Cover Story Is India's food security bill the magic pill? Outlook Euro Stats Currency Composition of Foreign Exchange Reserve Emerging Country Philippines In Focus US Becoming a Surveillance State. Right or Wrong?

1. Investeurs Chronicle
July 2013, Volume: 74

2. Cover
Story
Despite robust economic growth and rising incomes, India remains a hungry republic.
It ranks 65 out of 79 countries on the Global Hunger Index from the International Food Policy Research Institute. By the government's own estimate, nearly
half of India's children under five are chronically malnourished. From 2005-2010, India ranked second to last among 129 countries on underweight children,
below Ethiopia, Niger, Nepal and Bangladesh.
Surveys a decade ago found that 36% of Indian women of childbearing age were underweight, compared to 16% in 23 Sub-Saharan countries.
Economists Amartya Sen and Jean Dreze have called India's inability to properly feed its women and children "catastrophic failures, with wide-ranging
implications not only for the people of India today but also for the generations to be born in the near future".
The landmark Food Security Bill, the Congress-party led government belives, is India's best shot at battling chronic malnutrition and hunger.
The bill - which was passed by ordinance but needs to be ratified by parliament - proposes to make food a legal right. It seeks to cover two-thirds of the
country's population and provide 5kg of subsidised food grain per person per month.
The bill also proposes free meals and maternity benefits for pregnant women, lactating mothers, children between the ages of six months and 14 years, and
malnourished children and destitute and homeless people. All this should be good news for India, except that many don't believe so.
For one, some critics argue that the scheme could upset the budget with subsidies on food doubling to a whopping $23bn (£15.5bn). This will not help India,
they say, to cut its fiscal deficit to 4.1% of GDP by 2012-2013 from an uncomfortable 5.5% expected this fiscal year.
These critics frame India's food security debate as one of a "question of hungry people versus fiscal responsibility". But there are some graver reservations
over the scheme, which its critics say have not been addressed. One is that it is proposed the food be distributed through India's notoriously corrupt and leaky
state-owned cheap food ration shops.
Various studies over the years have estimated that anything between 37% and 55% of the subsidised rice and wheat are illegally diverted from these shops
and sold in the open market. Using these shops to distribute more food, they say, will mean more pilfering and more corruption.
Then there is the issue of identifying the beneficiaries.
Is India's food security bill the magic pill?

3. Cover
Story
The scheme classifies two categories of beneficiaries, who shall be identified by the federal government and the states. Activists like Binayak Sen argue that the
process of classifying beneficiaries is complex and would, also, lead to corruption.
Then there's the question of the shambolic quality of storage of food in India. By one estimate, India needs 60 million tonnes of food stocks to service the plan.
India's actual food stocks could be more than 90 million tonnes this year.
A lot of the food actually rots in decrepit warehouses and in open space, something which Jean Dreze and Amartya Sen describe as a "scandalous phenomenon",
a "situation of hunger amidst plenty".
Critics say this primarily happens because of the government's warped food policy: the government buys food grain at unreasonably high prices (called the
"minimum support price") from farmers which bolsters production, but lowers consumer demand because of the high price of food. The government is then
forced to buy the difference to sustain the artificially high prices.
One critic I spoke to said the bill was an "example of bog-standard populism" of the ruling government with an eye on what promises to be closely fought
general elections in 2014.
They point out that many Indian states are already providing cheap food to the majority of their people, and yet many of them continue to have high rates of
malnutrition.
Some, like Columbia University economist Arvind Panagariya, even reject the claim that India suffers from worse levels of malnutrition than poorer sub-
Saharan Africa, arguing that a flawed WHO methodology is to blame. Others, like economist Jayati Ghosh, say the bill is not enough as it does not provide
universal access.
"In the end," one economist tells me, "it's not really a question of whether the bill will add to India's soaring subsidy bill. The government can easily cut other
subsidies in fuel and fertiliser that end up benefiting the well-to-do.
"It's about the quality of the delivery system and to ensure that the food reaches the beneficiaries."
One way out, say many, is to transfer cash to the beneficiary instead of delivering food through a creaky, graft-prone distribution system.
Clearly, the jury is still out on how to tackle hunger in India - and the Food Security Bill may not the magic pill that the government thinks it will be.
Source; BBC News

4. The EUR/USD had the bottom drop out, with traders worried about negative interest rates from the ECB after the comments of Mr. Draghi on July 4, 2013
followed by a poor print of German factory orders and the US jobs data supporting a stronger than expected recovery, the euro fell to trade at 1.2824 after the
release.
After showing confidence last month, Mr. Draghi is likely to be more worried, especially as the yields are rising and the debt crisis could make a comeback. The
negative deposit rate and QE could be put on the table. While the situation in Germany may be improving, the euro-zone economies are far from getting out of
the woods.
In the US, Non-Farm Payrolls data needs to be really awful in order for the tapering plans to change. Given the stability in recent months, this is quite unlikely, so
the dollar will likely remain well bid.
Eurozone is a recession-hit economy, rising borrowing rates for debt-struggling nations and the ECB's accommodative and ready-to-act-anew stance are all
conspiring to pressure the euro. EUR/USD is expected to reach 1.26 by end of the current CY.
Stats
Outlook-Euro
Gloss
Inflation Index
An Inflation index is a tool used to measure the rate of
inflation in an economy. Benefits that rise over time to
offset increases in the cost of living, usually as measured
by the Labor Department's consumer price index.

5. Emerging Country- Philippines
The Philippines officially known as the Republic of the Philippines is a sovereign state in Southeast Asia in the western
Pacific Ocean. To its north across the Luzon Strait lies Taiwan. West across the South China Sea sits Vietnam. The Sulu Sea
to the southwest lies between the country and the island of Borneo, and to the south the Celebes Sea separates it from
other islands of Indonesia. It is bounded on the east by the Philippine Sea.
A newly industrialized country, the Philippine economy has been transitioning from one based on agriculture to one based
more on services and manufacturing. Philippines gross domestic product grew by 7.8 percent in the first quarter of 2013.
The industry sector, composed of mining, manufacturing, and construction, grew by 10.9 percent, higher than the recorded
5.3 and 8.9 percent during the first and last quarter of 2012. The Mining and Quarrying industry grew by 17 percent in Q1
of 2013, an exponential increase compared to 1.7 and 2.8 percent in the first and last quarter of the previous year.
Manufacturing industry grew by 9.7 percent this year, higher that the 6 and 5.5 percent in the first and last quarter of 2012.
Construction industry, meanwhile, further increased to 32.5 percent compared to 29.9 percent in the fourth quarter of
2012.
The country’s annual headline inflation further slowed down to 2.6 percent in April from 3.2 percent in March, easing to a
13-month low. It resulted from the slower annual increments in all the commodity groups except in the education index.
The annual decline still recorded in the transport index also contributed to the downtrend. Inflation a year ago was 3.0
percent.
In March of 2013, total external trade in goods reached $9.251 billion, representing a 4.6 percent decline from $9.694
billion recorded in the same month of 2012. This was due to the 8.4 percent downward trend of total imports, while
exports showed a slight 0.1 percent increase over a year earlier. The trade deficit narrowed in March of 2013 to $ -593.1
million, from $ -1048 million a year earlier.
Foreign direct investments (FDI) went down by 8.5% in the first quarter of CY 2013. The country received $1.3 billion in
net investments in January to March of 2013, slightly lower than the $1.4 billion in the same period last year.
The bilateral trade between India and the Philippines from April 2011 to March 2012 is US$ 1.4 billion of which US$ 992.91
million forms Indian exports to the Philippines and US$ 455.63 million is the component of India’s imports from the
Philippines. The major items of Indian exports to the Philippines are iron and steel manufactures and tools, frozen buffalo
meat, rice and wheat, electrical machinery, pharmaceutical products and transport equipment. India’s main items of import
from the Philippines are semiconductors, inorganic chemicals, newsprint, auto parts and minerals.
GDP growth is forecast at 6% for this year, with a similar pace anticipated in 2014. Growth in remittances and services
exports will contribute to current account surpluses of around 3% of GDP.
Vital Economic Statistics of
Philippines Economy
Particulars Details
GDP (nominal) $257 billion (2012)
GDP growth rate 7.8% (Q1 2013)
Currency Philippine peso
Credit Rating BB+ Moody's
BBB- S&P
Fiscal Deficit 2.30% (GDP 2012)
Current account
deficit
1169 USD Million
(March 2013)

6. In FocusForex
US Becoming A Surveillance State. Right Or Wrong?
Edward Snowden, an American who was formerly employed with NSA & the CIA has
been charged with espionage & theft of government property for leaking details of Key
Mass Surveillance Programs. He is currently in the process of seeking asylum (Refuge
in other Countries) from U.S. prosecution. London's The Guardian published a series
of exposés in June, 2013 about a variety of classified intelligence programs, including
notably PRISM, NSA call database, Boundless Informant along with Tempora, a British
black-ops surveillance program run by the NSA's British partner, GCHQ. Snowden said
the leaks were an effort "to inform the public as to that which is done in their name
and that which is done against them. He is currently stuck in a legal limbo in the
international transit area of Moscow’s Sheremetyevo airport after fleeing from
Hongkong. If convicted, he could face thirty years in jail. The Point to discuss is
whether to consider Snowden a hero, a traitor or a complex individual with a mixture
of motives and interests. The information he revealed speaks to some of the most basic
questions about the boundaries between the citizen and the state, as well as persistent
and real anxieties about terrorism. Some members questioned the constitutional
validity of the federal government surveillance on its citizens and suggested Snowden
should benefit from immunity from prosecution. Others, who work with the
intelligence community, called Snowden a "traitor" and accused him of putting
Americans at risk. He has filed asylum applications to 21 countries, many of which
have been denied, including one made to New Delhi mainly because the US is an
important ally. But that country is also somehow a bit of a contradiction, because on
the one hand the US remains a world leader in upholding freedom of expression, but
on the other hand, when we talk about whistleblowers, the US are not protecting
freedom of their expression. The merit of Snowden's revelations is that now there is
some transparency about the extent and the scandal of surveillance. It’s important to
get rid of the double standards. There is no denial of the Fact that such mass
surveillance is a contradiction to human rights, freedom of information and press
freedom.
Sensex Nifty
18,540
.89
19,495
.82
5590.
25
5867.
90
Gold (10 gm) Silver (1 Kg)
26710
25855
40751
40137
Crude Oil ($/barrel) Dollar/INR
101.16
107.72
59.73
60.34

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