India should review its medium-term fiscal strategy, a government report recommended yesterday, an indication of the challenge Indian Finance Minister Arun Jaitley faces to raise pay for government employees and bail out banks without increasing borrowing.
The Economic Survey, which sets the scene for Jaitley’s third annual budget on Monday, forecast that the Indian economy would grow by between 7.0 percent and 7.75 percent in the 2016-2017 fiscal year that starts on April 1.
Although Asia’s third-largest economy has overtaken China as the world’s fastest-growing, weak business investment and a growing bad loan problem is compelling Indian Prime Minister Narendra Modi to keep the spending taps open to deliver on his promise of jobs for India’s 1.3 billion people.
The government needs to cover the estimated US$16 billion cost of a once-in-a-decade pay and pensions increase for federal employees. The report also put the cost of recapitalizing banks at US$26 billion in the coming years.
Although the government is to stick to its budget deficit target of 3.9 percent of GDP in the year drawing to a close, the coming year would be “challenging” from a fiscal point of view, the report said.
The report, written by economic adviser Arvind Subramanian, said that “credibility and optimality” argued in favor of sticking to next year’s deficit target of 3.5 percent of GDP, but left room for an upward revision.
“The time is right for a review of the medium-term fiscal framework,” the report said.
Subramanian has called previously for increasing the deficit, only to be rebutted by Reserve Bank of India Governor Raghuram Rajan, who argues that India should keep its power dry in case the weakening world economy tips into a recession.
Raising pay for 10 million federal employees would not destabilize prices, the report said. Low inflation had taken hold and confidence in price stability had improved.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts