A British brokerage on Tuesday cut India's FY22 GDP growth estimate by a sharp 0.80 per cent to 9.2 per cent, saying the economic impact of the second wave of infections has been deeper than initially expected. Barclays chief India economist Rahul Bajoria also mentioned the slow pace of vaccinations in the country and the rolling lockdowns across many states for the estimate. It can be noted that last month has seen a slew of similar forecasts from analysts, even as the RBI maintained its estimate of a 10.5 per cent growth in real GDP.
Though COVID-19 and the subsequent lockdown left a trail of economic devastation on most countries, India can potentially build upon three positive aspects - push in the rural economy, stronger federalism and a huge consumption base, former RBI Governor Duvvuri Subbarao Rao has said. In his foreword on a Telugu book titled "Maandhyam Mungita Desam" (Nation in Recession) authored by Tummala Kishore, he said the challenge for the government in the months and years ahead is clear: to put the economy back on a healthy growth trajectory and ensure that growth is inclusive, with lower income households too enjoying the benefits of rapid growth.
With Nirmala Sitharaman's Budget presentation lasting for about one hour 31 minutes on Tuesday, the finance minister's budget speech this year became the shortest ever since 2019.
Barry Eichengreen, professor of economics and political science, University of California, Berkeley, analyzes the transparency of the Reserve Bank of India, the growth rate of the Indian economy and why he feels globalisation can never be rolled back.
'Narasimha Rao asked me why China was doing so well in attracting foreign investments and I gave my frank opinion.' 'I told him that giving thrust to exports had to be a national effort.' 'But in India, the system was very centralised in the Government of India and the state governments had no role to play.'
'Increased allocations for MNREGA could have provided the much needed push to rural demand and consumption at a time when recovery continues to remain uneven.'
Accusing the Congress of creating obstacles in the path of growth and economy, he declared that the government would try to get the bill passed with the help of parties
In August, domestic equity markets garnered one of the highest foreign portfolio investor (FPI) flows since the outbreak of the pandemic in 2020, despite the US Federal Reserve standing firm on unwinding its stimulus measures to control inflation. FPIs pumped in over Rs 51,000 crore ($6.4 billion) in August, the most since December 2020 and the third-highest tally since March 2020-the month the Covid-19 pandemic roiled global markets. This was the second consecutive month of positive foreign flows. In the preceding nine months, FPIs had yanked out over $32 billion or Rs 2.2 trillion.
The finance minister has stayed true to her commitment to fiscal consolidation, even though the pace of the decline in the deficit could have been faster, notes A K Bhattacharya.
The sweeping economic sanctions on Russia - the second largest producer of crude oil - following its invasion of Ukraine late last month can cull global and domestic growth along with the added pains of higher inflation and currency depreciation, RBI Deputy Governor Michael Patra has said. And if the war lingers on, it can even lead to deglobalisation and even a recession, he added. The ongoing war has only added a whole new dimension to the outlook, and in fact, a weighty downside, Patra said in a lecture at the industry lobby IMC on Friday evening.
'The fiscal pressure will be there, but the intent of the government behind this move is to spur demand and growth.'
India's economy grew by 1.6 per cent in the fourth quarter of 2020-21, restricting the full-year contraction to 7.3 per cent, official data showed on Monday. The fourth quarter growth was better than the 0.5 per cent expansion in the previous October-December quarter of 2020-21. The gross domestic product (GDP) had expanded by 3 per cent in the corresponding January-March period of 2019-20, according to data released by the National Statistical Office (NSO).
'A buoyant market economy is one which is led by the innovation and imagination of private persons,' notes Ajay Shah.
Religion matters. Aspirational India is still poor. India admires strong leaders. India values decency. Shreekant Sambrani highlights the reasons why the BJP pulled off improbable victories in the Hindi heartland.
The World Bank has approved loans totalling $1.75 billion (about Rs 13,834.54 crore) to fund India's PM Ayushman Bharat scheme and private investment to boost the economic growth. Of the total loan, $1 billion will go towards the health sector, while the rest $750 million will be in the form of development policy loan (DPL) to fill the financing gaps through private sector investment in the economy. The World Bank Board of Executive Directors approved two complementary loans of $500 million each to support and enhance India's health sector.
Bolstered by improved domestic demand, India's services sector expanded for the fourth consecutive month in January as business activities quickened and rising business optimism is set to sustain the growth momentum, a monthly survey said on Wednesday. The seasonally-adjusted India Services Business Activity Index rose from 52.3 in December to 52.8 in January, pointing to a quicker expansion in output. The index was above the critical 50 mark that separates growth from contraction for the fourth month in a row during January.
Fresh investments by corporates up just 5.8% in FY17, lowest since 1992
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Govt expects 15.8% growth in revenue collection this year.
Macroeconomic management is usually a lot more comfortable with lower fiscal deficits. The sooner we get there, the better for the economy, says former Chief Economic Adviser to the Government of India Shankar Acharya.
The state's revenue receipts might not afford various freebies announced by the parties, unless revenue deficit and hence fiscal deficit is widened.
Prime Minister Narendra Modi asserted on Wednesday that his government's action against corruption has made some people angry but he will not turn back in this fight against graft and nepotism, however big an alliance his rivals form against him.
Foreign Direct Investment flows to India in 2021 were 26 per cent lower, mainly because large M&A deals recorded in 2020 were not repeated, the UN trade body has said.
India's manufacturing sector activities eased slightly in February but firms were upbeat as they responded to increased new work intakes by stepping up production and purchasing activities, a monthly survey said on Monday. The seasonally-adjusted IHS Markit India Manufacturing Purchasing Managers' Index (PMI) fell marginally to 57.5 in February from 57.7 in January, indicating that even though the pace of growth eased from January it remained sharp in the context of historical data. The headline figure for February remained above its long-run average of 53.6, the survey noted. In PMI parlance, a print above 50 means expansion while a score below 50 denotes contraction.
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Given the 18-day government shutdown in the US and the likelihood for continued wrangling between the Democrats and the Republicans, it now looks like tapering may be off the table till the first quarter of 2014.
Widening of the tax base, doing away with cess and surcharge, improvement in compliance and moderation in tax for emerging sectors are some of the suggestions submitted to the Finance Ministry ahead of the Budget by Think Change Forum (TCF). Experts are of the opinion that there is a need to grow tax revenues for the government to drive economic growth and make investments in developmental activities, TCF, the think tank said in a statement. Towards this end, poor compliance was identified as a weak link in achieving targeted collections leading to complex issues like overtaxing, complicated tax structures, rising litigation, among others.
Prime Minister Modi has said it is their small units that drive the Indian economy.
Hussain said the new government had inherited an "empty treasury" while the prices of oil were shooting up.
Industry body CII has pitched for a reduction in personal income tax rates, decriminalisation of the goods and services tax and a relook at the capital gains tax rates as part of its agenda presented to the government for the forthcoming Budget. Arguing that the GST law already contains adequate penal provisions for deterrence against evasion of taxes, CII has suggested decriminalisation of GST law. Also, the applicability of prosecution provisions should not be based on the absolute amount of tax evasion but should be based on real intent to evade the taxes and a certain percentage of the tax payable, it stated.
Bharti group-backed OneWeb and New Space India Limited, the commercial arm of the Indian Space Research Organisation, have entered into an agreement that will help ensure OneWeb completes its satellite launch programme. The first launch with New Space India is expected in 2022 from the Satish Dhawan Space Centre (SDSC) SHAR, Sriharikota. The launches will add to Low Earth Orbit (LEO) satellite communications firm OneWeb's total in-orbit constellation of 428 satellites -- 66 per cent of the planned total fleet -- to build a global network that will deliver high-speed, low-latency connectivity.
In the midst of third wave of COVID-19, Finance Minister Nirmala Sitharaman has come up with an impactful Budget which is balanced, fiscally prudent and growth-oriented, the USA India Chamber of Commerce has said. President of the Boston-based USA India Chamber of Commerce (USAIC) Karun Rishi, however, said it is a matter of concern that the budget lacks tangible measures to increase revenue generation. "Opting to keep the fiscal deficit at 6.9 per cent and increase capital expenditure by 35 per cent is a masterstroke. "The annual budget estimates the effective capital expenditure of Rs 10.68 lakh crore in 2022-23, making up about 4.1 per cent of the GDP," he said. "A phenomenal increase in the government's capital expenditure is likely to facilitate the expenditures on infrastructure and create jobs.
The Reserve Bank of India on Thursday kept the benchmark interest rate unchanged at 4 per cent and decided to continue with its accommodative stance against the backdrop of an elevated level of inflation.
'There is a vision in the Budget, and the vision is to take India from a largely agrarian, rural economy into a fast-track digitalised economy.'
Rallying behind the government, the BJP decided to launch a counter-offensive against the opposition "disinformation campaign" on the controversial land bill with Prime Minister Narendra Modi asserting that his growth model was pro-poor.
Here's the full text of address to the nation by President Droupadi Murmu on the eve of the Republic Day 2023.
The Monetary Policy Committee (MPC) may go for a hike of up to 0.25 per cent in the reverse repo rate at which the RBI absorbs excess liquidity and leave the repo rate at which it lends, to narrow the policy rate corridor, a British brokerage said on Thursday. "Growth concerns amid spread of the Omicron variant and relatively benign inflation out-turns provide the RBI with enough room to maintain its growth-supportive monetary policies," analysts at Barclays said, ahead of the resolution announcement next week. The RBI will hike the reverse repo rate by 0.20-0.25 per cent, given its liquidity management actions, it said.
Growth in India will pick up from current levels, says LEO Puri, managing mirector, UTI Asset Management Company.
'If you look at the order books of capital equipment companies or money deployed on the ground, there is forward movement in terms of actual investment by the private sector.'
'Domestic will remain very much the core of what IndiGo is.' 'But the emphasis in our next growth phase is going to be on the international side.'
Modi stressed his government has created a 'security cover' to ensure good heath of children and mothers during the past 55 month of his rule.
Theoretically, the currency with the public should expand in sync with the nominal income, which again moves in relation to the nominal growth rate of the economy. But the correlation breaks easily when other factors come into play, says Anup Roy.
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