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Merkel visit: 18 MoUs inked, India to fast track system for German firms

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New Delhi: India and Germany on Monday gave a major boost to their bilateral ties, especially in the economic field, by inking 18 MoUs, including one for setting up a fast-track system for German companies in India, as Prime Minister Narendra Modi and German Chancellor Angela Merkel held talks here.

The range of MoUs includes one on security cooperation, and another for promotion of German as a foreign language in India and for the promotion of Modern Indian languages in Germany.

Modi, in his speech, termed the bilateral mechanism of Inter-Governmental Consultation (IGC) as unique, saying it had helped bring growth in relations.

We see Germany as a natural partner in achieving our vision of India’s economic transformation. German strengths and India’s priorities are aligned. And, so is our mutual goodwill,” he said, after holding the 3rd IGC with Merkel here.

He said both sides have convergence of views and rapidly growing cooperation in the field of clean energy and combating climate change.

Both agreed on the India-Germany Climate and Renewable Alliance for combating climate change, Modi said, and thanked Germany for its over one billion euro aid each for India’s Green Energy Corridor project and for solar projects in India.

“We look forward to a concrete outcome at COP21 (Conference of Parties) in Paris,” Modi said.

He said both sides will see a boost in partnership in areas of defence manufacturing, trade in advanced technology, intelligence, and countering terrorism and radicalism.

He thanked Germany for its strong support for India’s membership of the international export control regimes.

“As we discussed in the G4 Summit in New York, Chancellor and I are committed to pursue reforms of the United Nations, especially the Security Council,” Modi said.

He also thanked Merkel for the return of a 10th century statue of Durga in her Mahishasurmardini avatar from Jammu and Kashmir.

Modi said the statue is a symbol of the victory of good over evil.

He said: “This also suggests that in this age of transitions and turmoil, India-Germany partnership will be a force of good for the world.”

Merkel, in her media statement, said both sides held very good IGC and bilateral talks. She said the IGC mechanism has underscored the intensity of bilateral ties with India.

She said the inking of so many agreements is a “testimony to the dynamic relations”. She said more than 1,500 German companies are in India and more would be glad to open up in India. She commended the inking of the fast track agreement on German companies. “The speed at which you grant licences has increased, which is a good thing,” Merkel said.

She said Germany can help India in the area of sustainable development in the villages.

On expansion of the UN Security Council, Merkel referred to the meeting of the G4 countries of India, Germany, Japan and Brazil last week in New York and said the members of G4 are trying to seek permanent seat at the UNSC.

Both sides inked an agreement on security cooperation; an MoU on Solar Energy Partnership; for cooperation in the field of Skill Development and Vocational Education and Training; on Security Cooperation; railways and for cooperation in disaster management.

(IANS)

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Fall Of The Currency And Increase In Oil Prices: India ‘s Turmoil

The falling rupee has given a boost to some of India’s most lucrative exports, such as software services and pharmaceuticals, which add up to billions of dollars.

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India
Rajesh Kumar, left, shares a ride to work with another employee, Dilip Swain, right, as higher petrol prices in India begin to be felt in people's pocketbooks.VOA

The fall of the currency of India to record lows and rising global oil prices have raised worries that the world’s fastest growing economy faces headwinds that could hurt the fortunes of Prime Minister Narendra Modi’s party in next year’s general elections.

From people filling fuel at gas stations to thousands of students heading out to study overseas, the impact of the slumping rupee is sparking discontent.

Having plunged by about 12 percent against the dollar this year, the rupee is one of Asia’s worst faring currencies, and as in other countries, the slide has accelerated since the crash of the Turkish lira.

“The reasons are global. We must bear in mind that in last few months, dollar has strengthened against almost every currency,” said Finance Minister Arun Jaitley recently as he tried to send out reassuring signals that India’s economy is on track.

India
The rupee has plunged by about 12 percent this year raising fears of spiraling inflation. VOA

The rupee’s sharp depreciation comes at a time when the economy had recovered from a slowdown and surged to a two-year high in the quarter that ended in June. Forecasts put growth for this year at 7.5 percent.

Economy will slow

But economists warn this momentum will be difficult to sustain as the tumbling rupee, along with rising crude oil prices, takes a toll on growth. India, the world’s third largest oil importer, gets almost 80 percent of its fuel needs overseas.

“The government needs to mellow down on growth aspirations,” said N.R. Bhanumurthy, economist with the National Institute of Public Finance and Policy. “The growth needs to come down to a little less than 7 percent.”

Even as the government faces the prospect of a slowing economy, it is under pressure to lower taxes on gas and diesel to bring down the sharp rise in prices. Fuel is one of the most heavily taxed items in India, with rates as high as nearly 50 percent. Prices vary from state to state, but they have gone up by about 14 percent this year.

Hoping to cash in on the growing disaffection over the surge in fuel prices and the sliding rupee, opposition parties led nationwide protests that shutdown offices and schools in several cities this week.

India
Discontent with spiraling fuel prices poses a challenge to Prime Minister Modi’s Bharatiya Janata Party ahead of general elections next year. VOA

The government dismissed the protests, saying that although people faced momentary difficulties, they understood they were because of factors beyond its control.

Political analysts are not so sure, pointing out that fuel prices are a politically sensitive issue in India and usually result in a spike in inflation.

“Anger is rising, there is resentment,” said Satish Misra at the Observer Research Foundation, warning the ruling party will face a backlash “Obviously that is going to have a negative impact on the electoral fortunes of the Bharatiya Janata Party, there is no doubt about that.”

Warnings from economists

Among those who are upset with the high fuel prices is Rajesh Kumar, who commutes 30 kilometers to the advertising agency where he works. Hit by the higher prices that eat into his income, he has started sharing the ride with another employee.

India
Narendra Modi. Wikimedia Commons

“I have given up the idea of buying another car,” he said despondently. “I will not be able to afford the cost of running it.”

Economists however have warned the government against giving in to populist pressures ahead of a series of state polls later this year and general elections around April next year. They say lowering taxes on fuel or taking measures to prop up the currency will strain the country’s finances and hurt the economy in the long run.

Also Read: Diverse Gathering To Be Addressed This World BioFuel Day: PM Narendra Modi

“One needs to be more careful and vigilant,” Bhanumurthy said. “It is easy for India to stay with low growth than experiencing the high deficit.”

But there is also some good news for the Indian economy. The falling rupee has given a boost to some of India’s most lucrative exports, such as software services and pharmaceuticals, which add up to billions of dollars. (VOA)