Economy
Indian economy: Interesting mid-year signals

Overall, the review offers rich insights about the Indian economy and its performance. It also gives a semblance of things that are to be expected in the future especially the forthcoming budget

 

The recently released mid-year review of the Indian economy by the finance ministry offers some fascinating insights into Indian public policy and decision-making.
 
Growth and Inflation: 
The review mentions that the real GDP has grown at a 7.2 percent in H1 of 2015-16. It is slightly lower in comparison to the GDP growth of 7.5 percent in FY 2015. The review also mentions very explicitly that the discrepancy in the GDP, which has been questioned by economists, is due to problems in measurement rather than any biases of the people involved in the computing the national accounting statistics. 
 
Inflation seems to have moderated. The CPI inflation has moderated to 5 percent in October 2015 compared to 5.4 percent in February 2015. Similarly, the WPI has been in the negative territory since November 2014 and was pegged in October 2015 at -3.8 percent. The fiscal deficit target is pegged at 3.9 percent of the GDP, which has the likelihood to be met amid tax buoyancy, especially from the indirect taxes. On the flip side, the lower than projected growth rate and lower than projected disinvestment receipts may just make it more challenging to meet the fiscal deficit target. 
 
Similarly, India's external position appears robust. The CAD is at a comfortable level of 1.2 percent of GDP. Forex reserves are little above $350 billion in December 2014 as compared to little over $270 billion in July 2013. Also, net FDI inflows have increased to $17 billion in H1 2015-16 in comparison to $15.8 in H1 2014-15. The rupee's performance relative to the dollar, as also against a basket of 36 currencies, has been robust - making India competitive. A stable rupee also makes it well positioned to absorb volatility as the US Federal Reserve moves towards normalcy by increasing interest rates.
 
The Four Engines: 
The review examines the four engines that enable economic growth. Two of these seem to be working well while two seem to be a little sluggish. Public expenditure and private consumption seem to be working well. Public expenditure doing well is reflected by the growth in real gross fixed capital formation by public sector that is at present 29 percent. The credit growth in the private sector aided by the low commodity prices internationally reflect that the private consumption as being a 'bright spot' in the economy. 
 
The engines that seem to be sluggish are private investment and exports. The private investment remains weak as corporate balance sheets remain stressed. It is due to rise in indebtedness of the private sector that has resulted in weak private investment. Similarly, export performance remained peevish due to decline in exports. The decline is attributed to the decrease in global demand. Also in the context of exports the non-oil sector export performance is better than the overall export performance. 
 
Sector-wise performance: 
The primary sector has seen turmoil due to this being the second year being with deficient rainfall from the SW monsoon. The review offers some justifications as well as reveals some interesting points about the agriculture sector. It clearly mentions that the recent spike in the price of pulses was due to the decrease in the production of pulses which went don from 19.25 million tonnes in 2013-14 to an estimated 17.20 million tonnes in 2014-15 - a fall of 2.05 million tonnes. Additionally, the review offers close monitoring of minimum support prices (MSPs) as these have a bearing on the level and composition of agricultural output. It also mentions that agricultural credit has increased to Rs.8,45,000 crores in 2014-15. 
 
In the industrial sector, the signals are mixed. While the index of industrial production has grown marginally better in H1 2015-16 as compared to H1 2014-15, there is variation in performance in various sectors. In production terms power, fertilizer and car sectors are surging while commodity sectors like steel, iron, aluminium and cement seem to be doing less well. The corporate sector performance contracted further by 4.6 percent y-o-y but was offset by total expenditure contracting at a higher rate (7.8 percent). The decline in raw material costs resulted in improving net profit growth that reached 9.9 percent y-o-y.
 
In the services sector, too, there are mixed signals. Though it performs the best among the three sectors and about the past there are still concerns about service exports. The growth of services sector accelerated to 10.2 percent in 2014-15 as compared to 9.1 percent in 2013-14. Trade, Hotel, Transport, communication and services related to broadcasting' achieved the highest growth rate, followed by finance, real estate & professional services. Service exports as well tourism seems to decelerate. 
 
Overall, the review offers rich insights about the Indian economy and its performance. It also gives a semblance of things that are to be expected in the future especially the forthcoming budget. Overall the review diagnoses some unique challenges that the government and its institutions must look into and resolve.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
 

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COMMENTS

Mahesh S Bhatt

1 year ago

Are we seeing only investments or ROI too

We have quantity economics which has destroyed the quality/utilizations/ returns across sectors mainly in real estate.

High costs of fuel has slowed down the business with steady inflation wrongly drafted.

Murli Deora/Jaipal Reddy ( opposed Mukesh oil rate upgrade) / Chako in 4 years of UPA Oil costs up from $ 1.29 to $ 4.56 & Modi raised to $ 5.59 Jai Ho

PETROL PRICES AROUND D WORLD
Pakistan. Rs 26.00
Bangladesh Rs 22.00
Cuba Rs 19.00
Italy. Rs 14.00
Nepal. Rs. 34.00
Burma. Rs. 30.00
Afghanistan. Rs 36.00
Sri Lanka. Rs. 34.00
INDIA. Rs. 82.00
How it comes to this......
Basic cost per 1litre. 16.50
+ Centre Tax. 11.80%
+ Excise Duty. 9.75%
+ Vat Cess. 4%
+ State Tax. 8%
Total added up together becomes Rs 50.05 per 1 litre. + now another Rs 32. Extra. This 32/- extra for what no explaination for this.
What a great job by the GOVT. Of INDIA !!!!!!!!
PASS THIS MESSAGE TO ALL INDIANS. JAGO GRAHAK JAGO
JAI HO.................
Mukesh Ambani's
Dream House 7 years construction
finished,
4 lakhs squre ft,
27 floors,
9 lifts,
3 heli pads,
1 theatre,
1 gym,
1 park,
168 car parking,
600 rooms,
600 servants,
world's LARGEST RICHEST
SINGLE FAMILY HOUSE..
Total cost
Rs.4700/- crores only.
Last month Mukesh
moved with his wife &
3 childrens in 2 it.
1st month electricty
bill is 71 lacs.
Incredible INDIA.!
Amir logon ka garib desh. Guys plz forward this
Hamara Bharat mahaan

We are guaranteed for grand downturn asap.

God Bless Amen Merry Christmas & HNY 16

Mahesh

RCOM sells 150 flats in Navi Mumbai for Rs330 crore

The company also expects to finalise and announce plans very shortly for monetisation of its valuable real estate measuring nearly 4 acres, situated at a prime location in New Delhi

 

Industrialist Anil Ambani-led Reliance Communications (RCOM) on Monday said it has sold nearly 150 residential flats at Sea Woods complex in Navi Mumbai for Rs.330 crore, which will be used for repayment of debt.
 
"The sale consideration for the disposal of the flats at Navi Mumbai has been finalised at over Rs.330 crore. The disposal marks the commencement of RCOM's monetisation programme for surplus real estate owned by the company.
 
"The entire proceeds from the monetisation of real estate will be utilised by RCOM for repayment of debt, as part of its overall deleveraging plans," said a company statement.
 
"RCOM has already received more than 50 percent of the sale proceeds, and the balance amount will be realised during the current financial year, upon completion of documentation, etc. presently underway," it added.
 
The company also expects to finalise and announce plans very shortly for monetisation of its valuable real estate measuring nearly 4 acres, situated at a prime location in New Delhi.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Highlights of proposed Insolvency and Bankruptcy Code

It proposes Insolvency Regulator to exercise regulatory oversight over insolvency professionals, insolvency professional agencies and informational utilities

 

Highlights of the bill for an Insolvency and Bankruptcy Code that was introduced in the Lok Sabha, the lower house of parliament, by Finance Minister Arun Jaitley on Monday:
 
- Consolidates into a single law a host of legislations that deal with the subject;
 
- Aims to speedily adjudicate such cases for higher recovery of debt and money;
 
- Allows operational creditors like employees to also call for insolvency resolution;
 
- Proposes Insolvency Regulator to exercise regulatory oversight over insolvency professionals, insolvency professional agencies and informational utilities;
 
- Moots two separate Insolvency Adjudicators -- one with jurisdiction over companies and the other over insolvency and bankruptcy resolution of individuals;
 
- Proposes to regulate insolvency professionals and insolvency professional agencies, under regulator's oversight;
 
- Proposes fast-tracking resolution of insolvency cases and improve recoveries of amount lent to companies within a timeline of 180 days, extendable by another 90 days;
 
- Proposes insolvency resolution process for individuals where the creditors and the debtor will engage in negotiations to arrive at an agreeable repayment plan of debts;
 
- Moots "Fresh Start" process for indigent individuals with income and assets lesser than specified thresholds; and
 
- Proposes insolvency information utilities which would collate, authenticate and disseminate financial information from listed companies and creditors of companies.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
 

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