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Antonyms: powerless
Example Sentence:
Antonyms: income
K
gG
Example Sentence:
in
A modest outlay on local advertising was spent.
nk
3. SANCTIFY (VERB): (शु करना): consecrate
Ba
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Antonyms: deconsecrate
gr
Example Sentence:
le
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Antonyms: opponent
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Example Sentence:
gG
All drivers must adhere to speed limits.
in
nk
7. CONTEND (VERB): (संघष करना): face
Ba
Example Sentence:
gr
le
Example Sentence:
Example Sentence:
The herd was fleeing back to the high land in a wild stampede.
K
Antonyms: silence
gG
Example Sentence:
in
nk
They understand the language of political discourse only.
Ba
@
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@TheHinduVocab1
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Who’s afraid of monetisation of the defi cit?
The shrill clamour against it is based on misconceptions; fears of infl ation lack substance
ry weight. Institutional investors the government by buying Treasu government bonds in the secon
are largely bound by covenants ry bills. As proponents of what is dary market in recent years, with
Step by step that require them to exit an econo
my that falls below investment
called Modern Monetary Theory
point out, even that is not re
the RBI joining the party of late.
These are carried out under Open
Talks will not fi nd an immediate resolution to grade. quired. The central bank could Market Operations (OMO). The im
If India is downgraded to junk simply credit the Treasury’s ac pact on money supply is the same
the LAC standoff , but a start has been made
GETTY IMAGES/ISTOCKPHOTO
T.T. Ram Mohan status, foreign institutional inves count with itself through an elec whether the central bank acquires
W
ith offi cial talks getting under way over the tors, or FIIs, will fl ee in droves. tronic accounting entry. government bonds in the secon
A
weekend, the monthlong standoff between s the government began to The stock and bond markets will When the government spends dary market or directly from the
Indian and Chinese soldiers along the LAC in wrestle with the severe take a severe beating. The rupee the extra funds that have come in Treasury. So why the shrill cla
Ladakh and Sikkim has entered a more considered downturn caused by the no will depreciate hugely and the cen to its account, there is an increase mour against monetisation of pu
vel coronavirus pandemic, some tral bank will have its hands full in ‘Base money’, that is, currency blic debt?
phase. There was little expectation that the videoconfe
economic pundits urged the go trying to stave off a foreign ex plus banks’ reserves. So, yes, mo
rence on Friday, held between External Aff airs Ministry vernment to go out and spend change crisis. That is the last thing netisation results in an expansion About infl ation control
offi cials in Delhi and their Ministry of Foreign Aff airs without worrying about the in we need at the moment. from an increase caused by slow of money supply. But that is not OMO is said to be a lesser evil than
counterparts in Beijing, and talks between the Leh crease in public debt. They said ing growth, the latter being called the same as printing currency direct monetisation because the
Corps Commander with the South Xinjiang Military Re the rating agencies would under Work towards an upgrade an ‘automatic stabiliser’ ). notes. former is a ‘temporary’ expansion
gion Commander, held in the ChushulMoldo region on stand that these are unusual times. We have to put our best foot for Keeping the fi scal defi cit on a What could be the objection to in the central bank’s balance sheet
China’s side of the LAC on Saturday, would bear fruit If they did not and chose to down ward now to prevent a downgrade leash addresses the concerns of such an expansion in money sup whereas the latter is ‘permanent’.
grade India, we should not lose too and bring about an upgrade in rating agencies about a rise in the ply? It could be that the expansion But we know that even socalled
immediately. However, statements from both sides that
much sleep over it. stead. To do so, we need to note public debt to GDP ratio. But it is infl ationary. This objection has ‘temporary’ expansions can last
the talks will continue indicate a desire to resolve the the key concerns that Moody’s has does little to address their con little substance in a situation for long periods with identical ef
situation. The MEA and the MFA have also reiterated Rating and fundamentals cited in eff ecting the present cerns about growth. The debt to where aggregate demand has fal fects on infl ation. What matters,
their commitment to abide by agreements between Well, the decision of the rating downgrade to our rating: slowing GDP ratio will worsen and fi nan len sharply and there is an in therefore, is not whether the cen
Prime Minister Narendra Modi and Chinese President agency, Moody’s, to downgrade growth, rising debt and fi nancial cial stress will accentuate if growth crease in unemployment. In such tral bank’s balance sheet expan
Xi Jinping, which came after the last big standoff , at India from Baa2 to Baa3 should sector weakness. These concerns fails to recover quickly enough. a situation, monetisation of the sion is temporary or permanent
Doklam in 2017, to not allow “diff erences to escalate in come as a rude awakening. The are legitimate. The government’s stimulus pack defi cit is more likely to raise actual but how it impacts infl ation. As
present rating is just one notch Many economists as also the Re age relies heavily on the banking output closer to potential output long as infl ation is kept under con
to disputes”. During the Doklam incident, even after a
above the ‘junk’ category. Moody’s serve Bank of India (RBI) expect system to shore up growth. But without any great increase in trol, it is hard to argue against mo
meeting between the leaders on the sidelines of a G20 has also retained its negative out India’s economy to shrink in FY there is only so much banks can infl ation. netisation of the defi cit in a situa
summit, it had taken several highlevel engagements to look on India, which suggests that 202021. The combined fi scal defi do. More government spending is Exponents of the MMT make a tion such as the one we are now
ensure a drawdown to the 73day standoff . a further downgrade is more likely cit of the Centre and the States is required, especially for more striking point. They say confronted with.
Given the diff erences between the situation now and than an upgrade. expected to be in the region of 12% infrastructure. there is nothing particularly virtu We now have a way out of the
previous incidents, it would be naive to assume that this The rationale given by Moody’s of GDP. Moody’s expects India’s ous about the government incur constraints imposed by sovereign
standoff can be resolved quickly through talks. The should especially make people sit public debt to GDP ratio to rise Clearing misapprehensions ring expenditure and issuing ratings. The government must
up. The downgrade, Moody’s says, from 72% of GDP to 84% of GDP in We need to increase the discre bonds to banks instead of issuing confi ne itself to the additional bor
standoff is at more than one location, including the
has not factored in the economic 202021. The banking sector had tionary fi scal stimulus without in these to the central bank. The ex rowing of ₹ 4.2 trillion which it has
Finger areas of the Pangong Tso, Galwan Valley and Go impact of the pandemic. It has to nonperforming assets of over 9% creasing public debt. The answer pansion in base money and hence announced. Further discretionary
gra post in Ladakh and the Naku La pass in Sikkim, and do with India’s fundamentals be of advances before the onset of the is monetisation of the defi cit, that in money supply is the same in fi scal stimulus must happen
it will require careful study to decide how to deinduct fore the onset of the pandemic and pandemic. Weak growth and ris is, the central bank providing either route. (The precise se through monetisation of the defi
soldiers. Furthermore, a “status quo ante” will require the extended lockdown with ing bankruptcies will increase funds to the government. Mention quence of central bank transac cit. That way, the debt to GDP ratio
that Chinese soldiers vacate areas where they have dug which India responded. The mes stress in the banking sector. ‘monetisation of defi cit’ and many tions in these two cases and the can be kept under control while al
in for weeks now. Nothing short of their full withdrawal sage should be clear enough. Any The government’s focus thus far economic pundits will cower in identity in outcomes is shown in so addressing concerns about
should satisfy India, which means that more than talks further deterioration in the funda has been on reassuring the fi nan terror. These fears are based on Macroeconomics by Mitchell, Wray growth. The rating agencies
mentals from now on will push In cial markets that the fi sc will not misconceptions about monetisa and Watts, three economists who should be worrying not about mo
on the ground and by diplomats, there is a need for
dia into ‘junk’ status. spin out of control. It has kept the tion of the defi cit and its eff ects. are among the leading exponents netisation per se but about its im
strong political direction from Beijing to the PLA to do We should not lose sleep over a ‘discretionary fi scal stimulus’ A common misconception is of MMT). The preference for priv pact on infl ation. As long as infl a
that. Otherwise, India must prepare for a longdrawn further downgrade and simply down to 1% of GDP, a fi gure that is that it involves ‘printing notes’. ate debt is voluntary. MMT expo tion is kept under control, they
standoff , and manoeuvres aimed at ensuring China’s borrow our way out of trouble? most modest in relation to that of One image that leaps to mind is nents say it has more to do with an should not have concerns — and
pull back. In addition, even as the government tries to Anybody who thinks so is living in many other economies, especially the printing presses of central ideological preference for limiting we need not lose sleep over a pos
analyse the reasons for China’s aggressive action, it cloud cuckoo land. Whatever the developed economies. (‘Discre banks cranking out notes with government expenditure. But that sible downgrade.
must introspect on signals it misread and warnings that failings of the agencies, in the im tionary fi scal stimulus’ refers to an abandon. But that is not how cen is a debate for another day.
perfect world of global fi nance increase in the fi scal defi cit caused tral banks fund the government. Central banks worldwide have T.T. Ram Mohan is a professor at IIM
went unheeded across its strategic command. If such
that we live in, their ratings do car by government policy as distinct The central bank typically funds resorted to massive purchases of Ahmedabad. E-mail: ttr@iima.ac.in
skirmishes normally follow the melting of snowlines,
for example, then why was the LAC not adequately
manned in AprilMay? Serious notice should have been
taken of China’s protests on the redrawing of the Jam
muKashmir and Ladakh maps, as well as the impact of
The critical role of decentralised responses
the Home Minister’s vow in Parliament to “take back” Strategies in tackling the COVID19 crisis must include local governments being equipped and fi scally empowered
Aksai Chin. The Defence Minister has said that Chinese addressed. One, the new normal low market rate but signifi cantly cal level fi nd no mention in the fi ve
troops arrived in “heavy numbers” and therefore the demands a paradigm shift in the above the reverse repo rate to at tranches of the packages an
government must also study what intelligence was re delivery of health care at the cut tract banks. We are appealing to nounced by the Union Finance Mi
GETTY IMAGES/ISTOCKPHOTO
ceived ahead of such movement, and when action was ting edge level. Two, the parallel the patriotic sentiments of nonre nister. The claim for a higher
taken upon it. Finally, why has the standoff emerged at bodies that have come up after the sident Indians and rich citizens. award to LGs is loud and clear.
73rd/74th Constitutional Amend Needless to say, credit rating is not The ratio of basic to tied grant is
all, after the intense summitlevel conversations in Wu
M.A. Oommen ments have considerably distorted to be the weighing consideration. fi xed at 50:50 by the commission.
han and Mamallapuram to discuss building trust at the the functionsfund fl ow matrix at That the Resurgent India Bond of In the context of the crisis under
LAC? Given the government’s silence on events thus far, the lower level of governance. 1998 could mobilise over $4 billion way, all grants must be untied for
T
it is unlikely that it will put out answers to these ques he novel coronavirus pan Three, there is yet no clarity in the in a few days encourages us to try freely evolving proper COVID19
tions publicly, but in any event, they must be sought. demic has brought home the assignment of functions, function this option. containment strategies locally.
critical role of local govern aries and fi nancial responsibilities When they are not taxed, people Further the 13th Finance Commis
ments and decentralised respons to local governments. Functional remain indiff erent. LGs, States and MP fund scheme sion’s recommendation to tie local
Selling space es. In terms of information, moni
toring and immediate action, local
mapping and responsibilities con
tinue to be ambiguous in many
people seem to labour under a fi s
cal illusion. In States such as Uttar
The suspension of MPLADS by the
Union government for two years is
grants to the union divisible pool
of taxes to ensure a buoyant and
SpaceX’s mission carrying humans to space governments are at an advantage, States. Instructively, Kerala at Pradesh, Bihar and Jharkhand, lo a welcome measure. The annual predictable source of revenue to
marks a new age in commercial space fl ight and eminently, to meet any disas tempted even responsibility map cal tax collection at the panchayat budget was around ₹ 4,000 crore. LGs (accepted by the then Union
ter such as COVID19. While impos ping besides activity mapping. level is next to nil. Property tax The Union government has appro government) must be restored by
F
or the United States to send American astronauts ing restrictive conditionalities on Four, the critical role of local go forms the major source of local re priated the entire allocation along the commission.
to space from American soil after a gap of nine States availing themselves of the vernments will have to be recog venue throughout the world. All with the huge nonlapseable ar Flood, drought, and earth
years is a milestone in itself. That this took place enhanced borrowing limits (3.5% nised by all. A few suggestions for States should take steps to en rears. MPLADs, which was avow quakes are taken care of by the
at the time of one of the biggest civil rights upsurges to 5% of Gross State Domestic Pro resource mobilisation are given hance and rationalise property tax edly earmarked for local area de Disaster Management Act 2005
since the 1960s makes it almost like an escape to fanta duct, or GSDP) for 202021 is un under three heads: local fi nance, regime. A recent study by Profes velopment, must be assigned to which does not recognise epidem
sy, riding on the wings of a publicprivate partnership warranted, the recognition that lo Members of Parliament Local Area sor O.P. Mathur shows that the local governments, preferably to ics, although several parts of India
cal governments should be fi scally Development Scheme, or share of property tax in GDP has panchayats on the basis of wellde experienced several bouts of va
between NASA and Elon Musk’s SpaceX. The less ex
empowered immediately is a valid MPLADs, and the Fifteenth Fi been declining since 200203. This fi ned criteria. rious fl us in the past. The new pan
pensive journey is a clear fi nancial advantage as the U.S. signal for the future of local gover nance Commission (FFC). portends a wrong signal. The A special COVID19 contain demic is a public health challenge
has been paying the Russians $80 million to put one as nance. This article makes some share of property tax in India in ment grant to the LGs by the FFC of an unprecedented nature along
tronaut into space ever since they stopped NASA’s hu suggestions to improve local fi Local fi nance 201718 is only 0.14% of GDP as to be distributed on the basis of with livelihood and welfare chal
man space launch programme. Thus, SpaceX comes in nance and argues that the extant Property tax collection with ap against 2.1% in the Organisation SFClaid criteria is the need of the lenges. The fi rst Report speaks of
to provide advantages in costs, innovation and safety. fi scal illusion is a great deterrent to propriate exemptions should be a for Economic Cooperation and hour. The commission may do mitigation funds and even pre
In the 2000s, when Mr. Musk showed off his rockets mobilisation. compulsory levy and preferably Development (OECD) countries. If well to consider this. The local go pared a disaster risk index, to map
must cover land. The Economic property tax covers land, that will vernment grant of ₹ 90,000 crore out vulnerable areas. These are re
and lobbied in Washington DC, he was mostly ignored,
Core issues Survey 201718 points out that ur hugely enhance the yield from this for 20202021 by the FFC is only dundant in the present context.
yet now, NASA wants him to fi nd customers for space COVID19 has raised home four ban local governments, or ULGs, source even without any increase 3% higher than that recommend The 2005 Act may have to be mod
fl ights. This can expand the power of U.S. commerce ex major challenges: economic, generate about 44% of their reve in rates. ed by the Fourteenth Finance ifi ed to accommodate the emerg
ponentially. Japanese billionaire Yusaku Maezawa has health, welfare/livelihood and re nue from own sources as against Land monetisation and better Commission. For panchayats ing situation.
already signed up as a potential traveller to the moon source mobilisation. These chal only 5% by rural local govern ment levy may be tried in the con there is only an increase of ₹ 63 COVID19 has woken us up to
and back. With this partnership, Americans have taken lenges have to be addressed by all ments, or RLGs. Per capita own re text of COVID19 in India. To be crore. The commission’s claim the reality that local governments
yet another leap of faith in creating commerce in space. tiers of government in the federal venue collected by ULGs is about sure, land values have to be un that the grant works out to 4.31% must be equipped and empo
If his plans get realised, Mr. Musk could make space polity, jointly and severally. Own 3% of urban per capita income bundled for socially relevant pur of the divisible pool and that it is wered. Relevant action is the criti
revenue is the critical lever of local while the corresponding fi gure is poses. higher than the 3.54% of the FC cal need.
fl ights as common as domestic fl ights. Technologically,
government empowerment. Of only 0.1% for RLGs. There is a Municipalities and even subur XIV is obviously because the size
it is a remarkable feat. The collaboration brings in a course the several lacunae that yawning gap between tax poten ban panchayats can issue a corona of the denominator is smaller. M.A. Oommen is an Honorary Fellow,
‘willingness to fail’ which has kept SpaceX alive. This is continue to bedevil local gover tial and actual collection, resulting containment bond for a period of Building health infrastructure and Centre for Development Studies,
coupled to the propensity to ‘qualify every compo nance have to be simultaneously in colossal underperformance. say 10 years, on a coupon rate be disease control strategies at the lo Thiruvananthapuram
nent’, which has been NASA’s strength.
NASA has partially outsourced its work of innovating,
testing and building new technology to market players
LETTERS TO THE EDITOR Letters emailed to letters@thehindu.co.in must carry the full postal address and the full name or the name with initials.
more such innovative space companies to participate. The state of politics overdose of ideological Private care towards only people with during this crisis. It is a dire online, scan the QR code
CM A ND-NDE
YK
THE HINDU
TUESDAY, JUNE 9, 2020
DELHI
@TheHinduVocab1
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OPED 7
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