As per a statement from Bangladesh Ministry of Power, Energy and Mineral Resources, effective from August 6, diesel prices have increased about 42.5%, petrol prices by 51.2% and 95-octane petrol prices by 51.7%, reportedly the biggest increase since 1971, the independence of Bangladesh.
With a dwindling forex reserves, there appearing no early end of Russia - Ukraine War, the Bangladesh Government walks a tight rope. On-goings in Sri Lankan crisis fresh in the memory, the Government is trying its best that Bangladesh crisis don’t get like Sri Lanka. Bangladesh Government is seeking loans, reportedly of $450 million, from International Monetary Fund (IMF), and conditions set by IMF for it as usual are against subsidies.
The Government on its part says that there is increase in international crude oil prices, and conditions are also challenging due to Russia-Ukraine War. If high subsidies continue then petrolium sector government companies will face problems, and it will also further deteriorate forex reserve conditions. Once the international crude oil prices go down, there may be some adjustments in the future.
As per news reports, there are transport crisis in the capital city of Dhaka, or else in Chittagong - the largest port city of Bangladesh, or even some other cities/places. There are also reports of power-cuts due to load-shedding ordered by the government there. There are also news reports of public protests with demonstrators flocking the streets in some places against steep fuel price hike. There are also news reports of opposition political parties and students’ groups holding protests against the steep fuel price hike. Steps are there to maintain peace and not let the conditions worsen.
Bangladesh economy has been one of the fastest growing in the world for the last few years, all this may hamper growth momentum. Already effects are visible on transport, movement of food items or other essential items. There is a panic in the private industry as well as it fears shortage of essential supplies or increased input costs. Apprehension in the agriculture sector is that it may hamper power supply or else at least profit margin due to increased input costs. With Bangladesh already facing the problem of relatively high inflation in the recent months, the inflationary trends may further worsen.
Sri Lankan Government granted permission to a Chinese research vessel Yang Wang-5 on 13th August 2022 to dock at its Sri Hambantota Port despite India’s concerns. Earlier Sri Lanka had withheld its permission due to complaint lodged with it by India, but as per media reports Sri Lanka finally gave permission under China’s pressure,
Though Yang Wang-5 is described as research and survey vessel by international shipping analytics sites, yet as per reports in a large section of Indian media it is dual use ship. As per Indian reports, the Yang Wang-5 could be used for space and satellite/missile tracking, and has some uses for international ballistic missile launches.
While China makes efforts to increase its presence and influence in Indian Ocean, India has its suspicions and concerns on the same. India feels China is trying to establish that its naval ships have the right to dock at Sri Hambantota Port, and it is exploiting Sri Lanka’s economic and political turmoil. As per news reports, China pressured Sri Lanka that it may block IMF’s bailout package which Sri Lanka needs urgently.
India feels the ship could spy on its activities, thus India lodged its complaint with Colombo on the same. Indian Ministry of External Affairs (MEA) said it will closely monitor bearings on India’s security and economic interests and will take all necessary measures to safeguard them.
Already due to nearly two-year old military conflict between India and China at the Line of Actual Control (LAC) are low, Yang Wang-5 may add to complications. While China says, India should not interfere on bilateral cooperation between Sri Lanka and China, but India says while it completely respects Sri Lanka’s sovereignty, but it has every right to protect its security interests.
Then President Mahinda Rajapaksha borrowed heavily from China from 2005 to 2015, it brought Sri Lanka under more Chinese influence. While Sri Lanka is under high Chinese debt, India has extended this year an unprecedented help of over $3.8 billion to Sri Lanka amidst grave crisis. Sri Lanka is highly dependent on India and China, and both the countries have conflicting interests with resent tensions in bilateral-relations.
Sri Lanka leased the port to China for 99 years for $1.12 billion, less than $1.4 billion what Sri Lanka paid to a Chinese company to build it. As Sri Lanka was unable to make heavy repayments needed for the port, since 2017 the port is run by a Chinese company, China Merchants Ports, which took it for a 99-year lease.
On 12th August 2022, the UN health agency said, it has renamed two clades of virus using Roman numerals, instead of geographical areas, to avoid stigmatisation. Its Congo Basin clade is renamed as ‘Clade one or I’ while West Africa clade is renamed ‘Clade two or II’ with further its two variants Clade IIa and Clade IIb. Decision is made following a meeting of scientists based on current best practices of naming diseases.
World Health Organisation (WHO) says it is opening public forum to rename Monkeypox, Monkeypox was first named in 1958 at that time international best practices did not exist for naming diseases. Though a weak one, yet one argument given against renaming is that it could disconnect future researchers from research papers written over a long period of time after 1958 when the disease was first discovered.
WHO said that newly-identified viruses, related diseases, and virus variants should be given names that avoid causing offence to any cultural, social, national, professional, or ethnic groups, and which minimise any negative impact on trade, travel, tourism or animal welfare. If causative pathogen is known, it should be used as part of the disease name with additional descriptions, and names should be short and easy to pronounce.
WHO declared, in late July 2022, multi-country outbreak of Monkeypox as public health emergency of international concern, and it is its variant Clade IIb which is more in circulation. According to a WHO situation report published. on 10th August 2022, there have now been 27,814 laboratory cases, and 12 deaths from the disease in 89 countries and regions worldwide, with Europe and the Americas hit the hardest.
These include: surveillance, finding cases, isolation and contact tracing, behavioural changes needed for its prevention, vaccination of close contacts and treatment of severe illness with antiviral drugs, etc.
Recently US House of Representatives Speaker Nancy Pelosi visited Taiwan, as a part of multi-stop Asia tour, which infuriated China, as China says it is against its ‘One China’ policy. Taiwanese President Tsai Ing-wen is from pro-independence Democratic Progressive Party. Chinese military moves as a response to Pelosi’s Taiwan’s visit has led to highest level of China - Taiwan tension in nearly 30 years. Pelosi arrived in Taiwan on August 2, departed on August 3, and China’s largest-ever military exercise began on August 4 as infuriated reaction. On August 2, few hours before Pelosi’s arrival in Taiwan China warned US that it would be “held liable and pay price for hunting China’s sovereignty and security interests”. Few days earlier, on a phone call, China’s President Xi Jinping had warned US President Joe Biden against Pelosi’s scheduled-visit to Taiwan.
Not only China has enhanced military drills targeting Taiwan, it has even imposed Trade sanctions on Taiwan those include suspension of some fish and fruit imports, and ban on export of natural sand of construction use. China also suspended imports of biscuits and pastries from some Taiwanese exporters. China on its part appears determined to further practice live weapon firing in the southern part of Yellow Sea.
Taiwan on its part has asked China to “immediately stop raising tensions and taking provocative actions to intimidate the Taiwanese people”. Even though Taiwan’s political and military leadership is concerned and cautious of Chinese moves, but it seems Taiwan’s people at large have learnt to live with Chinese threats, and the life moves on as usual. Yet, Taiwan says it is now ‘preparing for war without seeking war’, and it won’t succumb to pressure from China.
While Taiwan is an autonomous self-governing democracy, but most countries in the world yet don’t recognise Taiwan as independent sovereign country and have full diplomatic relation with Beijing not Taipei. China considers Taiwan as its part thus it is opposed to use of “Republic of China” by Taiwan. While China under Xi Jinping’s leadership seems determined for full integration of Taiwan in China under “One China” policy, Taiwan on its part makes moves for more independence from China.
The Taiwan Strait is a key sea route thus crucial for the world supply-chain. If the conflict persists, not only it may affect Taiwan’s port operations but also makes it unsafe for traffic to pass through the Strait. Taiwan’s Ministry of Defence said that China’s military drills amount to an ‘air and sea blockade’ as operations of commercial flights and cargo ships are affected. Trade ships have safety concerns in heading into Taiwan’s port in the area thus it impacts shipments including those of electronic goods.
In a joint statement, US, Japan and Australia have urged for diplomatic solution through dialogue, and have condemned China’s missile launches. The joint statement was issued in the sidelines of Association of South East Asian Nations (ASEAN) Summit in Cambodia. G7 has asked China to refrain from military drills and to maintain status quo in the region. US on its part told China not to turn Pelosi’s visit into crisis.
It is not that China’s military drills only impact Taiwan, Japan said several of Chinese missiles came down within its exclusive economic zone (EEZ). Even other countries in region or neighbourhood are concerned about the Chinese military moves.
This new regulatory framework of Reserve Bank of India (RBI) is focused on the digital lending ecosystem of RBI’s Regulated Entities (REs) and the Lending Service Providers (LSPs).
As per government’s reply in Parliament, there were 7,813 complaints against banks and non-banking finance companies (NBFCs) regarding digital lending application and recovery agents under RBI’s Integrated Ombudsman Scheme. Need was felt to make digital lending ecosystem or Digital Lending Apps (DLAs) more transparent, accountable, and fair with a better care for rights and data privacy of borrowers.
These regulations are based on the recommendations of the Working Group on Digital Banking (WGDL) constituted by the RBI on 31 January 2021. While some of its recommendations are put to immediate effect, some others need further deliberations with stakeholders as there are technical nuances and legal complexities.
These new regulations are expected to provide some relief to borrowers using DLAs from mis-selling of loans by DLAs, unfair business conduct, engagement of third parties by DLAs and unethical recovery practices, excessive interest rates, breach of data privacy, or other unfair business practices on part of DLAs. everybody knows and gets excited about it.
Regulated financial companies must provide a Key Fact Statement (KFS) in standardised format for all digital lending products before executing any contract. The new framework digital banking specifies that finance companies should disclose all-inclusive costs of digital borrowings to borrowers. Digital banking apps should also showcase information relating to a financial product’s features, loan limit, liabilities, terms and costs.
If consumer complaint remains unresolved with stipulated period of 30 days, then then the borrowers can file complaint under the Reserve Bank - Integrated Ombudsman Scheme (RB-IOS). There should be suitable grievance redressal officer with details posted on the website of loan provider to deal with complaints against respective DLAs. Data collected by Digital Lending Apps (DLAs) should be need-based and can be collected after securing borrower’s explicit consent.
Any lending sources through DLAs is to be reported to Credit Information Companies (CICs) irrespective of its nature and tenor. Companies cannot increase the credit limits of the customers without their explicit consent. These regulations bring enhanced supervision and scrutiny of Digital Lending Apps (DLAs) by RBI.
Regulated entities need to disclose all needed information before signing in for loans. Regulated entities should disclose Annual Percentage Rate of Interest (APR) to borrowers.
RBI has classified lenders in three categories: First, those entities it will regulate and permit to carry out lending process. Second, it will have companies authorised to carry out lending as per statutory provisions but unregulated by RBI. Third, this group includes entities offering lending instruments outside any statutory or regulatory requirements. These new set of regulations brought by the RBI basically target first category of lenders.
RBI has suggested it through enactment of a law to discharge the functions of verifying DLAs before such apps are publicly distributed through app stores.
As per its projections India could emerge as Asia’s strongest economy in 2022-23 as it is best positioned to generate robust demand, helped by economic policy reforms, a young workforce and business investment. Its projections say that covid pandemic was exogenous shock and it is now fading, while Russia-Ukraine War impact risk management remains but now receding. Its report says, “… it is the breadth of recovery where we are seeing growth firing on almost all cylinders …”
These include lower corporate taxes, supply-chain diversification, Production Linked Incentive (PLI) Scheme, picking up domestic demand/consumption as economy is now fully opened, V-shape recovery in some sectors, healthy and policy focus towards lifting the productive capacity, conducive India’s household balance sheets, sustaining of cyclical recovery by structural factors, etc. Automobile sectors performs impressive as car sales are 24% above pre-pandemic levels, highest in Asia.
These include: Russia-Ukraine War and its impact on energy prices and global supplies, in July 2022 contraction in business activities in Eurozone and USA, economic problems faced in the developed economies, tradeoff between interest rates and inflation - increase in interest rates to battle inflation but for growth lower interest rate boost up money supply in the market, etc.
India, Asia’s third largest economy grew 9.2 percent in fiscal year 2022, and that was a sharp recovery from 6.6 percent contraction in the previous year due to COVID-19 lockdown. Increasing investment to GDP ratio, higher investment in human capital, labour force participation rate (LFPR) can contribute for improving growth.
As external risks recede, India’s gross domestic product (GDP) growth is poised to average 7 percent in the coming months. The Report says, “Over 2022-23, India’s growth will average 7%, the strongest among the largest economies, contributing 28% and 22% to Asian and global growth.”
Morgan Stanley predicts that as India’s macro factors like inflation and forex reserves head back to the comfort zone, India’s Central Bank (RBI) may not have to intervene and resort to another rate hike. Policy reforms, business investment and growth in service exports are expected to contribute for a better growth and performance.