economic-news

5 jan

Google launches My Business and Digital Unlocked tool for small and medium businesses

Internet giant Google launched two new initiatives My Business and Digital Unlocked to train and help small and medium businesses (SMBs) in India capitalise on the digitisation wave faster. These initiatives were launched by Google CEO Sundar Pichai in New Delhi in presence of Union IT and law minister Ravi Shankar Prasad in New Delhi. Key Facts My Business Websites: Under it, Google will provide free websites and web tools to small businesses in order to bolster their digital presence. This will help SMBs create a free, mobile optimised website. Digital Unlocked: It is a training programme launched in association with industry body FICCI. It will provide Indian SMBs essential digital skills to enable them to get online and connect to customers in different parts of the country. The trainings will be certified by Google, Indian School of Business and FICCI. In addition, Google also launched Primer, a free mobile application designed to teach digital marketing skills in a quick, easy and interactive way. It also works offline and is currently available in English and Hindi languages.

Union Government launches IPR Enforcement Toolkit for Police

The Union Commerce and Industry Minister Nirmala Sitharaman launched an Intellectual Property Rights (IPR) Enforcement Toolkit for Police. This toolkit will be provided to all state police departments across the nation to assist them in dealing with the cases relating to Trademarks and Copyrights infringements. Key Facts The toolkit has been jointly developed by the Cell for IPR Promotion and Management (CIPAM) and Federation of Indian Chambers of Commerce and Industry (FICCI). It will act as a ready reckoner for police officials across the country for dealing with crimes related Intellectual Property rights (IPR) infringement, specifically Trade Marks counterfeiting and Copyrights piracy. In addition it will provide details of offences under various laws, checklists for registering a complaint and conducting search and seizures case of IP crimes. About CIPAM The CIPAM is nodal agency under the aegis of the Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry. It is working to ensure effective implementation of the National IPR Policy 2016. It has undertaken several measures to strengthen the IP ecosystem in the country.

7 jan

India’s GDP growth expected to be slower at 7.1% in 2016-17: CSO

According to growth projection released by the Central Statistics Office (CSO), India’s Gross Domestic Product (GDP) growth is expected to grow at a slower pace at 7.1% in 2016-17 as compared to 7.6% in 2015-16. This estimate is in sync with the Reserve Bank of India’s (RBI) economic growth forecast and is largely based on data from the first seven months of the year. The slowdown is chiefly due to an industrial slowdown. Key Facts Per capita net national income during 2016-17: estimated to be Rs.1,03,007, rise of 10.4% as compared to Rs. 93,293 during 2015-16 with the growth rate of 7.4%. Agriculture, forestry and fishing sector: likely to show a growth of 4.1% during 2016-17, as against the previous year’s growth rate of 1.2%. Manufacturing sector: It is estimated to grow by 7.4% in 2016-17 as compared to growth of 9.3% in 2015-16. Wholesale price index (WPI): food articles has risen by 6.9%, manufactured products 2.0%, and electricity -1.4% and all commodities 2.8% during April-November 2016-17 period. Consumer price index: It has shown a rise of 5.0% during April-November 2016-17. Note: This estimate does not factor in the impact of the Union Government’s demonetization decision announced on November 8, 2016. The outcome-based numbers from the September to December 2016 quarter will be captured in the next growth projection to be released in February 2017.

11 jan

PM Narendra Modi inaugurates India’s first international exchange at GIFT city

Prime Minister Narendra Modi inaugurated India’s first international exchange India INX at the International Financial Service Centre (IFSC) of GIFT (Gujarat International Financial Tech) City Gandhinagar, Gujarat. India INX is a wholly-owned subsidiary of the Bombay Stock Exchange (BSE). It will enable Indian firms to compete on equal footing with offshore firms. Key Facts India INX will initially trade in equity derivatives, currency derivatives, commodity derivatives including index and Stocks. Subsequently, it will offer depository receipts and bonds once required infrastructure is ready. It will work for 22 hours in a day working from sunrise to sunset i.e. starting when Japan exchanges begin and close when US markets end. It will have 250 trading members including commodity and overseas brokers. India INX is one of the most advanced technology platforms with turnaround time of 4 seconds. It will facilitate international investors and NRIs to trade from anywhere in the world.\ It will provide benefits in terms of waiver of security transaction tax, commodity transaction tax, dividend distribution tax, long term capital gain tax and income tax.

13 jan

Industrial production grows 5.7% in November 2016

India’s factory output, measured by the Index of Industrial Production (IIP) has registered 5.7% growth in November 2016 as against 1.9% in October 2016. It is the fastest growth recorded in more than four years and is largely on account of a low base effect. It also does not display the negative effects of demonetisation as production cycles in manufacturing take longer to adjust to any demand change. Key Facts Manufacturing sector grew by 5.5% in November 2016. Mining sector output rose 3.9%. Electricity generation sector increased 8.9%. Capital goods output surged 15%. Consumer durable output jumped 9.8% Consumer non-durable production increased 2.9% Overall growth in consumer goods output was 5.6%. About Index of Industrial Production (IIP) The IIP is compiled and published every month by Central Statistics Office (CSO) of the Union Ministry of Statistics and Programme Implementation. It covers 682 items comprising Manufacturing (620 items), Mining (61 items) & Electricity (1 item). The weights of the three sectors are 75.53%, 14.16%, 10.32% respectively and are on the basis of their share of GDP at factor cost during 2004-05. The eight Core Industries comprise nearly 38 % of the weight of items included in IIP. Base Effect: It is basically the consequence of abnormally high or low levels of inflation in a previous month distorting headline inflation numbers for the most recent month.

17 jan

Richest 1% own 58% of total wealth in India: Oxfam Study

According to study conducted by rights group Oxfam, India’s richest 1% now hold a huge 58% of the country’s total wealth, indicating rise income inequality. It is higher than the global figure of about 50%. It shows that 57 billionaires in India now have same wealth ($216 billion) as that of the bottom 70% population of the country. Globally, just 8 billionaires have the wealth as the poorest 50 % of the world population. Key Findings of Study The total global wealth in the year 2016 was $255.7 trillion of which about $6.5 trillion was held by billionaires, led by Bill Gates ($75 billion), Amancio Ortega ($67 billion) and Warren Buffett($60.8 billion). Globally, just 8 billionaires have the same amount of wealth as the poorest 50% of the world population. Since 2015, richest 1 % owned more wealth than the rest of the planet. Over the next 20 years, 500 people will hand over $ 2.1 trillion to their heirs (a sum larger than GDP of India, a country of 1.3 billion people). Over the last two decades, richest 10% of the populations in China, Laos, Indonesia, India, Bangladesh and Sri Lanka have seen their share of income increase by more than 15%. Poorest Sections: The poorest half of world has less wealth than had been previously thought. The poorest 10% have seen their share of income fall by more than 15%. Solution: It calls to build a human economy that benefits everyone not just the privileged few. In India, there are 84 billionaires with a collective wealth of $248 billion led by Mukesh Ambani ($19.3 billion), Dilip Shanghvi ($16.7 billion) and Azim Premji ($15 billion). Gender pay gap: India suffers from huge gender pay gap. It has among the worst levels of gender wage disparity (men earning more than women in similar jobs) and the gap exceeding 30%. In India, women form 60% of the lowest paid wage labour but only 15% of the highest wage–earners. Thus, India women are poorly represented in top bracket of wage–earners and experience wide gender pay gap at the bottom. Indian government must introduce inheritance tax and increase wealth tax as the proportion of this tax in total tax revenue is one of the lowest in India to end the extreme concentration of wealth and to end poverty.

IMF cuts India’s FY17 growth rate to 6.6% from 7.6%

The World Economic Outlook (WEO) update released by the International Monetary Fund (IMF) has cut India’s growth rate for the fiscal year 2016–17 to 6.6% from its previous estimate of 7.6%. India’s growth rate was cut due to the temporary negative consumption shock of demonetisation. It has dampen India’s growth by 1% point in the FY2017 and 0.4% point in FY2018, compared with IMF’s earlier projections. Key highlights of IMF’s Outlook Global economic activity will pick up pace in FY17 and FY18, especially in emerging markets and developing economies. Global growth is forecast at 3.4% in FY17 against 3.1% in FY16. There is marginal upward shift in prospects for the US and China until 2018 but India, Mexico and Brazil are among the large economies that have had their projections revised downwards. For China, the growth forecast for FY 2017 was revised upwards, to 6.5%, 0.3% point above the October 2016 forecast. In 2018, China’s growth rate is projected to be 6% against India’s 7.7%. The recent election of Donald Trump as US President could have a positive impact on US economy, but extent of it could not be gauged immediately. The stimulus policies expected and already underway in US and China will hold world economy from further slowdown and result in rise of global growth. India’s Demonetisation move led to shortage of currency causing a slump in demand and widespread job losses dampening growth. Other Asian countries such as Thailand and Indonesia will also face headwinds in medium term.

India ranks 60th in Inclusive Development Index

India ranked 60th among the 79 developing countries in 2017 Inclusive Development Index (IDI) released in World Economic Forum’s (WEF) ‘Inclusive Growth and Development Report’. The index is based on 12 performance indicators and countries are ranked on IDI scores based on a scale of 1-7. It has three pillars Growth and Development, Inclusion and Intergenerational Equity, and Sustainability in order to provide a more complete measure of economic development than GDP growth alone. Key Highlights of 2017 IDI Top 10 developing economies in 2017 IDI: Lithuania (1st), Azerbaijan (2nd), Hungary (3rd), Poland (4th), Romania (5th), Uruguay (6th), Latvia (7th), Panama (8th), Costa Rica (9th) and Chile (10th). Top 10 advance economies in 2017 IDI: Norway (1st), Luxembourg (2nd), Switzerland (3th), Iceland (4th) and Denmark (5th), (6th), Netherlands (7th), Australia (8th), New Zealand (9th) and Austria (10th). BRIC’s countries: Russia (13th), China (30th) and Brazil (30th). India’s neighbours: India’s many of the neighbouring nations are ahead in the rankings. China (15th), Nepal (27th), Bangladesh (36th) and Pakistan (52nd). India, with a score of only 3.38, ranks low among 79 developing economies, despite its growth in GDP per capita is among the top 10 and labour productivity growth has been strong. India scores well in terms of access to finance for business development and real economy investment. Reasons for India’s lower rank: India’s debt-to-GDP ratio is high, that raises some questions about the sustainability of government spending. India’s labour force participation rate is low, informal economy is large and many workers are vulnerable to employment situations with little room for social mobility. India needs more progressive tax system to raise capital for expenditures in infrastructure, health care, basic services and education,

India ranks 92nd in 2017 Global Talent Index
India was ranked 92nd among 118 countries in the 2017 Global index of talent competitiveness (GTI) list. The index measures ability of countries to compete for talent i.e. how countries grow, attract and retain talent. The index is produced by global business school INSEAD in partnership with Adecco Group and Human Capital Leadership Institute (HCLI) of Singapore. Key Highlights of 2017 GTI Top 10 Countries: Switzerland (1st), Singapore (2nd), United Kingdom (3rd), United States (4th), Sweden (5th), Australia (6th), Luxembourg (7th), Denmark (8th), Finland (9th) and Norway (10th). BRICS Countries: India’s ranking is worst among the five BRICS countries. China (54th), Russia (56th), South Africa (67th) and Brazil (81st). It noted that BRICS countries are not getting stronger and both China and India have slipped from their year-ago rankings. India Related Facts: In this edition of the list, India slipped by 3 places compared to 89th rank in 2016 GTI. India stood on a relatively solid in pool of global knowledge skills compared with other emerging markets. But in terms of retaining and attracting talent indices, India ranked lowly 104th and 114th, respectively. Overall a major challenge for India is to attract talent from abroad, particularly in the context of large emigration rates of high-skilled people. India has been able to create a stable pool of global knowledge skills, but still experiences a brain drain. India’s ranking will improve only if it improves in its regulatory (94th) and market (99th) landscapes. GTI global ranking of cities: 2017 edition of GTI also released the first-ever global ranking of cities on the basis of their reputation and growing footprint in attracting, growing, and retaining global talent. Top 10 global cities in terms of talent competitiveness: Zurich, Helsinki, San Francisco, Gothenburg, Madrid, Paris, Los Angeles, Eindhoven and Dublin. Mumbai was only Indian city to make into this list.

19 jan

Bengaluru ranked world’s most dynamic city: JLL Index
According to recently released Jones Lang LaSalle’s City Momentum Index (CMI), Bengaluru (capital of Karnatak) has emerged as the most dynamic city in the world. The index tracks the speed of change of a city’s economy and commercial real estate market. It covers 134 major established and emerging business hubs and ranks them on parameters like technology, connectivity, population, education and real estate investments. Key Facts Top 10 cities in 2017 CMI: Bengaluru (India), Ho Chi Minh City (Vietnam), Silicon Valley (US), Shanghai (China), Hyderabad (India), London (UK), Austin (US), Hanoi (Vietnam), Boston (US) and Nairobi (Kenya). Most dynamic cities around the world share the ability to embrace technological change, absorb rapid population growth and strengthen global connectivity. Cities in India, China and Vietnam, along with several in the United States head the list of the world’s fastest changing cities. In this edition of CMI, cities from Asia-Pacific region comprise half of the top 30 fastest-changing cities. India has over taken China as home to some of the world’s most dynamic cities. Six Indian cities feature in the CMI Global Top 30 that includes Pune (13th rank), Chennai (17th), Delhi (23rd), Mumbai (25th).

CCEA approves listing of five general insurance PSUs at the stock exchanges

The Cabinet Committee on Economic Affairs (CCEA) has given its ‘in principle’ approval for listing the five Public Sector General Insurance Companies (2016-17) owned General Insurance Companies in the stock exchanges. They are New India Assurance Company Ltd, United India Insurance Company Ltd, Oriental Insurance Company Ltd, National Insurance Company Ltd and General Insurance Corporation of India. The shareholding of these PSGICs will be divested from 100% to 75% in one or more tranches over a period of time as per Securities and Exchange Board of India (SEBI) and Development Authority of India (IRDAI) rules and regulations. Significance of listing of PSGICs Bring transparency and equity in the companies functioning as listing on the stock exchange necessitates compliance requirements of SEBI. Improve corporate governance and risk management practices leading to improved efficiency. It will lead to greater focus on growth and earnings. Open the way for the companies to raise resources from the capital market to meet their fund requirements to expand their businesses, instead of being dependent on the Government for capital infusion. Divestment in these companies will help government in raising resources and portion of the funds can be used by the company for expansion. Background The Union Finance Minister in his 2016-17 Budget speech had announced that public shareholding in Government-owned companies is a means of ensuring higher levels of transparency and accountability. In order to promote this objective, the general insurance companies owned by the Government will be listed on the stock exchanges.

Union Cabinet approves amendment in Modified Special Incentive Package Scheme
The Union Cabinet has given its approval for amendment in the Modified Special Incentive Package Scheme (M-SIPS) for electronics manufacturing. These modifications will further incentivize investments in electronic sector and move towards Union Government’s goal of ‘Net Zero imports’ in electronics by 2020. Key Amendment The applications will be received under M-SIPS scheme till December 2018 or till such time that an incentive commitment of Rs 10,000 crore is reached, whichever is earlier. In case the incentive commitment of Rs 10,000 crore is reached, a review will be held to decide further financial commitments. For new approvals, the incentive under the scheme will be available from the date of approval of a project and not from the date of receipt of application. The incentives will be available for investments made within 5 years from the date of approval of the project. Unit receiving incentive will provide undertaking to remain in commercial production for at least 3 years. The Appraisal Committee chaired by Secretary, Ministry of Electronics and IT will recommend approval of project. Significance of amendment in M-SIPS Expedite investments into the Electronics System Design and Manufacturing (ESDM) sector in India. Create employment opportunities and reduce dependence on imports. About Modified Special Incentive Package Scheme (M-SIPS) The Union Cabinet in 2012 approved the M-SIPS to provide a special incentive package to promote large scale manufacturing in the ESDM sector to boost domestic electronic product manufacturing in the country. The scheme provides subsidy for capital expenditure 20% for investments in Special Economic Zones (SEZs) and 25% in non-SEZs. It also provides reimbursement of countervailing duty/excise for capital equipment for non-SEZ units and also reimbursement of duties and central taxes for some of the projects with high capital investments.

20 jan

FIPB clears 6 FDI proposals worth Rs 1,187 crore

The Inter-ministerial body Foreign Investment Promotion Board (FIPB) approved six investment proposals envisaging foreign investments of Rs 1,186.5 crore. Decision in this regard was taken by FIPB meeting headed by Economic Affairs Secretary Shaktikanta Das. It has approved the proposals of Sanofi Synthelabo India, Star Den Media Services, Idea Cellular Infrastructure Services, Boehringer Ingelheim India Pvt. Ltd, Menarini India Private Limited and Recipharm Participation B.V. Netherlands. Background India allows FDI in most sectors through the automatic route, but in certain segments considered sensitive for the economy and security, then those proposals first have to be cleared by FIPB. The Union Government has taken a slew of measures in the recent past to boost foreign direct investment into the country. The FDI in the country has grown to $40 billion in the financial year 2015-16 as against $30.94 billion in the previous FY 2014-15. About Foreign Investment Promotion Board (FIPB) The FIPB is inter-ministerial body that offers a single window clearance for applications on Foreign Direct Investment (FDI) that are under the approval route. The finance secretary is the chairman of the FIPB. It is housed in the Department of Economic Affairs, Union Ministry of Finance. Presently, FDI proposals up to 3,000 crore rupees are cleared by the FIPB. However, those proposals involving FDI of more than 3,000 crore rupees are given final clearance by the Cabinet Committee on Economic Affairs (CCEA) headed by Prime Minister.

20 jan

Draft steel policy anticipates Rs. 10 lakh crore investments

The Steel Ministry has released new draft National Steel Policy of 2017, envisaging to double India’s domestic steel production capacity to 300 million tonnes by 2030-31. The draft policy anticipates a requirement of Rs. 10 lakh crore of fresh investments to meet production goal and expects creation of at least 11 lakh new jobs in the process. Key Features of Policy Two alternatives vision: (i) Create a globally competitive steel industry that promotes inter-sectoral growth (ii) Create a self-sufficient steel industry that is technologically advanced, globally competitive and promotes inclusive growth. Focuses on: Impediments like high input costs, import dependency, availability of raw materials and financial stress plaguing the sector. Couple of factors such as the demand and production of sponge iron are still under discussion. Gas-based steel plants: Proposes gas-based steel plants and technologies such as electric furnaces to bring down use of coking coal in blast furnaces in order to cut down reliance on expensive imports of coking coal. Public sector firms in the steel sector: They should aim for economies of scale. The will be encouraged to divest their non-core assets through mergers and restructuring. Greenfield steel plants along India’s coastline: These plants will be set up under the aegis of Sagarmala project to tap cheap imported raw materials such as coking coal and export the output in a more cost-effective manner. Cluster-based approach: It will be pursued, especially for micro, small and medium enterprises (MSMEs) to ensure easy availability of raw materials, optimum land use and economies of scale.

24 jan

N K Singh panel submits report on changes in FRBM Act

The Fiscal Responsibility and Budget Management (FRBM) Committee has submitted its 4 volume report on changes in FRBM Act, 2013 to the Union Finance Minister Arun Jaitley. The 5 member committee was headed by N.K. Singh, former Revenue and Expenditure Secretary and former MP. Its member included RBI Governor Urjit Patel, Chief Economic Advisor Arvind Subramanian, former Finance Secretary Sumit Bose, and National Institute of Public Finance and Policy Director Rathin Roy. Key Facts The committee was constituted in May 2016 following Finance Minister Budget 2016-17 announcement. It was assigned task to review the working of the FRBM Act over last 12 years to suggest the way forward. It was also tasked to examine the need and feasibility of having a ‘fiscal deficit range’ as the target in place of the existing fixed numbers (percentage of GDP) as fiscal deficit target. The committee has kept in view the broad objective of fiscal consolidation and prudence and has suggested changes required in the context of the uncertainty and volatility in the global economy. The first volume of the report addresses the issue of the fiscal roadmap, fiscal policy, international experience and recommendations therein. The second volume refers to international experience especially from a lot of international organisations particularly OECD, the World Bank, ILO. The third volume deals with Centre-State issues. The fourth volume deals with views of domain experts both from national and international appropriate for fiscal policy

India rejects attempts of EU, Canada for global investment agreement

India, along with Brazil, Argentina and some other nations rejected an informal attempt of European Union (EU) and Canada to work towards a global investment agreement at World Trade Organisation (WTO)-level. The EU and Canada proposed agreement incorporates a contentious Investor-State Dispute Settlement (ISDS) mechanism. They wanted their investment pact to be the template for a similar multilateral agreement. What is Investor-State Dispute Settlement (ISDS) mechanism? The ISDS mechanism permits companies to drag governments to international arbitration without exhausting the local remedies. It also allows them to claim huge amounts as compensation citing losses they suffered due to reasons, including policy changes. The contentious ISDS mechanism already has been incorporated by investment pact by the EU and Canada. What is India’s position? India has rejected such mechanism. It clearly held that only after all local options have been exhausted for settling disputes between a corporate and a government, then the issues can be taken up in international arbitration tribunals. It also held that such provisions could be a part of bilateral agreements but they can’t be allowed in a multilateral agreement.