Indian Economy : News,Discussions & Updates

India's FY22 GDP projection upgraded to 9.3%-9.6% range: SBI Ecowrap​

With 42% population fully vaccinated againt Covid-19, SBI Research has revised upwards India's GDP growth projection to range of 9.3%-9.6% for FY22 and 8.1% in Q2FY22.

"The reason for the upward revision is that India recorded only 11% increase in Covid cases during Q3 2021, second lowest among top 15 most affected countries, and the increase in cases has declined to 2.3% in November 2021 over September 2021. So far, 1.15 billion vaccine doses have been administered, with 81% of the eligible population receiving at least a single dose and 42% of the eligible population both doses. In certain states including Himachal Pradesh, Gujarat, Uttarakhand, Kerala, Karnataka, Telangana and Madhya Pradesh more than 50% of the eligible population has been fully vaccinated," stated the report authored by Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India. The report was released on Monday.

India’s projected 8.1% growth rate in Q2FY22) is the highest growth across all economies. The average GDP growth of 28 selected economies has decelerated to 4.5% in Q3 (2021) as against 12.1%. Also at an annual rate of 9.3-9.6%, India’s real GDP growth would now be 1.5%-1.7% higher than the pre-pandemic level of FY20.

Meanwhile, on Friday, PM has announced to repeal all the three agriculture laws and will complete the constitutional process in the upcoming winter session of Parliament. PM has also announced to form a committee to decide, among others, making the system of MSP more effective and transparent.

SBI Research suggest 5 key agricultural reforms that could act as enablers even without these bills.

First, instead of MSP as a price guarantee that farmers are demanding, the Government mayensure a quantity guarantee clause for a minimum period of 5 years that make its mandatory of procurement to production percentage of crops (being currently procured) being at least equal to last year percentage (with safeguards in exceptional events like droughts, floods etc).

Second, converting the Minimum Support Price to Floor Price of Auction on National Agriculture Market (eNAM). However, this will not completely solve the problem as the current data shows that average modal prices in e-NAM mandis is lower than the MSP in all kharif commodities (except Soyabean).

Third, efforts must also continue to strengthen APMC market infrastructure. As per our estimates which are based on a government report, the monetary loss for cereals is almost Rs 27,000 crore due to harvest and post-harvest losses. The losses for oilseeds and pulses are Rs 10,000 crore and Rs 5,000 crore, respectively.

Fourth, establish a Contract Farming Institution in India that will have the exclusive right to oversee price discovery in Contract Farming. Contract farming has been instrumental in many countries by providing growers access to supply chains with market and price stability, as well as technical assistance. The experience of Thailand shows market certainty (52%) and price stability (46%) were prime factors due to which farmers participated in contract farming.

Fifth, ensuring a symmetric procurement across states. The procurement of cereals had continued to be asymmetric, with top producing states in paddy like West Bengal (First) and Uttar Pradesh (Second) witnessing minimal procurement, even as states like Punjab and Haryana that are not largest producers witnessing much larger procurement.
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India's FY22 GDP projection upgraded to 9.3%-9.6% range: SBI Ecowrap

SBI Ecowrap also lists 5 growth enablers despite Modi's U-turn on farm laws
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Indian salesmen threaten supply disruptions in protest against Reliance​

NEW DELHI, Dec 5 (Reuters) - India's household goods salesmen have threatened to disrupt supplies to mom-and-pop stores if consumer companies provide products at lower prices to Reliance Industries (RELI.NS), according to a letter seen by Reuters.

Reuters reported last month Indian salesmen representing companies such as Reckitt Benckiser , Unilever (ULVR.L) and Colgate-Palmolive (CL.N) said their sales had dropped 20-25% in the last year as mom-and-pop stores were increasingly partnering with Indian billionaire Mukesh Ambani's Reliance.


Ambani's deeply discounted offerings were prompting more stores to order digitally from his JioMart Partner app, posing an existential threat to more than 450,000 company salesmen who for decades served every corner of the vast nation by going store-to-store to take orders.

Citing the Reuters story, the All India Consumer Products Distributors Federation - which has 400,000 members - has written to consumer companies demanding a level playing field, saying they must get products at same prices like other big corporate distributors such as Reliance.


If the pricing-parity demand is not met, the group said in its letter, its salesmen will stop distribution of products to mom-and-pop stores, and will also not supply newly launched consumer goods if such partnerships continue beyond Jan 1.

"We have earned reputation and goodwill amongst our retailers by giving them good service for many years ... We have decided to call a 'Non-cooperation' movement," said the letter.


The group's president, Dhairyashil Patil, said the letter was sent to Reckitt, Hindustan Unilever, Colgate and 20 other consumer goods companies.

None of the three consumer companies, as well as Reliance, responded to requests for comment.

Mom-and-pop stores, or "kiranas", account for 80% of a near-$900 billion retail market in India. About 300,000 such stores in 150 cities order goods from Reliance, with the company setting a target of 10 million partner stores by 2024.

Traditional distributors have told Reuters they have been forced to cut vehicle fleet and staff as their business has been suffering because they can't match Reliance's pricing.

Jefferies in March estimated kiranas will "steadily increase the share of procurement" from Reliance "at the cost of traditional distributors". Such sales for Reliance could mushroom to $10.4 billion by 2025 from just $200 million in 2021-22, Jefferies estimates.
www.reuters.com

Indian salesmen threaten supply disruptions in protest against Reliance

India's household goods salesmen have threatened to disrupt supplies to mom-and-pop stores if consumer companies provide products at lower prices to Reliance Industries , according to a letter seen by Reuters.
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India slips to seventh place on world m-cap ranking, shows data​

Mid-October, the Indian equities market was on the verge of breaking into the club of top-five nations in terms of market capitalisation. The domestic markets had closed the gap with its former colonial ruler, which currently is in fifth place with a market cap of $3.68 trillion.

However, in the past six weeks, not just the market cap gap between UK and India has widened but India has ceded its number 6th place to France. The benchmark Sensex is currently down 7.54 points, or 4,658 points from its record high of 61,766 on October 18.
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India slips to seventh place on world m-cap ranking, shows data

The benchmark Sensex is currently down 7.54 points, or 4,658 points from its record high of 61,766 on October 18
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www.newindianexpress.com

Currency in use nears Rs 30 lakh crore despite spectacular jump in digital payments

NEW DELHI: Despite a spectacular jump in digital payments, the love for cash among Indians fails to go away. The value of total cash in circulation is nearing R
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Modi ji DON'T ever again , even think of DEMONETIZATION 😂
www.google.com

Indians refuse to let go of cash

Cash in circulation, which was 10.7% of GDP in FY18 has risen to 14.5% in FY21.
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Two Thirds of E COMMERCE payments are done in Cash on Delivery mode
 

Is India on the cusp of a flurry of free trade deals?​

Bengaluru, India – At a giant liquor store in Bengaluru, most aisles were packed, as residents of India’s tech hub stocked up for year-end celebrations. But one part of the shop was empty: the section where imported wines, subject to prohibitively high tariffs that can run up to 150 percent, were stacked.

That could soon change. India and Australia are on the cusp of inking an “early harvest” deal before the end of the month that will pave the way for a broader free trade agreement (FTA) that they hope to sign next year. Former Prime Minister Tony Abbott, now a trade envoy for the Australian government, has indicated that Indian tariffs on his country’s wines could be slashed under the interim pact.

The talks with Australia reflect a broader urgency that many experts say has previously been missing on the part of the Indian government when it comes to embracing FTAs and a more open global trade regime.

India is hoping to kick-start negotiations for an FTA with a post-Brexit United Kingdom in January. Commerce Minister Piyush Goyal has said New Delhi hopes to seal a free trade deal with the United Arab Emirates in early 2022. Earlier this year, India and the European Union decided to restart long-stalled talks for a comprehensive trade and investment treaty. Meanwhile, India has also initiated talks with Canada for an FTA and is exploring one with the Gulf Cooperation Council, a six-member grouping consisting of Bahrain, Qatar, Saudi Arabia, Kuwait, Oman and the UAE.

All of this contrasts with the sceptical eye that the government of Prime Minister Narendra Modi came into office with back in 2014, when it announced a review of all earlier FTAs signed by India, arguing that some of those had not helped the country.
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Gantry cranes at the Jawaharlal Nehru Port in Navi Mumbai, Maharashtra, India [File: Dhiraj Singh/Bloomberg]

The only FTA signed by India over the past seven years has been with the 10-member Association of Southeast Asian Nations (ASEAN) in 2015 – and the two sides had already completed most of the groundwork before Modi took office. In November 2019, India walked out of negotiations on the Regional Comprehensive Economic Partnership (RCEP), leaving a collective of the 10 ASEAN states, China, Japan, South Korea, Australia and New Zealand to sign on without New Delhi. The RCEP is the world’s largest trade deal and comes into effect in January.

“It was a blunder to stay out of the RCEP,” said Pradeep S Mehta, a veteran trade analyst who has served on multiple advisory panels of the World Trade Organization. “If the government is genuinely changing course on free trade, that would be welcome. It’s about time.”

Growth vs inequality​

In some ways, India’s quandary over FTAs mirrors heated debates on globalisation across the world in recent years. On the one hand, India’s economic growth really took off after it opened itself up to international investments in the 1990s. But the forces of globalisation — everywhere — have also deepened inequality and left local manufacturers vulnerable in the face of cheaper imports from abroad.

“FTAs are clearly a very important element of global trade, but you have to guard against lowering tariffs too much for the import of foreign products,” TP Sreenivasan, former Indian permanent representative to the United Nations, told Al Jazeera. “Because you can get flooded by their goods and that hurts domestic industry.”

But the data shows that avoiding free trade deals has not necessarily made Indian manufacturers more competitive. In fact, India’s trade imbalance has grown, with net imports going up from $137bn in 2014-15 to $161bn in 2019-20.
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the data shows that avoiding free trade deals has not necessarily made Indian manufacturers more competitive [File: Arko Datto/Bloomberg]

India and Australia started talks on an FTA in 2011. A decade later, without that deal, India remains a net importer from Australia. With the UAE, things have gotten worse. India used to be a net exporter until 2019-20 — now it imports more than it sells to the Middle Eastern country. That widening gulf between exports and imports appears to have prodded the government into rethinking its approach, say analysts.

To be sure, FTAs are not necessarily a fix for a country’s trade imbalance. Earlier FTAs with countries like Japan and Malaysia were focused more on goods than on services, which are India’s strength, said Debashis Chakraborty, associate professor at the Indian Institute of Foreign Trade in Kolkata.

But staying out of FTAs is not the solution either, he warned. Take the RCEP. “Entry into that agreement now would have given India the chance to play at the high table and set the rules for the region,” Chakraborty told Al Jazeera. “If we join 10 years later, we would not be able to dictate terms. We will need to accept what is already decided.”

A key argument against joining the RCEP was the fear that it would allow China greater access to the Indian market without adequate reciprocal gains. But Mehta pointed out, in an interview with Al Jazeera, that even without the RCEP, China is by far India’s single biggest source of imports.

Lines in the sand​

Not everyone agrees that the government has shifted its approach. Sreenivasan, the former diplomat, said earlier delays in FTA negotiations were often the result of the other country dragging its feet.

But India too has often drawn a line in the sand and then refused to budge. Between 2016 and 2018, India’s bilateral investment protection treaties with 23 EU countries expired. The EU kept pleading with India to agree to stopgap extensions, but India allowed those pacts to die — elevating the risk of investing in India — while instead negotiating for a pan-EU deal that is yet to be finalised.

By refusing to join the RCEP, India could again be shooting itself in the foot, cautioned Chakraborty. Modi’s political slogans of Make in India and Aatmanirbhar Bharat (self-reliant India in Hindi) — calls to build the country’s manufacturing capacity — depend on an increase in foreign investment into the country. But the 15 members of the RCEP will find it easier to shift businesses within the trade grouping because of shared rules than to invest in an external nation like India, which will likely lose out on future investments.

“If we are looking at the global production network that is working out across Southeast Asia, the RCEP would have been a good opportunity to get seamlessly integrated into that system,” said Chakraborty.

While there is no evidence the Indian government is changing its thinking on the RCEP, the rush to push through bilateral FTAs with a host of nations suggests a recognition that the Modi administration’s earlier approach was not working.

For India’s wine connoisseurs, that could mean a particularly merry Christmas.
www.aljazeera.com

Is India on the cusp of a flurry of free trade deals?

India has shown little enthusiasm for free trade deals since Modi took office, but that appears to be changing.
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www.livemint.com

Toy imports decline in 3 years as India registers 8k MSMEs for manufacturing

This comes in the backdrop of Prime Minister Narendra Modi during his monthly 'Mann ki Baat' radio programme, talked about making 'toys for the world' and highlighted the ability of India to become a 'toy hub’
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