by admin | May 25, 2021 | Opinions
By Frank F. Islam,
On Sunday, January 7, the New York Times ran a front page story titled “Rising Anxiety in India is Piercing Modi’s Aura of Invincibility”. The article discussed the decline in GDP, consumption and consumer confidence and its impact on India and Indians.
A little more than two weeks later, on January 23, Prime Minister Narendra Modi gave the opening address at the Davos World Economic Forum (WEF) in Switzerland. In that address, he declared: “According to the World Bank and IMF, our growth rate is going to be steady and high.”
The question becomes, as the end of the first quarter of 2018 approaches, whether the Times’ more pessimistic or Modi’s more optimistic perspective is correct. The answer from the most recent data and trends indicates that the optimistic view will most likely prevail.
Things are not quite as stunningly bright, as in 2014 right after Modi’s swearing-in as Prime Minister, when I wrote in an article for Foreign Policy magazine: “It is now Modi’s India. And, Modi’s India is a place of grand ambitions, great expectations and high hopes.” But, it looks like there is a lot more sunshine on the horizon than there are clouds in India’s economic future.
Part of the reason for this assessment is that the slowdown in the economy in India was self-induced. It was caused primarily by two governmental policies: demonetisation and the imposition of a Goods and Service Tax (GST).
Scholars and economists will argue whether these two actions were necessary or beneficial. I will leave that debate to them. Looking at where things stand today, it appears that the Indian economy is turning the corner and will continue to grow to position India as a world leader.
There are a few negative indicators such as the decline of the Nikkei India Services Business Activity Index to a seven-month low of 47.8 in February. This is however offset by the fact that India’s GDP growth for the last quarter of 2017 was 7.2 per cent — making it the fastest-growing economy in the world for that time period. Combine this with projected GDP growth for India in the 7 to 7.8 per cent range in the current and next fiscal years by various groups, and there is considerable cause for optimism.
That optimism is strengthened by three factors: Progress on the ground in India; the country’s global and regional economic appeal; and, the “defining partnership for the 21st century” between India and the United States.
Modi highlighted some of the economic accomplishments and plans developed during his tenure in his Davos WEF remarks. Most of them related to initiatives of the Make In India programme, including making India a manufacturing hub; the Skill India programme; and the opening of bank accounts for unbanked people.
At Davos, Modi also mentioned briefly that India is ranked third on the Global Trust Index list of the most trusted governments in the world. This accomplishment cannot be over-stressed. It is important and differentiating because we are living in an era when trust in government and democracy around the globe is in deep decline.
In his Davos speech, Modi also stressed the enormous opportunities that companies have to invest in “inclusive economic development” in India. By all accounts, business leaders from around the globe responded very favourably to his sales pitch. On a regional basis, the success of the India-Asean Summit held as part of this year’s Republic Day ceremonies and the potential of India’s “Act East” policy speak for themselves.
Finally, there is the “defining partnership” between the US and India. President Obama used this phrase during his first visit to India in 2009 and his administration worked assiduously to strengthen that partnership during his eight years as President.
This year has been a little more worrisome for the partnership. There were concerns about protectionism as President Donald Trump talked about import taxes in January. Then, on March 8 along came Trump’s tariffs on aluminium and steel imports and that upset the apple cart.
But probably not a lot, because the level of export of steel and aluminium products to the US is relatively low. The Indian media quoted industry leaders as saying “India will not be impacted much”.
There is another reason the impact will be low. That is because the Trump administration sees the chance and the need to increase US exports to India substantially going forward. Getting a fairer balance in the trading relationship was a primary topic of the 2017 US-India Bilateral Trade Policy Forum held in November. It can be expected this will be an area for negotiation moving forward
In summary, the Modi economy has many rays of sunshine. Those rays do not shine uniformly on all though.
There are also a few clouds. These include: An across-the-board need for empowerment of women and enhanced educational opportunities for minorities. As those rays get brighter, one must be brought to focus to dispel those clouds.
(Frank F. Islam is an entrepreneur, civic and thought leader based in Washington DC. The views expressed here are personal. He can be contacted at ffislam@verizon.net)
—IANS
by admin | May 25, 2021 | Banking, Economy, Finance, Markets, News
New Delhi : India would grow at 7.3 per cent in 2018-19, the World Bank said on Wednesday forecasting that the economy would revert to its trend growth rate of 7.5 per cent by 2019-20 as it bottoms out from the impact of the Goods and Services Tax (GST) and demonetisation.
In the current year, the economy is expected to clock a growth rate of 6.7 per cent, said the World Bank’s India Development Update report, which takes stock of the Indian economy.
It said while India’s GDP growth saw a temporary dip in the last two quarters of 2016-17 and the first quarter of 2017-18 due to demonetization and disruptions surrounding the initial implementation of GST, but economic activity had begun to stabilize since August last year.
“While services will continue to remain the main driver of economic growth, industrial activity is poised to grow, with manufacturing expected to accelerate following the implementation of the GST, and agriculture will likely grow at its long-term average growth rate,” it said.
It added that reaching growth rates exceeding 8 per cent will require continued reform aimed at resolving issues related to credit and investment, and enhancing the competitiveness of India’s exporting sector.
“Maintaining hard-won macroeconomic stability, providing a definite and durable solution to the cleaning up of banks’ balance sheets, realising GST’s growth and fiscal dividend, and regaining momentum on the unfinished structural reform agenda will be key for realising these rates of growth,” it added.
“Accelerating the growth rate will also require continued integration into the global economy.”
According to the World Bank, India’s growth in recent years has been supported by “prudent macroeconomic policy” including a new inflation targeting framework, energy subsidy reforms, fiscal consolidation, higher quality of public expenditure and a stable balance of payment situation.
“In addition, recent policy reforms have helped India improve the business environment, ease inflows of foreign direct investment (FDI) and improve credit behaviour,” it added.
World Bank’s India Country Director Junaid Ahmad said India’s long-term growth has become more steady, stable, diversified and resilient.
“In the long-run, for higher growth to be sustainable and inclusive, India needs to use land and water, which are increasingly becoming scarce resources, more productively, make growth more inclusive, and strengthen its public sector to meet the challenges of a fast growing, globalizing and increasingly middle-class economy,” he added.
Poonam Gupta, the lead economist and the main author of the report, said that durable revival in private investments and exports would be crucial for India achieving a sustained high growth of 8 percent and above.
“This will require continued impetus for structural reforms. Resorting to countercyclical policies will not help spur sustained growth and India should not compromise its hard-earned fiscal discipline in order to accelerate growth,” she added.
The report recommended reforms in the fields of private investments, bank credit and exports.
—IANS
by admin | May 25, 2021 | Business, Economy, Large Enterprise, Markets, News
New Delhi : As manufacturing picked up pace, India’s factory production growth in January at 7.5 per cent doubled over the 3.5 recorded in the same month last year, even as retail inflation eased in February, official data showed on Monday.
Industry welcomed the “pick-up in growth trajectory” witnessed in the beginning of the calendar year.
The Index of Industrial Production (IIP), however, rose marginally over the 7.1 per cent registered in December 2017, a Central Statistics Office (CSO) release said here.
The cumulative IIP growth for the April-January period of the current fiscal, at 4.1 per cent, was lower than the 5 per cent posted in same period of 2016-17.
In line with the recent trend of recovery in manufacturing, the sector, which constitutes 77.63 per cent of the index, grew by 8.7 per cent during January, as compared to 2.5 per cent in the same month last year.
Retail inflation for February eased down to 4.4 per cent, compared to 5.07 per cent in the previous month. The consumer price-indexed (CPI) inflation was 3.65 per cent in February 2017.
Inflation softened last month mainly on account of cheaper food prices and lower cost for fuel. Inflation rate in the consumer food segment was lower at 3.26 per cent, as compared to 4.7 per cent in January.
The January IIP was also boosted by a higher offtake of consumer and capital goods.
Capital goods output in the month under consideration increased sharply by 14.6 per cent, as against a fall of 0.6 per cent in January last year.
Consumer durables recorded a growth rate of 8 per cent as against a decline of 2 per cent in the same month a year ago.
The mining sector, however, registered negligible growth of 0.1 per cent, as compared to 8.6 per cent rise in January last year.
During January, 16 out of 23 industry groups in the manufacturing sector showed positive growth.
Commenting on the IIP numbers, industry chamber Assocham described these as signs of “an underlying pick-up in the growth trajectory”.
“It would be safe to assume that a lot of advantage has accrued because of the low base effect of the previous year when the growth had plunged following the demonetisation, said Assocham Secretary General D.S. Rawat in a statement.
On retail inflation, “the undercurrent remains biased on the upside, making RBI disinclined towards any rate cut”, he said.
Deloitte India Lead Economist Anis Chakravarty said: “Overall, the latest IIP data points towards signs of economic recovery as the negative effect of the disruptive shocks of last year appear to be on the wane. However, the momentum of the recovery needs to be sustained through effective implementation of the structural and infra related reforms.”
—IANS
by admin | May 25, 2021 | Economy, Markets, News
By Porisma P. Gogoi,
Mumbai : The Indian stock markets during the upcoming week are expected to take directions from domestic macro-economic data points slated to be released from March 12 onwards.
Apart from the data, developments on the global trade front, along with the direction of foreign funds, will also determine the course of key Indian equity indices, said market observers.
“Market participants will keep a close eye on domestic macro-economic data releases. The government will announce inflation data based on consumer price index (CPI) for February and industrial production data (Index of Industrial Production, IIP) for January on March 12,” D.K. Aggarwal, Chairman and Managing Director of SMC Investments and Advisors, told IANS.
“Besides, global macro-economic data, developments in the Budget session of Parliament, trends in global markets, investment by foreign portfolio investors (FPIs) and domestic institutional investors (DIIs) will continue to dictate the trend on the bourses next week,” he said.
During March 5-9, figures from the National Securities Depository (NSDL) revealed that FPIs invested in equities worth Rs 1,384.36 crore, or $212.98 million.
Provisional figures from the stock exchanges showed that foreign institutional investors (FIIs) sold-off scrips worth Rs 280.74 crore, while DIIs purchased scrips worth Rs 131.07 crore during last week.
On technical levels, if the NSE Nifty50 trades and closes above the 10,288-level in the upcoming week, then it is likely to test 10,375 to 10,463-10,565 levels, as per Arpit Jain, Assistant Vice President at Arihant Capital Markets.
“However, if the Nifty trades and closes below 10,165 level, then it can test 10,077 to 9,990-9,888 levels,” Jain told IANS.
“Broadly, the weekly trend is down, hence at higher levels, we are likely to witness selling pressure,” he added.
Last week, the Indian equity markets were engulfed by bears as global trade war fears following US President Donald Trump’s proposal to impose tariff on import of metals, along with the turmoil in the domestic banking sector, continued to erode the risk-taking appetite of investors.
On a weekly basis, the barometer 30-scrip Sensitive Index (Sensex) of the BSE shed 739.8 points or 2.17 per cent to close at 33,307.14 points.
The wider Nifty50 of the National Stock Exchange (NSE) closed trade at 10,226.85 points — down 231.5 points or 2.21 per cent from its previous week’s close.
“With global uncertainty over the US trade war and its reaction, all eyes are also on the proposed meeting of North Korean Leader Kim Jong Un and President Trump in the coming months,” Dhruv Desai, Director and Chief Operating Officer of Tradebulls, told IANS.
According to Vinod Nair, Head Of Research at Geojit Financial Services, absence of major triggers to maintain the upward trend is keeping investors on the sidelines.
“Though the long-term outlook for the domestic economy continues to be strong, issues like global trade headwinds, NPA (non-performing assets) issues and US Federal Reserve’s rate-hike trajectory are adding volatility to the market,” said Nair.
“Market participants are cautiously awaiting the CPI and IIP data next week. Inflation is expected to come down to 4.74 per cent in February which will ease bond yield in the near term. IIP is expected to show some moderation,” he added.
(Porisma P. Gogoi can be contacted at porisma.g@ians.in )
—IANS
by admin | May 25, 2021 | Banking, Economy, Markets, News
By Porisma P. Gogoi,
Mumbai : The bears, tracking weak global cues, under-performance by banking sector stocks and outflow of foreign funds, ruled the Indian equity markets during the week ended Friday which saw the BSE Sensex and Nifty50 indices dropping over 2 per cent.
Fears of a global trade war following US President Donald Trump’s proposal to impose tariff on import of metals, along with the turmoil in the domestic banking sector, continued to erode the risk-taking appetite of investors.
On a weekly basis, the barometer 30-scrip Sensitive Index (Sensex) of the BSE shed 739.8 points or 2.17 per cent to close at 33,307.14 points.
The wider Nifty50 of the National Stock Exchange (NSE) closed trade at 10,226.85 points — down 231.5 points or 2.21 per cent from its previous week’s close.
“The week gone by saw the Nifty resuming its intermediate downtrend after a minor loss witnessed last week. There were no sectoral gainers, while the top losers were metal, PSU bank, pharma and infra indices,” Deepak Jasani, Head, Retail Research, HDFC Securities, told IANS.
According to D.K. Aggarwal, Chairman and Managing Director of SMC Investments and Advisors, domestic market closed the week in red tracking weak global cues.
“Actually, market participants across the globe reacted to President Donald Trump’s decision to impose tariffs on metal imports,” Aggarwal told IANS.
“Oil prices fell for a second consecutive week as the dollar strengthened and concerns over rising US crude production continued to mount on signs of an inventory build-up at a key US storage hub,” he added.
On the currency front, the rupee closed flat at 65.17 against the US dollar.
“Markets continued to trade lower even though economy growth numbers been positive. The Punjab National Bank fraud (PNB) has taken a big toll on the markets and has resulted in a sell-off in almost all the banks stocks,” said Dhruv Desai, Director and Chief Operating Officer of Tradebulls.
Desai pointed out that the country’s IT sector has emerged as an outperforming sector in the recent correction witnessed in the markets.
“The S&P BSE IT index rose nearly 10 per cent compared to a one per cent fall seen in the S&P BSE Sensex so far in the year 2018,” Desai told IANS.
Vinod Nair Head Of Research at Geojit Financial Services, said: “Market continued to be under pressure on concerns impending global trade war, extension of PSU NPA (non-performing assets) worries and rise in bond yields.”
PSU Bank index — the key underperformer — declined by 5 per cent during the week, Nair said.
“FIIs (foreign institutional investors) are pulling out money given negative cues from both domestic as well on global front. The introduction of Long Term Capital Gains, scam in PNB, repeated signals from the US Fed to hike interest rates rapidly and possibility of downgrades of India weightage from MSCI index are the key factors which is turning FIIs cautious on domestic market,” he added.
Provisional figures from the stock exchanges showed that FIIs sold-off scrips worth Rs 280.74 crore, while domestic institutional investors (DIIs) purchased scrips worth Rs 131.07 crore during the week.
Figures from the National Securities Depository (NSDL) revealed that foreign portfolio investors invested in equities worth Rs 1,384.36 crore, or $212.98 million, during March 5-9.
The top weekly Sensex gainers were: Asian Paints (up 0.73 per cent at Rs 1,127.75); NTPC (up 0.55 per cent at Rs 163.90); HDFC (up 0.32 per cent at Rs 1,818.45); Infosys (up 0.27 per cent at Rs 1,163.40); and Hero MotoCorp (up 0.21 per cent at Rs 3,587).
The losers were: Tata Steel (down 10.32 per cent at Rs 605.60); Tata Motors (down 7.86 per cent at Rs 341.70); Tata Motors (DVR) (down 7.34 per cent at Rs 192.60); Adani Ports (down 6.95 per cent at Rs 377.30); and Bharti Airtel (down 5.81 per cent at Rs 401.95).
(Porisma P. Gogoi can be contacted at porisma.g@ians.in)
—IANS
