Bharat Rakshak

The economy is likely to clip at 8 per cent next fiscal as the massive bank recapitalisation will help revive the long-stalled credit demand and private investments, says a brokerage report. According to Wall Street brokerage Goldman Sachs, the Rs 2.11-trillion bank recapitalisation announced by government last month and a likely recovery in earnings are also likely to drive up the stock markets and has set the Nifty target of 11,600 by next December.

“We project above-consensus real GDP growth of 8 per cent in 2018-19, while we see a growth of 6.4 per cent for 2017-18, as the negative impact from shocks (demonetisation and GST implementation) this year fade and the bank recap programme unlocks credit and private investment growth,” it said today. It said CPI inflation is likely to rise above the mid-point of RBI target to 5.3 per cent in FY19 due to a pick-up in food and commodity prices, and so it expects RBI to hike policy rates by 75 basis points by mid-2019.

The success in divestments and encouraging goods and services tax collections will help government reduce pressure on the fiscal math, says a report. “Disinvestment drive and GST rollout will reduce pressure on fiscal arithmetic,” domestic rating agency India Ratings said in a report today. It can be noted that government has reiterated its commitment to narrow down the fiscal deficit to 3.2 per cent for fiscal 2018. Front-loading of expenditure, where government has exhausted 96 per cent of the deficit by August, and also a slowdown in growth which led it to even mull a stimulus, had put question marks over whether it government will be able to meet the fiscal deficit target or not.

The report said successful subscription of Bharat 22 exchange traded fund launched last week has helped government move closer to its FY18 divestment target of Rs 72,500 crore and it has raised Rs 52,300 crore by the end of November. It said government can exceed its capital receipts target through divestment alone in the remaining four months, depending on ONGC’s acquisition of 51.11 per cent government stake in Hindustan Petroleum Corporation. This will bring in at least an additional Rs 32,000 crore to divestment kitty. Without elaborating, the report said the divestment strategy has a potential to generate Rs 1 trillion and also provide buffer against lower surplus transferred by the Reserve Bank and the likely shortfall from the telecom sector.

Ahead of the release of official data on Indian GDP growth in the second quarter, industry chamber Ficci said on Monday that the July-September GDP is expected to improve to 6.2 per cent and rise further to 6.7 per cent in the third quarter of current fiscal. Pulled down by sluggish manufacturing, growth during the first quarter of this financial year fell to 5.7 per cent, clocking the lowest Gross Domestic Product (GDP) growth rate under the Narendra Modi dispensation. The previous low of 4.6 per cent was recorded in January-March 2014.

Morgan Stanley said the house is expecting the second quarter India’s Q2 GDP number growth to be around 6.5%, which will confirm a turn in the growth environment. “The moderation seen in the data points in October could be a temporary downtick, while the underlying fundamentals of the economy are good enough to bring recovery back again,” he told the channel.

Further, he said that all the drivers of growth would be in place by FY-19. “The private capex joining in will bring the strength in India growth numbers that we are forecasting for it to go to 7.5 percent in March FY19,” he pointed out in the same interview.

Last week, Morgan Stanley said that India is uniquely placed among emerging markets and has a very clear reform agenda to address long-standing issues.

Macquarie has said that the country’s GDP growth will bounce back to 7.2 percent on-year in the next calendar year 2018, supported by revival in rural consumption and improvement in exports.

The growth expectations are built around an improved outlook for capital expenditure after the central government recently unveiled a Rs 2.11 lakh crore (representing 1.2 percent of GDP) recapitalisation package for public sector lenders which will be injected over two years.

Among the key takeaways from the report by Macquarie were the expected bounce back in consumption, and more importantly a pick up in rural demand. Nevertheless, urban consumption may not see more legs of growth anymore for some time, as per the brokerage firm. Exports may improve on the back of improved global growth forecasts, the report said.

Aayog was asked by government in May 2016, to prepare a 15-year Vision, 7-year Strategy and a 3-year Action Agenda in place of the earlier Five-year Plans (12th Plan between FY13-FY17 was the last one). Under former vice-chairman Arvind Panagariya, the Aayog worked on these plans in right earnest and also brought out a document on the 3-year (2017-18 to 2019-20) Action Agenda. However, there is a twist again. Though there is no official announcement yet in this regard, the work on the 15-Year Vision and 7-Year Strategy documents have been put in cold storage, sources told FE.

Panagariya’s successor, Rajiv Kumar is more focused on the prime minister’s Vision 2022, which aims to celebrate India’s 75th year of Independence by achieving a set of goals from doubling farmers’ income to pucca houses for all. One of the big initiatives in this regard is to make a dramatic improvement in the overall socio-economic development of 115 backward districts. The strategy envisaged by Kumar and his team is to adopt a focused approach and ensure convergence of efforts of the Central, state and local governments, the sources said. The priority now is to establish a real-time monitoring mechanism to focus on outcomes that matter to common people in these districts besides giving rise to a “virtuous cycle of economic development,” the sources added.

Suraj wrote:Panagariya's blue sky goals from Niti Aayog have been replaced with a set of focussed goals set by PM Modi:
Arvind Panagariya action plan abandoned, NITI Aayog adopts PM Narendra Modi vision

Aayog was asked by government in May 2016, to prepare a 15-year Vision, 7-year Strategy and a 3-year Action Agenda in place of the earlier Five-year Plans (12th Plan between FY13-FY17 was the last one). Under former vice-chairman Arvind Panagariya, the Aayog worked on these plans in right earnest and also brought out a document on the 3-year (2017-18 to 2019-20) Action Agenda. However, there is a twist again. Though there is no official announcement yet in this regard, the work on the 15-Year Vision and 7-Year Strategy documents have been put in cold storage, sources told FE.

A few months ago, a senior tax consultant walked up to me at a function and started talking about the dramatic changes in the behaviour of the Income Tax department.

Now, everything has been streamlined and is online. No more visits to tax department, no more intrusions, no more energy-sapping waits at tax offices. I thought about this conversation when India jumped 30 places in the EODB ranks helped by a sharp improvement in the paying taxes category.
...
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He cited the example of how poor African countries are able to approve/process mergers of group companies faster than India. It takes up to five months to get approval for merger of 100 per cent subsidiary with the parent while in Ghana it took only three days.
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How did the banks think the promoters will somehow get money to bid for their assets? If they suspected that promoters had stashed money abroad, why did they not go after them in the first place when the interest was not getting repaid?

GST, Rera, Demonetisation, bankruptcy code are pushing Indian businesses to adapt new ways, change old practices and be transparent in dealings with outside world. It is disruptive and painful. But like bitter medicine that cures illness and puts you back on your feet, it may just be enough to set Indian businesses and banks onto a new revolutionary path!

A senior finance ministry official said that suggested changes include the provision for lateral entry from the private sector into specialised verticals, the establishment of a remuneration committee, and making boards more accountable by separating their management and supervisory functions.

"Some recommendations have also been made by the Banks Board Bureau (BBB), and we are examining them. The idea is to make these banks more professionally managed and ensure that they are on a par with the private sector," said the official cited above.
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One of the other recommendations is to put in place a framework for assessment of the board and directors of PSBs on the lines provided for in the Companies Act, 2013. Some of these issues were also touched upon at the 'PSB Manthan', a two-day conclave of PSBs.

"There was some discussion on how banks can be more responsible and responsive. It was also about restoring the pride of the banker and winning the hearts and minds of customers," said a senior bank executive.
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arshyam wrote:Rahul M saar, thanks for adding the links to the 1st post. Where did you get them from, btw? The previous thread's 1st post didn't have them...

Indian economic growth likely rebounded in the July-September quarter from the slowest growth in three years, with demand picking up modestly as the effects from a shock ban on high-value currency notes eased, a Reuters poll showed.

But the Reuters poll of 52 economists over the past week showed gross domestic product growth likely rose to 6.4 percent from a year ago in the July-September quarter, from 5.7 percent in the previous period.

If the data, due to be released on 1200 GMT on Nov. 30, matches expectations, it will break a five-quarter slowing trend and mark the best rate this calendar year. Forecasts in the poll ranged from 5.9 percent to 6.8 percent.

Since mid-year, sales of two-wheel and commercial vehicles, oil consumption, cargo traffic and rail freight have all increased and raised hopes that the impact of the cash squeeze has bottomed out.

Industrial and manufacturing activity as measured by business surveys has also improved in recent months. And Mumbai's BSE Sensex index of leading shares hit a record high earlier this month.

Indeed, none of the 52 economists in the poll expected growth to slow from 5.7 percent. But for now, few economists expect a return to growth rates above 8 percent clocked at the start of 2016.

The Reuters poll also showed India's gross value-added (GVA) growth estimate likely accelerated to 6.2 percent, from 5.6 percent.

Gross domestic product expanded 6.3 percent in July to September from a year earlier, the Statistics Ministry said in a statement in New Delhi on Thursday.

Manufacturing GVA rose 7 percent in Jul-Sept. compared with 7.7 percent the previous year; construction 2.6 percent versus 4.3 percent; agriculture grew 1.7 percent compared with 4.1 percent; mining grew 5.5 percent against a 1.3 percent decline.

Trade, hotel and similar services rose 9.9 percent versus 7.7 percent; financial services grew 5.7 percent versus 7 percent.

Suraj wrote:Here’s the official CSO report:
Good numbers indeed . Nice to see that gross fixed capital formation (GFCF) is close to 30% again, after a downward slide for some time

Suraj wrote:Here’s the official CSO report:
Q2 GDP report
Good numbers indeed . Nice to see that gross fixed capital formation (GFCF) is close to 30% again, after a downward slide for some time . Suggests an uptick in investment, which in turn means higher future growth.

Suraj wrote:
I don’t know about the agri scene . Maybe someone with time on their hands can do a sweep of sector news in the last few months to see what’s happening . There’s not been any drought or anything major . Could be just high base effect .

Agriculture and allied activities grew at a slower pace in the second quarter of 2017-18 as compared to the same period last year, and also sequentially, due to the impact of a high base and drop in kharif grain production.

It was officially stated that production of foodgrain during the kharif season declined by 2.8 per cent, as compared to growth of 10.7 per cent during the same period in 2016-17.

Around 52.5 percent of Gross Value Added in the sector is based on livestock products, forestry and fisheries, which saw combined growth of 3.8 per cent in Q2. In Q1, the growth was 3.4 per cent.

Foodgrain production in the 2017-18 kharif is expected to be 134.67 million tonnes. This is 2.8 per cent less than the fourth estimate of last year but only 0.3 per cent less than the first estimate of 2016-17.

The total output dropped because of uneven rain in some parts and a shift in acreage in a few crops, particularly soybean, pulses and coarse cereals. A clearer picture is expected in the second and third estimates.

India badly needs a fresh approach to insolvent businesses. Its banks’ balance-sheets sag under 8.4trn rupees ($130bn) of loans that will probably not be repaid—over 10% of their outstanding loans. But foreclosure is fiddly: it currently takes over four years to process an insolvency, and recovery rates are a lousy 26%. Partly as a result, bankers have often turned a blind eye to firms they ought to have foreclosed on.

This is bad for the banks and worse for the economy, which has slowed markedly, in part as credit to companies has dried up. The problem festered for years, not least because banks’ reserves of capital were inadequate to cover the losses that would have resulted if they had acknowledged dud loans. And bosses at state-owned banks, where most of the problems lie, feared even sensible agreements to lower an ailing company’s debt burdens could be painted as cosying up to cronies.

The Indian authorities have, in stages, removed roadblocks to resolving all this. From 2015, banks were forced to acknowledge which loans were “non-performing”, having spent years expertly sweeping problems under the carpet. Bank-capital levels are being bolstered (albeit with money borrowed from the banks themselves). And the infrastructure for the new bankruptcy code, which requires administrators to run firms in limbo and a new courts system, is being created from scratch.

Lenders loth to foreclose on welshing tycoons are being left with no choice; a dozen deeply distressed firms were shunted into insolvency proceedings by the authorities in June. These account for under 3% of all loans, but over a quarter of those in arrears, reckons Ashish Gupta of Credit Suisse. All told, nearly 400 companies big and small are going through the process, establishing a first batch of precedents.

To ensure that no side delays proceedings, the new code says that if creditors and borrowers cannot agree on how to revive the company within 270 days, its assets will be sold for scrap. But the assumption had been that the companies’ “promoters”, as India dubs founding shareholders, would find a way to stay on. Many were planning to bid for their old assets in auctions few thought they would lose, given the mass of inside information they hold.

The government has now banned any defaulting promoters from bidding, which means they will lose “their” companies to new owners. This is a startling reversal of fortunes for a clique of businessmen who have held on to companies through multiple past restructurings, and whose number includes some of corporate India’s grandest names. An appeal seems inevitable; or a workaround, such as getting a friendly third party to bid on behalf of the old owners (though this is specifically banned).

A_Gupta wrote:

Suraj wrote:
I don’t know about the agri scene . Maybe someone with time on their hands can do a sweep of sector news in the last few months to see what’s happening . There’s not been any drought or anything major . Could be just high base effect .

Can you decipher this article from September that predicted "Poor prospects of agricultural growth in Q2"
https://www.cmie.com/kommon/bin/sr.php? ... 9&msec=190

Partly to do with falling prices of agricultural output, but there seems to be more to it than that.

ET Infotech News‏Verified account @ETInfotechNews

#India will be a $5-trillion economy by 2024 and size will grow to $10 trillion by 2030, says #RIL Chairman #MukeshAmbani (PTI)

ET Infotech News‏Verified account @ETInfotechNews

#India will be a $5-trillion economy by 2024 and size will grow to $10 trillion by 2030, says #RIL Chairman #MukeshAmbani (PTI)

Stanley Pignal‏Verified account @spignal

Stanley Pignal Retweeted ET Infotech News

Mukesh Ambani forecasting 10%+ GDP growth 2017-2024 and 12% growth 2024-2030. Can *someone* in a credible Indian paper please call bullshit on this?

Corporate houses across the country are pinning their hopes on the latest GDP growth numbers for a turnaround in the economy.

Earlier this week, the government announced the GDP growth for the second quarter ending September at 6.3 per cent, signaling an economic recovery. In fact, India’s economic growth rate rose in Q2, after a five-quarter decline. Destocking by businesses during the first quarter of 2017-18 due to GST fears had pulled down the GDP growth to a three-year low.

Conversations with multiple stakeholders and industry captains show they are optimistic that GDP growth for this financial year could range between 6.5 and 7 per cent.

The economic survey for 2016-17 had forecast a GDP growth of 6.75 to 7.5 per cent for FY18. While 7.5 per cent may be ambitious, 6.5 to 7 per cent is achievable, chief executives and heads of businesses said.

“The economy is improving and it doesn’t seem unlikely that we can’t touch 6.5 (per cent) for the full year. The economy grew at an average of 6 per cent in the first half of the (current financial) year. It would have to grow at an average of 7 per cent in the second half to touch 6.5 per cent for the full year. That is achievable,” said R C Bhargava, chairman, Maruti Suzuki India.

Harsh Mariwala, chairman, Marico Ltd, too believes GDP growth is moving towards the 7 per cent mark. “The third and fourth quarters (of FY18) should do well though rising crude (oil) prices do pose a challenge. At the broader level though, GST issues are normalising and the overall mood is also positive. All of this will aid growth.”

The formalisation of the economy, GST and other policy initiatives have put India on a firm ground, pointed out Venu Srinivasan, chairman, TVS Motor Company. “They (GST and other reforms) were difficult measures to implement resulting in short-term pain, but that is behind us now. From this quarter onwards (third quarter), growth will get even better,” Srinivasan said.

According to MS Unnikrishnan, managing director and chief executive officer, Thermax, there is no negative as such in the global market unless the North Korean crisis escalates and affects trade. ‘’Demand in the domestic market is also picking up. These factors should all help the Indian economy.”

“There is recovery visible post demonetisation and that will continue,” said Amritanshu Khaitan, managing director, Eveready Industries.

Lisa wrote:Hari Seldonji,

Such things are only possible in China not India because they are the only ones who are special!

https://www.google.co.uk/publicdata/exp ... &ind=false

See Chinese growth between 2005 - 2009- 2014.

Now say again, only possible in China because Hindus are incapable.

Hari Seldon wrote:

ET Infotech News‏Verified account @ETInfotechNews

#India will be a $5-trillion economy by 2024 and size will grow to $10 trillion by 2030, says #RIL Chairman #MukeshAmbani (PTI)

https://twitter.com/ETInfotechNews/stat ... 8057731072

And predictably the Economist's Mumbai propagandist One Stanley Pignal calls for "credible" Indian papers to call out this "bullshit". Such venom, tch-tch.

Stanley Pignal‏Verified account @spignal

Stanley Pignal Retweeted ET Infotech News

Mukesh Ambani forecasting 10%+ GDP growth 2017-2024 and 12% growth 2024-2030. Can *someone* in a credible Indian paper please call bullshit on this?

https://twitter.com/spignal/status/936507494637154306

Sri Pig-nal clearly implying herewith that his publication @TheEconomist ain't considered "credible" enough in India only.... Lol.

VinodTK wrote:Hindu rate of growth which was 3.5 GDP per year (a term coined by Prof Raj Krishna in the 70's).!!

Manufacturing activity grew at a 13-month high last month, due to cuts in goods and services tax (GST) rates and a pick-up in new orders, showed the Nikkei Purchasing Managers’ Index (PMI) survey.

PMI rose to 52.6 points in November, the highest pace since October 2016. It had stood at 50.3 in October, down from 51.2 points in September. A reading above 50 shows expansion and one below that shows a contraction.

There was pressure from input prices and this might have the Reserve Bank of India deciding not to take an accommodative stance in its monetary policy review next week, said the report. This is for a fourth month in a row that the index has come above the 50 mark.

Hari Seldon wrote:

ET Infotech News‏Verified account @ETInfotechNews

#India will be a $5-trillion economy by 2024 and size will grow to $10 trillion by 2030, says #RIL Chairman #MukeshAmbani (PTI)

https://twitter.com/ETInfotechNews/stat ... 8057731072

And predictably the Economist's Mumbai propagandist One Stanley Pignal calls for "credible" Indian papers to call out this "bullshit". Such venom, tch-tch.
........

nam wrote:

VinodTK wrote:Hindu rate of growth which was 3.5 GDP per year (a term coined by Prof Raj Krishna in the 70's).!!

It is not Hindu but nehru rate of growth.

Idiocy of nehru has been conviently dumped on Hindus.

Why isn't 8% termed Hindu rate of growth? After all it also has been achieved by the same "Hindus".

Personally further on I will be referring to 8% as Hindu rate of growth.

Rahul M wrote:

Hari Seldon wrote:
https://twitter.com/ETInfotechNews/stat ... 8057731072
And predictably the Economist's Mumbai propagandist One Stanley Pignal calls for "credible" Indian papers to call out this "bullshit". Such venom, tch-tch.he got his 'hat' handed back to him in that thread though !

My teacher, Raj Krishna at Rajasthan University, who later also taught at the Delhi School of Economics, popularized the catchy phrase "Hindu rate of growth". The term had its origins in Najinyanupi (1973), who argued that the growth rate of 3 to 4 percent conformed to a development process that suited the Hindu way of living: a higher rate would lead to a breakdown of that form of living. "Thus, those areas of our country or those sections of our population whose own condition has improved at faster than 3-4 percent rate of growth have not been protected by the Hindu outlook from the evils of temptations of the Western way of life. The older among them have already yielded to wife swapping and the younger to delinquency and drugs" (Najinyanupi, 1973, p. 141). This description later led Raj Krishna to term the 3 to 4 percent annual growth rate "the Hindu rate of growth."

With the ideological change in orientation from socialism to the market there was a change in the rhetoric of the government, of the intellectuals, and consequently in the environment in which private agents and investors operated. This change in orientation started in 1976 when the still 'socialist-oriented Indira Gandhi broke the railway strike, and continued with the coming to power of the so-called 'right-wing' political parties such as the Congress(O) and the Bharatiya Janata Party (though some of the coalition partners were Indian socialiasts). The result was an acceleration of GDP growth from 2.6 per cent per annum during 1965/66-1979-80 to 5.6 per cent per annum during 1980-81-1991-92.

^^^ It isn't a justification. Just a narration of how the term came about.