04/10/2016 World Business Report


04/10/2016

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That's all from me. I'm going to have a break. Here is Sally.

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Investors look for continuity, not change, but will the new boss

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of India's central bank deliver today?

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India's cheap labour and cheap parts means it's an attractive option

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We have a special report from Chennai.

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Also in the programme, if the monster-sized trade deal

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between Europe and the US fails, who could benefit?

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We'll talk you through the winners and losers.

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In a few hours' time, the newly-appointed governor

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of the Indian Central Bank, Urjit Patel, will make his first

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As global growth stalls, amid fears over protectionism

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and financial instability, India is seen as one of the few

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bright spots in an otherwise gloomy picture.

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In 2015, the Indian economy expanded by 7.6%, and earlier this year it

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overtook China to become the fastest-growing major economy

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One of the factors behind India's development is the country's

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On average, India's population continues to get younger

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By 2050, the UN estimates that it will have a working age population

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That's over four times the size of the combined North

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India may have cured the problem of runaway inflation,

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but concerns still remain that India's banks have bad debts,

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and that Prime Minister Narendra Modi's reform programme

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With me is Fran Boait, Executive Director of the pressure

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Good morning. Thank you for coming in. A new man in charge of the

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central bank. Tell us about the differences, or will it be business

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as usual? Well, one of the most exciting things about today's

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announcement is that for the first time it is moving from a decision

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taken by the Governor unilaterally to actually being a committee of

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people, which is obviously a great step from having decision making

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power of monetary policy decisions in one person, to a panel. That is a

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positive step forward. However, looking at central banks in the UK,

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the Bank of England, the bank of Japan, the Federal Reserve, the

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European Central Bank, just because you have a committee doesn't

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necessarily mean that you get a diversity of thinking in terms of

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monetary policy. I think there is an important point which is that,

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globally, central banking faces kind of an intellectual crisis, and

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monitor a policy isn't working with low interest rates. -- monastery

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policy. As you say, we have all looked at central banks in recent

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years to rescue economies, and to some degree they have, but some

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would argue they have not. In the United States, for example, there

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was a humongous Hunter Tootoo easing programme for a tremendous period of

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time. Some would argue that has put the US into the place where they are

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now, where they can put interest rates up and they are growing the

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economy. But you have a different view on that? I would not argue that

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quantitative easing was not necessary during the crisis years

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ago, it may have been the best tool we had in a hurry, and the crisis

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could have a worse without it. But it is a different position eight

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years on, and we have just started this quantitative easing programme

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in the UK, which will have negative side-effects. More and more

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economists are pointing at the lack of demand around the world, the very

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high levels of private debt, and saying that will interest rates and

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quantitative easing do not work, and we need to be thinking better about

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why the tools are on the table. In India, we were just talking through

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some of the statistics, they have an enormous working population in the

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future, which for places like Japan and other countries, that is their

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challenge. It is a working population, it is very productive.

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It was quite interesting as well is that that pop relation will have

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more disposable income in India, which is quite exciting. The

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standard of living is expected to improve. Therefore, I guess, the

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central bank has challenges it needs to face in terms of how it steers

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the Indian economy with, hopefully, more reform from Narendra Modi's

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government. Definitely. India is in a very different position from the

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UK, Japan, Australia, et cetera. If it does not want to go down the same

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part of the more developed economies, the main thing is to

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watch its debt, and where it is going. The problems that caused the

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2008 crisis and the problem is that lots of other economies are pointing

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out, it is too much bank lending going into the finance, insurance

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and real estate sectors. Really, as long as the new governor keeps his

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eye on money going into productive economies, India should be better

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placed than the rest of us. We will keep watching it. Fran, thank you

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for coming in and sharing your thoughts. And when we hear from the

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central bank in India, we will probably also hear from our team in

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Mumbai, who are across that for us today. We will keep you up-to-date.

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As we mentioned, India is now overtaking China to become the

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fastest-growing major economy in the world.

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Trade has had a significant role to play in the country's development

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and India has evolved into a major international hub for car makers.

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As part of our week-long series on trade, Yogita Limaye sent this

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report from near the southern Indian city of Chennai.

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This woman lives with her mother in a small town near Chennai. She grew

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up in a village and her father was a farmer. After he died, it was up to

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her to put food on the table. By night, she helps out in the kitchen.

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But by day, she is a technician at a car factory. She leads a small team

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here, and cannot imagine a life without this job. TRANSLATION: I

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would have had to work on a farm, and we would have had just enough

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money for our day-to-day lives. I first started this job, because we

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were poor, nobody gave us any respect. Now people say, she is

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working a big company and making money. In fact, lots of people ask

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me for jobs for their children to. Thousands of people are employed at

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this plant. Each salary earned helps keep a home running. Hundreds of

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cars are made here every day. They are sold across India, and nearly

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half of them are exported. This car is being loaded onto a truck, from

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where it will be taken to be Chennai port on India's eastern coast to be

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sold overseas. Cars that are made here I sent to more than 100

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countries, and the Western world is a big market. Lots of jobs in the

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factory depend on exports. Like this car maker, several other foreign

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brands have set up shop in Chennai. There are challengers. Inadequate

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infrastructure, and India's famed bureaucracy. But there are big

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advantages to. India is a cost competitive country. That means

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labour is relatively cheap compared to other countries, and it also

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means we can get parts relatively cheaply. In other words, we can make

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cars here with a total delivered cost of the vehicles being more

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competitive than, perhaps, Western Europe or North America or Japan. If

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more factories open in India, and it sells more to the world, the faster

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it economy will grow. For many of these workers, it could be a chance

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to grow as well, from being makers of cars to perhaps someday be in

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buyers. -- being buyers. Over in New York, policymakers

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from the US and EU are in talks over the Transatlantic Trade

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and Investment Partnership. The landmark TTIP agreement aims

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to provide a boost to economic growth by reducing trade barriers,

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but there are fears it may be delayed as opposition mounts on both

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sides of the Atlantic. Let's cross over to

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Rico Hizon in Singapore. Good morning. All good afternoon, as

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the case might be. Tell us more? Well, you know what, the view of

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some experts is that if the TTIP does not materialise, Asia will be

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the clear winner. It does if it is signed, Asian analysts believe many

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companies you may have to switch their production processes and

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create their products differently to accommodate TTIP's standards when

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exporting to the US and the European Union. And if Asian domestic

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standards and regulations do not match, Asian companies would be

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forced to create two sets of products, which would result in

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higher production costs. Earlier, I spoke with Debra elms, an Asian

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reduction expert. She said a failed outcome would benefit the region,

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especially China. If the TTIP agreement between the US and the

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European Union collapses, I think the Europeans will rapidly turned

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their attention to Asia. They are already negotiating a number of

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agreements, and I think they will speed up their bilateral investment

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treaties aux with China, and they will speed up a lot of negotiations

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that they have here in Asia. Deborah also stressed that the TTIP will not

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pass will be signed before the US presidential elections because of

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wrecks it and major antitrade sentiment in the US. -- because of

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Brexit. Thank you. At is all for me from now.

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A flagship government programme to support and supervise offenders

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leaving jail after serving prison terms of less than 12 months has

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been severely criticised by the Chief Inspectors of Probation

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In a joint report, the inspectors said the scheme, known

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