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Economists say negative trend will continue for at least two more months

The output of eight core sector industries shrank for the fourth straight month in June 2020, although the contraction eased to 15%, showing some recovery from the 22% fall in May, according to data released by the Commerce Ministry on Friday. Economists expect the negative trend to continue for at least two more months.

During April-June 2020-21, the sector’s output dipped by 24.6% as compared to a positive growth of 3.4% in the same period previous year.

Monsoon boost

Of the eight core sectors, the fertilizer industry was the only one which saw actual growth in June, with output rising 4.2% in comparison to June 2019. This, however, is lower than the May 2020 growth of 7.5%, but reflects the positive outlook in the agriculture sector where a normal monsoon is leading to expectations of a bumper kharif crop.

The remaining industries showed contraction, with the steel sector continuing to remain the worst performer, with a 33% drop in production in comparison to the previous year. Cement production fell almost 7%, albeit an improvement from the 22% contraction seen in May.

The energy sectors also showed negative growth, with coal production falling 15.5% and crude oil and natural gas production dropping 6% and 12% respectively.

Refinery squeeze

Petroleum refinery production, which carries the greatest weight in the core sector index, saw a contraction of almost 9% while electricity generation dropped 11%.

“The daily mobility and power indicators do show sequential improvement in May and June but it is now plateauing out in July, so it is hard to predict when sluggish economic activity will recover,” said India Ratings chief economist D.K. Pant.

“The national lockdown may have been lifted, but several States have announced their own lockdowns till the end of August, and even globally, we are seeing a second wave of infections,” he said.

Focus on development of Amaravati, Kurnool and Vizag

In a major turning point in the history of Andhra Pradesh, Governor Biswa Bhusan Harichandan on Friday gave his assent to the A.P. Decentralisation and Inclusive Development of All Regions and A.P. Capital Region Development Authority Repeal Bills - 2020.

The clearance of the decentralisation Bill facilitates the development of Amaravati, Kurnool and Visakhapatnam as the Legislative, Judicial and Executive Capitals respectively.

The repeal of the CRDA paves the way for the formation of the Amaravati Metropolitan Region Development Authority. The government is free now to give the ‘three capitals’ proposal a tangible shape while a batch of petitions that challenged the two Bills is pending adjudication by the High Court.

As per the Decentralisation Bill, Visakhapatnam will have the Raj Bhavan, the Secretariat and offices of the Heads of Departments, and Amaravati will be the seat of the Legislature. Regarding the judicial capital, the Bill says: “The seat of all State judicial institutions established under the State legislation, shall, as far as practicable, be located in Kurnool.”

Accordingly, the principal seat of the High Court will be located in Kurnool and Benches constituted as per the procedure laid down in the A.P. Reorganisation Act, 2014. The Bills were considered as ‘deemed to be passed’ as one month has elapsed after their introduction in the Legislative Council for the second time, as per Clause 2 of Article 197 of the Constitution notwithstanding the fact that they were not cleared by the Upper House.

‘India should respond to request for talks on Kalapani row’

The 1947 agreement among India, Nepal and the United Kingdom that deals with the military service of Gurkha soldiers has become “redundant,” Foreign Minister of Nepal Pradeep Kumar Gyawali said on Friday.

In an online interaction organised by the Nepal Institute of International Relations, the Minister also said India should respond to Nepal’s request for talks on the Kalapani dispute to prevent the issue from impacting people-to-people relations.

“Gurkha recruitment was on the one hand the first window that was opened to Nepali youth to go abroad... In the changed context, some of those provisions have become questionable. Tripartite agreement of 1947 has become redundant,” said Mr. Gyawali. He spoke of a possible “bilateral” arrangement with India regarding the Gurkha soldiers.

The 1947 agreement divided the Gurkha regiments of the British empire between India and the United Kingdom. However, Gurkha veterans have been alleging that the U.K. has been discriminating against them. Mr. Gyawali did not spell out the specific terms that Nepal wishes to discuss with India on the Gurkha soldiers in the Indian military.

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