New Delhi: The Economist’s takeaway from the recently concluded Shanghai Cooperation Organisation (SCO) Summit in China’s Tianjin is that it signals a major shift in global geopolitics. “Xi Jinping’s Anti-America Party,” is how the paper assesses it.
Countries which have otherwise been known for their West-ward tilt “flocked” to China for the Summit, The Economist writes. “Most striking is Narendra Modi, signalling India’s shift from America towards China. That follows Donald Trump’s disastrous double-fault singling India out for sky-high tariffs and embracing its enemy, Pakistan, following a conflict in May.”
As the US tackles inflation, countries in Asia—including India—are experiencing the chill of “deflation”, the paper says in another report.
The “Inflation-prone” India has seen a price hike of only 1.6 percent in the past year, the lowest since 2017. But while the answer might be Trump’s tariffs—since “they should hit Asia as a demand shock, reducing both export prices and outputs” —the issue runs deeper. Other than Chinese overcapacity and weak demand, wage growth has also been decelerating, says The Economist.
In several countries, a growing supply of workers has put downward pressure on wages, notes Miguel Chanco of Pantheon Macroeconomics, a consultancy, in the report. “The labour-force participation has surged in the Philippines and broken records in India, Indonesia and Malaysia.”
“Fresh memories of the global inflationary surge of 2022, to which most Asian households were painfully exposed, may have pushed more people to seek work. Asia’s central bankers also seem fearful of a repeat. In general, their monetary policy is too restrictive given threats to demand.”
However, Trump’s tariffs will “entrench the low-inflation trend”, says The Economist.
American securities firm Jane Street has filed an appeal against the SEBI order, in which the watchdog accused the firm of “a sinister scheme” and banned it from trading in India, citing fraud and manipulation, report Krishn Kushik and Philip Stafford in the Financial Times.
In a filing to an appellate tribunal on Wednesday, the US high-frequency trading firm said the Securities and Exchange Board of India had also refused it access to crucial and relevant documents for its defence and called the regulator’s July order “untenable” and “flawed,” says the report, adding that Jane Street has asked that “SEBI be banned” from taking further action while the appeal is pending.
Also in the Financial Times, Andres Schipani, Veena Venugopal and Chris Kay zoom into India’s Goods and Services Tax reforms.
”With India bracing for the economic impact of US President Donald Trump’s 50 per cent tariffs, the government hopes GST 2.0—as the revamp is known—will spur consumption growth with everything from clothes to two-wheelers,” notes the report.
However, it’s complicated. “Anomalies are baked into the system,” they write. “Registering for a GST number requires an official to physically verify the address. Companies that operate in multiple states need multiple registration. Companies also have to submit themselves to audits in multiple states.”
The article also adds that the GST cuts are expected to shrink, according to HSBC estimates, government revenue by about $16bn, approximately 0.4 per cent of the GDP.
Meanwhile, the BBC reports on the floods in Punjab. Abhishek Dey writes Punjab is the latest Indian state to be ravaged by devastating floods. At least 30 people have died and more than 354,000 people have been affected, says the report.
“Punjab is often referred to as the ‘food basket’ of India and is a major source for agricultural production, particularly of staples like wheat and rice,” it says. “A quarter of Punjab’s 30 million people depend on agriculture, raising immediate concern about rural livelihoods.”
(Edited by Ajeet Tiwari)
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