9 February 2015

India's FY15 GDP estimated to soar 7.4% under new methodology

The government on Monday estimated India’s economic growth this financial year at 7.4%, against 6.9% in 2013-14, as the country changed its definition of gross domestic product (GDP), as well as the base year for calculating it.

The estimated growth for 2014-15 is the same as China’s growth for 2014. Earlier, both the International Monetary Fund and the had said India’s growth would exceed China’s by 2016-17.

According to data released earlier, growth stood at 5.7% in the first quarter of 2014-15 and 5.3% in the second. However, according to the new data, the first quarter recorded 6.5% growth, the second 8.2% and the third 7.5% (agriculture output contracted during the third quarter). Had the government not increased its spending, growth in the third quarter would have been lower, but that would pressure fiscal deficit.  Besides, gross fixed capital formation, a proxy for investment, and private final consumption expenditure, which reflects demand in the economy, witnessed a slow down in growth  as interest rates remained high.

Following the change, the second quarter of 2014-15 recorded higher growth compared to the first, contrary to results thrown up by the previous methodology.

Going by a like-for-like comparison, the projected growth for 2014-15 stands at a four-year high; growth in 2010-11 was 10.3%. The data will boost the confidence of the National Democratic Alliance government, despite the fact that much of the higher numbers were due to a statistical change --- the definition of GDP was changed to include indirect taxes (net of subsidies), called GDP at market prices. Also, the base year was changed from 2004-05 to 2011-12.

"Based on this performance it does look that the Budget will target growth of 7.5-8% in its calculations for FY16 as the policy measures adopted and stable economic conditions will facilitate such growth next year," CARE Ratings chief economist Madan Sabnavis said.

He cautioned that while these numbers reinforce the view of the earlier series of improvement, the numbers get magnified significantly. "Therefore, overall perception on should not be changing," he said.


GDP growth as % year-on-year
2005-06 (base 2004-05)2006-07 (base 2004-05)2007-08
(base 2004-05)
2008-09 (base 2004-05)2009-10 (base 2004-05)2010-11 (base 2004-05)2011-12 (base 2004-05)2012-13 (base 2011-12)2013-14 (base 2011-12)2014-15 (base 2011-12)
9.39.39.83.78.510.36.65.16.9          7.4
Note: Growth is given on the basis of new definition of GDP; 2014-15 growth is based on advance estimates

Against advance estimates, results of the three quarters are primarily based on actual data, even as the Index of Industrial Production (IIP) data for December are yet to be released. Advance estimates are based on actual data for two quarters, part actual and part projection for the third quarter and a projection for the fourth.

These estimates help calculations for the annual Budget, scheduled to be presented on February 28.

According to the new estimates, the size of India’s economy during 2014-15 is slightly reduced to Rs 1.26 lakh crore from Rs 1.29 lakh crore projected in the Budget. As such, it will be more difficult for the government to meet its fiscal deficit target. Even if it restricts its fiscal deficit to the budgeted Rs 5.31 lakh crore, this would be 4.2% of GDP, against 4.1% estimated in the Budget. The very fact that the government expenditure on public administration and others is projected to rise higher at 9% in 2014-15 against 7.9% in 2013-14 would also widen the deficit.

"Nominal GDP for 2014-15 has been pegged lower than assumed in the Budget, which would make the task of restricting the fiscal deficit at 4.1% of GDP more stringent," ICRA senior economist Aditi Nayar said

Even as annual economic growth rate is projected to pick up in 2014-15, agriculture growth is slated to fall to 1.1% from 2.7% in 2013-14.

Size of India's economy (in Rs crore)
Base Year 2011-122012-132013-142014-15
2004-0590,09,722101,13,281113,55,073128,76,653*
2011-1288,32,01299,88,540113,45,056126,53,762
*Budget Estimates    

This financial year, industry is estimated to grow 5.93%, against 4.5% the previous financial year. While the manufacturing segment is forecast to expand 6.8% (5.3% in 2013-14), electricity and related sectors are estimated to expand 9.6%, against 4.8% in 2013-14. Growth in mining and quarrying, however, is expected to fall to 2.3% 5.4% in FY14, while growth in the construction sector is estimated at 4.5%, against 2.5% during the previous year.

In 2014-15, the services sector is estimated to grow a stellar 10.62%, against 9.05% in the previous year. Within services, financial, real estate and professional services are set to expand 13.7%, compared with 7.9% in 2013-14.

Trade, hotels and other segments are estimated to expand 8.4%, against 11.1% in 2013-14.

The country's per capita income is projected to increase to Rs 88,533 in 2014-15 against 80,388 in 2013-14 and Rs 71,593 in the previous year. Average income of an Indian rose 10.1% in 2014-15 against 12.3% in 2013-14 and 11.3% in 2012-13.

In the third quarter, agriculture production contracted 0.4% against two% in the second quarter and 3.5% in the first quarter. In fact, it is largely 20% rise in government expenditure on public administration, defence and other services which pushed up GDP growth to some respectable level in Q3. It was starkly higher than 6.9% in the second quarter and 1.9% in the first quarter.

Another area of concern remained gross fixed capital formation (GFCF) and private final consumption expenditure (PFCE), which have been showing deceleration in growth.

rose just 1.64% in Q3 from 2.79% in Q2 and 7.65% in Q1 of the current financial year. PFCE grew 3.53% in the third quarter against 8.69% in the second and 4.34% in the first three months.

Chambers-- Confederation of Indian Industry and the Federation of Indian Chambers of Commerce and Industry-- sought to draw the government's attention to this area and pressed for measures in the Budget to revive investments and demand in the economy.

Centre's fiscal deficit as percentage of GDP 
Base year2011-122012-132013-142014-15
2004-055.64.84.54.1*
2011-125.84.94.54.2
*Budget Estimates    
Source: Ministry of statistics and programme implementation

India’s liability law will not be amended: Union Government

Union Government has notified that India’s Civil Liability Nuclear Damage (CLND) Act, 2010 or CLND rules will not be amended.
In this regard, a detailed paper titled ‘Frequently Asked Questions and Answers on Civil Liability for Nuclear Damage Act 2010 and related issues‘ was released by Ministry of External Affairs (MEA).
This paper says that the foreign suppliers of the reactors cannot be sued for damages by the victims of a nuclear accident.
However, the suppliers can be held liable by the operator, who has the right of recourse that could be operationalized through the contract between the operator and the supplier.
Governments decision comes after the understanding was reached with the US, during President Barack Obama’s recent visit.

About Civil Liability Nuclear Damage (CLND) Act, 2010

  • CLND Act, 2010 was passed by the Parliament in August 2010.
  • This Act limits the liability of the operator in case of nuclear accident and secures the operator the right to recourse under certain circumstances and provides a mechanism to compensate victims of nuclear damage.
  • In November 2011 under the parent Act, Civil Liability for Nuclear Damage Rules were notified. These Rules stipulate certain mandatory clauses for contracts that secure the operator the right to recourse.
  • It also prescribe the procedure to provide compensation to victims in case of nuclear incidents.

8 February 2015

Ratan Tata among business leaders for zero GHG emissions by 2050

Global business leaders from some of the world’s largest companies under the group ‘B Team’ called on governments and businesses to commit to bold action at this year’s UN climate negotiations in Paris.
The leaders include India’s Ratan Tata, Ariana Huffington, Sir Richard Branson, Unilever CEO Paul Polman, also the B Team leader, all of whom have set their sights on a global goal of net-zero greenhouse-gas (GHG) emissions by 2050.
The letter issued on February 5, comes before discussions begin in Geneva this Sunday on fine-tuning the Lima draft text. The B Team said, “As you enter into a critical week of discussions in Geneva, we ask that you communicate this goal to the government representatives who will be negotiating on behalf of the citizens of the world, and that you make every effort to ensure this goal becomes the foundation upon which countries build the text of the final agreement.”
The latest Intergovernmental Panel on Climate Change (IPCC) assessment said that achieving net-zero GHG emissions by 2100 will provide only a 66 per cent chance of limiting global warming to 2 degrees Celsius. The B Team said a 1-in-3 chance of failure is unacceptable, given the potential for catastrophic climate impacts. Acting decisively and immediately, with a clear target of net-zero GHG emissions by 2050, is the only way we can lower this risk and avoid ballooning costs, the B Team pointed out.
The business leaders called on governments to commit to a global goal of net-zero greenhouse-gas emissions by 2050, and to embed this in the agreement to be signed in Paris. It urged businesses to match this ambition by committing to long-term targets and driving low-carbon solutions to scale – thereby enabling the world to achieve the net-zero 2050 target.
It also asked for both businesses and governments to adopt meaningful and effective carbon pricing and for governments to end all fossil fuel subsidies, and to shift this capital to help scale affordable renewable energy solutions to enable wider economic transformation.
Businesses and governments should ensure the benefits of responses to climate change flows to vulnerable and impoverished communities that suffer disproportionately from climate change and are least equipped to cope with its impacts, the statement added.
The signatories are Sir Richard Branson, Arianna Huffington, Dr. Mo Ibrahim, Guilherme Leal, Strive Masiyiwa, Blake Mycoskie, François-Henri Pinault, Paul Polman, Ratan Tata, Zhang Yue, Professor Muhammad Yunus and Jochen Zeitz along with Mary Robinson and Dr. Gro Harlem Brundtland as Honorary Leaders of The B Team.
These global leaders have also written an appeal to Christiana Figueres, Executive Secretary of the UNFCCC.
Mr. Polman in the statement said, “A target of net-zero emissions by 2050 is not only desirable but necessary. This is the time to redouble our efforts and further accelerate progress to decarbonize our economy. This is not going to be easy, but the earlier we act, the greater the economic opportunities will be.
Mary Robinson, UN Special Envoy on Climate Change and President of the Mary Robinson Foundation for Climate Justice, explained that a transition to net-zero will succeed only if it is done fairly. The necessary technology for sustainable development must be an available and affordable option for all countries

New virus, more outbreaks

A look at state-wise data shows that states with larger numbers of fatalities are also those with less successful public health infrastructure as a whole

In July 21, 2009, 14-year-old Rida Sheikh returned from St Anne’s School, Pune, with a runny nose and a headache. A quick trip to the neighbourhood physician later, she was back at school the next day. Five days later, she was on antibiotics. Three days after that, she was in the ICU on ventilator support. On July 30, her throat swabs were sent to National Institute of Virology. On August 4, swine flu had claimed its first recorded Indian victim.
Close to six years later, the Influenza A (H1N1) 2009 virus has killed 4,407 Indians according to officially recorded numbers. The extent of its spread is, however, far wider.
One of the reasons the virus has captured public imagination is that it is incredibly infectious. In research led by the World Health Organisation and Imperial College and published in 2013, Maria D. Van Kerkhove and her colleagues estimated that one-fifth of the population in 19 countries including India were infected with the virus in 2009-10, the first known season of the virus after the first case was discovered in Mexico in April 2009. The first official case in India was a 23-year-old man who flew into Hyderabad from the United States on May 19, 2009, and was screened at the airport.
The WHO declared H1N1 swine flu a pandemic in June 2009 when laboratories had identified cases in 74 countries, and only declared the pandemic to have ended in August 2010.
The fatality rates from swine flu however, are low; Ms. Kerkhove and her colleagues’ study estimated it at 0.02 per cent of all cases, meaning that only two out of every 100,000 people infected with swine flu died in 2009-10. These fatality ratios are lower than that of seasonal influenza, though public health experts warn against comparing a newer and less well-surveyed virus with seasonal flu.
Younger targets

Swine flu also disproportionately affected young children and younger people, leading to a larger loss in human years than seasonal influenza.
Officially, the world is in a “post-pandemic period” when it comes to swine flu. “Based on knowledge about past pandemics, the H1N1 (2009) virus is expected to continue to circulate as a seasonal virus for some years to come. While the level of concern is now greatly diminished, vigilance on the part of national health authorities remains important. Such vigilance is especially critical in the immediate post-pandemic period, when the behaviour of the H1N1 (2009) virus as a seasonal virus cannot be reliably predicted,” the WHO said in August 2010, declaring the end of the pandemic.
The threat from swine flu to India now needs to be viewed differently, health experts say, with the virus now settling into what is closer to a seasonal influenza pattern. India had 3,037 cases of swine flu and 275 deaths this year as of Saturday, Dr. Jagdish Prasad, Director General of Health Services, told The Hindu. Rajasthan was proving to be of greatest concern with 497 cases and 73 deaths as of Saturday, Dr. Prasad said, adding that a team had been sent to the state. “It does seem like the virus is settling into a seasonal pattern. As temperatures rise, the number of cases has begun to decline,” he said.
Better monitoring

With more deaths in just over a month than there were in all of 2014, it isn’t yet clear if the virus is spreading faster or if there is better surveillance, or if both are happening, Dr. Manish Kakkar, Senior Public Health Specialist, Communicable Diseases, at the Public Health Foundation of India, said. “Since this is a relatively new virus, we are likely to see outbreaks for several years before it settles down into a seasonal pattern,” he said. “But it is also true that before the pandemic, India never had influenza surveillance in place. There was very little laboratory work, very little data gathering and we weren’t investing much,” he said.
With better monitoring, the number of fatalities should decline as well. A look at state-wise data shows that states with larger numbers of fatalities are also those with less successful public health infrastructure as a whole. “Look at Delhi. It has 706 cases but only five deaths. If detected early, there should be no mortality,” Dr. Prasad said.
The government has begun testing a vaccine, but when it is ready for roll-out, it will be administered only to health workers and high risk individuals, Dr. Prasad said. Influenza vaccines are typically kept for high-risk groups only, and changes in the composition of the vaccine need to be made on a yearly basis, Dr. Kakkar said. “Moreover, there have been several studies showing that the effectiveness of the seasonal flu vaccine in many western countries is extremely low,” he cautioned.

LCA-NP2 makes debut flight

The second prototype of the Navy version of the Light Combat Aircraft took off from the Hindustan Aeronautics Ltd runway at 12.27 p.m. and flew for about 35 minutes.

LCA-NP2, the second prototype of the Navy version of the Light Combat Aircraft, flew for the first time on Saturday.
It took off from the Hindustan Aeronautics Ltd runway at 12.27 p.m. and flew for about 35 minutes, said HAL, the production partner in the indigenous fighter programme. Officials of HAL, the Aeronautical Development Agency, safety certifying agency CEMILAC and other DRDO officials watched the flight.
HAL Chairman T. Suvarna Raju said a main contribution in it was the new and complex landing gear designed for NP-2 by engineers of the Aircraft Research and Design Centre.
Navy test pilot Captain Shivnath Dahiya of the National Flight Test Centre flew the NP-2. The chase aircraft cover was provided by a limited series production aircraft (LSP2) piloted by Gp. Capt. Suneet Krishna (retd).LCA-NP2, the second prototype of the Navy version of the Light Combat Aircraft, taking off on its maiden flight from the HAL runway in Bangalore on Saturday.

Will 'Make in India' reform trade, too?


The Budget must feature key elements of the pending trade and business facilitation reforms to reduce the massive trade transaction costs plaguing the Indian economy

India is yet to become a major global player even after launching extremely bold and successful economic in 1991 after a massive crisis. The main reason is a complete neglect of trade, industrial and business facilitation reforms in the last decade.

First generation reforms (1991-2004) were not followed up, and hard policy decisions on trade, investment, trade facilitation, and regulatory reform were postponed. Strong global growth, coupled with the lagged impact of earlier first generation reforms that unleashed some of the latent entrepreneurial spirit in the Indian economy, led to strong growth between 2004 and 2008. Growth due to global tailwinds was mistakenly perceived as inherent Indian competitiveness, and the urgency and hunger for reforms got dimmed within the bureaucratic and policy establishment.


During this period of policy paralysis, the international trade landscape underwent major changes. International trade today is defined by integrated production networks that combine intermediate goods and services from several countries to produce the final goods and services. Global fragmentation of production is essentially a division of labour based on specialised tasks that need to be combined through an efficient supply chain. Thus, the focus now is to connect to regional and global supply chains. To succeed in that, the massive have to be drastically reduced through trade facilitation and logistical facilitation reforms. Alongside, the business environment has to make doing business a breeze. This will enable MSMEs to participate actively in linking to global supply chains. This in turn will encourage a larger flow of efficiency-seeking FDI with the aim of making India a hub in the supply chain process. This will create jobs and make inclusive growth real. This should be at the heart of the prime minister's recent 'Make in India' initiative. The following section highlights some of the key elements to be covered under it.

First, the success of 'Make in India' needs to be predicated upon the need to diversify services beyond IT-and IT-ES. Indian trade policy in services became IT-centric with over-emphasis in its trade negotiation priorities on Mode 4 (or liberalisation of the movement of people), a critical demand of the Indian IT lobby. It did not focus on the barriers preventing the take-off of other services such as behind-the-border regulatory restrictions on accounting, legal, engineering, architecture, or health-related professional services in partner countries. Global trade in off-shored services is becoming increasingly about trade in tasks, i.e. carrying out specialised functions within the broader accounting or legal service professions. With the emergence of big data as a driving force of innovation and business development, data analytics and management will emerge as a huge area of opportunity in professional services exports for India. Trade barriers related to regulatory constraints on undertaking certain types of legal or accounting tasks offshore, and barriers related to emerging issues in data privacy and data restrictions, are now the areas of maximum concern for the future growth of off-shore professional and technical services model (such as BPO or KPO). This requires urgent domestic regulatory reforms of the services sector in India and negotiation of such trade barriers within trade agreements.

Secondly, the objective of 'Make in India' to transform India to become a major global player is linked to strategic regionalism. India's regionalism efforts till now were largely uncoordinated andwere put into motion with modest success. India also invested a lot of negotiating energy in FTAs with industrialised economies like Japan and the EU. These agreements follow the old 20th century model of trade negotiating strategy - focus on tariffs and try to keep sectors that are most sensitive out of the tariff reduction schedule. Deeper engagement on technical standards and related barriers, trade facilitation, or on the regulatory aspects of services market access - the issues that define effective market access in this production chain-related integrated global economy - are not a part of such agreements.

Since India's existing agreements or those currently being negotiated (for example, EU-India) remain shallow in terms of their level of ambition, market access gains will be marginal, especially with industrialised-country partners like Japan and EU, given that tariffs there are already low, and agriculture and a liberalised visa regime are not included in these FTAs. The PM's visit to Japan has laid the groundwork for a much deeper bilateral economic partnership that goes beyond the mandate of the existing FTA between the two countries.

Given the current global scenario, it would make sense for India to look to a deeper regionalism that incorporates the 21st century trade negotiating mandate. This would mean reworking its trade engagement with SE Asia and replacing existing shallow agreements with ones that have a wider mandate, as well as simultaneously considering joining, or at least being ready to conform to the TPP's evolving gold standard in trade policy, so that India is not left out of the largest global supply chain. The RCEP, where India is an ambitious agenda setter on new trade barriers rather than a defensive player trying to cherry-pick domestic winners and losers, provides another avenue. The entire focus now should be towards a link to regional supply chains of Asean countries. This will require policies to attract FDI that would help create these regional linkages. Essentially, trade negotiations would have to be complemented by greater focus on domestic reform - i.e., business facilitation to create a more competitive and diverse manufacturing base in India, creating more opportunities to find a niche in the regional production network.

The critical element of this regionalism is connectivity. An ambitious long-term vision to ensure economic connectivity between India and the rest of Southern Asia is critical to India's trade policy objectives in pursuing regional agreements with Asean economies. Connectivity would not only encompass road, rail, air, and sea linkages but also linkages between Indian and Southern Asian energy networks (pipelines and electricity grids). It would also include institutional mechanisms to facilitate movement of people (thus enabling services trade), customs and other regulatory harmonisation, and liberalisation of education, health, banking and financial services.

One must acknowledge the importance attached to by our PM to trade and business facilitation reforms which featured in the first of the new government, and soon thereafter highlighted by the PM himself in adopting 'Make in India' as a top policy reform initiative. This is totally consistent with India's dynamic comparative advantage and with the evolving global trade and investment landscape. The task ahead is not easy. But it is well within our reach. We just need the political will to keep the momentum of trade and business facilitation reforms going and continue to treat this as a top priority reform initiative. Hopefully, the forthcoming Budget will feature key elements of the outstanding trade and business facilitation reforms to substantially reduce the massive trade transaction costs plaguing the Indian economy.

'The freedom of religion,Barack Obama

Many times as President, I've been reminded of a line of prayer that was fond of. She said, "Keep us at tasks too hard for us that we may be driven to Thee for strength." I've wondered at times if maybe God was answering that prayer a little too literally. But no matter the challenge, He has been there for all of us. He's certainly strengthened me "with the power through his Spirit," as I've sought his guidance not just in my own life but in the life of our nation.

Now, over the last few months, we've seen a number of challenges - certainly over the last six years. But part of what I want to touch on today is the degree to which we've seen professions of faith used both as an instrument of great good, but also twisted and misused in the name of evil.

As we speak, around the world, we see faith inspiring people to lift up one another - to feed the hungry and care for the poor, and comfort the afflicted and make peace where there is strife. We heard the good work that Sister has done in Philadelphia, and the incredible work that Dr Brantly and his colleagues have done. We see faith driving us to do right.

But we also see faith being twisted and distorted, used as a wedge - or, worse, sometimes used as a weapon. From a school in Pakistan to the streets of Paris, we have seen violence and perpetrated by those who profess to stand up for faith, their faith, professed to stand up for Islam, but, in fact, are betraying it. We see (the Islamic State), a brutal, vicious death cult that, in the name of religion, carries out unspeakable acts of barbarism.

We see sectarian war in Syria, the murder of and in Nigeria, religious war in the Central African Republic, a rising tide of anti-Semitism and hate crimes in Europe, so often perpetrated in the name of religion.

So how do we, as people of faith, reconcile these realities - the profound good, the strength, the tenacity, the compassion and love that can flow from all of our faiths, operating alongside those who seek to hijack religious for their own murderous ends?

Humanity has been grappling with these questions throughout human history. And lest we get on our high horse and think this is unique to some other place, remember that during the Crusades and the Inquisition, people committed terrible deeds in the name of Christ. Michelle and I returned from India - an incredible, beautiful country, full of magnificent diversity - but a place where, in past years, religious faiths of all types have, on occasion, been targeted by other peoples of faith, simply due to their heritage and their beliefs - acts of intolerance that would have shocked Gandhiji, the person who helped to liberate that nation.

So this is not unique to one group or one religion. There is a tendency in us, a sinful tendency that can pervert and distort our faith. In today's world, when hate groups have their own Twitter accounts and bigotry can fester in hidden places in cyberspace, it can be even harder to counteract such intolerance. But God compels us to try. And in this mission, I believe there are a few principles that can guide us.

And, first, we should start with some basic humility. I believe that the starting point of faith is some doubt - not being so full of yourself and so confident that you are right and that God speaks only to us, and doesn't speak to others.

Our job is not to ask that God respond to our notion of truth - our job is to be true to Him, His word, and His commandments. And we should assume humbly that we're confused and don't always know what we're doing and we're stumbling towards Him, and have some humility in that process. And that means we have to speak up against those who would misuse His name to justify oppression, or violence, or hatred with that fierce certainty. No God condones terror. No grievance justifies the taking of innocent lives, or the oppression of those who are weaker.

And so, as people of faith, we are summoned to push back against those who try to distort our- any religion - for their own nihilistic ends. And here at home and around the world, we will constantly reaffirm that fundamental freedom - freedom of religion - the right to practice our faith how we choose, to change our faith if we choose, to practice no faith at all if we choose, and to do so free of persecution and fear and discrimination.

There's wisdom in our founders writing in those documents that help found this nation the notion of freedom of religion, because they understood the need for humility. They also understood the need to uphold freedom of speech, that there was a connection between freedom of speech and freedom of religion. For to infringe on one right under the pretext of protecting another is a betrayal of both.

But part of humility is also recognising in modern, complicated, diverse societies, the functioning of these rights, the concern for the protection of these rights calls for each of us to exercise civility and restraint and judgement. And if, in fact, we defend the legal right of a person to insult another's religion, we're equally obligated to use our free speech to condemn such insults and stand shoulder-to-shoulder with religious communities. Just because you have the right to say something doesn't mean the rest of us shouldn't question those who would insult others in the name of free speech. Because we know that our nations are stronger when people of all faiths feel that they are welcome, that they, too, are full and equal members of our countries.

So humility, I think, is needed. And the second thing we need is to uphold the distinction between our faith and our governments. The United States is one of the most religious countries in the world. And one of the reasons is that our founders wisely embraced the separation of church and state. Our government does not sponsor a religion, nor does it pressure anyone to practice a particular faith, or any faith at all. And the result is a culture where people of all backgrounds and beliefs can freely and proudly worship, without fear. It's from the heart.

It's not the case in authoritarian governments that elevate an individual leader or a political party above the people, or, in some cases, above the concept of God Himself. So the freedom of religion is a value we will continue to protect here at home and stand up for around the world.

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