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India hikes spending, shuns ‘outright populism’ in last pre-election budget
NEW DELHI, Feb 1 (Reuters) – India announced on Wednesday one of its biggest ever increases in capital spending for the next fiscal year to create jobs but targeted a narrower fiscal deficit in its last full budget ahead of a parliamentary election due in 2024.
Prime Minister Narendra Modi’s party has been under pressure to create jobs in the populous country where many have struggled to find employment, although the economy is now one of the world’s fastest-growing.
“After a subdued period of the pandemic, private investments are growing again,” Finance Minister Nirmala Sitharaman said as she presented the 2023/24 budget in parliament.
“The budget makes the need once again to ramp up the virtuous cycle of investment and job creation. Capital investment is being increased steeply for the third year in a row by 33% to 10 trillion rupees.”
The capital spending increase to about $122.3 billion, which would amount to 3.3% of gross domestic product (GDP), will be the biggest such jump after an increase of more than 37% between 2020/21 and 2021/22.
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Total spending will rise 7.5% to 45.03 trillion rupees ($549.51 billion) in the next fiscal year starting on April 1.
Sitharaman said the government would target a fiscal deficit of 5.9% of GDP for 2023/24 compared with 6.4% for the current fiscal year and slightly lower than a Reuters poll of 6%. The aim is to lower the deficit to 4.5% by 2025/26.
STEADY ‘MACRO BOAT’
Brokerage Nomura said the budget “prudently pushes for growth, without rocking the macro boat”.
“In the event, the government has presented a good budget. It has pushed for growth via public capex and continued on the path towards fiscal consolidation, without offering much in terms of outright populism.”
Capital Economics said the “absence of a fiscal blowout”, a recent drop in inflation and signs of moderating growth could convince India’s central bank to slow the pace of rate hikes next week.
It said there was still a chance of fiscal slippage as campaigning kicks off for the election, in which Modi is widely projected to win a third straight term.
The finance ministry’s annual Economic Survey, released on Tuesday, forecast the economy could grow 6% to 6.8% next fiscal year, down from 7% projected for the current year, while warning about the impact of cooling global demand on exports.
Sitharaman said India’s economy was “on the right track, and despite a time of challenges, heading towards a bright future”.
Her deficit plan will be aided by a 28% cut in subsidies on food, fertiliser and petroleum for the next fiscal year at 3.75 trillion rupees. The government cut spending on a key rural jobs guarantee programme to 600 billion rupees – the smallest in more than five years – from 894 billion rupees for this fiscal year.
The government’s gross market borrowing is estimated to rise about 9% to 15.43 trillion rupees next fiscal year.
CONSTRAINTS
Moody’s Investors Service said the narrower fiscal deficit projection pointed to the government’s commitment to longer-term fiscal sustainability, but that a “high debt burden and weak debt affordability remain key constraints that offset India’s fundamental strengths”.
Among other moves to stimulate consumption, the surcharge on annual income above 50 million rupees was cut to 25% from 37%.
Indian shares reversed earlier gains to close lower on Wednesday, led by a fall in insurance companies after the budget proposed to limit tax exemptions for insurance proceeds, while Adani Group shares tumbled again as it struggles to repel concerns raised by a U.S. short seller.
Since taking office in 2014, Modi has ramped up capital spending including on roads and energy, while wooing investors through lower tax rates and labour reforms, and offering subsidies to poor households to clinch their political support.
A lack of jobs for young people, and meagre wages for those who do find work, has been one of the main criticisms of Modi.
Sitharaman also said the government was allocating 350 billion rupees for energy transition, as Modi focuses on green hydrogen and other cleaner fuels to meet India’s climate goals.
($1 = 81.7725 Indian rupees)
Reporting by Shubham Batra, Nikunj Ohri, Shivangi Acharya, Sarita Singh, Nigam Prusty, Manoj Kumar, Rupam Jain and Indian bureaux; Writing by Krishna N. Das; Editing by Kim Coghill, Jacqueline Wong and Gareth Jones
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Magnitude 6.4 quake shakes northern California, leaves 2 dead, thousands without power
RIO DELL, Calif., Dec 20 (Reuters) – A powerful magnitude 6.4 earthquake jolted the extreme northern coast of California before dawn on Tuesday, damaging homes, roads and water systems and leaving tens of thousands of people without electricity.
At least 11 people were reported injured, and two others died from “medical emergencies” that occurred during or just after the quake, according to the Humboldt County Sheriff’s Office.
The tremor, which struck at 2:30 a.m. PST and was followed by about 80 aftershocks, was centered 215 miles (350 km) north of San Francisco offshore of Humboldt County, a largely rural area known for its redwood forests, local seafood, lumber industry and dairy farms.
The region also is known for relatively frequent seismic activity, although the latest quake appeared to cause more disruption than others in recent years.
Tuesday’s temblor set off one structure fire, which was quickly extinguished, and caused two other buildings to collapse, according to the California Department of Forestry and Fire Protection (CalFire).
The department said its dispatchers fielded 70 emergency calls after the quake, including one report of a person left trapped who needed rescuing, spokesperson Tran Beyea said.
Details on quake-related casualties was sketchy, but one surviving victim was a child with a head injury and the other an older person with a broken hip, according to local media reports citing the sheriff’s office.
‘REALLY INTENSE’
Police closed a bridge crossing the Eel River into Ferndale, a picturesque town notable for its gingerbread-style Victorian storefronts and homes, after four large cracks were discovered in the span. The California Highway Patrol also said the roadway foundation there was at risk of sliding.
Authorities reported at least four other roads in Humboldt County closed due to earthquake damage, and a possible gas line rupture under investigation. One section of a roadway was reportedly sinking, the Highway Patrol said.
Ferndale and the adjacent towns of Fortuna and Rio Dell appeared hardest hit, with damage including water main breaks and about two dozen homes “red-tagged” because they were too unstable to be safely inhabited, state emergency services officials said.
[1/7] The collapsed second story porch of a house is seen after a strong 6.4-magnitude earthquake struck off the coast of northern California, in Rio Dell, California, U.S. December 20, 2022. REUTERS/Fred Greaves
“The shaking was really intense,” said Daniel Holsapple, 33, a resident of nearby Arcata, who recounted grabbing his pet cat and running outside after he was jostled awake in pitch darkness by the motion of the house and an emergency alert from his cellphone.
“There was no seeing what was going on. It was just the sensation and that general low rumbling sound of the foundation of the whole house vibrating,” he said.
Janet Calderon, 32, who lives in the adjacent town of Eureka, said she was already awake and noticed her two cats seemed agitated moments before the quake struck, shaking her second-flood bedroom “really hard.”
“Everything on my desk fell over,” she said.
California’s earthquake early warning system appeared to have worked, sending electronic alerts to the mobile devices of some 3 million northern California residents 10 seconds before the first rumbles were felt, said state emergency chief Mark Ghilarducci.
While earthquakes producing noticeable shaking are routine in California, tremors at a magnitude 6.4 are less common and potentially dangerous, capable of causing partial building collapses or shifting structures off their foundations.
Tuesday’s temblor struck in a seismically active area where several tectonic plates converge on the sea floor about 2 miles offshore, an area that has produced about 40 quakes in the 6.0-7.0 range over the past century, said Cynthia Pridmore, a senior geologist for the California Geological Survey.
“So it is not unusual to have earthquakes of this size in this region,” she told a news conference.
Shaking from Tuesday’s quake, which occurred at the relatively shallow depth of 11.1 miles (17.9 km) was felt as far away as the San Francisco Bay area, the U.S. Geological Survey reported. The biggest aftershock registered a magnitude 4.6.
Some 79,000 homes and businesses were without power in Ferndale and surrounding Humboldt County shortly after the quake, according to the electric grid tracking website PowerOutage.us.
PG&E crews were out assessing the utility’s gas and electric system for any damage and hazards, which could take several days, company spokesperson Karly Hernandez said.
Reporting by Nathan Frandino in Rio Dell, Calif.; Writing and additional reporting by Steve Gorman in Los Angeles; Additional reporting by Daniel Trotta in Calsbad, Calif; Rich McKay in Atlanta, Brendan O’Brien in Chicago, Laila Kearney in New York City and Akriti Sharma in Bengaluru; Editing by Chizu Nomiyama, Mark Porter, Lisa Shumaker and Richard Chang
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China’s Xi on ‘epoch-making’ visit to Saudi as Riyadh chafes at U.S. censure
RIYADH, Dec 7 (Reuters) – Chinese President Xi Jinping began a visit to Saudi Arabia on Wednesday that Beijing said marked its biggest diplomatic initiative in the Arab world, as Riyadh expands global alliances beyond a long-standing partnership with the West.
The meeting between the global economic powerhouse and Gulf energy giant comes as Saudi ties with Washington are strained by U.S. criticism of Riyadh’s human rights record and Saudi support for oil output curbs before the November midterm elections.
The White House said Xi’s visit was an example of Chinese attempts to exert influence, and that this would not change U.S. policy towards the Middle East.
“We are mindful of the influence that China is trying to grow around the world,” White House National Security Council spokesperson John Kirby told reporters.
China, the world’s biggest energy consumer, is a major trade partner of Gulf oil and gas producers. Bilateral ties have expanded under the region’s economic diversification push, raising U.S. concerns about growing Chinese involvement in sensitive infrastructure in the Gulf.
Energy Minister Prince Abdulaziz bin Salman on Wednesday said that Riyadh would remain a “trusted and reliable” energy partner for Beijing and that the two countries would boost cooperation in energy supply chains by establishing a regional centre in the kingdom for Chinese factories.
Saudi Arabia is China’s top oil supplier and Xi’s visit takes place while uncertainty hangs over energy markets after Western powers imposed a price cap on sales of oil from Russia, which has been increasing volumes to China with discounted oil.
On Wednesday Chinese and Saudi firms signed 34 deals for investment in green energy, information technology, cloud services, transport, construction and other sectors, Saudi state news agency SPA reported. It gave no value for the deals, but had earlier said the two countries would seal agreements worth $30 billion.
‘EPOCH-MAKING VISIT’
Xi was met on arrival by the governor of Riyadh, the kingdom’s foreign minister and the governor of sovereign wealth fund PIF.
Crown Prince Mohammed bin Salman is expected to offer him a lavish welcome, in contrast with the low-key reception for U.S. President Joe Biden whose censure of Saudi Arabia’s de facto ruler formed the backdrop for a strained meeting in July.
Xi will hold bilateral talks with Saudi Arabia and Riyadh will later host a wider meeting with Gulf Arab states and a summit with Arab leaders which will be “an epoch-making milestone in the history of the development of China-Arab relations”, foreign ministry spokesperson Mao Ning said.
The Chinese president said he would work with the Gulf Cooperation Council and other Arab leaders “to advance Chinese-Arab relations and Chinese-GCC relations to a new level”, SPA reported.
For Riyadh, frustrated by what it sees as Washington’s gradual disengagement from the Middle East and a slow erosion of its security guarantees, China offers an opportunity for economic gains without the tensions which have come to cloud the U.S. relationship.
“Beijing does not burden its partners with demands or political expectations and refrains from interfering in their internal affairs,” Saudi columnist Abdulrahman Al-Rashed wrote in the Saudi-owned Asharq Al-Awsat newspaper.
Unlike Washington, Beijing retains good ties with Riyadh’s regional rival Iran, another supplier of oil to China, and has shown little interest in addressing Saudi political or security concerns in the region.
Saudi Arabia, birthplace of Islam, had supported China’s policies in Xinjiang, where the U.N. says human rights abuses have been committed against Uyghurs and other Muslims.
Saudi officials have said that regional security would be on the agenda during Xi’s visit. The United States has for decades been Saudi Arabia’s main security guarantor and remains its main defence supplier, but Riyadh has chafed at restrictions on U.S. arms sales to the kingdom.
Riyadh has said it would continue to expand partnerships to serve economic and security interests, despite U.S. reservations about Gulf ties with both Russia and China.
Reporting by Eduardo Baptista in Beijing and Aziz El Yaakoubi in Riyadh; Additional reporting by Ghaida Ghantous and Maha El Dahan in Dubai and Steve Holland and Doina Chiacu in Washington; Writing by Dominic Evans and Ghaida Ghantous; Editing by Nick Macfie, Toby Chopra and Alistair Bell
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Ukraine says it hit Russian troop bases, key bridges in overnight strikes
A general view shows the Antonivskyi (Antonovsky) bridge closed for civilians, after it reportedly came under fire during Ukraine-Russia conflict in the Russian-controlled city of Kherson, Ukraine July 27, 2022. REUTERS/Alexander Ermochenko
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KYIV, Aug 8 (Reuters) – Ukraine conducted long-range strikes on Russian troop bases and two key bridges across the Dnipro river overnight, Ukrainian officials said on Monday.
The strikes hit the only two crossings Russia has to the pocket of southern Ukrainian territory it has occupied on the western bank of the vast Dnipro river, said Natalia Humeniuk, spokesperson for Ukraine’s southern military command.
“The results (of the strikes) are rather respectable, hits on the Antonivskyi and Kakhovskyi bridges,” she said on television.
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Ukrainian HIMARS strikes also hit multiple military bases in Ukraine’s Russian-occupied southern city of Melitopol in the early hours, killing troops and destroying hardware, the exiled mayor said.
“According to preliminary estimates, a significant amount of military equipment was destroyed,” Mayor Ivan Fedorov wrote on Telegram.
Reuters could not immediately verify the officials’ battlefield accounts.
Ukraine’s defence minister said two weeks ago that 50 Russian ammunition depots had been destroyed by U.S.-supplied HIMARS multiple rocket launchers, which Ukraine started using in June.
Russia says it is waging a “special military operation” in Ukraine to rid it of nationalists and protect Russian-speaking communities. Ukraine and the West describe Russia’s actions as unprovoked aggression.
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Reporting by Max Hunder; editing by Tom Balmforth and Nick Macfie
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Russia and China open cross-border bridge as ties deepen
June 10 (Reuters) – Russia and China opened a new cross-border bridge in the far east on Friday which they hope will further boost trade as Moscow reels from sweeping Western sanctions imposed over its actions in Ukraine.
The bridge linking the Russian city of Blagoveshchensk to the Chinese city of Heihe across the Amur river – known in China as Heilongjiang – is just over one kilometre long and cost 19 billion roubles ($342 million), the RIA news agency reported.
Amid a firework display, freight trucks from both ends crossed the two-lane bridge that was festooned with flags in the colours of both countries, video footage of the opening showed.
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Russian authorities said the bridge would bring Moscow and Beijing closer together by boosting trade after they announced a “no limits” partnership in February, shortly before President Vladimir Putin sent his forces into Ukraine.
“In today’s divided world, the Blagoveshchensk-Heihe bridge between Russia and China carries a special symbolic meaning,” said Yuri Trutnev, the Kremlin representative in the Russian Far East.
China wants to deepen practical cooperation with Russia in all areas, Chinese Vice Premier Hu Chunhua said at the opening.
Russia’s Transport Minister Vitaly Savelyev said the bridge would help boost bilateral annual trade to more than 1 million tonnes of goods.
CUTTING JOURNEY TIME
The bridge had been under construction since 2016 and was completed in May 2020 but its opening was delayed by cross-border COVID-19 restrictions, said BTS-MOST, the firm building the bridge on the Russian side.
BTS-MOST said freight traffic on the bridge would shorten the travel distance of Chinese goods to western Russia by 1,500 kilometres (930 miles). Vehicles crossing the bridge must pay a toll of 8,700 roubles ($150), a price that is expected to drop as toll fees begin to offset the cost of construction.
Russia said in April it expected commodity flows with China to grow, and trade with Beijing to reach $200 billion by 2024.
China is a major buyer of Russian natural resources and agricultural products.
China has declined to condemn Russia’s actions in Ukraine and has criticised the Western sanctions on Moscow.
($1 = 57.8000 roubles)
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Reporting by Reuters
Editing by Gareth Jones
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EXCLUSIVE Rating agencies say Biden’s spending plans will not add to inflationary pressure
U.S. President Joe Biden delivers remarks on the state of his American Rescue Plan from the State Dining Room at the White House in Washington, D.C., U.S., May 5, 2021. REUTERS/Jonathan Ernst
Nov 16 (Reuters) – U.S. President Joe Biden’s infrastructure and social spending legislation will not add to inflationary pressures in the U.S. economy, economists and analysts in leading rating agencies told Reuters on Tuesday.
Biden has spent the past few months promoting the merits of both pieces of legislation – the $1.75 trillion “Build Back Better” plan and a separate $1 trillion infrastructure plan. read more
The two pieces of legislation “should not have any real material impact on inflation”, William Foster, vice president and senior credit officer (Sovereign Risk) at Moody’s Investors Service, told Reuters.
The impact of the spending packages on the fiscal deficit will be rather small because they will be spread over a relatively long time horizon, Foster added.
Senator Joe Manchin, a centrist Democrat, has previously raised inflationary concerns in relation to Biden’s social spending plan, with a report earlier this month suggesting he may delay the passage of the Build Back Better legislation. read more
“The bills do not add to inflation pressures, as the policies help to lift long-term economic growth via stronger productivity and labor force growth, and thus take the edge off of inflation,” said Mark Zandi, chief economist at Moody’s Analytics, which operates independently from the parent company’s ratings business.
Zandi said the costs of both the infrastructure and social spending legislation were sustainable.
“The bills are largely paid for through higher taxes on multinational corporations and well-to-do households, and more than paid for if the benefit of the added growth and the resulting impact on the government’s fiscal situation are considered”, he said in an interview.
Charles Seville, senior director and Americas sovereigns co-head at Fitch Ratings, said the two pieces of legislation “will neither boost nor quell inflation much in the short-run.”
Government spending will still add less to demand in 2022 than in 2021 and over the longer-run, the social spending legislation could increase labor supply through provisions such as childcare, and productivity, Seville told Reuters.
The House of Representatives passed the $1 trillion infrastructure package earlier this month after the Senate approved it in August. Biden signed the bill into law on Monday.
The Build Back Better package includes provisions on childcare and preschool, eldercare, healthcare, prescription drug pricing and immigration.
“The deficit will still narrow in FY 2022 as pandemic relief spending drops out and the economic recovery boosts tax revenues”, Seville said. “But the legislation (Build Back Better) does not sustainably fund all the initiatives, particularly if these are extended and don’t sunset, meaning that they will be funded by greater borrowing.”
The Congressional Budget Office anticipates publishing a complete cost estimate for the Build Back Better plan by Friday, Nov. 19. Biden said on Tuesday he expected the Build Back Better legislation to be passed within a week’s time.
Reporting by Kanishka Singh in Bengaluru; editing by Dan Burns and Lincoln Feast.
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Biden, top team to crisscross U.S. in victory tour for $1 trillion infrastructure bill
WASHINGTON, Nov 8 (Reuters) – President Joe Biden and top officials in his Cabinet are hitting the road to promote the $1 trillion infrastructure bill passed in Congress last week, as they explain when and where Americans can expect to see some of the funds in their own communities.
White House aides are planning a bipartisan signing ceremony for the infrastructure bill as soon as this week, after it gained final passage on Friday night when Democrats who control the House of Representatives ended months of bickering and approved it. read more
Biden is also pressing lawmakers to approve a separate, climate and safety-net package known as his Build Back Better plan. It is estimated to cost about $1.75 trillion and has been the subject of fierce debate on Capitol Hill.
“It’s going to be a tough fight. It ain’t over yet, as the expression goes, but I feel good, and I think people are beginning to realize it’s important to get it done,” Biden told reporters on Monday.
Biden heads to the Port of Baltimore on Wednesday to promote the infrastructure bill and will travel to places where the “need is and the action is,” Transportation Secretary Pete Buttigieg told the White House daily news briefing on Monday.
Buttigieg and Energy Secretary Jennifer Granholm, Interior Secretary Deb Haaland, Environmental Protection Agency Administrator Michael Regan and Commerce Secretary Gina Raimondo are fanning out across the country as well.
“In the coming weeks, those members and other senior officials will travel to red states, blue states, big cities, small towns, rural areas, tribal communities and more to translate what this deal means for real people across the country,” a White House source said.
A Democratic National Committee source told Reuters the party would unveil a slogan based on the bill: “Democrats delivered.”
The bill sends tens of billions of dollars to federal agencies and states for bridge and highway repair, new broadband and public transportation projects and will fund a network of electric-vehicle charging stations across the country.
“A lot of this sells itself,” Buttigieg said, “because communities never needed to be persuaded that their bridge needed to be fixed or their airports needed an upgrade. … They’ve been trying to get Washington to catch up to them.”
It gives Biden and Democrats a much-needed jolt of good news after poll numbers have fallen for the president. Republicans made gains in local elections last week, winning the governor’s office in Virginia and coming closer than expected in heavily Democratic New Jersey.
The White House victory lap will include messages on African-American and Spanish-language media and partnering with labor unions, business groups and state and local leaders.
The DNC source said that while the infrastructure bill is an important milestone, Democrats need to pass Biden’s social safety and climate spending plan next.
“Voters have a short memory. They have already forgotten the CARES Act (COVID-19 relief program). They will forget a bridge that was built or a highway that was repaired, but they will remember the monthly child tax credit payment. It is necessary that we pass that,” the source said.
Reporting by Jarrett Renshaw; Writing by Steve Holland; Editing by Heather Timmons, David Gregorio and Peter Cooney
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