Hyderabad: The heat wave sweeping across Andhra Pradesh and Telangana claimed over 200 more lives since Tuesday, taking the toll to 1,360.
Officials on Wednesday night said 157 people succumbed to sunstroke in Andhra Pradesh while 70 died in Telangana since Tuesday.
There was no respite from the blistering heat as both the states recorded temperatures three to seven degrees Celsius higher than the average.
Almost all the deaths were reported during the past one week.
Though Andhra Pradesh’s Deputy Chief Minister N. Chinna Rajappa had confirmed 551 deaths on Tuesday, the toll was revised later based on reports received from the districts.
Disaster management department officials said they were revising the figures after receiving confirmation from field-level officials about the deaths.
Though temperatures dropped in parts of Telangana and also in north coastal Andhra on Wednesday, both the states continued to reel under the searing heat.
The Hyderabad Meteorological Centre has warned that severe heat wave conditions may continue for another two days.
The heat wave, attributed to dry winds from the north-westerly direction, may abate after two days.
The highest temperature of 47 degrees Celsius was recorded at Jangamaheswarapuram in Guntur district of Andhra Pradesh on Wednesday. Vijayawada, Bapatla and Machilipatnam sizzled at 46 degrees.
The mercury continued to be above 42 degrees in most parts of south coastal Andhra and Rayalaseema.
In Telangana, Nalgonda and Khammam were the hottest places on Wednesday at 46 degrees Celsius.
Poor people, especially the homeless, construction workers, rickshaw pullers and street vendors were the worst hit by the heat wave.
According to officials, the majority of the victims were the elderly and children. The Andhra Pradesh government has already announced compensation of Rs.1 lakh each for the families of the victims.
Out of 867 deaths confirmed by officials in Andhra Pradesh till Tuesday night, Prakasam district accounted for 202. Guntur (130), Visakhapatnam (112) and East Godavari (107) also bore the brunt of the heat wave.
Vijayanagaram district accounted for 78 deaths, Nellore 74, Srikakulam 40, Chittoor 29, Kadapa 22, Kurnool 17 and Anantapur 14.
In Telangana, Nalgonda district was the worst hit with 73 deaths. Khammam district accounted for 60 deaths, Mahabubnagar 32, Medak 26, Karimnagar and Adilabad 22 each, Warangal 9, Nizamabad 8 and Hyderabad and Ranga Reddy seven each.
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:
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.
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.
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.
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.
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)