สรุปข่าวเศรษฐกิจอินเดียประจำวันที่ 27 มีนาคม 2557

Economists not very optimistic about growth in 2014-15

With the growth bottoming out in the current fiscal, experts are not very optimistic about the country's economic picture changing significantly in 2014-15 even if a new government comes to power after the general elections starting next month. "My qualitative prediction do emerge from my assessment we got to address the structural bottlenecks. They will not bear fruits immediately but they will create momentum which will lay the foundation for more rapid growth," said Subir Gokarn, former Deputy Governor of RBI. Gokarn, who is currently head of Director of research Brookings India, said food inflation has been there over 10 per cent for last six years. Price Inflation is expected to be around 6 per cent, Index of Industrial production between 5-6 per cent, while GDP over 7 per cent in the next fiscal, Bhalla said. Talking about rupee Gokarn said it has responded to narrowing of current account deficit and the correction got sharper than what was expected. Rupee has been strengthening against dollar in the past few days following inflow of foreign currency. Gokarn said rupee at 60 against US dollar provides some competitiveness to India's exports and is also making imports a lot less competitive to producers. "In the short term, rupee stability , I think, a huge factor, in the current capital inflow that you referred to but I don't think it can be taken for granted. It is not something that is going to remain in place. Unless we start addressing structural issues," he said.

(Source: Economic Times)

Lower CAD limits India's exposure to global shocks: Moody's

Fall in high Current Account Deficit (CAD) limits India's vulnerability to global financial market volatility although elevated inflation still poses risks, says rating agency Moody's. Moody's assigns 'Baa3' rating on India, with a stable outlook. "With India, signs of a decline in its high CAD as a percentage of GDP and the make up of the government's debt profile limit the extent of sovereign exposure to global financial market volatility. But continued higher inflation poses risks," Moody's Investors Service said in a report. Wholesale price-based inflation stood at a nine-month low of 4.68 per cent, while retail inflation slowed to a 25-month low of 8.1 per cent in February. Rising exports and moderation in gold imports have pulled down CAD sharply to $4.2 billion, or 0.9 per cent of GDP, in December quarter of 2013-14. It narrowed to $31.1 billion (2.3 per cent of GDP) in April-December 2013, from $69.8 billion (5.2 per cent of GDP) in April-December of 2012. The CAD, which reflects difference between inflow and outflow of foreign currency, had touched a record-high of $88.2 billion, or 4.8 per cent of GDP, in 2012-13. In the context of Asia, the report said the recent financial market volatility and pressure on emerging market currencies have underscored the potential vulnerability these markets face during an extended period of uncertainty. "Those with external imbalances, a reliance on external funding, and weak policy frameworks will remain vulnerable to sentiment changes, capital flow adjustments, or disorderly market reactions," it said.The key indicators of external vulnerability include a large CAD, low foreign exchange reserves, large government gross borrowing, and high foreign currency denominated debt as a proportion of total general government debt, the report added.

(Source: Economic Times)

Anti-FDI traders to sell on eBay, to start with

Small traders, known for opposing foreign investment in their business, may set up shop in American electronic commerce company eBay's online marketplace. Some trade bodies that already sell on eBay are expanding their presence. The Bharatiya Janata Party's prime ministerial candidate, Narendra Modi, last month urged small traders to compete with foreign retail chains through e-commerce. At a conference organised by traders' associations in the capital, Modi, without stating his position on foreign investment in supermarkets, said, "The online world presents new opportunities for you." Praveen Khandelwal, general secretary of the Confederation of All-India Traders, who was present at eBay's launch of a report on sellers today, said traders' opposition to foreign investment in retailing had not changed. However, online marketplaces, like those provided by eBay, could help local traders to grow, he added. Apart from eBay, another American e-commerce company Amazon operates an online marketplace in India. Indian e-commerce companies like Flipkart and Snapdeal have significant foreign investment in them. India does not allow foreign direct investment in inventory-led e-commerce companies, but there is no restriction on online marketplaces. Traders' associations pointed out that eBay was the first e-commerce company to approach them. eBay works with the Surat Diamond Association, the Khadi and Village Industries Commission, the Vijayawada Chamber of Commerce and the Federation of Indian Exporters' Organisations among others, said Latif Nathani, managing director, eBay India. "Small traders will be interested to join hands with eBay because the company will facilitate their online stores and will never compete with sellers," he added. eBay, which operates its online marketplace in 39 countries, recently led other investors to buy a larger stake in Snapdeal for Rs 830 crore. The company refused to comment on its Snapdeal stake or future acquisition plans.

(Source: Business Standard)

Congress puts on a business face to win back India Inc

While promising the usual slew of “rights” associated with the Congress — Right to Education, Right to Employment — the 130-year-old party sought, on Wednesday, to tell India Inc that Narendra Modi isn’t the only game in town. So, even among the “rights” for citizens, there is to be a Right to Entrepreneurship, to help those who wish to start businesses and India’s rank, when it comes to the Ease of Doing Business, is to be raised to 75 from 134 in five years. The 15-point agenda is dominated by economic issues, an attempt to reassure India Inc that it will deliver on reforms. Flexible labour laws are on the agenda — although there’s no mention of the Industrial Disputes Act, the Apprentice Act, 1961, is to be reformed to encourage more firms to hire apprentices, which is a big positive. However, even as several measures to put the economy back on the rails have been listed, it’s evident the party is not about to abandon its numerous entitlement schemes. Conscious of the fact that the Indian economy has nearly ground to a halt over the past year, the manifesto commits to restoring growth to 8% a year “within three years”, a rate to be sustained over two decades — GDP in the third quarter of FY14 came in at 4.7%. The party believes it can deliver manufacturing growth of 10% with special emphasis on small and medium enterprises. There is also an effort to assuage the concerns of foreign investors; the drawn-out dispute with British telecom major Vodafone over taxes, it would appear, has prompted the party to promise it would “ensure that the unpredictable risk of retroactive taxation is avoided”. However, the manifesto asserts, at the same time, that the government will ensure foreign companies pay taxes where profits are earned. The party ostensibly wants to win back the confidence of industry. Support will be given to “more transparent, competitive and better-regulated public-private partnerships”, the manifesto states, arguing the model must be widely used with new financing structures to access long-term funds. There is also mention of $1 trillion to be spent over the next decade on power, transport and infrastructure. The Congress also seeks to give a push to planned urbanisation, creating inclusive cities and revamping urban governance; it hopes to achieve this by empowering mayors, increasing their tenures and allowing them as also chairpersons of municipalities to function much like CEOs of cities with executive powers. The manifesto talks of encouraging foreign direct investment in labour-intensive sectors — UPA II had thrown the open multi-brand retail space to FDI in September, 2012 albeit with a cap of 51%. There are also the expected noises on reining in inflation and improving productivity in agriculture. The party hasn’t provided details on how it would promote a more open and competitive economy — for example, whether coal mining would be freed up — though it says it would open the economy to more global and domestic competition.

(Source: Financial Express)

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