The Reserve Bank of India cut its policy interest rate to a new low yesterday, a larger than expected move, in a bid to turn the economy around and promote growth. The RBI has been in a race with China to cut its rates pre-emptively, and to keep its rates low while US federal funds rates are expected to rise. Central Bank governor Raghuramn Rajan made this the latest in a long series of surprises for analysts. India, while experience stagnant growth, has a number of things going for it – namely the low price of commodities and its currently low rate of exchange with the dollar have produced efficiencies that seem to be staving off a full-blown economic crisis like in China.
India additionally unilaterally decreased the price of locally produced natural gas by 18% for six months, which hurt local producers like Oil India and Reliance Industires, in an effort to deter exploration, per one of the campaign promises of Prime Minister Narendra Modi. India reviews the government supported price of gas half-yearly, based on formulas from other developed markets. Likely this move is to enhance the purchasing power of the average Indian consumer, with 18% savings on price that could be distributed elsewhere in the stagnant economy.
The move comes as a relief for foreign importers to India, like those in Central Asia. Their benchmark prices may be low, but weakening domestic providers could provide opportunity in the future for players like Kazakhstan and Turkmenistan to provide natural gas and oil to the key Indian market.
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- The government of Kazakhstan is considering cutting its mineral-extraction taxes to spur investment, a mirror situation of what is going on in Russia, where the MET is under consideration to be raised. The move was announced as part of a plan to increase output and recapture Kazakhstan’s failing market share against OPEC countries. Kazakhstan has already cut its oil production by 1 million tons for next year, and much of the production comes from already-mature assets, meaning that new projects must be started to ensure the same output in the future.
- Kazakhstan’s Energy Ministry has announced no operational changes at Kashagan oil field, with repair operations still ongoing and production unlikely to begin once again for at least another year. However, the US Energy Information Administration said that Kashagan is expected to return to service early next year, but most estimates say that it will cost as much as 15 times more than initially expected to restart production on the field.
- In Afghanistan, the Taliban have taken Kunduz, in the north, signaling the government’s growing inability to manage the civil war. Kunduz officials have been quoted as saying “It’s over. We have no food, no ammunition” after the Taliban took the strategic hill of the Bala Hisar, the former location of the antiquated fortress of the Afghan monarch. The Taliban announced they would use Kunduz as a staging area to control other areas of Northern Afghanistan.
- Ukraine’s President Petro Poroshenko has mocked Russia’s bid for anti-terrorism coalition, saying it would be another ploy by Russia to back bellicose puppet organizations like the separatist militias within eastern Ukraine. In a speech to the UN General Assembly, he said “Over the last few days, we have heard conciliatory statements from the Russian side. Cool story, but really hard to believe. How can you urge an antiterrorist coalition if you inspire terrorism in front of your own door?” Moscow has consistently denied any allegations of wrongdoing.
- The World Bank has once again downgraded Russia’s economic outlook, saying that the economy may contract further next year. The new figures show that a contraction of 3.8% is expected for 2015, with a 0.6% contraction expected for 2016 according to the baseline scenario. However, the report additionally called a “lower-bound scenario” in which oil prices drop well below the baseline projection of $53 per barrel, GDP could contract by as much as 2.8% in 2016.
- A high-court in Tajikistan has branded the Islamic political party that attempted to gain seats in Parliament during the last election as a terrorist group. The Islamic Renaissance Party of Tajikistan (IRPT) will likely be the target of a major crackdown, and the court’s action has already forced the closure of the newspaper and called for the banning of any video, audio, or printed materials related to the party’s activities. This comes after the failing of a coup by deputy defense minister, Abduhalim Nazarzoda.
- According to a report by the International Crisis Group, the failure of promised political reforms could spell another revolution for Kyrgyzstan. The report is summarized by Eurasia Net, and paints a decidedly somber picture for the country’s outlook, and said that the upcoming October 4 Parliamentary elections are unlikely to change anything, citing the weaknesses of those institutions, saying “Parliament and the presidency seem unwilling and institutionally incapable of addressing these issues