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    Please see notes to Table I. There are upside risks to the baseline with the synchronised cyclical rebound, revival of global trade and easy financing conditions reinforcing each other.

    If global growth turns out to be 50 bps over the baseline, it could strengthen domestic growth by 20 bps above the baseline and raise domestic inflation by around 10 bps. On the other hand, protectionist policies, continuing uncertainty associated with the pace and timing of normalisation of monetary policy in the US and other systemic central banks, and higher crude oil prices pose downside risks to global demand.

    There remains uncertainty, however, about the magnitude and timing of implementation of the HRA award by the state governments for their employees and these are, therefore, not included in the baseline inflation path.

    Assuming that all state governments implement increases in pay and allowances of the same order as the central government during the course ofCPI inflation could turn out to be around bps above the baseline on account of the direct statistical effect of higher HRAs, with additional indirect effects emanating from higher demand and increase in inflation expectations.

    As noted earlier, monetary policy should look through the direct statistical effects, while being vigilant about indirect effects working through inflation expectations.

    Changing market perceptions about the pace and timing of monetary policy normalisation in the US, along with domestic inflation, fiscal slippage and current account balance developments, have been important factors driving exchange rate movements in the recent period and are likely to remain so in the near-term. With economic activity gathering pace in the euro area, uncertainty surrounding normalisation plans of the European Central Bank is likely to add to financial market volatility.

    The US macroeconomic policy mix — easy fiscal policy in an environment when monetary accommodation is being withdrawn — can accentuate market volatility. Assuming a depreciation of the Indian rupee by around 5 per cent relative to the baseline, inflation could edge higher by around 20 bps and the boost to net exports could increase growth by around 15 bps. On the other hand, with growth picking up in recent months, sound domestic fundamentals and the various initiatives taken by the Government to boost investment, India may continue to be an attractive destination for foreign investment, which could put upward pressures on the currency.

    An appreciation of the Indian rupee by 5 per cent in this scenario could soften inflation by around 20 bps and reduce growth by around 15 bps in Given the sensitivity of the agricultural sector to rainfall conditions, the actual growth and inflation dynamics would critically depend on the progress of the monsoon.

    A deficient monsoon could lower overall GDP growth by around bps in Furthermore, the Union Budget has proposed revised guidelines for arriving at the MSPs for kharif crops, although the details are not yet fully available. If the monsoon is deficient and the budget proposals on MSPs lead to higher food prices, headline inflation could rise above the baseline by around 80 bps. An empirical assessment presented in the MPR of October suggests that: Given the present levels of the combined centre and states fiscal deficit, an increase in the fiscal deficit to GDP ratio by bps could lead to an increase of about 50 bps in inflation.

    Apart from its direct impact on inflation, fiscal slippage has broader macro-financial implications, notably on economy-wide costs of borrowing which have already started to rise. These may feed into inflation and elevate it further. Rural and infrastructure sectors are identified as thrust areas in the Union Budget, which could energise aggregate demand. With the acceleration in global trade, the Indian economy could benefit from buoyant external demand.

    In addition to the usual monsoon related uncertainty, inflation faces upside risks from a variety of other sources, especially due to the oil prices, the fiscal slippage, and the statistical effect from the expected increases in HRAs by the state governments, The purely direct statistical impact of the HRA adjustment on CPI will be looked through while formulating monetary policy.

    Uncertainty over the pace and timing of monetary policy normalisation by the systemic central banks in advanced economies, protectionist tendencies and fears of a trade war pose significant risks to the baseline inflation and growth paths.

    Prices and Costs Consumer price inflation rose sharply in Q3: It moderated somewhat in Q4 on a delayed seasonal easing of prices of vegetables.

    Industrial input costs increased through H2: Wage pressures have remained moderate in both the organised and rural sectors. The course of consumer price index CPI inflation in Q3 was significantly influenced by house rent allowance HRA increase for central government employees from Julyfollowing the recommendations of the 7th central pay commission CPC.

    The HRA impact on inflation excluding food and fuel was even larger at around 75 basis points, adjusting for which it would have been lower at 4. Food inflation rose sharply in Q3 pushed by the unseasonal pick-up in prices of vegetables; and fuel inflation accelerated due to an uptick in inflation in liquefied petroleum gas LPGkerosene, coke and electricity. In Q4, headline inflation eased to 4.

    Excluding the HRA impact, headline inflation was 4. Actual inflation outcomes in Q3 were in alignment with the direction of the projected trajectory, but in levels, they turned out to be 35 basis points higher than forecast due to a combination of shocks. First, an unseasonal spike in the prices of onions and tomatoes during October-November caused prices of vegetables to soar, propelling inflation in this category to close to 30 per cent in December.

    Second, fuel inflation rose sharply during October-November on the back of an escalation in LPG prices. Third, international crude oil prices started firming up further from October. The pass-through to CPI inflation was, however, muted in Q3 due to excise duty cuts in early October and lagged mark-ups by oil marketing companies OMCs. In Q4, most of the factors imposing these upward price pressures reversed.

    The winter downturn in prices of vegetables accentuated in January. Domestic LPG prices also eased in February, tracking international prices. As a result, the deviation between the actual and the projected inflation narrowed in Q4 to 15 bps Chart II.

    While prices of vegetables did undergo a shallower than usual moderation in December, an unfavourable base effect came into play, pulling up inflation to a peak of 5.

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    In Q4, headline inflation moderated with a fall in momentum due to a delayed but steep reversal in prices of vegetables Chart II. While median and modal inflation were similar, the continuing deflation in pulses gave the inflation distribution a considerable negative skew this year in contrast to the positive skew generated by high sugar and pulses inflation during Chart II. Diffusion indices 3 of price changes in CPI items suggest that on a seasonally adjusted basis, after an uptick in Q3: The lagged impact of the still negative output gap and moderation in nominal rural wages also contributed to lower inflation during this period, while the firming up of crude oil prices imparted upward pressure Chart II.

    Decomposing inflation into its goods and services components reveals that the pick-up in inflation from June to December and its reversal from January largely emanated from prices of non-durables, particularly perishables; while those of services registered a sustained increase, primarily due to increase in housing inflation from 4.

    Housing alone contributed over 90 per cent of the observed increase in services inflation during this period. Turning to the drivers of food inflation in the second half of the year, the food and beverages sub-group contributed around 40 per cent to overall inflation, up from just 12 per cent during the first half.

    Adequate buffer stocks kept inflation in cereals generally under check. With cereals inflation under check, the pick-up in food inflation was largely on account of prices of vegetables — specifically tomato and onion — and intermittent uptick in prices of animal protein-rich food items. Continued decline in prices of pulses exerted a strong downward pull.

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    Vegetables, which account for 13 per cent of the food group in CPI, were the principal drivers of food inflation. Price pressures in vegetables started building up from June following a fall in mandi arrivals, especially in onions and tomatoes Chart II.

    While tomato prices recorded some contraction during August-September, the extended South-West monsoon in October in several important tomato-producing centres, especially in states like Karnataka, Andhra Pradesh, Telengana, Madhya Pradesh and Odisha, led to severe crop losses and tomato prices shot up again in November. Another driver was the inflation in onions, which rose from - 14 per cent in April to per cent in December.

    Again, while unfavourable weather was a factor, large procurement of onions by a few state governments was the principal cause of the price spike. Post-Novemberonion and tomato prices plunged with the arrival of fresh winter crops. Supply management measures by the government, especially in case of onions, helped in easing prices. The State-owned canalising agency viz. The central government also advised states to take measures by way of licensing, imposition of stock limits and movement restrictions to balance supplies.

    In case of potatoes, delayed sowing in West Bengal — a key growing state — due to extended monsoon showers in October, induced price pressures. However, carry-over stocks from the previous crop reined them in. Analysis based on CPI data suggests that there is no significant difference in the m-o-m changes of prices of vegetables in urban and rural areas — the spike in prices of vegetables uniformly impacted rural and urban India 5.

    Most of the demonetisation-induced fall in prices of vegetables reversed as is evident from the trend and cyclical components of CPI-Vegetables Chart II. The other food components that recorded uptick in prices, albeit unevenly, were protein-rich items such as egg, meat and fish. Inflation in egg prices jumped from 0. Pulses, with a weight of 5 per cent in the food group, contributed significantly to food inflation dynamics during the year.

    The contribution of pulses to overall inflation shifted from 6. At a granular level, the contribution of arhar in overall pulses inflation declined consistently from Julywhile the contribution of gram prices, turned increasingly negative month after month till December With the production for pulses duringas per the second advanced estimates, being marginally higher at Arhar and urad prices remain below their minimum support prices MSPs at the mandi level in the major producing states viz.

    Corrective measures were initiated by the government during the course of the year such as removal of export ban on all pulses and an imposition of 60 per cent import duty on gram and 30 per cent import duty on masoor in order to support prices and provide some relief to farmers. Sugar and spices are the other items which played an important role in the overall moderation of food inflation.

    Inflation in sugar and confectionery, which was in double digits all through averaging about 20 per centdeclined significantly during the year, largely due to measures facilitating imports and on expectations of higher domestic production the sugarcane production foras per the second advanced estimates, is With sugar prices easing rapidly, however, the central government has again raised the import duty on sugar to per cent and re-imposed stockholding limits on sugar sales for February and March Prices of spices have moved into deflation since June on account of a fall in prices of dry chillies, turmeric, dhania, and black pepper.

    Fuel and light inflation, which was at 5. Since the migration of subsidy payments on LPG to banks under the direct benefit transfer scheme, LPG prices track international prices closely. Administered kerosene also registered sustained price increases as OMCs raised prices in a calibrated manner.

    Fuel and light inflation since December has eased driven by the downturn in LPG inflation, reflecting international price movements, as well as on account of moderation in firewood and chips and dung cake inflation. Turning to the underlying inflation dynamics, CPI inflation excluding food and fuel edged up from the June trough of 3.

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    The substantial increase largely reflected an increase in housing inflation Chart II. Inflation in CPI excluding food and fuel, as also petrol and diesel, increased from June by basis points to 5. While the HRA impact explained much of this increase, petrol and diesel initially in Q3, had a dampening effect as much of the pass-through of surge in international crude oil price to domestic prices was delayed to the second half of January Further, excluding the four volatile items — petrol, diesel, gold and silver — and housing, the inflation in February was 70 basis points lower at 4.

    For goods, inflation picked up across commodity groups: Services inflation increased by basis points over June Chart II. The contribution of transport services also edged up in recent months, as fuel prices were transmitted to increase in transportation fares. In contrast, communication services inflation has remained muted due to low cellular services inflation.

    Thus, the HRA impact was reflected only in January After the June trough, inflation measured by trimmed means in the CPI hardened for the rest of Thereafter, all trimmed means, including the weighted median, edged down, reflecting, inter alia, the broad-based softening of food prices Chart II. Y-o-y growth in farm input costs slipped temporarily into negative territory in January Chart II.

    The rise in global crude oil prices and the hardening of metal prices fuelled the rise in input costs from August onwards and contributed to the turnaround in domestic non-farm input costs as they got passed on to inputs such as high speed diesel, aviation turbine fuel, naptha, bitumen, furnace oil and lube oils. Among other industrial raw materials, domestic coal inflation generally remained high during the year, tracking the surge in international coal prices and domestic supply shortages.

    However, inflation in other inputs depicted a mixed behaviour.
    The collection consist of clothing, orders and medals, flying equipment, personal records and other effects used in the course of action against the island by Unteroffizier Sergeant Hans Hassemer.

    The collection is being placed on permanent display at the Lascaris War Rooms as part of the interpretation about the air war in Malta during the period — The Lascaris War Rooms itself is a massive underground space excavated by the British during the war to offer additional accommodation space for the personnel who worked in the nearby underground War HQ that runs under the Upper Barracca Gardens in Valletta. Late in it started being converted into a full-blown modern War Headquarters from where the last stages of the air war over Malta were fought and the invasion of Sicily was direct between 9th July and 17th August FWA is currently working on a large-scale exhibition on the latter to mark its 75th anniversary.

    This is to be located within the Lascaris War Rooms and is to be completed this year. The policy specifically states that: FWA is not against development but will never accept the systematic and uncontrolled destruction of our built heritage in the name of ugliness and mere utility.

    Malta must learn to do things properly and that also applies to planning its future development whether in providing new housing or for its industrial needs.


    Destroying what is beautiful is not an option. We must stop the systematic uglification of this one time charming island. Thornycroft Ltd on 24 January Her initial assignment was to perform escort duties between Scapa Flow and Iceland. She remained in this theatre for the first part of the war, during which time she served with the ill-fated Arctic convoy PQ 17 in Junefrom which twenty-four ships were lost.

    Only two months later she took up the role of close escort in the Pedestal convoy to Malta. During the fierce attacks that dogged the convoy, Ledbury claimed three enemy aircraft destroyed and five damaged, and was one of three destroyers that helped the crippled oil tanker Ohio into the Grand Harbour. She later took part in the Allied landings in Sicily, Salerno, and operations in the Adriatic and Aegean.

    Penn was launched on 12 February Also like the Ledbury, the Penn was involved in Operation Pedestal in It ran for issues from 25 January until it ceased publication on 21 November The Victor told adventure tales in comic book format. It featured many stories that could be described as "Boy's Own" adventures.

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    In particular, each week the front cover carried a story of how a medal had been won by British or Commonwealth forces during the Great War or the Second World War. Ohio Runs the Gauntlet to Malta! We are reproducing today three paintings of this entrance executed by the celebrated Schranz painters from and post These images are taken from the new Fondazzjoni Patrimonju publication 'Celebrating Years of Shranz - This entrance was reformed into a three gated one by the British in line with their building of the Lascaris Battery in for which they had also reshaped part of the Saluting Battery walls and installed the long flight of hard stone steps reached from present day St.

    The rooms to the left are two Ordnance Rooms built for servicing the Saluting Battery and later extended to accommodate the Master Gunner responsible for the Valletta Eastern Defences and his family. InFWA was awarded a planning permit to undertake this project which was appealed by a third party but won again.

    After five years, FWA is still waiting for the responsible authorities to do what is needed for it to give start to this project which will complete its fabulous restoration of the Saluting Battery which is now officially the most viewed heritage attraction in Malta.

    The first model to be shown here is the 9-pdr RML 6-cwt gun mounted on a wooden block trail carriage. All others will follow in the coming days. This type of carriage was widely used in the colonies especially in India.

    It was produced for use by field, horse and naval artillery and fired a projectile weighing approximately 9 pounds 4. Inthe 9-pdr RML 8cwt field gun was selected by the Royal Artillery to replace the more sophisticated Armstrong pdr Rifled Breech Loader RBL of the same weight which had acquired a reputation for unreliability. The gun was rifled using the system developed by William Palliser, in which studs protruding from the side of the shell engaged with three spiral grooves in the barrel.

    Ina 6 cwt version was introduced for horse artillery and was later adopted for field artillery use, replacing the 8 cwt version. All variants used the same ammunition, which took the form of shrapnel shell, case shot and common shell.

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    The 9 pounder remained in front-line service with the Royal Artillery until when the pdr RML pounder 8 cwt gun was introduced, however it remained in use with colonial forces until and saw action in the Anglo-Zulu War ofthe First Boer War of [1] and the Anglo-Egyptian War in Egypt. In the process, the top part of the plinth was severely damaged with some of its over-sized capping stones dislodged and toppled over. The rest of the structure sustained similar damage. The stone plinth dates back to the Hospitaller period and originally mounted a large timber crucifix.

    This crucifix was removed from it during an act of incredible bravado carried out by members of the Zejtun Militia to spite the occupying French enclosed in Fort San Salvatore but a few meters away during the French Blockade in The crucifix was marched from there to Zejtun were it was re-erected in the town square on the right side of the parish church where it remains to this day.

    The restoration of the COR is almost finished following painstaking work by our dedicated maintenance unit. The chamber is being finished in its late s livery which is the way it looked when it was permanently closed down in The COR was fully modernised in giving it the configuration in which it had survived to this day. The former served for the filtering of all radar information about the presence of airborne aircraft approaching or in the vicinity of the island.

    Once verified this information was relayed to the Fighter Operations Room for plotting onto its table. The latter served entirely for the coordination of the land-based anti-aircraft defence of the island during a raid.

    It is to be said that the job of the Fighter Controller responsible from the Fighter Operations Room was that of coordinating the air defence of the island whether using just fighters or guns or both. The restoration of this most important part of the underground War Headquarters in Valletta is generously funded by the Malta Airport Foundation. This is the fifth year in succession that FWA has been involved in this prestigious sea race.

    The Rolex Middle Sea Race is unquestionably a very prominent and popular one. In all, yachts an in excess of a thousand crew from 30 different countries will take part.

    Starting from the Grand Harbour its course will cover nm and will circumnavigate Sicily. Tony a native of the Inner- Hebrides was a loyal supporter of Fondazzjoni Wirt Artna and its long-term restoration of Fort Rinella and its Armstrong ton gun at Kalkara.

    Indeed, he was one of the very first visitors to make it to the fort as soon as FWA had embarked on its restoration some 30 years ago.


    Accompanied by his charming family including his grandchildren for always found time to explain all the work that we had put into the fort over the years. Tony was a solar person who was a pleasure to talk to and he is sorely missed by all.

    The bench is funded by the Roe family and is being placed along one side of the Armstrong ton gun emplacement, a favourite spot with Tony each time he would venture to the Fort to a have a look at the big gun.

    At the going down of the sun and in the morning We will remember him. Immediate action is required to shore up the collapsed part and to save this important historic building. The collapsed building material ought also to be salvaged to allow for the reinstatement of the collapsed part.

    This will ensure that the original construction pattern and finishes employed in the construction of this building will be matched. The Planning Authority had agreed with that and had obliged the developer not only to retain but also restore the building complete with its WW2 edition.

    At the time, FWA had offered the developers its free services to help restore the building but never heard anything back. Following the latest collapse, FWA has written again to the Planning Authority and the Superintendence for the Cultural Heritage to take the necessary steps to save this building. We all hope that this incident will not serve as a convenient excuse to have the historic building demolished.

    She became a volunteer Air-Raid Warden on 22nd May and remained so throughout the war. Her husband Maurice Camilleri was also a member of the same unit as were others from both sides of the family.

    Many of the superintendents were leaders of the Scout Movement, who in were called to attend courses given by British officers and some Maltese doctors, about poisonous gas because of a possible air attack.

    Days before Malta was attacked the superintendents occupied centres, generally state schools, about ten all over the island. Each centre had its own doctor, air-raid wardens and constables, whose duty it was to look for and carry the casualties to the centre.

    Recent Aquisition Fondazzjoni Wirt Artna has acquired a large collection of British wartime printed propaganda material including some posters of various sizes. Other funds went to buy medical supplies for the British Red Cross and the St.

    The fundraising was mostly carried out by the Anglo-Maltese League at a time when the war in Malta was still in its infancy.

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    The object in question is an M. It has an overall length 4-in less taila body diameter of When filled it weighed lbs. The bomb had an exploder container screwed in its nose and base plate. Amatol is a highly explosive material made from a mixture of TNT and ammonium nitrate. TNT or Trinitrotoluene is a powerful yellow chemical compound with convenient handling properties whose explosive yield is considered to be the standard measure of bombs and other explosives.

    Indeed this type of bomb was provided with dual suspension lugs single and double which made it possible to use by both British and U. Originally the aerial bomb was donated to Steve Cali by an elderly Siggiewi farmer who then kindly passed it on to Fondazzjoni Wirt Artna.

    It was used as an agricultural implement to flatten the surface after the annual plough. Missing parts such as the nose exploder and tail section are currently being sourced. Once completed this impressive wartime piece of aerial ordnance will be placed on display in the new Operation Husky museum exhibition at the Lascaris War Rooms which is to be completed by mid-next year in time to mark the 75th anniversary of the Allied invasion of Sicily.

    During World War Two, the island was protected by a very dense anti-aircraft artillery cover which along RAF fighters won the Battle for Malta against great odds. The land based anti-aircraft defence was provided by two Artillery Brigades consisting of British and Maltese Regiments: The regiment was then sent to Malta and arrived by convoy Operation Substance on 24th July The regiment then moved under the brigade to Dunkirk on 17 September and remained there into earlywhen the brigade came under II Canadian Corps in the north.

    The formation badge consists of dark blue shield superimposed by a white St. Over five hundred such badges worn by British, Dominion, Indian and Colonial troops are known to have been used.

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    The formation badge played an important role in war as a distinctive sign, and as a means of promoting esprit de corps. At the end of World War Two the War Office decided to retain their use and encourage the introduction of new ones and with time they had become an established feature of British Army military battle dress all the way up to the present.

    Press Event held at the Underground War H. Extensive work has been carried out and the restoration of an original military wall map, which measures some 20m across, is in its final stages.

    The press had the opportunity to meet with the specialist conservator, Ms Francesca Muscat, who is restoring the map, and to see another two older maps accidentally found underneath this map and also see the latest achievements in the restoration of the War HQ complex.

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