Gravitas: How to tackle India's growth slowdown?

Is A Global Economic Growth Slowdown Imminent?

Gravitas: Economic slowdown: The Global picture

The economic growth slowed to a seven-year low to 5 percent in April to June quarter from 8 percent a year ago, as per the government data. Watch this video to know more.

Domestic factors behind slowdown in Indian economy; Here are the details

The Indian economy in the fourth quarter of 2018-19 witnessed a modest growth of 5.8%. Watch this video to know more.

Indian economy is in grip of a severe slowdown; All you need to know

Greece on Friday sought permission from the eurozone to repay loans to the IMF before their maturity date, a move Athens hopes will rebuild international trust in its economy.

Greece's new center-right finance minister Christos Staikouras made his request at his first meeting with his eurozone counterparts since taking office in July. &nbsp;

"I welcome such an early repayment for a very simple reason: because it increases the debt sustainability of Greece," said Klaus Regling, the head of the European Stability Mechanism, the eurozone's bailout fund.

Regling said once officially launched, the approval process would take about two months.

Regling's ESM, which is governed by the eurozone 19 finance ministers, holds most of the public debt owed by Greece after a decade of EU and IMF bailouts.

Greece's overspending triggered a major eurozone crisis a decade ago and nearly led to the demise of the single currency bloc.

Since then, Athens has carried out painful reforms in exchange for three bailouts worth 289 billion euros ($330 billion) from the European Union, the European Central Bank, and the International Monetary Fund.

The country exited its third and final international bailout in August 2018.

Nevertheless, its debt load remains high with public debt standing at 335 billion euros ($372 billion) or 180 percent of GDP last year.

According to Bloomberg, the government hopes to pay off 2.9 billion euros of the remaining 8.8 billion Greece owes the Washington-based IMF.

Some of the loans demand rates of over 5 percent pushing the market-friendly government to seek cheaper terms.

Greece on Friday sought permission from the eurozone to repay loans to the IMF before their maturity date, a move Athens hopes will rebuild international trust in its economy.

Greece on Friday sought permission from the eurozone to repay loans to the IMF before their maturity date, a move Athens hopes will rebuild international trust in its economy. Greece's new center-right finance minister Christos Staikouras made his request at his first meeting with his eurozone counterparts since taking office in July. "I welcome such an early repayment for a very simple reason: because it increases the debt sustainability of Greece," said Klaus Regling, the head of the European Stability Mechanism, the eurozone's bailout fund. Regling said once officially launched, the approval process would take about two months. Regling's ESM, which is governed by the eurozone 19 finance ministers, holds most of the public debt owed by Greece after a decade of EU and IMF bailouts. Greece's overspending triggered a major eurozone crisis a decade ago and nearly led to the demise of the single currency bloc. Since then, Athens has carried out painful reforms in exchange for three bailouts worth 289 billion euros ($330 billion) from the European Union, the European Central Bank, and the International Monetary Fund. The country exited its third and final international bailout in August 2018. Nevertheless, its debt load remains high with public debt standing at 335 billion euros ($372 billion) or 180 percent of GDP last year. According to Bloomberg, the government hopes to pay off 2.9 billion euros of the remaining 8.8 billion Greece owes the Washington-based IMF. Some of the loans demand rates of over 5 percent pushing the market-friendly government to seek cheaper terms.

Greece seeks early IMF debt repayment to build trust

Former President Pranab Mukherjee said here on Thursday that Gross Happiness is no less important than Gross Domestic Product (GDP), and its basic foundation is education.

"The world today is not merely talking about Gross Domestic Product, the world wants more. A new concept has come that GDP is important but side by side Gross Happiness is also important and its basic foundation is education," said Mukherjee.

He was speaking at the launch of Delhi Deputy Chief Minister and Education Minister Manish Sisodia's book titled 'Shiksha'&nbsp;here on Teachers'&nbsp;Day on Thursday.

Mukherjee greeted teachers on the occasion and said students should be encouraged to ask questions.

He also thanked Sisodia for his book saying, "I thank you for writing a book not for research scholars but for ordinary teachers and practitioners in the field of education. A book like this is important during a time like this and it will be beneficial for teachers, officials and educators."&nbsp; 
&nbsp;

Former President Pranab Mukherjee said here on Thursday that Gross Happiness is no less important than Gross Domestic Product (GDP), and its basic foundation is education.

Former President Pranab Mukherjee said here on Thursday that Gross Happiness is no less important than Gross Domestic Product (GDP), and its basic foundation is education. "The world today is not merely talking about Gross Domestic Product, the world wants more. A new concept has come that GDP is important but side by side Gross Happiness is also important and its basic foundation is education," said Mukherjee. He was speaking at the launch of Delhi Deputy Chief Minister and Education Minister Manish Sisodia's book titled 'Shiksha' here on Teachers' Day on Thursday. Mukherjee greeted teachers on the occasion and said students should be encouraged to ask questions. He also thanked Sisodia for his book saying, "I thank you for writing a book not for research scholars but for ordinary teachers and practitioners in the field of education. A book like this is important during a time like this and it will be beneficial for teachers, officials and educators."

Gross Happiness is also important along with GDP: Pranab Mukherjee

Slowdown hits the world's largest economy. U.S GDP Growth falls to 2% Estimated was 2.1%

WION Wallet: U.S GDP Growth falls to 2% Estimated was 2.1%

India's GDP growth slowed down to 5 per cent in the first quarter of the financial year FY20&nbsp;indicating that that slowdown in the Indian economy persists.

The GDP growth fell from 5.8 per cent to 5 per cent in the April to June period in 2019.

In May, the government had announced India's GDP figures for January-March quarter of 2018-19&nbsp;had slipped to 5.8 per cent against 6.6 per cent in the third quarter due to poor performance in agriculture and manufacturing sectors.

The Central Statistics Office (CSO) had said that GDP growth during 2018-19 fiscal had stood at 6.8 per cent&nbsp;lower than 7.2 per cent in the previous financial year.

India's GDP growth slowed down to 5 per cent in the first quarter of the financial year FY20 indicating that that slowdown in the Indian economy persists. The GDP growth fell from 5.

India's GDP growth slowed down to 5 per cent in the first quarter of the financial year FY20 indicating that that slowdown in the Indian economy persists. The GDP growth fell from 5.8 per cent to 5 per cent in the April to June period in 2019. In May, the government had announced India's GDP figures for January-March quarter of 2018-19 had slipped to 5.8 per cent against 6.6 per cent in the third quarter due to poor performance in agriculture and manufacturing sectors. The Central Statistics Office (CSO) had said that GDP growth during 2018-19 fiscal had stood at 6.8 per cent lower than 7.2 per cent in the previous financial year.

India's GDP growth falls to 5 per cent in April-June 2019

<a href="https://www.wionews.com/world/singapore-to-raise-retirement-age-to-65-years-prime-minister-243941">Singapore</a>'s core inflation eased to its slowest pace in more than three years in July, data showed on Friday, prompting authorities to downgrade their full-year forecast amid firming bets for monetary policy easing.

The core inflation gauge rose 0.8 per cent from a year earlier, the slowest rate since April 2016, weighed down by declines in utilities and retail prices.

That was lower than a 1.0 per cent forecast in a Reuters poll and a 1.2 per cent&nbsp;increase in the previous month.

Authorities said they expected core inflation - the preferred price gauge of the central bank which is due to meet in October - to be in the lower half of their 1 per cent-2 per cent&nbsp;forecast for 2019, having previously said it would come in the middle.

The 1 per cent-2 per cent&nbsp;forecast range remains in place.

"This is further evidence of the weakened condition of the economy," said Steve Cochrane, chief APAC economist at Moody's Analytics.

"This will likely raise expectations of monetary policy easing... Particularly as many central banks in the region have already begun to ease monetary policy."

The Monetary Authority of Singapore (MAS) said last week, after the city-state slashed its full-year growth forecast, that it was not considering an out-of-cycle policy move.

The Singapore dollar weakened after the data release and was down around 0.2 per cent&nbsp;against the US dollar on the day.

The headline consumer price index in July rose 0.4 per cent&nbsp;year-on-year, matching January's figures, the lowest so far in 2019. The poll had called for a 0.55 per cent&nbsp;rise, compared with a 0.6 per cent&nbsp;increase a month earlier.

Singapore's headline rate is expected to average 0.5 per cent-1.5 per cent&nbsp;for the full year, MAS and Singapore's trade ministry said in a joint statement on Friday.

"An acceleration in inflationary pressures is unlikely against the backdrop of slower GDP growth, uncertainties in the global economy, as well as the continuing restraining effects of MAS' monetary policy tightening in 2018," the authorities said.

Singapore's core inflation eased to its slowest pace in more than three years in July, data showed on Friday, prompting authorities to downgrade their full-year forecast amid firming bets for monetary policy easing.

Singapore's core inflation eased to its slowest pace in more than three years in July, data showed on Friday, prompting authorities to downgrade their full-year forecast amid firming bets for monetary policy easing. The core inflation gauge rose 0.8 per cent from a year earlier, the slowest rate since April 2016, weighed down by declines in utilities and retail prices. That was lower than a 1.0 per cent forecast in a Reuters poll and a 1.2 per cent increase in the previous month. Authorities said they expected core inflation - the preferred price gauge of the central bank which is due to meet in October - to be in the lower half of their 1 per cent-2 per cent forecast for 2019, having previously said it would come in the middle. The 1 per cent-2 per cent forecast range remains in place. "This is further evidence of the weakened condition of the economy," said Steve Cochrane, chief APAC economist at Moody's Analytics. "This will likely raise expectations of monetary policy easing... Particularly as many central banks in the region have already begun to ease monetary policy." The Monetary Authority of Singapore (MAS) said last week, after the city-state slashed its full-year growth forecast, that it was not considering an out-of-cycle policy move. The Singapore dollar weakened after the data release and was down around 0.2 per cent against the US dollar on the day. The headline consumer price index in July rose 0.4 per cent year-on-year, matching January's figures, the lowest so far in 2019. The poll had called for a 0.55 per cent rise, compared with a 0.6 per cent increase a month earlier. Singapore's headline rate is expected to average 0.5 per cent-1.5 per cent for the full year, MAS and Singapore's trade ministry said in a joint statement on Friday. "An acceleration in inflationary pressures is unlikely against the backdrop of slower GDP growth, uncertainties in the global economy, as well as the continuing restraining effects of MAS' monetary policy tightening in 2018," the authorities said.

Singapore cuts 2019 core inflation forecast as prices hit a 3-year low

The RBI on August 7, 2019, reduced the repo rate by 35 bps from 5.75 per cent to 5.40 per cent. This is the fourth consecutive cut in a row this year. It also tempered the GDP growth estimates to 6.9 per cent in line with CRISIL.

While the rate cut is 10 bps more than street estimates, it highlights that the central bank recognises the severity of the current slowdown. Including this rate cut, RBI has reduced repo rate (the rate at which it lends to banks) by 110 bps this year (1.10 per cent), and it is at its lowest level in the last nine years.

The RBI governor in a press briefing expressed confidence that this cut would give a boost to investment, consumption and growth. While decline in rate cuts are likely to reduce EMIs for individuals and cost of borrowing for corporates, it alone is not likely to spur growth.

Firstly, the banks do not pass on the full benefits of rate cuts to consumers. Out of the 75-bps rate cut before the August announcement, banks have passed on only 29 bps benefit to end consumers, less than 40 per cent.

Generally, it takes two to three months for transmission, some could argue. Even by this logic, banks have passed on only 60 per cent&nbsp;benefit. Private banks have been laggards compared to public sector banks. Also, lenders generally pass on more benefits on new loans rather than existing ones.

Just because the EMIs have come down, people would not be tempted to invest in two-wheelers, cars and real estate as consumption depends a lot on sentiment. Consumer confidence declined in July 2019 due to deterioration in sentiments on jobs, price levels and the general economic situation, according to RBI’s own survey.

For the first time in the last decade, FMCG companies are witnessing a decline in their volumes, 5.5 per cent in Q1 FY20 versus 12 per cent in Q1 FY19, according to a Prabhudas Liladhar report. Rural demand has been badly hit due to low farm incomes and wage growth.

The real estate sector is sitting on an all-time high inventory of 12.76 lakh houses in the top 30 cities. The entire auto industry is witnessing a slowdown as never before. Maruti Suzuki reported its sixth consecutive monthly sales decline with numbers falling 33 per cent in July 2019 while TVS Motors reported a decline of 13 per cent.

Maruti for the sixth month in a row has announced production cuts of 25 per cent. As per reports, 2.3 lakh workers have been laid off. This has had a knock-on effect on OEM and auto ancillary sectors, which employ significant number of contractual workers.

Since auto and real estate sectors contribute 15 per cent-17 per cent to India’s GDP, their slowdown has had a direct impact on other sectors like metals and mining, cement and tyre manufacturing, among others.&nbsp;

The manufacturing industry is operating at a capacity utilisation of 75 per cent. Growth in eight core sectors fell to four-year low of 0.2 per cent in June 2019.&nbsp;

Until and unless the manufacturing industry sees a permanent revival in demand and reduction in idle capacity utilisations, it may not think of fresh investments.

Banks, on the other hand, are still reeling from high NPAs. The delay in IBC insolvency cases is hurting the banks, which continue to adopt a selective and cautious approach to lending. Even the retail portfolio of banks is showing signs of stress. The liquidity crunch, post the IL&amp;FS default and the NBFC crisis has not helped matters.

The Indian economy is facing an acute demand side issue and RBI cannot fix it alone. The government missed the opportunity to leave more money in the hands of people through tax cuts in Budget 2019. Instead, the finance minister increased taxes on the super-rich, which has acted as a dampener.

Since tight fiscal math prevents the government from increasing its spending, like it did, post the global financial crisis, India will need to fall back on private consumption expenditure to boost demand and growth. The new Direct Tax Code, which is expected to propose sweeping changes in tax rates should be implemented next year without fail. Till then, all eyes on the festive season! 
 
(This article was originally published on The DNA. Read the <a href="https://www.dnaindia.com/analysis/column-are-the-rate-cuts-enough-to-boost-growth-2782948">original article</a>)

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL.)&nbsp;

The RBI on August 7, 2019, reduced the repo rate by 35 bps from 5.75 per cent to 5.40 per cent. This is the fourth consecutive cut in a row this year. It also tempered the GDP growth estimates to 6.

The RBI on August 7, 2019, reduced the repo rate by 35 bps from 5.75 per cent to 5.40 per cent. This is the fourth consecutive cut in a row this year. It also tempered the GDP growth estimates to 6.9 per cent in line with CRISIL. While the rate cut is 10 bps more than street estimates, it highlights that the central bank recognises the severity of the current slowdown. Including this rate cut, RBI has reduced repo rate (the rate at which it lends to banks) by 110 bps this year (1.10 per cent), and it is at its lowest level in the last nine years. The RBI governor in a press briefing expressed confidence that this cut would give a boost to investment, consumption and growth. While decline in rate cuts are likely to reduce EMIs for individuals and cost of borrowing for corporates, it alone is not likely to spur growth. Firstly, the banks do not pass on the full benefits of rate cuts to consumers. Out of the 75-bps rate cut before the August announcement, banks have passed on only 29 bps benefit to end consumers, less than 40 per cent. Generally, it takes two to three months for transmission, some could argue. Even by this logic, banks have passed on only 60 per cent benefit. Private banks have been laggards compared to public sector banks. Also, lenders generally pass on more benefits on new loans rather than existing ones. Just because the EMIs have come down, people would not be tempted to invest in two-wheelers, cars and real estate as consumption depends a lot on sentiment. Consumer confidence declined in July 2019 due to deterioration in sentiments on jobs, price levels and the general economic situation, according to RBI’s own survey. For the first time in the last decade, FMCG companies are witnessing a decline in their volumes, 5.5 per cent in Q1 FY20 versus 12 per cent in Q1 FY19, according to a Prabhudas Liladhar report. Rural demand has been badly hit due to low farm incomes and wage growth. The real estate sector is sitting on an all-time high inventory of 12.76 lakh houses in the top 30 cities. The entire auto industry is witnessing a slowdown as never before. Maruti Suzuki reported its sixth consecutive monthly sales decline with numbers falling 33 per cent in July 2019 while TVS Motors reported a decline of 13 per cent. Maruti for the sixth month in a row has announced production cuts of 25 per cent. As per reports, 2.3 lakh workers have been laid off. This has had a knock-on effect on OEM and auto ancillary sectors, which employ significant number of contractual workers. Since auto and real estate sectors contribute 15 per cent-17 per cent to India’s GDP, their slowdown has had a direct impact on other sectors like metals and mining, cement and tyre manufacturing, among others. The manufacturing industry is operating at a capacity utilisation of 75 per cent. Growth in eight core sectors fell to four-year low of 0.2 per cent in June 2019. Until and unless the manufacturing industry sees a permanent revival in demand and reduction in idle capacity utilisations, it may not think of fresh investments. Banks, on the other hand, are still reeling from high NPAs. The delay in IBC insolvency cases is hurting the banks, which continue to adopt a selective and cautious approach to lending. Even the retail portfolio of banks is showing signs of stress. The liquidity crunch, post the IL&FS default and the NBFC crisis has not helped matters. The Indian economy is facing an acute demand side issue and RBI cannot fix it alone. The government missed the opportunity to leave more money in the hands of people through tax cuts in Budget 2019. Instead, the finance minister increased taxes on the super-rich, which has acted as a dampener. Since tight fiscal math prevents the government from increasing its spending, like it did, post the global financial crisis, India will need to fall back on private consumption expenditure to boost demand and growth. The new Direct Tax Code, which is expected to propose sweeping changes in tax rates should be implemented next year without fail. Till then, all eyes on the festive season! (This article was originally published on The DNA. Read the original article) (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL.)

Are the rate cuts enough to boost growth?

Indonesian President Joko Widodo on Friday proposed a 2,528.8 trillion rupiah ($177.56 billion) budget to parliament for 2020, focusing spending on human resources, which was central in his re-election campaign.

The 2020 budget proposals set a target of 5.3 per cent growth in the gross domestic product (GDP), the same as this year's, although officials have often said 2019 growth would probably range from 5.1 per cent to 5.2 per cent.

The proposed budget is 3 per cent bigger than 2019's plans, but about 8 per cent larger than the latest government estimate of what Jakarta will spend this year.

It will fund the president's programmes in the first year of his second five-year term, which officially begins in October.

"The 2020 state budget policy is designed to be expansive, but to remain targeted and measured," Widodo told parliament.

To fund his budget, <a href="https://www.wionews.com/world/as-indonesias-widodo-seeks-a-second-term-rural-voters-have-some-doubts-210297">Widodo proposed to set a target of 2,221.5 trillion rupiahs </a>of state revenue. That brings the fiscal deficit in his budget proposals to 1.76 per cent of GDP, which he said gave room to anticipate global uncertainties.

Juniman, the chief economist of Maybank Indonesia, said Widodo's GDP growth assumption, which is used as the basis of the government's tax revenue target, is unattainable.

"I'm pessimistic the 5.3 per cent growth can be achieved. Given the gloomy global condition and its slowdown trend this year and next, it will be hard for any emerging market to grow faster than this year," said Juniman, who uses one name, like many Indonesians.

He gave a 5 per cent growth outlook for 2019 and 2020.

Though the president's GDP growth target was "slightly optimistic", the tax target was "cautiously realistic", said Bank Danamon economist Wisnu Wardana.

While Widodo promised to keep building infrastructure in 2020, the budget's main theme was improving human resources, with the president pledging to "answer to our demographic challenges".

Earlier on Friday, Widodo told parliament raising the quality of the labour market in his second term was key to reaping the benefit of a demographic dividend - a time when the number of people of working age exceeds those of non-working-age.

The government proposed to spend 505.8 trillion rupiah ($35.51 billion) for education in 2020, up 30 per cent from this year, to improve basic education as well as provide financing for 818,000 students to go to universities, Widodo said.

It would also use the budget to provide training for what Widodo called "emerging skills", such as coding, data analytics, graphic design and even training to become a coffee barista.

The budget proposals also assumed an inflation rate of 3.1 per cent, a yearly average rupiah exchange rate of 14,400 to the dollar, a 5.4 per cent average rate for 3-month Treasury bills and an average crude oil price of $65 a barrel, Widodo said.

Parliament typically takes until October to approve the government's budget proposals.

Indonesian President Joko Widodo on Friday proposed a 2,528.8 trillion rupiah ($177.56 billion) budget to parliament for 2020, focusing spending on human resources, which was central in his re-election campaign.

Indonesian President Joko Widodo on Friday proposed a 2,528.8 trillion rupiah ($177.56 billion) budget to parliament for 2020, focusing spending on human resources, which was central in his re-election campaign. The 2020 budget proposals set a target of 5.3 per cent growth in the gross domestic product (GDP), the same as this year's, although officials have often said 2019 growth would probably range from 5.1 per cent to 5.2 per cent. The proposed budget is 3 per cent bigger than 2019's plans, but about 8 per cent larger than the latest government estimate of what Jakarta will spend this year. It will fund the president's programmes in the first year of his second five-year term, which officially begins in October. "The 2020 state budget policy is designed to be expansive, but to remain targeted and measured," Widodo told parliament. To fund his budget, Widodo proposed to set a target of 2,221.5 trillion rupiahs of state revenue. That brings the fiscal deficit in his budget proposals to 1.76 per cent of GDP, which he said gave room to anticipate global uncertainties. Juniman, the chief economist of Maybank Indonesia, said Widodo's GDP growth assumption, which is used as the basis of the government's tax revenue target, is unattainable. "I'm pessimistic the 5.3 per cent growth can be achieved. Given the gloomy global condition and its slowdown trend this year and next, it will be hard for any emerging market to grow faster than this year," said Juniman, who uses one name, like many Indonesians. He gave a 5 per cent growth outlook for 2019 and 2020. Though the president's GDP growth target was "slightly optimistic", the tax target was "cautiously realistic", said Bank Danamon economist Wisnu Wardana. While Widodo promised to keep building infrastructure in 2020, the budget's main theme was improving human resources, with the president pledging to "answer to our demographic challenges". Earlier on Friday, Widodo told parliament raising the quality of the labour market in his second term was key to reaping the benefit of a demographic dividend - a time when the number of people of working age exceeds those of non-working-age. The government proposed to spend 505.8 trillion rupiah ($35.51 billion) for education in 2020, up 30 per cent from this year, to improve basic education as well as provide financing for 818,000 students to go to universities, Widodo said. It would also use the budget to provide training for what Widodo called "emerging skills", such as coding, data analytics, graphic design and even training to become a coffee barista. The budget proposals also assumed an inflation rate of 3.1 per cent, a yearly average rupiah exchange rate of 14,400 to the dollar, a 5.4 per cent average rate for 3-month Treasury bills and an average crude oil price of $65 a barrel, Widodo said. Parliament typically takes until October to approve the government's budget proposals.

Indonesia president proposes $178 billion budget for 2020 with focus on education

Famed for valuing <a href="https://www.wionews.com/south-asia/in-happy-bhutan-the-prime-minister-is-a-doc-on-saturdays-217279">Gross National Happiness</a> over economic growth, Bhutan is a poster child for sustainable development.&nbsp;

But booming car sales may impact efforts to preserve its rare status as a carbon-negative country and an increase in traffic is testing the good humour of its citizens.

Bhutan has seen a more than five-fold increase in cars, buses and trucks on its roads in the past two decades, according to transport authority director general Pemba Wangchuk with capital Thimphu hardest hit by the influx of vehicles.

Phuntsho Wangdi, a media consultant, says the congestion and lack of parking now make driving stressful in the tiny Himalayan kingdom where there are no traffic lights.&nbsp;

"I wish there were fewer cars. It wasn't like this before," he adds of life in Thimphu, which is home to half the cars in the country.

The nation's economy has grown 7.5 per cent each year in the past decade, according to the World Bank. Officials estimate there is now one car for every seven people in Bhutan, which has a total population of 750,000.

But the nation's narrow country lanes and outdated city roads can barely cope. A lack of infrastructure, along with poor driving etiquette&nbsp;some simply leave their cars parked in the middle of the road -- compounds the problem.

"Every year the number of cars and the number of people are increasing, and the roads have remained the same, and it’s a problem for us," Lhendup, a taxi driver, tells AFP. &nbsp;

Gridlock misery

Morning rush hour journeys that once took five minutes now take more than half an hour.&nbsp;

This may seem a small figure compared to the hours of gridlock faced by commuters in Manila, Jakarta, and Bangkok, but it is a step-change for the Bhutanese who say the situation has rapidly deteriorated in the past year.&nbsp;

"It is chaotic. I eat my breakfast in the car now to save time," says Kuenzang Choden, who drops her four-year-old daughter at school every day before heading to work.&nbsp;

The traffic jams are a sign of the wider economic changes the nation is facing. Bhutan is renowned for prioritising Gross National Happiness over GDP and has captured tourists' imagination as a tranquil, idyllic land, but there are signs of malcontent.&nbsp;

According to the World Bank's 2018 report, the youth unemployment rate is high, as is rural to urban migration, which puts a strain on the resources of towns and cities. And despite its reputation as a place where well-being is prioritised, it ranked 95th out of 156 countries in the 2019 UN World Happiness Report.&nbsp;

The proliferation of the internet and smartphones are fuelling modern desires, while dealers are filling their showrooms with new brands and models from Japan and South Korea to lure buyers.

And while taxes have increased and restrictions put on vehicle loans, car buyers are not discouraged.

Local financial institutions gave 3.2 billion ngultrums ($46 million) in car loans in 2015, but by last year the amount had reached 6.7 billion ngultrums ($96 million).

The figures please local businessmen but worry environmentalists keen to ensure Bhutan remains one of the world's greenest countries.

Environmental activist Yeshey Dorji explains: "As a nation that prides itself on being a carbon-negative country, the increase in the number of fossil fuel vehicles speaks poorly of our leadership position in environmental conservation."

Radical measures&nbsp;

Bhutan and Suriname, both with lush forests, are the only two countries to claim they are carbon negative, absorbing more carbon pollution than they give off.

Methane from cows, the burning of crops and other farm activities used to be Bhutan's main source of greenhouse gases. But that has changed in recent years to industry and cars.

Bhutan's constitution dictates that at least 60 per cent of the country must be forest and the figure is currently above 70 per cent. &nbsp;&nbsp;

But Bhutan is now importing more in fossil fuels than it exports in hydropower to India -- the country's biggest revenue earner.

Public transport is poor, particularly in Thimphu, which is home to 100,000 people but barely 40 buses.

The capital's mayor Kinlay Dorji plans to introduce bus-only lanes on city roads and wants to buy more buses.

"Its time for radical measures," he says.

"We have to make public transport more attractive and discourage owning cars," he adds, warning that unless action was taken Thimphu risked grinding to a standstill.

To ease congestion, the city is also constructing its first two multi-storey car parks that will each take about 600 cars.

The National Environment Commission insists Bhutan is still carbon-negative despite the traffic jams and vehicle boom but wants to stop things worsening.&nbsp;

Commission secretary Dasho Sonam P. Wangdi explains: "We cannot stop people from buying cars, but we can introduce alternative, less polluting cars such as the hybrid and electric ones to reduce carbon footprint." 
&nbsp;

Famed for valuing Gross National Happiness over economic growth, Bhutan is a poster child for sustainable development. But booming car sales may impact efforts to preserve its rare status as a carbon-negative country and an increase in traffic is testing the good humour of its citizens.

Famed for valuing Gross National Happiness over economic growth, Bhutan is a poster child for sustainable development. But booming car sales may impact efforts to preserve its rare status as a carbon-negative country and an increase in traffic is testing the good humour of its citizens. Bhutan has seen a more than five-fold increase in cars, buses and trucks on its roads in the past two decades, according to transport authority director general Pemba Wangchuk with capital Thimphu hardest hit by the influx of vehicles. Phuntsho Wangdi, a media consultant, says the congestion and lack of parking now make driving stressful in the tiny Himalayan kingdom where there are no traffic lights. "I wish there were fewer cars. It wasn't like this before," he adds of life in Thimphu, which is home to half the cars in the country. The nation's economy has grown 7.5 per cent each year in the past decade, according to the World Bank. Officials estimate there is now one car for every seven people in Bhutan, which has a total population of 750,000. But the nation's narrow country lanes and outdated city roads can barely cope. A lack of infrastructure, along with poor driving etiquette some simply leave their cars parked in the middle of the road -- compounds the problem. "Every year the number of cars and the number of people are increasing, and the roads have remained the same, and it’s a problem for us," Lhendup, a taxi driver, tells AFP. Gridlock misery Morning rush hour journeys that once took five minutes now take more than half an hour. This may seem a small figure compared to the hours of gridlock faced by commuters in Manila, Jakarta, and Bangkok, but it is a step-change for the Bhutanese who say the situation has rapidly deteriorated in the past year. "It is chaotic. I eat my breakfast in the car now to save time," says Kuenzang Choden, who drops her four-year-old daughter at school every day before heading to work. The traffic jams are a sign of the wider economic changes the nation is facing. Bhutan is renowned for prioritising Gross National Happiness over GDP and has captured tourists' imagination as a tranquil, idyllic land, but there are signs of malcontent. According to the World Bank's 2018 report, the youth unemployment rate is high, as is rural to urban migration, which puts a strain on the resources of towns and cities. And despite its reputation as a place where well-being is prioritised, it ranked 95th out of 156 countries in the 2019 UN World Happiness Report. The proliferation of the internet and smartphones are fuelling modern desires, while dealers are filling their showrooms with new brands and models from Japan and South Korea to lure buyers. And while taxes have increased and restrictions put on vehicle loans, car buyers are not discouraged. Local financial institutions gave 3.2 billion ngultrums ($46 million) in car loans in 2015, but by last year the amount had reached 6.7 billion ngultrums ($96 million). The figures please local businessmen but worry environmentalists keen to ensure Bhutan remains one of the world's greenest countries. Environmental activist Yeshey Dorji explains: "As a nation that prides itself on being a carbon-negative country, the increase in the number of fossil fuel vehicles speaks poorly of our leadership position in environmental conservation." Radical measures Bhutan and Suriname, both with lush forests, are the only two countries to claim they are carbon negative, absorbing more carbon pollution than they give off. Methane from cows, the burning of crops and other farm activities used to be Bhutan's main source of greenhouse gases. But that has changed in recent years to industry and cars. Bhutan's constitution dictates that at least 60 per cent of the country must be forest and the figure is currently above 70 per cent. But Bhutan is now importing more in fossil fuels than it exports in hydropower to India -- the country's biggest revenue earner. Public transport is poor, particularly in Thimphu, which is home to 100,000 people but barely 40 buses. The capital's mayor Kinlay Dorji plans to introduce bus-only lanes on city roads and wants to buy more buses. "Its time for radical measures," he says. "We have to make public transport more attractive and discourage owning cars," he adds, warning that unless action was taken Thimphu risked grinding to a standstill. To ease congestion, the city is also constructing its first two multi-storey car parks that will each take about 600 cars. The National Environment Commission insists Bhutan is still carbon-negative despite the traffic jams and vehicle boom but wants to stop things worsening. Commission secretary Dasho Sonam P. Wangdi explains: "We cannot stop people from buying cars, but we can introduce alternative, less polluting cars such as the hybrid and electric ones to reduce carbon footprint."

Car boom brings gridlock misery to 'green and happy' Bhutan

Global trade tensions, continued uncertainty and rising prospects for a <a href="https://www.wionews.com/world/uk-lawmakers-vote-in-bid-to-frustrate-no-deal-brexit-236976">no-deal Brexit</a> are sapping the strength of the world economy, which faces a "precarious" 2020, the <a href="https://www.wionews.com/world/christine-lagarde-resigns-as-international-monetary-fund-chief-starting-race-for-her-successor-236536">International Monetary Fund</a> warned on Tuesday.

Trade conflicts are undercutting investment and weakening manufacturing, and the IMF urged countries to avoid using tariffs to resolve their differences.

In the quarterly update of its World Economic Outlook, the IMF trimmed the global forecast issued in April by 0.1 percentage point this year and next, with growth expected to hit 3.2 per cent in 2019 and 3.5 per cent in 2020.

But the report sounded the alarm, saying things could easily go wrong.

"Global growth is sluggish and precarious, but it does not have to be this way, because some of this is self-inflicted," IMF chief economist Gita Gopinath told reporters.

"Dynamism in the global economy is being weighed down by prolonged policy uncertainty as trade tensions remain heightened despite the recent US-China trade truce... and the prospects of a no-deal Brexit have increased," she said at a briefing in Santiago, Chile.

Gopinath warned that the recovery is seen next year "is precarious" because "close to 70 per cent of the increase relies on an improvement in the growth performance in stressed emerging market and developing economies and is therefore subject to high uncertainty."

However, the United States, which is at the centre of most of the trade tensions, saw one of the rare upgrades in the report, as it got a short-term boost from strong economic growth in the early part of the year.&nbsp;

The IMF raised the US GDP forecast by three-tenths of a percentage point to 2.6 per cent for 2019, but weakening demand, in part due to the trade conflicts and tariffs, points to "slowing momentum over the rest of the year."&nbsp;

US economic growth is expected to slow to 1.9 per cent in 2020.

China, which is the main target of US trade actions, was already experiencing a slowdown. But "the negative effects of escalating tariffs and weakening external demand have added pressure," the report said. A sudden slowdown in China is a key risk to the world economy.

The report downgraded Chinese growth by a tenth of a point this year and next, to 6.2 per cent and 6.0 per cent.

Avoid policy missteps

The IMF cautioned that there is an abundance of "potential triggers" for the situation to turn negative quickly, including the possibility of more US tariffs on China or on European autos, as well as a no-deal Brexit and high debt levels in many countries.

"While the tensions abated in June, durable agreements to resolve differences remain subject to possibly protracted and difficult negotiations," the report said.

Gopinath repeated the IMF calculation showing that the combined effect of tariffs imposed last year and potential tariffs threatened in May between the United States and China could reduce global GDP in 2020 by 0.5 per cent.

The latest forecast was once again full of downgrades, with small downward revisions for Germany and Japan, but much larger cuts for Brazil, Mexico, Russia, India and South Africa countries that were the engine for global growth in the wake of the 2008 financial crisis.

The IMF again stressed that resolving uncertainty remains the most pressing issue for the global economy and said governments should avoid "policy missteps" that could have "a severely debilitating effect on sentiment, growth and job creation."

And "countries should not use tariffs to target bilateral trade balances," the report said while recognizing that "trade disputes may be symptoms of deeper frustration with gaps in the rules-based multilateral trading system."

President Donald Trump and Chinese leader Xi Jinping in June agreed to a truce in their trade hostilities.&nbsp;

US Trade Representative Robert Lighthizer is set to lead a delegation to China on Monday for the first face-to-face meeting since talks collapsed in May, according to media reports.

Commerce Secretary Wilbur Ross said the "overriding objective" is to get a good deal, which "is much more important than exact timing."

Global trade tensions, continued uncertainty and rising prospects for a no-deal Brexit are sapping the strength of the world economy, which faces a "precarious" 2020, the International Monetary Fund warned on Tuesday.

Global trade tensions, continued uncertainty and rising prospects for a no-deal Brexit are sapping the strength of the world economy, which faces a "precarious" 2020, the International Monetary Fund warned on Tuesday. Trade conflicts are undercutting investment and weakening manufacturing, and the IMF urged countries to avoid using tariffs to resolve their differences. In the quarterly update of its World Economic Outlook, the IMF trimmed the global forecast issued in April by 0.1 percentage point this year and next, with growth expected to hit 3.2 per cent in 2019 and 3.5 per cent in 2020. But the report sounded the alarm, saying things could easily go wrong. "Global growth is sluggish and precarious, but it does not have to be this way, because some of this is self-inflicted," IMF chief economist Gita Gopinath told reporters. "Dynamism in the global economy is being weighed down by prolonged policy uncertainty as trade tensions remain heightened despite the recent US-China trade truce... and the prospects of a no-deal Brexit have increased," she said at a briefing in Santiago, Chile. Gopinath warned that the recovery is seen next year "is precarious" because "close to 70 per cent of the increase relies on an improvement in the growth performance in stressed emerging market and developing economies and is therefore subject to high uncertainty." However, the United States, which is at the centre of most of the trade tensions, saw one of the rare upgrades in the report, as it got a short-term boost from strong economic growth in the early part of the year. The IMF raised the US GDP forecast by three-tenths of a percentage point to 2.6 per cent for 2019, but weakening demand, in part due to the trade conflicts and tariffs, points to "slowing momentum over the rest of the year." US economic growth is expected to slow to 1.9 per cent in 2020. China, which is the main target of US trade actions, was already experiencing a slowdown. But "the negative effects of escalating tariffs and weakening external demand have added pressure," the report said. A sudden slowdown in China is a key risk to the world economy. The report downgraded Chinese growth by a tenth of a point this year and next, to 6.2 per cent and 6.0 per cent. Avoid policy missteps The IMF cautioned that there is an abundance of "potential triggers" for the situation to turn negative quickly, including the possibility of more US tariffs on China or on European autos, as well as a no-deal Brexit and high debt levels in many countries. "While the tensions abated in June, durable agreements to resolve differences remain subject to possibly protracted and difficult negotiations," the report said. Gopinath repeated the IMF calculation showing that the combined effect of tariffs imposed last year and potential tariffs threatened in May between the United States and China could reduce global GDP in 2020 by 0.5 per cent. The latest forecast was once again full of downgrades, with small downward revisions for Germany and Japan, but much larger cuts for Brazil, Mexico, Russia, India and South Africa countries that were the engine for global growth in the wake of the 2008 financial crisis. The IMF again stressed that resolving uncertainty remains the most pressing issue for the global economy and said governments should avoid "policy missteps" that could have "a severely debilitating effect on sentiment, growth and job creation." And "countries should not use tariffs to target bilateral trade balances," the report said while recognizing that "trade disputes may be symptoms of deeper frustration with gaps in the rules-based multilateral trading system." President Donald Trump and Chinese leader Xi Jinping in June agreed to a truce in their trade hostilities. US Trade Representative Robert Lighthizer is set to lead a delegation to China on Monday for the first face-to-face meeting since talks collapsed in May, according to media reports. Commerce Secretary Wilbur Ross said the "overriding objective" is to get a good deal, which "is much more important than exact timing."

International Monetary Fund downgrades world growth, warns of 'precarious' 2020

IIF report says that China's debt-to-GDP ratio has crossed 300%. China's addiction to debt reaches new highs. Beijing is staring at a debt crisis. An IIF report pegs China's debt-to-GDP ration above 300%. The state-run firms are struggling under high corporate debt. The banks could face an NPA crisis. But still, Xi Jinping is encouraging more lending. Palki takes a look at China's soaring debt problem.

Gravitas: Is China staring at a debt crisis?

India's consumer goods industry is losing steam as spending in the country's rural heartland cools and small manufacturers lose competitive advantages in a slowing economy, market research firm Nielsen said on Thursday.

Volume growth in India's fast-moving consumer goods (FMCG) sector slowed to 6.2 per cent&nbsp;in the three months to June from 9.9 per cent&nbsp;in the previous quarter, Nielsen said, citing internal data from retail research.

"The sentiments echo those in India's economic environment, with GDP moving down," the report said.

In Jan-March, India's economy grew at its slowest pace in more than four years, while retail inflation hit an eight-month high in June on higher food prices.

Growth in the consumer goods sector in rural India, where over two-thirds of Indians live, was slowing at twice the rate of urban areas in the previous few quarters, Nielsen said.

Higher raw material costs and slowing demand in the foods sector have hurt small manufacturers, the report added.

India's biggest FMCG companies also posted disappointing results in the March quarter. Hindustan Unilever Ltd, which owns brands such as Dove, Surf excel and Lakme, reported a smaller-than-expected rise in profit, while rival Dabur India Ltd posted a fall in profit.

Nielsen also cut its forecast for FMCG growth for the first half of 2019 to 12 per cent against their earlier prediction of 13-14 per cent.

India's consumer goods industry is losing steam as spending in the country's rural heartland cools and small manufacturers lose competitive advantages in a slowing economy, market research firm Nielsen said on Thursday.

India's consumer goods industry is losing steam as spending in the country's rural heartland cools and small manufacturers lose competitive advantages in a slowing economy, market research firm Nielsen said on Thursday. Volume growth in India's fast-moving consumer goods (FMCG) sector slowed to 6.2 per cent in the three months to June from 9.9 per cent in the previous quarter, Nielsen said, citing internal data from retail research. "The sentiments echo those in India's economic environment, with GDP moving down," the report said. In Jan-March, India's economy grew at its slowest pace in more than four years, while retail inflation hit an eight-month high in June on higher food prices. Growth in the consumer goods sector in rural India, where over two-thirds of Indians live, was slowing at twice the rate of urban areas in the previous few quarters, Nielsen said. Higher raw material costs and slowing demand in the foods sector have hurt small manufacturers, the report added. India's biggest FMCG companies also posted disappointing results in the March quarter. Hindustan Unilever Ltd, which owns brands such as Dove, Surf excel and Lakme, reported a smaller-than-expected rise in profit, while rival Dabur India Ltd posted a fall in profit. Nielsen also cut its forecast for FMCG growth for the first half of 2019 to 12 per cent against their earlier prediction of 13-14 per cent.

India's consumer goods growth slows as rural demand cools: Report

Know how this Budget 2019-20 will affect your life. What Will Become Costlier & Cheaper Now. Watch this video to know more.

Budget 2019-20: What Will Become Costlier & Cheaper Now

The Economic Survey 2018-19 was presented in the Parliament, as is the practice, a day before the Union Budget.&nbsp;

The survey points out that amid weak global growth during the last five years, India took a few giant strides forward becoming the sixth largest economy as well as the fastest growing major economy in the world.&nbsp;

The average inflation was less than half the level of the preceding five years, lowest in post-independence history.&nbsp;

According to the survey, the Indian economy is projected to grow at 7 per cent&nbsp;in 2019-20, up 0.2 per cent&nbsp;from 2018-19, on the back of political stability, which is likely to push up economic activity in the country (activate the animal spirits).&nbsp;

To achieve the Prime Minister’s dream of India becoming a $5 trillion economy by 2025, India needs to attain and sustain a real GDP growth of 8% per annum. “This can be achieved by a ‘virtuous cycle’ of savings, investment and exports catalysed and supported by a favourable demographic phase,” says the survey.

Low oil prices compared to 2018-19 is expected to push the consumption, while low real interest rates are expected to provide a boost to investment; the two key levers of the Indian economy.&nbsp;

Investment is the ‘key driver’ of the Indian economy, accounting for 32 per cent&nbsp;of the GDP. The survey points out that the investment rate, which was declining from 2011-12, seems to have bottomed out. Fixed investment growth has increased from 8.3 per cent&nbsp;in 2016-17 to 9.3 per cent&nbsp;in 2017-18 and 10.0 per cent&nbsp;in 2018-19.&nbsp;

Investment is expected to pick up further on the back of higher credit growth, facilitated by lower interest rates and improved demand facilitated by a strong mandate, clearing all theories of political uncertainty.

Higher investments are likely to foster job creation; unemployment being a major issue facing the economy at a 45-year-high.&nbsp;

As per a CRISIL report, system-wide NPAs have declined to 9.3 per cent&nbsp;as of March 2019 after tripling to 11.5 per cent&nbsp;in the four fiscals till March 2018.&nbsp;

The continuing resolution of stressed assets in the banking sector highlighting the success story of the Insolvency and Bankruptcy Code is expected to give a fillip to the capex cycle, as per the Economic Survey.

India, unlike China, is a consumption-led rather than export dependent economy. India witnessed a deceleration in private final consumption in Q3 and Q4 of 2018-19, thus resulting in a slowdown in GDP growth.

The survey points out that this could have been due to low farm incomes in rural areas arising from low food prices and also due to the stress in non-banking financial companies (NBFCs), which affected its lending.

Private final consumption expenditure accounts for 60 per cent&nbsp;of India’s GDP with its growth rate mostly being higher than the overall GDP growth rate.&nbsp;

Consumption is likely to pick up with an increase in rural wages, higher food prices (higher MSPs) and income support scheme of Rs 6,000 per year to farmers. All these measures are likely to boost rural demand.&nbsp;

However, a weak monsoon and spill over impact of stress in the NBFC sector, present downside risks to consumption, says the survey.

June 2019, the first month of the monsoon season, recorded a 33% deficient rainfall — the worst in the last five years. Although IMD expects a near normal rainfall, region wise imbalances are expected to arise impacting crop production and agriculture growth.&nbsp;

The liquidity crunch faced by the NBFC sector due to IL&amp;FS default, loss of investor confidence and recent default by DHFL, shows that the sector is under stress.&nbsp;

Non-performing loans are rising, currently at 6.1%, while the credit disbursements fell by 31 per cent&nbsp;in Q4 2018-19. All this is likely to lead to lower credit offtake from NBFCs, which may dampen growth in consumption spending, the survey stresses. &nbsp;

As per the Economic Survey, the growth rate of the world output is projected to fall further to 3.3 per cent&nbsp;in 2019 (-0.3 per cent). The US and China trade war, the outcome of Brexit and downside risk to China’s growth, all point towards weak global cues. In this light, export growth could remain weak, which in turn could impact India’s GDP growth. &nbsp;The survey lays out a strategic blueprint for fructifying #Economy@5trillion. Now over to the Budget today!

(This article was originally published on The DNA. Read the <a href="https://www.dnaindia.com/analysis/column-don-t-underestimate-global-economic-impact-on-india-s-gdp-2768191">original article)</a>

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL.)&nbsp;

The Economic Survey 2018-19 was presented in the Parliament, as is the practice, a day before the Union Budget. The survey points out that amid weak global growth during the last five years, India took a few giant strides forward becoming the sixth largest economy as well as the fastest growing major economy in the world.

The Economic Survey 2018-19 was presented in the Parliament, as is the practice, a day before the Union Budget. The survey points out that amid weak global growth during the last five years, India took a few giant strides forward becoming the sixth largest economy as well as the fastest growing major economy in the world. The average inflation was less than half the level of the preceding five years, lowest in post-independence history. According to the survey, the Indian economy is projected to grow at 7 per cent in 2019-20, up 0.2 per cent from 2018-19, on the back of political stability, which is likely to push up economic activity in the country (activate the animal spirits). To achieve the Prime Minister’s dream of India becoming a $5 trillion economy by 2025, India needs to attain and sustain a real GDP growth of 8% per annum. “This can be achieved by a ‘virtuous cycle’ of savings, investment and exports catalysed and supported by a favourable demographic phase,” says the survey. Low oil prices compared to 2018-19 is expected to push the consumption, while low real interest rates are expected to provide a boost to investment; the two key levers of the Indian economy. Investment is the ‘key driver’ of the Indian economy, accounting for 32 per cent of the GDP. The survey points out that the investment rate, which was declining from 2011-12, seems to have bottomed out. Fixed investment growth has increased from 8.3 per cent in 2016-17 to 9.3 per cent in 2017-18 and 10.0 per cent in 2018-19. Investment is expected to pick up further on the back of higher credit growth, facilitated by lower interest rates and improved demand facilitated by a strong mandate, clearing all theories of political uncertainty. Higher investments are likely to foster job creation; unemployment being a major issue facing the economy at a 45-year-high. As per a CRISIL report, system-wide NPAs have declined to 9.3 per cent as of March 2019 after tripling to 11.5 per cent in the four fiscals till March 2018. The continuing resolution of stressed assets in the banking sector highlighting the success story of the Insolvency and Bankruptcy Code is expected to give a fillip to the capex cycle, as per the Economic Survey. India, unlike China, is a consumption-led rather than export dependent economy. India witnessed a deceleration in private final consumption in Q3 and Q4 of 2018-19, thus resulting in a slowdown in GDP growth. The survey points out that this could have been due to low farm incomes in rural areas arising from low food prices and also due to the stress in non-banking financial companies (NBFCs), which affected its lending. Private final consumption expenditure accounts for 60 per cent of India’s GDP with its growth rate mostly being higher than the overall GDP growth rate. Consumption is likely to pick up with an increase in rural wages, higher food prices (higher MSPs) and income support scheme of Rs 6,000 per year to farmers. All these measures are likely to boost rural demand. However, a weak monsoon and spill over impact of stress in the NBFC sector, present downside risks to consumption, says the survey. June 2019, the first month of the monsoon season, recorded a 33% deficient rainfall — the worst in the last five years. Although IMD expects a near normal rainfall, region wise imbalances are expected to arise impacting crop production and agriculture growth. The liquidity crunch faced by the NBFC sector due to IL&FS default, loss of investor confidence and recent default by DHFL, shows that the sector is under stress. Non-performing loans are rising, currently at 6.1%, while the credit disbursements fell by 31 per cent in Q4 2018-19. All this is likely to lead to lower credit offtake from NBFCs, which may dampen growth in consumption spending, the survey stresses. As per the Economic Survey, the growth rate of the world output is projected to fall further to 3.3 per cent in 2019 (-0.3 per cent). The US and China trade war, the outcome of Brexit and downside risk to China’s growth, all point towards weak global cues. In this light, export growth could remain weak, which in turn could impact India’s GDP growth. The survey lays out a strategic blueprint for fructifying #Economy@5trillion. Now over to the Budget today! (This article was originally published on The DNA. Read the original article) (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL.)

Don’t underestimate global economic impact on India’s GDP

Jagan Mohan Reddy to take part in NITI Aayog meet. Jagan to raise special status demand for A.P. Special status for a state is a contentious issue. Basically 30% GDP goes to special category states. Watch this video to know more.

India Watch: Jagan Demands 'Special Status For Andhra Pradesh'

Pakistan's Finance Ministry expects economic growth in the financial year ending in June to hit 3.3%, well below a target of 6.2% set last year, with key sectors all performing worse than expected, according to a planning document seen by Reuters.

The document also sets a target of 4% growth for the 2020 financial year, underlining the economic headwinds facing the government of Prime Minister Imran Khan.

The targets are due to be published officially on Monday ahead of the budget on June 11, which is expected to include tough austerity measures following a provisional bailout agreement with the International Monetary Fund.

Khan`s government came to power in August facing a yawning budget deficit expected at around 7% of gross domestic product as well as a balance of payments crisis, with foreign exchange reserves that cover less than three months of imports.

It has promised reforms to stimulate exports, cut the deficit and overhaul the power sector, and has pushed ahead with an ambitious infrastructure development project with China. But Pakistani households have struggled, with inflation running at more than 9%.

Key sectors in Pakistan's economy are all performing below the levels foreseen in last year's budget, which was passed under the previous government of Shahid Khaqan Abbasi.

Agriculture is seen growing just 0.8% compared with a 3.8% target, industrial output is set to rise 1.4% against a 7.6% target and services are forecast to grow 4.7%, compared with a target of 6.5%.

Pakistan's Finance Ministry expects economic growth in the financial year ending in June to hit 3.3%, well below a target of 6.2% set last year, with key sectors all performing worse than expected, according to a planning document seen by Reuters.

Pakistan's Finance Ministry expects economic growth in the financial year ending in June to hit 3.3%, well below a target of 6.2% set last year, with key sectors all performing worse than expected, according to a planning document seen by Reuters. The document also sets a target of 4% growth for the 2020 financial year, underlining the economic headwinds facing the government of Prime Minister Imran Khan. The targets are due to be published officially on Monday ahead of the budget on June 11, which is expected to include tough austerity measures following a provisional bailout agreement with the International Monetary Fund. Khan`s government came to power in August facing a yawning budget deficit expected at around 7% of gross domestic product as well as a balance of payments crisis, with foreign exchange reserves that cover less than three months of imports. It has promised reforms to stimulate exports, cut the deficit and overhaul the power sector, and has pushed ahead with an ambitious infrastructure development project with China. But Pakistani households have struggled, with inflation running at more than 9%. Key sectors in Pakistan's economy are all performing below the levels foreseen in last year's budget, which was passed under the previous government of Shahid Khaqan Abbasi. Agriculture is seen growing just 0.8% compared with a 3.8% target, industrial output is set to rise 1.4% against a 7.6% target and services are forecast to grow 4.7%, compared with a target of 6.5%.

Pakistan sees 2019 GDP growth at 3.3%, sharply below target

In this segment of India Watch, We speaks to Dr. Waheguru Pal Singh Sidhu, Professor at NY University & Mr. Lord Meghnad Desai, Author & Professor Emeritus at LSE.

India Watch: Decodes GDP Growth Rate Slump With Some Experts

GDP growth fell to 5.8% in March quatrer. Annual GDP growth has dropped to 6.8% from 7.2%. Experts said that consumption rates has slowed down in India. Watch this video to know more.

India Watch: Unemployment At A 45-Year High

India lost its spot as the fastest-growing major economy to China, clocking a disappointing 5.8% in the January-March quarter as a chill in domestic and global consumer demand hit manufacturers and service providers.

India's GDP growth slips to 5.8 percent in Q4

India's gross domestic product (GDP) growth in the January-March quarter of 2018-19 slipped to 5.8 per cent&nbsp;against 6.6% in the third quarter, due to poor performance in agriculture and manufacturing sectors, official data released by Central Statistics Office showed.

The Central Statistics Office (CSO) also revealed that GDP growth during 2018-19 fiscal stood at 6.8 per cent, lower than 7.2 per cent in the previous financial year.

The growth in gross domestic product (GDP) was slowest since 2014-15. The previous low was 6.4 per cent in 2013-14.

The fourth quarter growth was below China's 6.4 per cent.The slowdown in the economy will place India behind China's pace for the first time in nearly two years.

Meanwhile, the fiscal deficit for 2018-19 came in at 3.39 per cent of GDP, marginally lower than 3.4 per cent estimated in the revised estimates of the Budget, mainly due to increase in non-tax revenue and lower expenditure.

In absolute terms, fiscal deficit at the end of March 31, 2019, stood at Rs 6.45 lakh crore as against Rs 6.34 lakh crore in the revised estimates of Budget.

The fiscal deficit for 2018-19 works out to be 3.39 per cent of GDP, as per data released by Controller General of Accounts (CGA).

(With inputs from agencies)

India's gross domestic product (GDP) growth in the January-March quarter of 2018-19 slipped to 5.8 per cent against 6.6% in the third quarter, due to poor performance in agriculture and manufacturing sectors, official data released by Central Statistics Office showed.

India's gross domestic product (GDP) growth in the January-March quarter of 2018-19 slipped to 5.8 per cent against 6.6% in the third quarter, due to poor performance in agriculture and manufacturing sectors, official data released by Central Statistics Office showed. The Central Statistics Office (CSO) also revealed that GDP growth during 2018-19 fiscal stood at 6.8 per cent, lower than 7.2 per cent in the previous financial year. The growth in gross domestic product (GDP) was slowest since 2014-15. The previous low was 6.4 per cent in 2013-14. The fourth quarter growth was below China's 6.4 per cent.The slowdown in the economy will place India behind China's pace for the first time in nearly two years. Meanwhile, the fiscal deficit for 2018-19 came in at 3.39 per cent of GDP, marginally lower than 3.4 per cent estimated in the revised estimates of the Budget, mainly due to increase in non-tax revenue and lower expenditure. In absolute terms, fiscal deficit at the end of March 31, 2019, stood at Rs 6.45 lakh crore as against Rs 6.34 lakh crore in the revised estimates of Budget. The fiscal deficit for 2018-19 works out to be 3.39 per cent of GDP, as per data released by Controller General of Accounts (CGA). (With inputs from agencies)

India's GDP growth rate slows to 5.8% in Jan-March quarter, slowest in two years

France said that India and nations like Germany, Brazil and Japan are "absolutely needed" as permanent members of the UN Security Council. Watch full video to know more.

India ' Absolutely Needed' as permanent UN Security Council members, says France

Revamping global food production, retooling the financial sector, moving beyond GDP as a measure of progress and other "transformative changes" are needed to save nature and ourselves, a major UN biodiversity report is set to conclude.

Delegates from 130 nations wrap up week-long negotiations in Paris Saturday on the executive summary of a 1,800-page tome authored by 400 scientists, the first UN global assessment of the state of nature -- and its impact on humanity -- in 15 years.

The bombshell Summary for Policymakers, to be unveiled on May 6, makes for very grim reading.

Up to a million of Earth's estimated eight million species face extinction, many of them within decades, according to a draft version obtained by AFP.&nbsp;

All but seven per cent of major marine fish stocks are in decline or exploited to the limit of sustainability. At the same time, humanity dumps up to 400 million tonnes of heavy metals, toxic sludge and other waste into oceans and rivers each year.

Since 1990, Earth has lost 2.9 million hectares -- an area more than eight times the size of Germany or Vietnam -- of forests that play a critical role in absorbing record-level CO2 emissions.

The heavily negotiated text does not make explicit policy recommendations, but will serve "as a basis for redefining our objectives" ahead of a key meeting of the UN Convention on Biological Diversity in China next Fall, said Yunne Jai Shin, a researcher at the Research Institute for Development in Marseilles.

But the pressure to set clear targets -- similar to the cap on global warming in the 2015 climate treaty inked in the French capital -- has sparked calls for a "Paris moment" on biodiversity.

'Harmful subsidies'

The new report details how humans are undermining Earth's capacity to produce fresh water, clean air and productive soil, to name a few "ecosystem services".

The direct causes of nature's degradation -- in order of importance -- are shrinking habitat and land-use change, hunting for food or illicit trade in body parts, climate change, pollution, and predatory or disease-carrying alien species such as rats, mosquitoes and snakes.

"There are also two big indirect drivers of biodiversity loss and climate change -- the number of people in the world and their growing ability to consume," Robert Watson, chair of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES), told AFP ahead of the meeting.

The way humanity produces, distributes and consumes food -&nbsp;accounting for a third of land, 75 per cent of freshwater use and a quarter of greenhouse gas emissions -- is especially destructive, the report shows.

Fertiliser use, which degrades the soil's ability to grow plants and absorb CO2, has risen four-fold in just 13 years in Asia, and doubled worldwide since 1990.

"Feeding the world in a sustainable manner entails the transformation of food systems," the report notes.

Local food production, less demand for meat, fewer chemical inputs, use of renewable power, sustainable limits for fisheries, a sharp decline in tropical deforestation -- all are feasible and would help restore nature.

The report also spotlights "harmful subsidies" that encourage environmentally damaging fishing, agriculture, livestock raising, forestry and mining.&nbsp;

A downward spiral&nbsp;

The report cites estimates that tax havens finance about 70 per cent of vessels implicated in unregulated fishing and an equal share of the soy and beef sectors that are ravaging the Amazon.

The summary for policymakers maps out what Watson calls "several plausible futures," some inviting, others less so.

One labelled "economic optimism" sees burgeoning international trade unfettered by regulation. Population growth slows, but per capita consumption is high, leading to more climate change and pollution.&nbsp;

A "reformed markets" variant would feature more policies aimed at poverty alleviation and protecting the environment, but consumer demand remains high if more equally distributed.

"Global sustainable development" would see politicians and the public prioritise environmental issues and strict regulations. Policies and education promote low population growth, sustainable production and a concept of progress based on well-being, not just gross domestic product (GDP). People eat a lot less meat, and energy consumption declines.&nbsp;

"All variations of this archetype are beneficial for biodiversity," the underlying report says.

In a kindred world, international institutions weaken, but regional ones pick up the slack toward the same ends.

Finally, the last two scenarios -- "business-as-usual" and "regional competition" -- plunge the planet into a nightmarish, downward spiral of conflict, growing inequality and continuing degradation of nature.

Revamping global food production, retooling the financial sector, moving beyond GDP as a measure of progress and other "transformative changes" are needed to save nature and ourselves, a major UN biodiversity report is set to conclude.

Revamping global food production, retooling the financial sector, moving beyond GDP as a measure of progress and other "transformative changes" are needed to save nature and ourselves, a major UN biodiversity report is set to conclude. Delegates from 130 nations wrap up week-long negotiations in Paris Saturday on the executive summary of a 1,800-page tome authored by 400 scientists, the first UN global assessment of the state of nature -- and its impact on humanity -- in 15 years. The bombshell Summary for Policymakers, to be unveiled on May 6, makes for very grim reading. Up to a million of Earth's estimated eight million species face extinction, many of them within decades, according to a draft version obtained by AFP. All but seven per cent of major marine fish stocks are in decline or exploited to the limit of sustainability. At the same time, humanity dumps up to 400 million tonnes of heavy metals, toxic sludge and other waste into oceans and rivers each year. Since 1990, Earth has lost 2.9 million hectares -- an area more than eight times the size of Germany or Vietnam -- of forests that play a critical role in absorbing record-level CO2 emissions. The heavily negotiated text does not make explicit policy recommendations, but will serve "as a basis for redefining our objectives" ahead of a key meeting of the UN Convention on Biological Diversity in China next Fall, said Yunne Jai Shin, a researcher at the Research Institute for Development in Marseilles. But the pressure to set clear targets -- similar to the cap on global warming in the 2015 climate treaty inked in the French capital -- has sparked calls for a "Paris moment" on biodiversity. 'Harmful subsidies' The new report details how humans are undermining Earth's capacity to produce fresh water, clean air and productive soil, to name a few "ecosystem services". The direct causes of nature's degradation -- in order of importance -- are shrinking habitat and land-use change, hunting for food or illicit trade in body parts, climate change, pollution, and predatory or disease-carrying alien species such as rats, mosquitoes and snakes. "There are also two big indirect drivers of biodiversity loss and climate change -- the number of people in the world and their growing ability to consume," Robert Watson, chair of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES), told AFP ahead of the meeting. The way humanity produces, distributes and consumes food - accounting for a third of land, 75 per cent of freshwater use and a quarter of greenhouse gas emissions -- is especially destructive, the report shows. Fertiliser use, which degrades the soil's ability to grow plants and absorb CO2, has risen four-fold in just 13 years in Asia, and doubled worldwide since 1990. "Feeding the world in a sustainable manner entails the transformation of food systems," the report notes. Local food production, less demand for meat, fewer chemical inputs, use of renewable power, sustainable limits for fisheries, a sharp decline in tropical deforestation -- all are feasible and would help restore nature. The report also spotlights "harmful subsidies" that encourage environmentally damaging fishing, agriculture, livestock raising, forestry and mining. A downward spiral The report cites estimates that tax havens finance about 70 per cent of vessels implicated in unregulated fishing and an equal share of the soy and beef sectors that are ravaging the Amazon. The summary for policymakers maps out what Watson calls "several plausible futures," some inviting, others less so. One labelled "economic optimism" sees burgeoning international trade unfettered by regulation. Population growth slows, but per capita consumption is high, leading to more climate change and pollution. A "reformed markets" variant would feature more policies aimed at poverty alleviation and protecting the environment, but consumer demand remains high if more equally distributed. "Global sustainable development" would see politicians and the public prioritise environmental issues and strict regulations. Policies and education promote low population growth, sustainable production and a concept of progress based on well-being, not just gross domestic product (GDP). People eat a lot less meat, and energy consumption declines. "All variations of this archetype are beneficial for biodiversity," the underlying report says. In a kindred world, international institutions weaken, but regional ones pick up the slack toward the same ends. Finally, the last two scenarios -- "business-as-usual" and "regional competition" -- plunge the planet into a nightmarish, downward spiral of conflict, growing inequality and continuing degradation of nature.

'Move beyond GDP,' suggests UN report to fix nature and avoid human misery

Sri Lanka faces a likely collapse in tourism following <a href="https://www.wionews.com/west-asia/islamic-state-claims-responsibility-for-sri-lanka-bombings-212899">Easter Sunday bomb attacks</a> on churches and hotels, which would deal a <a href="https://www.wionews.com/south-asia/danish-billionaire-loses-three-children-in-sri-lanka-blasts-212889">severe blow to the island's economy</a> and financial markets, and potentially force it to seek further IMF assistance.

The International Monetary Fund extended last month a $1.5 billion loan for an extra year into 2020, a key step in keeping foreign investors involved in what so far this year has been a top-performing frontier debt market.

But with growth, and therefore state revenues, now likely to slow significantly, the budget targets agreed with the IMF may have to be reviewed, and the government is expected to resist pressure for any spending cuts before elections expected later this year.

There is even a possibility that more IMF money may be needed if foreign investment falls, adding to the hard currency gap left by plunging tourism receipts.

"If growth slows a lot more and the budget deficit assumptions need to be reassessed, then they'll have to sit down and negotiate something more feasible," said Alex Holmes, Asia economist at Capital Economics.

The Sri Lankan stock index dived 2.6 per cent on Tuesday in its first day of trading after the attacks that killed more than 300 people, while the heavily-managed rupee held steady.

Tourism is Sri Lanka's third-largest and fastest growing source of foreign currency, after remittances and garment exports, accounting for almost $4.4 billion or 4.9 per cent of gross domestic product (GDP) in 2018.

A fall in tourism receipts is bound to weaken the rupee over time. The central bank, whose coffers are too light to defend the currency through interventions, is likely to have to raise interest rates.

This, in turn, would choke lending, hurting consumers and the investment plans of local businesses, while also making it more costly for the government to seek funding from foreign investors via bond markets.

"The central bank may be forced to hike rates again this year," said Win Thin, global head of currency strategy at Brown Brothers Harriman (BBH).

"With foreign reserves very low right now, the central bank cannot actively support the rupee."

After falling 16 per cent against the US dollar last year to record lows, the rupee had gained 4.6 per cent this year as of last week.

Sri Lankan bonds have been among the best performing globally, only bettered by Argentina and Chile. But the main stock index has lost about 10 per cent.

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Weak finances

Sri Lanka's external position was already precarious.

To help fund a record $5.9 billion in foreign loans this year, the country successfully sold $2.4 billion in five-year and 10-year US dollar bonds last month, but that was right after the IMF extension and amid bets of looser monetary policy.

In January, Sri Lanka used its reserves to repay debt worth $1 billion. It had about $5 billion left in February, the least since April 2017, and only enough to cover two months of imports and about two-thirds of its short-term external debt, according to BBH calculations.

Colombo also needs to finance a current account deficit of about 3 per cent of GDP.

Prime Minister Ranil Wickremesinghe is already facing heavy criticism domestically for higher taxes, and tight monetary and fiscal policies that have crimped growth to a 17-year low.

Having emerged from a 51-day political crisis in which President Maithripala Sirisena sacked and replaced him with pro-China former president Mahinda Rajapaksa - a decision which was later reversed - Wickremesinghe set an ambitious fiscal deficit goal of 4.4 per cent of GDP, compared with 5.3 per cent in 2018.

But he also boosted spending on state employees, pensioners and the armed forces and promised more funds for rural infrastructure, leading economists to doubt the targets. A presidential vote is expected later this year followed by a general election in 2020.

"Given the fact they have repayments coming up for sovereign bonds, it could lead to more pressure on foreign currency reserves. So, it's a near term negative for the tourism sector and also market sentiment as well," said Ruchir Desai, fund manager at Asia Frontier Capital, who co-manages the $16 million AFC Asia Frontier Fund.

"Valuations are cheap, no doubt... but until they get some kind of political unity which can result in stable policy-making, we will probably remain underweight (equities) until the elections."

Sri Lanka faces a likely collapse in tourism following Easter Sunday bomb attacks on churches and hotels, which would deal a severe blow to the island's economy and financial markets, and potentially force it to seek further IMF assistance.

Sri Lanka faces a likely collapse in tourism following Easter Sunday bomb attacks on churches and hotels, which would deal a severe blow to the island's economy and financial markets, and potentially force it to seek further IMF assistance. The International Monetary Fund extended last month a $1.5 billion loan for an extra year into 2020, a key step in keeping foreign investors involved in what so far this year has been a top-performing frontier debt market. But with growth, and therefore state revenues, now likely to slow significantly, the budget targets agreed with the IMF may have to be reviewed, and the government is expected to resist pressure for any spending cuts before elections expected later this year. There is even a possibility that more IMF money may be needed if foreign investment falls, adding to the hard currency gap left by plunging tourism receipts. "If growth slows a lot more and the budget deficit assumptions need to be reassessed, then they'll have to sit down and negotiate something more feasible," said Alex Holmes, Asia economist at Capital Economics. The Sri Lankan stock index dived 2.6 per cent on Tuesday in its first day of trading after the attacks that killed more than 300 people, while the heavily-managed rupee held steady. Tourism is Sri Lanka's third-largest and fastest growing source of foreign currency, after remittances and garment exports, accounting for almost $4.4 billion or 4.9 per cent of gross domestic product (GDP) in 2018. A fall in tourism receipts is bound to weaken the rupee over time. The central bank, whose coffers are too light to defend the currency through interventions, is likely to have to raise interest rates. This, in turn, would choke lending, hurting consumers and the investment plans of local businesses, while also making it more costly for the government to seek funding from foreign investors via bond markets. "The central bank may be forced to hike rates again this year," said Win Thin, global head of currency strategy at Brown Brothers Harriman (BBH). "With foreign reserves very low right now, the central bank cannot actively support the rupee." After falling 16 per cent against the US dollar last year to record lows, the rupee had gained 4.6 per cent this year as of last week. Sri Lankan bonds have been among the best performing globally, only bettered by Argentina and Chile. But the main stock index has lost about 10 per cent. × Weak finances Sri Lanka's external position was already precarious. To help fund a record $5.9 billion in foreign loans this year, the country successfully sold $2.4 billion in five-year and 10-year US dollar bonds last month, but that was right after the IMF extension and amid bets of looser monetary policy. In January, Sri Lanka used its reserves to repay debt worth $1 billion. It had about $5 billion left in February, the least since April 2017, and only enough to cover two months of imports and about two-thirds of its short-term external debt, according to BBH calculations. Colombo also needs to finance a current account deficit of about 3 per cent of GDP. Prime Minister Ranil Wickremesinghe is already facing heavy criticism domestically for higher taxes, and tight monetary and fiscal policies that have crimped growth to a 17-year low. Having emerged from a 51-day political crisis in which President Maithripala Sirisena sacked and replaced him with pro-China former president Mahinda Rajapaksa - a decision which was later reversed - Wickremesinghe set an ambitious fiscal deficit goal of 4.4 per cent of GDP, compared with 5.3 per cent in 2018. But he also boosted spending on state employees, pensioners and the armed forces and promised more funds for rural infrastructure, leading economists to doubt the targets. A presidential vote is expected later this year followed by a general election in 2020. "Given the fact they have repayments coming up for sovereign bonds, it could lead to more pressure on foreign currency reserves. So, it's a near term negative for the tourism sector and also market sentiment as well," said Ruchir Desai, fund manager at Asia Frontier Capital, who co-manages the $16 million AFC Asia Frontier Fund. "Valuations are cheap, no doubt... but until they get some kind of political unity which can result in stable policy-making, we will probably remain underweight (equities) until the elections."

Sri Lanka may need more IMF help as blasts threaten tourism

India’s <a href="https://www.wionews.com/business-economy/in-2018-indias-gdp-to-grow-at-73-china-to-grow-at-65-world-bank-189117">GDP growth</a> is expected to accelerate moderately to 7.5 per cent in Fiscal Year 19-20, driven by continued investment strengthening, particularly private-improved export performance and resilient consumption, the World Bank has said.

The real GDP growth is estimated at 7.2 per cent in FY18/19, the World Bank said in its latest report on South Asia on Sunday ahead of the spring meeting of the World Bank and the International Monetary Fund. Data for the first three quarters suggest that growth has been broad-based. Industrial growth accelerated to 7.9 per cent, making up for a deceleration in services.

Balanced growth

Meanwhile, agriculture growth was robust at four per cent. On the demand side, domestic consumption remained the primary growth driver, but gross fixed capital formation and exports both made growing contributions. Over the last quarter, growth is expected to remain balanced across sectors, the report said. Inflation dynamics have been subdued over most of the FY18/19, the report said.

The World Bank said India’s GDP growth is expected to accelerate moderately to 7.5 per cent in FY19/20, driven by continued investment strengthening-particularly private- improved export performance, and resilient consumption. With robust growth, and food prices poised to recover, inflation is expected to converge toward four per cent, it said, adding that both the current account and the fiscal deficit are expected to narrow.

“On the external front, improvements in India’s export performance and low oil prices should bring about a reduction in the current account deficit to 1.9 per cent of GDP,” it said. “On the internal front, the consolidated fiscal deficit is projected to decline, albeit slowly (to 6.2 and 6.0 per cent of GDP in FY19/20 and FY20/21 respectively). As the centre’s deficit is budgeted to remain unchanged at 3.4 per cent of GDP in FY19/20, the burden of adjustment will rest on the states, the World Bank said.

Inflation

A sustained decline in food prices since July 2018, subsequently complemented by the softening of oil prices and concomitant appreciation of the rupee, has led to a steady decline in inflation, it noted. Observing that headline inflation stood at 2.6 per cent in February 2019, and the average for FY18/19 so far at 3.5 per cent, well below the RBI’s target-midpoint of four per cent, the report said that as a result, the RBI reduced the policy rate by 25 basis points (to 6.25 per cent) in February 2019. However, the report said that the current account deficit widened in FY18-19.

India’s external position worsened significantly in the first half of FY18-19, as large portfolio outflows were triggered by US monetary policy and fears of contagion from stress in some emerging market economies. The nominal exchange rate depreciated, and foreign reserves declined by over eight per cent over January to October 2018. However, since then, the decline in oil prices and the United States Fed signalling a slower pace of normalisation than initially anticipated led to a partial reversal. Portfolio outflows have reversed, and the rupee has appreciated by about four per cent since October 2018.

India’s GDP growth is expected to accelerate moderately to 7.5 per cent in Fiscal Year 19-20, driven by continued investment strengthening, particularly private-improved export performance and resilient consumption, the World Bank has said.

India’s GDP growth is expected to accelerate moderately to 7.5 per cent in Fiscal Year 19-20, driven by continued investment strengthening, particularly private-improved export performance and resilient consumption, the World Bank has said. The real GDP growth is estimated at 7.2 per cent in FY18/19, the World Bank said in its latest report on South Asia on Sunday ahead of the spring meeting of the World Bank and the International Monetary Fund. Data for the first three quarters suggest that growth has been broad-based. Industrial growth accelerated to 7.9 per cent, making up for a deceleration in services. Balanced growth Meanwhile, agriculture growth was robust at four per cent. On the demand side, domestic consumption remained the primary growth driver, but gross fixed capital formation and exports both made growing contributions. Over the last quarter, growth is expected to remain balanced across sectors, the report said. Inflation dynamics have been subdued over most of the FY18/19, the report said. The World Bank said India’s GDP growth is expected to accelerate moderately to 7.5 per cent in FY19/20, driven by continued investment strengthening-particularly private- improved export performance, and resilient consumption. With robust growth, and food prices poised to recover, inflation is expected to converge toward four per cent, it said, adding that both the current account and the fiscal deficit are expected to narrow. “On the external front, improvements in India’s export performance and low oil prices should bring about a reduction in the current account deficit to 1.9 per cent of GDP,” it said. “On the internal front, the consolidated fiscal deficit is projected to decline, albeit slowly (to 6.2 and 6.0 per cent of GDP in FY19/20 and FY20/21 respectively). As the centre’s deficit is budgeted to remain unchanged at 3.4 per cent of GDP in FY19/20, the burden of adjustment will rest on the states, the World Bank said. Inflation A sustained decline in food prices since July 2018, subsequently complemented by the softening of oil prices and concomitant appreciation of the rupee, has led to a steady decline in inflation, it noted. Observing that headline inflation stood at 2.6 per cent in February 2019, and the average for FY18/19 so far at 3.5 per cent, well below the RBI’s target-midpoint of four per cent, the report said that as a result, the RBI reduced the policy rate by 25 basis points (to 6.25 per cent) in February 2019. However, the report said that the current account deficit widened in FY18-19. India’s external position worsened significantly in the first half of FY18-19, as large portfolio outflows were triggered by US monetary policy and fears of contagion from stress in some emerging market economies. The nominal exchange rate depreciated, and foreign reserves declined by over eight per cent over January to October 2018. However, since then, the decline in oil prices and the United States Fed signalling a slower pace of normalisation than initially anticipated led to a partial reversal. Portfolio outflows have reversed, and the rupee has appreciated by about four per cent since October 2018.

India’s GDP expected to accelerate moderately to 7.5% in 2019-20: World Bank

The Reserve Bank of India(RBI) today cut benchmark lending rate by 0.25 per cent to 6 per cent.

The decision&nbsp;came as a relief for home loan buyers.

The RBI maintained a neutral stance on the monetary policy.

The central bank&nbsp;projected GDP growth for 2019-20 at 7.2 per cent. RBI revised downward retail inflation estimate to 2.4 per cent in Q4 FY19, 2.9-3 per cent in H1 FY20 and 3.5-3.8 per cent in H2 FY20.

Four out of six MPC members voted for the rate cut while the other two members favoured no change in repo rate, the RBI informed.

In February, the RBI had cut interest rates for the first time in 18 months by 25 basis points to 6.25 per cent. The move was as a result of low inflation at the time. Besides the repo rate, reverse repo was reduced to 6 per cent from 6.25 per cent.

Repo rate is the rate at which commercial banks borrow money from the RBI; while reverse repo rate is the rate at which RBI collects money from banks.

RBI had last hiked interest rates in August 2018 by 0.25 per cent. It came on back of a similar increase in June, 2018.

The Reserve Bank of India(RBI) today cut benchmark lending rate by 0.25 per cent to 6 per cent. The decision came as a relief for home loan buyers. The RBI maintained a neutral stance on the monetary policy.

The Reserve Bank of India(RBI) today cut benchmark lending rate by 0.25 per cent to 6 per cent. The decision came as a relief for home loan buyers. The RBI maintained a neutral stance on the monetary policy. The central bank projected GDP growth for 2019-20 at 7.2 per cent. RBI revised downward retail inflation estimate to 2.4 per cent in Q4 FY19, 2.9-3 per cent in H1 FY20 and 3.5-3.8 per cent in H2 FY20. Four out of six MPC members voted for the rate cut while the other two members favoured no change in repo rate, the RBI informed. In February, the RBI had cut interest rates for the first time in 18 months by 25 basis points to 6.25 per cent. The move was as a result of low inflation at the time. Besides the repo rate, reverse repo was reduced to 6 per cent from 6.25 per cent. Repo rate is the rate at which commercial banks borrow money from the RBI; while reverse repo rate is the rate at which RBI collects money from banks. RBI had last hiked interest rates in August 2018 by 0.25 per cent. It came on back of a similar increase in June, 2018.

RBI cuts lending rate by 0.25 per cent to 6 per cent; projects GDP growth for 2019-20 at 7.2%

US economic growth was revised sharply lower for the final three months of 2018, with data showing GDP expanded 2.2 per cent rather than the 2.6 per cent originally reported, the government said Thursday.

The Commerce Department said the revision came after more complete data were used in the calculations.

However, that did not change the growth rate for the full year, which remains at 2.9 per cent compared to 2.2 per cent in 2017. 
&nbsp;

US economic growth was revised sharply lower for the final three months of 2018, with data showing GDP expanded 2.2 per cent rather than the 2.6 per cent originally reported, the government said Thursday.

US economic growth was revised sharply lower for the final three months of 2018, with data showing GDP expanded 2.2 per cent rather than the 2.6 per cent originally reported, the government said Thursday. The Commerce Department said the revision came after more complete data were used in the calculations. However, that did not change the growth rate for the full year, which remains at 2.9 per cent compared to 2.2 per cent in 2017.

US GDP growth revised down sharply to 2.2% in Q4

Globally, real estate development is an important parameter to measure economic growth. If one just looks at the demand for homes in India, the growth potential is huge. &nbsp;

Initiatives by the government, including ‘Housing for All by 2022’ offer&nbsp;major growth potential not just for the sector, but also for economic development and GDP growth.

Indian real estate is the engine which will power the Indian economy into the ‘big league’. From the ancillary industries that it supports to job creation – easily the next in line after agriculture and manufacturing – Indian real estate has the potential to reach the magic figure of ‘trillion dollars’.

Let us look at the route map to achieve this. A KPMG Report released at NAREDCO and APREA’s Real Estate &amp; Infrastructure Investors’ Summit in Mumbai last year stated that the Indian real estate will be a $1 trillion industry by 2030.

This will propel it to being the third largest economy globally – and this growth will be driven by not just the huge demand for homes, but also new and emerging asset classes within real estate, such as affordable housing, co-working spaces, warehousing and logistics, among others.

The ‘grease’, which will ensure this happens easily, is the post-RERA transparent regulatory environment powered by the economic and taxation reforms.

Estimates suggest that from $120 billion in 2017, the sector should grow to $650 billion by 2025. During this period, its contribution to GDP is estimated to go up from the present 7 per cent to 13 per cent. &nbsp;

Even as the new paradigm in post-RERA scenario ensures this does happen, we also need to factor in ground realities that will play a major role.

Infrastructure growth is opening up peripheral areas, as also creating satellite cities, the new growth centres of real estate. &nbsp;

Figures speak for themselves - from an average highways road construction pace of 3 km per day in May 2014, the figure now stands at 27 km per day. &nbsp;

The National Highways, earlier a stretch of 96,000 km, are now in the process of being doubled. &nbsp;

Creating jobs is another aspect where real estate powers the economy, and will help achieve the ‘trillion dollar’ target. The third largest employer, it employs over 50 million at present. &nbsp;

While the initial days of the new regulatory environment saw Indian real estate going through a phase of transition, now the story is largely about enhanced growth potential. &nbsp;

Over the past year, we have seen real estate post higher numbers, while also evolving and adopting global best practices. &nbsp;

From being an unorganised sector traditionally, Indian real estate has become more organised, transparent and now offers a safe and secure environment – ideal for investment that drives growth.

It has witnessed implementation of landmark reforms, which impacted it directly as also indirectly, be it GST, RERA, Insolvency and Bankruptcy Code and Benami Property Transaction Act, among others. &nbsp;

While the initial pain did exist, these reforms have taken the housing sector towards a healthier ecosystem and make the trillion dollar economy target sound feasible.

The biggest impact of these steps is financial discipline in the sector, which has also created a better perception for India as a global hub for investments. &nbsp;

Private equity investments in Indian real estate have improved 15 per cent year-on-year in January-March 2018, reaching $3 billion. &nbsp;

Overall, strong economic ground rules, proactive reforms and the use of technology will continue to boost the sector. &nbsp;

A number of new asset classes—such as co-working spaces, affordable housing, rental housing, and warehousing realty—have mushroomed in the country, and are fast gaining traction.

Backed by regulatory changes, the growth story of Indian real estate has been co-scripted by rapid urbanisation, increasing levels of income and growth in foreign and domestic investment, entry of international real estate players, investors and Indian corporate houses and the recent appreciation in EODB rankings.

(This article was originally published on The DNA. Read the <a href="https://www.dnaindia.com/analysis/column-indian-real-estate-can-evolve-into-trillion-dollar-economy-2721515">original article</a>)

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL.) 
&nbsp;

Globally, real estate development is an important parameter to measure economic growth. If one just looks at the demand for homes in India, the growth potential is huge.

Globally, real estate development is an important parameter to measure economic growth. If one just looks at the demand for homes in India, the growth potential is huge. Initiatives by the government, including ‘Housing for All by 2022’ offer major growth potential not just for the sector, but also for economic development and GDP growth. Indian real estate is the engine which will power the Indian economy into the ‘big league’. From the ancillary industries that it supports to job creation – easily the next in line after agriculture and manufacturing – Indian real estate has the potential to reach the magic figure of ‘trillion dollars’. Let us look at the route map to achieve this. A KPMG Report released at NAREDCO and APREA’s Real Estate & Infrastructure Investors’ Summit in Mumbai last year stated that the Indian real estate will be a $1 trillion industry by 2030. This will propel it to being the third largest economy globally – and this growth will be driven by not just the huge demand for homes, but also new and emerging asset classes within real estate, such as affordable housing, co-working spaces, warehousing and logistics, among others. The ‘grease’, which will ensure this happens easily, is the post-RERA transparent regulatory environment powered by the economic and taxation reforms. Estimates suggest that from $120 billion in 2017, the sector should grow to $650 billion by 2025. During this period, its contribution to GDP is estimated to go up from the present 7 per cent to 13 per cent. Even as the new paradigm in post-RERA scenario ensures this does happen, we also need to factor in ground realities that will play a major role. Infrastructure growth is opening up peripheral areas, as also creating satellite cities, the new growth centres of real estate. Figures speak for themselves - from an average highways road construction pace of 3 km per day in May 2014, the figure now stands at 27 km per day. The National Highways, earlier a stretch of 96,000 km, are now in the process of being doubled. Creating jobs is another aspect where real estate powers the economy, and will help achieve the ‘trillion dollar’ target. The third largest employer, it employs over 50 million at present. While the initial days of the new regulatory environment saw Indian real estate going through a phase of transition, now the story is largely about enhanced growth potential. Over the past year, we have seen real estate post higher numbers, while also evolving and adopting global best practices. From being an unorganised sector traditionally, Indian real estate has become more organised, transparent and now offers a safe and secure environment – ideal for investment that drives growth. It has witnessed implementation of landmark reforms, which impacted it directly as also indirectly, be it GST, RERA, Insolvency and Bankruptcy Code and Benami Property Transaction Act, among others. While the initial pain did exist, these reforms have taken the housing sector towards a healthier ecosystem and make the trillion dollar economy target sound feasible. The biggest impact of these steps is financial discipline in the sector, which has also created a better perception for India as a global hub for investments. Private equity investments in Indian real estate have improved 15 per cent year-on-year in January-March 2018, reaching $3 billion. Overall, strong economic ground rules, proactive reforms and the use of technology will continue to boost the sector. A number of new asset classes—such as co-working spaces, affordable housing, rental housing, and warehousing realty—have mushroomed in the country, and are fast gaining traction. Backed by regulatory changes, the growth story of Indian real estate has been co-scripted by rapid urbanisation, increasing levels of income and growth in foreign and domestic investment, entry of international real estate players, investors and Indian corporate houses and the recent appreciation in EODB rankings. (This article was originally published on The DNA. Read the original article) (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL.)

Indian real estate will power Indian economy into the ‘big league’

Russia's economic growth climbed to a six-year high in 2018, but the growth was fuelled by one-off factors that mean the goals set by President Vladimir Putin won't be achieved without an increase in household incomes, economists said.

Putin, after winning his fourth term last year, ordered the government to bring the Russian economy into the world's top five by 2024, saying economic growth should surpass the global average of about 3 per cent.

New data published this month by Russia's Federal Statistics Service, or Rosstat, seemed to show that Russia, the world's 12th largest economy, had moved closer to the Kremlin's goal.

Gross domestic product grew 2.3 per cent last year, Rosstat said, exceeding the 1.5 to 2.0 per cent foreseen by the central bank and the 1.8 per cent predicted by the economy ministry.

Growth exceeded expectations partly because Rosstat revised construction growth in the first 11 months of 2018 to 5.7 per cent from 0.5 per cent. The economy ministry said construction in Russia's Yamalo-Nenets region accounted for the revision.

A week after the data were published, the ministry said GDP growth had been boosted by one-time factors and predicted it would slow to 1.3 per cent in 2019.

"We can speak of sustainable growth when there are sustainable growth drivers such as higher investment, low capacity utilisation, rising households' incomes, which with some delay filters into consumer demand, which drives the economy," said Andrey Movchan, an economist at the Carnegie Moscow Centre.

"We have none of that," Movchan said. "We are moving slowly towards a demographic pitfall, we have almost zero non-state investment ... All developments favour GDP contraction rather than growth."

Analysts polled by Reuters in late December had expected last year's GDP growth would remain at 1.7 per cent, then slow to 1.4 per cent in 2019.

GDP Grows, incomes fall

Economists have been sceptical about the GDP figure, saying it did not represent broader economic trends and was not indicative of sustainable growth in a country facing the risk of more US&nbsp;sanctions and restrictions on its oil output because of a deal with OPEC.

An unexpected pick-up in construction, higher borrowing activity, growing inventories and stronger exports all boosted 2018 growth, the data showed. But a continuing decline in real disposable incomes among households raised doubts the reported growth could be last.

The average salary in Russia in 2018 rose 10 per cent to 43,400 roubles ($660.24), but real disposable incomes, or money adjusted for inflation that households have after paying taxes, declined 0.2 per cent in 2018 after falling 1.2 per cent in 2017, according to Rosstat.

Inventories in the economy rose in late 2018 ahead of a planned increase in value-added tax to 20 per cent from 18 per cent, the data showed.

That may have been driven by companies stocking up before prices rose, said Valery Mironov of the Higher School of Economics.

"GDP would be growing faster than demand but that's just because of growing inventories," he said. "This is only a temporary gain."

Households also contributed to growth in 2018 by taking out more loans. Retail lending rose 22.4 per cent last year after a 12.7 per cent increase in 2017, central bank data showed.

Factors that contributed to economic growth are "temporary moments that do not indicate any kind of steady trend of an increase in demand in the economy," said Vladimir Tikhomirov, chief economist at BCS brokerage.

"The current trends that are in the economy remain," he said.

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Russia's economic growth climbed to a six-year high in 2018, but the growth was fuelled by one-off factors that mean the goals set by President Vladimir Putin won't be achieved without an increase in household incomes, economists said.

Russia's economic growth climbed to a six-year high in 2018, but the growth was fuelled by one-off factors that mean the goals set by President Vladimir Putin won't be achieved without an increase in household incomes, economists said. Putin, after winning his fourth term last year, ordered the government to bring the Russian economy into the world's top five by 2024, saying economic growth should surpass the global average of about 3 per cent. New data published this month by Russia's Federal Statistics Service, or Rosstat, seemed to show that Russia, the world's 12th largest economy, had moved closer to the Kremlin's goal. Gross domestic product grew 2.3 per cent last year, Rosstat said, exceeding the 1.5 to 2.0 per cent foreseen by the central bank and the 1.8 per cent predicted by the economy ministry. Growth exceeded expectations partly because Rosstat revised construction growth in the first 11 months of 2018 to 5.7 per cent from 0.5 per cent. The economy ministry said construction in Russia's Yamalo-Nenets region accounted for the revision. A week after the data were published, the ministry said GDP growth had been boosted by one-time factors and predicted it would slow to 1.3 per cent in 2019. "We can speak of sustainable growth when there are sustainable growth drivers such as higher investment, low capacity utilisation, rising households' incomes, which with some delay filters into consumer demand, which drives the economy," said Andrey Movchan, an economist at the Carnegie Moscow Centre. "We have none of that," Movchan said. "We are moving slowly towards a demographic pitfall, we have almost zero non-state investment ... All developments favour GDP contraction rather than growth." Analysts polled by Reuters in late December had expected last year's GDP growth would remain at 1.7 per cent, then slow to 1.4 per cent in 2019. GDP Grows, incomes fall Economists have been sceptical about the GDP figure, saying it did not represent broader economic trends and was not indicative of sustainable growth in a country facing the risk of more US sanctions and restrictions on its oil output because of a deal with OPEC. An unexpected pick-up in construction, higher borrowing activity, growing inventories and stronger exports all boosted 2018 growth, the data showed. But a continuing decline in real disposable incomes among households raised doubts the reported growth could be last. The average salary in Russia in 2018 rose 10 per cent to 43,400 roubles ($660.24), but real disposable incomes, or money adjusted for inflation that households have after paying taxes, declined 0.2 per cent in 2018 after falling 1.2 per cent in 2017, according to Rosstat. Inventories in the economy rose in late 2018 ahead of a planned increase in value-added tax to 20 per cent from 18 per cent, the data showed. That may have been driven by companies stocking up before prices rose, said Valery Mironov of the Higher School of Economics. "GDP would be growing faster than demand but that's just because of growing inventories," he said. "This is only a temporary gain." Households also contributed to growth in 2018 by taking out more loans. Retail lending rose 22.4 per cent last year after a 12.7 per cent increase in 2017, central bank data showed. Factors that contributed to economic growth are "temporary moments that do not indicate any kind of steady trend of an increase in demand in the economy," said Vladimir Tikhomirov, chief economist at BCS brokerage. "The current trends that are in the economy remain," he said.

Russia's GDP growth, at six-year high, raises question of durability

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