Growth story breaks down as Dollar linked Indian economy seems to have no bottom at all!

Growth  story breaks down as Dollar linked Indian economy seems to have no bottom at all!

Troubled Galaxy Destroyed Dreams, Chapter 798
Palash Biswas

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Growth  story breaks down as Dollar linked Indian economy seems to have no bottom at all. Gross fixed capital formation, a proxy for investment activity, is down to 32.8% of GDP (at constant prices) compared to 33.9% last year.Private consumption has remained flat 59.5% of GDP  (at constant prices) in the same quarters of both 2011-12 and this year.Basic goods output growth, which comprises of infrastructure sectors such as crude oil, natural gas, petroleum refinery products and fertilisers, appear to be slowing down considerably with the growth rate of eight infrastructure sectors plunging to.1.8% in July, down from 8.2% in July 2011, and at its lowest level in nine months.Deprived of fundamentals it continues the free fall.Analysing the latest growth numbers, Crisil has noted that the Indian economy grew at 5.5 per cent in the Q1FY13, marginally better than 5.3 per cent in Q4FY12.But the black money hegemony is least interest to rvive the production system as said to be concerned over declining performance of the manufacturing sector, Finance Minister P Chidambaram said quick decisions were needed to remove bottlenecks hampering investments.Chidambaram was responding to first quarter Gross Domestic Product (GDP) numbers, which showed a growth of 5.5%, down from 8% in the corresponding period last fiscal.The decline in the GDP was mainly on account of poor showing by the manufacturing sector where the growth rate decelerated to 0.2% from 7.3% in the same quarter in 2011-12.Chidambaram, however, drew comfort from the fact that the quarterly GDP numbers were better on sequential basis. The GDP registered a growth of 5.3% in the fourth quarter (January-March) 2011-12.The growth story continues despite the infinite fall!The parliament faces unprecedented standoff as the opposition is trying its best to make responsiblt the irresponsible government inflicted with scams, latest being coalgate , the bone of contention!Since legislation as well as policy making paralyed, we may not hope naything better in given conditions. The prime minster is away in Tehran to oblige US diplomacy as a mediator to sustain Dollar supremacy as Iran has statred a consumer exchange rejecting the Dollar. RBI governor is sitting duck away in New York! The masse have to live on Rs Thirty two daily as the apex court refused to review the scale. What next?Union Finance Minister P Chidambaram offered worship at the famous famous hill shrine of Lord Venkateswara at Tirumala near in Tirupati last night.Perhaps the god may save Indian economy!Chidambaram, on his first visit to the shrine after assuming charge of Finance Ministry recently, was accompanied by his wife Nalini, son Karti Chidambaram and daughter-in-law Srinidhi Karti and other family members.On the other hand, Prime Minister Manmohan Singh blamed the 'lack of cohesive coordination' in domestic politics as one of the factors hampering growth rate.Is it the story?India incs seem not to be so worried as corporate lobbying continues as greater reflection of infight within. But the symptoms look very bad as despite favourable gestures from the banks already motivated by the FM, consumer market is also hit. Demand for new cars and two-wheelers continues to be weak in spite of the fast-approaching festival season.But theFM considers growth of the promoter builder raj with healthy construction sector as silver lining!Far from worried with Indian economy or feeling the urgency as public liability,PRIME Minister Manmohan Singh Friday came down strongly on the BJP for obstructing Parliament over the coal blocks allotment controversy, saying it was a "total negation of democratic politics" to not allow the party with majority to function.

On the other hand, The Supreme Court has expressed its reluctance to review the poverty line fixed at Rs 32 per capita per day in the country, noting the figure may not be "fabulous" but it was not for them to settle economic policies, Indian Express reports..

"We cannot review or alter it. We cannot settle economic policies for the country. In the light of your concerns, we can say it is not fabulous but it has been fixed by the Planning Commission on certain basis only," said a Bench led by Justice T S Thakur on Wednesday.

The court was responding to a request by senior advocate Colin Gonsalves, who appeared for NGO "People's Union for Civil Liberties" and sought its indulgence to review the "unrealistic and deplorable" Rs 32-figure while dealing with larger issues plaguing the Public Distribution System (PDS).

The fall in production of rice and oilseeds pulled down the growth in the agriculture sector to 2.9 per cent in the first quarter of the current fiscal, even as wheat and cotton output increased.On the other hand,India's relatively superior savings rate, which supported investments in factories and infrastructure for nearly two decades before the 2008 crisis, is faltering as corporate profitability is squeezed and inflation-averse individuals rush to the safety of gold and real estate. Banks - the biggest intermediary supplying money to businesses - are turning cautious due to rising bad loans and slowing deposits growth.

Away in America,Federal Reserve Chairman Ben Bernanke on Friday said the US economy faced "daunting" challenges and that progress reducing unemployment had been too slow, but he stopped short of providing a clear signal of further monetary policy easing.While in India,continued disruptions in Parliament are also reducing the prospect of policy reforms during a time when the country is under threat of credit ratings downgrades from Standard and Poor's and Fitch Ratings.Investors are now expected to focus on the US Federal Reserve chairman Ben Bernanke's speech later in the day amid hopes he will hit at resuming asset purchases. Potential action from the European Central Bank is also keenly anticipated.

Although the data signalled the worst may be over, investors worry that growth will remain lethargic, but not low enough to prompt interest rate cuts from the Reserve Bank of India (RBI).With the inflationary expectations still high, most experts are of the opinion that the Reserve Bank of India (RBI) will not cut key rates in its monetary policy review on September 17. However, most of them are anticipating a 50 bps cut towards the end of FY13.Markets fell on Friday to their lowest close in four weeks as lenders such as ICICI Bank Ltd were hit after stronger-than-expected gross domestic product (GDP) data dashed hopes for rate cuts next month, while Reliance Industries Ltd (RIL) fell after Citigroup downgraded the stock.Public sector banks also edged lower, though they did turn positive at one point after the farming sub-index within the April-June GDP data grew more strongly than expected.However, the prospect of reduced non-performing assets from rural areas was not enough to keep shares afloat in a down market. State Bank of India fell 0.13 %, while Bank of India retreated 0.6 %.Software services exporters fell as worries intensified pricing power in the sector would be hit by rising competition and a weaker global outlook.Shares of the energy conglomerate had a good run in August, but started to slide towards the second half. RIL shares still posted a 3.1 % gain for the month.

Most amusing part of the story seems to be yet another patch up attempt as  the Government is planning to come out with a business development index based on economic parameters to reflect the strength of the corporate sector.

Corporate Affairs Minister Veerappa Moily said on Friday that a credible agency would be entrusted with the work of developing the index.

"This index will be based on robust economic parameters that will reflect the true strength of corporate sector," Moily said at a function organised by the Institute of Company Secretaries of India.

The proposal comes against the backdrop of rising concerns among the investor community over the overall investment climate in the country.

Moily said the Ministry of Corporate Affairs will come out with a sustainability reporting framework for companies in a "couple of weeks".

The Minister also said radical solutions are needed to tackle social and economical problems. Regarding the new Companies Bill, 2011, Moily said he hopes the Bill will be passed in the next session of Parliament.

The Bill is aimed at creating a good regulatory environment for sustainable and inclusive growth.

The proposed National Competition Policy may help in tackling inflation by creating a fair playing field for producers, farmers and traders, Corporate Affairs Minister Veerappa Moily said today.


The Minister said that good competition would "create a win-win situation for producers, farmers, traders among others".

"That is the kind of big benefit," he added. He was speaking at a function organised by the Institute of Company Secretaries of India (ICSI) here.

"Whenever we confront with inflation and many other problems of economy we always look at the RBI and bankers...on what they will do. "But, ultimately they can't do anything to contain inflation ... Only fair play of the competition law and competition policy is the solution," Moily said.

Consultations are underway on a draft National Competition Policy to integrate principles of fair-trade practices in various economic policies.

Inflation, which touched 6.87% in July, continues to remain a concern for the economy. Though inflation moderated in July compared to 7.25% in June, it still remains much above the 5-6% comfort level of the Reserve Bank of India (RBI).

Meanwhile, food inflation, which accounts for nearly 15% of the overall inflation basket, was at 10.06% in July. Supply side bottlenecks are seen as one of the reasons for high inflation.

The RBI in July cut economic growth estimate to 6.5% from 7.3% and raised its inflation forecast for the year to 7% from 6.5%. It continues to say prices that are rising and there's little room to cut the repo rate, the rate at which it lends to banks.

Investments, the fuel needed to put the economy back in the 8% orbit, may not revive for more than a year even with lower interest rates. This is because the consumption and savings behaviour of individuals and companies has turned adverse.

The GDP growth in the agriculture sector stood at 3.7 per cent in the same quarter of the 2011-12 fiscal.The agricultural sector, which contributes about 14 per cent to India's GDP, comprises of agriculture, forestry and fishing.

"The production of wheat increased by 8.1 per cent during the rabi season of agriculture year 2011-12 (which ended in June 2012), while rice registered a decline of 16.6 per cent," Central Statistical Organisation data released today said.

Among the commercial crops, the production of oilseeds declined by 12.6 per cent during rabi 2011-12, it added.The production of cotton and sugarcane recorded growth rates of 6.7 per cent and 4.5 per cent, respectively during agricultural year 2011-12 (July-June).Cereal output recorded a growth rate of 3.5 per cent during the rabi season of agriculture year 2011-12 over the production in the year-ago period.

Despite a revival in the monsoon rains, which lasts from June to September, the sowing of kharif (summer) crops is still lagging behind target.The sowing so far in the ongoing season is down by 6 per cent to 920.31 lakh hectares as against 979.19 hectares in the last kharif season.As per the Indian Meteorological Department's (IMD) data, the overall rainfall in the country during June to August 30 is deficient by 12 per cent.

"Of course the decline of fixed investment is a source of concern to the government. It emphasises once again the need to take quick decisions to accelerate investment, especially removing all bottlenecks to investment in the manufacturing sector," he said in a statement.

"After continuous reduction in the growth rate in successive quarters beginning in the fourth quarter of 2010-11, this is the first time when quarterly growth rate has exceeded the growth rate in the previous quarter", the Minister said.

At the same time, he added, there was also encouraging signs as the construction sector recorded a growth of 10.9%, up from 3.5% in Q1 of the last fiscal.

Hindustan times reports:India's economy grew 5.5% in the April to June quarter, confirming fears of a widespread slowdown caused by a demand and investment sque-eze from a host of factors that include local policy logjam, high interest rates and sluggish exports amid a euro zone crisis The growth in April to June is marginally higher than the previous quarter's 5.3% growth and a sharp drop the 8% recorded in the same quarter in the previous year.

"Overall, despite today's sligh-tly higher GDP print, we believe that the underlying growth momentum remained weak with three critical drivers: private consumption, investment and exports leading the slowdown. Early data such as the manufacturing and exports suggest no pick up in sight," said Sonal Varma, of broking and research firm Nomura.

Experts blamed domestic uncertainty behind the sudden turnabout in the economy, which until recently was the destination global investors flocked to.

India's GDP growth languished around its lowest in three years in the quarter that ended in June, offering no respite for Prime Minister Manmohan Singh as he struggles to escape a series of political scandals that have paralysed his economic agenda.Weak demand in the West has hit exports, but the heaviest toll on the economy is from overspending and a lack of reforms at home - a point made by both the central bank and ratings agencies Fitch and Standard & Poor's, who threaten to downgrade India's sovereign ratings to junk.The economy grew 5.5 percent in the quarter, government data showed on Friday, just above the 5.3 percent posted in the three-month period ending in March and slightly better than economists' expectations in a Reuters poll.

The BSE Sensex witnessed the worst fall in over one month despite GDP data for the fiscal first quarter indicating a marginal recovery in economic growth.

Meanwhile,the aggressive intent of the Congress-led government in taking on the main opposition BJP paralysing parliament became quite clear on Thursday as it rushed to pass two bills in Lok Sabha amid rucks over the CAG report on the coal block allocation issue.The government could not, however, repeat this feat in Rajya Sabha, where the amended version of the Whistle Blowers Protection Bill is awaiting nod for over past one week.DNA reports.

The government aims to whittle down the bill, passed by the Lok Sabha on December 27 without discussion, with an amendment to bar use of the 'secret' cabinet notes and other confidential policy papers for exposing corruption.Sources in the government said with no meeting ground in sight to allow a smooth functioning of the parliament, the ministries have been asked to identify the priority business and get it passed in the current monsoon session amid rucks by taking into confidence friendly parties.On Thursday, the government managed to pass that law that would allow the government to set up All India Institute of Medical Sciences-like institutes across the country just by a notification.

- India's economy would grow at 6.7 percent in the current fiscal year, less than an earlier estimate of 7.5-8.0 percent, Prime Minister Manmohan Singh's Economic Advisory Council said two weeks ago.

- The country's wholesale inflation unexpectedly dropped to near three-year low of 6.87 percent in July from 7.25 percent in June, while consumer price inflation slowed slightly to 9.86 percent from 10.02 percent.

- Earlier this week, the Reserve Bank of India (RBI) Governor Duvvuri Subbarao said inflation remained too high and needed to fall further or risk more damage to the economy, dismissing criticism of the bank's hawkish stance.

- The country's industrial output fell for the third time in four months in June, adding to pressure on new Finance Minister Palaniappan Chidambaram to move quickly and pull Asia's third-largest economy from its worst slowdown in almost a decade.

- The HSBC Purchasing Managers' Index for the services sector, which gauges the activity of hundreds of Indian companies, slipped to 54.2 in July from June's 54.3 while for manufacturing, the index fell to 52.9 in July from 55.0 in June -- its biggest one-month drop since September last year.

- India sharply revised its GDP data to show a much worse economic performance than originally thought in the aftermath of the global financial crisis, putting renewed scrutiny on the reliability of government data.

Unhappy with 5.5. per cent GDP growth in April-June quarter, industry chambers today said opportunities for revival of the economy would soon "peter out" if the government does not take immediate policy action.Expressing serious concern over the continuous slowdown in the GDP, which was the slowest pace of Q1 growth in a decade, industry body CII said the numbers leave no doubt about the "criticality" of the situation.

CII strongly feels that opportunities for revival of economic growth would soon peter out if the economy dives into a downward growth spiral due to steep decline in growth of gross capital formation," chamber's Director General Chandrajit Banerjee said in statement.


We once again appeal for a coordinated monetary and fiscal intervention to address this deteriorating situation, Banerjee said.

Industry body Assocham said the disaggregated figures clearly show the weaknesses in the economy and immediate corrective steps are required.

"The manufacturing sector has obviously been worst hit as the sector has become virtually stagnant at 0.2 per cent in Q1 of 2012-13 against 7.3 per cent growth in the corresponding period last year", Assocham President Rajkumar N Dhoot said.

Dhoot said given the global slowdown and slackening in exports demand, domestic manufacturing needs some stimulus by deeper cuts in interest rates.

"With the Finance Minister announcing intent on fiscal consolidation, this is an opportune time to cut repo rates," CII added.

Industry body FICCI said the growth slowdown reflects a sharp decline in investment and the government should take measures to control the fiscal deficit and lay basis for boosting investment demand.

"... what is worrisome is expectations of subdued global growth, uncertainty on Eurozone and slowdown in capital formation in India... I would like to emphasise that many needed economic decisions can be taken on administrative basis without new legislation," FICCI President R V Kanoria.

Consultancy firm Dun and Bradstreet expects the July-September (second quarter) GDP to remain subdued at below 6 per cent on inflationary pressures, unsatisfactory monsoon and policy stagnation.

"Nonetheless, we expect growth to witness some revival during the second half of the current fiscal with abatement of inflationary pressures and further easing of the monetary policy," said Dun and Bradstreet economist Arun Singh.

The Reserve Bank today permitted individual overseas investors, also called Qualified Foreign Investors (QFIs), to hedge currency risk for their investments in equity or debt instruments.

"It has now been decided to allow QFIs to hedge their currency risk on account of their permissible investments (in equity and debt instruments)," the RBI said in a notification.

Currency risk arises as QFIs are allowed to invest in rupee-denominated units of domestic mutual fund schemes and listed equity shares.

A QFI is an individual, group or association resident in a foreign country that is compliant with Financial Action Task Force (FATF) standards. QFIs do not include FIIs/sub accounts.

As per the notification, QFIs have been allowed to hedge the currency risk on the market value of entire investment in equity or debt in India as on a particular date.

It has also allowed to hedge Initial Public Offers (IPO) related transient capital flows under the Application Supported by Blocked Amount (ASBA) mechanism.

As part of hedging mechanism, the QFIs are allowed to pick forward foreign exchange contracts with rupee as one of the currencies and foreign currency-INR options.

Foreign Currency-INR swaps are allowed for IPO-related flows, it said.

Some investors have been optimistic a weak growth number would persuade the central bank to lower interest rates at its Sept. 17 policy meeting, but the bank's recent comments remain hawkish in the face of stubbornly high inflation.

The RBI still maintains a hawkish bias and rate cuts are still seem some way off. Asian data momentum has not been great in Q3 so it is difficult to see a dramatic improvement in Q3, said Jonathan Cavenagh, a currency strategist at Westpac, Singapore.

The absence of a stronger rebound in growth is further bad news for the government, which is embroiled in a row with the main opposition Bharatiya Janata Party (BJP) over sweetheart coal deals. The state auditor has questioned the deals, and the BJP has refused to allow parliament to function until Singh quits.

A raft of bills, including a number of important economic reforms, is now bogged down in the legislature. The furore has deepened the sense of dysfunction in Indian politics that has already stalled bold measures to cut government spending on costly fuel subsidies and help bring down high inflation. Poor monsoon rains have added to the economic gloom.

The manufacturing sector grew an annual 0.2 percent during the quarter, the first of the 2012/13 fiscal year that runs to next March, while farm output rose 2.9 percent.

For now, Finance Minister P. Chidambaram is focused on small-bore measures he hopes will put the economy on track, and his ministry is also contemplating possible budget cuts later in the year.

The Reserve Bank of India (RBI) meets on Sept. 17 to review monetary policy and bond prices rallied earlier this week on expectations a low growth reading would pressure the bank to reduce interest rates, some of the highest among major economies.

But only last week the RBI said fighting inflation remained the cornerstone of its monetary policy, and said lower interest rates alone would not jumpstart the economy.

India's benchmark 10-year bond yield rose 3 basis points to 8.23 percent after the GDP data.

Bonds fall, rupee trims losses after April-June GDP

India's benchmark 10-year bonds fell, while the rupee and stocks trimmed earlier losses on Friday.

India's benchmark 10-year bond yield rose as much as 3 basis points to 8.23 percent from levels before the data, as faster GDP growth is expected to reduce expectations for interest rate cuts.

The rupee trimmed losses, trading at around 55.72 to the dollar from around 55.77 before the data was released.

India's benchmark BSE index and NSE index trimmed losses as well, and were down around 0.3 to 0.4 percent each.

India's 1-year OIS swap rose 3 bps to 7.78 percent, while the 5-year swap rates was up around 4 bps to 7.16 percent, according to traders.

COMMENTARY

SUJAN HAJRA, CHIEF ECONOMIST, ANAND RATHI SECURITIES, MUMBAI

We don't think that today's growth number will lead to any change in the Reserve Bank of India's monetary policy stance. It is unlikely that there will be a rate cut before the fourth quarter of the current fiscal year ending in March 2013.

Our growth estimate for the current fiscal year is 5.8 percent. We are seeing that slowdown in the manufacturing sector is percolating to the services sector. However, in the third and fourth quarter of the fiscal, there may be some improvement in industrial activity.

RADHIKA RAO, ECONOMIST, FORECAST PTE, SINGAPORE

Sense of relief was palpable in the domestic financial markets after the stronger-than-expected Q2 GDP print. Whilst an upside surprise at 5.5 percent, the pace of growth is undeniably below potential and validates the need for the government to address sluggishness in investment and external sector activity.

Inflation remains sticky for the same reason that GDP is underweather - supply side constraints and structural bottlenecks. Thereby RBI action, we reckon, will be dictated by when the government gets its act together on the fiscal situation and ease structural constraints. We nonetheless still see reason to hold on to 50 bps rate cut by year-end, albeit might be deferred to Q1 2013.

JONATHAN CAVENAGH, CURRENCY STRATEGIST, WESTPAC, SINGAPORE

Likely to take some of the heat out of USD/INR but only at the margin. The RBI still maintains a hawkish bias and rate cuts still seem some way off. Asian data momentum has not been great in Q3 so difficult to see a dramatic improvement in Q3.

RAHUL BAJORIA, REGIONAL ECONOMIST, BARCLAYS CAPITAL, SINGAPORE

There are some oddities in the number like if I look at the industrial production data, mining was negative and so was manufacturing, but that is not reflected in the GDP data and that's one source of the upside.

Also, construction number looks abnormally strong. On paper this looks good, but there is some scope of revision in the GDP data. For RBI, I guess it will possibly help them to explain their anti-inflation stance. But even if on relative basis the number looks good, overall it is still weak. If we look at the first half of 2012, growth is 5.4 percent compared with 6.4 percent in second half of 2011.

MARKET REACTION

- The benchmark 10-year bond yield rose as much as 3 basis points to 8.23 percent from levels before the data.

- The rupee trimmed losses, trading at around 55.72 to the dollar from around 55.77 before the data was released.

- The benchmark BSE index and NSE index trimmed losses, and were down around 0.3 to 0.4 percent each.

- The 1-year OIS swap rose 3 bps to 7.78 percent, while the 5-year swap rates was up around 4 bps to 7.16 percent, according to traders.


Reuter reports: Economic growth languished near its slowest in three years in the quarter that ended in June but was slightly better than expected, signalling the worst may be over for Asia's third largest economy and dashing investor hopes of an early rate cut.

Quarterly GDP grew 5.5 per cent, driven by a rebound in construction and financial services, provisional government data showed on Friday, just above the 5.3 per cent posted in the three months ended in March and slightly higher than economists had forecast in a Reuters poll.

The number offered little respite for Prime Minister Manmohan Singh as he struggles to escape a series of political scandals that have paralysed his economic agenda. Economists do not foresee a rapid return to boom times in India.

But while failing to signal a decisive rebound, the read-out was viewed by analysts as not weak enough to prod the central bank into make a near-term cut in interest rates, which have been on hold since April as it tries to force the government to push through reforms that would help tame inflation.

"We expect a gradual recovery in growth during the current fiscal year ending in March 2013, but this recovery is contingent on structural reforms," said Leif Eskesen, chief economist for India and ASEAN at HSBC in Singapore. "It will also depend on the stabilisation of the global economy."

Weak demand in the West has hit Indian exports, but the heaviest toll on the economy is from government overspending and a lack of reforms, a point made by both the central bank and ratings agencies Fitch and Standard & Poor's, who threatened to downgrade India's sovereign ratings to junk.

NO RATES MOVE, YET

Many G20 central banks have been moving to support growth, but policy interest rates have come down just once in more than two years and are among the highest of big economies.

Some investors had been optimistic that a weak growth number would persuade the Reserve Bank of India (RBI) to cut borrowing costs at its September 17 review, but the slight uptick will bolster the bank's argument that stubborn inflation is its main concern.

"The RBI still maintains a hawkish bias and rate cuts still seem some way off," said Jonathan Cavenagh, a currency strategist at Westpac Bank in Singapore, who said data from across Asia suggested growth would remain subdued in the September quarter.

RBI Governor Duvvuri Subbarao this week said inflation remained too high and needed to fall further or risk more damage to the economy.

Benchmark 10-year bond yield rose 3 basis points to 8.23 per cent after the GDP data, while one- and five-year overnight index swap rates also rose, reflecting disappointment over hopes for rate cuts in September.

Manmohan Singh's economic advisory panel this month cut its forecast to 6.7 per cent for economic growth in the year to next March (2012/13), down from a previous forecast of 7.5-8 per cent. The RBI predicts growth of 6.5 per cent in the same period.

Manmohan Singh's economic advisor C. Rangarajan said on Friday he saw growth being led by agriculture and basic industries such as coal and steel in the next few months.

"The monsoon has been very normal during the month of August and therefore the rural demand may pick up and may not decline as one has expected earlier," he said.

While the growth figure is strong by global standards, it is considered almost recessionary in India, which targets 9 per cent expansion to provide jobs for a bulging young population.

Worried about social unrest if aspirations are not met, Manmohan Singh recently called high growth a matter of national security.

But for all the gloom in recent months, plenty of companies and investors continue to bet on India's longer-term prospects, especially in sectors driven by domestic demand.

Net foreign institutional investment in Indian stocks and bonds has quadrupled this year to $16.7 billion, including nearly $4 billion since the start of July.

The Sensex is up 14 per cent this year, making it one of the best performing major stock markets in Asia.

BUDGET CUTS?

Newly reappointed Finance Minister P. Chidambaram has vowed to revive an economy he steered through the 2008 credit crunch with tax cuts. The buzz on his return to the ministry helped a market rally, further fuelled by a flurry of minor policy moves.