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UK terminates Tampon Tax: A significant and necessary step

Tampons are products used by women during their menstrual cycle. This good could be classified as need, making it essential for survival and something that all women should have access to. UK officially left the European Union on 31st December 2020, and with this its obligation for a 5% tax on tampons was also forgone, the UK could now choose to tax this good according to its will, since the EU did not allow the tampon tax of 5% to be reduced or abolished, however since BREXIT is now complete the Boris led government has made the decision to take a step which was long needed.  The tampon tax raises the price of the good, making it expensive for consumers, and in some cases may also make it unaffordable for poor consumers, which should not be the case since making tampons inaccessible can have multiple adverse effects. Woman who cannot afford these products during their cycle, may feel stressed and depressed, they are less likely to go to work and if they do, they are more likely to be
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E - Vehicles get assistance by Delhi government

  The Delhi government has announced an incentive on the purchase of electric vehicles, upto Rs. 30,000 on two wheelers and Rs. 150,000 on four wheelers. The incentive will come in the form of a subsidy which will allow producers to produce at lower costs and therefore are likely to reduce prices for consumers. This will funded by the pollution cess and road tax on fuels. India has very few electric vehicles due to high tariffs on importing electric vehicles and also lack of domestic production. Although Two wheelers have become famous in the country due to previous central government initiatives such as FAME, these initiatives have not been  very effective.  E- Vehicles are beneficial for the environment since they reduce the greenhouse emissions and are also considered to be on average low cost. One of the reasons for a lot of companies to not produce in India was the high cost and less availability of spare parts. This assistance gives the producer an incentive to manufacture in Ind

Privatization of Indian Railways

The Ministry of Railways has announced that it would be moving towards the privatization of 109 railway routes. The Indian railways are the world's fourth-largest network. The government plans an Rs. 30,000 Crore investment from the private sector.  According to the ministry, the objective of this is to modernize the railway, reduce traveling time, create jobs, and enhance safety along with better experience. The department also stated that the private trains would be equivalent or faster than the already existing trains on the same route.  The private sector will also be responsible for the maintenance and operating of these costs and will have to pay haulage and energy charges to the Indian Railways, and the driver and guard will be from the Indian Railways. The Indian Railways has been a burden on the government due to its losses. The affordable prices of the railways, limit the revenue generated by the government, and privatizing the railway could help ease this bu

What Does Boycott China Mean for the poor in India?

Throughout May, the situation between India and China at their border. In June, 20 Indian soldiers were killed in a clash at the Galwan valley which led to an escalation in tensions between the two economic and military powerhouses. This sparked anger among the Indians and many, including politicians called for a boycott of Chinese Imports. However, what is not known is if India can live without Chinese goods. China is India’s largest trading partner and India runs a trade deficit with China, which means the value of goods imported from China is more than the goods exported from India to China. The problem with boycotting Chinese goods is that the goods imported from China are to a large extent goods which are cheap but to an extent quality goods, such as mobile phones. Although goods from European and American competitors tend to be better than the Chinese, they are expensive and only a small proportion of Indians can afford them. Therefore, those who are rich are less likely to use g

AIIB extends its support to India

The Asian Infrastructure Investment Bank (AIIB) approved a $750 million loan for India to fight the Covid-19 Pandemic. The bank also stated that the fund will help with ‘bolstering economic aid for businesses, including for the informal sector, expanding social safety nets for the needy, and strengthening the country’s health care systems’.  India currently has the third highest number of coronavirus cases and according to the world bank 270 million people in India live below the national poverty line. While 81 million live in densely populated settlements with limited access to health care.  This loan is one of the many, banks across the world have provided India with funds to combat the coronavirus. The world bank has provided a $1 Billion package and the AIIB has also helped India previously with the help of loans.  This loan focuses on the informal sector and strengthening the healthcare systems, which is the need of the hour, since those working in the informal sector and living i

Fiscal Stimulus or Economic contraction

Recently, the prime minister of India Narendra Modi announced an injection of 20 lakh crore into the economy. The aim of the investment is to help India take a step forward towards economic stability. According to news, The PM claimed that it may take an extensive period of time to combat the outbreak of Covid-19, and hence it is salient for the economy to continue its economic growth to avoid a severe unprecedented economic crisis. Thus, the government decided to enhance economic activity by injecting money into the economy. Furthermore, the government of India also aspires to make India and reduce its economic dependency to avoid any vulnerability to the economy (in terms of relying on imports) during times of exogenous shocks. The injection into the economy may be controversial, and may not bring out the expected outcome for the economy. There are numerous theories and ideas which indicate that such a fiscal stimulus can have negative effects on the India economy. Fi

US-China Tensions Rise, India takes advantage

India is said to be developing land of more than 450,000 acres, in order to attract Companies who would want to leave China. Tensions between the US and China have rised after the US blamed China for the development of the coronavirus disease. A rise in tension could include a trade war by both countries adding tariffs and hence making it worse for companies producing in China. This is the perfect opportunity for India to give shelter to the companies willing to leave China. If India makes the best of this then they could see companies setting up industries in India which will make products in India cheaper, improve the balance of trades, contribute to GDP growth, create employment and generate tax revenue. The industries setting up will make the goods cheaper since the goods will be produced in India and tariffs and quotas can be avoided. Some amount of goods will also be exported and the overall imports will be reduced, hence increasing the injection and reducing the leakage from the

Pakistan lifts import ban for Indian medicinal drugs

The Pakistan government has lifted a ban on Indian medicinal drugs and raw materials required for these drugs. The decision came after the pharmaceutical industry demanded to lift the ban, since there was a shortage of multiple drugs. Pakistan has imported various vitamins as well as vaccines for diseases such as polio and tetanus. India has been supplying drugs to countries all around the world(HCQ dilema link) during the time of this pandemic. The lift on import for drugs will help Pakistan since it was having a shortage of drugs and these essential goods. This will help the country fight other diseases while the pandemic is going on and this is important because it will help save lives, which will help increase the life expectancy of the people while also maintaining a healthy workforce which is important once the lockdown ends and people will have to go to work. The sale of these medicines will also pump revenue for the retailers in Pakistan, at a time when the aggregate demand and

Why did UP suspend labour laws?

The Uttar Pradesh government announced that it would be suspending a few labour laws for the next three years. They did this to help reduce the impact of the Covid-19 Pandemic on the labours. The suspension of these laws can help increase employment. The labour laws are primarily used to protect labours and provide them with healthy and safe working conditions, equal and right pay and stop wrongful termination. However, there are more labour laws which ensure that the firms are working in good will. Sometimes laws may be very strict and lead to a rigidity in the labour market.  For example, if there are minimum wage laws which are higher than what the employers are willing to pay, it reduces the demand for labour and hence firms will hire less labours, resulting in structural unemployment; similarly, strict laws for firing labours can lead to firms being more harsher in hiring employees and end up hiring less employees. A deregulation of the labour market can usually help in reducing t

20% Traders close permanently, Home Ministry fails to rescue

The confederation of All India Traders (CAIT) said in a statement that nearly 20% of Indian traders could run out of business in the upcoming months, According to CAIT nearly $72 Billion has been lost in revenue in the period between 25th March to 30th April. Out of the 70 million traders who have suffered, 15 million traders will have to close down permanently. The traders are mainly made up of small and medium sized retailers. CAIT claims that there is no synchronization between the central and state governments and the home ministry have not helped the situation on the ground. They are looking for intervention from the government in order to minimize the impact. Earlier, Nobel Prize winner - Abhijit Banerjee suggested that India needs a big stimulus package in order to recover from this economic crisis. The Indian government has failed to introduce any stimulus package in order to help the economy. A lack of any help from the government can lead to a rise in unemployment and push ma

Unemployment hits record high in the US

The United States Bureau for Labour Statistics recorded an unemployment rate of 20.6%, which is the highest ever recorded since 1934.  Due to the Covid-19 pandemic, the aggregate demand in countries all around the world are falling. The world's largest economy and the country which has the highest number of cases of Coronavirus has seen a surge in the unemployment rate.  The United States is the world's largest exporter of goods after China and the fall of demand for goods all around and the world and slowdown in international trade has led to most industries in the United States coming to a halt or reducing the production to meet demand. Since reducing supply requires labourers to be made redundant and hence increasing unemployment. Services such as restaurants, movie theatres and public transport are not in demand and hence workers from these sectors are also being made redundant. A rise in unemployment levels is a bad indicator and comes along with a slowdown in the economy.

Amazon V Facebook

Facebook invested $5.7 Billion for a 9.9% stake in Reliance subsidiary Jio, this will help Jio Mart users to make payments through Whatsapp, which is the most widely used messaging app in India. Jio Mart helps local grocery stores to connect with consumers nearby with the help of e-commerce. Jio Mart is seen as a competition to ‘Local Stores by Amazon’ which also allows local grocery stores to connect with consumers in their locality. The service was launched six months ago on a trial basis. However, Local Stores, the stores themselves are responsible for delivering the goods, while in Jio Mart goods use its own delivery system to deliver the goods, this includes employees of Jio Mart to pick up goods from the store and deliver it to the consumer. During the coronavirus pandemic the need to deliver essential goods such as groceries at the doorstep is paramount and consumers may also be willing to pay extra for this service. Facebook and Amazon are among the largest corpora

HCQ Dilemma

O ne of the recent articles stated that the USA has demanded India to supply them with HCQ for the rising corona  malaria, and it is also recommended by the scientists and doctors that HCQ can to certain extent cure virus victims in the USA. Nonetheless the USA is not the only country demanding India for the HCQ drug, there are multiple other countries which are demanding India for HCQ suppliers. This signifies the shortage in the world market for the HCQ drug.  The HCQ drug is a drug used to combat and help victims or patients of coronavirus recover. Knowingly, as the cases of coronavirus in the USA are rising exponentially, which is leading to an economic instability (Exchange rates are becoming more volatile), and this is one of the main reasons why the demand for the HCQ drug is more than the supply for it leading to a shortage in the market. According to one of the recent news articles there is a shortage of the HCQ drug in Rajasthan. The shortage in the world market will cont

Government Retaliates to Chinese Investment

The People's Bank of China increased its stake in India's largest private sector bank HDFC to more than 1%, this move has been seen by the authorities as a risk of an opportunistic investment by the Chinese. The share prices for the Bank were above Rs.1200 throughout February but due to coronavirus have fluctuated at around Rs.800. The bank also showed a 15.5% profit in the 4th Quarter of the financial year. Many government owned Chinese banks have been investing in countries around South Asia as a part of the One Belt One Road initiative. India has stayed out of the One Belt One Road initiative however, this move by the Chinese Central Bank seemed to worry the authorities. Taking note of the situation, the government decided to amend the Foreign Direct Investment (FDI) policy in order to discourage opportunistic investment in India. The new FDI policy requires Investors from the neighbouring countries, sharing land borders will require investment through a government r

OPEC+ comes together to fix oil prices

The Organisation of Petroleum Exporting Countries(OPEC) along with other major oil producers such as Russia and the United States decided to reduce the global oil supply. The decision came due to the coronavirus reducing demand for oil worldwide, leading to a fall in oil prices . However the OPEC+ decided to cut the oil supply by around 9.7 million barrels per day(bpd) which is about 10% of the global oil supply. The consumption of oil has been said to be reduced by 30% globally. The reduction in oil supply was taken in order to maintain the profits. The cut in supply will lead to a fall in employment levels since workers will be made redundant. These workers will lose their main source of income and hence will not be able to demand other consumer goods, hence the aggregate demand in the economy will be reduced and the GDP may also fall. Since a lot of the revenue for oil dependent economies like Saudi Arabia and UAE comes from oil, the government revenue will also reduce, and th

SUPREME COURT ORDERS TO MAKE COVID-19 TESTING FREE

On Thursday, 9th April, the Supreme Court of India asked the government to ensure that testing for the coronavirus should be made free by all private labs. The reason for this being that private labs are charging nearly Rs.4500, which many Indian may not be able to afford. Government labs which do the tests for free can do around 15,000 tests a day. By taking this decision the supreme court is making the tests widely available and reducing the chances of spreading the virus. This was an important step because the poor people are more likely to get Coronavirus since they live closely and they should be able to afford these tests. Since these tests become free it will lead to India getting rid of Coronavirus faster which is good for the economy. However, the private labs may not be able to bear the cost of providing everyone with free tests and may have to shut down. Hence the government will have provided them with some other source of support. The court also announced that the g

HONG KONG- LOCAL DEMAND GROWS DUE TO PANDEMIC

Due to the Covid-19 pandemic trade between countries have reduced, the threat of the virus spreading has led to countries shutting down borders and imposing lockdowns. Due to this Hong Kong which imports 98% of their vegetables has seen an increase in demand for its homegrown fresh foods. An article shows that the farmers are failing to meet the demands for the local products. This leads to shortage of goods and hence requires the farmers to raise prices to the point where demand meets supply. However, since food items are a necessity and everyone should be able to afford it, the government and farmers should work on further increasing the supply of food products. If this does not happen then the poor people may not be able to afford this necessity. In order to overcome this situation the government should also try using rationing so that the maximum number of people can get food. The government could also impose a price ceiling in order to make the good more affordable to th

GOVERNMENT RESTRICTS EXPORTS OF DIAGNOSTIC KITS

The government put a curb on diagnostic kits on Saturday, April 4th. The decision was announced by the directorate general of foreign trade. The curb only allows those with a license to export diagnostic kits, earlier there were no restrictions on the export of this good. This measure was put into effect immediately. This measure comes after the number of coronavirus cases have been growing at a very fast rate in the world's second largest populated country, even though the country has been under a complete lockdown for more than a week, the rise in cases have been massive.Testing kits are very important for any nation and demand is nearly inelastic for these kits, these kits are needed to test patients for coronavirus. As spoken about in our post earlier, these kits are a necessity. Exporting these kits are helpful for the economy, however only if they are in excess. If India continues to export these kits without meeting the demand in its home country, the situati

US ANNOUNCES $2.9 MILLION ASSISTANCE FOR INDIA TO TACKLE COVID-19

T he United States government announced that they would be providing India with a $2.9 million assistance package in order to help the Indian government prepare laboratory systems, activate case-finding and event-based surveillance, and support technical experts for response and preparedness. This will help India combat the deadly virus which has taken thousands of lives around the world. As India is still in the initial stages and under a lockdown, the total cases in India stand a little above 1200 and have continued to grow, looking at other countries such as Italy and the United States, who have a smaller population and better health facilities compared to India and hence India poses a larger threat from this virus. According to experts the most effective way to stop the spread of this virus is to have social distancing because the virus can spread easily from person to person. However, the World Health Organisation believes that to contain the virus all countries need

PRICE WAR IN THE OIL INDUSTRY

On 8th March 2020 there was a price war between Saudi Arabia and Russia, which consequently caused 31% price drop (From $31.02 to $20 per barrel). The factor which led to the price war between the two countries is the drop in quantity demand for oil barrels due to the widespread of Coronavirus, subsequently Russia refused to agree with  OPEC to stabilise/fix a price, clearly indicating a non-collusive oligopoly. The price war has caused the oil prices to drastically fall, and has also led to reduction in the world oil supply, which can have drastic effects on the economy because oil is an essential resource for the world, as oil is used for transportation, energy production, cooking and more, without these activities an economy will have major problems in functioning, for instance visualise an economy sustaining without electricity; communicating with other without electricity would become impossible, which can result in an economy down turn. Nonetheless, the reduction