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Guest Column: Monetary ‘Teasing’ and Fiscal Expansion

Private Estimates in this regard are between 0.2 - 0.4 per cent shy of the governments estimate

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Fiscal Expansion
Unexpected corporate tax cuts alongside previous measures announced over the last few days by the government amount to a total fiscal expansion of around 0.8 per cent of GDP at face value. Pixabay

The unexpected corporate tax cuts alongside previous measures announced over the last few days by the government amount to a total fiscal expansion of around 0.8 per cent of GDP at face value. That said, private estimates in this regard are between 0.2 – 0.4 per cent shy of the governments estimate.

Here are the growth, monetary policy, and bond market aspects of the move:

Growth
With this the government has shown a clear commitment to shore up growth even with its back against the wall, fiscally speaking. Further, it has resisted an easy consumption stimulus which may have had very little multiplier effects and possibly may have eventually contributed to some macro-economic imbalances. Rather, the tax cuts will help improve corporate profits and hopefully improve our global competitiveness. Further, incentives for new units announced may also help with attracting some of the global supply chains reallocations that are underway given escalating trade tensions.

This may, however, not necessarily be a substantial shot in the arm for near-term growth prospects. The tax cuts may be used in a variety of ways, including stepping up investments, reducing debt, cutting product prices, increasing salaries, buyback and dividends, among others.

All told, the immediate pass-through and growth impulses created may be not as strong and thus the tax buoyancy hoped for on the back of stronger growth may have to wait for a while. This is especially true as general competitiveness in an increasingly challenging world requires other aspects of factor input efficiencies to fall in place as well.

Fiscal Expansion
Fiscal policy for fiscal expansion has indeed chosen to step up to the plate, then monetary policy need not be as aggressive. Pixabay

Monetary policy
Prima facie, if, unlike earlier expectation of limited further space, fiscal policy has indeed chosen to step up to the plate, then monetary policy need not be as aggressive, all else being equal. That said, the global and local context is weak enough to argue for yet some (though not substantial) incremental role for monetary easing. This is especially true because RBI Governor Das doesn’t appear to be as large a fiscal hawk, currently (indeed welcoming the bold step from the government, after observing one day prior that fiscal space seemed limited).

We would hence look for monetary “teasing” incrementally, as opposed to “easing” that we were expecting before and would expect the repo rate to bottom out in the 5 to 5.25 per cent area. The one caveat to this view is of further global growth deterioration which would then open up room for further easing, whereas liquidity policy is expected to remain one of substantial surplus.

Fiscsal Expansion
Government has shown a clear commitment to shore up growth even with its back against the wall, towards Fiscal Expansion. Pixabay

Bonds
As noted, before term spreads have been quite wide for this part of the cycle, largely reflecting the inadequate availability of risk capital versus the supply of bonds (the same inadequacy is being reflected as higher credit spreads in the loan and credit market).

Despite more than adequate liquidity now, risk capital has been cautious possibly due to lack of confidence on market risk, given the fiscal and bond supply overhang. Since a large term premium has already existed, we wouldn’t expect a significant further expansion just because the risk has now materialized.

Further we don’t expect the entire expansion to manifest in the Centre’s fiscal deficit. After sharing this with states and accounting for other levers built in, we are looking for a final fiscal deficit of 3.7 nper cent versus the 3.3 per cent budgeted. This will entail some additional bond supply eventually, but with the cushion that the Centre’s net bond supply was slated to fall substantially in the second half of the year versus the first.

Portfolio Strategy
With the prospects of monetary easing somewhat diminishing in incremental intensity, and accounting for the somewhat higher bond supply, we may expect some amount of curve steepening going forward. This may likely happen as market participants anchor themselves to 3 thoughts: One, liquidity will remain abundantly surplus. Two, repo rate is here or modestly lower. Three, prospects of a very large bond rally are somewhat diminished (although this view will evolve going forward depending also on how much net additional supply actually manifests for local absorption) . This will likely increase appeal for the front end of the curve versus the longer duration, hence creating steepening pressure.

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Reflecting the above thought, we have cut our recent duration elongation into the 10-14 year segment and are now refocussing on being overweight 5-7 year for government bonds in our active duration funds. For AAA corporate bonds, the relative value continues in up to 5 years. These segments could better align to what remains an environment of abundant surplus liquidity, a very attractive term spread, still general lack of credit growth, and continued global monetary easing. (IANS)

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Here Are Some Ways to Tackle Body Shaming on Social Media

Social media literacy and awareness is something that all of us need to become familiar with

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Body Shaming
Girls are more impacted by body shaming and early teens are a vulnerable age group, says an expert. Pixabay

 With increasing addiction to social media platforms and the age of ‘likes’; we have been introduced to a seemingly new way of reaching out and getting an instant opinion poll on how we look. While the expectations are to receive compliments, this also opens the door to unwarranted remarks; which can leave us feeling vulnerable and distraught. Body shaming over the internet can range from unpleasant sarcastic and snide remarks to blatant fat-shaming, nasty comments and objectification.

As per Dr Kedar Tilwe, Psychiatrist and Sexologist at Hiranandani Hospital, Vashi – A Fortis Network Hospital, the anonymity offered by the platform and the inherent insecurity of the ‘Troll’ can sometimes combine to make a morbid virtual safe-haven for people to shed social etiquettes. The end result is comments which are not only unsavoury but downright petty and malicious. Often these do not even have direct relevance to the post or topic being discussed, making them even more vindictive and hurtful.

When one is exposed to body-shaming, it can directly lower the self-esteem, self-worth and may cause a confidence crisis for the victim. It may be responsible for precipitation of major psychiatric illnesses such as Depression, Panic Disorder, Social Anxiety Disorder and Body Dysmorphic Disorder. Girls are more impacted by body shaming and early teens are a vulnerable age group, says the expert. Here are some ways we can deal with such behavior, if it’s directed at you or someone you know.

The official way

Social media literacy and awareness is something that all of us need to become familiar with. This should include awareness of the nature of the social media platform, its etiquette and protocol. Most sites have clear policies with regard to the content and often have a mechanism of reporting hateful personal speech. So you need to avail this mechanism and report such personal attacks.

Personal coping

The only opinion which matters about your body image is yours, so remind yourself about it. Also recognize the difference between the evirtual’ versus the ereal world’; acknowledging this variance can help you deal with it more easily. Reach out to family or friends and discuss the thoughts that are bothering you. Or try a estress buster’ or relaxation technique that you are aware of.

Professional help

Sometimes Anxiety, persistent negative thoughts, depressive rumination and lowered stress tolerance may persist despite the above mentioned interventions. Cognitive-Behavioral Therapy (CBT), Rational Emotive Behavior Therapy (REBT), Supportive counselling or even appropriate medication if required, can help in empowering you to deal with such situations. So, reach out to a mental health professional near you or enroll with support groups or helplines are also easily accessible.

Social Media
With increasing addiction to social media platforms and the age of ‘likes’; we have been introduced to a seemingly new way of reaching out and getting an instant opinion poll on how we look. Pixabay

The social network

Online platforms are basically virtual communities or network of people. So if you see someone being victimized or ostracized speak up and call out the etroll’ if possible. Doing this can take away the anonymity, which is often the body-shamers most effective protection. It will also provide a much needed source of support and assurance to the victim.

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Inculcating awareness

Body-shaming is prevalent across all age groups but often begins during the teenage years. So sensitising children through awareness programs, open forum discussions or even simply leading by example is perhaps the need of the hour when it comes to reducing the specter of body-shaming. (IANS)