Indian Union Budget 2021-22: With the virus having negatively impacted economies worldwide it led to a contraction of 23.9% in GDP for India (Q12020-21). GDP growth numbers for nations such as the United States of America, United Kingdom etc. have also been in the range of (-9.1%) and (-20.4%) resp for Q1, 2020. However, with the Indian economy showing signs of recovery in Q2 FY21, GDP growth estimates saw a revision. As per the first advanced estimates released by the National Statistical Office (NSO), the agriculture sector showed positive growth and services sector was the worst hit. India’s real GDP is estimated to contract by (-7.7%) in 2020-21, compared to a growth rate of 4.2% in 2019-20.
However, despite faster than expected economic recovery making experts revise their forecasts for 2020-21 and 2021-22, there are few signals such as falling wholesale price index (WPI) and current account surplus which do not gel well with the recovery mode. Fall in exports by 15.8% from USD 200.55 billion during April-December, 2020 from USD 364.18 billion in the previous year is a challenge though it reflects a negative external market. More disturbing is the continued fall in imports though it has improved in December 2020. Imports which stood at USD 258.29 billion during April-Dec, 2020 saw a 29.08% fall as compared to the last year which clearly indicates that the manufacturing sector has still not regained its normalcy point.
In December 2020, the trade deficit widened to USD 15.71billion with imports growing by 7.6% and exports contracting for the third month in a row. The fall in exports has been attributed to declining demand in sectors such as petroleum, leather and marine products. IIP contracted 1.9% in November 2020 slowing the trend in increasing factory output seen in the previous two months. Mining and manufacturing witnessed a contraction of 7.3% and 1.7% respectively. Similarly, WPI at 1.22% may appear music to consumers; but certainly does not reflect a positive investment environment.
Thus, keeping the above mentioned economic scenario in mind and in view of the ambitious target set by the Prime Minister of building the country into an Atmanirbhar Bharat, the Union Budget to be announced on February 1, 2021, is the occasion to unfold the road-map in terms of increased government expenditure, increasing purchasing power of the common man who is expected to play a proactive role in demand boosting and building of a robust policy environment.
With the general election being three years away, in any normal circumstance the government could have easily opted for tough measures. However, under the prevailing situation and with the virus resulting in the economic scenario being thrown out of gear the government might not be able to enjoy the mid-term luxury of opting for path breaking economic policy reforms and fiscal measures. The government has to carefully walk through political nuances coupled with a deteriorating fiscal balance, an outcome of the pandemic on one side and economic compulsions on the other and get back on the trajectory of economic growth. Thus, a well-designed and carefully laid out road-map to usher economic growth back on track at the cost of short term political gains would make the budget a historic one.
This is an opportune time and an apt moment for the Government to reiterate its commitment to big-ticket reform measures required to give the requisite boost to the economy. In this direction, fine-tuning of GST in terms of slabs and also intention to bring petroleum products within its ambit would help in bringing down cost of production-thereby, boosting consumption demand.
With the RBI stating in its Financial Stability Report, December 2020 that the banks gross non-performing assets are estimated to rise sharply to 13.5% by Sept 2021 it is time that banks brace themselves for a rollback of the regulatory forbearance announced in light of the pandemic. Similarly, returning to implementation of the bankruptcy code that too at a time when there is no liquidity crunch in the economy would give a positive signal, though at the cost of annoying vested interests in the industry.
With the Make in India programme being envisioned to evolve into Make for the World and the call being given for Vocal for Local thereby laying the building blocks for India to be the manufacturing hub for the world, the government may also have to unfold its reform intentions revolving around labour and land if a big-push is to be given to infrastructure projects as stated by the PM. Today’s youth constitute tomorrow’s working population. NEP 2020 which aims for universalisation of education and bringing quality into higher education by helping students build a scientific temperament from a young age seeks to build a base for a Vibrant India. The budget should ensure that there is adequate provision for an effective implementation of the NEP.
Not to miss the fact that it is equally important to consolidate the goodwill amongst the poor, educated middle class and marginal farmers. This is all the more the need of the hour when an attempt is going on to mislead the public and build a perception of the Government being anti-farmers. This notion has to be disproved in terms of a big jump in rural budget allocation and kisan-related measures such as substantial allocation on agri-infrastructure like cold chains, ripening chambers and refrigerated transportation alongwith promotion of food processing units.
Last but not the least, the middle class population segment certainly is looking for higher disposable income resulting from a cut in tax burden. With a higher marginal propensity to consume the middle class can effectively contribute to revival of demand. A confidence booster from the Union budget can lead to increase in discretionary spending which had taken a backseat during the pandemic. Higher spending would lead to increased production, increase in employment numbers and higher income levels which would set the ball rolling on the economic growth track. Until and unless the February 2021 budget is a 1991-like budget, if not better than that, the nation is bound to feel disappointed to miss a historic opportunity.
Source: The Financial Express
Accelerated investment in upskilling and reskilling of workers can add at least 6.5 trillion dollars to global GDP, create 5.3 million new jobs by 2030 and help develop more inclusive and sustainable economies worldwide, according to a World Economic Forum report published on Monday.
The report titled 'Upskilling for Shared Prosperity' and authored in collaboration with PwC finds that accelerated skills enhancement will ensure that people have the experience and skills needed for the jobs created by the Fourth Industrial Revolution -- boosting global productivity by 3 per cent on average by 2030.
The newly created jobs will be those that are complemented and augmented -- rather than replaced -- by technology.
"Even before Covid-19, the rise of automation and digitisation was transforming global job markets, resulting in the very urgent need for large-scale upskilling and reskilling. Now, this need has become even more important," said Bob Moritz, Global Chairman of PwC.
"Upskilling is key to stimulating the economic recovery from Covid-19 and creating more inclusive and sustainable economies. To make this happen, greater public-private collaboration will be key," he said.
Saadia Zahidi, Managing Director of World Economic Forum, said millions of jobs have been lost through the pandemic while accelerating automation and digitisation mean that many are unlikely to return.
"We need new investments in the jobs of tomorrow, the skills people need for moving into these new roles and education systems that prepare young people for the new economy and society," she said. "There is no time to waste."
Sharan Burrow, General Secretary at the International Trade Union Confederation (ITUC), said investment in job creation, particularly climate-friendly jobs, is key to ensuring a reskilling revolution, and concerted action by governments and by business is needed urgently.
Source: The Business Standard
India’s gross domestic product (GDP) is expected to contract by 8 per cent in 2020-21, according to the latest round of FICCI’s Economic Outlook Survey. The annual median growth forecast by the industry body is based on responses from leading economists representing industry, banking and financial services sector. The survey was conducted in January. The median growth forecast for agriculture and allied activities has been pegged at 3.5 per cent for 2020-21. “Agriculture sector has exhibited significant resilience in the face of the pandemic. Higher rabi acreage, good monsoons, higher reservoir levels and strong growth in tractor sales indicate continued buoyancy in the sector,” Ficci stated on the survey findings.
However, industry and services sector, which were most severely hit due to the pandemic induced economic fallout, are expected to contract by 10 per cent and 9.2 per cent respectively during 2020-21. The industrial recovery is gaining traction, but the growth is still not broad based. The consumption activity did spur during the festive season as a result of pent-up demand built during the lockdown but sustaining it is important going ahead, the survey said.
Besides, it observed that some of the contact intensive service sectors like tourism, hospitality, entertainment, education, and health sector are yet to see normalcy.
“The quarterly median forecasts indicate GDP growth to contract by 1.3 per cent in the third quarter of 2020-21. The growth is expected to be in the positive terrain by the fourth quarter with a projection of 0.5 per cent growth,” estimates the survey. Further, on the estimates of other macro parameters, the survey participants put the median growth forecast for IIP at (-) 10.7 per cent for the year 2020-21, with a minimum and maximum range of (-) 12.5 per cent and (-) 9.5 per cent respectively.
WPI-based inflation rate is projected to be flat in 2020-21. On the other hand, CPI-based inflation has a median forecast of 6.5 per cent for 2020-21, with a minimum and maximum range of 5.8 per cent and 6.6 per cent respectively, the survey revealed. On the fiscal front, a slippage is imminent this year and the median estimate for fiscal deficit to GDP ratio was put at 7.4 per cent for 2020-21 by the participants with a minimum and maximum range of 7 per cent and 8.5 per cent respectively. Fiscal deficit for 2020-21 was budgeted at 3.5 per cent.
However, participants of the survey expect the economy to perform much better and have projected a median GDP growth rate of 9.6 per cent for the financial year 2021-22. The strong rebound in growth will be supported by a favourable base as economic activity normalizes post the sharp pandemic led contraction. The minimum and maximum growth was forecast at 7.5 per cent and 12.5 per cent respectively.
“However, a surge in the number of COVID-19 cases and the appearance of new strains can be a deterrent to the improving growth conditions. It is therefore important that preventive measures continue to be in place,” Ficci said. A good vaccine coverage without many cases of adverse reporting will be a pre-requisite for the normalization process, it added.
However, economists participating in the survey were deeply concerned about the global liquidity situation which, at present, is significantly in surplus and is finding ways to enter asset markets. The participants called upon global central banks to remain watchful of the situation and not allow overheating of markets. Moreover, despite optimism on the growth front, economists cited persistent risks to unemployment and therefore felt the need for continuous monitoring on that front.
Sharing their expectations from the Union Budget, a majority of the participating economists suggested increased public expenditure on building infrastructure. They suggested that the government restructure its expenditure in favour of capital spending (in roads, railways, urban and rural infrastructure, housing) along with providing a clear roadmap and financing plans of the National Infrastructure Pipeline announced in the latter part of 2019.
To enhance revenue collections, economists suggested that government utilizes the current buoyancy in market sentiments to their favour by pushing for disinvestments.
They also underlined the need for continuous focus towards ease of doing business while simultaneously reducing the cost of doing business in India. They also suggested a relief package for the services industry particularly those which were most impacted/continue to be deeply impacted by the pandemic including travel & tourism, hospitality, transport, education and healthcare sectors. Economists participating in the survey have called for increased budget allocation for critical social sectors such as health and education given the current situation.
They said the spending on creation of agriculture infrastructure must be expedited which would result in enhanced capacity of cold storage and warehousing facilities in the country. “Employment creation and consumption revival remain the key areas for ensuring a sustainable turnaround in economic prospects. Therefore, they called upon the government to announce temporary fiscal stimulus to support consumption in the form of income tax breaks or direct income transfers,” the economists in the survey said. To ease the employment situation in both rural as well as urban areas, they called for greater budget allocations to MGNREGA along with introduction of an urban employment guarantee scheme similar to its rural equivalent.
Source: The Financial Express
The pace of normalisation of business activity in India moderated compared to the start of the year as the Nomura India Business Resumption Index (NIBRI) marginally dipped to 92.7 for the week ended January 24 from a 94.4 at the start of the month.
The index of high frequency indicators including mobility indices, also recorded a fall from the previous week’s reading of 93.2, Nomura said in a note on Tuesday, driven by a sharp drop in Google’s mobility indices.
Despite this, NIBRI’s average trend was higher in January at 93.4 as compared to 91.7 in December and 86.3 during the previous month, suggesting that the economy remained on the path of normalisation, said Nomura economists Sonal Varma and Aurodeep Nandi, in the note.
In terms of mobility, Google’s workplace and retail and recreation mobility indices dipped to half of the previous week’s levels even as the Apple driving index improved, the note said.
Power demand saw a healthy 5.1% growth coming on the back of 1.7% improvement in the previous week. Similarly, the labour participation rate inched up to 41.3% from 39.4% earlier.
While the economy would continue to see positive growth, Nomura expected some paring in the pace of sequential improvements, projecting 2% quarter-on-quarter growth for the final quarter of this fiscal compared to 10% sequential growth it saw in the previous quarter.
Going forward, “Progress on vaccinations, growth support in the Budget and a global recovery remain key near-term growth determinants,” Nomura said.
Source: The Economic Times
India's information technology spending is expected to reach $88.8 billion in 2021, an increase of 6.8 per cent from last year, according research firm Gartner.
In 2020, India IT spending fell 2.7 per cent as chief information officers prioritized spending on technology and services that were deemed “mission-critical” during the initial stages of the pandemic.
Gartner further forecast worldwide IT spending would be $3.9 trillion in 2021, an increase of 6.2 per cent from 2020, largely due to the increased speed of digital transformation last year to satisfy remote working, education and new social norms.
“In 2021, CIOs have to fast track their digital projects to get the necessary attention and funding from the board,” said Naveen Mishra, senior research director at Gartner. “Digital initiatives directly related with improving customer engagement and supported with a shorter ROI (return on investment) window will be prioritised in the current economic environment. Improving demand scenario across select verticals in India will spur the overall IT spending in 2021.”
All IT spending segments are forecast to return to growth in 2021. Enterprise software is expected to have the strongest rebound (8.8 per cent) as remote work environments are expanded and improved. The devices segment will see the second highest growth in 2021 of 8 per cent and is projected to reach $705.4 billion in IT spending.
“There are a combination of factors pushing the devices market higher,” said John-David Lovelock, distinguished research vice president at Gartner. “As countries continue remote education through this year, there will be a demand for tablets and laptops for students. Likewise, enterprises are industrializing remote work for employees as quarantine measures keep employees at home and budget stabilisation allows CIOs to reinvest in assets that were sweated in 2020.”
Gartner forecasts global IT spending related to remote work will total $332.9 billion in 2021, an increase of 4.9 per cent from 2020.
Through 2024, businesses will be forced to accelerate digital business transformation plans by at least five years to survive in a post-Covid-19 world that involves permanently higher adoption of remote work and digital touchpoints, it added.
Despite the availability of Covid-19 vaccines, the virus will continue to require government health interventions throughout 2021. Non-Covid-19 geopolitical factors such as Brexit and the US-China tension will also inhibit recovery for some regions.
“Covid-19 has shifted many industries’ techquilibrium,” said Lovelock. “Greater levels of digitalisation of internal processes, supply chain, customer and partner interactions, and service delivery is coming in 2021, enabling IT to transition from supporting the business to being the business. The biggest change this year will be how IT is financed; not necessarily how much IT is financed.”
Source: The Business Standard
Asserting that the coronavirus crisis has brought the world together in sharing best practices, Union Minister Smriti Irani on Monday said it is the time to work together as a global family and cited India’s example in fighting the pandemic through cooperative federalism.
Speaking at the World Economic Forum’s online Davos Agenda Summit, Irani said, “My country is the proof that when the government and citizens come together, much can be done, despite initial fears about the scale of the pandemic making it difficult to coordinate responses.”
Irani, who was participating in a panel discussion on ‘Restoring Economic Growth’ along with Singapore’s Senior Minister Tharman Shanmugaratnam and Bank of Japan Governor Haruhiko Kuroda, among others, stressed on the need to support the global community.
She said her country has supported the needs of poorer sections of society with measures, including cash transfers and clean fuel grants, while the Indian government also gave financial support to millions of SMEs and farmers over the course of the pandemic.
The global economy contracted by more than 5 per cent in 2020 with many countries falling into recession, according to the World Bank.
Discussing how businesses and governments can collaborate more effectively to restore growth sustainably while boosting productivity and sharing prosperity, the panelists said the range of possibilities is narrower this year, but still wide.
“No one can predict what will happen in 2021,” Shanmugaratnam said.
He also warned that this would not be the last global health crisis and there is a need to invest in multilateralism.
“The biggest lesson we need to take from the pandemic was the importance of mutual interest. We have greatly underfunded the global public good and this will be far more expensive in the long term,” the minister added.
Irani also agreed that there was a need for greater international cooperation, but cautioned, “those who made predictions about the year 2020 will bite their tongue before making pronouncements for 2021”.
She said, “In India, we learned very richly from our experience of cooperative federalism. We are proud of the fact how everyone rallied together. there was no sense of despair that we will not overcome whatever challenge the pandemic throws up.”
Irani said it is time to invest in each other.
While the world has lived as a global community for years, there was no recognition of the fact that the future can be so uncertain that we throw out of the window every technology in science and defence.
“This pandemic has given many economies and an opportunity to introspect that it is as wise to invest in your own nations as well as the global community.”
She further hoped that the introspection, which has been deliberate because of the pandemic, is giving us an opportunity to come together to recognise that technology is important as the human interface that has benefitted us as economies and countries.
Irani, Minister of Women and Child Development, and Textiles, said it is yet to be seen whether the pandemic and its impact were really behind us and whether the world was looking forward to a new normal or still adjusting to the despair that was thrown up by the pandemic.
“I am hopeful that we will go from despair to a new hope,” she added.
Asserting that the definitions of developing countries, global economy and resurgence will change post-pandemic, she said, “We need to work not only as a global economy but as a global family.”
“And when you talk about the global family, there will be restrictions and challenges, but our minds will come together in terms of finding solutions and applications that are viable for all.”
She also said it needs to be ensured that those without digital skills are not left behind when technology expands in our workplaces.
On how bravely India handled the pandemic, she said India did not produce a single PPE suit in March last year, but within three months it became the world’s second-largest exporter for this product by creating an industry worth over USD 1 billion, growing from zero to 1,100 companies.
Source: The Financial Express
‘Commerce and Industry Ministry has identified a number of items for duty revisions. Some announcement on duties may come in the Budget’ said a govt official
The government is looking at ways to bring down core inflation through duty revision measures in the Union Budget.
Increase in the cost of doing business can inflate the prices of goods and create a situation which hits the common man more starkly than others. This would leave the government with limited options, including boosting economic growth, increasing infrastructure investments and creating jobs.
The pandemic has led to simultaneous demand and supply shocks, and to soften the impact, the government is looking at lowering the import duty on external inputs, such as metals, and components, among others. “Commerce and Industry Ministry has identified a number of items for duty revisions. Some announcement on duties may come in the Budget,” a government official hinted.
However, sources in the Petroleum Ministry remained non-committal on whether or not excise duty on fuel will be cut. Higher fuel prices are adding to input costs. “The factual position is known to the Finance Ministry; now it is up to them,” an official told BusinessLine.
But, one thing is clear: efforts will be made to bring down the cost of doing business, since that has a share in core inflation.
Core inflation measures price changes in goods and services, excluding those from food and energy and represents the long-term trend. For the month of December, headline inflation (including price trends of volatile food and energy products) dipped to a 14-month low of 4.6 per cent, but core inflation (CPI excluding food and fuel) remained elevated at 5.5 per cent. It had exhibited a small moderation from the November reading of 5.7 per cent. This was the eighth month of 5 per cent plus core inflation.
In fact, RBI, in its January bulletin, said that price pressures in respect of CPI core components are likely to remain in place. PMIs for manufacturing and services sectors point to an intensification of input price pressures in December. This is due to rise in prices of fuel, industrial metals, and edible oil, and increased cost of doing business in the post-lockdown situation. “In a scenario where demand conditions are getting normalised and firms are regaining pricing power, this poses the risk of higher pass-through of rising input costs to output prices,” it said.
According to L Viswanathan, Partner at Cyril Amarchand Mangaldas, “Although recent budgets have indicated increases in import duties, the government’s articulation of ‘Atmanirbhar’ as well as India taking its place in the global supply chains seem to point towards a reduction in import duties for inputs and raw materials to ensure lower input costs for both domestic consumption as well as exports.”
Measures to improve competitiveness and ease of doing business will probably include rationalisation of regulation and legal and regulatory reform, consolidation and continuation of multiple reforms in financial services, infrastructure, labour and education.
The industry feedback to the Finance Ministry has been that there is a need for a relook at import bans, custom duties, anti-dumping duties and various bilateral treaties. At a recent meeting with Prime Minister Narendra Modi ahead of the Budget, which is to be presented on February 1, top economists made a case for taking a close look at import tariffs.
“Ease of doing business and attracting manufacturing and services to India must remain high on the agenda of the government. Price controls are market distorting and will probably be avoided,” Viswanathan said.
Sanjay Kumar, Partner at Deloitte India, said that input costs could relate to the cost of fuel, electricity, and logistics, among others. It is often said that China’s logistics cost is a third of India’s. That itself presents a huge disadvantage for India. Infrastructure development is the answer to that problem. Most of the MSMEs use electricity. “Getting quality supply, and pricing which respects economies of scale, can help them reduce their input costs and become far more viable,” he said, adding “It is important to correct both supply side and demand side. Businesses need to be opened up.”
Source: The Hindu Business Line
With the Covid-19 pandemic playing spoilsport, FY21 disinvestment revenues will likely be at a five-year low of around Rs 30,000-40,000 crore or 14-19% of the massive annual target of Rs 2.1 lakh crore. However, the government will set disinvestment receipts target at around Rs 2 lakh crore for FY22, as bulk of the deals planned for FY21 such as strategic sale of fuel retailer-cum-refiner BPCL and the initial public offering (IPO) of Life Insurance Corporation are seen materialising next fiscal, along with a clutch of other privatisation deals.
The disinvestment receipts so far this year have been about Rs 17,958 crore or 8.5% of the FY21 target. The government’s residual 26.12% stake sale in Tata Communications (erstwhile Videsh Sanchar Nigam Limited) is expected to fetch around Rs 8,000 crore by February-March.
Taking advantage of the recent uptick in the share market, the Centre may also attempt to execute a few offer for sales (OFS) of minority stakes in CPSEs before the end of the current fiscal. While four CPSEs have already bought back a portion of their shares, four more, including Coal India and MOIL, are expected to buy back shares from the government by March 31, 2021. Still, the overall receipts from this route will be the lowest since FY16 (Rs 23,997 crore).
The government’s plan to sell 52.98% stake in BPCL, which was expected to be completed this fiscal, will likely spill over to next financial year, largely due to procedural delays. The government’s stake in BPCL was worth about Rs 60,000 crore in November 2019, around the time the stake sale proposal was approved by the Union Cabinet. At the current market prices, the stake is worth about Rs 44,500 crore only. However, the actual receipts will depend on valuation and consideration of a premium.
After the expression of interest (EoI) stage, three shortlisted bidders for BPCL will be asked to put financial bids in the second stage in February. Since the shortlisted firms will do their due diligence, field queries and evaluate the assets of company and might visit some of its facilities, the cash flow from the transaction is seen materialising in FY22, said people familiar with the matter.
The IPO of LIC was the second biggest component of the budgeted disinvestment target for this fiscal. The insurer’s IPO won’t materialise in the current financial year owing to tardy progress in preparations. While the valuation of the insurer – which often plays White Knight to the government – will be known closer to the listing. LIC is believed to be worth Rs 8-11.5 lakh crore, meaning a 10% IPO could fetch the government Rs 80,000-110,000 crore.
After the EoI stage, Air India privatisation will enter financial bids stage in March-April and the officials are optimistic of the deal going through in FY22. The bids for AI are likely to be under Rs 20,000 crore. The Centre could get about Rs 3,000 crore cash. Besides BPCL, the Air India deal was also targeted to be concluded by March 31, 2021.
Delay in floating of EoI for the Centre’s 30.8% stake sale in Container Corporation and IDBI Bank has pushed these transactions to the next financial year. After clarity on land leasing policy from the Indian Railways that has to be approved by Cabinet, the EoI for ConCor stake (worth about Rs 7,900 crore at current market prices) will be invited. Similarly, the government is yet to invite bids for its 47.1% stake in IDBI Bank worth about Rs 13,600 crore at the current market prices. The IDBI stake sale could also be pushed to the next financial year.
Meanwhile, the Centre has floated an EoI for the strategic disinvestment of its 63.75% stake in Shipping Corporation of India (SCI) worth about Rs 2,500 crore and 26% stake in BEML worth about Rs 1,000 crore.
The next financial year could prove to be a watershed year of privatisation after a gap of 17 years, given the new strategic sector policy on the anvil and statements made by senior government functionaries in recent weeks that the privatisation process would be “more ambitious”. India’s last outright sale of a CPSE was carried out in FY04.
Source: The Financial Express
The government is set to amend laws to streamline the functioning, especially the disciplinary aspects, of three professional institutes — the Institute of Chartered Accountants of India (ICAI), Institute of Cost and Works Accountants of India (ICWAI) and Institute of Company Secretaries of India (ICSI).
A bill to amend relevant provisions of laws governing the three bodies is expected to be introduced during the second half of the budget session of Parliament. The idea is to step up oversight on the three bodies after a committee suggested several changes almost three years ago. In fact, some of the proposals have been accepted; the legal changes are being undertaken in consultation with the institutes.
ICAI itself has been open to changes in recent months and has sought to simplify the process in cases such as those where the Quality Review Board suggests disciplinary action against its members, who are chartered accountants.
The disciplinary track record of ICAI had come under the scanner a few years ago, with even Prime Minister Narendra Modi flagging it at the time of the launch of goods and services tax. Subsequently, the role of auditors had come under scrutiny after the collapse.
As part of the proposal, the government intends to have a say in the appointment of secretaries of the institutes and directors responsible for the discipline of the professionals. At one time, the ministry of corporate affairs, which is piloting the bill, was looking to appoint government officers in these roles.
The committee headed by Meenakshi Dutta Ghosh, a former civil servant, had suggested that the disciplinary platform should be independent of the institute while pointing out that the current mechanism needed to be revamped.
Source: The Economic Times
The finance ministry on Monday released the 13th instalment of Rs 6,000 crore to the states to meet GST compensation shortfall, taking the total amount of fund released to Rs 78,000 crore.
Till now, 70 per cent of the total estimated GST compensation shortfall has been released to the states and union territories (UTs) with legislative assembly.
The Centre had set up a special borrowing window in October 2020 to meet the estimated shortfall of Rs 1.10 lakh crore in revenue arising on account of the implementation of the GST.
The finance ministry in a statement said it has released the 13th weekly instalment of Rs 6,000 crore to the states to meet the GST compensation shortfall. Out of this, an amount of Rs 5,516.60 crore has been released to 23 states and an amount of Rs 483.40 crore has been released to the 3 UTs with legislative assembly (Delhi, Jammu and Kashmir, and Puducherry).
The amount has been borrowed this week at an interest rate of 5.30 per cent.
"So far, an amount of Rs 78,000 crore has been borrowed by the central government through the special borrowing window at an average interest rate of 4.74 per cent," it added.
Out of this, an amount of Rs 71,099.56 crore has been released to the states and an amount of Rs 6,900.44 crore has been released to the 3 UTs, the ministry said.
The remaining five states, Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim do not have a gap in revenue on account of GST implementation, it added.
In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the Centre has also granted additional borrowing permission equivalent to 0.50 per cent of Gross States Domestic Product (GSDP) to the states to help them in mobilising additional financial resources.
Permission for borrowing the entire additional amount of Rs 1,06,830 lakh crore (0.50 per cent of GSDP) has been granted to 28 states under this provision, the statement added.
Source: The Business Standard
As many as 450 infrastructure projects, each worth Rs 150 crore or more, have been hit by cost overruns totalling more than Rs 4.28 lakh crore, according to a report. The Ministry of Statistics and Programme Implementation monitors infrastructure projects worth Rs 150 crore and above.
Of the 1,687 such projects, 450 reported cost overruns and 558 were delayed.
"Total original cost of implementation of the 1,687 projects was Rs 21,44,627.66 crore and their anticipated completion cost is likely to be Rs 25,72,670.28 crore, which reflects overall cost overruns of Rs 4,28,042.62 crore (19.96 per cent of original cost)," the ministry's latest report for December 2020 said.
The expenditure incurred on these projects till December 2020 was Rs 12,17,692.37 crore, which was 47.33 per cent of the anticipated cost of the projects.
However, the report said the number of delayed projects decreases to 408 if delay is calculated on the basis of latest schedule of completion.
Further, for 923 projects, neither the year of commissioning nor the tentative gestation period has been reported.
Out of 558 delayed projects, 111 projects have overall delay in the range of 1-12 months and 135 projects have delay of 13-24 months. As many as 187 projects reflect delay in the range of 25-60 months and 125 projects show delay of 61 months and above. The average time overrun in these 558 delayed projects is 45 months.
Reasons for time overruns as reported by various project implementing agencies include delay in land acquisition, delay in obtaining forest and environment clearances, and lack of infrastructure support and linkages.
Delay in tie-up for project financing, delay in finalisation of detailed engineering, change in scope, delay in tendering, ordering and equipment supply, and law and order problems, among others, are the other reasons, the report said.
The report also cited 'state-wise lockdown due to COVID-19' as a reason for delay in implementation of these projects.
Project agencies are not reporting revised cost estimates and commissioning schedules for many projects, which suggests that time and cost overrun figures are under-reported, it added.
Source: The Economic Times
The global economy, ravaged by the COVID-19 pandemic, is projected to grow at 5.5 per cent in 2021 and 4.2 per cent in 2022, the IMF said on Tuesday, reflecting the expectations of a vaccine-powered strengthening of business activities later in the year and additional policy support in a few large economies.
“In our latest World Economic Outlook forecast, we project global growth for 2021 at 5.5 per cent, 0.3 percentage point higher than our October forecast, moderating to 4.2 per cent in 2022, said Gita Gopinath, Chief Economist of the IMF.
The global economy contracted by an estimated 3.5 per cent in 2020 amidst the unprecedented health crisis.
The 2021 forecast is revised up by 0.3 percentage point relative to the previous forecast (5.2 per cent) in October last year, reflecting expectations of a vaccine-powered strengthening of business activities later in the year and additional policy support in a few large economies, the IMF said.
According to Gopinath, the upgrade for 2021 reflects the positive effects of the onset of vaccinations in some countries, additional policy support at the end of 2020 in economies such as the United States and Japan and an expected increase in contact intensive activities as the health crisis wanes.
However, the positive effects are partially offset by a somewhat worse outlook for the ‘very near-term’ as measures to contain the spread of the virus dampen activity, she said.
Noting that there is a great deal of uncertainty around this forecast, Gopinath said that greater success with vaccinations and therapeutics and additional policy support could improve outcomes, while slow vaccine rollout, virus mutations, and premature withdrawal of policy support could worsen the outcomes.
If downside risks were to materialise, a tightening of financial conditions could amplify the downturn at a time when public and corporate debt are at record highs worldwide, she added.
The Indian-American economist said the projected recovery in growth this year follows a severe collapse in 2020.
Even though the estimated collapse (-3.5 per cent) is somewhat less dire than what the IMF had previously projected (-4.4 per cent), owing to stronger-than-expected growth in the second half of last year, the 2020 economic shrinkage remains the worst peacetime global contraction since the Great Depression (1929-1933).
Due to this partial rebound, over 150 economies are expected to have per-capita incomes below their 2019 levels in 2021. That number declines, only modestly, to around 110 economies in 2022.
At USD 22 trillion, the projected cumulative output loss over 2020-2025 relative to the pre-pandemic projected levels remains substantial, she said.
The IMF, in its World Economic Outlook (WEO) update, said that consistent with recovery in global activity, global trade volumes are forecast to grow about eight per cent in 2021, before moderating to six per cent in 2022.
Services trade is expected to recover slower than merchandise volumes, which is consistent with subdued cross-border tourism and business travel until COVID-19 transmission declines everywhere, it said.
According to the WEO, the emerging market and developing economies are projected to trace diverging recovery paths.
Considerable differentiation is expected between China where effective containment measures, a forceful public investment response, and central bank liquidity support have facilitated a strong recovery and other economies.
Oil exporters and tourism-based economies face particularly difficult prospects, considering the expected slow normalisation of cross-border travel and the subdued outlook for oil prices.
As noted in the October 2020 WEO, the pandemic is expected to reverse the progress made in poverty reduction across the past two decades.
Close to 90 million people are likely to fall below the extreme poverty threshold during 2020 21.
Across regions, vulnerabilities, economic structure, and pre-crisis growth trends, together with the severity of the pandemic and the size of the policy response to combat the fallout, shape recovery profiles.
Notable revisions to the forecast include the one for India (2.7 percentage points for 2021), reflecting carryover from a stronger-than-expected recovery in 2020 after lockdowns were eased, the IMF said.
Source: The Financial Express
Finance minister Nirmala Sitharaman faces a huge challenge this year. The coronavirus pandemic raged through 2020, roiling economies and ruining many lives. The government’s revenues are down but expenditure commitments are up (think of the free vaccines promised). What path should the finance minister now take?
Should she try and balance the books by levying additional taxes? Say, introduce a temporary Covid-19 cess at the highest income-tax slab, or maybe reintroduce the wealth tax? Or, should she focus on maintaining tax stability while stepping up expenditure for economic revival?
To understand how both scenarios could play out, let’s first look at what impact moderate tax rates have on the tax-GDP ratio and how this compares with a high-tax regime.
EY’s analysis of the historical tax rates in India shows that we have come a long way in achieving the objective of a rational and moderate tax rate regime. For instance, in 1971, the personal tax system had as many as 12 tax brackets, with tax rates ranging from zero to 85%. With surcharge, the highest tax rate worked out to a staggering 93.5%.
The effective burden of personal taxes was reduced in successive years as governments recognised that moderate rates, a wider base and higher compliance made for a better tax policy as opposed to high rates. In 1992-93, the tax rates were considerably simplified: only four tax brackets, with the peak rate at 40%. The 1997-98 ‘Dream Budget’ — presented by P Chidambaram — cut the peak personal income-tax rate from 40% to 30% and the corporate incometax rates from 40% to 35% for domestic firms. This announcement set the new peak tax rate for personal income-tax which continues until today, although with additional surcharges the highest tax burden is now 42.7%.
The immediate impact of the Dream Budget was a sharp fall in the tax-GDP ratio. But, soon after, moderate rates led to better compliance. The government also took measures to broaden the tax base. So, eventually, the tax-GDP ratio got much better.
Consider the numbers. After the 1997-98 Budget, personal tax collections fell by 6%. However, in the next five years (FY1999 to FY2003), the average personal tax-GDP ratio jumped to 1.4% as against 1.2% in the previous five years (FY1993 to to FY1997). A similar effect was observed in the corporate tax collections too, where the average CITGDP ratio increased from 1.4% in the previous five years (FY1993 to FY1997) to 1.6% in the next five years (FY1999 to FY2003). This sustained increase in the tax-GDP ratio was achieved despite India facing global economic headwinds and a three-year growth slowdown between FY2000 and FY2002.
The data suggests that stability and a gradual moderation of tax rates resulted in a positive behavioural response with better compliance, leading to an increase in the direct taxes-to-GDP ratio in the long run.
India’s peak effective tax rate (after including surcharge and cess) hovered between 30% and 35.9% till last year. The hike in surcharge by the Finance Act, 2020 catapulted the peak rate to the present level.
The prime minister has launched the initiative of ‘Honouring the Honest’. In keeping with this spirit, in times of crisis, the focus may need to be on stability, encouraging compliance, broadening the tax base and boosting consumption to improve tax collections. To this effect, certain measures have already been announced and it is expected that Budget 2021 will be constructed around these themes. In the circumstances, any additional burden on existing taxpayers or any new taxes like wealth tax/estate duty, which were discontinued earlier for reasons of high administrative costs and low revenue yield, may not be in sync. The mantra for the FM in Budget 2021 should be ‘No New Tax’.
Source: The Economic Times
To ensure that big players do not corner a large part of the funds, The Ministry of Textile (MoT) is likely to impose caps on the incentive that can be claimed by a company under the production linked incentive (PLI) scheme for man-made fibre (MMF) and technical textiles.
The Hindu business line quoted a source saying, “A cap on the maximum amount that can be claimed under the PLI scheme by a textile company is likely to be put in place so that a big player can’t take most of the amount that has been earmarked for the sector and there is a more even distribution.”
It is pertinent to mention here that the textile sector has been allocated Rs. 10,683 crore under the recently announced PLI scheme.
As far as eligibility norms are concerned, while the minimum turnover for eligibility under the scheme could be Rs. 100 crore, it need not be for the specific item for which a company wants to claim PLI.
As soon as the Union Cabinet approves the PLI scheme for the textile sector, which is in the last stages of discussion and finalisation, it will be notified by the MoT and the modules for registering interested players will be made.
It is being said that the incentive rates offered for the textiles sector are one of the highest (compared to other sectors). It is likely to be fixed at 9 per cent of turnover in the first year for companies with a turnover between Rs. 100 crore and Rs. 500 crore and 7 per cent for those above that.
Source: Apparel Online
Eight Chartered Accountants (CAs)have been arrested so far under the nationwide drive against fake GST invoices, sources in the revenue department said on Monday. The two-halfmonth-long campaign has resulted in arrests of 258 persons who were found to be availing input tax credit (ITC) fraudulently.
Among those arrested, at least two persons have been booked under COFEPOSA(Conservation of Foreign Exchange and Prevention of Smuggling Activities Act) also. The GST intelligence and Central GST authorities have booked more than 2,500 cases against 8,000 fake GST-registered entities during the drive so far. They have also recovered over Rs 820 crore of evaded GST.
The typical modus operandi of the chartered accountants has been to float multiple non-existent firms and fake entities to dupe the exchequer with fraudulent ITC utilisation in connivance with fraudsters and fly-by-night operators, sources said. They added that the department has shared information with chartered accountants’ regulatory body Institute of CharteredAccountantsof India (ICAI) on the arrested professionals, and the body has been asked to take appropriate action.
The revenue department has attributed its success in weeding out tax evasion on complete data sharing among GST, customs and income tax, and use of data analytics including AI and machine learning.
Source: The Financial Express
After two years of unusual negative growth, the Centre’s gross tax receipts will likely jump and register a smart growth of 15% or higher in FY22, giving the much-needed cushion to the government to continue to stimulate the recovering economy with fiscal expenditure. That in years when the GDP growth was sharper than the previous ones, the tax buoyancy usually improved – meaning tax revenue grew faster than the rate at which the economy expanded – gives credence to the assumption.
Most analysts expect the nominal GDP to grow at 15% or thereabouts in FY22; going by historical pattern, it is possible that the tax revenue will grow at the same rate (buoyancy 1) or even up to five percentage points higher. That probably means the sharpest annual growth in tax revenue since FY11, when it was a robust 27%.
Samiran Chakraborty, chief India economist at Citi Group, said given the unprecedented Covid-induced downturn in FY21, a better way to look at FY22 tax growth is to compare it with the FY20 level. The tax revenue growth in FY22 over FY20 could be about 10% and the nominal GDP growth could also be of almost an equivalent proportion. Moreover, if the excise duties on fuels are excluded, the tax-to-GDP ratio in FY22 will still be lower than the pre-crisis level. “Our equity strategists are looking at an EPS growth of 35% in FY22. Against that, about 25% corporate tax growth (year-on-year) next fiscal doesn’t seem to be out of place,” he said.
Sajjid Chinoy, chief India economist at JP Morgan, also said given the current circumstances, more than buoyancy, a better way would be to look at the tax-to-GDP ratio. “If I adjust for excise duties (hikes in rates on fuels) and the corporate tax cuts, over the last two years, gross tax-to-GDP ratio has fallen by over 1.5 percentage points because of the downturn,” he said.
“When you get an upturn (in FY22), you are going to recover some – we are building in 0.8% of GDP. That translates into a 27% growth ex-excise. So, don’t be surprised at all if, given the depressed base, on a nominal GDP growth of 15%, you might get a 27-28% rise in gross taxes in FY22,” Chinoy added.
Tax revenue being highly elastic to GDP growth is a proven notion, which is belied only when the substantial cuts in tax rates are undertaken. A case in point are the years 2008-09 and 2009-10, when taxes were slashed as part of the stimulus package, announced to counter the effects of global financial meltdown.
What also increases the chances of a tax buoyancy greater than 1 in FY22 is augmented ‘tax effort’, meaning a crack down on evasion via increased use of sophisticated data analytics. The GST data base is increasingly facilitating efficient detection of evasion of even income taxes by firms and individuals.
Also, enabled by the hefty hikes in the assorted excise rates on auto fuels from October 2019 through May 2020 – the cumulative tax rate on diesel in FY21 was more than double the level in FY20 –, the Centre could net a tidy sum of Rs 1.2 lakh crore or more in FY22 over FY20 level as additional gross revenue from auto fuel taxes. The Centre’s revenue from taxes on petrol and diesel, before devolution to states, surged 40% to Rs 1.31 lakh crore even in the pandemic-hit first half the year, which saw sales of the two auto fuels dip 24% on year.
Since a large part of the extra taxes on auto fuels are not shared with states, these imposts will benefit the Union budget in a more pronounced manner than taxes in the divisible pool.
It is unlikely that the finance minister will give out tax breaks, at a big cost to the exchequer in the coming Budget.
Demonetisation bolstered the direct tax assessee base and improved the tax’s buoyancy to a great degree in FY17 and FY18, but the slump in economic growth and a return to old, evasive habits by sections of taxpayers led to a sudden, precipitous erosion of these gains in FY19 and FY20. And the pandemic has dealt a body blow to the tax revenue in FY21 – an unprecedented rate of contraction is set ti be registered, even though it could be a bit narrower than (-)13% registered in April-November.
FY19, FY20 and FY21 are also proof that the tax revenue usually falls sharper than the rate at which economic growth declines. Of course, the decline in tax revenue witnessed in FY20 could also be attributed in good measure to the steep corporate tax cut.
An aspect to be noted is that the demonetisation’s positive impact was visible on personal income tax immediately, that is, in the year in which the measure was implemented, but it boosted the corporate tax assessee base and the corporate tax revenue mainly in the subsequent year. Direct tax buoyancy reached a temporary peak in 2018-19 and has since fallen; the buoyancy fell into an abyss in FY20 itself. Tax effort has helped a lot in FY21, in the absence of which, the revenues could have fallen even sharper in the year.
The Centre’s gross tax receipts fell from Rs 20.8 lakh crore in FY19 to Rs 20 lakh crore in FY20. Assuming a decline of 5%, the receipts in FY21 are seen at Rs 19 lakh crore. Finance secretary Ajay Bhushan Pandey is on record to state that the gross tax receipts this year will be “close to last year’s level”.
Source: The Financial Express
The government in the budget next week is expected to announce measures such as extending the facility of bulk clearance for e-commerce imports and exports with a view to promoting the growth of this fast-growing segment in the country, sources said. They said that as there is a multi-fold increase in the e-commerce sector in the country, a significant volume of products is imported into and exported out of India through this platform and there is a need to find a balance between control and facilitation for the sector.
Currently, importers and exporters are required to submit individual/separate clearance documents for each package with the Indian customs department, which adds cost for traders to conduct business through e-commerce.
"With an aim to support the growth of the e-commerce sector in India, the facility for bulk clearance of import and export is required for e-commerce import and exports. Additionally, a simplified process in case of return of e-commerce shipments would also help in promoting the growth," one of the sources said.
Finance minister Nirmala Sitharaman will unveil the Budget for 2021-22 on February 1.
According to exporters, easing of processes for the sector would further help in boosting the country's outbound shipments.
"Extending the facility of bulk clearance is a good idea. Globally this facility is there. It will help in reducing transaction cost. if it is permitted, it would hugely benefit the e-commerce trade,' Federation of Indian Export Organisations Director General Ajay Sahai said.
A leather exporter said that the move if announced in the Budget would help promote exports through e-commerce medium.
Source: The Economic Times
India and China were two major “outliers” in a gloomy year for foreign direct investment (FDI ), as global inflows plunged 42% on year in 2020 to $859 billion, the lowest level since the 1990s, according to the latest Unctad report.
While India witnessed a 13% year-on-year rise, the highest among key nations, in FDI inflows in 2020, China’s rose 4%. Of course, in absolute term, China remained way ahead, with an inflow of as much as $163 billion, while India’s stood at $57 billion. Inflows into India were boosted by those into the digital sector, the report said. Analysts have pointed out that a sizable chunk of these was drawn by Reliance Jio alone.
The UK and Italy saw an over 100% crash each in FDI inflows, followed by Russia (96% drop), Germany (61%), Brazil (50%), the US (49%), Australia (46%) and France (39%).
The Unctad report also warned that uncertainty about the Covid-19 evolution will continue to hamper global FDI inflows in 2021, “threatening sustainable recovery prospects”.
Developing economies drew as much as 72% of global FDI in 2020 – their highest share on record. Asian nations did particularly well, attracting $476 billion in FDI last year.
Responding to the report, commerce and industry minister Piyush Goyal tweeted: “India Means Business: Despite Covid, FDI inflows into India grew at fastest rate among top economies. With double-digit FDI growth of 13% in 2020, the world is beating a path to India.”
Addressing a virtual round-table of mostly foreign investors, Prime minister Narendra Modi, in November, promised “whatever it takes” to make India the engine of global growth. He invited the top executives of 20 global pension and sovereign wealth funds that together manage about $6 trillion in assets to be part of the country’s “exciting progress ahead”.
Investments remain critical to India’s resurgence story, as private consumption has been badly bruised by income losses in the aftermath of the pandemic. Also, India’s reliance on FDI grew substantially in recent years, as overleveraged domestic investors cut down on fresh expansions.
Even before the pandemic struck, the share of gross fixed capital formation (GFCF) in GDP collapsed to 29.8% on year in FY20 from as much as 34.3% in FY12.
However, after a record 47.1% slide in GFCF in the June quarter, thanks to the Covid-induced lockdown, the contraction in such fixed investments narrowed sharply to just 7.3% in the September quarter, suggesting a sharp rebound quarter-on-quarter.
Source: The Financial Express
The Central government has released the thirteenth instalment of Rs 6,000-crore GST compensation payment to the states, the government said on Monday. The states and Union Territories have so far received Rs 78,000 crore of Rs 1.1 lakh crore to be disbursed by the Centre this fiscal.
The Central government borrows the funds under a special window and passes it on to states in back-to-back loan arrangement. The interest rate for the latest loan instalment was 5.31% while the average rate for the entire borrowing so far is at 4.75%, the government said.
While 23 states have been allotted Rs 5,516.6 crore in this round of weekly instalment, the remaining money (Rs 483.4 crore) has been released to the three Union Territories with a legislative assembly (Delhi, Jammu & Kashmir & Puducherry) which are members of the GST Council.
“The remaining five states, Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim do not have a gap in revenue on account of GST implementation,” the government said.
Although GST regime has a mechanism of compensation cess fund, which is made up of cess proceeds, to be used for compensating states in case of shortfall below their protected revenue each year. This guarantee of revenue protection is baked into the law and the states are entitled to a 14% y-o-y growth in their GST revenue.
However, since last year, the compensation cess fund has proved to be inadequate for the purpose. The Central government proposed this year that it would pay states through market borrowing but many states didn’t agree with the Rs 1.1 lakh crore estimated shortfall.
The Centre insisted that it would only pay to the extent of shortfall due to GST implementation issue and not Rs 1.85 lakh crore which is the revenue deficit that includes the pandemic-induced slowdown. After the initial logjam, all the states eventually came on board with the borrowing scheme.
In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the Central government has also granted additional borrowing permission equivalent to 0.50 % of Gross States Domestic Product (GSDP) to the states choosing option-I to meet GST compensation shortfall to help them in mobilising additional financial resources.
“All the states have been given their preference for option-I. Permission for borrowing the entire additional amount of Rs 1,06,830 crore (0.50 % of GSDP) has been granted to 28 states under this provision,” the government said.
Source: The Financial Express
During the third quarter (Q3) of the current fiscal, Vardhman Textiles Limited, a leading Indian textile company, reported net sales Rs. 1,750.10 crore in December 2020 – down 4.12 per cent from Rs. 1,825.21 crore in December 2019.
The net profit was at Rs. 170.52 crore in Q3 of FY21, which is a fall of 14.38 per cent from Rs. 199.17 crore in Q3 of FY20.
Production of yarn by the company during the same period was 58,806 metric tonnes compared to 56,994 metric tonnes in Q3 of FY20. Yarn sales (including internal transfers) grew to 61,178 metric tonnes compared to 59,413 in Q3 of FY20.
At the same time, its grey fabric production showed de-growth to 503 lakh metres in Q3 of FY21 from 555 lakh metres in Q3 of FY20.
At the same time, the sales of the same (including internal transfers) also showed de-growth to 507 lakh metres from 555 lakh metres in Q3 of FY20.
The processed fabric production also showed a fall from 401 lakh metres in Q3 of FY20 to 306 lakh metres in Q3 of FY21.
The sales of the same also decreased from 396 lakh metres in Q3 of FY20 to 320 lakh metres in Q3 of FY21.
Source: Apparel Online
The IMF on Tuesday projected an impressive 11.5 per cent growth rate for India in 2021, making the country the only major economy of the world to register a double-digit growth this year amidst the coronavirus pandemic.
The International Monetary Fund’s growth projections for India in its latest World Economic Outlook Update released on Tuesday reflected a strong rebound in the economy, which is estimated to have contracted by eight per cent in 2020 due to the pandemic.
In its latest update, the IMF projected a 11.5 per cent growth rate for India in 2021. This makes India the only major economy of the world to register a double-digit growth in 2021, it said.
China is next with 8.1 per cent growth in 2021 followed by Spain (5.9 per cent) and France (5.5 per cent).
Revising its figures, the IMF said that in 2020, the Indian economy is estimated to have contracted by eight per cent. China is the only major country which registered a positive growth rate of 2.3 per cent in 2020.
India’s economy, the IMF said, is projected to grow by 6.8 per cent in 2022 and that of China by 5.6 per cent.
With the latest projections, India regains the tag of the fastest developing economies of the world.
Early this month, IMF Managing Director Kristalina Georgieva had said that India actually has taken very decisive action, very decisive steps to deal with the pandemic and to deal with the economic consequences of it.
India, she said, went for a very dramatic lockdown for a country of this size of population with people clustered so closely together. And then India moved to more targeted restrictions and lockdowns.
What we see is that transition, combined with policy support, seems to have worked well. Why Because if you look at mobility indicators, we are almost where we were before COVID in India, meaning that economic activities have been revitalized quite significantly, the IMF chief said.
Commending the steps being taken by the Indian government on the monetary policy and the fiscal policy side, she said it is actually slightly above the average for emerging markets.
Emerging markets on average have provided six per cent of GDP. In India this is slightly above that. Good for India is that there is still space to do more, she said, adding that she is impressed by the appetite for structural reforms that India is retaining.
Source: The Financial Express
Overseas investment by domestic firms fell by over 42 per cent to USD 1.45 billion in December 2020, according to Reserve Bank data.
In the year-ago period, companies in India had invested USD 2.51 billion in their foreign firms (joint ventures / wholly-owned units).
In November 2020, the total outward foreign direct investment (OFDI) was of USD 1.06 billion, down by 27 per cent from a month ago period.
Of the total FDI investment by the Indian companies during the month under review, USD 775.41 million was in the form of equity infusion and USD 382.91 million was in the form of loan.
Investment of USD 287.63 million was in the form of issuance of guarantee, as per the data.
Among major investors, ONGC Videsh Ltd invested a total of USD 131.85 million in joint ventures and wholly-owned subsidiaries in Myanmar, Russia, Vietnam, Colombia, British Virgin Islands among others.
Intas Pharmaceuticals invested USD 75.22 million in a wholly-owned subsidiary in the UK and Tata Consultancy Services invested USD 27.77 million in a wholly-owned unit in Ireland.
Source: The Business Standard
The scheme is seen as more acceptable for WTO members than MEIS, which has been replaced
The Centre is considering the option of continuing the Export Promotion Capital Goods (EPCG) scheme, which allows exporters to import certain capital goods used in manufacturing without paying duties, for some more time, despite a World Trade Organisation (WTO) panel ruling that the scheme is not consistent with multilateral rules.
In ongoing consultations for the new Foreign Trade Policy (FTP), the Directorate-General of Foreign Trade (DGFT) has received a number of representations from export bodies for continuation of the EPCG scheme, an official close to the development told BusinessLine.
"Our exporters need continued support in acquiring machinery, for production of high quality goods. At this time of global uncertainty, removing the import duty exemption benefits could hit them hard. There is big demand from the industry for continuation of the EPCG scheme and the government is seriously considering it,” an official said.
The Finance Ministry, too, has to be on board if a decision for extending the scheme beyond 2020-21 is taken. Last year, the FTP for 2015-20 was extended by a year due to Covid-19 disruptions, and most schemes, including the EPCG, was extended. The new five-year FTP policy will be implemented from April 1, 2021.
Under the EPCG schemes, import of capital goods for pre-production, production and post-production is allowed at zero customs duty, subject to fulfilment of specific Export Obligations equivalent to six times of duties, taxes and cess saved on capital goods, to be fulfilled in six years.
The capital goods allowed under the EPCG scheme includes spares (including reconditioned/ refurbished), fixtures, jigs, tool, moulds and dyes. Capital goods attract an average customs duty of around 7.5 per cent, so an exemption results in significant benefits for exporters.
The problem facing the government, however, is a WTO dispute panel report issued in October 2019 that backed several claims filed by the US against export promotion measures adopted by India such as the EPCG scheme and the popular Merchandise Export from India Scheme (MEIS). It ruled that India had to roll back these incentives.
“India has already rolled back the MEIS scheme from the beginning of 2021, as it was a more direct export subsidy because of the way the incentives were fixed and given out to exporters in various sectors. However, one may argue that the EPCG scheme is unlikely to lead to market distortions as it is only an import duty relief given to exporters to upgrade their technology. Continuing the EPCG scheme would certainly ruffle fewer feathers globally than continuing the MEIS would have done,” a Delhi-based trade expert said.
Moreover, since India also appealed against the decision of the WTO panel against its exports schemes, the panel’s report can’t be binding till the Appellate Body holds a hearing and gives its verdict. “As the Appellate Body of the WTO is currently dysfunctional due to the US preventing appointment of judges and the appeal is pending, India is not under pressure to replace all its disputed schemes immediately,” the expert added.
Other export incentives that the WTO panel has ruled against include those extended to Export Oriented Units, Electronics Hardware Technology Parks and Special Economic Zones.
Source: The Hindu Business Line
Foreign Direct Investment into India rose by 13 per cent in 2020, boosted by interest in the digital sector, and while fund flows "declined most strongly" in major economies such as the UK, the US and Russia due to the COVID-19 pandemic, India and China bucked the trend, the UN has said.
An 'investment trends monitor' issued by the United Nations Conference on Trade and Development (UNCTAD) on Sunday said that global foreign direct investment (FDI) collapsed in 2020 by 42 per cent to an estimated USD 859 billion from USD 1.5 trillion in 2019.
Such a low level was last seen in the 1990s and is more than 30 per cent below the investment trough that followed the 2008-2009 global financial crisis.
The decline in FDI inflows was concentrated in developed countries, where fund flows fell by 69 per cent to an estimated USD 229 billion.
However, FDI in India rose by 13 per cent, boosted by investments in the digital sector.
"China was the world's largest FDI recipient, with flows to the Asian giant rising by 4 per cent to USD 163 billion. India, another major emerging economy, also recorded positive growth (13 per cent), boosted by investments in the digital sector," the report said.
It added that "in relative terms, FDI flows declined most strongly in the UK, Italy, Russia, Germany, Brazil and the US due to the dramatic impact of COVID-19. India and China bucked the trend".
FDI in South Asia rose by 10 per cent to USD 65 billion. India's 13 per cent rise in FDI saw the total foreign investments for 2020 touching USD 57 billion. The report noted that acquisitions in India's digital economy was the largest contributor to this rise.
Cross-border merger and acquisition (M&A) sales grew 83 per cent to USD 27 billion, the report said, citing social networking giant Facebook's acquisition of 9.9 per cent stake in Reliance Jio platforms, via a new entity, Jaadhu Holdings LLC. Infrastructure. Similarly deals in the energy sector propped up M&A values in India, it said.
Further, India and Turkey are attracting record numbers of deals in information consulting and digital sectors, including e-commerce platforms, data processing services and digital payments.
Despite projections for the global economy to recover in 2021, the UNCTAD expects FDI flows to remain weak due to uncertainty over the evolution of the COVID-19 pandemic.
The organisation has projected a 5 per cent to 10 per cent FDI slide in 2021 in last year's World Investment Report.
The effects of the pandemic on investment will linger, said James Zhan, Director of UNCTAD, investment division.
Investors are likely to remain cautious in committing capital to new overseas productive assets," Zhan said.
According to the report, the decline in FDI in 2020 was concentrated in developed countries, where flows plummeted by 69 per cent to an estimated USD 229 billion.
Flows to North America declined by 46 per cent to USD 166 billion, with cross-border mergers and acquisitions dropping by 43 per cent. Announced greenfield investment projects also fell by 29 per cent and project finance deals tumbled by 2 per cent.
Greenfield investment is a kind of FDI, in which the parent company creates a subsidiary in the host country and builds its operations from the ground up.
The United States recorded a 49 per cent drop in FDI, falling to an estimated USD 134 billion. The decline took place in wholesale trade, financial services and manufacturing.
Cross-border M&A sales of US assets to foreign investors fell by 41 per cent, mostly in the primary sector.
On the other side of the Atlantic Ocean, investment in Europe dried up as well. In the United Kingdom, FDI fell to zero, and declines were recorded in other major recipients.
Looking ahead, the FDI trend is expected to remain weak in 2021.
Data on an announcement basis, an indicator of forward trends, provides a mixed picture and point at continued downward pressure.
Sharply lower greenfield project announcements (-35 per cent in 2020) suggest a turnaround in industrial sectors. Similarly, the 2020 decline in cross-border M&As (-10 per cent) was cushioned by higher values in the last part of the year.
Looking at M&A announcements, strong deal activity in technology and pharmaceutical industries is expected to push M&A-driven FDI flows higher.
For developing countries, the trends in greenfield and project finance announcements are a major concern, the report said.
Although overall FDI flows in developing economies appear relatively resilient, greenfield announcements fell by 46 per cent and international project finance by 7 per cent.
These investment types are crucial for productive capacity and infrastructure development and thus for sustainable recovery prospects.
Risks related to the latest wave of the pandemic, the pace of the roll-out of vaccination programmes and economic support packages, fragile macroeconomic situations in major emerging markets, and uncertainty about the global policy environment for investment will all continue to affect FDI in 2021, the report said.
The coronavirus has killed over 2.1 million people, along with over 99 million confirmed cases, across the world so far.
Source: The Business Standard
India’s economy is estimated to contract by 9.6 per cent in 2020, as lockdowns and other containment efforts to control COVID-19 slashed domestic consumption without halting the spread of the disease, and the growth is expected to recover and grow at 7.3 per cent in 2021, according to a UN report on Monday.
In 2020, the world economy shrank by 4.3 per cent, over two and half times more than during the global financial crisis of 2009. The modest recovery of 4.7 per cent expected in 2021 would barely offset the losses of 2020, said the latest World Economic Situation and Prospects released by the UN.
In South Asia, the pandemic severely impacted most economies in the region, dragging down average GDP by -8.9 per cent in 2020. India, in particular, suffered its largest economic decline in history, with output falling by nearly 10 per cent in 2020.
“India’s economic growth has fallen from 4.7 per cent in 2019 to -9.6 per cent in 2020, as lockdowns and other containment efforts slashed domestic consumption without halting the spread of the disease, despite drastic fiscal and monetary stimulus,” the report said.
UN Secretary-General António Guterres said the world is “facing the worst health and economic crisis in 90 years. As we mourn the growing death toll, we must remember that the choices we make now will determine our collective future.”
“Let’s invest in an inclusive and sustainable future driven by smart policies, impactful investments, and a strong and effective multilateral system that places people at the heart of all socio-economic efforts,” he said.
The Indian economy, which grew at 4.7 per cent in 2019, is estimated to contract by 9.6 per cent in calendar year 2020. The report said that the economy is forecast to recover and clock a 7.3 per cent growth in 2021 but slow down to 5.9 per cent in 2022.
The report said that the COVID-19 crisis has wreaked havoc on labour markets in the developing world. By mid-2020, unemployment rates had quickly escalated to record highs: 27 per cent in Nigeria, 23 per cent in India, 21 per cent in Colombia, 17 per cent in the Philippines and above 13 per cent in Argentina, Brazil, Chile, Saudi Arabia and Turkey.
Looking ahead, East Asia is projected to recover from a low base, with growth rebounding to 6.4 per cent in 2021, before moderating to 5.2 per cent in 2022. In most economies, domestic demand will be supported by continued monetary and fiscal stimulus. These baseline projections, however, are highly contingent on the successful containment of the virus, both domestically and abroad.
China will remain the region’s main driver of growth, with GDP growth projected to rebound to 7.2 per cent in 2021, from 2.3 per cent in 2020. China’s economic recovery, however, is expected to be uneven across sectors. While infrastructure investment is expected to rebound strongly, private consumption growth is likely to remain moderate, the report said.
South Asia is also expected to expand by 6.9 per cent in 2021, but growth will remain insufficient to bring the region back to its 2019 output level. The recovery also hinges on the containment of the pandemic and effective policy stimulus going forward.
With multiple waves of the pandemic threatening to trigger another round of widespread lockdowns, downside risks to the growth outlook of the East and South Asia regions remain high. In South Asia, many economies face prohibitive fiscal restraints.
Effective domestic revenue mobilisation can make up some of the shortfalls, but concessions from international lenders will also be needed. Preemptive fiscal austerity could have disastrous consequences for the countries in the region, it added.
Source: The Financial Express
While Bangladesh’s apparel exports witnessed a 3% during the July-December period of FY21, its foreign currency earnings from the home textile products posted a robust growth by 48% to $547 million.
As per Export Promotion Bureau (EPB) data, during the July-December period, the first half of the current fiscal year 2020-21, Bangladesh earned $547.48 million, up by 48% compared to $370 million in the same period of last fiscal year. In the FY20, the sector brought $759 million.
Home textile products include bed linen, bed sheet and other bedroom textiles, bath linen, carpets and rugs, blankets, kitchen linen, curtains, cushions and cushion cover and covers for quilts.
However, exports earnings from the RMG sector declined by 3% to $15.54 billion during H1 of FY21, which was $16 billion in the same period of last year.
Exports earnings from clothing products declined due to the devastating impacts of the Covid-19 pandemic, which disrupted the supply chain and reduced demands as people were staying at home.
However, the stay at home increased the demands of knitwear products and home textile items, which helped exporters to earn a better even amid the pandemic.
“With the outbreak of Covid-19 pandemic, people were very afraid about the infection and they stayed at home, while the government-sponsored lockdown in European Union and the US including other countries put a bar to go out,” Mohammed Rashed Mosharrof, General Manager (Marketing) and Head of Operations of Zaber and Zubair Fabrics told Textile Today.
“Besides, people joined offices staying at home as corporate offices allowed employees to work from home. Peoples’ movement, as well as travel, was restricted due to the Covid-19 pandemic,”
Since the users did not go out and stayed at home, they mostly used home textile products and they used outwear products on a very limited scale, Rashed said.
Since Bangladesh has quality products at affordable prices, exporters have been able to take the advantage of higher demands, he added.
Talking to the Textile Today sector people opined that Bangladesh can earn over $1 billion from the sector but it needs policy support to grow further.
We earned $936 million the last calendar year and there is a huge opportunity to grow in the global markets. Bangladesh has a skilled workforce and expertise,” Belayet Hossain, Managing Director of R.T.T Textile Industries told Textile Today.
As of now the global market is over 90 billion but our share is very small and we can grab more shares, he added.
Also, business is shifting from China, which is offering an ample opportunity for Bangladesh, said Hossain.
However, the sector leader also called for the devaluation of Taka against the US dollar as it would help to improve competitiveness in the global markets.
“Bangladeshi currency gained against the US dollar, while our competitors are enjoying extra benefits as their currencies are devalued,” M Shahadat Hossain, Chairman of Bangladesh Terry Towel and Linen Manufacturers and Exporters Association (BTTLMEA) told Textile Today.
Right now, our exporters are facing competition in the global market due to the appreciation of Taka against USD. So, the government should provide policy support and devalued Taka by Tk5 against USD to help us to increase competitiveness in the global markets, said Hossain.
Source: Textile Today
Singapore hopes to facilitate a deeper partnership between the ASEAN and India that would be to everyone's benefit as deeper integration with the region would enable greater access to significant opportunities, Singapore Minister in the Prime Minister's Office, Tan See Leng, said here on Tuesday.
The Association of Southeast Asian Nations (ASEAN) is considered one of the most influential groupings in the region, and India and several other countries including the US, China, Japan and Australia are its dialogue partners.
"Looking to the future, Singapore as a country coordinator of the ASEAN-India dialogue relations, hopes to facilitate a deeper partnership between ASEAN and India. This would be to everyone's benefit as deeper integration with the region would enable greater access to significant opportunities," said Tan, congratulating India on its 72nd Republic Day, celebrations for which were held virtually by the Indian High Commissioner P Kumaran.
India would always be a valued partner and a friend to Singapore, Tan said. "We look forward to strengthening this relationship in the years to come," he said, recalling India's relationship with the city-state since its independence in 1965.
The 10-member countries of ASEAN are Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar and Cambodia.
The ties between India and ASEAN have been on an upswing in the last few years with focus being on ramping up cooperation in the areas of trade and investment as well as security and defence.
"As our countries move towards the next stage of recovery from COVID-19, we look forward to working with India which is a key player in the global pharmaceutical supply chain," he said, noting the hard work put in by the two countries in keeping the supply chains open especially for essential goods such as health supplies and food.
"Our partnership is especially strong on the economic front. We will work with the Indian government to establish skill centres in different parts of India to expand on this area of cooperation. Indian companies in Singapore have played their parts through partnerships with us and the region. Similarly, Singapore companies have a vested interest in the bright potential and promise of India, he said.
The minister singled out Capitaland of Singapore, which is continuing to expand its presence in India, having commenced construction of an IT Park in Chennai in the middle of last year.
In his address at the virtual Republic Day celebration, the High Commissioner Kumaran noted Singapore's interests in various economic development fields, with over 440 companies having registered in India and total investments of USD 106 billion.
Even during the COVID-19 pandemic, Singapore has retained its position as the top source of FDI and FPI for India and Singapore companies continue to be interested in various fields from real estate, infrastructure, logistics, food processing and high technologies.
Nearly 9,000 Indian companies are registered in Singapore, exploring business opportunities across markets in the region, said the envoy.
Source: The Business Standard
UK based clothing retailer Next are close to an all-time high, thanks to a strategy that has seen the company sail through Covid-19 headwinds.
With the start of the first lockdown last March, Next feared shuttering its high street stores would have a disastrous impact on finances.
UK based clothing retailer Next sales growth have held up better than expected, boosted by higher demand for home furnishings, loungewear and children’s clothing. Though back in last March, the fashion brand dreaded closing its high street shops which will have a terrible effect on finances.
Besides, The Next share price rose as high as £79.34 recently, close to the record of £80.15 reached in December and August 2015. The shares have more than doubled since they fell to a low of £36.62 in March, and have gained nearly 15% over the past year.
Next has appeared as one of the victors from a rough Christmas period thanks to robust online sales. In the 9 weeks to 26 December, sales were 1.1% lower than the previous year, a much better act than the 8% decline the company had forecasted in the autumn season. Along with 43% of its physical stores closed. Though Next’s online sales were up by 36%.
Simon Wolfson, Chief Executive Officer, Next said, “The £28m of extra profit from better-than-expected sales in November and December will be all but wiped out by the impact of shutdowns during the Boxing Day sales as well as new lockdowns in England and Scotland in the new year that have forced non-essential retailers to close again, including Next’s 500-store chain.”
Amid all this uncertainty, Next is forecasting profits of £670m for the coming year. The amount would be within 10% of pre-COVID-19-pandemic levels.
Neil Wilson, Chief Market Analyst said Next, together with web-only retailers such as Asos, have obviously appeared as “online champions”, noticing that short sellers have “thrown in the towel in the last couple of months which has been helping drive the stock higher.”
Source: Textile Today
Britain and India are committed to an enhanced trade partnership as the first step towards a positive free trade agreement in future and plans are expected to be further formalised during the visit of Prime Minister Boris Johnson to India in the coming months, the UK's Minister for South Asia has said.
Lord Tariq Ahmad, who is also Minister for the Commonwealth in the Foreign, Commonwealth and Development Office (FCDO), said the strong relationship between the two countries has been further intensified with the vaccine collaboration to help fight the common enemy in the form of COVID-19.
"We have been undertaking steps to remove barriers to trade and the hope is that an Enhanced Trade Partnership will lead to a positive free trade agreement (FTA) with India in future, said Ahmad, in an interaction to mark India's 72nd Republic Day celebrations on Tuesday.
"The ultimate goal is an FTA and the first steps in that direction are expected to form part of the initiatives that will be unveiled when the Prime Minister (Boris Johnson) visits India later this year, he said.
The minister indicated that many practical steps in the shape of business-to-business relations, which fully utilise the under-leveraged Indian diaspora in the UK, are also in the works.
Alongside, a real professional partnership that takes on board the mobility of skilled professionals and students between the two countries will be at the heart of a further strengthened bilateral relationship for a post-Brexit Global Britain.
India, as the pharmacy of the world, is a key composite to both our countries' commitment to the equitable access to COVID-19 vaccines around the world, through the COVAX facility. This has been a key area of collaboration, including between AstraZeneca and the Serum Institute of India, said Ahmad, in reference to the vaccine collaboration.
The UK has committed 548 million pounds to the COVAX Advance ?Market Commitment ?(AMC), which aims to provide at least 1 billion doses of vaccines for high-risk populations in 80?low and lower middle-income countries and 12 eligible upper-middle income countries in 2021, including India.
The Serum Institute of India (SII) will be one of the main suppliers of COVAX AMC, besides providing a significant proportion of India's domestic supply. The current COVAX portfolio includes 170 million AstraZeneca doses and 200 million doses of AstraZeneca or Novavax from the SII, with an option of up to 900 million doses agreed.
The minister also offered his deepest condolences to the loss of life from the fire at the Pune-based institute's vaccine facility last week, as he paid tribute to the work being conducted in the field of vaccines as a result of the UK-India partnership, at a government-to-government as well as private sector level.
India is a strategic partner and we look forward to working closer together within the Commonwealth as we look towards Kigali (Commonwealth Heads of Government Meeting in Rwanda in June), he added.
According to latest FCDO data, UK-India bilateral trade increased by over 11 per cent to nearly 24 billion pounds and the UK was the largest European market for India's goods exports in the 2019-20 financial years.
Source: The Business Standard
President Joe Biden has signed an executive order that strengthens the existing Buy American rules by closing loopholes and reducing waivers granted on federal purchases of US-made goods to ensure that American manufacturing is part of the engine of the country’s prosperity.
Biden, who signed the executive order on Monday, six days after being sworn in, also ordered the creation of a new post at the White House.
He said the Director of Made in America at the White House Office of Management and Budget will oversee the all-of-government Made in America initiative.
“I don’t buy for one second that the vitality of the American manufacturing is a thing of the past. American manufacturing was the arsenal of democracy in World War II, and it must be part of the engine of American prosperity now. That means we are going to use taxpayers’ money to rebuild America. We’ll buy American products and support American jobs, union jobs,” Biden said during an event at the White House.
Biden said the federal government every year spends approximately $600 billion in government procurement to keep the country going safe and secure.
He said that there’s a law that’s been on the books for almost a century now: to make sure that taxpayers’ dollars for procurement is spent to support American jobs and American businesses.
Biden alleged that the previous administration didn’t take it seriously enough and the federal agencies waived the Buy American requirement without much pushback at all.
Big corporations and special interests have long fought for loopholes to redirect American taxpayers’ dollars to foreign companies where the products are being made. The result: tens of billions of American taxpayers’ dollars supporting foreign jobs and foreign industries, he said.
In 2018, he said, the Defence Department spent $3 billion on foreign construction contracts, leaving American steel and iron out in the cold.
“It spent nearly $300 million in foreign engines and on vehicles instead of buying American vehicles and engines from American companies, putting Americans to work,” he said as millions of Americans remained unemployed amidst the raging coronavirus pandemic.
The executive order signed on Monday aims to tighten the existing Buy American policies, and go further.
“We’re setting clear directives and clear explanations. We’re going to get to the core issue with a centralised, coordinated effort,” he said.
That starts with stopping federal agencies from waiving Buy American requirements with impunity, as has been going on.
If an agency wants to issue a waiver to say “We’re not going to buy an American product as part of this project; we’re going to buy a foreign product,” they have to come to the White House and explain it, he said.
These waivers would be publicly posted.
Biden directed the Office of Management and Budget to review waivers to make sure they are only used in very limited circumstances.
“For example, when there’s an overwhelming national security, humanitarian, or emergency need here in America.
“This hasn’t happened before. It will happen now,” he said.
Biden said that under the Build Back Better Recovery plan his administration will invest hundreds of billions of dollars in buying American products and materials to modernise infrastructure and competitive strength will increase in a competitive world.
That means millions of good-paying jobs, using American-made steel and technology, to rebuild roads, bridges, ports, and to make them more climate resilient, as well as making them able to move faster and cheaper and cleaner to transport American-made goods across the country and around the world, making the US more competitive.
“It also means replenishing our stockpiles to enhance our national security. As this pandemic has made clear, we can never again be in a position where we have to rely on a foreign country that doesn’t share our interest in order to protect our people during a national emergency. We need to make our own protective equipment, essential products and supplies. And we’ll work with our allies to make sure they have resilient supply chains as well,” Biden said.
Biden said that the executive action will not only require that companies make more of their components in America, but that the value of those components is contributing to the economy, measured by things like the number of American jobs created and/or supported.
“At the same time, we’ll be committed to working with our trading partners to modernise international trade rules, including those relating to government procurement, to make sure we can all use our taxpayer dollars to spur investment that promotes growth and resilient supply chains,” Biden said.
Shortly after taking office in 2017, Biden’s predecessor, Donald Trump, had issued a series of executive orders that were aimed at strengthening rules requiring federal agencies to buy US-made goods when possible. But critics argued that the effort fell short, partly because of Trump’s failure to adequately enforce the rules.
Source: The Hindu Business Line
In spite of the COVID-19 pandemic and international economic sluggishness, textile and fashion apparel exports from China increased by 9.6% year-on-year to US$291.22 billion in 2020, data released by the ministry of industry and information technology (GACC) disclosed.
Category-wise, garment exports declined by 6.4% to $137.38 billion during the year. On the other hand, textile exports jumped 29.2 % year-on-year to $153.84 billion.
In December 2020 alone, textile exports from China increased by 12.6% year-on-year to $12.29 billion. Apparel exports too rose by 2.8% during the month to $13.91 billion. Sustained by the robust export performance, China’s national GDP enlarged 2.30% in 2020 as compared to 2019 last year. Amid COVID-19, China is the only major economy to see growth in the pandemic-ravaged year.
Source: Textile Today
