The Budget session of the Parliament is all set to open with the presentation of the Economic Survey of India on January 29.
The Economic Survey is typically presented a day before the Union Budget. But this year it is being brought earlier than usual because the day-before-budget this time is a Sunday.
Like every year, the 2020-21 Survey will present an estimation of the progress the Indian economy made during the preceding 12-month period. The forecasts put out by the survey, along with the reasons cited for them, evince keen interest in economy watchers.
The survey will feature the details and outcomes of the schemes and policies implemented by the government during the year under review. Moreover, the survey will likely provide hints about what is in store for the economy in the coming days.
This year's survey assumes a much higher significance in view of the unprecedented manner in which 2020 played out. From hitting a multi-decade GDP trough in Q1 to making a noticeable recovery in the quarter that followed, the Indian economy has been in an extremely fluid state all through 2020-21.
Because of the havoc wreaked by the pandemic, pointers related to all major indicators of the economy will be in sharp focus at this year's survey presentation. These indicators include agricultural output, factory production, the state of infra, foreign trade, inflation, jobs, etc, among others.
Despite the visible economic damage wrought by Covid, official numbers are still hard to come by. That is generating more interest in this year's Economic Survey and the indications that it might give about what's coming.
Source: The Economic Times
India is considering a proposal to raise levies on a range of imported goods, with a view to boosting local manufacturing in line with the government’s focus on self-reliance, people with knowledge of the matter said.
Refrigerator, washing machines, cloth dryers, aluminum and electrical goods are among products likely to see an increase in customs duty, the people said asking not to be identified citing rules. The move may be announced as part of the federal government’s annual budget to be presented on Feb. 1.
Boosting local manufacturing is key for Prime Minister Narendra Modi’s government to create jobs lost because of measures to stem the pandemic. While India’s current account -- the broadest measure of trade -- flipped to a rare surplus last year due to a slump in consumption, sustaining the trend will require India to substitute non-essential imports with home-made goods.
Import duties on some raw materials used for making export goods may also be pared, the people said. Items such as copper cathodes and copper waste and scrap -- used in air-conditioning and electronics, besides coal tar pitch, and certain raw materials for making furniture may also see levies slashed, they said.
A call made to a finance ministry spokesman during business hours was not immediately answered.
Modi has made self-reliance central to his government’s plan to shake-off the economic fallout of the pandemic. Lockdowns to check the viru’s spread disrupted economic activity and pushed India -- which not long ago held the title of the world’s fastest growing major economy -- toward the biggest annual contraction on record this year.
Source: The Business Standard
India's Foreign Direct Investment (FDI) saw a significant jump in November 2020. FDI data released by the Commerce Ministry shows that total FDI in the month of November 2020 grew by a whopping 81 % to $ 10.15 billion against $ 5.6 billion in November 2019. FDI equity has also jumped to $ 8.5 billion as against $ 2.8 billion in November 2019, registering a growth of 70 %.
India has attracted total FDI inflow of $ 58.37 billion during April to November 2020. It is the highest ever for the first eight months of a financial year (F.Y.) and 22 % higher as compared to the first eight months of 2019-20 ($ 47.67 billion).
FDI equity inflow received during F.Y. 2020-21 (April to November 2020) is $ 43.85 billion. It is also the highest ever for the first eight months of a financial year and 37% more compared to the first eight months of 2019-20 ($ 32.11 billion), the data revealed.
FDI is a major driver of economic growth and an important source of non-debt finance for the economic development of India. It has been the endeavour of the government to put in place an enabling and investor-friendly FDI policy, the Commerce Ministry said.
The intent all this while has been to make the FDI policy more investor-friendly and remove the policy bottlenecks that have been hindering the investment inflows into the country. The steps taken in this direction have borne fruit, as is evident from the ever-increasing volumes of FDI inflows being received into the country, it said.
Measures taken by the Government on the FDI policy reforms, investment facilitation and ease of doing business have resulted in increased FDI inflows into the country. The following trends in India's Foreign Direct Investment are an endorsement of its status as a preferred investment destination amongst global investors.
Source: The Economic Times
The ₹111-lakh cr investments required for infra till FY25 will need to be mopped up via alternate channels; govt, traditional infrastructure-financing channels will not be able to raise such huge funds
Infrastructure investment trusts (InvITs) and real estate investment trusts (REITs) are gaining currency in India and can potentially help raise up to ₹8-lakh crore of capital for India’s infrastructure buildout over the next five fiscal years, according to a CrisilL Ratings analysis.
A deeper debt market where investors can discern risks and returns across infrastructure asset classes, and stable regulations will be critical to achieving this goal.
A government task force has estimated that ₹111-lakh crore of investments are required in infrastructure through fiscal 2025 — or twice that spent in the past five fiscals. That’s a humungous investment need, and cannot be met by the government and traditional infrastructure-financing channels alone. Thus, alternative channels need to be pressed into service.
InvITs and REITs can play a significant role here. Their combined assets under management (AUM) have logged a whopping 42 per cent compounded annual growth rate (CAGR) since the launch of the first InvIT in fiscal 2018 to ₹2-lakh crore now.
Manish Gupta, Senior Director, CRISIL Ratings Ltd, said, “Investments under InvITs and REITs can grow by another ₹8-lakh crore over the next five fiscals, driven by an enabling regulatory framework, ample availability of operational infrastructure and real estate assets, and increasing appetite from global and domestic investors looking to invest in high-yield assets.”
Recent rules afford setting up of an unlisted private InvIT sans any cap on leverage or ratings, or curbs on investments in operational assets. While this could raise credit risks to some extent, it may still support holistic market development.
As the market expands and regulations open up, the landscape will change, necessitating sharper differentiation in the credit and operating risks of InvITs and REITs.
Nitesh Jain, Director, CRISIL Ratings, said, “Lenders and unitholders need to differentiate the varying nature of operating risks of underlying asset classes. For instance, the cash-flow stability of a power transmission project is higher than that of a solar power project. Typically, a power transmission project’s revenue is linked to the availability of lines and not the actual transmission, whereas a solar power project’s revenue is linked to the power generated. Therefore, a power transmission project carries low operating risk and can sustain higher debt.”
Source: The Hindu Business Line
India’s federal budget Monday will be a much tougher balancing act than New Delhi’s regular annual fiscal trapeze. For one thing, the pandemic has upset business-as-usual calculations of how much to spend, on what, and how to finance it. For another, an impatience to make up for lost time has to be weighed against a shrinking of policy space in emerging markets: A reprise of the 2013 global taper tantrum could compound the country’s considerable domestic challenges.
On the first question — how much to spend — Finance Minister Nirmala Sitharaman must simply do a lot more. Even with some loosening of the purse strings in the final months of the fiscal year that will end in March, Moody’s Investors Service affiliate ICRA NSE -0.48 % Ltd. expects annual government expenditure to have been broadly unchanged from the 30 trillion rupees ($415 billion) estimated before the outbreak.
The answer to what to spend on is being dictated by the fault lines that opened after India imposed one of the world’s harshest lockdowns. Without a safety net for workers badly affected by Covid-19, ongoing economic revival from the June quarter’s 24% loss in real output could peter out for lack of demand.
A combination of stepped-up social spending — including on long-neglected healthcare — and a state-led infrastructure push will make the recovery both durable and inclusive. A fifth of the 70 million-plus Indians who lost their services, manufacturing and construction jobs are either still working as farmhands or are unemployed. Discouraged, many have exited the labor force. They need income support.
But where’s the money? Taxes are due a rebound. Together with government asset sales — such as listing state-backed Life Insurance Corp. on the stock market — they can help narrow the combined federal and state deficit to 8.5% of gross domestic product next fiscal year, from around 12% now. It means that the bond market will still have to cough up more than households’ pre-Covid annual financial savings. (The post-lockdown surge in thrift was temporary, a result of people not being able to consume.)
The central bank will be reluctant to buy government bonds by the truckload from banks and make a record glut of rupee liquidity worse. While inflation in India is expected to slip to 4.55%, from 6.3% estimated by economists for the current fiscal year, global inflation expectations are hardening.
That’s why it’s important for Sitharaman to keep an eye on the Federal Reserve. As inoculation in the U.S. gathers speed, officials may turn more confident about the need to start trimming their asset purchases in early 2022, Bill Dudley, a former vice chairman of the Fed's rate-setting committee, wrote recently for Bloomberg Opinion. Given the positive correlation between U.S. inflation expectations and Indian bond yields, New Delhi may struggle to keep a lid on borrowing costs.
Even a hint of a sooner-than-expected U.S. monetary tightening could prove to be expensive. Back in the summer of 2013, then-Fed Chairman Ben Bernanke triggered a flight of capital from emerging markets by suggesting a tapering of U.S. money-printing. India was running large current-account deficits, and the dollar financing needed to plug the gaps abruptly stopped. This time around, India’s balance of payment is in surplus. Domestic demand is yet to be fully repaired, while foreign capital is rushing in to participate in a liquidity-fueled stocks rally.
That creates its own problems. The Reserve Bank of India has recently hinted at a preference for buying dollars, adding to its already formidable stash of nearly $600 billion in foreign-exchange reserves. But purchasing the U.S. currency will also add to rupee liquidity. If the RBI tries to mop up too much of it too quickly, short-term interest rates will rise. In a world still awash with cheap cash, that could invite an unwanted deluge of “carry trade” dollars to India looking to profit from extra yield, according to Ananth Narayan, a finance professor and analyst at Observatory Group.
It’s a Catch-22. Leave the liquidity glut unattended, and foreigners may chase overpriced Indian equities. Withdraw it, and watch carry traders pile in. Both kinds of speculative bets will eventually unwind, setting the rupee up for a hard fall.
It’s important, therefore, for Prime Minister Narendra Modi’s administration to not overburden the central bank. Nor can the middle class, which is paying very high fuel taxes, be squeezed further. Protectionist import tariffs on intermediate goods will hurt exporters. New Delhi should instead pluck the low-hanging fruit. Despite surging equity markets, state asset sales have been a washout. Getting deals done and reinvesting the proceeds in new infrastructure would be crucial.
The creaking financial system also needs capital. In the worst-case scenario in RBI’s stress tests, 14.8% of India’s bank loans might turn bad by September. A decisive cleanup of what’s not entirely a new problem might seem like a drag, given the many urgent demands on taxpayers, including for vaccination. But India needs both a healthy population — working, studying and consuming freely — and restored financiers who can support credit while cushioning any external shock. Like a 2022 taper tantrum. If the moneymen keel over, any delicate fiscal balance achieved this year won’t endure.
Source: The Economic Times
Welspun India, one of the leading textile companies in the world, reported over twofold increase in consolidated net profit at Rs. 174.80 crore for the third quarter ended 31 December 2020.
It is all-time high quarterly revenue of the company.
During the same period of last financial year, the company had consolidated net profit of Rs 75.09 crore.
In a regulatory filing, the company said that its total income during the quarter under review stood at Rs. 2,049.71 crore (rose around 29 per cent) as against Rs 1,604.92 crore in the year-ago period.
“During the quarter under review, its plants at Vapi and Anjar operated at peak capacities,” it said.
The sale of bath linen volume grew by 17 per cent year-on-year, while sales volume of bed linen grew by 43 per cent year-on-year. Sales volume of rugs and carpets grew by 28 per cent year-on-year.
Dipali Goenka, CEO & JMD of the company said in a tweet, “I am delighted to announce our Q3, FY21 results reveal an all-time high quarterly revenue. ‘Never let a crisis go to waste’. With that in mind, Welspun pushed the envelope working harder and creating opportunities. Our efforts bore fruit, and clients and stakeholders applauded us.”
The Board of company in its meeting has revised Advanced Materials Project by deferring project for wet-wipes and bleach-cotton product lines at Kutch District, Gujarat and Rangareddy District, Telangana.
Accordingly, the cost of project to be set up as per revised approval is Rs. 299.60 crore.
The Board may take up project for remaining product lines for discussion at appropriate time.
Source: Apparel Online
Saying India would have infrastructure needs worth 4.5 trillion dollars by the year 2040, Prime Minister Narendra Modi on Thursday invited global CEOs at the World Economic Forum (WEF) to invest in India, saying the government and industry must achieve this target together. “There are ample opportunities on offer, which are even more convincing as they are in a vibrant democracy, business-friendly climate and in a big market like India,” the PM said, inviting CEOs to align their future prospects with such opportunities and promising to give any help that they would need.
India’s Aatmanirbhar Bharat mission is fully committed to global good and the global supply chain and India now has a predictable and friendly environment, from tax regime to the FDI norms, Prime Minister Narendra Modi said in his opening address at the World Economic Forum.
Modi also said that India was sending its vaccine to several countries and helping in developing the infrastructure for successful vaccination, thus saving the lives of citizens of other countries. “The WEF should be reassured that only two make-in-India vaccines have come so far and many more from India will come. India's upcoming vaccines will help other countries at a swifter pace, bigger scale, and more speed to fight the pandemic,” the PM said. He also highlighted that India has vaccinated over 2.3 million health workers within 12 days and would complete its target of vaccinating 300 million old people and people with co-morbidities in the next few months.
Interacting with CEOs of Siemens NSE 0.86 % and ABB, Modi said the Aatmanirbhar Bharat campaign had been launched to increase the capacity of India’s economy and its resilience and to make India’s an export hub for manufacturing. He asked the CEOs to collaborate with India’s Production Linked Incentive (PLI) scheme which is worth 26 billion dollars. “Incremental production will bring incentives which on average are almost 5 percent of production value. Hence, 520 billion dollars worth of production will happen as a result of PLI,” the PM said. He said India will release a National Logistics Policy and said FDI in India had increased 13 percent in 2020 despite Covid-19.
The PM stressed that India is now walking ahead to become Aatmanirbhar, which will strengthen globalisation. “I assure you that every success of India will help the world to succeed. We have the capacity and capability to strengthen the global supply chain and reliability. We have a big consumer base and its expansion will benefit the global economy,” PM Modi said at WEF. He added that India had stressed a lot on reforms and incentive-based stimulus in recent times. “Even during COVID, India has paced structural reforms in all sectors. These reforms are being supported by PLI-schemes. We are also matching our growth with climate change targets,” the PM said, stressing India's commitment to "climate-sensitive development".
Modi also said that in the midst of numerous doubts, India had a message of belief, positivity, and hope from over 1.3 billion Indians. “When Covid arrived, India had its share of problems. Several experts and organizations had made several predictions that India would be most affected by the pandemic…that a tsunami of Covid will come. Someone had even said that 700-800 million would be infected and someone had said that over 2 million Indians would die from the pandemic. Looking at the condition of countries with better health infrastructure, the world was right in worrying about us. We did not let negativity overpower us. 18% of the world's population is in India, a country that saved mankind from a big disaster by saving its citizens from Covid,” the PM said.
Source: The Economic Times
Indian Union Budget 2021-22: One of the significant changes introduced by the Finance Act, 2020 was the abolishment of the Dividend Distribution Tax (“DDT”) and reinstating the classical system of taxing dividends, where the shareholder is liable to pay tax on the dividend income. This change had a major impact on the taxation of unitholders of Real Estate Investment Trusts and Infrastructure Investment Trusts (collectively referred to as “Business Trusts”), which derive a significant chunk of their returns from dividends earned by the Business Trusts. Subsequently, the relevant stakeholders made various representations to the Finance Minister to clarify the newly introduced provisions to ensure that the new system of taxing dividend is not very onerous for the Business Trust and investors.
Before the Finance Bill, 2020 was enacted, the Finance Minister provided certain relaxations to address the concerns of the Business Trust industry. Though the majority of the concerns of the Business Trust industry seem to have been addressed in the second set of revisions, we are trying to revisit some of these changes and analyze their efficacy through this article.
Under the erstwhile regime, dividend distributed by a domestic company was subject to DDT, in the hands of the company, at an effective rate of 20.56%. Such dividends were generally exempt in the hands of all shareholders, including non-resident unitholders in the Business Trusts in India, though they may have been taxed in the home jurisdiction of a non-resident unitholder. Further, as per erstwhile regime, dividend distributed by a special purpose vehicle (“SPV”), in which a Business Trust held the entire share capital other than as required to be held by the Government or any regulatory authority, was exempt from DDT. The dividend received by business trusts from their SPVs was then distributed to the unitholders without any further tax being levied on it.
Pursuant to the passage of Finance Act, 2020, dividend income is now directly subject to tax in the hands of the shareholders, at the applicable rate and the SPV is required to withhold tax on the same. However, a Business Trust is still exempt from tax on dividend income from an SPV provided the business trust holds controlling interest or such percentage holding, as may be prescribed. Even though the dividend income is exempt in the hands of Business Trusts, no specific exemption has been granted to the SPVs from withholding tax while distributing post tax profits to a business trust. Though it is possible for the Business Trust to obtain a nil withholding tax certificate, the Finance Minister may also incorporate appropriate carve outs in the withholding tax provisions to rationalise these provisions and to reduce unnecessary hassle of obtaining nil withholding certificates from the tax authorities time and again.
Additionally, the erstwhile regime did not exempt a multi-level structure (i.e. where the business trust holds shares in the SPV through an intermediary holding company) from the applicability of DDT. Accordingly, the dividend paid by an SPV to its holding company was subject to DDT. However, holding companies could claim exemption from DDT provided the entire share capital of the holding company was held by a Business Trust.
It is pertinent to note that Finance Act, 2020 has reintroduced section 80-M in the Income-tax Act. This section provides for a deduction for dividends received by one domestic company from another domestic company, limited to the amount of dividend received from the investee company if the shareholder company pays dividend before the specified due date i.e. one month prior to the return filing date. Accordingly, under the current regime SPVs are not required to pay any tax on dividend distributed and the holding company can claim the deduction from such dividend income to the extent of dividends distributed by it before the specified date.
Under the current provisions the SPV would also be required to withhold tax at the rate of 10% on the dividends distributed by it to the holding company. Further, relevant SEBI regulations governing the Business Trust require holding companies to distribute 100% of their income from SPVs. Thus, considering that the actual money received by the holding company from the SPV, after deduction of tax at source, would be 90% of the income earned by it from SPV, certain holding company may face cash flow issues in complying with regulatory requirement of distributing 100% income, which consequently will prevent such holding companies from claiming 100% deductions of the dividends earned from the SPVs. Though this issue may not arise in situations where the holding companies have sufficient cash to meet the distribution requirements, this issue is more likely to arise in newly established Business Trust structures. Thus, Budget 2021 should provide for suitable amendments to address this issue and rationalise of the current taxation provisions.
With the Finance Minister promising a post pandemic budget ‘unlike anything in the past 100 years’, one must not lose sight of the fact that rationalising existing provisions, as discussed above, and providing certainty to taxpayers may go a long way in promoting investments in the post pandemic world.
Source: The Financial Express
Finance Minister Nirmala Sitharaman in the Budget next week is likely to unveil a blueprint of a new privatisation policy, where the government will exit PSUs in the non-strategic sector, sources said. The Budget for the fiscal beginning April 1 is likely to identify the strategic sectors PSUs where the government would like to retain its presence, the two sources aware of the matter said.
The Cabinet on Wednesday cleared the new public sector enterprises (PSE) policy that will define strategic and non-strategic sectors.
The strategic sectors are likely to be ones that are critical for national interest and of the public good.
As part of 'Aatmanirbhar Bharat', the government in May had announced that there will be a maximum of four public sector companies in strategic sectors, and state-owned firms in other segments will eventually be privatised.
Under the policy, a list of strategic sectors will be notified where there will be at least one and a maximum of four public sector enterprise.
In other sectors, central public sector enterprises (CPSEs) will be privatised, depending on the feasibility.
The sources said the Budget is likely to focus on privatisation of CPSEs, which would help the government meet the resources needed to fund increased expenditure.
In the current fiscal, the government has mopped up Rs 17,957 crore from CPSE minority stake sale and share buyback. This compares to the Budget target of Rs 2.10 lakh crore for the entire fiscal.
There are about 249 operating CPSEs with a combined turnover and net worth of Rs 24 lakh crore and Rs 12 lakh crore, respectively. Of this, over 54 are listed on the bourses.
Source: The Economic Times
Indian Union Budget 2021-22: The FY2022 Union Budget comes at an inflection point in the Covid-19 pandemic’s trajectory. Even as the scars remain, the vaccination rollouts have raised hopes of the end of the pandemic. The variations across formal versus informal, rich versus poor, manufacturing versus services, fiscal profligacy versus rectitude, among others form the backdrop of the budget. The broader aim of the government should be to focus on setting the stage for sustained income/consumption opportunities for the bulk of the population. The government would also need to provide a credible medium-term road map for debt and deficit to allay any concerns (which will come up once the fears of the pandemic recede).
This budget will see the trade-off become more acute between (1) stimulating growth, and (2) maintaining fiscal rectitude. We have long argued that the government needs to stimulate the economy through infrastructure spending in the recovery phase. The government needs to aim at increasing stable incomes for large parts of the population in the middle and bottom of the pyramid which have been the worst hit by the pandemic. To that end, infrastructure spending (a higher multiplier for the economy and employment generator for the bulk of the population), as well as a well-oiled financial system (providing growth capital for the long term), is essential to take the agenda forward.
We expect the government to focus on (1) health: expenditure on vaccination along with expansion of infrastructure in semi-urban/rural areas, (2) infrastructure: any additional fiscal room should get channelled into capital expenditure, specifically, roads, railways, housing, and rural/urban infrastructure, and (3) financial sector: government could explore setting up a ‘bad’ bank, creating a DFI for infrastructure financing, and penciling in proceeds from privatization of PSBs. However, both for privatization as well as DFIs, implementation and outcomes will be more important than the announcement. Rural India will continue to be in focus through NREGA and the agriculture sector spends.
We do not expect the government to announce any major changes in taxes though we do not rule out measures/incentives related to housing (mostly in affordable) and health. There have been reports about a Covid cess though it is unlikely to yield much unless rolled out to most of the taxpayers (high income individuals and large corporates). On the indirect tax front, we expect the government to revisit some of the custom duty rates on finished/semi-finished products in the PLI related sectors.
Keeping in view the need to maintain an easy fiscal, we pencil in GFD/GDP at 5.5% in FY2022 after 7.1% in FY2021. The FY2022 expectations assume nominal GDP growth of around 14%, gross tax revenues growth at 20%, a heavy reliance on non-tax revenue and divestments, and capital expenditure growth of 12%. Beyond the usual financing routes, we believe that if banking system liquidity stays comfortably in surplus, the government should explore issuing Covid bonds directly to retail/HNI investors (possibly with tax benefits) which would not complicate the liquidity management plans too much.
Finally, budgets are much less focused upon in most economies and usually viewed as a presentation of the accounts with allocations for the next year. As the government has demonstrated, pushing long term growth is a year round exercise and certainly not restricted to the budget. Keep watching more intently for what happens (and doesn’t happen) in the rest of the year.
Source: The Financial Express
Indian Finance Minister Nirmala Sitharaman is expected to unveil plans to boost economic growth when she presents the 2021/2022 federal budget on Feb. 1.
Corporates and industry lobby groups expect the government to announce greater spending on healthcare and infrastructure, as well as tax breaks for the automotive, manufacturing and tourism industries, reeling from the coronavirus crisis.
Here is a wish list from industry leaders:
HEALTHCARE AND PHARMACEUTICALS
The drugs industry is hoping for incentives to spur more investment in research and development (R&D), via bigger tax deductions on R&D spending, said Sudarshan Jain, secretary general of the Indian Pharmaceutical Alliance.
Kiran Mazumdar Shaw, chief of Biocon Ltd, hopes the government will raise healthcare spending to 2.5% of gross domestic product by fiscal 2025 from about 1% now.
REAL ESTATE AND INFRASTRUCTURE
The real estate and construction sector, a bellwether for the Indian economy, is hoping for tax reliefs for home buyers and regulations curbing a rise in construction costs.
AUTOMOBILE INDUSTRY
The automobile industry hopes for a roadmap for a recently announced production-linked incentive scheme and policy on scrapping of commercial vehicles.
Toyota Kirloskar, the Indian unit of Toyota Motor Corp , said it was looking forward to support measures for the manufacture of hybrid electric vehicles and parts.
AVIATION
The aviation industry is looking for lower taxes on aviation turbine fuel and levies such as airport charges, parking and landing and navigation charges, said Moody's India unit, ICRA.
TOURISM AND HOSPITALITY
The National Restaurant Association of India is hoping for more liquidity support, with low collateral, and a minimum moratorium of six months.
Personal tax breaks for domestic travel would also help, said Deep Kalra, founder and top official of online booking website MakeMyTrip Ltd.
RETAIL
Brick-and-mortar retail firms seek a national retail policy, to help combat the growing popularity of online sellers.
"Formulation of national retail policy, removing the distinction between e-commerce and physical retail under one policy has been spoken about and we hope that this happens in FY 21," said Preet Dhupar, chief financial officer of Ikea India.
BANKING
The coronavirus brought a slump in lending by banks, and despite signs the economy is improving, the central bank has warned that the industry could see bad loans nearly double.
Some analysts expect the setting up of a so-called "bad bank", which the government will use to buy bad assets from state-owned banks. There are also expectations for moves to recapitalise state-owned banks.
Public sector banks may need a further 430 billion rupees ($5.9 billion) as capital requirement in the next financial year, ICRA said.
Source: The Economic Times
The private equity and venture capital (PE/VC) sector recorded investments worth $47.6 billion across 921 deals in 2020, almost at par with the previous year, led by fund-raising by Reliance Group entities. Exits stood at $6 billion across 151 deals with open market exits accounting for 40 per cent of all deals by value.
Had it not been for the PE investments of $17.3 billion in Reliance Group firms, the year under review would have been 36 per cent lower than 2019. In terms of volume, number of deals in 2020 declined by 11 per cent compared to last year (921 deals in 2020 Vs 1,030 deals in 2019), according to a report by Indian Private Equity & Venture Capital Association and EY.
“PE/VC investment activity capped off a tumultuous 2020 on a high, closing out with over $7.1 billion of investments in December, making it the second-highest monthly total in 2020. While the Jio Platforms’ and Reliance Retail’s fund-raising juggernaut rolled on in May-June and September-November respectively, seemingly unaffected by the pandemic, Indian PE-VC investment activity ground to monthly average of less than $1.2 billion during March-June, the lowest ever in the past six years,” Vivek Soni, Partner and National Leader Private Equity Services at EY, said.
“July saw almost $4.1 billion of PE/VC investments (non-RIL entities) and as India continued to fare better than expected on both health and economic parameters, monthly PE/VC investment activity strengthened month-on-month,” he added.
Large deals (greater than $100 million) fell from 109 in 2019 to 66 (excluding RIL Group deals) largely due to the tepid deal-making for one-third of the year.
Infra sector hit
Consequently, while most sectors, barring the ones mentioned above witnessed declines in PE/VC investments, infrastructure sector investments declined the most, from $13.8 billion in 2019 to $5 billion in 2020. PE/VC exits too saw a significant decline of 46 per cent from 2019 levels, reaching a five-year low as pandemic induced lockdowns and the resulting disruptions roiled asset prices, forcing PE/VC investors to postpone stake sales to better times.
One of the biggest reasons for the relative decline in PE/VC investments in 2020 is the under-performance of the infrastructure and real estate sectors, which attracted the highest PE/VC investment in 2019, at $20 billion, accounting for 42 per cent of all PE/VC investments in 2019. In 2020, these sectors have received only $10.2 billion in investments, accounting for just 21 per cent of total PE/VC investments.
As a result, there has been a sharp decline in buyout activity as well, which has recorded a decline of 28 per cent in terms of value and 30 per cent in terms of volume. Infrastructure and real estate sectors accounted for 71 per cent of all buyouts by value in 2019 which has dropped to 61 per cent in 2020.
Exits
In 2020, exits fell by 46 per cent in value terms ($6 billion vs $11.1 billion in 2019) and is the lowest value in six years. In terms of volume, exits declined by 4 per cent compared to 2019 (151 deals in 2020 vs 157 deals in 2019). The decline was mainly due to fewer large deals.
Exits via open market were the highest at $2.4 billion (67 deals) in 2020, 47 per cent fell compared to 2019. Exits via initial public offerings (IPOs) were second in line with $1.2 billion recorded across nine IPOs ($247 million across eight IPOs in 2019), which includes the $1 billion SBI Cards partial exit by Carlyle.
Source: The Business Standard
India is likely to predict economic growth of 11% in the fiscal year beginning April 1 in its annual economic survey later on Friday, a source said, betting on a sharp recovery from the pandemic-induced slump this year.
The Indian economy, which the International Monetary Fund singled out as a global bright spot only a few years ago, is set to contract 7.7% in the current fiscal year to March 31, the deepest contraction in four decades, the economic survey is expected to say.
But the government predicts the rollout of vaccines against COVID-19, which has killed 153,847 Indians, will re-energise Asia's third-largest economy with 11% growth next year, said the source, who is familiar with the matter. That would mark the strongest growth since India liberalised its economy in 1991.
The survey is set to forecast nominal GDP, which includes inflation, will rise 15.4%, the highest since India's independence in 1947, said the source, who asked not to be identified. High nominal GDP points towards higher tax collections.
The survey's projections form the basis for key figures in the budget, due to be delivered on Monday by Finance Minister Nirmala Sitharaman.
However, she may have to make some tough choices to keep in check the government's ballooning debt while presenting a spending plan able to lift the economy.
The source said the government expected a "V-shaped" economic rebound on the back of its vaccination push and a recovery in demand.
India has started inoculating millions of people with two vaccines -- Serum Institute of India's COVISHIELD, licensed from Oxford University and AstraZeneca, and COVAXIN, developed domestically by Bharat Biotech and the Indian Council of Medical Research.
Source: The Economic Times
Prime Minister Narendra Modi on Thursday assured global business leaders that situations on economic front will change rapidly now.
“Earlier we focussed on saving each and every life, now every Indian is fully involved for development of the nation,” Modi said while addressing the annual summit of the World Economic Forum held virtually. “India is marching ahead with a commitment for self-reliant,” he said.
Modi’s remarks assumes significance as Finance Minister Nirmala Sitharaman is all set to present the Union Budget for FY 2021-22 on February 1.
The Budget is expected to lay down the path of rapid development during coming years. Many global agencies – with IMF as latest addition – have projected double digit growth during FY 2021-22.
Keeping this in mind, the Budget is expected to focus more on public investment and incentivise private investment.
Modi said that aspiration for self-reliance will strengthen globalism with new vigour. He hoped that such a campaign will get big support from Industry 4.0. According to experts, industry 4.0 has four elements – connectivity, automation, artificial intelligence or machine learning, and real time data.
Digital growth
Modi said that India boasts of data for internet, mobile connectivity in remote areas and good number of smartphones. India has big pool of experts related with automation and design. Most of global firms have engineering centre in India. “Work on digital infrastructure during last six years in India is a matter of study for World Economic Forum. This infrastructure has enabled digital solutions as part of day-to-day life of an Indian,” he said. India has issued 1.3 billion universal identity - Aadhaar to its citizens. Bank accounts are linked with this identity and mobile phone.
“December alone saw over ₹4 trillion worth of transactions through UPI, the payment system,” he said, while attributing this to mobile connectivity and Aadhaar seeding.
Modi assured that every success of India will assist success of the world. “Our self-reliance campaign is committed towards global goods,” he said, while adding that India has capacity, capability and reliability to strengthen global supply chain. “India has very big consumer base and its expansion will help the world,” the PM said.
Source: The Hindu Business Line
India must ensure that the COVID-19 pandemic is well contained and the distribution and rollout of vaccines are well managed if it wants to achieve a double-digit growth rate for the next fiscal year, the IMF said on Thursday, insisting that securing a robust and sustained economic recovery will require a bold and multifaceted policy response.
The International Monetary Fund (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 the double-digit growth this year amidst the catastrophic coronavirus pandemic.
"To achieve a double-digit growth rate for the next fiscal year, it would be important to ensure that the COVID-19 pandemic is well contained and the distribution and rollout of vaccines are well managed in a timely manner," Paolo Mauro, Deputy Director of the Fiscal Affairs Department at the IMF, told in an interview.
Securing a robust and sustained economic recovery will require a bold and multifaceted policy response, including investment in health infrastructure to further contain the pandemic and to ensure the availability and effective distribution of vaccines and treatments, he said.
The IMF projection reflects a faster than expected recovery in mobility, a rapid decline in active COVID-19 cases, and recovery in various high-frequency economic indicators in recent months, he said.
The upward revision for FY21/22 to double-digit growth reflects carryover from a stronger-than-expected recovery in 2020 and a potential improvement in economic confidence from the distribution and rollout of vaccines, Mauro said.
Responding to a question, Mauro said that while the economic recovery is underway, the output is projected to remain below its potential in the near-term and substantial downside risks remain. This implies that fiscal policy can and should remain accommodative next year, supporting the recovery.
"At a minimum, we advise countries to avoid a premature withdrawal of fiscal policy support, which could increase risks for near-term activity and potentially for more durable scarring," he said.
Looking around the world at the experience of other countries, including those that were hit by the pandemic earlier, three areas seem to be priorities: higher spending in health; targeted support and assistance to vulnerable households and small and medium-sized firms; and higher public infrastructure spending, he said.
"First and foremost, adequate resources for the health care system are needed to cope with the increased demand caused by the pandemic, including the ongoing vaccination programme," he said.
This requires coordinated state and central government action, given the importance of the states in providing health care. Beyond the current crisis, higher health care spending can achieve better health outcomes and prepare for future crises, the IMF official said.
Asserting that spending on social safety nets is the key to protect vulnerable households from the economic effects of the pandemic, he said that the disruption in economic activity is widening inequality and risks reversing past gains in poverty reduction.
The measures that were announced by India in response to the pandemic go in the right direction. It will be important to continue to support low-income households and ensure that support reaches the most vulnerable.
Preventing viable small and medium-sized enterprises (SMEs) from going out of business and maintaining, as much as possible, existing employment relationships will facilitate a private sector-led recovery.
It is helpful to evaluate current liquidity support schemes, address constraints to implementation, and consider expanding targeted support to viable SMEs, Mauro said.
Further, higher public infrastructure spending sustained over the medium-term can help foster the recovery, close infrastructure gaps, and boost India's growth potential. A focus on clean energy would reduce local pollution and facilitate the transformation to a greener post-pandemic economy, he said.
"Given India's relatively high debt among emerging economies, expanding spending in these priority areas will need to involve a combination of higher fiscal deficits in the near term as well as expenditure prioritisation, for example through reducing poorly targeted subsidies," Mauro said.
Furthermore, near-term accommodative fiscal stance needs to be accompanied by a credible medium-term fiscal consolidation plan anchored on revenue mobilisation, reforms that boost the growth potential, and policies to tackle weaknesses in the financial sector, all of which can reinforce market confidence and contribute towards enhancing fiscal space.
"Finally, given India's federal structure, it will also be important to ensure that states have the financial resources and the flexibility to support the ongoing economic recovery," Mauro said.
Source: The Economic Times
India has extended the ban on scheduled international passenger flight services to and from India till the end of February this year.
Earlier the ban was in place till the end of January. All scheduled international services to and from India have been suspended since March last year.
In a circular the Directorate General of Civil Aviation said on Thursday that the latest restriction will not apply to international all cargo operations and flights specifically approved by the DGCA.
The Circular further says, “however, international scheduled flights may be allowed on selected routes by the competent authority on a case to case basis.”
India has established air bubble arrangement with over a dozen nations including UK, US, France, Australia and Qatar under which international flights are allowed to carry select category of passengers to and from India.
Interestingly, Ronojoy Dutta, Chief Executive Officer, IndiGo, said on Thursday that the government is likely to allow international flights to select countries such as Sri Lanka and Saudi Arabia soon.
Opening up of some routes
He indicated that the opening up of some international routes, which are likely to be to countries which are in close geographical proximity to India is expected to happen in the next six-to-eight weeks.
Dutta said this during a call with analysts which had been organised after the Delhi based low cost airline declared its third quarter results on Thursday.
Source: The Business Standard
The Budget is expected to turn to external financing of the fiscal deficit during FY22. The gross marketing borrowing, however, is likely to be less than the enhanced amount for the current fiscal.
Loans from multilateral agencies such as the World Bank, IMF, ADB and the bilateral JICA will constitute the external financing. These funds are mainly used for long-term financing and carry much lower interest rates. A sovereign bond issue overseas is not a priority now.
External financing is one of the tools to bridge the fiscal deficit gap and is expected to be in the range of ₹60,000-65,000 crore, while the gross borrowing is likely to be around ₹10.5-11 lakh crore. The Budget Estimate for external financing for FY21 was ₹4,622 crore while the enhanced gross borrowing number is ₹12-lakh crore.
All-time high
The amount raised through external financing during the first eight months (April-November) in FY21 touched ₹38,495.5 crore, which is 833 per cent of the Budget Estimate. This is an all-time high. During the corresponding period of last fiscal (FY20), it was actually an outflow, of 240 per cent of Budget Estimate. Government officials said considering the requirement of the infrastructure sector and due to limited long-term funding facility, higher external financing would be a better option. “Domestic borrowings is through G-Secs which have maturity period of 1-40 years. But as the needs for various schemes and programmes especially health, defence and education are very high, domestic borrowing will first be preferred there,” a senior government official said.
Devendra Kumar Pant, Chief Economist with India Ratings & Research (Ind-Ra), feels external financing of deficit could touch ₹55,000 crore. “Similar to FY21, Ind-Ra expects external financing of fiscal deficit to the tune of ₹67,050 crore, which is 5 per cent of the estimated fiscal deficit. He said the World Bank and its group committed $5.13 billion to India in 2020 from an average of $3 billion during 2017-2019. In 2021, the World Bank group has already committed for $1.04 billion.
Gross borrowing
To bridge the deficit (the gap between the expenditure and the income of the government), gross borrowing in FY22 is expected to be more than the Budget Estimate of ₹7-8 lakh crore but less than the revised borrowing of ₹12-lakh crore during the current fiscal.
“No doubt more and more resources are required, but some good numbers from tax revenue and non-tax revenue are expected. This will have an impact on the borrowing requirements,” another official said.
Source: The Hindu Business Line
India's rank has slipped six places to 86th among 180 countries in corruption perception index (CPI) in 2020.
For 2020, Transparency International (TI)'s Corruption Perception Index (CPI) was released on Thursday.
The index, which ranks 180 countries and territories by their perceived levels of public sector corruption according to experts and business people, uses a scale of 0 to 100, where 0 is highly corrupt and 100 is very clean. A country with a higher score has a higher score has a higher rank. India's rank is 86 out of 180 nations with a score of 40.
"India was ranked at 80th position out of 180 countries in 2019. The CPI score for India is almost constant this year as well as the previous year score," the index said. In 2019, India's score was 41.
India is still very low on the corruption index, the report said, noting that experts feel CPI does not reflect actual real corruption level in any country. The integrity score determines the corruption situation of a country.
This year, New Zealand and Denmark rank at first position with scores of 88. Somalia and South Sudan rank lowest at 179th position with scores of 12.
Source: The Economic Times
Nirmala Sitharaman is likely to increase spending by more than 15% year-on-year in 2021-22 with an emphasis on infrastructure and healthcare, say senior officials and advisers involved in budget preparation, as she looks to reinvigorate an economy projected to contract 7.7% in the current fiscal year.
But the officials, who asked not to be named as the budget discussions were private, said major subsidy programmes such as for food, fertiliser and fuel would likely be partly funded through off-budget borrowing by state-owned firms.
The sources said the government was also likely to project a tax revenue increase of 18-20%, aided by the lower base of the current year and an expected economic turnaround.
On Thursday, Gopal Krishna Agarwal, a BJP spokesman, said the budget would be a “game-changer”.
“We’re working towards a resurgent India and Aatmanirbhar Bharat,” Agarwal told media, using Prime Minister Narendra Modi’s term for his push for India to be self-reliant.
To mop up additional revenue and to support Hindu nationalist Modi’s self-sufficiency drive, the government is likely to hike import duties on a number of high-end goods in a bid to raise more than 210 billion rupees in revenue.
TAX CUT HOPES
Corporates and industry chambers expect the finance minister to unveil some tax relief measures for pandemic-hit sectors such as real estate, aviation, tourism and autos.
And analysts say the government would also have to consider providing tax relief to small businesses and consumers to boost consumer sentiment and revive economic growth.
But, with the economic contraction likely pushing India’s fiscal deficit for the current financial year ending in March to more than 7% of gross domestic product - double the government’s initial estimate of 3.5% - analysts believe this may be quite challenging.
“The government will be operating on a tightrope with the need for higher counter-cyclical spending balancing demands for prudence,” JPMorgan’s Sanjay Mookim said.
PUSH TO PRIVATISE
New Delhi is likely to rely heavily on privatisation of state-run firms and sales of minority stakes in large companies such as Life Insurance Corp to fund its expenditure programme.
India could aim to raise 2.5-3 trillion rupees from stake- sales in 2021-22, after raising just about 180 billion rupees in the current year, well short of its 2.1 trillion rupees target.
“Privatisation should be the key to government revenue assumptions,” Jefferies India Private Ltd’s Mahesh Nandurkar said.
Sitharaman is also expected to announce plans to fix the recurring problems in the banking sector, including the creation of a new infrastructure development bank and a “bad bank”, say officials.
A state “bad bank” would look to unburden banks of toxic assets to spur fresh lending, and an infrastructure development bank would be conducive to lending towards projects with long gestation without the asset-liability mismatch that a commercial bank often faces, officials said.
The government is also likely to announce 200-250 billion rupees of capital infusion into banks, officials said.
Source: Reuters India
The Economic Survey 2020-21 will be tabled in Parliament today, two days before presentation of the Union Budget.
The survey will provide an estimate of the economic development across the country during the financial year.
Like every year, the survey will make an analysis of the trends in infrastructure, agricultural and industrial production, employment, prices, exports, imports, money supply and forex reserves, apart from all other factors that influence the economy and the budget.
The survey will also present economic growth forecasts, along with reasons why the government thinks the economy will expand or shrink.
According to sources, the survey may predict a steep recovery from Covid slump, with a forecast of 11 per cent GDP growth for 2021-22.
For this fiscal (2020-21), the survey is likely to peg economic contraction at 7.7 percent, the sharpest fall in four decades.
Nominal GDP may be seen by the survey as rising to 15.4%, the most since 1947, which may lead to higher tax collections, said one source to Reuters.
As a usual practice, the survey's forecasts are often the basis for key figures in the budget.
Source: The Economic Times
The Karnataka government has hit out at Maharashtra Chief Minister Uddhav Thackeray over his continued provocative statements on the boundary row. Deputy Chief Minister Laxman Savadi demanded that Mumbai be made a Union territory until it is merged with Karnataka as it was once a part of the Bombay-Karnataka region and hence the people of the state have a rightful claim to it.
Speaking to a section of media at Borgaon near Nipani on Wednesday, Savadi was reacting to the statements of Thackeray that Belagavi region should be made a Union territory and that he would not be silent until it is merged with Maharashtra.
He condemned Thackeray's statements and said the Mahajan Commission has already submitted its report on the boundary dispute and the people of Karnataka were confident that the verdict of the Supreme Court on the row would be in the state's favour.
People of this region (North Karnataka) were demanding their rightful share of Mumbai as the region was once a part of Bombay-Karnataka, said Savadi adding, "The time has come to start demanding our share of Mumbai and efforts to get Mumbai merged in Karnataka state should begin now. And until Mumbai is merged with Karnataka, I demand that the Union government declare Mumbai as a Union territory.''
Further, Savadi said the boundary dispute between both the states would be settled once Karnataka started asking for a share in Mumbai.
The DCM underlined the need to finish the Maharashtra Ekikaran Samiti (MES) in Belagavi and said the BJP was planning to get all the leaders of MES into the party to ensure that the MES chapter was closed. "We have to finish the MES and it is our duty. We will make MES top leader Aravind Patil of Khanapur as BJP candidate in the next assembly election,'' he added.
Meanwhile, the release of a book on the boundary dispute by the Maharashtra CM in Mumbai on Wednesday and his provocative statements on the vexed dispute evoked a sharp response in Karnataka as leaders from different political parties hit out at Thackeray.
KPCC Working President Satish Jarkiholi said it had been the practice in Maharashtra to issue irresponsible statements on the boundary dispute whenever a new government came to power. It was not a new development at all, he said.
Stating that Belagavi region was an integral part of Karnataka and that a case pertaining to the boundary dispute was pending before the Supreme Court, he said, "As a Kannadiga, I would like to give a message to Uddhav Thackeray not to resort to politics in this matter as all Marathi people in Karnataka are living happily.''
Source: The New Indian Express
Mumbai local trains, popularly referred to as the lifeline of the maximum city, will resume services almost fully from Friday. The decision for a full re-run of the local trains was taken in a meeting of the state government, the Railways and the Brihanmumbai Municipal Corporation (BMC) officials chaired by Maharashtra Chief Minister Uddhav Thackeray recently.
The Traffic Control Department of the Mumbai Central Division of Western Railway has reportedly sent a letter to all station masters for opening local trains for all starting today. Station masters have been informed to run trains on a full schedule. As of now, the Western and Central lines are only open for commuters who come under essential services. Women are allowed to avail the services freely during peak hours.
Officials of the Central Railway have said that they have started working on a full resumption of services; however, Mumbai Mirror reported that no official orders have been received in this regard.
Full services to be resumed during non-peak hours only
Several models are being deliberated in order to fully resume services, the report quoted officials as saying. Full services will only be resumed during non-peak hours, an official said.
Source: Times now news.com
India and Japan held the fifth joint meeting of the India-Japan Act East Forum (AEF) on Thursday to give a push to connectivity projects and other development & capacity building initiatives as part of their Indo-Pacific partnership.
The meeting was co-chaired by Harsh Vardhan Shringla, Foreign Secretary, and Suzuki Satoshi, Ambassador of Japan to India.
The AEF reviewed progress of ongoing projects in the North Eastern Region of India in various areas including connectivity, hydropower, sustainable development, harnessing of water resources, and skill development, according to officials.
They discussed several new projects being undertaken under India-Japan bilateral cooperation and also exchanged views on cooperation in new areas such as healthcare, agro-industries and SMEs, bamboo value chain development, smart city, tourism and people-to-people exchanges, officials added.
Foreign Secretary and the Japanese Ambassador appreciated the role played by the AEF since its establishment in 2017 in streamlining India-Japan bilateral cooperation for the modernization of the North Eastern Region.
AEF provides a platform for India-Japan collaboration in the North Eastern Region under India’s "Act East Policy” and Japan’s vision for a "Free and Open Indo-Pacific”.
Japan attaches a great importance to the cooperation for the development of India’s North East, anchored by its historical ties, trust and friendship, an official said.
“The North East stands on a place strategically important to realise a free, open and inclusive Indo-Pacific; and Japan is proud to have been a partner with the people of North East in their aspirations for a better and sustainable future. Japan is the only country which has an independent framework for discussing the development of India’s North East and the one at such a high-level,” a Japanese official said.
Japan has been actively providing assistance to various projects in the region. The ongoing ODA projects supported by Japan amounts to more than 231 billion yen(appx. INR 1,600 crore).
The AEF has been a driving force to coalesce the developmental efforts of India, its North Eastern regionand Japan. The AEF provides guidance for the joint actions between Japan and India, as well as with the North Eastern region. In today’s meeting, such key areas as road connectivity, health (including water and sanitation), forest conservation and people-to-people exchanges were covered to pursue further collaborations.
Source: The Economic Times
Bangladesh’s huge export-oriented readymade garment industry is fighting for its survival after fresh coronavirus curbs in Europe and North America shrivelled already-weakened order books, industry leaders said.
The government told Reuters it was considering a new support package for the industry that contributes almost 16 per cent of GDP to the economy. Companies in the world’s largest garment exporting nation after China supply to big Western brands such as Walmart, Gap, and H&M.
“The first wave of the pandemic rattled the supply chain and the financial base of the industry through order cancellations, payment deferments and discount demands,” said Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association. “The second wave has decapitated the already dead.”
Huq said readymade garment exports fell 9.69 per cent in December from a year earlier, led by an 18 per cent drop in sales of woven garments. Knitwear products such as t-shirts and sweaters inched down 0.45 per cent.
Most factories are struggling to stay afloat and able to use only half of their capacity due to a lack of orders, said Mohammad Hatem, vice president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).
“Buyers are hardly placing any orders,” he said. “Even if they place order, they demand steep price cuts of as much as 20% along with deferred payments of up to 200 days. That makes the situation so difficult for us to survive.”
‘Unprecedented Crisis’
Prime Minister Sheikh Hasina’s government had offered a $1.25 billion package for the sector to survive the shock of the first wave as cancellations reached about $6 billion in March 2020. Most of the orders came back later but at a sharp discount.
More relief was on the way, said K M Abdus Salam, secretary of the Ministry of Labour and Employment, without revealing any financial details.
“This is an unprecedented crisis,” he said. “The government can’t help alone. Major market players, including brands, buyers and governments of sourcing countries, manufacturers, everyone has a role to play to ensure faster recovery of the sector.”
Low wages have helped Bangladesh rapidly scale up its garment industry that now has some 4,000 factories employing 4 million workers.
About a third of the 1 million workers who were either furloughed or laid off early in the pandemic have been rehired since July, according to union leaders, but many are fearful of being made jobless again.
“We are told we could lose our jobs again if the work orders don’t rise soon,” said Banesa Begum, a worker on the outskirts of the capital city Dhaka and the only breadwinner in her five-member family.
“I can’t sleep at night when I think of it. I’m already struggling to survive as I have not been able to clear all the debt I took when I was without a job for four months.”
Source: The Financial Express Bangladesh
US National Security Advisor Jake Sullivan spoke to his Indian counterpart Ajit Doval on Wednesday and reaffirmed US President Joe Biden’s commitment to a strong and enduring US-India strategic partnership based on shared commitment to democracy, according to a statement released by the White House.
“They discussed the importance of continuing close cooperation in the Indo-Pacific region, promoting regional security, and renewing efforts to collaborate on global challenges, including COVID-19 and climate change,” the release said.
The two spoke on the telephone.
Doval pointed out that as leading democracies, India and the US were positioned to work closely on regional and international issues including combating the scourge of terrorism, maritime security, cyber security and peace and stability in the Indo-Pacific region and beyond, as per a release issued by the Ministry of External Affairs on Thursday.
The two highlighted the need to work collectively to address challenges in the post-Covid era and further expand the Comprehensive Global Strategic Partnership, the release added.
Source: The Business Standard
Speakers at a programme on Wednesday said the Bangladesh Investment Development Authority (BIDA) should coordinate more with its stakeholders to do better in the Ease of Doing Business ranking.
They also said that apart from fixing problems related to the 10 indicators of Ease of Doing Business, other barriers to business should be addressed to create an investment-friendly atmosphere in the country.
The suggestions came at a workshop on the Ease of Doing Business organised by BIDA at BIAM auditorium in the city's New Eskaton.
The workshop primarily discussed three components of the Ease of Doing Business -- starting a business, dealing with construction permit, and registering property -- and reforms were done in the areas, and way forward.
BIDA Executive Chairman Md Sirazul Islam addressed the programme as the chief guest.
Additional secretary of the land ministry Muhammad Salehuddin, additional secretary of the Power Division Abul Khair Md Aminur Rahman, member of Rajdhani Unnayan Kartripakkha (RAJUK) Md Shafi Ul Haque, Real Estate and Housing Association of Bangladesh (REHAB) Vice-President (finance) Md Shohel Rana, among others, spoke at the event.
During his speech, BIDA Executive Chairman Sirazul Islam said Bangladesh was ranked 168, jumping eight notches, out of 190 countries in the EoD index-2019 prepared by the World Bank Group - the performance was not that much promising.
"Now we are working to enter within the top 100, and in this regard, BIDA has taken different reform programmes," he said.
He said, "To do well in the index, BIDA has been working on the 10 indicators of the index, recommending reforms in rules and regulations of different state bodies to fix the problems in setting up businesses."
"However, there are many business components which don't come under the 10 indicators of the Ease of Doing Business but very important for facilitating businesses.
Businesses that respond to WB survey before preparing the Ease of Doing Business, focus more on other conditions unrelated to the 10 indicators, which as a result don't reflect the country's efforts in easing business," he said.
Hoping collaboration from the private sector, BIDA executive chairman said the government's efforts in easing business should be evaluated from a holistic approach than a narrow focus.
Referring to one-stop service (OSS) facility launched by BIDA, REHAB vice-president said, "We hoped that starting a business would be easy after the OSS is launched but it hasn't yet added that much value at the expected level."
Property or land registration process is still very complex and takes too much time, he said, adding that more cooperation among state bodies is needed to reduce 'harassment' of entrepreneurs.
He also urged BIDA to bring Dhaka WASA under the OSS platform like DESA and DESCO.
Source: The Financial Express Bangladesh
Stuck in the grip of a viral pandemic, the US economy grew at a 4% annual rate in the final three months of 2020 and shrank last year by the largest amount in 74 years.
For 2020 as a whole, a year when the coronavirus inflicted the worst economic freeze since the end of World War II, the economy contracted 3.5% and clouded the outlook for the coming year. The economic damage followed the eruption of the pandemic 10 months ago and the deep recession it triggered, with tens of millions of Americans left jobless.
Thursday’s report from the Commerce Department estimated that the nation’s gross domestic product — its total output of goods and services — slowed sharply in the October-December quarter from a record 33.4% surge in the July-September quarter. That gain had followed a record-shattering annual plunge of 33.4% in the April-June quarter, when the economy sank into a free-fall.
The pandemic’s blow to the economy early last spring ended the longest US economic expansion on record, nearly 11 years. The damage from the virus caused GDP to contract at a 5% annual rate in last year’s January-March quarter. Since then, thousands of businesses have closed, nearly 10 million people remain out of work and more than 400,000 Americans have died from the virus.
The estimated drop in GDP for 2020 was the first such decline since a 2.5% fall in 2009, during the recession that followed the 2008 financial crisis. That was the deepest annual setback since the economy shrank 11.6% in 1946, when the economy was demobilising after World War II.
The most catastrophic annual contraction in records dating to 1930 was a 12.9% fall in 1932 during the Great Depression.
The government’s report Thursday was its first of three estimates of growth last quarter; the figure will be revised twice in the coming weeks.
The outlook for the 2021 economy remains hazy. Economists warn that a sustained recovery won’t likely take hold until vaccines are distributed and administered nationwide and government-enacted rescue aid spreads through the economy, a process likely to take months.
Source: The Financial Express
Speakers at an international webinar have stressed the need for diversifying the country's export basket and focusing on bilateral free trade agreements to address the challenges of the post-Covid global economic shock.
Though Bangladesh has emerged as one of the top performers during the Covid-19 pandemic, they said, it has to get ready to face the challenges after its graduation from LDC status.
Bangladesh-German Chamber of Commerce and Industry (BGCCI) organised the webinar on 'Post-Covid economic relations between Bangladesh and Germany' on Wednesday.
Commerce Minister Tipu Munshi was the chief guest at the programme chaired by Omar Sadat, president of BGCCI.
The minister stressed the need for further promoting the bilateral ties between the two countries, reminding the fact that Germany is the second-largest export destination of Bangladesh and top trading partner in Europe.
The country will face some challenges after its graduation from LDC status in terms of tariff burden, he said, adding that Germany along with its European allies can help Bangladesh in this regard.
The minister also urged BGCCI to continue playing its role in further consolidating the bilateral trade ties between the two countries.
Bangladesh Ambassador to Germany Mosharraf Hossain Bhuiyan expressed the hope that in the coming days, German investment in Bangladesh will grow as there has been massive reform of FDI policies in the country.
Dr Mustafizur Rahman, Distinguished Fellow of the CPD, urged the government to set up country-specific special economic zones to draw investment from other countries.
One such SEZ can be allocated to German investors, he said pointing out that German investment in the country was only $193 million, compared to US$3.7 billion from the USA and $2.5 billion from the UK in the last fiscal year.
BGMEA president Rubana Huq urged the German financial institutions to come up with post-export payment guarantee schemes, saying that Bangladeshi exporters have $8 billion accounts receivable from international buyers.
She also urged the German investors to invest in promoting man-made fibre technology in Bangladesh.
Syed Nasim Manzur, Managing Director of Apex Footwear Ltd, told the webinar that Bangladesh outperformed many other countries in achieving growth during the pandemic due to various factors, including the prudence of the government led by Prime Minister Sheikh Hasina and the resilience of the country's workers.
Terming Germany the engine of Europe, Mr Nasim said when the buyers of Germany slow shopping, it affects buyers in other countries.
He stated that since October, exports to Germany fell by 47 per cent and the country went into lockdown in mid-December, the peak season for retail sales.
CEO of StanChart Naser Ezaz Bijoy said the behaviour of international buyers has now become an issue, not the performance of Bangladeshi exporters.
CEO of the BGCCI Ambassador Shahed Akhtar moderated the discussion.
Marck Wengrzik, MD of AKA Export Credit, Ms Christine Jordan, Head of Structured Finance, Stan Chart AG, Jan Mortiz, Head of Country Committee, BD East Asia Association also took part in the webinar.
Source: The Financial Express Bangladesh
India and Japan on Thursday reviewed progress of various ongoing projects in the Northeastern region in areas of connectivity, hydropower, sustainable development and harnessing of water resources, the Ministry of External Affairs (MEA) said.
The review was carried out at the fifth joint meeting of the India-Japan Act East Forum.
The meeting was co-chaired by Foreign Secretary Harsh Vardhan Shringla and Japanese Ambassador Suzuki Satoshi, the MEA said.
"The AEF reviewed progress of ongoing projects in the North Eastern Region of India in various areas including connectivity, hydropower, sustainable development, harnessing of water resources, and skill development," it said in a statement.
It said the two sides discussed several new projects being undertaken under India-Japan bilateral cooperation and also exchanged views on cooperation in new areas such as healthcare, agro-industries bamboo value chain development, tourism and people-to-people exchanges.
The AEF provides a platform for India-Japan collaboration in the North Eastern Region under India's 'Act East Policy' and Japan's vision for a 'Free and Open Indo-Pacific'.
"The Foreign Secretary and the Japanese Ambassador appreciated the role played by the AEF since its establishment in 2017 in streamlining India-Japan bilateral cooperation for the modernisation of the North Eastern region," the MEA said.
Source: The Hindu Business Line
Rules of origin of the South Asian Free Trade Area (SAFTA) can supersede the provisions of the new Indian customs rules in case any conflicts arise, experts say.
The Indian customs (administration of rules of origin under trade agreement) rules made in September last year have a number of provisions that contradict the SAFTA RoO.
Earlier, Bangladesh Tariff Commission (BTC) under the ministry of commerce had identified a number of inconsistencies between the SAFTA RoO and Indian new customs rules.
Officials said the Indian customs authority, in response to a letter of the commerce ministry, said it would stick to its position as it found the new rules not contradictory.
Mostafa Abid Khan, a member of Bangladesh Tariff Commission, said the government could start a consultation with the Indian customs authority to resolve the issue instead of retaliation.
He said the neighbouring country should address the contradictory provisions of the new rules to make it aligned with the SAFTA rules. "I would suggest our exporters follow the SAFTA rules instead of the new customs rules of India," he said.
Officials said the SAARC secretariat is ineffective to complain against the violation of the SAFTA rules by a member country.
The customs rules have the provisions that may raise mistrust between the government authorities of the two countries, they said.
It undermines the competent government authorities of the exporting countries by denying the preferential treatment using the judgment on the evidence provided by the issuing authority, the commission said in a letter to the commerce ministry.
The confidentiality of the product sources may also be hampered with the implementation of such rules, they said.
The customs wing of the National Board of Revenue (NBR), in a recent letter to the commerce ministry, also said the Indian customs authority is forcing the importers to follow complex and difficult process to avail duty-free benefit under the different preferential trade agreements.
The wing said it seems to be a violation of the principles of international trade agreements. The customs international trade and agreement wing gave the opinion after reviewing the new rules.
For example, one rule has made it mandatory for including some information in the bill of entry, which may discourage the importers to avail the benefit of the preferential trade agreements.
Furthermore, the rules have empowered its principal commissioner or commissioner of customs to reject the preferential claim of the importers while SAFTA RoO said the certificate of Origin could not be rejected in case of small mistakes in the information contained in documents such as import certificates, invoice and packing list.
The customs wing of the NBR said the Indian counterpart seems conservative about allowing benefits offered in the preferential trade agreements.
The Indian customs rules have made it mandatory for some declarations that the importers are not supposed to know. Only exporters may know the information about the origin of the product.
The commission, in its observation, said neither the SAFTA RoO nor the Operational Certification Procedures (OCP) require the exporters or issuing authority to send this information to the importers.
Source: The Financial Express Bangladesh
Prime Minister Narendra Modi spoke to Abu Dhabi Crown Prince Sheikh Mohammed Bin Zayed Al Nahyan and the two leaders discussed the impact of the COVID-19 pandemic in the region, expressing satisfaction that cooperation between India and the UAE did not halt even during the health crisis.
In a telephone conversation, the PMO said in a statement on Thursday, the two leaders agreed to continue close consultations and cooperation to further strengthen the India-UAE partnership in the post-COVID-19 world.
In this context, they discussed the opportunities for further diversifying trade and investment links.
In a tweet, Modi said, 'Had a warm telephone conversation with my friend Sheikh @MohamedBinZayed. Thanked him for his personal attention to the well-being of Indians in UAE. Even the pandemic has not slowed India-UAE cooperation, and we agreed to continue enhancing and diversifying our partnership.' The crown prince is also the deputy supreme commander of the UAE armed forces.
The two leaders shared their confidence that the COVID-19 crisis would soon be overcome, and looked forward to meeting in person in the near future, the statement said. Earlier in the day, Modi had hailed India's growing ties with countries in the Middle East and had in this context noted that India-bound Rafale fighter aircraft were recently refuelled midair in the UAE and countries like Greece and Saudi Arabia had also helped.
Source: PTI News
