The Indian government unveiled a series of new initiatives this week, showcasing a focus on boosting the electric vehicle industry, supporting maritime development, and addressing the needs of gig workers.
Boost for the EV Industry:
On Wednesday, the Cabinet announced a ₹10,900 crore electric vehicle subsidy scheme. This ambitious plan aims to incentivize the deployment of 14,028 electric buses and provide subsidies for 2.48 million electric two-wheelers and 316,000 electric three-wheelers. The initiative is designed to accelerate the adoption of electric vehicles in India, a key objective for the government. This scheme was part of a package of new programs announced by the Cabinet, which also included investments in rural roads and hydropower projects. Additionally, the Ayushman Bharat health insurance scheme was extended to senior citizens above 70 years.
Oil Prices Dip:
Global oil markets experienced a significant shift this week as Brent crude oil prices fell below $70 a barrel on Tuesday, marking a 33-month low. The Opec+ cartel revised its global demand forecast downward for 2024 and 2025, citing reduced demand expectations. While India’s oil demand is projected to rise by 5% in 2024, the overall trend reflects a cautious outlook on global oil consumption. The price of oil did recover slightly on Wednesday, closing at $70.61 per barrel.
Maritime Development Fund:
The Indian government is set to approve a Maritime Development Fund, potentially exceeding ₹10,000 crore, later this month. The fund, which will be a corporate entity with the government holding a minority stake, is designed to support domestic shipbuilding and blue water infrastructure. This initiative could play a pivotal role in boosting India’s maritime industry and reducing reliance on foreign shipping. Funding support will likely be provided in the form of debt, equity, or viability gap funding.
Social Security for Gig Workers:
On September 17th, marking Prime Minister Narendra Modi’s 74th birthday and the 100th day of his government’s third term, the government is expected to announce long-awaited social security benefits for gig workers. This move would provide health insurance and other benefits to an estimated 7.7 million gig workers in India. The plan is to require aggregators to contribute a portion of their revenue, potentially 2%, to a social security fund dedicated to supporting these workers.
Tourism’s Balancing Act:
The first half of 2024 witnessed a surge in tourism arrivals in Greece, reaching a record high of 16% compared to 2023. While tourism contributes significantly to the Greek economy, the country is facing the challenges of overtourism. Popular destinations like Santorini and Mykonos are grappling with a housing crisis and strain on public infrastructure. Greece has joined other European countries in implementing measures to manage the influx of tourists, including a levy on cruise-ship visitors and potential tax increases on short-term rentals.
India’s Sovereign Wealth Fund:
The Indian government is taking steps to establish its first sovereign wealth fund, aiming to pool its shares in 48 listed public sector units (PSUs). The fund will hold these shares, including those of Specified Undertaking of the Unit Trust of India (SUUTI), with the goal of creating a professional sovereign fund akin to Singapore’s Temasek and GIC. This move is expected to contribute to India’s economic development and create opportunities for strategic investments, including potentially acquiring critical minerals to support energy production.
Chart of the Week: Gold’s Rise:
Gold prices have been experiencing a remarkable rally, with China’s growing demand playing a key role. The People’s Bank of China has been steadily increasing its gold reserves since tensions with the US began escalating in 2015. By the end of July 2024, China’s central bank held 2,264 tonnes of gold, representing 4.9% of its total reserves. This trend underscores the increasing significance of gold as a safe haven asset in a world marked by geopolitical uncertainty.
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