation to a 15-month peak of 7.44 percent in July, compared to 4.87 percent just a month earlier. This unanticipated uptick in Consumer Price Index (CPI) inflation compelled swift action from the government to curb the ascent of essential food prices. Notably, a 40 percent export duty on onions was introduced on August 19 to discourage exports and guarantee a sufficient domestic supply.

Experts foresee CPI inflation to hover above the 7 percent mark in August, although there are some indications of easing prices. The government has even initiated the sale of tomatoes at reduced prices in major consumption centres. Nevertheless, the expectation is for inflation to decline markedly in anticipation of the festive season, with some economists predicting a sub-5 percent rate by October.

Yet, prior to this projected decline, price hikes are predicted to exceed previous forecasts. On August 10, despite the Monetary Policy Committee (MPC) maintaining the policy repo rate at 6.5 percent for the third consecutive meeting, the RBI elevated its inflation projection for July-September by a substantial 100 basis points to 6.2 percent.

However, the inflation forecast adjustment proved to be outdated in light of the July inflation figures released on August 14. An article penned by RBI staff on August 17 indicated that inflation was now expected to average “well above 6 percent” in the July-September period.

The finance ministry’s monthly report added a hopeful perspective on the situation, stating that the recent price surges in specific food items were likely to be transient. It anticipates a decline in tomato prices with the influx of fresh stocks by the close of August or early September. Additionally, augmented imports of tur dal are foreseen to temper the inflation in pulses. These factors, along with the ongoing efforts of the government, are poised to usher in moderation in food inflation in the months ahead.

The finance ministry also emphasized the need to monitor the external sector to bolster India’s merchandise exports in the face of subdued global demand. Although services exports are projected to continue thriving, geopolitical and geo-economic concerns are anticipated to persist, underlining the importance of maintaining macroeconomic stability. This stability is essential to prevent excessive increases in interest rates, reinforce India’s appeal as a domain of performance and promise for both domestic and international investors, and sustain a steady trajectory of economic growth.

New Delhi: Quelling the fervor surrounding the notion of BRICS nations adopting a shared currency, Foreign Secretary Vinay Mohan Kwatra has cast doubts on the feasibility of such a move. During an exclusive media briefing, Kwatra steered the discourse away from a united currency and emphasized BRICS’ emphasis on bolstering trade using individual national currencies.

Kwatra expounded, “The substantive facet of our trade and economic dialogues within BRICS has predominantly centered on amplifying trade conducted in our respective sovereign currencies. This approach diverges significantly from the intricacies associated with contemplating a shared currency.”

The notion of a common currency within BRICS has ignited fervent discussions, with influential figures like Brazilian President Lula da Silva and Russian Foreign Minister Sergey Lavrov rallying behind the concept. Some view this prospect as a potential contender to the dominance of the US dollar in global trade.

President Lula da Silva advocated for the idea during an address in April, stating, “I wholeheartedly support the creation of an intra-BRICS trade currency, akin to the euro crafted by the Europeans.”

Russian Foreign Minister Sergey Lavrov echoed this sentiment in January, asserting, “Responsible and self-respecting nations recognize the stakes involved and perceive the shortcomings of the current international monetary and financial architecture. They aspire to forge their own mechanisms that ensure sustainable growth, insulated from external dictates.” Lavrov went on to elaborate on the possibility of establishing a currency framework within the confines of BRICS.

However, India has exhibited a cautious stance on this matter in the public arena. External Affairs Minister S Jaishankar declared that the topic of a unified BRICS currency has not even grazed the surface of their discussions. Kwatra’s statements now seem to reaffirm the consortium’s commitment to intensifying trade interactions conducted through separate national currencies.