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News. Now for the latest financial news with Sally and World Business | :00:00. | :00:18. | |
Report. Bitter medicine to cure a sick economy ` India awaits the | :00:19. | :00:21. | |
first Budget from its new government. Day of action ` over a | :00:22. | :00:29. | |
million UK public sector workers walk out in a battle with the | :00:30. | :00:36. | |
government over austerity. Welcome to World Business Report. I'm Sally | :00:37. | :00:46. | |
Bundock. Also in the programme: Chinese trade recovers, but the | :00:47. | :00:48. | |
numbers disappoint. We'll bring you the details. But first: "Bitter | :00:49. | :00:52. | |
medicine". That is what India's Prime Minister Narendra Modi has | :00:53. | :00:55. | |
warned his country needs to get its economy back on track. He swept to | :00:56. | :00:59. | |
power back in May with promises of reform. Today we find out what that | :01:00. | :01:02. | |
medicine might be, with his government's first Budget. Here is | :01:03. | :01:05. | |
what he is up against. The most obvious problem is weak economic | :01:06. | :01:11. | |
growth. India's economy grew just 4.7% in the year to April. That is | :01:12. | :01:15. | |
around the weakest in a decade, and about half what is needed to create | :01:16. | :01:18. | |
jobs for the young and growing population. It is estimated a | :01:19. | :01:20. | |
million new people enter India's Labour market each month. Then there | :01:21. | :01:27. | |
is the problem of inflation. Consumer prices were up almost 10% | :01:28. | :01:30. | |
last year, driven by food prices, and that hits ordinary Indians hard. | :01:31. | :01:33. | |
They rely on government subsidies to fuel, food and fertilizer. But that | :01:34. | :01:43. | |
is crippling the government's finances. Ratings agencies have | :01:44. | :01:45. | |
warned they might cut India's credit rating if it doesn't rein in its | :01:46. | :01:49. | |
finances. Balancing all this will be the challenge today. Yogita Limaye | :01:50. | :02:07. | |
is in Delhi for us. Tell us what is expected from this Budget. Will | :02:08. | :02:13. | |
sally, let me just show you where that document was actually made. | :02:14. | :02:17. | |
That will bring behind me houses the finance ministry. I have been told | :02:18. | :02:20. | |
that finance ministry officials have been locked in there for days trying | :02:21. | :02:25. | |
to create this document, which is much anticipated here in India, and | :02:26. | :02:28. | |
the Finance Minister has literally just let that building to go to | :02:29. | :02:32. | |
India's Parliament to deliver that speech which will happen in about an | :02:33. | :02:36. | |
hour from now. To your question, what is expected, as you pointed | :02:37. | :02:40. | |
out, India's finances have not been in order for quite awhile now. Need | :02:41. | :02:46. | |
to increase revenues or decrease spending. A large part of that goes | :02:47. | :02:50. | |
to subsidies, particularly fuel subsidies, where India spends as | :02:51. | :02:57. | |
much a $20 billion. The government won with a massive majority, meaning | :02:58. | :03:01. | |
they will face perhaps less political opposition even if they | :03:02. | :03:04. | |
have to take some unpopular decisions. What most analysts expect | :03:05. | :03:08. | |
is that we might see some cuts in those fuel subsidies. As we have | :03:09. | :03:11. | |
said, it is a new government, people are hoping for fresh ideas. How | :03:12. | :03:18. | |
optimistic are Indian people that today's Budget will be one of the | :03:19. | :03:24. | |
key answers to its problems? Well all of the businesses that we have | :03:25. | :03:27. | |
been speaking to over the past few weeks seem very optimistic. What | :03:28. | :03:31. | |
they want and what they are expecting to see in this Budget is | :03:32. | :03:36. | |
that there will be some plan to make doing business in India easier. | :03:37. | :03:39. | |
Prime among those, they are expecting a roadmap for a goods and | :03:40. | :03:46. | |
services tax, simply put, that is simply one single tax across India. | :03:47. | :03:50. | |
Currently, depending on where you operate your business, there are | :03:51. | :03:54. | |
several layers of taxation, and it is difficult and cumbersome for | :03:55. | :03:56. | |
companies to comply with all of them. Companies want to see a | :03:57. | :04:00. | |
roadmap for a single tax across India. As far as ordinary people are | :04:01. | :04:07. | |
concerned, there has not been good news. Food prices have spiralled. | :04:08. | :04:09. | |
The monsoon forecast is below normal, it is expected to hit | :04:10. | :04:13. | |
reduction, and again, if fuel subsidies are cut, things will | :04:14. | :04:18. | |
become more expensive. We will talk to you later today as that news | :04:19. | :04:22. | |
starts to break. A very important day for the Indian economy. Focusing | :04:23. | :04:27. | |
on the UK, more than a million public sector workers here in the UK | :04:28. | :04:30. | |
go on strike today, in a dispute with the government over pay, | :04:31. | :04:33. | |
pensions and working conditions. Local government employees, from | :04:34. | :04:34. | |
refuse collectors to librarians, will be joined by teachers, | :04:35. | :04:37. | |
firefighters and civil servants, in what they are calling a "day of | :04:38. | :04:40. | |
action". We'll be talking to an expert in a moment, but first this | :04:41. | :04:48. | |
report from John Moylan. The Graham family in Northumberland believe the | :04:49. | :04:50. | |
government has dealt them a bad hand. As a teaching assistant, | :04:51. | :04:54. | |
Sharon's pay has risen by just 1% in four years. So she has to hold down | :04:55. | :05:03. | |
two other jobs to get by. Where I work, 75 to 80% of teachers' | :05:04. | :05:06. | |
assistants work two jobs. It is not just me, there is lots of us have | :05:07. | :05:19. | |
multiple jobs. We are all struggling to get by. Like Sharon, 1.4 million | :05:20. | :05:21. | |
local government workers have endured a three`year pay freeze, | :05:22. | :05:24. | |
followed by a below`inflation 1% pay rise in 2013. It is the prospect of | :05:25. | :05:28. | |
another 1% rise this year which led unions to ballot for industrial | :05:29. | :05:30. | |
action. Pay rates in local authorities have got so bad that in | :05:31. | :05:33. | |
October, the national minimum wage overtook the council pay rate, you | :05:34. | :05:36. | |
can't legally pay any less than councils pay their staff, which is | :05:37. | :05:39. | |
appalling when you think of the front`line service jobs that those | :05:40. | :05:42. | |
people do in our communities everyday. Tomorrow, council workers | :05:43. | :05:44. | |
will be joined by teachers, civil servants, and firefighters, in the | :05:45. | :05:46. | |
largest co`ordinated strike since the public`sector pensions dispute | :05:47. | :05:49. | |
three years ago. But it has been condemned by the government. I think | :05:50. | :06:01. | |
they are wrong and damaging, because they will affect services and affect | :06:02. | :06:05. | |
people who have nothing to do with the dispute whatsoever. I also think | :06:06. | :06:08. | |
they are wrong because some of them are based on ballots which took | :06:09. | :06:11. | |
place two years ago, with a small percentage of people actually voting | :06:12. | :06:26. | |
for strike action. The government says pay restraint helps families by | :06:27. | :06:34. | |
protecting jobs, services, and repairing the public finances. So | :06:35. | :06:37. | |
the Grahams are unlikely to get a boost to their household income any | :06:38. | :06:42. | |
time soon. Professor John Ryan is from the Von Hugel Institute at the | :06:43. | :06:47. | |
University of Cambridge. Thank you for coming in. Good morning. We | :06:48. | :06:52. | |
heard the challenges many are facing. And Chancellor Osborne seems | :06:53. | :06:57. | |
to be quite set on his goal to reduce our borrowing has an economy, | :06:58. | :07:01. | |
but trade unions are also very determined. How will this play out? | :07:02. | :07:06. | |
At the moment Chancellor Osborne has not in successful in looking after | :07:07. | :07:10. | |
the finances of the country, the national debt is going up, and | :07:11. | :07:14. | |
posterity, as far as the people striking today, in this one`day | :07:15. | :07:19. | |
strike, feel that they are being targeted in this process. So there | :07:20. | :07:24. | |
are quite a lot of people either living on subsistence wages, | :07:25. | :07:27. | |
low`paid workers, as we saw from the peace earlier. They are actually | :07:28. | :07:32. | |
struggling in this economy, which supposedly is doing well. How do we | :07:33. | :07:36. | |
resolve this then, from your point of view? Because as you say, public | :07:37. | :07:48. | |
finances are in a pretty ports done a poor state. How does this get | :07:49. | :07:52. | |
resolved? It will get resolved over a period of time, and when another | :07:53. | :07:57. | |
period of crisis hit in the next few years, there is quite a lot of | :07:58. | :08:01. | |
public sector workers out there. There are lots of debts. And maybe | :08:02. | :08:07. | |
there is a point of putting a marker down today for the employment rights | :08:08. | :08:12. | |
of the people that are in work. Because in the future, I think that | :08:13. | :08:17. | |
those public sector workers will be targeted for redundancies. We have | :08:18. | :08:23. | |
seen very similar strike is happening in Europe recently for the | :08:24. | :08:26. | |
same kinds of reasons. Greece yesterday had a 24`hour walkout of | :08:27. | :08:32. | |
workers. Are they being affected, these days of action? `` being | :08:33. | :08:37. | |
effective? They are not doing well at all because of the circumstances | :08:38. | :08:41. | |
of the eurozone crisis. Countries like Germany tend to work, and there | :08:42. | :08:47. | |
is a negotiated settlement at some stage of the process. It is very ad | :08:48. | :08:51. | |
hoc. Countries doing well like Germany, there is resolution. Quite | :08:52. | :08:56. | |
a lot of countries in Europe at the moment are going through a more | :08:57. | :08:59. | |
advanced process of dealing with these Budget deficits. And it is | :09:00. | :09:03. | |
also an insider outsider debate, people in work are trying to protect | :09:04. | :09:10. | |
their jobs, people outside are trying to get more employment | :09:11. | :09:15. | |
protection. The plot will thicken, no doubt. Thank you for your time | :09:16. | :09:20. | |
this morning. We will keep across that story as the date progresses. | :09:21. | :09:25. | |
Turning our attention to the world's second`biggest economy. | :09:26. | :09:29. | |
Trade in and out of China has continued to recover in June, | :09:30. | :09:31. | |
according to official data out in the last few hours. But the figures | :09:32. | :09:34. | |
have disappointed the markets. Let's get the latest. Rico Hizon is | :09:35. | :09:39. | |
following this for us in Singapore. Lovely to see you. Make sense of | :09:40. | :09:46. | |
this latest news out of China. Asian investors are not excited at all | :09:47. | :09:51. | |
about the numbers. Exports rising 7.2% from a year ago, the low market | :09:52. | :09:55. | |
expectations of more than 10%. Imports also missed for cuts, rising | :09:56. | :10:00. | |
by about 5% due to sluggish domestic demand. When you speak to | :10:01. | :10:03. | |
economists, Sally, they say unless more stimulus measures as taken by | :10:04. | :10:08. | |
the government, they doubt China will be able to achieve its growth | :10:09. | :10:14. | |
target of 7.5 cent in 2014. Together with weak inflation reports, | :10:15. | :10:19. | |
analysts believe domestic demand remained weak. `` seven .5%. | :10:20. | :10:24. | |
China's exports were sluggish this year, but its trade performance has | :10:25. | :10:27. | |
gained some traction in recent months, helped along by the | :10:28. | :10:31. | |
improving US economy. The government gave exporters more tax breaks. | :10:32. | :10:35. | |
Credit insurance and currency trading options. Imports have also | :10:36. | :10:39. | |
been weak, highlighting sluggish domestic demand. But activity data | :10:40. | :10:43. | |
and June surveys on productivity have spurred some hope that the | :10:44. | :10:50. | |
economy is indeed steady. So the markets and investors are still | :10:51. | :10:54. | |
hoping for more stimulus initiatives in the second half of the year. | :10:55. | :11:01. | |
Sally. Thank you. How let's talk you through some of our business | :11:02. | :11:06. | |
stories: French bank BNP Paribas has pleaded guilty to a charge of | :11:07. | :11:09. | |
conspiracy, as part of a $9 billion settlement with the US Department of | :11:10. | :11:11. | |
Justice for violating sanctions against Sudan, Cuba and Iran. BNP | :11:12. | :11:14. | |
Paribas has also admitted filing false business records and agreed to | :11:15. | :11:17. | |
a temporary ban trading in US dollars. As ever, the markets are | :11:18. | :11:29. | |
very focused on any news out of China, as Ricoh his unmentioned. As | :11:30. | :11:35. | |
you can see, a very mixed picture. We saw a real bounce back in the US | :11:36. | :11:40. | |
after two days of declines. Earnings beat expectations, and Alcoa's | :11:41. | :11:49. | |
shares went up to their highest in two years. A good start to the | :11:50. | :11:51. | |
season in the US. Hello again. As we mentioned | :11:52. | :12:08. | |
earlier, a survey of senior health and social care staff has found that | :12:09. | :12:12. | |
nearly half of them thought it was either "very" or "quite unlikely" | :12:13. | :12:15. | |
the NHS in England would still be free in ten years' time. The poll | :12:16. | :12:18. | |
also predicted a funding crisis in the | :12:19. | :12:19. |