India to regain top spot with GDP pegged at 7.3%

India to regain top spot with GDP pegged at 7.3% in 2018-19: WB

The World Bank is estimating India’s economy to grow by 6.7 per cent during the current fiscal year, higher than the 6.5 per cent estimate by the India government.

The Gross Domestic Product (GDP) growth is expected to rise to 7.3 per cent in 2018-19, making India again the world’s fastest growing economy, according to the World Bank’s Global Economic Prospects report released on Tuesday.

IndiaThe report dropped the growth estimate for 2017-18 by 0.1 per cent from its projection June 2017, because of the disruptions to the economy from the Goods and Services Tax (GST). But it raised the growth forecast for 2018-19 by 0.1 per cent from the June figure.

The Bank forecast GDP growth of 7.5 per cent in 2019-20 and 2020-21. The World Bank saw benefits down the road from GST.

“Over the medium term, the GST is expected to benefit economic activity and fiscal sustainability by reducing the cost of complying with multiple state tax systems, drawing informal activity into the formal sector, and expanding the tax base,” the report said.

The Bank put the growth estimate for China’s economy for 2017 at 6.8 per cent and forecast 6.4 per cent increase in 2018.

World tiding over financial crisis

In its overview, the Bank said it finally saw the world economy recovering from the financial crisis that hit the world with full force in 2011.

It said, “2018 is on track to be the first year since the financial crisis that the global economy will be operating at or near full capacity.”

The report forecast the global growth rate to edge up to 3.1 per cent in 2018 after “a much stronger-than-expected” 2017 growth of three per cent in 2017.

“The broad-based recovery in global growth is encouraging, but this is no time for complacency,” World Bank Group President Jim Yong Kim said in a statement. “This is a great opportunity to invest in human and physical capital.”

India’s Ministry of Statistics and Programme Implementation reported last week that it estimated the GDP to grow by only 6.5 per cent in 2017-18 compared to 7.1 per cent in 2016-17.

As per IMF estimates

The World Bank estimate is in line with the International Monetary Fund’s (IMF) projection of 6.7 per cent for 2017. The IMF, however, forecast a slightly higher growth estimate of 7.4 per cent for 2018.

Morgan has projected a growth rate of 6.4 for 2017 and 7.5 per cent in 2018. Nomura also estimated this year’s growth to be 7.5 per cent.

The World Bank report said that private investment was expected to revive in India “as the corporate sector adjusts to the GST; infrastructure spending increases, partly to improve public services and Internet connectivity; and private sector balance sheet weaknesses are mitigated with the help of the efforts of the government and the Reserve Bank of India.”

The government’s recent recapitalisation package for public sector banks could “resolve banking sector balance sheets, support credit to the private sector, and lift investment,” the report added.

This is a positive

Another positive for India is that the global trade recovery is expected to lift exports, the report added.

The World Bank expected results from India’s recent reforms, including the demonetisation, and the ‘Make in India’ initiative.

They “are expected to encourage formal sector activity, broaden the tax base, and improve long-term growth prospects despite short-term disruptions in the case of demonetisation,” it said.

The ‘Make in India’ “aims to improve investment and innovation as well as develop skills to meet the demand for skilled labour,” the report said.

“To achieve these goals, the government has taken various steps to improve the business climate, such as shortening approval times for trademarks and patents to enhance property right protection, lowering restrictions on foreign direct



After sliding for almost five quarters, country’s economy has rebounded from a three-year low to swell by 6.3 per cent in July-September quarter. The Government data released, no doubt, showed a positive sign of growth trajectory, overcoming teething troubles after the bumpy launch of Goods and Services Tax (GST). The data also showed that the gross domestic product or GDP numbers expanded due to accelerated growth of manufacturing sector in the country.

GDPHowever, the growth of eight core-sector industries slowed to 4.7 per cent in October and agriculture growth slumped to 1.7 per cent. The country’s fiscal deficit crossed 96 per cent of Budget estimates at October-end. However, it is expected that the rebounding GDP could blunt Opposition’s attack on Prime Minister Narendra Modi for his “hasty GST launch”.

With the sign of growth trajectory, Finance Minister Arun Jaitley remained optimistic of a higher growth rate in coming quarters. “The last five quarters had witnessed a downward trend. This marks the reversal of this trend. This also indicates that perhaps the impact of two very significant structural reforms — demonetisation and GST — is behind us and hopefully in coming quarters we can look for an upwards trajectory,” he said after the Central Statistics Office released the GDP data.

Syncing with recent Moody’s upgrade of India’s sovereign credit for the first time in nearly 14 years, the growth buoyancy comes at a time when the Modi Government has been facing Opposition charges of wrong implementation of demonetisation and GST that disrupted the $2.4-trillion economy. On the other hand, Moody’s predicts that India would be the world’s seventh-largest economy to grow at 6.7 per cent in 2017-18 and at 7.5 per cent in the next fiscal.

The country witnessed the GDP growth of 5.7 per cent in April-June quarter, the lowest growth rate since Modi took over as PM, while it was 7.5 per cent in the September quarter of the previous fiscal. In the fourth quarter of 2013-14, economy had grown at 4.6 per cent.

Reacting to the GDP growth, Chief Statistician TCA Anant hinted that the numbers could be revised upwards as businesses uncertain of the new GST regime may have accounted for lesser taxes. “After the five quarters of growth decline, we see reversal of GDP in the second quarter,” he said.

Jaitley further said, “Government’s reforms to push economic growth are working, (and it) can be seen from that: manufacturing has shown robust growth of 7 per cent in Q2 and services at 7.1 per cent. Gross fixed capital formation has increased from 1.6 per cent in Q1 to 4.7 per cent in Q2.”

“The September quarter GDP growth, he added, is quite a significant trend reversal and has been driven by pick-up in manufacturing.

The Finance Minister further said, “The deceleration in overall growth witnessed since the first quarter of the last fiscal has been reversed and the economy now seems to have weathered the transitional challenges experienced earlier in the year and appears poised for a durable recovery going forward.”

“Traditionally, July-September is a quarter where a lot of production takes place to cater to festive demand. In the previous quarter, businesses were delaying production amid preparations for the GST launch,” he said, adding that the output in the September quarter is primarily for consumption and sales.

As far as the CSO data is concerned, agriculture growth slumped to 1.7 per cent, but the economic activities that registered growth of over 6 per cent in the second quarter of 2017-18 year-on-year are manufacturing, electricity, gas, water supply and other utility services, trade, hotels, transport and communication and services related to broadcasting.

Gross value added (GVA), a key input of GDP that is tracked by the RBI, rose 6.1 per cent in July-September compared to 5.6 per cent in the June quarter this year and 6.8 per cent in the September quarter of the last fiscal.

The expansion in GVA in the first half of the current fiscal has been estimated at 5.8 per cent, down from 7.2 per cent in the year-earlier period. The growth in agriculture, forestry and fishing was 1.7 per cent, mining and quarrying 5.5 per cent, construction 2.6 per cent, and financial, insurance, real estate and professional services 5.7 per cent. The growth in public administration, defence and other services also stood at 6 per cent.

-01 December 2017 | New Delhi

S&P keeps India rating unchanged with stable outlook

S&P keeps India rating unchanged with stable outlook

Standard & Poor Global Ratings ( S&P ) retained its BBB- rating for India’s sovereign with a ‘stable’ outlook on Friday, belying expectations that it may take a cue from rival Moody’s Investor Services which upgraded the country’s credit rating last week for the first time in 13 years.

Despite one-off factors like demonetisation and the introduction of the Goods and Services Tax denting growth for two quarters, S&P expects India’s economy to grow robustly from 2018-20 with robust foreign exchange reserves rising further.

S&PHowever, the rating agency cited India’s low per capita income, the sizable fiscal deficit and high general government debt as factors that weigh down the country’s credit profile and re-iterated its BBB- rating on India with a stable outlook indicating that the rating is unlikely to see a change in the near future. A BBB- rating denotes the lowest investment grade rating for bonds

“Ratings are constrained by India’s low wealth levels, measured by GDP per capita, which we estimate at close to US$2,000 in 2017, the lowest of all investment-grade sovereigns that we rate. That said, India’s GDP growth rate is among the fastest of all investment-grade sovereigns, and we expect real GDP to average 7.6% over 2017-2020,” S&P Global Ratings said in its rating rationale.

By contrast, Moody’s Investors Services had raised India’s sovereign rating last Friday, citing the country’s high growth potential compared to its similarly rated peers and economic and institutional reforms that have been undertaken or are works in progress.

“This is clearly a conservative call wherein S&P would like to see the results of the reforms initiated before a ratings revision while Moody has taken the Call based on the reforms initiated,” said Ranen Banerjee, partner (public finance and economics) at PwC India.

“The ruling party continues to consolidate its power at the state level and, despite obstacles to the implementation of reform, strong growth is likely to continue,” S&P noted, adding that it expects Prime Minister Narendra Modi’s BJP-led coalition to make further electoral gains. These gains could help the government overcome resistance to legislative reforms in the Rajya Sabha, where the NDA still is in a minority, the rating agency said.

Taking note of the reforms that have been pushed through in recent years to address ‘long-standing impediments to the country’s growth’ such as GST, the Bankruptcy Code and a framework for resolving bad loans while recapitalising state-owned banks, S&P has also referred to the government’s focus on improving the ease of doing business as a positive for the investment climate.

“However, confidence and GDP growth in 2017 appear to have been hit by the sudden demonetization exercise in late 2016… The July 1, 2017 introduction of the GST, which combines the central, state, and local-level indirect taxes into one, has also led to some one-off teething problems that have dampened growth,” the agency pointed out, before adding that the medium-term growth outlook remains favourable.

“Nevertheless, in the medium term, we anticipate that growth will be supported by the planned recapitalization of state-owned banks, which is likely to spur on new lending within the economy. Public-sector-led infrastructure investment, notably in the road sector, will also stimulate economic activity, while private consumption will remain robust. The removal of barriers to domestic trade tied to the imposition of GST should also support GDP growth,” S&P underlined.

Soumya Kanti Ghosh, group chief economic adviser at the State Bank of India, said S&P’s rating action was not unexpected going by history but questioned its comments on India’s per capita income.

“”The argument given by S&P that India has low per capita income which is acting as detractor from the sovereign rating upgrade, is fallacious as Indonesia which was upgraded seven times between 2002 and 2011 had a low per-capita GDP of $1,066 in 2003 when its credit rating was upgraded and India’s GDP per-capita is now $1,709.4,” Dr Ghosh said.

While the stable outlook suggests the agency doesn’t expect any change in the rating soon, there could be downward pressures if GDP growth disappoints, if net general government deficits rose significantly or if the political will to maintain India’s reform agenda significantly lost momentum, S&P has said.

The rating agency has estimated public sector banks will need a capital infusion of about $30 billion to make large haircuts on loans to viable stressed projects and meet the rising capital requirements under the Basel III norms.

The bank capitalisation program and the planned ramp-up in public-sector-led infrastructure investments as well as persistent fiscal deficits at the State level will have a bearing on India’s large general government debt and overall weak public finances, S&P said, stressing these continue to constrain India’s ratings.

“India has a long history of high net general government fiscal deficits (net of liquid assets, deficits averaged over 8% of GDP over the past 20 years and 7% in the past five years). The planned large infrastructure investment program is likely to limit expenditure flexibility, even though the government is likely to be able to tap private sector funds for the construction of many of these infrastructure projects,” the agency said.

While the Centre is expected to broadly ‘succeed in controlling deficits’ and government revenues will rise due to efforts to expand the tax base such as demonetisation and GST, S&P foresees problems at the State level to ‘add 3% on average to the consolidated general government deficits over the forecast horizon.’


GDP surprise takes market to 6-month high, Sensex soars 241 points

GDP surprise takes market to 6-month high, Sensex soars 241 points

Robust GDP data for the December quarter allayed market fears as the Sensex on Wednesday rallied over 241 points to end at about a six-month high of 28,985 amid firm global cues.

GDP, microstatThe impact was such that even the broader NSE Nifty took back the 8,900-mark.

The Central Statistic Office on Tuesday showed that GDP expanded by 7 per cent in the third quarter, belying all fears of the note ban derailing economic activity. It also retained its first advance growth estimate for the fiscal at 7.1 per cent.

The Sensex took off on a positive note and went past the key 29,000-mark to touch a high of 29,029.17 before settling up by 241.17 points, or 0.84 per cent, at 28,984.49, a level last seen on September 8 last year when it had closed at 29,045.28.

The gauge had lost 149.65 points in the previous two sessions.

The NSE Nifty also moved up 66.20 points, or 0.75 per cent, to 8,945.80 after shuttling between 8,960.80 and 8,898.60.

A monthly PMI survey showed that India’s manufacturing sector grew for the second straight month in February.

Meanwhile, U.S. President Donald Trump, in his address to the Congress, took a more measured tone, saying he is open to immigration reforms.

Moody’s Investors Service said demonetisation will be credit positive for India as it is likely to reduce tax avoidance and corruption, which cheered market players.

“A surprise growth of 7.1 per cent in third quarter GDP data and no negative comments in Trump’s speech have given a renewed buying interest in the market. The impact of cash crunch seems over—estimated. Prima facie, the February auto sales numbers are looking better as discretionary spending is gradually picking up,” said Vinod Nair, Head of Research, Geojit Financial Services.

 Both the key indices have rallied by almost 9 per cent in the past two months, largely on the back of a growth-oriented Budget, better-than-expected earnings from bluechip companies and strong global cues.

The government pegged GDP growth at a higher-than-expected 7.1 per cent for 2016-17 despite the cash blues, with manufacturing and agriculture doing exceptionally well, which in turn made India keep the tag of the world’s fastest growing large economy.

Better Chinese factory readings led to a higher closing in Asia and and a better opening in Europe.

Stocks of automobile companies led by M&M, Hero Motocorp and Bajaj Auto were in limelight and gained up to 3.13 per cent largely on the back of encouraging sales numbers for February.

Other prominent gainers included Tata Steel, Dr. Reddy’s, ITC Ltd, Sun Pharma, HDFC Ltd, Axis Bank, Infosys, SBI, Hindustan Unilever, ICICI Bank, Power Grid and Cipla, rising by up to 3.66 per cent.

Out of the 30-share Sensex pack, 21 ended higher while 9 led by GAIL, NTPC, Tata Motors, Bharti Airtel, RIL, Coal India, Lupin and Wipro ended lower, which limited the gains.

The BSE realty index gained the most by surging 3.46 per cent, followed by metal 1.91 per cent, FMCG 1.30 per cent, bank 0.96 per cent and healthcare 0.87 per cent.

In step with the trend, the small-cap index rose 0.45 per cent and mid-cap 0.13 per cent.

Meanwhile, foreign investors bought shares worth Rs 1,146.23 crore on Tuesday, showed provisional data.

-PTI, MUMBAI, MARCH 01, 2017

Hard work is more powerful than Harvard : Modi

Hard work is more powerful than Harvard : Narendra Modi

Modi’s remark comes against the backdrop of Nobel Laureate Amartya Sen’s comment that demonetization is a “despotic action that has struck at the root of economy based on trust.”

Prime Minister Narendra Modi on Wednesday said, “ Hard work is more powerful than Harvard” as the latest GDP data shows demonetisation did not affect growth rate, rather the figures improved.

Hard work, microstat“On the one hand are those [critics of note ban] who talk of what people at Harvard say, and on the other is a poor man’s son, who through his hard work, is trying to improve the economy,” he said at an election meeting in Maharajganj.

“In fact, hard work is much more powerful than Harvard” he said.

Mr. Modi’s remark came against the backdrop of Professor of Economics and Philosophy at Harvard University and Nobel laureate Amartya Sen terming demonetisation a “despotic action that has struck at the root of economy based on trust.”

On February 28, the government pegged the GDP growth at a higher than expected 7.1% for 2016-17, despite the cash blues, which was higher than China’s 6.8% for October-December period of 2016, making India retain the tag of the world’s fastest growing economy.

On the electoral politics in Uttar Pradesh, Mr. Modi said the electorate had ensured the BJP’s victory in the first five phases and now they would give surplus votes as “gift and bonus” in the remaining two rounds.

“I request the voters of the State to give the rest of the two phases as bonus to the party. This is similar to the chillies and coriander leaves, which the vegetable seller gives to the buyer as bonus,” he said drawing applause from the crowd.

A few days back, the Prime Minister spoke of the possibility of a hung Assembly in the State, saying that the Samajwadi Party and the Bahujan Samaj Party were waiting for such an opportunity for bargaining. This prompted Chief Minister Akhilesh Yadav to comment that after dreaming of 300-plus seats, Mr. Modi is now talking about a fractured verdict.


Union Budget 2017; most brilliant document since 1991 Budget: Surjit Bhalla

Union Budget 2017 is probably most brilliant document since the 1991 Budget

By: Surjit Bhalla

The Union Budget has been extra-careful and conservative about the impact of DeMo on the economy. It is very likely that GDP growth for FY17 will close in on a number above 7%. It is probably the most brilliant economic and political document since the path-breaking 1991 Budget.

A detached, unhurried reading of Union Budget 2017 does lead one to conclude that it was not a run of the mill Budget. It was different, both in what it did, and what it did not do. It was a state-of-the-art workmanlike Budget with one flaw—it hesitated to go the full, logical distance in tax reforms. Why? Likely because it is waiting for a near-optimal political and economic moment February next year.

Union BudgetIn several articles preceding this Budget, and ever since the demonetisation (DeMo) policy announced on November 8, I have argued that the key post-DeMo goal of the government should be to create a political and economic environment conducive to considerably less creation of black money. I had identified three key areas for policy. First, individual income tax compliance must be made to increase, and as jointly argued with Arvind Virmani, this would not happen unless incentives (carrots) were given to taxpayers for them to come into the tax net and for them to declare a larger fraction of their income. Second, the real estate sector needed to be cleaned up, for it was a major sink for black money. Third, election-funding policies needed to be urgently reformed—this politician-dominated sector is one of the largest black sinks.

On the latter two policy objectives, the Budget has been extraordinarily innovative—especially on election funding.

In addition to black money, the other problem plaguing the Indian economy has been the low rate of growth of capital formation (investment) by the private sector. This, I had emphasised, was very likely due to the extraordinarily high rates of taxation of profits in India. The corporate sector, in aggregate, was paying more than 60% of its profits as taxes to the government (corporate tax, dividend tax, pension payments, insurance payments, indirect taxes, surcharges, cesses—need one go on?). FM Jaitley has decided to fire the first salvo in cutting tax rates of a bygone socialist era in which profits were considered “evil” and something bhadralok shunned with pride.

For 96% of firms (all those with turnover less than R50 crore), the corporate tax rate has been reduced by 5 percentage points—from 30% to 25%. This is just not enough, and possibly a major clean-up will be presented in next year’s Budget when (hopefully) a no-exemption corporate tax rate of 18-20% will be implemented for all firms, big and small.

Personal income tax (PIT) rates: Modi-Jaitley have taken a significant step forward by halving the tax rate (from 10% to 5%) for the lower middle-class of taxpayers (earning between R2.5 lakh and R5 lakh). Even taxpayers earning between R5 lakh and R50 lakh will have their tax outgo reduced by R12,500. For those earning between R50 lakh and R1 crore there is a tax surcharge of 10%, and the surcharge for incomes above R1 crore is retained at 15%.

There are important state elections (especially UP) days after the Budget presentation on February 1. It is well recognised (and perhaps, inevitably, should be) that a Budget is both an economic and a political document. Jaitley goes to considerable length in the Budget to emphasise that we are not a PIT compliant society. To coin a phrase, when it comes to PIT, Indians are pits. This was also emphasised by PM Modi on December 31, and this is a very welcome innovation for leading policymakers to publicly, and loudly, admit to the plague of tax non-compliance.

Comparing the tax compliance data offered by Jaitley on page 28 of the Budget speech and our synthetic or estimated income distribution for 2011 to 2016/17 (the one used by Virmani and myself), one gets the following result: For 2015-16, those earning between R10 lakh and R50 lakh (individuals with no tax surcharge), only 13% of individuals paid taxes, while for those with incomes above R50 lakh, tax compliance is 26%, i.e., the super-rich who are paying a 10-15% surcharge are twice as tax compliant as the near-rich! So, the policy of not cutting taxes for all is an opportunity missed; next year, maybe?

However, in the main, the Budget is workmanlike, and brilliant, in being focused on the Big Picture, and ignoring all advice to do the wrong things—e.g., instituting long-term capital gains tax, or bringing in inheritance tax, or providing doles instead of infrastructure, rejecting universal basic income, and indirectly hinting (through the Economic Survey) that the days of cash transfers for the poor were near (bye-bye, PDS). The best commentary on NREGA was by the FM when he declared that this favourite of Sonia Gandhi and the Congress-Left had received the maximum ever allocation of R48,000 crore. What Jaitley did not emphasise was that this was the lowest in real terms since the programme was initiated in 2008-09; the real allocation to NREGA is now less than two-thirds of the R37,400 made available in 2008-09. Further, and more importantly, NREGA has been converted into a programme for providing infrastructure for irrigation.

The Budget has been extra-careful and conservative about the impact of DeMo on the economy. It is very likely that GDP growth for FY17 will close in on a number above 7%. Somewhat surprisingly, DeMo has not had that big a negative impact on the economy. The jury is still out, but all (conservative) official estimates peg GDP growth at no less than 6.7%. This is obtained with a GDP for agriculture at 4.1%. Kharif acreage, unaffected by DeMo, had an expansion of 3.5%. Add a minuscule productivity growth of 0.6%, and one obtains the CSO estimate of 4.1% agricultural growth for FY17.

The CSO was honest about not extrapolating beyond October 2016. But the rabi acreage, advertised by many anti-DeMo experts as doomed, has expanded by at least 5.9% (all data as of January 13, 2016, Economic Survey, pg. 156); wheat acreage is up by 7.1%. This implies that a minimum level of agricultural growth for FY17 will likely be close to 5.5%, and the likely level being 6-7%. Assuming agricultural growth of 6.5% (versus the 4.1% CSO estimate) yields a GDP growth level of 7.1%, well above that of the (deliberately conservative) ministry of finance and near identical to the estimates of both CSO and RBI.

The BJP, especially PM Modi, is a long-distance runner, a Test player, rather than gimmicky T20s (or even less gimmicky ODI). This longer vision has been apparent for some time, and I believe comes out strongly in the Budget in its estimate of the fiscal deficit for FY18. Remember, the Budget is (ultimately) about fiscal-ism, revenues and expenditures, i.e., the fiscal deficit.

The Budget has not only under-estimated GDP growth, but also the addition to tax revenue this year, and in the future, from increased PIT tax compliance. The fiscal deficit for next year is very likely to be less than 3.2% target for FY18, and likely less than 3%. If both tax revenues and GDP growth are understated, the fiscal deficit is doubly overstated! What a great idea, Sirji.

Large state elections are only in November 2018; and 2019 are the national elections. Flush with higher than expected tax revenue and GDP growth, the Modi government will likely complete tax reform for individuals, and corporates, in February next year. What exquisite timing—set a conservative base this year, so you can be radical next year.

The author is contributing editor, The Financial Express, and senior India analyst at Observatory Group, a New York-based macro policy advisory group
Views are personal
Twitter: @surjitbhalla


Indian economy to grow 6.8% in 2016-17, says Icra

7.1% GDP estimate erroneous, Indian economy to grow 6.8% in 2016-17, says Icra

7.1% GDP estimate erroneous, Indian economy to grow 6.8% in 2016-17, says Icra

These are testing times for the Modi government, though it is fighting against odds in curbing corruption and triggering growth engine of the economy.

The arsenal thrown at government this time has come from domestic rating agency Icra, and not from the Opposition camp.

IANS reported Icra’s claim that advance estimate of 7.1 percent GDP released by Central Statistical Organisation (CSO), will have major errors as it does not include the data for the months after demonetisation.

The agency on Friday pegged the expected growth for 2016-17 lower at 6.8 percent.

 “Given the impact of demonetisation on actual activity from mid-November 2016 onward, projecting GDP growth for the full year by extrapolating the trends up to October 2016 for several sectors, may introduce more errors than in earlier years. This would be particularly apt for cash intensive sectors such as construction,” Icra said in a statement.

The advance estimates released by the CSO of growth in FY2017 are unsurprising, as they draw heavily from the available data for the first half of this fiscal, it said.

“However, Icra expects GDP (gross domestic product) and GVA (gross value added, which excludes taxes and subsidies) growth for FY2017 at 6.8 per cent and 6.6 per cent respectively, appreciably lower than the advance estimates,” it said.

The CSO pegged the country`s gross domestic product at 7.1 per cent in 2016-17 compared with 7.6 per cent in 2015-16.

The anticipated growth of real GVA in 2016-17 is 7 per cent against 7.2 per cent in 2015-16, according to CSO estimates.

“The growth in deposits is an outlier, hence November data was not used for the financials,” India`s Chief Statistician T. C. A. Anant had said, implying that demonetisation is not a normal factor in the calculation of annual national income.

Icra said: “Given the unfolding trends, we expect actual FY2017 growth to be lower than the advance estimates for sub-sectors such as manufacturing, agriculture, electricity and construction.”

In contrast, the recent uptick in commodity prices may well result in a somewhat improved GVA performance of the mining sector in H2 FY2017 as compared to the year-on-year decline in the first six months of FY2017, the agency added.

“Moreover, the unavailability of corporate filings for third quarter of FY2017 and second advance estimates of rabi output (as opposed to the available data on sowing), are likely to constrain the accuracy of the advance estimates,” the statement said.

While rabi sowing has grown by a healthy 7 percent on a subdued base, activity and incomes related to non-crop agricultural sectors including horticulture and livestock may have been adversely impacted by the liquidity crunch, it added.

-January 7, 2017, New Delhi


7th Pay Commission: August salary as per new pay matrix

7th Pay Commission: August salary as per new pay matrix

7th Pay Commission: Notification this week; August salary as per new pay matrix

The notification for the implementation of the 7th Pay Commission recommendations related to the hike in basic pay and pension is likely to be issued by the Narendra Modi government later this week.

With the issuance of notification, 4.8 million central government employees and 5.2 million pensioners could get the increased payout from their August salaries.

The Union Cabinet had earlier cleared the recommendations of the 7th Pay Commission headed by AK Mathur on June 29 in respect of the hike in basic pay and pension. However, the decision on 7th Pay Commission suggestions relating to allowances has been referred to a Committee headed by Finance Secretary.

The Committee will complete its work in a time bound manner and submit its reports within a period of 4 months. Till a final decision, all existing allowances will continue to be paid at the existing rates.

The gazette notification usually comes after 15 to 20 days of Cabinet approval. For implementation of 6th Pay Commission recommendations,  it was issued on 29th August 2008, after 16 days of Cabinet approval while the Union Cabinet had given its approval for implementation of the recommendations of the Sixth Central Pay Commission on 14th August 2008.

The recommendations will benefit over 1 crore employees. This includes over 47 lakh central government employees and 53 lakh pensioners, of which 14 lakh employees and 18 lakh pensioners are from the defence forces.

The Commission had recommended a 23.55 percent overall hike in salaries, allowances and pension involving an additional burden of Rs 1.02 lakh crore, or nearly 0.7 percent of GDP.

The entry-level pay has been recommended to be raised to Rs 18,000 per month, from the current Rs 7,000, while the maximum pay, drawn by the Cabinet Secretary, has been fixed at Rs 2.5 lakh per month from the current Rs 90,000. Rate of annual increment has been retained at 3 percent.

-July 25, 2016, New Delhi

Economy on ‘upward curve’, monsoon, GST to push growth: Jaitley

Economy on ‘upward curve’, monsoon, GST to push growth: Jaitley 

With India retaining the fastest growing large economy tag post latest GDP numbers, Finance Minister Arun Jaitley today said the country is on an “upward curve” and a good monsoon, GST passage and increased infra and rural spending will further accelerate the growth.
With pro-growth policies helping gross domestic product grow a faster-than-expected 7.9 per cent in January-March quarter and 7.6 per cent in the entire 2015-16 fiscal, he asserted that these are not “stray figures” and an analysis of the pattern shows inherent strength in the economy.
Also aiding was the growth in output of eight core sectors growing 8.5 per cent in April on the back of pick up in output of refinery products, fertilisers, steel, cement and electricity.
“Last two years, a number of factors were loaded against us – there was a global slowdown and we had two consecutive below normal monsoon rainfalls,” he said, adding that people are surprised how India has managed to grow at the fastest pace in the world.
Going forward, “reform process is going to continue. Hopefully, Goods and Services Tax (GST) bill is passed (in ensuing monsoon session of Parliament), which has the potential to add to GDP growth. Also, our infrastructure and rural spending will add to that,” he said commenting on the latest GDP numbers.
On the forecast of a good monsoon this year, Jaitley said it “would mean an increase in agriculture production, more purchasing power and rural demand.”
On the growth clocked in 2015-16, Jaitley — who is on a six-day investor wooing tour of Japan — said, there was improvement in the agriculture as well as the services sector. “More importantly, there is a consumer demand and there is increased consumer spending,” he added.
The GDP expansion in January-March period bettered 7.2 per cent of December quarter and helped extend the lead over China, which grew 6.7 per cent in the March quarter – the slowest in the world’s second largest economy in seven years.
Earlier speaking at a meeting organised by Japan-India Business Cooperation Committee, he said investors looking for higher returns should park funds in India’s infrastructure and manufacturing sectors.
“As growth would return to the world, consumer spending would pick up, hopefully the monsoons would be better, this trend which has been set in India itself could be improved upon. That we are on an upward curve seems evident,” he said.
-01 June 2016 | PTI | Tokyo

Economy to grow at 7-7.5 pc in 2016-17, 7.6 pc in current yr

Economy to grow at 7-7.5 pc in 2016-17, 7.6 pc in current yr

Ahead of the Union Budget, the Economic Survey today termed external environment as challenging but projected a 7-7.5 per cent GDP growth rate in the next fiscal which could accelerate to eight per cent in a couple of years.
The Economic Survey for 2015-16, which was tabled in Parliament today, also made a case for carrying forward the reform process to achieve macro-economic stability.
Inspite of challenges and lower than projected GDP growth rate during 2015-16, “the fiscal deficit target of 3.9 per cent of GDP seems achievable.”
After a 7.2 per cent economic growth in 2014-15, it said the expansion in economy will be 7.6 per cent in the current fiscal, the fastest in the world.
However, it cautioned that if the world economy remained weak, India’s growth will face considerable headwinds.
On the domestic side, two factors can boost consumption, increased spending from higher wages and allowances of government workers if the 7th Pay Commission is implemented and return of normal monsoon.
At the same time, the Survey enumerated three downside risks – turmoil in global economy could worsen the outlook of exports, contrary to expectations oil price rise would increase the drag from consumption and the most serious risk is the combination of these two factors.
“One of the most critical short-term challenges confronting the Indian economy is the twin balance sheet problem – the impaired financial positions of the public sector banks and some corporate houses. The twin balance sheet challenge is the major impediment to private investment and a full-fledged economic recovery,” the Survey said.
-26 February 2016 | PTI | New Delhi