Aurelia Butler

Kiran VB, 29, a resident of India’s tech capital Bangalore, had hoped to work in a factory after finishing high school. But he struggled to find a job and started working as a driver, eventually saving up over a decade to buy his own cab.“The market is very tough; everybody is sitting at home,” he said, describing relatives with engineering or business degrees who also failed to find good jobs. “Even people who graduate from colleges aren’t getting jobs and are selling stuff or doing deliveries.”His story points to an entrenched problem for India and a growing challenge for Prime Minister Narendra Modi’s government as it seeks re-election in just over a year’s time: the country’s high-growth economy is failing to create enough jobs, especially for younger Indians, leaving many without work or toiling in labour that does not match their skills.The IMF forecasts India’s economy will expand 6.1 per cent this year — one of the fastest rates of any major economy — and 6.8 per cent in 2024.However, jobless numbers continue to rise. Unemployment in February was 7.45 per cent, up from 7.14 per cent the previous month, according to data from the Centre for Monitoring Indian Economy. “The growth that we are getting is being driven mainly by corporate growth, and corporate India does not employ that many people per unit of output,” said Pronab Sen, an economist and former chief adviser to India’s Planning Commission.“On the one hand, you see young people not getting jobs; on the other, you have companies complaining they can’t get skilled people.”

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Government jobs, coveted as a ticket to life-long employment, are few in number relative to India’s population of nearly 1.4bn, Sen said. Skills availability is another issue: many companies prefer to hire older applicants who have developed skills that are in demand.“A lot of the growth in India is driven by finance, insurance, real estate, business process outsourcing, telecoms and IT,” said Amit Basole, professor of economics at Azim Premji University in Bangalore. “These are the high-growth sectors, but they are not job creators.”Figuring out how to achieve greater job growth, particularly for young people, will be essential if India is to capitalise on a demographic and geopolitical dividend. The country has a young population that is set to surpass China’s this year as the world’s largest. More companies are looking to redirect supply chains and sales away from reliance on Chinese suppliers and consumers.India’s government and states such as Karnataka, of which Bangalore is the capital, are pledging billions of dollars of incentives to attract investors in manufacturing industries such as electronics and advanced battery production as part of the Modi government’s “Make in India” drive.The state also recently loosened labour laws to emulate working practices in China following lobbying by companies including Apple and its manufacturing partner Foxconn, which plans to produce iPhones in Karnataka.However, manufacturing output is growing more slowly than other sectors, making it unlikely to soon emerge as a leading generator of jobs. The sector employs only about 35mn, while IT accounts for a scant 2mn out of India’s formal workforce of about 410mn, according to the CMIE’s latest household survey from January to February 2023.According to a senior official in Karnataka, highly skilled applicants with university degrees are applying to work as police constables.

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The Modi government has shown signs of being attuned to the issue. In October, the prime minister presided over a rozgar mela, or an employment drive, where he handed over appointment letters for 75,000 young people, meant to showcase his government’s commitment to creating jobs and “skilling India’s youth for a brighter future”.But some opposition figures derided the gesture, with the Congress party president Mallikarjun Kharge saying the appointments were “just too little”. Another politician called the fair “a cruel joke on unemployed youths”.Rahul Gandhi, the scion of the family behind the Congress party, has signalled that he intends to make unemployment a point of attack for the upcoming election, in which Modi is on track to win a third term.“The real problem is the unemployment problem, and that’s generating a lot of anger and a lot of fear,” Gandhi said in a question-and-answer session at Chatham House in London last month. “I don’t believe that a country like India can employ all its people with services,” he added.

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Ashoka Mody, an economist at Princeton University, invoked the word “timepass”, an Indian slang term meaning to pass time unproductively, to explain another phenomenon plaguing the jobs market: underemployment of people in work not befitting their skills.“There are hundreds of millions of young Indians who are doing timepass,” said Mody, author of India is Broken, a new book critiquing the economic policies of successive Indian governments since independence. “Many of them are doing so after multiple degrees and colleges.”

Dildar Sekh, 21, migrated to Bangalore after completing a high school course in computer programming in Kolkata.After losing out in the intense competition for a government job, he ended up working at Bangalore’s airport with a ground handling company that assists passengers in wheelchairs, for which he is paid about Rs13,000 ($159) per month.“The work is good, but the salary is not good,” said Sekh, who dreams of saving enough money to buy an iPhone and treat his parents to a helicopter ride.“There is no good place for young people,” he added. “The people who have money and connections are able to survive; the rest of us have to keep working and then die.”Additional reporting by Andy Lin in Hong Kong and Jyotsna Singh in New Delhi More

(Reuters) – UBS Group AG (SIX:UBSG) is seeking government guarantees of about $6 billion for a potential takeover of Credit Suisse Group AG, a person with knowledge of the discussions told Reuters on Saturday. The talks are still ongoing and the figure could change as several scenarios are still under review, the person said. The guarantees would cover the cost of winding down parts of Credit Suisse and potential litigation charges, the source said. A second person confirmed this without specifying the $6 billion figure.Talks to resolve the crisis of confidence in Credit Suisse are encountering significant obstacles, and 10,000 jobs may have to be cut if the two banks combine, the first source said. Swiss regulators are racing to present a solution for Credit Suisse before markets reopen on Monday, but the complexities of combining two behemoths raises the prospect that talks will last well into Sunday, said the person, who asked to remain anonymous because of the sensitivity of the situation. Credit Suisse, UBS and the Swiss government declined to comment. Credit Suisse was valued at the equivalent of about $8 billion at the close on Friday.        Deutsche Bank AG (NYSE:DB) is also interested in acquiring parts of Credit Suisse, the first source said. However, any deal with the German lender could take longer, the source said.      A spokesperson for Deutsche Bank (ETR:DBKGn) declined to comment. Bloomberg earlier reported the German lender’s interest in parts of Credit Suisse.     “Any potential deal will be littered with complexity, litigation protections being one, with the situation to remain fluid but with clarity necessary before Monday,” Thomas Hallett, a KBW analysts said in a note to clients on Saturday.  More

(Reuters) – With the U.S. and European banking crisis wreaking havoc in global markets, some financial industry executives are calling on the Federal Reserve to pause its monetary policy tightening for now but be ready to resume raising rates later.Investors are currently pricing a 60% probability that the Fed will raise rates by 25 basis points on Wednesday, with the remainder betting on no change. Some industry executives said the central bank should prioritize financial stability now. “Go fast and hard on financial stability; go gradual and slow on price stability,” said Peter Orszag, chief executive of financial advisory at investment bank Lazard (NYSE:LAZ) Ltd. Orszag said the Fed should pause but be ready to hike again gradually as the situation develops.The central bank declined to comment. Fed officials are in their pre-meeting blackout period, during which they are barred from commenting on monetary policy or the economic outlook. The Fed has rapidly raised interest rates over the past year in a bid to beat back inflation, at a pace not seen since the 1980s. Others have joined in, with the European Central Bank raising rates by 50 basis points earlier this week. The rapid rise in rates after years of cheap money is rippling through global markets and industry. Two U.S. banks have failed over the past week and others have come under pressure, while Swiss lender Credit Suisse is scrambling to pull together a rescue deal this weekend. Tumult in the banking sector has roiled asset prices, sending U.S. government bond yields plummeting in the past week, with some investors complaining that massive price swings have made it more difficult to trade. U.S. stocks took a rollercoaster ride, though the S&P 500 managed to close higher on the week despite steep losses in bank shares.WILD CARDSome market observers have argued that a sustained pause could fuel worries that consumer prices will rebound. Recent U.S. economic data give the Fed little reason to believe it has defeated inflation. Consumer prices rose at a 6% annual rate in February, nearly three times the central bank’s target, and there have been only nascent signs of a significant easing in hiring and wage growth.”While the banking woes will certainly command attention, we believe that it is not systemic but more of a liquidity issue that the Fed can contain with its lending facilities,” wrote Bob Schwartz, senior economist at Oxford Economics, in a note.But he added that the “wild card” will be market reaction.James Tabacchi, chief executive of broker-dealer South Street Securities, said he thought the Fed would eventually need to go above 6%. The current Fed funds rate is 4.5% to 4.75%.”I am an inflation hawk. But what will it hurt to wait a month and say, ‘We’d like to see the market stabilize?’” Tabacchi said. “I think the Fed should pause.”DISINFLATIONARY TRENDS Orszag, who served as the director of the U.S. Office of Management and Budget in the Obama administration, said as long as long-term inflationary expectations were not unhinged, as was the case now, the Fed had time. Raising rates too rapidly could break things, as the current banking crisis demonstrated.A number of factors pointed to lingering effects of the pandemic on inflation, such as supply-chain disruptions and demand for travel and entertainment.In a new paper, Orszag and co-author Robin Brooks, chief economist at the Institute of International Finance, estimated that lagged effects associated with delivery times may explain between 30% and 70% of elevated core PCE inflation in the fourth quarter of 2022. That would work out over time and be a disinflationary force this year, they said.Torsten Slok, chief economist at Apollo Global Management (NYSE:APO), wrote in a note on Saturday that the recent tumult in the banking sector is already tightening financial conditions. The events this past week correspond to a 1.5% increase in the Fed funds rate, Slok wrote.“In other words, over the past week, monetary conditions have tightened to a degree where the risks of a sharper slowdown in the economy have increased,” he said. BlackRock Inc (NYSE:BLK) strategists argued that the gyrations of the past week showed that markets had woken up to the damage caused by the rapid rise and were pricing in a recession. “The trade-off for central banks – between fighting inflation and protecting both economic activity and financial stability – is now clear and immediate,” they wrote in a report earlier this week. More

WASHINGTON (Reuters) – The lightning speed at which the banking industry descended into turmoil has shaken global markets and governments, reviving eerie memories of the financial crisis. Like 2008, the effects may be long lasting.In the space of a week, two U.S. banks have collapsed, Credit Suisse Group AG needed a lifeline from the Swiss and America’s biggest banks agreed to deposit $30 billion in another ailing firm, First Republic Bank (NYSE:FRC), in a bid to boost confidence. Evoking recollections of the frenzied weekend deals to rescue banks in the 2008 financial crisis, the turmoil prompted monumental action from the U.S. Federal Reserve, U.S. Treasury and the private sector. Similar to 2008, the initial panic does not seem to have been quelled. “It does not make any sense after the actions of the FDIC and the Fed and the Treasury (last) Sunday, that people are still worried about their banks,” said Randal Quarles, the former top banking regulator at the Federal Reserve. He now faces renewed criticism over his agenda at the Fed, where he oversaw efforts to reduce regulations on regional banks. “In an earlier world, it would have calmed things by now,” Quarles said.The collapse of Silicon Valley Bank, which held a high number of uninsured deposits beyond the $250,000 Federal Deposit Insurance Corporation (FDIC) guaranteed limit, shook confidence and prompted customers to withdraw their money. U.S. bank customers have flooded banking giants, including JPMorgan Chase & Co (NYSE:JPM), Bank of America Corp (NYSE:BAC) and Citigroup Inc (NYSE:C) with deposits. That has led to a crisis of confidence and steep selloff in smaller banks. “We do a lot of contingency planning,” said Stephen Steinour, chief executive of Huntington Bancshares (NASDAQ:HBAN) Inc, a lender based in Columbus Ohio. “We started to do the ‘what if scenario’ and looked at our playbooks.” As banks grapple with short-term shocks, they are also assessing the long term. The swift and dramatic events have fundamentally changed the landscape for banks. Now, big banks may get bigger, smaller banks may strain to keep up and more regional lenders may shut. Meanwhile, U.S. regulators will look to increase scrutiny on midsize firms bearing the brunt of the stress.U.S. regional banks are expected to pay higher rates to depositors to keep them from switching to larger lenders, leaving them with higher funding costs.“People are actually moving their money around, all these banks are going to look fundamentally different in three months, six months,” said Keith Noreika, vice president of Patomak Global Partners (NYSE:GLP) and a former Republican Comptroller of the Currency. 2008 ALL OVER AGAIN? The current crisis may feel frighteningly familiar for those who experienced 2008, when regulators and bankers huddled in closed rooms for days to craft solutions. Thursday’s bank-led $30 billion boost to First Republic also reminded people of the 1998 industry-led attempt to rescue Long-Term Capital Management, where regulators brokered a deal for industry giants to pump billions into the ailing hedge fund.With this latest panic, there are differences.”For anyone who lived through the global financial crisis, the past week is feeling hauntingly familiar,” Josh Lipsky, senior director of the Atlantic Council’s GeoEconomics Center and a former IMF adviser wrote in a blog post. “If you look past the surface, it’s clear that 2023 bears little similarity to 2008.” In 2008, regulators had to contend with billions of dollars in toxic mortgages and complex derivatives sitting on bank books. This time, the problem is less complex as the holdings are U.S. Treasuries, writes Lipsky.And this time, the industry is fundamentally healthy. While Congress and regulators whittled away at safeguards for regional banks over the years, there are tougher standards for the biggest global banks, thanks to a sweeping set of new restrictions from Washington in the 2010 Dodd-Frank financial reform law. That stability was on display Thursday, when the biggest firms agreed to place billions in deposits at First Republic, effectively betting the firm would remain afloat. Even so, the firm remains under pressure, with its stock price falling 33% the day after the capital infusion. “Banks are actually healthier than they were pre-[2008 crisis] because they haven’t really been allowed to do virtually anything in terms of actually taking true underlying credit risks in their assets,” said Dan Zwirn, CEO of Arena Investors in New York.Now bankers and regulators are grappling with an unexpected set of challenges. Deposits, long seen as a reliable source of bank cash, have now come into question. And those who watched SVB’s quick collapse wonder what role social media, now omnipresent but niche back in 2008, might have played in people pulling out money.”$42 billion in a day?” said one senior industry official who declined to be named, referring to the massive deposit flight Silicon Valley Bank saw before its failure. “That’s just insane.”REGULATORY LENS The last crisis changed the banking industry, as massive firms went under or were bought by others and Dodd-Frank was enacted. Similar efforts are now underway. “Now the regulators know that these banks offer a greater risk to our overall economy than they thought they did. And I’m sure they will go back and increase regulation to the extent they can,” said Amy Lynch, founder and president of FrontLine Compliance.A divided Congress is not likely to advance any comprehensive reforms, according to analysts. But bank regulators, led by the Fed, are signaling they are likely to tighten up existing rules on smaller firms at the center of the current crisis. Currently, regional banks below $250 billion in assets have simpler capital, liquidity and stress testing requirements. Those rules could increase in intensity after the Fed concludes its review.”They definitely must, it’s not even should, they must reconsider and change their strategies and the rules that were adopted,” said Saule Omarova, a law professor who President Joe Biden once nominated to lead the Office of the Comptroller of the Currency.The recent crisis has also put big banks back on Washington’s radar, possibly erasing years of work by the industry to escape the tarred reputation it carried from the 2008 crisis.Prominent big bank critics like Senator Elizabeth Warren are criticizing the industry for pushing simpler rules, in particular a 2018 law allowing midsize banks like Silicon Valley Bank to avoid the most vigorous oversight.Other policymakers are reserving ire for regulators, wondering aloud how SVB could have ended up in such a dire position while watchdogs were on the job.The Federal Reserve plans to conduct an internal review of its supervision of the bank. But there are growing calls for an independent look. On Thursday, a bipartisan group of 12 senators sent a letter to the Fed, saying it was “gravely concerning” supervisors did not identify weaknesses ahead of time.”SVB is not a very complicated bank,” said Dan Awrey, a Cornell Law professor and bank regulation expert. “If big and not-complex can’t get the appropriate supervision, that then raises the question: who on Earth can we regulate?” More