1. Debt-to-GDP ratio of Centre and states
• The centre has released a Status Paper on Government Debt for 2017-18.
• The Centre’s total debt as a percentage of GDP reduced to 46.5% in 2017-18 from 47.5% as of March 31, 2014.
• The total debt of the States has risen to 24% in 2017-18, and is estimated to be 24.3% in 2018-19.
• In absolute terms, the Centre’s total debt increased from ?56,69,429 crore at the end of March 2014 to ?82,35,178 crore in 2017-18, representing a 45% increase. The total debt of the States increased from Rs.24,71,270 crore to ?40,22,090 crore over the same period, an increase of almost 63%.
• While the Centre is moving in the right direction in terms of meeting the N.K. Singh Committee recommendations on public debt, the States are moving in the opposite direction.
• Outstanding liabilities of States have increased sharply during 2015-16 and 2016-17, following the issuance of UDAY bonds in these two years.
• The increase in the debt stock at the State level is worrying because they don’t have the wherewithal to service the debt if it goes beyond a certain point. They could then start getting into a debt trap situation.
• The N.K. Singh-headed FRBM (Fiscal Responsibility and Budget Management) Review Committee report had recommended the ratio to be 40% for the Centre and 20% for the States, respectively, by 2023.
• It said that the 60% consolidated Central and State debt limit was consistent with international best practices, and was an essential parameter to attract a better rating from the credit ratings agencies.
• The States do have some fiscal space to reduce their borrowing in the coming years due to the large cash surpluses they hold. This indicates scope for reducing the quantum of market borrowings by State governments in case they bring down their cash surpluses (parked as investment in treasury bills of the Central government).
• State governments as a group have exhibited a tendency to hold large cash surpluses/investments in Cash Balance Investment Account on a consistent basis while at the same time resorting to market borrowings to finance their GFD (Gross Fiscal Deficit).
2. ILO Commission’s Future of Work Report
• The Global Commission on the Future of Work released its report on Jan 22. The document calls on governments to take steps to address the challenges caused by unprecedented transformations going on in the world of work.
• Due to the unprecedented transformational change in the world of work, there are several transformational challenges that are bound to occur.
• Artificial intelligence, automation and robotics will lead to job losses, as skills become obsolete.
• A universal labour guarantee that protects fundamental workers’ rights, an adequate living wage, limits on hours of work and safe and healthy workplaces.
• Guaranteed social protection from birth to old age that supports people’s needs over the life cycle.
• A universal entitlement to lifelong learning that enables people to skill, reskill and upskill.
• Managing technological change to boost decent work, including an international governance system for digital labour platforms.
• Greater investments in the care, green and rural economies.
• A transformative and measurable agenda for gender equality.
• Reshaping business incentives to encourage long-term investments.
• It is time for a vision for a human-centred agenda that is based on investing in people’s capabilities, institutions of work and in decent and sustainable work.
• Countless opportunities lie ahead to improve the quality of working lives, expand choice, close the gender gap, reverse the damages wreaked by global inequality. Yet none of this will happen by itself.
• Governments, trade unions and employers need to work together, to make economies and labour markets more inclusive. Such a social dialogue can help make globalization work for everyone.
3. China`s economy grew at 6.6% in 2018, slowest rate in almost 3 decades
• China`s economy grew at 6.6 per cent in 2018, its slowest rate in almost three decades. The world`s second biggest economy was grappling with the effects of the current trade war with the US and declining exports.
• In the three months to December, the economy grew 6.4% from a year earlier, down from 6.5 per cent in the previous quarter. The data was in line with forecasts but underlines recent concern about weakening growth. China`s National Bureau of Statistics (NBS) said that last year`s growth rate was down from 6.8 per cent in 2017 and was the lowest since 1990 when growth rate was 3.9 per cent.
• China`s rate of expansion has raised worries about the potential knock-on effect on the global economy. The trade war with the US has added to the gloomy outlook. The US and China have been locked in an escalating trade spat since early 2018, raising import tariffs on each other`s goods.
4. India to surpass United Kingdom in world`s largest economy rankings
• India is likely to surpass the United Kingdom in the world`s largest economy rankings in 2019, to become world`s fifth largest economy, according to a report by global consultancy firm PwC.
• As per the report, while the UK and France have regularly switched places owing to similar levels of development and roughly equal populations, India`s climb up the rankings is likely to be permanent.
• PwC`s Global Economy Watch report projects real GDP growth of 1.6 per cent for the UK, 1.7 per cent for France and 7.6 per cent for India in 2019.
• According to World Bank data, India became the world`s sixth largest economy in 2017 surpassing France and was likely to go past the UK which stood at the fifth position.
• The US was the world`s largest economy with a size of 19.39 trillion dollars, followed by China at 12.23 trillion dollars at the second place in 2017.