8.2% GDP growth an outcome of reforms like gst, liberalisation of fdi norms by Modi government, says CII
The 8.2 per cent economic growth in the first quarter of 2018-19 is an outcome of key reforms like GST and liberalisation of FDI norms initiated by the government, CII said Tuesday. According to the chamber, increase in private investment and enhanced government spending will help India garner a GDP growth of 7.3-7.7 per cent for the ongoing financial year. “Further, with good monsoons so far, we could see strong domestic demand contributing to higher GDP growth this fiscal,” CII President Rakesh Bharti Mittal said.
Mittal noted that GST, reforms in Ease of Doing Business, FDI, labour, agriculture, and many other initiatives aimed at improving the overall investment climate and productivity have begun to show impact. “These have collectively contributed to the robust GDP figures that we saw for June quarter 2018-19. At 8.2 per cent it is a significant improvement over the 5.6 per cent registered a year back,” said the CII President.
According to him, the reforms have also led to increased demand leading to better capacity utilisation and higher growth of industry, which again is reflected in manufacturing growth at an impressive 13 per cent plus in the first quarter. “A few external challenges remain, in the form of oil prices and hardening interest rates in the US, but our domestic strengths are robust enough to ensure that India would ride over any bumps on the road,” Mittal said.
CII claimed that the results of a poll conducted among its National Council CEOs are the most positive in a long time. “The industry leaders are bullish on demand, top and bottom line growth, capacity utilization, investment plans and also new hiring. In short, we are in the midst of a recovery, which is firmly rooted in strong fundamentals,” CII said.
ECGC should provide liberal insurance cover to promote exports: FIEO
The commerce ministry should direct the Export Credit Guarantee Corporation (ECGC) to provide liberal insurance coverage to consignments with a view to promote overseas shipments, FIEO said Friday. Federation of Indian Export Organisations (FIEO) President Ganesh Gupta said the claims made by exporters should be settled on time and not rejected outrightly.
“We have asked the commerce ministry to direct ECGC on this issue. Exporters are facing huge problem at this front. Proper insurance cover is important to boost the country’s exports. ECGC should work with exporters to address all the issues,” he said. Gupta said the liberal insurance cover for markets such as Africa and Latin America would help promote shipments in these regions. In June, the government approved capital infusion of Rs 2,000 crore to ECGC to enhance insurance coverage to micro, small and medium enterprises exports.
Insurance coverage from the corporation will help improve competitive position of Indian exporters in international markets. ECGC offers credit insurance schemes to exporters to protect them against losses due to non-payment of export dues by overseas buyers due to political and/or commercial risks.
India’s exports grew 9.78 per cent to USD 302.84 billion in 2017-18. Since 2011-12, exports have been hovering at around USD 300 billion. Promoting exports helps a country to create jobs, boost manufacturing and earn more foreign exchange.
Suresh Prabhu asks tourism Minister Alphons Kannanthanam to set up iittm at Ratnagiri or Sindhudurg
Commerce and Industry Minister Suresh Prabhu has urged his Tourism counterpart to set up Indian Institute of Tourism and Travel Management (IITTM) at Ratnagiri or Sindhudurg to promote the development of this region. In a letter to Tourism Minister Alphons Kannanthanam, he said the Konkan region with its 700 km coastline has huge potential to promote the region as a tourist destination and opening a branch of IITTM, Goa there may not help in actualising this potential fully.
Establishment of a full-fledged institute will not only be a booster for greater tourism but will also provide much necessary fillip to the overall economic development in this backward region, the commerce minister said. “I would request you to consider setting up a full-fledged IITTM at a suitable place in either Ratnagiri or Sindhudurg district. I have requested the Maharashtra Chief Minister to provide land for this,” he said.
A native of Sindhudurg district of Maharashtra, Prabhu represents Andhra Pradesh in the Rajya Sabha. IITTM is an autonomous body under Ministry of Tourism. It offers education, training, research and consultancy in sustainable management of tourism, travel and other allied sectors.
Business-friendly policies, digital push boost retail FDI, says report
Government policies promoting ease of doing business, changing consumer behaviour due to digital influence, and revamped retail strategies have spurred foreign inflows into retail and wholesale trade, a report said. The government’s proactive approach has been appreciated by global retailers who were sitting on the fence to invest into India, but have now taken a serious look, the joint report by Deloitte and Retailers Association of India (RAI) on foreign direct investment (FDI), launched at the Retail CFO Summit Tuesday said.
As per the Reserve Bank of India (RBI), FDI in retail and wholesale trade nearly doubled to USD 4.4 billion in 2017-18, from USD 2.7 billion in 2016-17. The report expects the quantum of foreign investments flowing into the country to increase further “given the increasingly favourable macroeconomic environment in India and the government’s consistent focus on making the business environment more conducive”.
Quoting the UNCTAD’s World Investment Report 2017, the report said, 20 per cent of the global executives favoured India as the host destination for investments during 2017-19, ranking the nation third after the US and China. The digital revolution is a main contributor to a paradigm shift in consumer behavioural patterns, according to the report, resulting in revamping of strategies formulated by retailers and the complete supply chain.
Increasing number of new retailers are rampantly turning digital in nature and are operating with vastly different business models than their more entrenched counterparts, it added. “Growth is largely driven around convenience for the consumer, which has helped e-commerce and online sales,” Anil Talreja, partner, Deloitte India, told PTI.
Consumers especially of the age profile of under 32, are significantly driving progress and changing shopping habits, according to him. Listing out the challenges faced by the sector, Talreja said stumbling support sectors like infrastructure, and supply chain that are still not as advanced, and the rule of 30 per cent local sourcing, which requires companies to change their operating model, are the major roadblocks. It can be noted that the country’s retail sector is expected to grow to USD 1.1 trillion by 2020, registering a CAGR of 8.79 per cent between 2000 and 2020.
After GST, income tax overhaul on cards: Modi-appointed panel proposes 200% penalty on under-reporting
The Arbind Modi-led panel, which was formed last year in November to suggest changes in the Income Tax law, has proposed 200% additional penalty on under-reporting of income, ET Now reported quoting sources. It is not clear yet if such a proposal was made for personal income tax or corporate tax.
After the overhaul of the indirect tax system to switch to the Goods and Services Tax (GST), the Narendra Modi government shifted the focus on making changes to the 50-year-old Income Tax Act. A task force was appointed under top taxman Arbind Modi to suggest required changes in the act to increase ta compliance in the country.
The panel has also proposed to clearly define the difference between misreporting and under-reporting and suggested a 200% additional penalty on under-reporting and 50% additional penalty on misreporting, ET Now reported. Formed in November last year, the task force was initially given six months to prepare its report. In May this year, it was given a three-month extension.
Income Tax overhaul has been a long-pending agenda. Arguably it was the UPA-II, the suggested several changes in the Income Tax under the name Income Tax Code. However, the code expired with the new government coming to power. The Economic Survey also hinted at some changes required in the law.
It said that the biggest litigator is the Income Tax Department, which loses most of its cases filed against taxpayers. Recently, the Narendra Modi government increased the threshold for litigations by the tax department with an aim to cut its number by 41%.
It was earlier reported that the government may not be in favour of implementing any sweeping changes in the law as Lok Sabha elections are due in 2019. The big overhaul aside, the government has implemented several small changes to increase the tax base.A joint report by the World Bank and PwC said that due to a number of reforms including Income Computation and Disclosure Standards (ICDS) have helped in reducing the time required to comply with the corporate income tax.
Weak rupee takes toll on India’s external debt; short-term obligations to rise by whopping Rs 68,000 crore
Oil isn’t the only headache for India as the rupee slides. Add external debt to the list. With the currency losing more than 11 percent to the dollar this year, the country will have to shell out an extra 685 billion rupees ($9.5 billion) when repaying short-term debt in the coming months, according to numbers arrived at by the State Bank of India.
The rupee fell past 72 per dollar to a record low on Thursday, amid a deepening emerging market contagion and the risk of a wider current-account deficit. If the rupee averages 73 to a dollar this year and crude oil, India’s biggest import, averages $76 a barrel for the remaining half of 2018, that could see the country’s oil bill rise by 457 billion rupees, Soumya Kanti Ghosh, chief economic adviser at the State Bank, wrote in a note Thursday.
India’s short-term debt obligations, which included non-resident deposits as well as overseas commercial borrowings by companies, totaled $217.6 billion in 2017. Assuming 50 percent has either been paid in the first half of 2018 or was rolled over to next year, the remaining amount to be repaid in rupees would be 7.1 trillion rupees computed using the average exchange rate of 65.1 per dollar in 2017.
“For the second half of the year, assuming that rupee depreciates to an average value of 71.4 per dollar, the debt repayment amount would be 7.8 trillion rupees,” he wrote. That would implying an extra cost of nearly 700 billion rupees. The analysis did not give details of hedging, if any.
Increasing bond yields could add to the government’s fiscal costs, which is estimated at up to 0.7 percent of gross domestic product A 10 percent depreciation in the rupee could add up to 50 basis points to inflation, as per RBI estimates, besides pushing the oil import bill higher.
India tells us to ensure Iran sanctions don’t hurt economy; raises important issues in first ever 2+2 dialogue
Amid rising global crude oil prices, India has put forward its position to the United States, saying that the sanction imposed by the country on Iran imports will weigh on India, and hence Washington must ensure that the move should not hurt India’s economy. “We told them that we are an energy reliant country, and candidly told them that rapid reduction of oil imports from Iran will impact our economy. We said that our economy should not be impacted by your policies,” it is reported a source as saying. Interestingly, the US has told India that it is not in Washington’s interest to damage the Indian economy , in the first ever 2+2 dialogue between the two prominent world economies. As the US has walked out of the nuclear deal with Iran, it wants all countries to cut oil imports to nil by early November 2019.
To this, the US side replied they “fully understand”, and added that it is “our policy”, but “it is not in our interest to damage your economy,” the government source told. The reply came even as External Affairs Minister Sushma Swaraj and US Secretary of State Michael R Pompeo discussed the issue of oil imports from Iran.
“We have told the Indians consistently, as we have told every nation, that on November 4th the sanctions with respect to Iranian crude oil will be enforced, and that we will consider waivers where appropriate, but that it is our expectation that the purchases of Iranian crude oil will go to zero from every country, or sanctions will be imposed. So we’ll work with the Indians. We committed that we would do that. Many countries are in a place where they — it takes a little bit of time to unwind, and we’ll work with them, I am sure, to find an outcome that makes sense,” Pompeo told in his address.
Explaining the purpose behind the sanction, Pompeo said that US wants to make sure that Iran doesn’t engage in malign behaviour with wealth that comes from countries around the world. India has already told them it is going to buy oil and gas from the US.