India: Modi sworn in PM for third term

Narendra Modi sworned in as India's prime minister on Sunday for a third term, after a shock poll setback that will test his ability to ensure policy certainty in a coalition government in the world's most populous nation.

President Droupadi Murmu administered the oath of office to Modi at a ceremony at the Rashtrapati Bhavan, the president's palace in New Delhi, attended by thousands of dignitaries, including the leaders of seven regional countries, Bollywood stars and industrialists.

"Honoured to serve Bharat," Modi posted on X, minutes before he was sworn in, referring to India's name in Indian languages.

Supporters cheered, clapped and chanted "Modi, Modi" as the name of the 73-year old leader, dressed in a white kurta tunic and blue half jacket, was called to take his oath.

Modi was followed by senior ministers in the previous government: Rajnath Singh, Amit Shah, Nitin Gadkari, Nirmala Sitharaman, Subrahmanyam Jaishankar, and Piyush Goyal, among others. Their portfolios are expected to be announced after the swearing-in.

Modi, who started as a publicist of the Hindu nationalist Rashtriya Swayamsevak Sangh (RSS), the ideological parent of his Bharatiya Janata Party (BJP), is only the second person after independence leader Jawaharlal Nehru to serve a third straight term as prime minister.

Modi secured the third term in elections that concluded on June 01, 2024 with the support of 14 regional parties in his BJP-led National Democratic Alliance (NDA), unlike in the previous two terms when his party won an outright majority.

The outcome is seen as a big setback to the popular leader as surveys and exit polls had predicted BJP would secure even more seats than in 2019.

Modi delivered world beating growth and lifted India's global standing but appeared to have missed a step at home as a lack of enough jobs, high prices, low incomes and religious faultlines pushed voters to rein him in.

When Modi was the chief minister of the western state of Gujarat from 2001 to 2014, BJP enjoyed strong majorities, allowing him to govern decisively.

Modi's new term as prime minister, therefore, is likely to be fraught with challenges on building consensus on contentious political and policy issues in the face of different interests of regional parties and a stronger opposition, analysts say.

Some analysts worry that the fiscal balance in the world's fastest growing economy could also come under pressure due to demands for higher development funds for states ruled by the NDA's regional partners and a possible push by BJP to spend more on welfare to woo back voters it lost in this year's election.

While the broad focus on building infrastructure, manufacturing and technology could continue, "contentious reforms could be delayed", said Samiran Chakraborty, Chief Economist, India at Citi Research.

"The BJP’s major coalition partners are politically unpredictable, sometimes working with the BJP and sometimes working against them," added Rick Rossow, the Chair in US-India Policy Studies at the Center for Strategic and International Studies in Washington.

"The larger parties that will be a part of his coalition are mostly agnostic on national-level issues and should not be applying a brake on economic reforms or security ties with the United States, Japan, and other key partners," he said.

Modi, whose election campaign was marked by religious rhetoric and criticism of the opposition for allegedly favouring India's 200 million minority Muslims has adopted a more conciliatory tone since the shock result.

"We have won the majority ... but to run the country it is unanimity that is crucial ... we will strive for unanimity," he said on Friday after the NDA formally named him coalition head.

Courtesy: Reuters

 

India: Rahul Gandhi likely leader of opposition

Congress leader Rahul Gandhi is likely to be the Lok Sabha’s leader of the Opposition (LoP) after the Congress Working Committee (CWC), the highest executive forum of the party, passed a resolution on Saturday urging him to do so.

Gandhi, who has won from Wayanad in Kerala as well as Rae Bareli in Uttar Pradesh and remained the biggest draw for the party in the 2024 Lok Sabha elections, told the committee that he will consider the proposal and decide in the next few days.

For the past 10 years, the Congress, which is the largest Opposition party in Parliament, did not meet the criteria to get the LoP status in the Lower House. This time, with 99 seats, the party is entitled to get the LoP post, which has the status of a cabinet minister.

“In a resolution, the CWC unanimously requested Rahul Gandhi to take the LoP post in the Lok Sabha. All participants, in their view, were unanimous that Rahul Gandhi should become the LoP,” Congress general secretary KC Venugopal said after the CWC meeting.

“In this election, we raised burning issues such as unemployment, price rise, women’s issues, Agniveer and social justice. These issues have to be continued in a greater manner inside Parliament as well. Rahul Gandhi is the best person to lead this campaign in the Lok Sabha. In the current scenario, for a better, stronger and vigilant Opposition and those who want to protect the Constitution, it should be safe under Rahul Gandhi as LoP,” Venugopal added.

According to three CWC members, party veteran Digvijaya Singh was the first to suggest Gandhi’s name as the LoP. Both Singh and Gaurav Gogoi, the party’s deputy leader in the Lok Sabha, argued that as the LoP, Gandhi would be best suited to amplify the Congress’s ideology and key issues raised during the elections.

Punjab leader Partap Singh Bajwa is said to have told Gandhi, “I know you don’t like positions, but this is a responsibility.”

He also pointed out that some of the NDA allies are not comfortable with certain schemes such as Agniveer and MSP issues and Gandhi could build more pressure on the government. “You would be working on your election guarantees even when sitting in the Opposition,” he said.

After other speakers also urged Gandhi, Congress president Mallikarjun Kharge reminded him that after the CWC has passed a resolution, Gandhi has to accept the post. “Rahul Gandhi smiled and told the CWC that he will consider and take his decision in a few days,” said a senior member of the panel.

Even as Congress parliamentary party Chief Sonia Gandhi remained silent, general secretary Priyanka Gandhi Vadra lauded her brother’s role in the election. Priyanka mentioned that at times, she had doubts if the party would be able to revive but Rahul “was the only one who had unflinching faith in the Congress’s ability to bounce back”.

In his speech, Rahul Gandhi took a dig at those who have left the Congress and said, “Whoever had to leave, have left. Those who are here are warriors.”

Gandhi also heaped praise on Kharge, 81, for undertaking such extensive campaign across the country at his age. He also praised the party’s communication on its 25 guarantees and said, “This time we didn’t allow anyone to derail our narrative.”

He argued that the party’s communication on the Constitution, social justice and the guarantees had been strong and “the BJP couldn’t match us on these issues. In this election, our party and people of India fought together. Earlier people said many things about us. But now it is clear that nobody can destroy the Congress party.”

The main resolution of the CWC also praised Gandhi for his role in the 2024 Lok Sabha campaign.

“Former Congress President Shri Rahul Gandhi has to be singled out largely because of the Bharat Jodo Yatra and the Bharat Jodo Nyay Yatra that he designed and led. Both these Yatras that reflected his own thinking and personality were historic turning points in our nation’s politics and instilled hope and confidence in lakhs of our workers and crores of our voters,” the resolution said.

“Shri Rahul Gandhi’s election campaign was single-minded, sharp and pointed and more than any other individual it was he who made the protection of our republic’s Constitution the central issue in the 2024 elections. The Paanch Nyay-Pachees Guarantee programme which resonated so very powerfully in the election campaign was the outcome of Rahulji’s yatras in which he listened to the fears, concerns and aspirations of all people, especially the youth, women, farmers, workers, Dalits, Adivasis, OBCs and minorities,” it added.

In the 16th Lok Sabha (2014-19), Kharge was the Congress floor leader before he shifted to the Rajya Sabha. Adhir Ranjan Chowdhury was the party’s floor leader in the Lok Sabha during 2019-2024.

Courtesy: Hindustan Times

Pakistan: Central bank must cut interest rate

Pakistan, already suffering from cost pushed inflation faces two challenges. The Monetary Policy Committee (MPC) has to make a difficult decision of cutting interest rate for making debt servicing sustainable.

The business community is already jittery due to likely introduction of new taxes, no reduction in interest rate, but more distressing hike in electricity and gas tariffs.

Analysts believe, Pakistan’s current account just can’t be improved without restoring competitiveness of the local manufacturers.

During this past week, Moody’s statement suggesting a status quo in the upcoming MPC meeting exerted some pressure on the stock market.

Looking ahead, the upcoming MPC meeting on June 10 will be in the spotlight, with any rate cut expected to shift the market’s focus towards cyclical sectors.

More than two years into the steepest interest-rate tightening cycle in decades, central banks around the world are grappling with how fast to unwind the policy. Policymakers from South Korea to Canada are weighing progress on slowing inflation, and some have started cutting rates.

Policymakers in Latin America have been trimming since earlier this year. While that all marks a major milestone, price pressures have proven stubborn, a strong dollar has roiled developing nations and geopolitical tensions have added a layer of uncertainty to the post-pandemic economic recovery.

US Federal Reserve officials will meet next week and are widely expected to hold interest rates steady as the US economy hums along and the labor market keeps firing on all thrusters. 

The Labor Department data this week suggesting last year’s payroll gains might not have been as robust as first counted, there’s now the risk that Fed Chair Jerome Powell and his colleagues could keep monetary policy too tight for too long.

Even as the Fed’s central bank peers diverge (the en-vogue term for the current unwinding cycle), rate cuts by the European Central Bank and the Bank of Canada “are less bold departures and more like components of a mosaic,” Daniel Moss writes in Bloomberg Opinion. “Harmony has been breaking down for a while.”

 

US military repairs Gaza pier

A top US military official said humanitarian aid would begin flowing again in the coming days through the maritime corridor. The pier has been attached back to the Gaza beach after the causeway, the part that connects to the shore, was broken apart during high winds and heavy seas on May 25.

Vice Admiral, Brad Cooper, deputy commander of US Central Command, said the US military was moving with a sense of urgency to re-open the pier to deliver critical humanitarian aid to Gaza.

"We want to seize this opportunity and get the aid to the people as quickly as possible," he said. 

The pier is just one point of access for humanitarian aid to reach Gaza, but in its roughly weeklong operation before it broke apart, more than two million pounds of aid entered the territory. 

Cooper said he expects one million pounds of aid to be delivered over every two-day period once operations resume.

The Gaza pier has cost the US about US$230 million, which includes the cost of repairing it. Still, that figure is down US$90 million from an initial estimate.

Sen. Roger Wicker, ranking member of the Senate Armed Services Committee, said continuing operations with the pier was a bad idea. "It continues to put US troops in harm's way without any plan for ensuring that aid is delivered successfully to Gazans in need," said Wicker, calling it an "irresponsible" and "expensive experiment."

Cooper acknowledged concerns that the pier could face more trouble from bad weather but stressed the US military had backup plans.

"We do have a series of contingency plans to adjust and adapt to the weather,” he said. 

Israel controls all of the crossings into Gaza, where Palestinians are struggling to access food and water as Israeli forces wage war against militant group Hamas, and says it is doing everything possible to get aid into the strip.

The United Nations Office for the Coordination of Humanitarian Affairs said in an update that 9 out of 10 children are experiencing severe food poverty in Gaza.

The office also said that recent Israeli military activities, including in the southern city of Rafah, "have significantly destabilized humanitarian aid flows, forcing UN and partners to reorganize the entire operation."

 

Biden must be held accountable for Israeli genocide in Gaza

The Israeli military is committing genocide against Palestinians in Gaza, as documented by Defense for Children International – Palestine. Images of Palestinian children’s bodies circulate on social media, while Israeli leaders openly discuss their plans for ethnic cleansing. Despite this, the Biden administration continues to support Israel diplomatically and militarily.

President Biden, who claims no one is above the law, has refused to back South Africa's genocide case against Israel at the International Court of Justice (ICJ) and has dismissed preliminary findings supporting these claims. Additionally, Biden undermines the International Criminal Court's efforts to hold Israeli leaders accountable for war crimes.

The US legal system, while holding former President Trump accountable, has yet to address Biden's complicity in this genocide. An appellate court in San Francisco will soon reconsider a lawsuit aimed at stopping US arms transfers to Israel during this crisis. The Center for Constitutional Rights, representing various Palestinian and American groups, argues that the Biden administration's support for Israel constitutes complicity in genocide.

Despite court dismissals on jurisdictional grounds, Palestinian testimonies highlight the devastating impacts of US weapons in Gaza. Even as Israeli forces continue their brutal campaign, targeting civilians, journalists, doctors, and aid workers, Biden's administration has expedited weapon transfers to Israel.

The Israeli military's use of American-made bombs in attacks on displacement camps has resulted in thousands of Palestinian deaths, including many children. Despite State Department reports acknowledging the misuse of US defense articles, Biden has maintained unwavering support for Israel.

The US courts now face a critical decision: they can either allow the lawsuit to proceed, offering a chance to hold the Biden administration accountable, or they can permit ongoing impunity.

The continued US support for Israel’s actions has led to the deaths of thousands of Palestinian children, a toll that many US voters find unacceptable.

Pakistan Stock Exchange posts 2.8%WoW decline

Pakistan Stock Exchange remained lackluster throughout the week ended on June 07, 2024, closing at 73,754 points with benchmark index losing 2,124 points or 2.8%WoW.

The downward pressure was primarily driven by concerns over the potential elimination of the final tax status for CGT and dividends, which would align their tax rates with the normal income tax rate.

Additionally, Moody’s statement suggesting a status quo in the upcoming Monetary Policy Committee (MPC) meeting also exerted some pressure on the market. These negatives overshadowed positive developments during the week.

On the macro front, inflation in May'24 eased to a 30-month low of 11.8%YoY, resulting in positive real interest rates exceeding 1,000bps. This fueled market participants' expectations for rate cuts in the June 10 MPC meeting.

Furthermore, the announcement of monetary easing from developed economies, including the European Central Bank and the Bank of Canada, amplified this sentiment.

May trade deficit shrank by 15%MoM to US$2.1 billion, while record-high remittance inflows of US$3.2 billion, hinting at another potential current account surplus, raising expectations that FY24’s current account could close in surplus.

As the FY25 budget approaches, new tax measures have surfaced with the IMF demanding an additional PKR2.0 trillion in revenue, while the local officials considering additional taxation of PKR1.4 trillion.

With an overall volatility in market, participation also decreased by 5.3%WoW, with the average daily traded volume falling to 423 million shares as compared to 447 million shares a week ago.

On the currency front, PKR appreciated by 0.05%WoW to close at 278.2/US$.

Other major news flows during the week included: 1) FBR tax collection in May exceeded target by RPK15.21 billion, 2) Pakistan has to repay US$10 billion by July, 3) May Petroleum products sales was up 7% to 1.39 million Tons YoY, and 4) Cement sales was Up by almost 8% during May.

Top performing sectors included: Paper & Board, Jute, and Textile spinning, while the laagered included: Inv. Banks/ securities cos., E&Ps and Refinery

Major net selling was recorded by Individuals with a net sell of US$8.9 million. Insurance and Banks/ DFI absorbed most of the selling with a net buy of US$7.0 million and US$6.8 million.

Top performing scrips of the week were: YOUW, SHEL, MTL, SEARL and TRG, while the laggards included: CEPB, FFBL, PSX, PIBTL and OGDC.

Looking ahead, the upcoming MPC meeting on June 10th will be in the spotlight, with any rate cut expected to shift the market’s focus towards cyclical sectors.

Additionally, the Federal Budget 2025 will significantly influence investor sentiment. Given the prevailing uncertainties, the market is likely to remain volatile in the short run, with clarity expected to emerge after the budget announcement. Until then, AKD Securities advises investors to adopt a wait-and-see approach, although any corrections should be seen as opportunities for value buys.

 

US and Iran-Pakistan economic cooperation

Former Pakistani Minister of Information and Broadcasting Fawad Ahmed Hussain Chaudhry has called on Western countries to end their double standard regarding Pakistan's cooperation with Iran, particularly on a joint gas pipeline project between the two neighbors. 

In an exclusive interview with IRNA, Chaudhry argued that Pakistan should not be prevented from benefiting from its neighborly relations with Iran and the opportunity to resolve its energy crisis.

He criticized the West's unilateral sanctions against Iran, which he said have nothing to do with the cooperation between Tehran and Islamabad.

"Either the West must be accountable for overcoming the energy crisis in Pakistan, or it must refrain from the double standard towards Islamabad's bilateral collaborations with Tehran," he asserted.

Chaudhry emphasized that the Iran-Pakistan joint gas project is the best option to address Pakistan's energy crisis, but the illegal sanctions Washington has imposed on Iran continue to hinder its finalization.

He also praised the role of late Iranian President Ebrahim Raisi in enhancing bilateral ties between Iran and Pakistan, describing his visit to Pakistan as being "of great importance."

In June 2009, Pakistan and Iran entered into a Gas Sales and Purchase Agreement for a pipeline intended to transport gas from Iran's South Pars Field to energy-hungry Pakistan. The pipeline was designed to supply between 750 million and 1,000 million cubic feet of gas per day.

Iran reported the completion of its section of the pipeline in 2011. However, construction on the Pakistani side has faced repeated delays. The US has been pressuring the new Pakistani administration to refrain from picking up on the project. 

Pakistan is currently facing a severe energy crisis resulting from a gap between energy supplies and demands in the country.