India Economic Update
India has put up its most impressive show in the Doing Business Report, 2018 of The World Bank. Of the 190 countries ranked in the study, India was ranked 100. India has jumped 30 places from last year’s ranking.
The Doing Business Report is an assessment of 190 economies and covers 10 indicators that span the lifecycle of a business. Of the 10 indicators on which a country is ranked, India has improved its rank in six of the indicators. India is the only country in South Asia and among the BRICS economies to feature among the most improved economies
The marked improvement made by India
- On the “Resolving Insolvency” parameter, India’s rank improved from 136 to 103
- On the “Paying Taxes” parameter, rank improved from 172 to 119
- For “Getting Credit” the rank has improved from 44 to 29
- On the “Enforcing Contracts” parameter India’s rank improved from 172 to 164
- For “Protecting Minority Investors” India’s rank improved from 13 to 4
- On “Construction Permits”, the rank improved from 185 to 181
Slipping Consumer Confidence
As per the Consumer Confidence Survey conducted by the RBI, 34.6% of the respondents believe that the general economic condition had improved in September 2017 down from 44.6% in September 2016. Further, 40.7% of the respondents felt that the economic situation had worsened in September 2017, as against 25.3% during the same period last year. In the backdrop of a worsening economic scenario, employment prospects were the biggest worry of the respondents.
The Current Situation Index, which measures consumer sentiments about the present economic situation, further slipped in the pessimistic zone. The same set of parameters also pulled down the Future Expectations Index, which measures the overall sentiments about the economic situation in the next six months, in September 2017 compared to June 2017.
Reduced Home Loan Rates
State Bank of India, the country’s largest bank by deposits, reduced home loan rates to 8.30% from 8.35% and other financial institutions are expected to follow suit. The reduction in home loan rates should give a much needed boost to the real estate residential property market which has been under some stress in the recent past.
Direct Tax Collection Increase
The provisional figures of direct tax collections up to September 2017 show that net collections are at ` 3.86 lakh crore, which is 15.8% higher than the net collections for the corresponding period of last year. Net Direct Tax collections represent 39.4% of the total Budget Estimates of Direct Taxes for FY 2017–18 (` 9.8 lakh crore). Gross collections (before adjusting for refunds) have increased by 10.3% to ` 4.66 lakh crore during April to September 2017. Refunds amounting to ` 79,660 crore have been issued during April to September 2017.
The Union Cabinet approved the Bharatmala project, which is among the largest highway construction projects in the country, second only to the National Highways Development Project (NHDP). The highway work worth ` 8 lakh crore will begin before the end of 2018 under the Bharatmala project.
This ambitious project of the Government of India is expected to be a major driver for economic growth. The programme has been designed to bridge the gaps in the existing highway infrastructure that would help in the faster and more efficient movement of men and material.
The project is estimated to give the country 50 national corridors as opposed to six, in the present day. With this, 70–80% of freight will be transported along a national highway, as against 40% at present. Further, this project will also meet the connectivity needs of the backward and tribal areas, border areas and trade routes with neighbouring countries. A total of 24,800 kilometres are being considered in phase-1 of Bharatmala. In addition, the first phase of Bharatmala also includes 10,000 kilometres of balance road works under NHDP.
Performance of Major Ports
Cargo handled by major ports in the country, increased by 3.24% between April–September 2017, compared to the same period last year. The highest growth was registered by Cochin Port (19.62%) followed by Kolkata (including Haldia), New Mangalore, Paradip with a growth of around 12%. During the period April–September 2017, Kandla Port handled the highest volume of traffic (53.29 million tonnes) followed by Paradip (47.61 million tonnes), JNPT with 32.69
Urban cities Growth
The Bharatmala project, apart from increasing connectivity within the country, will also help decongest major urban centres. Under the project, 28 new ring roads and 45 bypasses have been planned. This move will help unclog traffic across major cities in the country.
Ring roads have been planned in Bengaluru, Pune, Sambalpur, Madurai, Indore, Dhule, Raipur, Shivpuri, Delhi, Bhubaneswar, Gurugram, Surat, Patna, Lucknow, Varanasi, Vijayawada, Chitradurga, Amravati (AP), Sagar, Solapur, Jaipur, Belgaum, Nagpur, Agra, Kota, Dhanbad, Ranchi and Udaipur.
Under the ring road project, a new ring road has been planned to be constructed in Delhi, which will start near Narela on the National Highway-1, pass through the National highway-10 near Rohini and end at NH-2.
Going forward, travelling will be much easier in Delhi NCR. Metro services have completely transformed the manner in which people travel within Delhi NCR. The Magenta Line, which is currently under trial, will bring the travel time between Noida and South Delhi to 16 minutes from more than one hour presently. There are also plans to expand the rapid metro services in Gurugram. As per a new proposal, under phase 3 of the Rapid Metro service, connectivity will be provided from Sikanderpur metro station to Gurugram railway station.
Global Economies Snapshot
The Bank of England raised its key interest rate by a quarter percentagepoint to 0.5%. It is the first hike in 10 years. The move comes at a time when inflation sits at 3% and economic growth has slowed. There remain considerable risks to theoutlook, given the process of EU withdrawal.
The U.S. economy grew at 3% between July–September 2017. In fact, for the first time in three years, the US economy has enjoyed back-to-back quarters of 3% growth. Growth between April–June 2017 was 3.1%.
According to the International Monetary Fund (IMF) bi-annual report, economic growth among countries in sub-Saharan Africa is expected to rebound this year from their 20-yearlows in 2016. IMF said that growth is expected to almost double this year to 2.6%, and to reach 3.4% in 2018. But despite the recovery, the public debt is rising and soon could become unsustainable in some African countries.
As per The World Bank, oil prices are forecast to rise to $56 a barrel in 2018 from $53 this year, due to the steadily growing demand, agreed production cuts among oil exporters and stabilising U.S. shale oil production, while the surge in metals prices is expected to level off next year. The prices for energy commodities that include oil, natural gas and coal—are forecast to climb 4% in 2018. The metals index is expected to stabilise in the coming year, after a 22% jump this year, as a correction in iron ore prices is offset by increased prices in other base metals.