Aurelia Butler

WASHINGTON (Reuters) -A bipartisan deal to raise the $31.4 trillion U.S. debt ceiling faces its first test in Congress on Tuesday, setting up what could be a nail-biting week of voting before the United States runs out of money to pay its bills.The House of Representatives Rules Committee is due to consider the 99-page bill at 3 p.m. (1900 GMT) on Tuesday, ahead of votes in the Republican-controlled House of Representatives and the Democratic-controlled Senate.Both Democratic President Joe Biden and the top Republican in Congress, House Speaker Kevin McCarthy, have predicted they will get enough votes to pass it into law before Monday, when the U.S. Treasury Department says it will not have enough money to cover its obligations. Representative Stephanie Bice, a Republican vote counter, said she was confident it would pass. “It is a true negotiation and reflective of divided government,” she told reporters.Republican Representative Nancy Mace on Tuesday said she would oppose the bill.”I’m voting NO on the debt ceiling debacle because playing the DC game isn’t worth selling out our kids and grandkids,” Mace said on Twitter.But first the bill will have to clear the Rules Committee.Normally a rubber stamp for House leadership, McCarthy placed three hardline conservatives on the powerful 13-member panel as a price for winning the speaker’s gavel in January.Two of those lawmakers have said they will vote against the bill, while the third, Representative Thomas Massie, has said previously that he does not want to use his perch to block legislation. He hinted on Monday that he might support the package. “I think it’s important to keep in mind the debt limit bill itself does not spend money,” he wrote on Twitter. His office declined to comment further.The four Democrats on the panel typically vote against Republican-backed legislation, but it is not clear whether they would oppose a deal that had been crafted by Biden.At least one, Representative Mary Gay Scanlon, is a member of a moderate group that supports the deal. Her office did not respond to a request for comment.McCarthy said on Monday he was not worried the Rules Committee would kill the bill. A successful vote there would set up a vote by the full House on Wednesday.A Senate vote could possibly stretch into the weekend if lawmakers in that chamber try to slow its passage. At least one, Republican Mike Lee, has said he may try to do so, and other Republicans have also expressed discomfort with some aspects of the deal.The bill would suspend the U.S. debt limit through Jan. 1, 2025, allowing Biden and lawmakers to set aside the politically risky issue until after the November 2024 presidential election. It would also cap some government spending over the next two years, speed up the permitting process for some energy projects, claw back unused COVID-19 funds, and introduce work requirements for food aid programs for some poor Americans.In another win for Republicans, it would shift some funding away from the Internal Revenue Service, though the White House says that should not undercut tax enforcement.Biden can point to gains as well: the deal leaves his signature infrastructure and green-energy laws largely intact, and the spending cuts and work requirements are far less than Republicans had pushed for. Republicans have argued that steep spending cuts are necessary to curb the growth of the national debt, which at $31.4 trillion is roughly equal to the annual output of the economy.Interest payments on that debt are projected to eat up a growing share of the budget as an aging population pushes up health and retirement costs, according to government forecasts.The deal would not do anything to rein in those fast-growing programs. Most of the savings would come by capping spending on domestic programs like housing, border control, scientific research and other forms of “discretionary” spending. Military spending would be allowed to increase over the next two years.The debt-ceiling standoff prompted ratings agencies to warn they might downgrade U.S. debt, which underpins the global financial system. Markets have reacted positively to the agreement so far. More

BENGALURU (Reuters) – The Reserve Bank of India (RBI) will leave its key interest rate unchanged at 6.50% on June 8 and for the rest of 2023 as it waits to see the economic impact of a series of hikes over the past year, a Reuters poll of economists found.Despite hitting an 18-month low of 4.70% in April, inflation was not expected to fall to the RBI’s 4% medium-term target for at least another two years, suggesting rate cuts are unlikely in the immediate future.All 64 economists in the Reuters poll taken between May 16 and 29 expected no change to the 6.50% repo rate at the conclusion of the RBI’s June 6-8 meeting.Median forecasts showed the rate has already reached its peak and will stay there for the rest of this year, lower than the 6.75% terminal rate predicted a few months ago.”Apart from the food price risks, the outlook for inflation looks to be improving … absent any sharp upside surprises, there is little or zero probability of further rate hikes by the RBI,” wrote Dhiraj Nim, economist at ANZ.”Yet a pivot from their hawkish stance may take longer since inflation is still far above the 4% target, which means the real repo rate is still accommodative.”Among those who had a longer-term view on rates, more than two-thirds of respondents, or 39 of 56, expected rates to remain unchanged until the end of the year.A quarter of respondents, 14, predicted the repo rate to be 6.25% or lower by then. Three forecast one more hike next quarter to 6.75%.But by the end of the first quarter next year, more than two-thirds of economists who had a forecast, or 27 of 40, predicted the rate at 6.25% or lower.Among the remaining 13 respondents, 12 predicted the rate would remain at 6.50%, while one said it would be 6.75%.Looking further out, median forecasts from a smaller sample showed the RBI would gradually reduce the repo rate next year, reaching 6.00% in the second quarter, then to 5.75% in the third quarter and 5.50% by end-2024. More

MUMBAI (Reuters) – On a hot summer afternoon, 23-year old Nizamudin Abdul Rahim Khan is playing cricket on a muddy, unpaved road in the Rafiq Nagar slum in India’s financial capital, Mumbai.Here, there is scant evidence of India’s fast-growing economy. Bordering what was once Asia largest garbage dumping ground, Rafiq Nagar and surrounding areas are home to an estimated 800,000 people, most living in tiny rooms across narrow, dark alleys.The young men and women in the area struggle to find jobs or work, and they mostly dawdle the day away, said Naseem Jafar Ali, who works with an NGO in the area. India’s urban unemployment soared during the COVID-19 pandemic, reaching a high of 20.9% in the April-June 2020 quarter, while wages fell. While the unemployment rate has fallen since, fewer full-time jobs are available.Economists say more and more job-seekers, especially the young, are looking for low-paid casual work or falling back on unreliable self-employment, even though the broader Indian economy is seen growing at a world-beating 6.5% in the financial year ending in March 2024.India is overtaking China to become the world’s most populous nation with over 1.4 billion people. Nearly 53% of them are under 30, its much-touted demographic dividend, but without jobs, tens of millions of young people are becoming a drag on the economy.”Unemployment is only the tip of the iceberg. What remains hidden beneath is the serious crisis of underemployment and disguised unemployment,” said Radhicka Kapoor, fellow at economic research agency ICRIER. Khan for instance, offers himself as casual labour for home repairs or construction, earning just about 10,000 Indian rupees ($122) a month to help support his father and his four sisters. “If I get a permanent job, then there will be no problem,” he says.The risk for India is a vicious cycle for the economy. Falling employment and earnings undermine India’s chances to fuel the economic growth needed to create jobs for its young and growing population. Economist Jayati Ghosh calls the country’s demographic dividend “a ticking time-bomb.””The fact that we have so many people who have been educated, have spent a lot of their own or family’s money but are not being able to find the jobs they need, that’s horrifying,” she said.”It’s not just the question of potential loss to the economy…it is a lost generation.”SMALL BUSINESSES COLLAPSEUnemployment is far more acute in India’s cities, where the cost of living is high and there is no back-up in the form of a jobs guarantee programme which the government offers in rural areas. Still many in the army of rural unemployed flock to the cities to find jobs.While urban unemployment was at 6.8% in the January-March quarter, the share of urban workers with full-time jobs has declined to 48.9% as of December 2022 from an already low 50.5% just before the start of the pandemic, government data shows. This means that of the estimated urban workforce of about 150 million, only 73 million have full-time jobs.For people in urban areas with full time jobs, average monthly wages, adjusted for inflation, stood at 17,507 rupees ($212) in the April-June 2022 quarter – the latest period for which government data is available. This was a modest 1.2% higher than the October-December 2019 period, before the start of the pandemic.But for the self-employed, incomes have fallen to 14,762 ($178.67) rupees in the April-June 2022 quarter, according to research by Ghosh and C.P. Chandrashekhar, both at the University of Massachusetts, Amherst. It was at 15,247 rupees in the October-December 2019 quarter.”The big thing that has happened is the collapse of small businesses, which were the backbone of employment,” said Ghosh.Since the Indian government’s decision to demonetise 86% of the country’s currency in circulation in 2016, there have seen continuous attacks on the viability of small business, with the pandemic being the latest, she said. Over 10,000 micro, small and medium enterprises shut in 2022-23 (April-March) alone, the government said in parliament in February. In the previous year, over 6,000 such units had shut. But the government did not specify whether any new enterprises were set up in those periods. GRADUATE PAINTERMany families in Khan’s neighbourhood, typical of the urban sprawl in the city of 21 million, have been hit by job losses and lower incomes in recent years. Young workers are particularly vulnerable.Arshad Ali Ansari, a 22-year-old student, said he saw his brother and sister lose their jobs soon after the start of the pandemic.Sitting in a single-room with a kitchen attached, where his family of eight lives, Ansari said they survive on his 60-year old father’s earnings of about 20,000 rupees a month. His brother, who was a graduate and had worked in a bank, lost his job during the pandemic and had to join their father in painting houses. “My brother had education, he had experience,” Ansari said.His sister, once a social worker, also lost her job and has given up hope of finding one.India will need to create 70 million new jobs over the next ten years, wrote Pranjul Bhandari, chief India economist at HSBC, in a note earlier this month. But only 24 million will likely be created, leaving behind “46 million missing jobs.””From that lens, a growth rate of 6.5% will solve a third of India’s jobs problem,” Bhandari wrote.($ 1 = 82.62) More

JERUSALEM (Reuters) -Israel’s monetary policy is currently restrictive and at an appropriate level given moderating inflation, but interest rates could rise further should the shekel’s depreciation continue, Bank of Israel Governor Amir Yaron said on Tuesday.Yaron said since the last interest rate decision on May 22, the shekel, which has been under pressure since the start of the year over the government’s judicial reform plans that triggered mass protests, has further depreciated 2-3%. “Should this trend continue, an even more restrictive monetary policy may be required,” he said.Inflation, Yaron added, was at least one percentage point higher than it should be due to a 10% depreciation versus the dollar since January. Inflation will likely remain at around a 5% rate in May but is expected to move back within a 1-3% target in the first quarter of 2024, he said. Yaron, speaking at an Israel Democracy Institute conference, said should the government push forward with its judicial plan, it should be done with a broad consensus and maintain the independence of institutions. The Bank of Israel has raised its benchmark interest rate to 4.75% from 0.1% in April 2022, leading to a sharp rise in mortgage repayments while banks reaped large profits and expanded dividend payouts, stoking anger among the public.Israeli Finance Minister Bezalel Smotrich told the conference it was “logical” to tax banks’ excess profits as a result of steep rises in interest rates.Smotrich, whose speech was continuously interrupted by protesters of the judicial plan, said such a tax “is the best way to correct the distortion created by the interest rate differentials and make it easier for the mortgage-taking public, without harmful legislative intervention.”The Tel Aviv banking index dropped 2.5% following Smotrich’s comments.Yaron said banks need to pass on higher rates to customers’ deposit accounts and not only to loans. If not, he warned the central bank “will not hesitate to act with the regulatory tools at our disposal”.Israel’s economy is “complex”, Yaron said, citing high economic activity and a tight labour market but declining consumer spending as a result of the interest rate increases.Yaron cautioned that the judicial plan could harm the economy over the long term, quoting a report that said at least half of local startups founded this year would not incorporate in Israel.He also pointed to local markets underperforming global indexes and an increase in Israel’s risk premium.Last week, parliament approved the 2023-2024 state budget, which Yaron said was responsible in that it was not excessively expansive but lacked “growth generators essential to the economy, and in some places there is even a negative contribution.”His comments come as the country’s economy is projected to slow to a growth of 2.5% this year from 6.5% in 2022. More