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Heatwave, reduced wheat production credit negative for India: Moody’s Investors Service

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High climatic temperatures affecting northwest India curbing wheat production and possible extended power outages exacerbating already high inflation and hurting growth is credit negative, said Moody’s Investors Service on Monday.

The credit rating agency in a report said: “Over the longer term, India’s highly negative credit exposure to physical climate risks — which contributes to the country’s highly negative environmental risk issuer profile score and credit impact score — means its economic growth will likely become more volatile as it faces increasing, and more extreme, incidences of climate-related shocks,” Moody’s said.

The Indian government has revised down its estimates for wheat production by 5.4 per cent to 105 million tonnes for the crop year ending June 2022, given lower yields amid higher temperatures, Moody’s said.

The lower production, and fears that a surge in exports to capitalise on high global wheat prices would add to inflationary pressures domestically, has prompted the government to ban the export of wheat and to divert it toward local consumption instead.

Although the move will partially offset inflationary pressures, it will hurt exports and subsequently growth. The ban comes at a time when India — the world’s second-largest wheat producer — could have been capitalising on the global output gap from wheat following the Russia-Ukraine military conflict, Moody’s said.

Global wheat prices have jumped 47 per cent since the conflict began in late February.

According to Moody’s, the wheat export ban is likely to induce further surge in wheat prices in importing countries like Bangladesh, which absorbed 56.8 per cent of India’s wheat exports in fiscal 2021, Sri Lanka-8.3 per cent, UAE – 6.5 per cent and Indonesia – 5.4 per cent.

Additionally, elevated power demand amid the heatwave and an uptick in economic activity — resulting in higher domestic power prices — prompted India’s Central Electricity Regulatory Commission (CERC) to cap power prices at Rs 12 per kilowatt-hour in the electricity exchanges.

With suppliers importing coal at market rates to fill the shortfall and inadequate supply to meet peak demand, at least 16 out of 28 states experienced 2-10 hours of power outage per day in April, Moody’s said.

After the price ceiling was introduced on April 1, India’s total domestic coal actual stock fell 23 per cent by mid-May, with days of actual stock declining to 7.8 days from 10 days.

Further drawdowns in coal inventory could lead to prolonged power outages in industrial and agricultural production, leading to significant cuts to output and weighing further on India’s economic growth — particularly if the heatwaves continue beyond June.

Inflation will be partially alleviated by keeping wheat production for domestic consumption and the cap in power prices in exchanges, as well as the Reserve Bank of India’s 40-basis-point policy rate rise in early May.

However, given the prominence of cereals and food more generally in India’s consumption, elevated food prices could add to social risks if they persist.

International

US on high alert over possible Israeli strike on Iran: Reports

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Washington, June 12: The United States has reportedly gone on high alert amid growing concerns of a potential Israeli strike on Iran’s nuclear facilities, local media reported.

The Trump administration is fearing that Israel may act unilaterally without Washington’s consent if negotiations between the US and Iran collapse, according to the Washington Post.

President Donald Trump, addressing the situation on Wednesday, stated that US personnel are being moved out of certain Middle Eastern regions, particularly Iran, due to the escalating risk of conflict.

“They (US personnel) are being moved out because it could be a dangerous place, and we will see what happens… We have given notice to move out,” Trump told reporters.

The US State Department has also permitted some diplomatic staff to leave Iraq, while the Pentagon has authorised military families to voluntarily depart from American bases throughout the region.

This uptick in security measures comes as hopes for a nuclear agreement between Washington and Tehran continue to fade, raising the spectre of another military confrontation in the Middle East following the recent Israel-Hamas conflict.

Trump reiterated his uncompromising stance on Iran’s nuclear ambitions, asserting, “They can’t have a nuclear weapon. Very simple. They can’t have a nuclear weapon. We’re not going to allow that,” when asked whether diplomatic solutions were still possible.

Last month, Axios reported that Israel was preparing for a rapid strike on Iran if the US-Iran talks failed.

Trump has previously threatened military action against Iran should nuclear negotiations stall, and in an interview with the New York Post earlier on Wednesday, admitted he was becoming “less confident” that Tehran would agree to halt uranium enrichment, one of the key conditions demanded by the US.

Recent months have seen rising concerns among US intelligence officials that Tel Aviv might move ahead with a strike on Iran’s nuclear infrastructure without notifying Washington.

In response, Iran has warned that any Israeli strike, given the US’ role as Israel’s key military and political backer, would have direct consequences for the United States.

In a post on X on Thursday, the Iranian government declared, “We are Ready.”

Iranian Defence Minister Aziz Nasirzadeh issued a stern warning on Wednesday, stating that any attack on Iran would be met with retaliatory strikes on US bases stationed in the Middle East.

In anticipation of potential fallout, Washington has ordered US embassies located within Iran’s strike range — including those in the Middle East, Eastern Europe, and North Africa — to activate emergency action committees.

These missions have been instructed to report back on security measures to mitigate potential risks. The State Department has reportedly also authorised voluntary departures from missions in Bahrain and Kuwait.

This precautionary approach led Secretary of State Marco Rubio to update the global travel advisory on Wednesday, stating, “On June 11, the Department of State ordered the departure of non-emergency US government personnel due to heightened regional tensions.”

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International

Scenes emerging of London-bound plane crashing in Ahmedabad devastating: British PM

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London/New Delhi, June 12: Several global leaders, including British Prime Minister Keir Starmer, on Thursday expressed shock and grief after an Air India flight bound for London, carrying over 240 passengers crashed shortly after taking off from the Ahmedabad airport, triggering a massive emergency response. The incident occurred near the Meghaninagar area of the city.

“The scenes emerging of a London-bound plane carrying many British nationals crashing in the Indian city of Ahmedabad are devastating. I am being kept updated as the situation develops, and my thoughts are with the passengers and their families at this deeply distressing time,” Starmer posted on X.

At least 169 Indians and 53 British nationals were travelling in Air India’s flight AI171 from Ahmedabad to London’s Gatwick airport.

British Defence Secretary David Lammy also expressed grief at the devastating plane crash and offered condolences to those affected.

“Deeply saddened by news of a devastating plane crash in Ahmedabad, India. My thoughts are with all those affected. The UK is working with local authorities in India to urgently establish the facts and provide support,” Lammy posted on X.

British Conservative Party MP Priti Patel urged the UK government to work with the Indian authorities to support the affected British families.

“My thoughts and prayers are with everyone affected by the plane crash at Ahmedabad and with the emergency services at the scene. This will be a worrying time for the families of those on board. As further information comes forward, the Government needs to ensure it is working with Indian authorities to support British families affected,” said Patel.

Ukrainian President Volodymyr Zelensky also took to social media, offering his deepest condolences on the tragic accident.

“Horrible news of a passenger plane crash in India. My deepest condolences to Prime Minister Narendra Modi and the entire people of India on this tragic day. Our thoughts are with all victims’ relatives and close ones in India, the UK, Portugal, and Canada. We share your shock and grief on this tragic day. We all pray for as many lives to be saved as possible and wish a speedy recovery to those injured,” Zelensky posted on X.

Russia’s Ambassador to India, Denis Alipov termed the accident as a major catastrophe.

“Heartbreaking news is coming from Ahmedabad. My heartfelt sympathy to the families and near ones of the victims and to all Indian people and the Government of India over this tragic major catastrophe!”, he said.

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National

Ruckus in Bengal Assembly as BJP MLAs protest over Maheshtala violence, Murshidabad riots

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Kolkata, June 12: Pandemonium broke out in the West Bengal Assembly on Thursday after Speaker Biman Bandyopadhyay refused to admit two adjournment motions, moved by opposition BJP, seeking discussions on the communal violence in Murshidabad in April and the clashes in the Maheshtala area in South 24 Parganas district.

As the members of the BJP’s legislative team moved the two adjournment motions soon after the House began, the Speaker refused to admit them on the grounds that both matters were sub judice and hence could not be taken up for discussion.

The refusal irked the BJP legislators, who, led by LoP Suvendu Adhikari, started protesting in front of the Speaker’s chair after coming down to the well of the Assembly.

The security personnel of the Assembly raised a human wall between the Speaker’s chair and the protesting legislators.

The BJP legislators shouted slogans and waved flags. They also protested by tearing apart paper documents on the House proceedings distributed among the legislators.

As the West Bengal Minister of State for Finance (independent charge), Chandrima Bhattacharya protested against this action, there were heated conversations between the BJP and Trinamool Congress legislators within the House.

“These paper documents are not any personal property that they can be destroyed in such a manner,” Bhattacharya was heard saying.

The BJP legislators continued with their protests even as the Trinamool Congress MLAs continued with their speeches in the House as per schedule.

Adhikari is scheduled to meet Governor C.V. Ananda Bose on the issue of Maheshtala violence

The BJP leader has sought the intervention of the Governor in initiating disciplinary action against the inspector-in-charge of the local Rabindra Nagar police station for allegedly remaining inactive in preventing clashes.

Earlier in the day, he approached the Calcutta High Court seeking a National Investigation Agency (NIA) probe into the Maheshtala clashes and deployment of Central Armed Police Forces (CAPF) personnel in the area where clashes broke out on Wednesday

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