Category — Economy
A World Bank report said that after a modest setback, India’s economic growth is expected to pick up speed from 6.8% in 2016 to 7.2% by 2017. Further, growth is expected to gather momentum by 2019 when the Indian economy is expected to expand by 7.7%.
The report also confirmed that South Asia remains the fastest-growing region in the world, gradually increasing its lead relative to East Asia. Regional GDP growth is expected to rise from 6.7% in 2016 to 6.8% in 2017, and 7.1% in 2018, reports the Times of India.
April 24, 2017 No Comments
With 31 percent of the surveyed respondents being more optimistic on the economic outlook over the next three years, India has jumped one spot to rank 8th in the 2017 AT Kearney Foreign Direct Investment (FDI) Confidence Index.
Vikas Kaushal, partner and head of India at U.K.-based AT Kearney said, “Investors see India as a vast and diverse up-and-coming market with plans to increase investments there over the near to medium term. Reform efforts by the current government have improved the country’s investment environment. India’s vast domestic market is an added attraction for foreign companies. Investors are looking at India’s phenomenal economic performance as a key selling point. It is forecast to be the fastest-growing major economy in the world in the coming years, which should provide a variety of investment opportunities to global firms.”
Business Standard reports that according to Kearney, 70 percent of the respondents plan to maintain or increase their FDI in India in the coming years. The government will eliminate the need for FDI approvals in sectors where licenses are also required, such as defense, telecommunications and broadcasting.
April 20, 2017 No Comments
KKR produced a white paper on the subject after co-chairman Henry Kravis told Narendra Modi that India lacked proper bankruptcy laws during the latter’s first visit to the U.S. in 2014, soon after becoming prime minister.
“I have never seen a government move so fast,” Kravis said. “He (Modi) was back in New York six-nine months later and he told me ‘we’re doing it’. And now what I hear from the lawyers is that it is a pretty darn good code.” The bankruptcy code was approved by India’s Parliament in May last year.
The Economic Times says: Kravis’ prescription is this: Quantify bad loans as per their fair-market value and not by oft-used matrices like replacement costs, and sell them to asset reconstruction companies with a haircut. That will affect the net worth of the banks and that’s where the government needs to step in to recapitalize balance sheets by selling shares to lower state ownership to below 51%.
“You just place a threshold and say across every industry if the loan is substandard by a certain value or percentage then it goes into the pool and the government tells the banks that we bridge your equity. Banks have to go back to lending once again. In India, they are still the main source of capital.”
April 16, 2017 No Comments
The International Monetary Fund said that the adoption of the Goods and Services Tax could help raise India’s medium-term GDP growth to over eight percent and create a single national market for enhancing the efficiency of the movement of goods and services. It also suggested that the GST “should have minimal exemptions, uniform cross-state rates, and as few tax rate tiers as possible.”
Zee News reports IMF’s additional inputs for India:
- Structural reforms could lead to significantly stronger growth
- A sustained period of continued low global energy prices would be beneficial to India
- Key sectors such as energy and real estate should be kept within the tax base
- A lower corporate income tax rate with smaller and streamlined deductions and exemptions should continue
- Efforts to improve tax administration should be stepped up
IMF further noted:
- Export competitiveness will rise as the cost of logistics fall
- GST will raise general government tax collection; foster compliance, and help ensure a decline in the share of the informal sector
- It can support fiscal consolidation efforts which, in addition to economic efficiency gains, should solidify recent monetary policy strides in achieving low and stable inflation in the medium-term
- Destination-based GST will create a single Indian market, and will greatly enhance India as an investment destination.
April 16, 2017 No Comments
Amazon India received the Reserve Bank of India’s approval to launch its own digital wallet in India. This will give the American online retail giant a slice of India’s fast-growing digital payments business pie.
Amazon will now be able to take on Paytm (an acronym for “pay through mobile”) and Freecharge both mobile payment platforms, as it prepares to launch a prepaid wallet service that will be broader in scope than its Pay Balance service which is restricted to only Amazon-based transactions.
Wallet services help customers bypass the two-step authentication process for online payments using credit or debit cards and makes the process smoother for online shoppers while plugging a key gap in the payments process that reduces the risk of loss of business from online shoppers, reports the Livemint.
April 14, 2017 No Comments