Tag: growth

IMF keeps India’s growth forecast at 7.2% for 2017-18

IMF keeps India’s growth forecast at 7.2% for 2017-18

24/07/2017 16:25

India will stay ahead of China in growth sweepstakes in 2017 as well as 2018, said the International Monetary Fund (IMF) while retaining the country’s GDP forecast at 7.2 cent for the current fiscal, reported PTI.

According to IMF’s World Economic Outlook Update, India’s growth is projected to accelerate to 7.7 per cent in 2018-19, from 7.2 per cent forecast for 2017-18.

While the IMF has retained India’s growth estimate as provided in the World Economic Outlook (WEO) in April, in the case of China, the forecast has been marginally raised to 6.7 per cent in 2017 and 6.4 per cent in 2018 from earlier projections.

India, however will continue to grow faster than China in 2017 as well as 2018.

Growth in India, the multilateral agency said, is forecast “to pick up further in 2017 and 2018, in line with the April 2017 forecast.

It added: “While activity slowed following the currency exchange initiative, growth for 2016 — at 7.1 per cent — was higher than anticipated due to strong government spending and data revisions that show stronger momentum in the first part of the year.”

According to the WEO update, inflation in advanced economies remains subdued and generally below target and has been declining in several emerging economies such as Brazil, India and Russia too.

It further said economic activity in both advanced and emerging and developing economies is forecast to accelerate in 2017 to 2 per cent and 4.6 per cent, respectively, with global growth projected to be 3.5 per cent, unchanged from the April forecast.

Indian economy grew 7.1 per cent in 2016-17.

The IMF further said that with a pick-up in global trade and strengthening domestic demand, growth in the ASEAN-5 economies is projected to remain robust at around 5 per cent.

December quarter GDP growth surprising, says Fitch

07/03/2017 15:01

The US-based Fitch Ratings today appeared to pick holes in the governments 7 per cent growth estimate for the December quarter despite the cash crackdown, saying official data suggesting strong private consumption are at odds with real services activity.

The rating agency, however, projected a robust 7.1 per cent growth for 2016-17 and 7.7 per cent in the following two financial years (2017-18 and 2018-19).

Fitch said estimates released by the Central Statistics Office (CSO) last week showed GDP was “hardly hit” in October-December by the cash crunch after the governments sudden move to pull out 86 per cent of currency in circulation overnight.

The 7 per cent GDP growth in the third quarter is marginally lower than 7.4 per cent expansion in the previous quarter.

“This number looks somewhat surprising as real activity data released since demonetisation pointed to weak consumption and services activity because these transactions are cash-intensive. By contrast, official data suggest that private consumption was strong in October-December (though services output growth moderated quite substantially),” it said.

In its latest Global Economic Outlook (GEO), Fitch said one reason for this discrepancy could be the inability of the official data to capture the negative effect of demonetisation on the informal sector.

“However, the formal sector also remained surprisingly robust. This raises the possibility that these initial estimates of the growth impact of demonetisation could well be underestimated, with the possibility of revisions to official GDP data later on,” it said.

Fitchs projection of 7.1 per cent economic growth for this fiscal is in line with the estimates of CSO and global think-tank OECD.

This growth rate compares to 7.8 per cent expansion in 2015-16.

It estimated retail price inflation to rise to 4.6 per cent in 2017-18 and 5 per cent in 2018-19, from 3.4 per cent in the current year.

For the world, it said growth slowed to 2.5 per cent in calendar 2016, from 2.7 per cent, which is projected to pick up to 2.9 per cent in 2017 and 3 per cent in the following year.

China, however, is seen to decelerate to 6.3 per cent in 2017 and 5.7 per cent in 2018, from 6.7 per cent in 2016.

Global oil prices may rise to USD 52.5 in 2017 and USD 55 in 2018, from an average of USD 45.1 per barrel in 2016.

Forecasting robust growth rates for India in the next two fiscal, Fitch said: “Gradual implementation of the structural reform agenda is expected to contribute to higher growth, as will higher real disposable income, supported by an almost 24 per cent hike in civil servants wages at the state level.”

It said macroeconomic policy support to growth may gradually fade.

“There may still be some positive impact from the previous accommodative monetary policy stance, but the Reserve Bank of India signalled in its February meeting that its interest rate easing cycle had come to an end,” it added.

“We are now expecting the policy interest rate to stay at its current level of 6.25 per cent. At the same time, the government announced in the last Budget the raising of the deficit target for 2017-18 to 3.2 per cent of GDP, from 3 per cent, which would support growth.”

GDP growth to slow to 5.7% in Jan-Mar 2017: Nomura

GDP growth to slow to 5.7% in Jan-Mar 2017: Nomura

13/02/2017 16:13

India’s economic growth is likely to remain muted in the first quarter of this calender year with the GDP likely to grow at 5.7 per cent in the January-March period amid subdued activity, says a report.

According to the global financial services major Nomura, following subdued growth in the first quarter, a V-shaped recovery is on the cards due to remonetisation, wealth redistribution and the lagged effects of lower lending rates.

“We expect growth to remain subdued in the first quarter of 2017 as the activity level remains below its recent peak,” Sonal Varma chief India economist at Nomura said in a research note.

Nomura expects economic growth to remain in a downtrend. As per the report, from 7.3 per cent GDP growth in the July-September 2016, the October-December 2016 quarter GDP growth is likely to slow to 6 per cent and further to 5.7 per cent in the first quarter of 2017 (January-March).

“We expect GDP growth to slow from 7.3 per cent in Q3 2016 to 6.0 per cent in Q4 and 5.7 per cent in Q1 2017,” it said.

According to official figures, industrial production contracted to a four-month low of 0.4 per cent in December, largely due to decline in production of capital goods and consumer goods.

“The moderation in industrial output growth is not a surprise; weak demand since demonetisation has likely forced companies to cut production in order to clear the excess inventory,” Nomura said.

Notwithstanding the improvement in manufacturing PMI in January, industrial output growth should sequentially improve though growth is expected to remain subdued in the first quarter of 2017 as the activity level remains below its recent peak.

“Thereafter, we expect a V-shaped growth recovery to take hold in the second half of 2017, due to remonetisation, wealth redistribution and the lagged effects of lower lending rates,” it added.

‘Reforms to boost growth; banking risks constraint rating’

20/09/2016 15:09

Moody’s Investors Service said the reforms undertaken by the government will help boost investor confidence and bolster growth potential, but cautioned muted private investment and banking sector risks will remain a constraint on India’s sovereign rating.

It also said in the near-term, challenging budget targets could lead to significant spending cuts late in the year, especially since fiscal deficit till July had touched 74 per cent of the whole year’s budget, reported PTI.

“In Moody’s view, over time, the multi-pronged but step- wise approach to reform will foster a stable macroeconomic environment. In particular, the cementing of the monetary policy framework with the objective of maintaining inflation at moderate levels is credit positive. Moody’s expects continuity in monetary policy, which is a credit positive,” said Moody’s Sovereign Group Senior VP Marie Diron as per the PTI report.

Moreover, structural hurdles will continue to constrain private sector investment and growth and banking sector will continue to pose contingent liability risks to the government over the near to medium term, Moody’s said.

“The credit implications of India’s reforms will materialise in the medium term,” it said.

Moody’s points out that banking sector risk will also remain a constraint on India’s sovereign ratings.

While bad asset recognition is a first step, the measure does not strengthen the resilience of banks, and therefore does not reduce the contingent liability risks for the sovereign.

Moody’s estimated that the fiscal costs of equity injections in public sector banks are manageable, although they are larger than currently budgeted and will add to the government’s challenge in meeting its fiscal targets.

Speaking at a joint Moody’s-ICRA sovereign and macro- economy briefing here, ICRA Senior Economist Aditi Nayar said economic growth will pick up in 2016-17 to 7.9 per cent, from 7.6 per cent last fiscal.

In the near-term, Moody’s expect private investment will remain weak as corporates in investment-intensive sectors are burdened by elevated debt levels.

In addition, the economy will remain vulnerable to fluctuations in monsoon rains. In general, infrastructure gaps will continue to constrain investment and the rise in FDI will not make up for muted domestic investment, it cautioned.

In terms of the monetary policy framework, the government of India has notified a CPI inflation target of 4 per cent, within a tolerance band of 2-6 per cent until March 2021.

“Such a scenario would help to anchor inflationary expectations. In addition, a favourable base effect as well as improved crop sowing dynamics will ensure that CPI inflation remains within this tolerance band in the near term,” ICRA said.

Core sector growth at 3.2% in July

Core sector growth at 3.2% in July

01/09/2016 13:00

India’s infrastructure sector grew at a weaker pace in July amid a dip in steel sector output, raising concerns over a slowdown in Asia’s third biggest economy which expanded at 7.1 per cent in the June quarter.

Output of the eight core industries which include coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity, expanded at 3.2 per cent in July 2016 from the same month a year ago, government data showed on Wednesday.

In June 2016, India’s infrastructure growth stood at 5.2 per cent, year-on-year.

The core sectors make up 38 per cent of the country’s overall industrial output and had grown by 1.3 per cent in July 2015, year -on-year.

Refinery production climbed 13.7 per cent in July 2016 from the year ago month while coal & natural gas output rose 5.1 per cent and 3.3 per cent, respectively.

However, the output in the steel sector shrank 0.5 per cent and electricity generation slowed in July compared to a year ago. Production in the cement industry rose by 1.4 per cent in July 2016 from the same month a year ago.

For the April-July 2016 period, cumulative core sector expansion stood at 4.9 per cent, the data showed.

India’s Q1 growth slows to 7.1%

01/09/2016 11:10

India’s economy expanded at the slowest pace in more than a year in the first quarter of FY 2016-17 amidst sluggish investment and farm output, dampening hopes of a near-term growth rebound to 8 per cent and adding pressure on the Reserve Bank of India (RBI) to cut interest rates to help bolster consumption and business sentiment.

Gross Domestic Product (GDP) in Asia’s third biggest economy expanded by 7.1 per cent in the April-June 2016 quarter from the year ago period, the slowest pace in five quarters, government data showed on Wednesday.

That compared to the 7.9 per cent expansion witnessed in Q4 FY 2015-16. Analysts had projected an expansion of 7.4 per cent in the country’s economy in the first quarter of the ongoing fiscal.

Despite the slowdown in growth, India remains the world’s fastest growing major economy.

Gross value added (GVA) grew at a solid 7.3 per cent in Q1 FY 2016-17, the data showed. Growth in Agricultural GVA slowed to 1.8 per cent in Q1 of this fiscal from 2.6 per cent a year ago.

Gross fixed capital formation, a proxy for investment, fell 3.1 per cent in real terms in the first quarter of the current fiscal.

Private consumption, the major driver of the country’s economy rose 7 per cent with a better monsoon and increase in wages likely to bolster household spending further in the coming quarters.

Auto industry to grow to Rs 20 lakh cr in 10 years: Gadkari

Auto industry to grow to Rs 20 lakh cr in 10 years: Gadkari

30/08/2016 17:12

Automobile industry turnover is poised to grow over four times to Rs 20 lakh crore in 10 years and has the potential to occupy the top slot globally, Union Minister Nitin Gadkari said.

Urging automakers to “not to compromise with quality”, he said innovation and technological upgradation can boost exports.

“Automobile industry, which is of Rs 4.5 lakh crore at present, we will take it to Rs 20 lakh crore in 10 years. It has the potential to become number one in the world,” Road Transport and Highways Minister said while addressing the annual meet of Automobile Component Manufacturers Association of India (ACMA).

He said the industry registered a growth of 8 per cent and accounted for exports to the tune of Rs 70,000 crore.

Urging automakers to go for research and innovation and not to compromise on quality, the minister said, “It is the government’s endeavour to frame such economic policies, which boost employment potential. To enhance employment potential we will have to increase exports. Innovation and research is key to it.”

He said unfortunately, the number of patents registered by India are very low as compared to the US and China which shows “industry’s motivation is less towards research and innovation. Made in India and Make in India is the priority of our government. I will request you to give attention to quality… if not, we will miss out on opportunities.”

To boost automobile exports, he said, the government has initiated a number of steps, including providing facilities to ports for exports besides promoting waterways.

“Our priority is to boost exports. Change your mindset. Western countries pay much attention to quality. We should improve our research and quality,” he said.

The minister said 1,58,000 vehicles were exported from Mumbai Port Trust last year and this year it will be 2 lakh cars.

He said the government was harnessing its 7,500 km of seafront and 20,000 km of waterways that will reduce transportation cost drastically.

Gross NPAs of state run banks double in 15 months: Reports

25/08/2016 09:29

As per latest data available with the central bank, the gross non-performing assets (NPAs), or bad loans, of India’s state-run banks, measured as a percentage of their advances, have swollen from 5.4 per cent as on March 2015 to 11.3 per cent 15 months later.

As per reports, in contrast, such bad loans of private banks and foreign entities in the industry, rose in a relatively less dramatic manner — from 2.2 per cent to 2.8 per cent for the former and from 3.2 per cent to 3.7 per cent for the latter.

As per the presentation by the Deputy Governor, the state-run banks also had dismal bottomlines. As against a net profit of Rs 30,869 crore in March 2015, they incurred a net loss of Rs 20,006 crore a year later.

During this period, the net profit of private banks registered a growth from Rs 35,832 crore to Rs 39,672 crore. While foreign banks also made a total net profit, it came down from Rs 12,764 crore to Rs 12,619 crore.

Education contributing to growth of services sector: Jaitley

Education contributing to growth of services sector: Jaitley

23/08/2016 16:52

Exhorting students to take advantage of expanding economy, Finance Minister Arun Jaitley today said education has become a powerful tool, which is contributing to the growth of services sector.

Jaitley was the chief guest at the Convocation of Delhi School of Business, Vivekananda Institute of Professional Studies (VIPS).

Addressing the students, Jaitley also called upon them to work hard in their initial years to attain higher goals than remaining mediocre.

“For us in India, education is a powerful resource. It is a powerful resource because the largest contribution to our economy comes from services sector. And in the services sector, the human resource itself has the largest role to play,” he said.

Services sector contribute about 60 per cent to the country’s GDP.

Referring to declining population in several developed countries, the minister said the movement of human resource is “an important item” on the agenda of international trade talks.

VIPS, affiliated to Guru Gobind Singh Indraprastha University, conducts LLM, MCA, LLB, BBA LLB, BCA and B.COM (Hons), among other courses.

IT Cos growth slowing as expected; outlook stable due to low debt levels

12/08/2016 14:56

Key IT companies weighted average revenues grew sequentially in 1QFY17 by 1.2 per cent, which is less than half the previous year same quarter and is in line with the growth slowdown expected, says India Ratings and Research (Ind-Ra).

The agency, however, maintains a stable outlook on Indian IT companies, on the back of low debt levels and continues to expect IT company’s growth to remain in the range of 8 per cent-9 per cent in FY17.

The growth slowdown in FY17 is expected due to lower budget allocations of clients in North America (constitutes 55%-60% of Indian IT companies revenues). Uncertainty on Brexit would also result in clients delaying IT spends and putting budgets on hold, it said.

Ind-Ra notes that historically, the first two quarters of the financial year are the stronger quarters and sets the pace for the full financial year, since client budgets are finalised and fixed on a calendar year basis and flows to Indian IT companies in the first and second quarter of the financial year. The growth rates in the third and fourth quarters are usually lower than the first two quarters.