Wall-Street Articls

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Rose Yu and Sarah Chen. July 31, 2012. Retrieved from

http://online.wsj.com/article/SB10000872396390444226904577560470940599572.html?KEYWORDS=economic+growth+articles

ECONOMIC GROWTH

The purpose of this article by Rose Yu and Sarah Chen is to explain how and why China aims to increasemonetarydevelopment during second half of 2012. The authors have compiled various facts and figures in order to focus the situationspredominant in first half of the year and how the government has prearranged to increase its expenditure on groundwork with the aim of engendering greater financial growth in later part of the year.

The gist of the article focuses on how the higher electricity consumption and railway investment would enable China to stimulate the economic growth in the country. The railway expansion plans were slowed down due to the fatal train crash last July. However, this year the railway ministry anticipates to spend $73 billion, which is an upsurge of 16%, on the organizationspeculation. This spending is seen as a key element for boosting economic growth which went down from 8.1% to 7.6% in second quarter of 2012. The economic growth rate has been slowest in more than 3 years. Additionally, the electricity consumption of China is seen as a yardstick of the country’s growth. The power consumption in second half of the year is expected to increase by 6%-8% as compared to 5.5% growth, witnessed in the first half.

The positive consequence of this infrastructure investment is that banks had been reluctant in lending to the railway ministry ever since the occurrence of rail accident last year. Thus, increasing the budget for investment in the railway infrastructure will help to provide the much needed funds and consequently boost the nation’s economic growth.

India Takes More Steps to Tackle Drought

Biman Mukherji. July 31, 2012. Retrieved from

http://online.wsj.com/article/SB10000872396390444860104577560874042079942.html

FEDERAL GOVERNMENT SPENDING

The purpose of Biman Mukherji’s article is to highlight how the Indian administration is taking steps in order to deal with the near-drought situation in the country arising as a result of weak monsoon. This involves setting aside the government funds for provision of various subsidies to its farmers in the affected regions in order to encourage them to keep up with the supply of essential food crops.

The article focuses on the steps taken by the Indian federal government such as provision of diesel-price funding to the farmers and increasing subsidies on the seed materials in order to avoid a fall in agricultural construction. The scanty monsoon rainfalls in the country have led to a significant decline in the planting zones of lentils, coarse cereals and rice. The government publicized a 50% diesel-price fundingfor the drought-hit farmers the total expenditure is expected to be Re. 12.6 billion ($226.21 million) that will be equally shared by federal as well as relevant state administrations.With the main focus of country’s monetary policy being still on combatinginflation, a weak monsoon season has further resulted in reducing options for the central bank to accelerate growth.

The negative consequences highlighted in the article include prospect of full-blown drought that would result in a fall in agricultural produce, rural incomes and subsequently serious negative consequences for the whole Indian economy. The subsidies granted by the government will help to tackle the situation to some extent.

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