Focus Merit

Category: Economy

Nepal wants India to take back demonetised notes worth Rs 7 crore

January 26, 2020

Nepal’s Central Bank is saddled with Rs 7 crore of demonetised Indian currency but India is not making “adjustments” to take back the notes, hoping the scrapped notes would be accepted by its neighbour. The land-locked country depends on India for trade and supplies. Indian currency is widely used in Nepal for day-to-day transactions, especially in the border areas.

The Indian government on November 8, 2016 announced the ban on old 500 and 1,000 rupee notes to curb black money in the system. Of the Rs 15.41 lakh crore worth Rs 500 and Rs 1,000 notes in circulation on November 8, 99.3 per cent or notes worth Rs 15.31 lakh crore have returned to the banking system.

India’s growth forecast for FY-20 lowered to 5.7% by UN

January 23, 2020

The UN projects India’s economy to grow by 5.7 percent in the current fiscal year and expects it to rise to 6.6 percent in the next fiscal year. The UN growth estimate for the current fiscal is drastically lower than the forecast of 7.6 per cent made in last year’s report in January and 7 percent in the May update.

The head of UN’s Global Economic Monitoring Branch, Dawn Holland, told IANS that although there has been a steep decline in growth, India was still one of the high performers globally. He said that it was expected to improve its growth rate in the coming year because of the steps being taken.

According to the report, only China has a higher growth rate than India among the world’s large economies with a 6 per cent forecast for the current calendar year.

India Ratings and Research expects GDP growth at 5.5 percent in FY21

January 23, 2020

According to India Ratings and Research, India’s GDP is expected to grow at 5.5 percent in FY21 as against the estimated 5 percent in FY20. The slowdown was due to a combination of factors including an abrupt and significant fall in NBFCs’ and bank lending, reduced income growth and savings of households and rising debt.

Sunil Sinha, economist, India Ratings stated that, a strong policy push coupled with some heavy lifting by the government is required to revive the domestic demand cycle and catapult the economy back into a high growth phase. According to the ratings firm, a continuance of low GDP growth even in FY21 means subdued tax revenue and limited room for stepping up expenditure.

World Gold Outlook 2020: RBI at 6th position in buying gold abroad

January 22, 2020

“World Gold Outlook 2020” has been released by World Gold Council in which it placed Reserve Bank of India on 6th position in the largest buyer of sovereign gold abroad. RBI currently holds 625.2 tonnes of gold which is 6.6% of the country’s foreign exchange.

The other 5 countries that have bought more gold than India include China, Russia, Kazakhstan, Turkey and Poland. Higher taxes have exacerbated the local gold price consumption. The recently introduces new hallmarking reforms are expected to increase consumer trust, remove inefficiencies, promote growth and improve confidence.

Bharti Airtel to raise FDI in the company to 100%

January 22, 2020

The Bharti Airtel Ltd has received the approval from the Telecom department to increase the Foreign Direct Investment (FDI) in the company to 100%. The approval will enable Bharti Airtel company to raise more funds as per its requirement.

The company also has the approval of the Reserve Bank of India (RBI) that allowed foreign investors to hold up to 74 percent stake in the company. Currently, foreign ownership in Bharti Airtel is 44.28%, after the share placement.

The approval comes few days before the company has to clear statutory liabilities of up to nearly Rs 35,586 crore, of which Rs 21,682 crore is licence fee and another Rs 13,904.01 crore is spectrum dues (excluding the dues of Telenor and Tata Teleservices).

India attracted $49 billion FDI in 2019, among top 10 recipients

January 21, 2020

The United Nations Conference on Trade and Development (UNCTAD) on Monday said that India was among the top 10 recipients of Foreign Direct Investment (FDI) in 2019, attracting $49 billion in inflows, a 16% increase from the previous year, driving the FDI growth in South Asia. The majority went into services industries, including information technology.

China, the second largest recipient, saw zero-growth in FDI inflows. Its FDI inflows in 2018 were $139 billion and $140 billion in 2019. The FDI in the UK was down 6% as Brexit unfolded. The global foreign direct investment remained flat in 2019 at $1.39 trillion, a 1% decline from a revised $1.41 trillion in 2018.

Inflows into Bangladesh and Pakistan declined by 6% and 20%, respectively, to $3.4 billion and $1.9 billion. This is against the backdrop of weaker macroeconomic performance and policy uncertainty for investors, including trade tensions.

Sri Lanka economic to grow 3.3 percent in 2020: World Bank

January 14, 2020

The World Bank has forecast Sri Lanka’s economic growth for 2020 at 3.3 percent. In its latest report of “World Bank’s January 2020 Global Economic Prospects,” the World Bank said for 2021 and 2022, it maintains the same forecast of 3.7 percent of economic growth in Sri Lanka.

The report further said growth in the region is expected to rise to 5.5 percent in 2020, assuming a modest rebound in domestic demand and economic activity benefiting from policy accommodation in India and Sri Lanka, as well as improved business confidence and support from infrastructure investments in Afghanistan, Bangladesh and Pakistan.

Sri Lanka’s new government headed by President Gotabaya Rajapaksa said recently that one of its targets include achieving a 6.5-percent economic growth per annum from 2020 and a GDP growth of 6,500 U.S. dollars per capita.

India needs 6.3% labour productivity growth to achieve 8% GDP: India Ratings

January 10, 2020

India Ratings and Research stated India will have to raise its labour productivity growth to 6.3% to achieve 8% GDP growth while it has to be up by 7.3% in order to achieve economic growth of 9%. The labour productivity growth in the current financial year has been pegged at 5.2%. Labour productivity during 2004-05 to 2007-08 have stood at 8.5%.

It is 40.4% higher than the level attained in FY19. Given the growth slowdown, it looks unlikely in the near term but is not unachievable. India’s labour productivity growth, like other nations, came under pressure in the aftermath of the 2008 global financial crisis, especially during FY11-FY15 (5.0%). However, it recovered thereafter and grew at 5.8% during FY16-FY19.

SBI’s report ‘Ecowrap’ lowers India’s growth rate to 4.6% for FY 2020

January 10, 2020

The State Bank of India (SBI) has released its research report ‘Ecowrap’. In the report ‘Ecowrap’, the economic research department of SBI has lowered India’s growth rate to 4.6% in the fiscal year 2020. The report also stated that agriculture and allied activities are expected to grow at 2.8%, while growth in industry projected to grow at 2.5% in fiscal year 2020. The service sector is also expected to increase to 6.9% in fiscal year 2020.

India’s economy to reach $7 trillion by 2030: Deutsche Bank

January 9, 2020

Deutsche Bank has projected that Indian economy will reach $7 trillion by 2030. The estimation was stated by Deutsche Bank in its research report “Imagine 2030”. According to the report, India will grow with the Nominal GDP growth rate of just over 10% in the next decade. Indian economy is presently valued at $3 trillion.

India’s economic growth may remain below potential in the near term. However, ongoing government measures are expected to provide a major push to its potential in the future. The decision to reduce corporate tax rate will likely incentivise greater foreign direct investment flow into the country and support private investment.