Former Finance Minister and senior Congress leader P Chidambaram on Friday questioned the Central Statistical Organisation’s GDP growth figure and termed demonetisation a fixed match between the government and Reserve Bank of India (RBI).
He said demonetisation has interrupted India’s economic story and “to recover from this, it would take between 12-18 months, maybe right up to the end of 2017-18”.
“Look at the CSO’s numbers, it seems nothing has happened to the economy. The dazzle of the number cannot hide the fact that crores of people in the country have been devastated,” said Chidambaram.
“The government has changed the methodology. The Gross Value Addition (GVA), when they add taxes to it and subtract subsidies, they arrive at the GDP,” he added.
Chidambaram further said: “The additional tax revenue is not a reflection of growth. Equally being stingy on subsidies doesn’t impact growth.”
Giving out quarter-wise GVAs of three years, Chidambaram said: “In 2014-15, quarter-wise GVAs were 7.26, 7.91, 6.29 and 6.19 per cent. There is no particular trend. It went up and came down. In 2015-16, the numbers are 7.75, 8.44, 6.95 and 7.42 per cent. Again it doesn’t show any trend.
The US government has temporarily suspended issuing premium H1B visas with effect from April 3, 2017. The US Citizenship and Immigration Services (USCIS) notification, however, said the pending applications for premium H1B visas and the ones filed before April 3 will be processed.
This suspension may last up to 6 months.
“The temporary suspension applies to all H1B petitions filed on or after April 3, 2017. Since FY18 cap-subject H1B petitions cannot be filed before April 3, 2017, this suspension will apply to all petitions filed for the FY18 H-1B regular cap and master’s advanced degree cap exemption,” noted in the USCIS ruling.
This means that the IT services firms cannot send their employees on urgent project requirement after April 3, thereby impacting their quarterly business numbers.
“With this, all the employers want to send employees on H1B visas have to plan for even longer delay,” said Poorvi Chothani of LawQuest, a global immigration and employment law firm.
Indian IT services firms send thousands of their employees to work on projects on-site with H1B visa and a large chunk of those applications are applied in the premium category because of shortage of time for certain works.
China’s National People’s Congress gets underway this weekend, and investors will get an update on the health of the US labour market.
Here’s what to watch in the coming days.
Li Keqiang, China’s premier, delivers the country’s proposed economic targets on Sunday at the opening of the fifth session of the 12th National People’s Congress, the country’s top legislature.
While much of the discussion takes place in closed-door meetings, economists are paying attention to the Government Work Report and the 2017 growth target. Jian Chang, economist at Barclays, said their base case is for 6.5 per cent growth. He also expects the government to maintain the budget deficit at 3 per cent and inflation target at 3 per cent.
On the politics front, China-watchers will keep their eyes peeled for clues on who could make it to China’s 25-member Politburo and possibly the Politburo Standing Committee (PSC), following a reshuffle of some senior provincial and central government leaders, particularly with the 19th Party Congress scheduled for this fall.
UK chancellor Philip Hammond will present his first budget on Wednesday, and economists expect it to show a decline in gilt issuance.
“The UK economy has outperformed earlier forecasts, and so there should be a bit more revenue to play with, leading to the first decline in borrowing in 3 years,” strategists at TD Securities said. “But we see a cautious budget with few giveaways as the UK approaches Brexit.”
European Central Bank
First fan charts to be released in April
There’s a new reason to read the FOMC Minutes.
The Fed will publish fan charts to show the range of its projections in the Minutes, starting with the minutes of the March 15 meeting, which will be released April 5.
The just released some examples of what the data will look like. The main line is the median of Fed projections with the wider band showing a 70% confidence interval.
The idea is to illustrate the level of uncertainty around the forecasts. I don’t see them as market moving. If anything, they’re designed to reduce volatility by highlighting how uncertain the Fed is.
Following Yellen’s speech which did not throw any curve balls to this week’s sharply revised, hawkish narrative by her FOMC peers, a March rate hike – according to Goldman – appears to be in the books. In a note moments ago by Goldman’s Jan Hatzius, the investment bank said that the bottom line is that “Fed Chair Yellen said today that a rate increase at the March FOMC meeting “would likely be appropriate”, as long as incoming data continue to confirm officials’ outlook. We see this as a strong signal for action at the upcoming meeting, and have raised our subjective odds of a hike to 95%.”
Goldman’s key points:
1. In remarks this afternoon, Fed Chair Yellen indicated a readiness to raise the funds rate at the FOMC’s March 14-15 meeting in fairly explicit language. She said that as long as “employment and inflation are continuing to evolve in line with” officials’ expectations, “a further adjustment of the federal funds rate would likely be appropriate”. As a result, we now see a hike at the March meeting as close to a done deal, and have raised our subjective probability to 95%.
2. The remainder of Chair Yellen’s speech focused on the Fed’s post-crisis monetary policy strategy in general, and did not discuss incoming data in much detail. However, given constructive comments about current economic conditions from many Fed officials this week—including from Vice Chair Fischer at today’s US Monetary Policy Forum—we think committee members will see recent news as consistent with their outlook, and therefore supportive of further tightening. At this stage, the February employment report—to be released next Friday—may have more bearing on the committee’s guidance about action after the March meeting than on its decision whether to hike this month.
Stocks inched upward Friday after remarks by Federal Reserve Chair Janet Yellen pointed to a rate hike later this month.
The Dow and S&P 500 posted fractional gains. The blue chips barely finished higher on the day, up 3 points and staying above 21,000, ending at 21,005.71.
Climbing 0.2% was the Nasdaq composite, to 5870.75.
“At our meeting later this month, the committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate,” Yellen said in a 1 p.m. ET speech at the Executives’ Club of Chicago.
While Yellen couched her remark in conditional terms that depend on economic data, she preceded it by citing a job market that has been “strengthening” and inflation that has been “rising toward our target” of 2% annually.
Several other Fed officials in recent days have indicated the Fed’s policymaking committee is likely to raise its benchmark short-term rate at a March 14-15 meeting.