India’s Parliamentary Panel Approves Overhauling Bankruptcy Regulations

Taking a key reform measure to improve ease of doing business, a parliamentary panel in India approved a bill to update outdated bankruptcy regulations. The panel proposed that the Insolvency and Bankruptcy Code should include laws to seize overseas assets of defaulting companies and individuals. The legislation, which will make it easier to wind up a dying company or recover dues from a defaulter, could be passed in the current session of parliament that ends on May 13, Finance Minister Arun Jaitley said.

Parliament of India

Parliament of India

World Bank data shows that creditors in India recover about 25.7 cents on the dollar in the 4.3 years it takes to resolve insolvency compared with 80.4 cents in the U.S. in less than half that time, which deters lending and investment, reports Bloomberg. The panel has also suggested that apart from banks, the state- owned Life Insurance Corporation and Infrastructure Development Finance Company be included in the list of lenders.

The legislation proposes:

  • an insolvency regulator
  • procedures for early identification of financial distress in companies, and
  • time-lines for their revival or shutting down

Insolvency issues are to be dealt with in a time frame of 3 to 9 months.

Among other measures to recover bad loans, India is planning to change rules, allowing debt recovery tribunals to limit cases to two hearings and give a ruling within 30 days of the final hearing.

May 3, 2016   No Comments

World Bank Chief Economist: Indian Economy Doing Well

In an interview with the Economic Times, Professor Kaushik Basu, chief economist of World Bank remarked, “If you look at the growth table of performance among big economies all over the world, India, today in our World Bank table, tops the chart and this has never happened before. So overall the economic situation is good.”

Kaushik Basu

Kaushik Basu

However, with the global scene taking a turn for the worst, he cautioned that reforms and policy vigilance was very important. “There are risks to global growth. It can slowdown more and if that happens it is bound to affect India because today no country is isolated. But the main sector where India has to pay a lot of attention is India’s export sector where India has not done well despite the fact that India is the fastest growing major economy in the world… and a lot of attention ought to get this back again to full steam.”

April 4, 2016   No Comments

World Bank Projects India Will Be the Fastest-Growing Economy until 2018

The Wall Street Journal reports on the new forecasts from the World Bank which says that India is “well positioned to withstand near-term headwinds and volatility in global financial markets” compared with other major emerging economies and predicts it will grow at 7.9% by 2018.

That would make it the fastest-growing developing-country economy by some margin, ahead of the next quickest, Bangladesh, at 6.8% and China at 6.5%, according to the latest  Global Economic Perspectives report published by the bank.

Table below from World Bank Group 2016. Global Economic Prospects, January 2016: Spillovers amid Weak Growth. Washington D.C.

Country

2013

2014

2015 estimate 2016 forecast 2017 forecast 2018 forecast
World

2.4

0.6

2.4

2.9

3.1

3.1

U.S.

1.5

2.4

2.5

2.7

2.4

2.2

Euro Area

-0.2

0.9

1.5

1.7

1.7

1.6

Japan

1.6

-0.1

0.8

1.3

0.9

1.3

United Kingdom

2.2

2.9

2.4

2.4

2.2

2.1

Russia

1.3

0.6

-3.8

-0.7

1.3

1.5

China

7.7

7.3

6.9

6.7

6.5

6.5

Indonesia

5.6

5

4.7

5.3

5.5

5.5

Thailand

2.8

0.9

2.5

2

2.4

2.7

Kazakhstan

6

4.4

0.9

1.1

3.3

3.4

Turkey

4.2

2.9

4.2

3.5

3.5

3.4

Romania

3.5

2.8

3.6

3.9

4.1

4

Brazil

3

0.1

-3.7

-2.5

1.4

1.5

Mexico

1.4

2.3

2.5

2.8

3

3.2

Colombia

4.9

4.6

3.1

3

3.3

3.5

Egypt

2.1

2.2

4.2

3.8

4.4

4.8

Iran

-1.9

4.3

1.9

5.8

6.7

6

Algeria

2.8

3.8

2.8

3.9

4

3.8

India

6.9

7.3

7.3

7.8

7.9

7.9

Pakistan

4.4

4.7

5.5

5.5

5.4

5.4

Bangladesh

6.1

6.5

6.5

6.7

6.8

6.8

South Africa

2.2

1.5

1.3

1.4

1.6

1.6

Nigeria

5.4

6.3

3.3

4.6

5.3

5.3

Angola

6.8

3.9

3

3.3

3.8

3.8

The World Bank said India would benefit because of a reduction in external vulnerabilities, a strengthening domestic business cycle and a supportive policy environment.

 

January 17, 2016   No Comments

India Bucks Slowdown Trend in Emerging Markets

In a new policy research note ‘Slowdown in Emerging Markets: Rough Patch or Prolonged Weakness?’ the World Bank noted that “growth in BRICS, with the exception of India, has been slowing significantly after 2010. These slowdowns are expected to continue over the near term.”

Emerging market growth has been fading steadily since 2010, slipping from an average 7.6 per cent in 2010 to a projected less than 4 percent this year. Some of the contributing factors have been weak international trade, slowing capital flows and slumping commodity prices, external challenges which have compounded domestic problems including blunted productivity and bouts of political uncertainty, the report added.

The World Bank said that while many emerging markets have implemented reforms in specific areas, a few have announced comprehensive structural reform plans, including China, India, and Mexico. India formally adopted inflation targeting in 2015, thus strengthening the credibility of the central bank, reduced barriers to FDI in insurance, telecommunications, railways, and retail, eliminated diesel subsidies while raising excise duties on petroleum and diesel fuel, approved the introduction of a harmonized goods and services tax, and committed to increasing public investment, it noted reports SiliconIndia News,

December 11, 2015   No Comments

India’s Economy is Now Growing Faster than China’s

Last year, economists at the World Bank, the International Monetary Fund, and Goldman Sachs  suggested that within a year or two, India’s economy might be growing more quickly than China’s.  But official statistics published on February 9th revealed that India’s GDP rose by 7.5% in 2014, a shade faster than China’s economy managed over the same period (see chart).

India and China GDP Comparision

India and China GDP Comparison

India’s statistics were “re-based” a week ago and the base year for calculation of GDP was revised from 2004-05 to 2011-12, and partly as a result, GDP growth for 2013-14 was also revised from 5.1% to 6.9%. Economists agree that the economy is doing better now than it was in 2013 and that India has been a rare bright spot among emerging markets.

The economy is likely to pick up further since the recent falls in commodity prices are a godsend for India which imports 80% of the oil it consumes; Indians are happy that the double-digit inflation in the country has decreased for this trend has prompted India’s central bank to reduce interest rates in January, from 8% to 7.75%.

February 17, 2015   No Comments