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Showing posts with label Market. Show all posts
Showing posts with label Market. Show all posts
India's economic expansion may have gained speed last quarter as manufacturing and services output improved even as weak rains hurt agriculture, economists said.

Gross domestic product in the three months ended Sept. 30 rose 7.4 percent from a year earlier, according to the median estimate in a poll of 14 economists by The Wall Street Journal. That is a step up from the 7.0 percent expansion in the preceding quarter.

The government is scheduled to issue the data on Monday.

"India's GDP growth is expected to have improved as industry clocked the highest output gains in over four years, while services remained resilient," said Mr. Sujit Kumar, an economist at Union Bank of India.

Industrial production data that were released earlier show output of manufacturing, mining and utilities firms rose 4.7 percent from the previous year during the quarter. That is a modest pickup from the 3.2 percent increase in the previous quarter and the strongest pace of expansion since the three months ended June 2011.

Still, the country received 15 percent less than the average level of rainfall during the June to September monsoon season the second successive year of shortfall. That is expected to weigh on farm production.

Some economists believe the weakness in the agricultural sector could more than offset the better performance of other sectors. A sustained decline in India's exports, which have been falling for almost a year now, also are expected to weigh on the economy.

Most economists predict Asia's third-largest economy will grow about 7.5 percent this year, helped by policy measures aimed at improving business conditions in Asia's third-largest economy.

In September, the Reserve Bank of India lowered its growth forecast to 7.4 percent from 7.6 percent, despite the four rate cuts it has delivered this year to stimulate investment. A further cut by the RBI, which will next review policy on Tuesday, isn't widely expected until next year.

"The RBI lowered its growth projection citing global headwinds, weak rains and sluggish private sector investment activity," Ms. Radhika Rao, India economist at DBS, said in a research note. "We expect these factors to also influence Monday's GDP numbers, but firm discretionary spending will pick part of the slack."

The spotlight will now be on the winter session of Parliament that started this week. Investors are hoping the government will be able to reach a consensus with opposition parties to help push through changes that will help growth, particularly one to enable the implementation of a nationwide uniform tax on goods and services.

"If some important bills get passed, then it will be positive for investor and business sentiment," said Mr. Saugata Bhattacharya, chief economist at Axis Bank. "That would translate to increased economic activity."

(Source – Market Watch, 27-November-2015)
India's economic growth in FY'17 is expected to be driven by consumption growth due to the impending pay revision of government employees. This would reverse the trend of FY'16 in which growth has been largely investment driven, said a report by British Bank Stanchart.

"We expect consumption to drive India's GDP growth in FY17 (year starting April 2016), taking over from investment," say Mr. Saurav Anand and Ms. Anubhuti Sahay of South Asia Research at Stanchart in their report. "Impending pay rises for public-sector employees, to be implemented from FY17, are likely to partly redirect the government's limited fiscal resources from investment to recurrent spending that will boost consumption."

While higher government spending on salaries will benefit consumption, the diversion of resources is likely to slow India's investment recovery, which has been driven entirely by government capital expenditure. This is going to impact the fiscal numbers according to the writers. "We expect the fiscal burden to be borne mostly by the central government, as it will implement the pay revisions in the first year (FY17), when it also aims to reduce the fiscal deficit by 0.4 percent of GDP to 3.5 percent of GDP."

The amount and details of the pay revisions - which are implemented once a decade - are expected to be finalized and announced by end-2015. Assuming a 15 percent hike in public-sector pay and pensions, we estimate total additional recurrent expenditure of 1.2 percent of GDP by the central and state governments over the next three years. This is likely to boost consumption. The impact in FY17 is likely to be limited to 0.7 percent of GDP, as states usually stagger the pay revisions over two to three years.

Urban consumers are likely to benefit the most from the pay rises, leading the consumption recovery in FY17. While urban consumption improved in H1-FY16, deteriorating rural demand has caused consumption to stabilize at low levels, putting the onus on investment to drive growth this year. Low inflation and the lagged impact of lower interest rates are also likely to boost urban demand, particularly for autos and white goods, in FY17. Rural demand is likely to improve if monsoon rains return to normal after three seasons of unfavorable weather conditions.

States' capacity expansion should hold up better given the staggered implementation of pay revisions and more fiscal headroom at the state level, according to the report. Since the private sector is unlikely to plug the gap created by slower central government investment, the pace of investment is likely to slow unless the central government slows the pace of fiscal consolidation. It aims to reduce the fiscal deficit to 3.5 percent of GDP in FY17 from 3.9 percent in FY16.

(Source – The Economic Times, 19-November-2015)
India has moved up one position to become the world’s seventh most valued ‘nation brand’, with an increase of 32 percent in its brand value to USD 2.1 billion.

The US remains on the top with a valuation of USD 19.7 billion, followed by China and Germany at the second and the third positions respectively, as per the annual report on world’s most valuable nation brands compiled by Brand Finance.

The UK is ranked 4th, Japan is at fifth position and France is sixth on the list. While India and France have moved up one position each since last year, all the top-five countries have retained their respective places. However, the surge of 32 percent in India’s ‘nation brand value’ is the highest among all the top-20 countries on the list.

China has retained its second position despite a decline of one percent in its brand value to USD 6.3 billion. Brand Finance said it measures the strength and value of the nation brands of 100 leading countries using a method based on the royalty relief mechanism employed to value the world’s largest companies.

The nation brand valuation is based on five year forecasts of sales of all brands in each nation and follows a complex process. The Gross domestic product (GDP) is used as a proxy for total revenues.
The report also said that India’s ‘Incredible India’ slogan has worked well, while Germany suffered due to the Volkswagen crisis. About the US, the report said it remains a powerful brand with an inviting business climate.

“However its value comes in large part from the country’s sheer economic scale… The US’ world-leading higher education system and the soft power arising from its dominance of the music and entertainment industries are significant contributors too. This soft power will help the US to retain the most valuable nation brand for some time after China’s seemingly imminent rise to become the world’s biggest economy,” it added.

The study further said that China’s recent stock market turbulence and slowing growth will also extend the US’ tenure of the top spot. Among the BRICS nations, India is the only country to have witnessed an increase in its brand value with all others – Brazil, Russia, China and South Africa – seeing a dip in their respective brand valuations.

India is the second most valued among these emerging economies after China, followed by Brazil, Russia and South Africa.

(Source – Assorted with the Inputs from PTI)

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The World Bank projected on Thursday that India’s GDP growth will remain below 8 percent till 2018, the penultimate year of Mr. Modi Government’s tenure. The projection contrasts sharply with the Government’s projection that the growth rate will cross 8 percent this year and will be in double digits before the end of its term.

“Productivity and investment need to accelerate to match India’s ambitions of double-digit growth,” World Bank’s Senior Country Economist for India Mr. Frederico Gil Sander cautioned, releasing its India Development Update.

GDP growth is expected to accelerate gradually to 7.5 percent in 2015-16 and to 7.8 and 7.9 percent in the subsequent two fiscal years, the Update projected. However, this acceleration in growth is conditional on the growth rate of investment picking up to 8.8 percent during the period 2015-16 to 2017-18, it said. “While growth will very likely remain above 7 percent in the next fiscal year, there is significant UN-certainty about the momentum of the economy.”

The projections would have been higher if the Constitutional Amendment Bill meant for the rollout of the Goods & Service Tax had cleared Parliament, Country Director World Bank India Mr. Onno Ruhl told reporters.

For the economy to achieve its potential, the Update called for three key reforms: First, boosting balance sheets of the banking sector by addressing the underlying challenges in the infrastructure sector, espe-cially power and roads. Second, continuing to im-prove the ease of doing business and enacting the GST and third, enhancing the capacity of states and local governments to deliver public services as more resources are devolved from the centre.

The World Bank flagged the contraction in exports for the past 10 months, resulting in a loss of market share, and the stressed financial sector as key concerns.
“Although India may be able to achieve fast GDP growth without export growth for a short period, sustaining high rates of GDP growth over a longer period will require a recovery of export growth…India has lost market share in the global ex-port market as India’s exports have become uncompetitive,” the Update noted.

It also cautioned that since oil prices are unlikely to fall further, reducing deficits beyond the current financial year will be another key challenge for the Modi Government.

The Update lauded the build-up in India’s foreign ex-change reserves: from a level equivalent to six months of imports in 2012-13 to nine months of imports as a consequence of the current account deficit narrowing. It projected the deficit to widen margin-ally to (-) 1.4 percent this year followed by (-) 1.7 per-cent and (-) 2 percent in the subsequent two years. It also praised the greater devolution of taxes to the states and the higher capital spending by the Centre.

(Source – The Hindu, 30-October-2015)
The world's largest coal miner Coal India Ltd. (CIL) is planning to put in place a mechanism to monitor execution of mining projects that cost over Rs. 150 crores as the PSU behemoth eyes an output of one billion tonnes by 2020.

According to a Coal India (CIL) official, a tender document has been drafted by the PSU to set up an IT-enabled system to monitor and evaluate projects.

"Comments/suggestions have been invited from par-ties/agencies having experience in the field of draft tender," the official said, adding that a "meeting in this regard will also be held next month where suggestions will be taken into account for finalization of the notice inviting tender".

In the first phase, the monitoring and evaluation system will be set up for projects costing Rs. 150 crores or more, the official explained. The government has set an ambitious one billion tonnes of production tar-get for CIL by 2020. Coal India accounts for over 80 percent of the domestic coal output.

Coal and Power Minister Mr. Piyush Goyal had earlier said CIL will produce at least 50 million tonnes more coal in the current fiscal than the last financial year.
He had said that in the last fiscal, CIL added 32 mil-lion tonnes, more than the cumulative growth of four years. CIL achieved an output of 229.54 mt in the first six months of the current fiscal, missing its target of 235.49 mt.

Coal India's output target for the current fiscal stands at 550 mt as against the recorded figure of 494.23 mt last fiscal.

(Source – Assorted with the Inputs from PTI)

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India will contribute $18 billion to the 100 billion dollar foreign-exchange re-serves pool that is currently being established by the BRICS group in order to help member nations "in case of any problems with dollar liquidity."

Brazil, Russia, India, China and South Africa have signed an agreement to set up the USD 100 billion pool, with maximum USD 41 billion coming from China. India's contribution of USD 18 billion to the Pool will be same as that of Brazil and Russia. South Africa would chip in USD 5 billion.

"The central banks of Brazil, Russia, India, China and South Africa have signed Operational Agreement on July 7, 2015 in Moscow. The Agreement outlines the terms of mutual support for member states in the framework of the Agreement on BRICS Pool of Conventional Currency Reserves," the Russian Central Bank said in a statement.

The fund will be an "insurance instrument" that members nations could draw on if they experience problems with their balance of payments. The Pool will go into force on July 30.

The Operational Agreement details the working procedures of the Pool to be observed by BRICS central banks, and defines their rights and obligations.

"The Pool is tasked to ensure mutual provision of US dollars by the central banks of BRICS members in case of any problems with dollar liquidity. Thus, this new insurance network is designed to maintain financial stability of its member states," the statement said.

The Agreement on setting BRICS Pool of Conventional Currency Reserves was signed on July 15, 2014 at the summit in Fortaleza (Brazil).The agreement was signed in Moscow after a meeting of the Finance Ministers and heads of the central banks of the BRICS countries. The Pool would help BRICS members to maintain financial stability in case of volatility in dollar ex-change rate. India's foreign exchange reserves dipped by a mar-ginal USD 237.5 million, to USD 355.221 billion, in the
week to June 26 on account of slight decline in a key component, the Reserve Bank of India data showed.

The agreement on the insurance pool comes ahead of the two-day Summit of the BRICS leaders in the Russian city of Ufa. The Summit could look at the possibility of starting credit facility in local currency by the BRICS Bank.

The first head of the Bank is noted Indian banker Mr. K.V. Kamath. The BRICS nations account for nearly USD 16 trillion in GDP and 40 percent of the world's population.

(Source – Assorted with Inputs from PTI)
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