23 August 2017

  |  CBI India


India turns 70

The general view is that whilst India has made undeniable progress, there are miles to go before its real potential is tapped.

India turns 70

Prime Minister Mr Narendra Modi delivered his fourth and shortest Independence Day speech where he covered his vision for a ‘New India’ to be achieved by 2022.

Mr Modi spoke of the success of competitive cooperative federalism and the introduction of the Goods and Services Tax. He also called for a united India and underscored the need to fight the forces of corruption and communalism.

He, however, sidestepped any reference to the ongoing military standoff with China at the border but spoke triumphantly about the ‘surgical strikes’ against Pakistan in September 2016 as an evidence of India’s strength and military capability.

India has chosen to stay away from China’s high profile Belt and Road Forum citing sovereignty issues over the disputed territories of Pakistan-Occupied Kashmir which will purportedly be covered under the China Pakistan Economic Corridor.

For the first time ever, the government of India presented a mid-term review of the economy.

A number of indicators - GDP, IIP, credit, investment and capacity utilisation, point to a deceleration in real activity since the first quarter of 2016-17 and a further deceleration since the third quarter.

Achieving the high end of the 6.75-7.5 percent growth projected previously will be difficult due to appreciation of the rupee, farm loan waivers and transitionary challenges from implementing GST, says the half-yearly economic survey.

See the interview of India’s Chief Economic Adviser Arvind Subramaniam.

Meanwhile, the UK’s Foreign Secretary Mr Boris Johnson addressed the Indian diaspora in London on the occasion of India’s Independence Day. He mentioned that the UK and India shared a strong commitment to tackling global challenges jointly. Read more.

Late last month, India’s eastern state of Bihar saw high political drama with Chief Minister (CM) Mr Nitish Kumar stepping down temporarily after splitting from coalition partner Mr Laloo Prasad Yadav, who is accused of corruption charges.

The coalition had successfully halted the BJP’s inroad into the state by a spectacular victory in the state assembly elections in November 2015.  Mr Kumar was reinstated as the CM the next day after support from the Bharatiya Janata Party (BJP).

This further consolidates the sway of the BJP in yet another Indian state.

Here are other highlights of the month

Policy and economic trends

RBI cuts interest rate

Early this month, the Reserve Bank of India finally cut interest rates, bringing hope that investments will pick up from the private sector.

The repo rate- the rate at which the central bank lends short-term money to banks was cut to 6% from 6.25%.

Dr Rajiv Kumar takes over as Vice-Chairman, Niti Aayog

The Indian government recently announced the appointment of eminent economist Dr Rajiv Kumar, as the new Vice-Chairman of India’s apex economic body Niti Aayog.

He succeeds Dr Arvind Panagarhiya who stepped down to go back to his academic role at Columbia University.

Manufacturing contracts to an almost 9-year low in July

With the introduction of the Goods and Services Tax, manufacturing in India contracted to an eight and a half year low, as indicated in the Nikkei Purchasing Managers Index (PMI).

Moody’s poll suggests Indian economy to grow 6.5-7.5% over 12-18 months

India's GDP growth will remain in the range of 6.5-7.5 per cent over the next 12-18 months and GST (Goods and Services Tax) will support the momentum for faster growth, according to a Moody's poll.

Over 200 market participants, polled by Moody's and its affiliate ICRA, were confident of India's stable economic growth prospects. The view is in keeping with signs of economic recovery after the short-term negative impact of demonetisation..

British luxury car exports to India on rise

The latest figures released by the UK automotive industry this week indicate a spike in exports from the UK to India. India is now the seventh largest Asian market for UK car exports.

Exports to India grew to 1,650 units this year, moving India up from eighth place in 2016 to seventh. Indian demand for UK's premium cars rose 8.3 per cent in the first half of 2017.

Over the same period, the number of Indian-built models registered by British buyers rose by almost half (48.6 per cent) to 21,135 units.

Member Newsmakers

Tata Technologies opens new European Innovation and Development Centre in Warwick, UK

Tata Technologies, inaugurated its new European Innovation and Development Centre (EIDC) in Warwick, UK.

The EIDC is a £20 million investment in the company’s operations in the UK and Europe, following the successful growth of the business across the region.

The new building will house Tata Technologies’ engineering support services, two advanced engineering labs and a modern R&D centre that will further develop the company’s capabilities and growth opportunities in key sectors including automotive, aerospace and industrial machinery.

The centre will serve as the company’s European headquarters. The facility will hold approximately 600 staff and create more than 200 additional jobs for design engineers and programme managers — creating STEM (science, technology, engineering and math) job opportunities at all levels, from graduate to senior leadership roles.

Barclays becomes first lender to tie up with India Post

British lender Barclays became the first bank to have a national tie-up with the India Post which runs over 155,000 post offices across the country.

Santander UK ties up with Yes Bank

Santander UK has signed a memorandum of understanding with Yes Bank India's fourth largest private sector bank, designed to help boost UK-India trade and local business networking opportunities.

Infosys to acquire Brilliant Basics

Global software major Infosys announced that they will acquire Brilliant Basics, the London based digital studio. The studio will enable the company to drive digital transformation solutions, which connect its clients' systems of record to new systems of engagement. Brilliant Basics has its digital studio in various location, like Bengaluru, Pune, New York, London and Melbourne.

AstraZeneca Pharma plans to launch cancer drug in India

AstraZeneca Pharma are launching Osimertinib, a lung cancer drug, in India. The drug has been approved in over 45 countries including US, EU, Japan, China and other Asian countries.

On the Radar 

Why politics has nothing to do with economics in India

Recently, Mr Ruchir Sharma, Chief Global Strategist and head of the Emerging Markets Equity team at Morgan Stanley Investment Management spoke about Indian economy and politics.

Read more about his views on the Indian economy and policy.