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After somewhat successful 'Look East' policy promoted by Prime Minister P V Narasimha Rao to promote trade and economic relations, the Narendra Modi government has launched a similar policy to double tourist arrivals to two crore in the next 2-3 years.

As much as 14 crore Chinese go on foreign travel every year. Even if India manages to get 1% in next 2-3 year, it will be a great achievement. At present, 2.5 lakh Chinese tourists arrive in India. About 1% would meant 14 lakh Chinese tourists, director-general of tourism Satyajeet Rajan said.

"China is going to be a major focus area to promote tourism in India. The government has drawn up a major initiative. Chinese are interested in everything good in life. They have a lot of income. More tourist arrivals from China, which is one of the largest trade partners with India, will boast tourism in the country" Rajan, a 1987 batch IAS officer from Kerala, told DNA Money.

"We have decided to set aside contentious issues while promoting tourism. Somehow, we have been diffident all the while. We have huge trade deficit with China. Tourism provided one opportunity to narrow it," he said in an interview.

Of the one crore tourist arrivals in India, the top most arrivals are from Bangladesh (20 lakh) followed by United States, a distant second at 13 lakh. But three crore Indians go abroad as tourist every year. The plan is to double it first to two crore and keep on increasing incrementally by 20-25% every year. A small country like France attracts eight crore tourists annually.

Most of the arrivals are business tourists at the moment. Tamil Nadu tops the list of tourist arrivals followed by Maharashtra and Delhi. They are followed by Rajasthan and Kerala. Many Bangladeshis arrive in India as tourist in search of jobs.

Apart from China, Rajan said the government is working on a strategy to attract tourists from Russia, Gulf countries and South East Asia apart from United States and Europe. The growth of tourists from these countries happened on their own. Now, the government will focus on these countries as they have huge potential.

Even Sri Lanka has 15 road shows every year to attract tourists from India. The gulf country has 30 road shows every year. We conduct in all four road shows in a year despite the fact there are several tourist attractions with diverse culture, he said.

Asked to elaborate on how the government proposed to attract more tourists from China, Rajan said China is social media driven and a team is going to come to India to take it forward.

Stressing on importance of travel portals, he said See-trip, Alibaba's travel arm Flieggy and Mafenggo are the top three social media travel platforms. These travel platforms are self regulated. For example Mafengoo has 6,000 tourist operators, who sell the platform's tourism packages. If any major complaint is received from a tourist operator then the company is immediately blacklisted and go out of business. 
There is a need to create such a platform in India, he said. In India, at the moment there is no self regulating mechanism among tourist operators, particularly when a tourist gets cheated.

Rajan said the tourism ministry has taken up with home ministry to allow credit cards using Chinese payment system 'Unionpay'. The home ministry's security clearance is required for Reserve Bank of India to give regulatory clearance. Unionpay is like Rupay payment system. Not many Chinese have Visa or Mastercard credit cards.

The government has also embarked upon a programme to sensitise the police so as to check the menace of touts, particularly in Delhi and North India. Besides, private initiatives are being roped in for proper training of guides, who should act more like a facilitator to foreign tourists, Rajan said, adding guides are also being trained in 8-9 foreign languages, including Chinese.

Rajan said high construction cost and high taxes came in the way of lowering hotel tariffs in India. Hotel tariffs are much higher than tariffs in most of the Asian countries. GST came in the way of promoting cruise tourism in the country.

Rajan also said there was a need to create world-class recreational facilities around tourist spots like in China. Foreign Tourists spend a lot of money on travel and hence they would like to spend weeks orsometimes&nbsp;months in a particular area. For example, if someone goes to Khajuraho, a major tourist spot, the entire place could be covered in 4-5 hours and thereafter they have nothing to do there. This acts as disincentive.

In China, a huge township, including recreation parks, hundreds of cheap budget hotels, water sport and all, has been created around Great Wall of China spending millions of dollars so that tourists stay there for weeks when they visit Great Wall of China, which takes only 10% of their time spent there.

RED-CARPET WELCOME

14 crore&nbsp;– Number of Chinese going on on travel every year &nbsp; 
1%&nbsp;of the Chinese tourists would mean 14 lakh visitors to India &nbsp; 
20 lakh&nbsp;– Bangladeshis visit India annually, the highest &nbsp; 
13 lakh&nbsp;– visitors from US to India annually &nbsp; 
3 crore&nbsp;– Indians go abroad every year &nbsp; 
20-25%&nbsp;– Govt eyes annual increase in no. of inbound tourists &nbsp; 
4&nbsp;– Roadshows India conducts every year to attract overseas tourists

 
DNA Money first published <a href="https://www.dnaindia.com/business/report-centre-looks-east-to-boost-tourism-2683744">this</a> article on 8th November, 2018.

Modi govt wants to double tourist arrivals; Not West, this is what India is eyeing

Convert waste into wealth is truly put into practice by a Delhi firm, which plans to go big by converting used edible oil into bio-diesel, helping the government to save huge foreign exchange. This will also help the country go green and save people from health hazards.

Though bio-diesel is already manufactured in India as a by-product from residual in refining crude palm oil for edible purposes, mainly in southern states, it is for the first time used cooking oil is being converted into bio-diesel in India.

A young third generation businessman and first-generation manufacturer, Shiva Vig has set up a company in Delhi BioD Energy India, a waste management company, that will convert 100 tons of used cooking oil a day into bio-diesel.

“The trial production will begin this month end and will go on full stream by next month,” Vig told DNA Money.

The idea behind this project is waste management, he said, adding it will also help in reducing dependency on imported crude oil, fighting pollution, managing illegal discharge of oil into a drainage system that contaminates water and clogs drainage system. Above all, it will check adulteration of edible oil.

Repeated use of cooking oil is extremely harmful to health. Various medical studies show that used oil when consumed, lead to life-threatening diseases like Parkinson’s, Alzheimer’s, heart disease, cholesterol and many more.

BioD is creating a state-of-the-art collection network for used cooking oil in Delhi-NCR and will soon expand to other parts of India to source raw material.

Prime Minister Narendra Modi government has come out with a biofuel policy, which aims to achieve 0.5% blending of biodiesel in diesel by 2020 and 5% by 2030.

According to The Statistics portal, the world production of biodiesel is 2,80,00,000 tonne and India’s contribution to it was a mere 2,00,000 tonne.

But the potential for used cooking oil collection in Delhi NCR is huge. As per the CARE report, the average consumption of oil in India is 14.4 kg per person per annum. Total consumption in Delhi alone is 6,76,800 tonne per year. Even a 10% collection will result in a sizeable production of bio-diesel. India consumes 82 million tonne of edible oil annually.

China produces lakhs of tons of bio-diesel from what they call ‘gutter oil’. China collects oil sludge in gutters and converts them into bio-diesel, which not only unclogs the drains but also produce critical fuel. While used cooking oil is easiest to convert into bio-diesel followed by animal fat. Acid oil processing into bio-diesel is the most difficult. While processing edible, about 3-5% acid oil is produced.

The higher the free fatty acid (FFA), the more expensive is the process to convert into bio-diesel. In bio-diesel FFA is around 5%. In used cooking oil, FFA is around 15-16 per cent and it has to be brought down to 4-5% for making it into bio-diesel. In case of animal fat, FFA is 40% and in acid oil, it is as high as 80%.

Vig said he is also toying with the idea of setting up an integrated park in collaboration with a Finland professor to extract tallow from dead cattle and buffaloes and converting them into bio-diesel.

Earlier, the government had allowed the sale of bio-diesel only to oil marketing companies. The government has now relaxed rules to allow the sale of bio-diesel to private parties as well. Transport operators, rural pump sets and diesel generators use biodiesel extensively as it is cheaper than diesel.

Both import and export of biodiesel is banned in India, which imports 80% of crude oil. A 5% blending of bio-diesel will save a foreign exchange of nearly $10 billion annually.

Vig is setting up another plant of similar capacity in Dubai for exporting bio-diesel from there to Europe. Getting used cooking oil and animal fat is no problem there. In India used cooking oil is quite expensive and is procured at around Rs 30 per litre in view of huge demand from wayside restaurants and for adulteration.

Source: DNA Money

Convert waste into wealth is truly put into practice by a Delhi firm, which plans to go big by converting used edible oil into bio-diesel, helping the government to save huge foreign exchange.&nbsp;


Waste into wealth? A Delhi firm to convert 100 tons of used cooking oil a day into bio-diesel

The 13th annual summit of Group of 20 (G-20) in Argentina capital Buenos Aires, to be held in November end, is important for emerging economies like India as it comes at a time when trade war is threatening to derail global growth and the imbalance arising in the world economic order.

Key agendas will be job creation, infrastructure development and removing hunger which is critical and vital for emerging economies like India. However, disruptive trade war and increasing protectionism by advanced economies are expected to take centre stage.

India will press for the need to stabilise the surging global oil prices and rein-in currency volatility in the face of appreciating dollar due to monetary tightening by the US Federal Reserve.

With global trade witnessing a sharp decline and estimates suggesting a shave off of $2 trillion in global trade, India, China and other emerging economies are likely to spearhead the efforts to preserve globalisation that has helped in taking millions of people out of poverty world over in the last couple of decades.

The 2018 G-20 Summit in which world leaders, including US President Donald Trump, Chinese President Xi Jinping and Indian Prime Minister Narendra Modi will participate, will discuss among other things the future of work (jobs), infrastructure for development and sustainable food future.

A country like India needs at least $1 trillion investment in infrastructure in the next five years and the summit could evolve ways to ensure an increased flow of funds for infrastructure development particularly from pension funds and insurance, which are flush with funds and waiting for an opportunity to make long-term investments.

With China growth slowing, India becomes an automatic choice for investments in infrastructure. The IMF quota reforms too will occupy the centre stage.

The G-20 is composed of 19 countries (Germany, Saudi Arabia, Argentina, Australia, Brazil, Canada, China, South Korea, United States, France, India, Indonesia, Italy, Japan, Mexico, Russia, the United Kingdom, South Africa and Turkey), as well as the European Union. Host, President Mauricio Macri of Argentina will preside over the summit.

Rajasthan Board of Revenue Chairman, V Srinivas, a senior IAS officer, who has served in the finance ministry and IMF, succinctly explained how G-20 has become an effective multilateral body to deal with emerging issues through the formulation of policies in which India had a pivotal role.

“G 20’s singular success has been in tactfully tackling recession during the last one decade,” he said. But when asked whether it has done enough to tackle jobless growth that followed 2008 crisis, Srinivas admitted this remained a challenge though some efforts have been made.

Former economic affairs secretary Shaktikanta Das, who is currently India’s Sherpa to the G-20, said it was precisely for this reason jobless growth is a major agenda item at the summit to be held from November 30 to December 1.

The summit will also take up the issue of cryptocurrencies, which has increasingly posed problems to G-20. There cannot be a single regulator like a central bank for sovereign currencies as cryptocurrencies transcends borders and managed by those who do not believe in sovereign rule of law. Currently, it is used by people who do not believe in any authority. The only earning in crypto-currency is capital gain. Bitcoin started with a value of just $400 in 2009 and went up to $20,000 and now it had fallen to $6000. So gains and losses come from its value at a given point of time.

Former RBI deputy governor Usha Thorat, who was in-charge of currency in the central bank, warned crypto-currency has several pitfalls. That’s why many countries like India are wary of it. Crypto-currency has security concerns and money-laundering issues.

It can also be used for terror funding, havala transactions, smuggling and other nefarious activities, including tax evasion and avoidance.

Watch This Zee Business Video Here:

<iframe allow="accelerometer; autoplay; encrypted-media; gyroscope; picture-in-picture" allowfullscreen="" frameborder="0" height="315" src="https://www.youtube.com/embed/g6u7CUdXS_Q" width="100%"></iframe>

Former G-20 sherpa and erstwhile planning commission deputy chairman, Montek Singh Ahluwalia is right in saying G-20 needed to repeat the performance to save the world trading system as it did 10 years ago to save the global financial system after 2008 global crisis.

The 13th annual summit of Group of 20 (G-20) in Argentina capital Buenos Aires, to be held in November end, is important for emerging economies like India as it comes at a time when trade war is threatening to derail global growth and the imbalance arising in the world economic order.


India at G-20 summit: As trade war threatens to derail global growth, this is what Centre is targetting

As air quality dips in the atmosphere further even before Diwali in National Capital and northern parts, there appears to be yet another major concern that is going unnoticed — poor quality of air inside home, offices and commercial complexes in the country.

Atmospheric poor air quality is no doubt bad, what is worse is the air one breathes inside the building, which also needs to be fixed and the common man, particularly in India and China, seems to be oblivious to this danger, caused more by carbon dioxide.

Cooking, room heaters, paints, air conditioners, smoke, dust, insecticides and so on cause pollution inside buildings, which are equally harmful and these are more dangerous than air pollution outside as people generally spend more time inside the buildings, several global studies have indicated.

This is precisely the reason that Europe, which has much better air quality compared to countries in Asia and elsewhere, has greater demand for air purifiers and other appliances that enhance air quality indoors.

Indoor plants could be one solution to reduce carbon dioxide level, but they occupy much more space as hundreds of plants would be required to do the job of one air purifier, besides space come at a premium in cities.

High levels of carbon dioxide inside homes, though not fatal, are a major cause for headaches and lethargy. Indians are poor athletes as their lung power is less due to air pollution both inside and outside homes.

With the Supreme Court restricting the use of fire crackers, some new age entrepreneurs have begun pioneering work to fix this gigantic problem.

Breathe Easy, a start-up founded by Barun Aggarwal is working on improving indoor air quality in large commercial buildings, besides offering solutions like air purifiers and quality masks to policemen and public to overcome this problem.

Aggarwal, who is also CEO of this company, is into research and has won a patent. He basically provides portable solutions, air purifiers for homes and cars, face masks, consumer-grade sensors and undertakes large projects for malls, hospitals, hotels and offices.

Watch Zee Business video here:

<iframe allow="autoplay; encrypted-media" allowfullscreen="" frameborder="0" height="315" scrolling="no" src="https://www.youtube.com/embed/LklJLrGmsnQ" width="100%"></iframe>Agarwal told DNA Money that while fixing the quality of air outside has to be a government initiative, fixing it inside the building has to be a private initiative. In India, a new concept of international quality certification of buildings has been initiated in this regard.

“The focus is now seven concepts in human well being in the environment. Indian building council in collaboration with US building council has started what is called India health and well-being standard. An Indian Green Council under the auspices of Confederation of Indian Industry (CII) has been set up for certification,” he said.

The certification is given after examining, air quality, water quality, nutrition standards in the canteen, lighting levels, sound, thermal comfort, fitness and mind.

At present, there is the government’s Green Griha certification, but its standards are very low and it does no good particularly in keeping under check air quality and carbon dioxide levels in buildings.

Under the new certification done by Indian Green Council, only two buildings have qualified for it in the National capital.&nbsp;One in Nehru place and another in Noida. No buildings in Mumbai has so far qualified and for that matter in any other cities in India. Most of the top ten polluted cities in the world are in India.

“If we wish to be healthy, we need to make sure that the air we breathe has PM2.5 and PM 1’s (suspended particles in air) under 15 ug/m3 and if we wish to reach our full potential in regard to cognitive ability then in addition, we need to breathe air that had carbon dioxide under 600 ppm and total volatile compounds (VOCs) under 50 ug/m3,” Kamal Meattle, chairman emeritus of Paharpur Business Centre, told DNA Money.

Pharpur Business Centre building in Nehru place is one of the two buildings that has got Indian green council certification. Carbon dioxide level in the atmosphere is around 400 parts per million or ppm, while inside buildings it goes up to 1000-1500 ppm. Anything beyond 700, makes one feel drowsy, lethargic and suffer a headache. It becomes fatal if it is beyond 40,000 ppm.

“One can increase one’s cognitive ability by 299% if we follow this. We should check out saturation blood oxygen levels by using a pulse oximeter. The readings should be 98-100%,” Meattle said.

There is a Harvard study available to indicate how important it is for well being of people to have improved air quality and low carbon dioxide level both inside and outside buildings. 
&nbsp;

Under the new certification done by Indian Green Council, only two buildings have qualified for it in the National capital.&nbsp;One in Nehru place and another in Noida. No buildings in Mumbai has so far qualified and for that matter in any other cities in India. Most of the top ten polluted cities in the world are in India.


Forget outdoor pollution, check the shockingly toxic air you breathe here

If a small country like Israel can feed the entire world, India, now among the top producers in fruits and vegetables, can more than double its horticulture produce by adopting drip irrigation extensively in the country. Nearly half of India's 142 million hectares of arable land, to be precise 69.5 million hectares, can be brought under drip irrigation, according to official estimates.

This if adopted, farm production in drip irrigated land would go up 40% on an average, labour cost will reduce 40% and use of scarce water would be lowered by at least 40%.

According to director of Ludhiana-based Central Institute for Post Harvest Engineering and Technology (CIPHET) R K Singh, if the yield, for example, of tomato is 100 tonne per hectare in a conventional farm, it would be more than 200 tonne with drip irrigation. In fact, in a fortified greenhouse, it could be much higher.

India's food grain production is estimated to be around 285 million tonne and horticulture around 380 million tonne this year. "It is true, supply is more than demand in farm produce in India. Post-harvest management, marketing and better storage are critical for ensuring that farmers' interests are protected by ensuring remunerative prices," Singh told DNA Money.

Barring clay soil, drip irrigation can be used in black cotton soil and few other types of soil. Now, drip irrigation is being tried out for food grain production as well like wheat and rice at IARI. It is now only in an experimental stage and results have so far been good. At the moment, drip irrigation is suited for horticulture production.

If the soil is soaked in water, the plants find it difficult to breathe and hence the yield is less, Singh said adding drip irrigation is so cost effective that farmers may not even require subsidies. Farmers prefer to soak the plants in water as they do not have to water them for at least a week. In case of drip irrigation, every alternative day, they will have to water plants.

Singh said in a wide-ranging interview that simple techniques like air-cooled storage rooms and shrink- wrapping using plastic material can improve the shelf life of fruits and vegetables by 10-15 days, thereby fetching better prices for farm produce.

Ideally, cold storage for multi horticultural crops should come up in every blocks and talukas for farmers as a long-term solution. Besides, food processing units suited for processing local crops have to be encouraged. Processed food made out of excess horticulture production will help farmers get a better income.

Former member of the erstwhile planning commission and agriculture economist Abhijit Sen said food inflation is low in India because rural demand is not picking up. Rich farmers do not want to buy more food grains and horticulture products as they now want more processed food, which is not adequately available.

Agricultural expert Ashok Gulati is of the view that cropping pattern needs to change. There is no justification for Maharashtra to produce sugar cane and rice in Punjab, as these crops are depleting the water table. Ideally, these crops should be grown in eastern UP, Bihar, West Bengal and Assam, where water is in abundance. R K Singh agrees with this viewpoint and said farmers in Punjab grow rice because they are assured of minimum support price, which is quite attractive.

In fact, the Punjab farmers are aware that they will get more income if they switch over to fruits and vegetables but it required some effort and marketing, Singh said. Also, growing Amla can solve the problem of salinity in soil due to excess use of water.

The second green revolution in food grains can now come from only eastern and north-eastern regions, as productivity in food grains has reached a plateau in Punjab, Haryana and Andhra Pradesh. If only irrigation is regulated in eastern India, green revolution can be replicated. Food crops, particularly rice, are water guzzlers, Singh said.

Amul model of cooperatives, contract farming, and multi-brand retail needed to be encouraged to ensure remunerative prices for horticulture and improved marketing, added Singh.

Former chief statistician and planning commission advisor, Pronab Sen felt Amul model of cooperatives is not getting replicated in horticulture because a farmer is the owner of cow whereas he is not the owner of the land. Unless tenancy rights are strengthened and improved, there will be no incentive for tenancy farmers to adopt the Amul model of cooperatives in horticulture.

Watch This Zee Business Video Here:

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Singh said contract farming is gradually spreading in India, particularly in horticulture and poultry and there are several examples of success stories. But massive efforts are needed to spread them across the country. Now, technology is there, money is there. Farmers, however, will have to be incentivised to adopt them.

Source: DNA Money

If a small country like Israel can feed the entire world, India, now among the top producers in fruits and vegetables, can more than double its horticulture produce by adopting drip irrigation extensively in the country.


Good news for farmers! How India can more than double horticulture produce

Low CPI inflation at 3.8% in September may be welcome but this does not mean all is well on the price front as wholesale inflation increased to 5.13% in the same month, indicating the Reserve Bank of India might have to resort to a rate hike ahead of its December monetary policy.

With domestic fuel prices surging ahead and global crude oil prices remaining high over $80 a barrel coupled with free fall of rupee and widening current account deficit, the situation is not all that comfortable for the central bank to continue with the pause in repo rate hike during the current month’s monetary policy.

In addition, the monetary tightening by the US Federal Reserve is making dollar appreciate and aggravating the woes of emerging economies like India.

The RBI has already indicated during the unveiling of last monetary policy that there cannot be any monetary easing but only monetary tightening as we go along.

The RBI’s Monetary Policy Committee decided to keep policy rates on hold, contrary to the consensus view in the market in the October policy.

The short-term repo rate was kept unchanged at 6.5% and accordingly, the reverse repo and marginal standing facility rates stood at 6.25% and 6.75%.

Repo rate is the rate at which the central bank lends money to commercial banks in the event of any shortfall of funds. It is used by monetary authorities to control inflation. Reverse repo rate is used by the central bank to borrow money from commercial banks within the country. An increase in reverse repo rate will decrease the money supply and vice-versa, other things remaining constant.

According to Crisil Research, the decision to hold rates in October policy is based on the factors to observe the evolving situation on the inflation front, which was lower than expected and due to a sharp slowdown in food inflation. Secondly, the RBI wanted to support liquidity in the system, which had come under pressure recently.

Former NIPFP director and 14th finance commission member, M Govinda Rao told DNA Money that all is not well on the inflation front, even though CPI inflation is within the range.

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“Oil prices are a problem. High domestic fuel prices have a cascading effect on prices as transport costs go up for all commodities. Also, there is 9% shortfall in rainfall this monsoon season, so it is to be seen if it would have an impact on agri production,” he said.

“True food inflation is still low and hence CPI inflation is low. But when we look at wholesale inflation the picture is not all that good. CPI inflation comes with a lag effect,” Govinda Rao said.

“With oil prices surging and rupee depreciating sharply, my fear is that RBI might have to resort to yet another rate hike and it is quite possible that the central bank might not wait till its December monetary policy,” he pointed out.

Rao is of the view GDP growth will anyway slowdown in the second half of the year because of various other factors including the woes on the trade front. The euphoria over 8.2% GDP growth in the first quarter of this financial year was unwarranted. The second quarter is likely to be close to 7.5% and in the subsequent two quarters, it is expected to be around 6.5-6.7%. Overall, India may end up with around 7.3-7.5% GDP growth this fiscal, which will be nowhere near 8% as projected earlier.

Devendra Kumar Pant, chief economist, India Ratings &amp; Research (Fitch Group), said, “Sequentially, out of three major groups, primary articles inflation increased sharply in September and fuel and light, and manufactured inflation moderated in September.

“Non-food manufacturing growth moderated consecutively in the second month; even in CPI inflation, the same trend was observed. However, it has remained more than 4% in the last five months.”

“It suggests though the demand conditions in the economy have remained strong, the pace of demand growth is gradually declining,” said Pant.

The prevailing market price for most kharif crops at major mandis has remained lower than the MSP, suggesting procurement hasn’t picked up,” added Pant.

“The future inflation trajectory would depend on the response of mandi prices with respect of new MSP and the movement of crude oil price and value of the currency,” he added.

With domestic fuel prices surging ahead and global crude oil prices remaining high over $80 a barrel coupled with free fall of rupee and widening current account deficit, the situation is not all that comfortable for the central bank to continue with the pause in repo rate hike during the current month’s monetary policy.


RBI rate hike ahead of monetary policy meet likely; may hurt overall growth

India, which is the second largest food producer globally, is expected to witness yet another good crop this year because of near normal monsoon for the third consecutive year. But for farmers, who account for more than 50% of the country’s 1.3 billion population, the possible good harvest may not be really bringing in the good news because of falling income and profitability.

According to Crisil, farm profitability has remained stressed despite normal rains. It is a mixed bag for rural income as luckily the non-farm sector is seeing better days. “There are some spoilers,” Crisil chief economist D K Joshi said, adding “rainfall distribution has been patchy and farmer income is down.

The good news is that rural non-farm side is seeing better days. Also, given healthy overall production, food inflation might stay contained.” The south-west monsoon has virtually ended with a 9% short of the long average which is considered normal by the meteorological department.

Despite bumper food grain and horticulture production, farm income has been falling during the last two years. Doubling farm income by 2022 seems to be elusive.

As it is average farm income is as low as Rs 20,000 a year and even doubling does not make much sense. The income is low despite India producing a record 275 million tones of food grain and a record 375 million tones of horticulture in 2017. Last year Rs 90,000 crore worth of fruits and vegetables were lost due to wastage, poor handling and transportation and poor post-harvest facilities like cold storage.

Agricultural economist Abhijit Sen, who was formerly a member of erstwhile planning commission, told DNA Money that doubling farm income by 2022 is virtually ruled out. This year output data is not yet available to indicate if farm income has gone down.

But in 2017 farm income did go down despite good farm production because of lack of demand. In other words, supply was more than demand. In India, the problem is 70% of demand for farm products came from rural area and if farm income does not go up demand too will not be there, he said, adding rich farmers, who can afford, want more of processed food and hence there is a need to step up food processing industries in the country.

One way is to step up farm exports, he said adding, unfortunately, global prices of farm products are less than domestic prices now so India is not competitive in agri exports. Until 2013 India had an advantage in exports as agri prices were lower than global prices.

The last time India witnessed good monsoon was from 2010-13, which saw four consecutive years of good monsoon when annual farm growth recorded a good average of 4.7%.

This time the average farm growth might not be high as the government resorted to demonetisation in November 2016, the first of the three years of good monsoon. This demonetisation came at a time when farmers were rejoicing good monsoon after two years of severe drought.

Also demonetisation in November that year came at a time when farmers were harvesting a good kharif crop and sowing for the rabi crop. The farmers were starved of cash when they required the most, resulting in the overall farm growth clocking around 2% that year despite good monsoon.

Despite normal rains, there are pockets of stress this monsoon season. Key kharif growing states like Gujarat, West Bengal and Bihar are hurt by the erratic monsoon, while six others, Maharashtra, Rajasthan, Andhra Pradesh, Madhya Pradesh, Uttar Pradesh and Karnataka are seeing “pain points”, Crisil analysis said.

The worry is now about the rabi crop because Gujarat, West Bengal and Maharashtra have deficient reservoir levels. Crop-wise, there is a strain in ground nut, cotton, tur, jowar and bajra.

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Advanced estimates indicate that jowar and bajra production may be down 10-15% this year, groundnut down 16%, cotton down 7% and tur down 4%. “Secondly, calendar 2018 is turning out to be another year where farmer incomes have not seen a material pick-up. This is despite government estimates of marginally higher kharif output, Crisil said.

Source: DNA Money

India, which is the second largest food producer globally, is expected to witness yet another good crop this year because of near normal monsoon for the third consecutive year.


Monsoon normal in India, but agri income set to be hit; farmers may not benefit fully

At a time when India is at a take-off stage to sustain a high 8% economic growth for a decade or two, the era of trade as an engine of growth as prescribed by the World Trade Organisation (WTO) seems to be at crossroads. This implicit warning came from the United Nations Conference on Trade and Development (Unctad).

Its latest 2018 Trade and Development report said in the absence of a strong global demand, trade is unlikely to act as an independent engine of global growth. A sharp escalation of tariffs and heightened talk of a trade war will only add to the underlying weakness in the global economy, the report said adding many countries including India are operating below potential.

“The world economy is again under stress, said Mukhisa Kituyi, Unctad secretary-general. Immediate pressures are building around escalating tariffs and volatile financial flows that are threatening global stability. The paradox of 21st-century globalisation is that ? despite an endless stream of talk about its flexibility, efficiency and competitiveness—advanced and developing economies are becoming increasingly brittle, sluggish and fractured, the Unctad report said.

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There are opinions emerging among top economists that post-second world war multilateral system is now an artefact of a bygone era. The new world order that is currently emerging will be defined less by shared principles, and more by the whims of individual leaders and governments. The ties that bind countries together will not be fully severed, nor will they create the conditions for true multilateralism, which meant there are possibilities of more trade wars, world’s opinion maker Project Syndicate said in one of its articles.

Unctad feared financial chicanery is back in the economic driving seat and political systems are drained of trust and this was happening when inequality was widening. The WTC, too, has cut the outlook for global commerce through 2019 and warned that tension between major trading partners increasingly threatens economic growth.

Global trade growth will slow to 3.9% this year and 3.7% next year, compared with 4.7% in 2017, WTO said revising its April forecast of 4.4% in 2018 and to 4% in 2019, respectively.

“Rising trade tensions pose the biggest risk to the forecast, but monetary policy tightening and associated financial volatility could also destabilise trade and output,” WTO director-general Roberto Azevedo said in a statement “More than ever, it is critical for governments to work through their differences and show restraint,” Azevedo said adding a full-blown global trade war would knock around 17% off global trade growth, and 1.9% off GDP growth.

WTO’s 2001 Doha development round of trade negotiations still in a limbo indicated all is not well in promoting trade as a major source of economic development. The major stumbling blocks to negotiations are the US and European Union. FIEO director general Ajay Sahai told DNA Money that “globalisation and multilateralism are certainly under threat now.”

The impact of trade on growth will vary depending on how much it is dependent on exports. In India, the impact will be less because its growth is less export-oriented. Globalisation detractors say the free trade was creating serious imbalances. They should know that the problem is not free trade but the emergence of few companies becoming monopolies.

Unctad’s research also shows, for both developed and developing countries, integration into global value chains correlates with declining shares of domestic value added in exports. Also, the share of actual production in domestic value added has declined. Free trade is one of oldest policy prescription for rapid growth right from the days of classical economist Adam Smith.

Even since WTO came into existence in particular free trade arguments have been championed more vigorously by the majority of global institutions, IMF, World Bank, WTO, OECD and so on. Rapid economic growth was also witnessed by export-oriented economies in Asia like Japan in 1950, South Korea in the 1960s and 1970s, then Asian tigers, and China in 1990s and 2000s.

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India too witnessed rapid growth for 4-5 years because of trade. Though there are trade wars and increasing protectionism among advanced economies, some countries like India could still benefit from the trade.

Source: DNA Money

At a time when India is at a take-off stage to sustain a high 8% economic growth for a decade or two, the era of trade as an engine of growth as prescribed by the World Trade Organisation (WTO) seems to be at crossroads. This implicit warning came from the United Nations Conference on Trade and Development (Unctad).


Trade war: India operating below potential; here is why

Prime Minister Narendra Modi, who had said in Davos that India would become a $5 trillion economy by 2025, has now revised it. Last week, he said India would achieve the feat by 2022. Currently, the size of the Indian economy is $2.6 billion. However, economists say the target is over-ambitious, if not impossible, given the global and domestic economic situation.

Though the Indian economy clocked an 8.2% GDP growth in the first quarter of this fiscal, many economists have forecast a slowdown in the second of half of this year in the wake of the global slowdown, trade war, strained fiscal and current account deficits, falling rupee and inflationary pressure.

World Bank has forecast India’s growth at 7.3% in 2018-19 and Reserve Bank of India 7.4%. The rapidly worsening global economic situation has forced a few others to forecast a growth rate of below 7% for India this financial year.

A Confederation of Indian Industry (CII) survey of about 200 companies this week said a majority of 64% of respondents felt that GDP growth will be in the range of 6.5% to 7.5% in 2018-19. In CII’s business confidence index report, about 28% of the respondent companies saw the GDP growth for July-September 2018 at 6.5-7%.

Renowned international economists Nouriel Roubini and Brunello Rosa in a recent article have painted a gloomy picture for the global economy for the next couple of years. They say by 2020 the conditions will be ripe for a global financial crisis because the US is running large fiscal deficits and China is pursuing loose fiscal and credit policies.

They warned that unlike in 2008 crisis, governments lack the policy tools to manage it and the situation would be worse than 2008.

If India were to become $5 trillion economy even by 2025, it will have to grow over 10% and to be precise 10.6%, which, according to NIPFP economist N R Bhanumurthy, is certainly over-ambitious if not impossible.

A simple calculation shows that if India were to grow at 7.4% that is projected by RBI this year and that is sustained over the next 7-8 years, then India will reach $5 trillion by 2027 at current prices. Even this 7.4% growth look difficult this year, and with global recession looming large India might not be able to sustain high GDP growth at least for the next few years.

If India were to become $5 trillion economy by 2022, then India will have to grow by at least 14.2% annually next four-five years, which perhaps no country has achieved so far. Even China has not clocked beyond 12% over a period of a few years.

Given the external and domestic condition even 10% growth is difficult for India in the foreseeable future, Bhanumurthy told DNA Money, adding $5 trillion certainly looks difficult to achieve even by 2025.

India is now that one of the large open economies and hence the contribution of external sector to growth is around 25%. Given any disturbance in the external situation as it is now, will knock out 25% of growth and that is very substantial. I think we need to be a little more careful in projecting such GDP numbers, he said, adding achieving the goal with just domestic spurt is almost impossible.

Also, with the US economy not growing beyond 4% in best of the times, and China now in the process of cooling down its economy by gradually slowing down its growth in the coming years, the chances of India largely depending on foreign trade to boost growth further will be increasingly difficult.

To achieve double-digit growth, which is essential to become $5 trillion economy by 2025, India would have to pursue export led growth like China, where 40-45% of GDP was because of exports. India’s former chief statistician Pronab Sen said India is far from it, at least in the foreseeable future.

Crisil chief economist D K Joshi said Crisil forecast “do not support double-digit growth. On a continuous basis, India can grow at 7.5-8% because of structural reforms carried out by the Modi government”.

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Another former chief statistician, TCA Anant, however, said double-digit growth is in the realm of a possibility and if China has done it, India too could do it.

&nbsp;

Source: DNA Money

Though the Indian economy clocked an 8.2% GDP growth in the first quarter of this fiscal, many economists have forecast a slowdown in the second of half of this year in the wake of the global slowdown, trade war, strained fiscal and current account deficits, falling rupee and inflationary pressure.


Economy at $5 tn? PM Modi sets mission impossible target?

Finance minister Arun Jaitley may be confident of meeting the fiscal deficit target of 3.3% of GDP this fiscal to please global credit rating agencies, but it may lead to contraction of public capital expenditure, which is already low in GDP terms when compared to the previous year, fear experts. Analysts said the trend in recent years to lower public capital expenditure does not augur well for the economy. In 2017-18, the Union Budget provided for public capital expenditure of 1.2% of GDP, which has come down to 0.9% of GDP in this year’s Budget.

The government made a major amendment in this year’s finance Bill, which went largely unnoticed. It has inserted provisions in the Fiscal Responsibility and Budget Management (FRBM) Act to allow higher than mandated borrowing and possibly spending, till the 2024 Lok Sabha election cycle. In an ideal fiscal situation, tax and non-tax revenue are used for administrative expenses and capital receipts, including market borrowings, are used for infrastructure expenditure.

The amendment ensured that the government will no longer have to report revenue deficit numbers and debt limit will run parallel to fiscal deficit target. Revenue expenditure usually reflects the consumption expenditure of the government. “No one is questioning the government’s ability to achieve 3.3% of GDP fiscal deficit target this year. My question is about the composition of fiscal deficit rather than the headline fiscal deficit,” N R Bhanumurthy, economist with National Institute of Public Finance and Policy, said.

As per the original FRBM Act, over a period of time government borrowing is to be utilised for capital expenditure only and the consumption expenditure is to be fully met by revenue mop-up. That’s why FRBM proposed that revenue deficit be brought to zero and fiscal deficit to 3% of GDP. The deficits are met by borrowing.

“The finance Bill passed this year clearly states there will be only fiscal deficit and public debt targets in FRBM. This means the government has indirectly stated there will be no concept of revenue deficit hereafter,’ Bhanumurthy told DNA Money. “This in my view is not expansionary. This meant shifting of expenditure from capital to consumption. Whenever there is fiscal stress, the first victim will be capital expenditure, which is not good for the economy,” he said.

Though there is some stability in expenditure this fiscal, there is a lot of uncertainty over revenue. As it is target of Rs one lakh revenue collection from GST every month has not happened so far. With the downward revision of GST rates periodically, Rs one lakh target will only be elusive for some more time. “At the moment there are pressures. We need to see what kind of election pressures are there. Ultimately the public expenditure will become the fall guy, Bhanumurthy said.

“Fiscal consolidation is not fiscal compression. Fiscal consolidation should always lead to higher growth provided the expenditure switching mechanism does not lead to expenditure compression mechanism, which will lead to contraction rather than expansion of the economy,’ he said. CARE chief economist Madan Sabnavis told DNA Money that fiscal deficit target can be met this year only through public expenditure compression with revenue targets slippages on GST and disinvestment fronts.

Crisil chief economist D K Joshi said the twin deficits � fiscal and current account—which had improved under the current government, have started reversing from last fiscal. The runaway rise in oil prices could stir inflation scourge back to life and impact other macro indicators too. 
A Crisil report estimates every $10 per barrel increase in crude oil price can raise India’s fiscal deficit by 8 basis points as a percentage of GDP and similarly current account deficit by 40 basis points.

The free fall of the rupee could only worsen the situation, with the country importing 80% of its crude oil requirement, analysts said.

Source: DNA 
&nbsp;

Finance minister Arun Jaitley may be confident of meeting the fiscal deficit target of 3.3% of GDP this fiscal to please global credit rating agencies, but it may lead to contraction of public capital expenditure, which is already low in GDP terms when compared to the previous year, fear experts.


Centre set to meet fiscal deficit target, but this spend faces axe

The government’s hasty measures to stem the rupee slide has not paid off as the currency weakened further by at least 1% to over Rs 72.97 to a dollar as the new week began. Analysts have warned against such actions as it’s not just the rupee, but other emerging market currencies too have depreciated against the strengthening dollar.

The rupee has been appreciating over the last 3-4 years due to government policies which also led to huge imports as well. Some course correction was therefore needed to reverse the overvalued rupee.

Analysts fear that government appears to be panicking which is not good at it sends a wrong signal to both domestic and foreign investors.

For the last four-and-a-half years, India lost the golden opportunity to reform exports in view of a global recovery.

Instead, according to former commerce secretary Rahul Khullar, the government implicitly pursued strong rupee policy, which was not good for the economy.&nbsp; “This resulted in real rupee value appreciating nearly 20% over the past 3-4 years because the government felt that stronger rupee meant a stronger economy,” said Khullar. Analysts said adding the bonanza that the government had due to lower oil prices was unfortunately frittered away.

Former MSME secretary and director general of foreign trade, Anup Pujari, however, said sharp rupee depreciation and widening current account deficit are double-edged weapons. He told DNA Money that it is a very good thing that has happened to India’s exports.&nbsp;

“One immediate example that comes to my mind is sugar. India had a bumper production and global prices are conducive. This provided an opportunity to make a kill on sugar exports,” said Pujari.

He agreed that oil imports are posing problems but the government is sitting pretty because it is getting additional revenue. “Also energy cost for industry is hardly 4-5% barring energy-intensive aluminium. So overall, it should not be inflationary,” added Pujari.

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The current account deficit is widening because of two reasons — demonetisation and hasty rollout of goods and services tax (GST). These measures impacted the informal sector badly, which accounted for nearly 80% of the jobs in the country.

India‘s CAD has been hit on both counts - low exports and high imports. But this does not mean the government should make efforts to control imports. Instead, it should step up exports through massive reforms, take steps to attract labour-intensive export units which are shifting base from China. At the moment most of them are going to Vietnam, Cambodia, Bangladesh and so on.

Both Khullar and Federation of Indian exports organisation are saying that import controls will not help in finding a permanent solution to tackle the problem. India needs to boost exports.

The government recently announced measures to attract additional capital inflows of $8-10 billion to manage the external situation. It also eased external commercial borrowing norms.

Kotak Mahindra Bank economist Upasana Bharadwaj was not sure how much capital flow will come from these measures and felt no panic reactions were needed at this stage. The market sentiments and a further slide in rupee have proved this point.

“I am puzzled by these measures since they seem to be sending out wrong signals,” Pronab Sen, former chief statistician told DNA Money.

The best way to stem the rupee slide is to stop the panic, he said adding that the government’s measures to mop up $8-10 billion are sending wrong signals to investors. “This is a sort of self-goal,” he said, adding the government should allow the market to tide over the situation.

The appreciation of rupee value has also contributed to cheap imports during the last 3-4 years, which has now started showing up. This has resulted in widening trade and current account deficit, Sen said.

More than demonetisation, the rollout of GST had badly impacted small exporters, who account for nearly 45% of India’s exports. The refunds are not forthcoming quickly and this has starved small exporters of working capital, Sen added.

Even with current account deficit at 2.5% of GDP, India could still grow at 8%.

According to former RBI governor Raghuram Rajan, falling rupee is not too big a worry right now. He feels it has not depreciated to a worrying level. The rupee has weakened nearly 10% so far this year making it the worst performing Asian currency.

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Rajan’s advice to government is that India should focus on strengthening its macroeconomic fundamentals instead of worrying about the depreciating rupee. However reining-in current account deficit and maintaining fiscal deficit is more important than sending wrong signals to investors that may shatter their confidence at a time when the economy is getting kick-started.

Source: DNA Money

Instead of panicking, government needs to strengthen its macroeconomic fundamentals and boost exports through reforms, say experts&nbsp; &nbsp;


Rupee fall: Course correction needed to reverse overvalued currency

The unusual spurt in diesel and petrol prices as a result of surging global oil prices and falling rupee poses danger to the economy, but the government can do very little to lower it at this stage due to difficult fiscal situation and widening current account deficit.

In fact, the government on Tuesday said that it will not cut excise duty on petrol and diesel to cushion spiralling prices, as it has limited fiscal space available to take any dent in revenue collections. "The government cannot disturb fiscal maths by cutting excise duty," a top government official said.

Surging fuel prices have the potential to destablise the economy as it is inflationary, can widen current account deficit, already hit by falling rupee and impact the strained fiscal deficit if tax cuts are resorted to rein in prices, say experts.

As it is the Reserve Bank of India (RBI) is looking at a possible rate hike in the next monetary policy in mid-September, and there appears to be no way the government at this juncture would cut fuel prices unless global prices fall, which seem unlikely.

"There is already fiscal pressure and there are fears of fiscal deficit going up this year. So there is nothing much government can do to reduce the domestic fuel prices by cutting taxes, except to pass on the surge in global crude oil prices fully to the consumers," Deloitte chief economist Anis Chakravarty told DNA Money.

The spurt is basically supply driven factor and not demand driven due to declining global crude oil production. Also, dollar appreciation is resulting in the depreciation of several major currencies, including the rupee. This is putting additional pressure on an already widening current account deficit of the country.

But market analysts argue that one of the reasons for high domestic fuel prices is the high taxes. Both at the Centre and states, petrol and diesel are considered as milch cows for revenue mop up.

Petrol and diesel prices touched a new high early this week. Petrol touched a maximum Rs 86.56 a litre and diesel Rs 75.54 in Mumbai. The petrol price includes Rs 19.48 excise, dealer commission of Rs 3.63 and state VAT of Rs 16.83.

According to government data, the central excise duty on petrol and diesel more than tripled between 2013-14 and 2017-18. During the same period, state VAT increased more than 38 per cent. The excised duty on petrol increased from Rs 9.48 per litre to Rs 21.48 in four years.&nbsp;

In the case of diesel, it increased more than four times from Rs 3.56 to Rs 15.33 during the period. In other words, every Rs 100 spent on petrol nearly Rs 46 goes to the central and state government by way of taxes and in case of diesel, it is nearly Rs 36. One estimate put central and state collection from oil at Rs 5 lakh crore annually.

A $10 per barrel hike in global crude oil prices reduces GDP by 0.3% and a Rs 10 hike in domestic fuel prices push up inflation by 0.5%. With rupee crossing Rs 71 to a dollar and India importing 80% of its crude oil, there is very little scope for domestic fuel prices to come down without a cut in excise.

"Ultimately, the government might have no choice to cut excise. But at the moment they will wait and watch and cut excise ahead of the elections to reduce the unusually high domestic oil prices," economist and former planning commission member Abhijit Sen said.

Sen does not expect oil to come under the GST net, as states will oppose the move because this is one of the major source of revenue for them. With crude oil hovering around $75 a barrel from a mere $33 a barrel in 2015, several forecasts suggest that it could go up further with threats of a cut in oil production and US sanctions on Iran.

Oil minister Dharmendra Pradhan has ruled out any government intervention to disrupt the daily revision in petrol and diesel prices. He also felt that the spurt in fuel price is temporary.

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CRUDE REALITIES 
1. One of the reasons for high domestic fuel prices is the high taxes. Both at the Centre and states, petrol and diesel are considered as milch cows for revenue mop up&nbsp; &nbsp; 
2. Dollar appreciation is resulting in the depreciation of several major currencies, including the rupee. This is putting additional pressure on an already widening current account deficit of the country&nbsp; &nbsp; 
3. The central excise duty on petrol and diesel more than tripled between 2013-14 and 2017-18

Source: DNA Money

Surging fuel prices have the potential to destablise the economy as it is inflationary, can widen current account deficit, already hit by falling rupee and impact the strained fiscal deficit if tax cuts are resorted to rein in prices, say experts.


Soaring diesel, petrol prices, rupee set to hit economy; govt can do very little  

After two successive droughts in 2014 and 2015 and devastating floods in parts of India this year, the government has woken up to farm distress and recently announced some steps to alleviate the suffering of farmers, although pundits feel they are very little and too late.

The government has promised to give top priority to agriculture and provide a higher minimum support price (MSP) to several crops. Besides, the government is also looking at forming a new agri export policy.

However, farmers appear to be not satisfied with these announcements as farm distress has worsened during the last four-and-a-half years.

Chief adviser to the consortium of Indian Farmers' Association P Chengal Reddy said the MSP announced by the government is too little and too late. The cost plus 50% recommended by the Swaminathan Committee should have been implemented in 2014. It has not happened even now. He, however, felt the recent heavy rains will not severely impact farm output this year but would help in overcoming marginal monsoon deficiency this year.

Agriculture output was extremely good in 2017 after a good monsoon in the previous year following two successive droughts. But the worrying part is farm income went down despite a record 275 million tonne of food grain production and 375 million tonne of horticulture.

"This is not good for the economy," India's former chief statistician said. BJP leader and trained economist Subramanian Swamy is right in saying that India had huge farm potential as productivity is one of the lowest in the world.

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If China has become a global manufacturing hub, India can be global agri-products hub as perhaps it is the only country wherein there is monsoon as a season. India has the largest irrigated land yet half of the arable land is depended on monsoon. Though India has adequate water sources, inefficient use has led to groundwater depletion while poor rainwater harvesting resulted in surplus going waste into the sea.

Unlike in China, where only one-seventh of its land mass is arable, most of India's land mass is arable and ideal for three crops. Russia, the US and Canada too do not enjoy this advantage, which has inclement weather thus making it difficult beyond one crop.

Yet, India's average rice productivity is one-sixth of the world average and wheat one-fourth of the world average. but productivity in experimental farms in Indian research institutions match the world productivity. This is true of other crops, milk and so on. Replicating it is not difficult.

The government's aim to achieve 4% sustained annual farm growth has remained a piped dream because agriculture has been neglected by the successive governments.

But when the number of small farmers is large, the ability to use technology becomes minimal. "Our extension system has broken down. Now you are talking much larger technology and getting that information across, the quality of extension workers has to be much superior and that has not happened," Sen said.

Farmers are not getting remunerative prices resulting in agriculture depression and subsequent lowering of farm income. This has led to farm distress and at times suicides by farmers. Three lakh farmers have committed suicides in last two decades.

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Sen told DNA Money that the demand for agri-products is very large in rural India but they can afford to buy only when their income goes up. "You are getting into chicken and egg problem. With farm prices crashing, the rural people's ability to consume is getting lower because of lower income," said Sen. Instead of price support like MSP, the government could consider income support to farmers, but here the problem is whom to give the income money—the land owner or the tiller. This can work only if tenancy rights are given to actual tiller. This is a complex problem, particularly in the north and eastern India. There would also be a need for constant updating of the database as farm labourers frequently shift places.

Farm sector has a huge potential for growth. The green revolution was implemented in only one-tenth of arable land in the country – that is only 40 districts, which is enough to feed the entire country, besides creating a surplus in food grains. Price stability mechanism that is MSP has worked only in these 40 districts.

Forward trading is another method for price discovery. This too has not worked because its implementation is tardy and a lot more "smoothening" is required, Sen said.

The welcome development is that the government has realised that farm sector has been neglected and agriculture is in a crisis, a few agri experts said.

"If agriculture does not do well, all other sectors will do badly and that is the core," Sen warned.

(Source: DNA Money)

Agriculture output was extremely good in 2017 after a good monsoon in the previous year following two successive droughts.&nbsp;


Target 4% agriculture growth: Why Government of India's ambitious goal is a big challenge

The central government might be gung-ho on India becoming the fastest growing economy at 7.7% in January-March quarter of 2018, but the GDP growth is feared to be not that good when non-corporate data comes out by this year-end or early next year.

“Well, the claim of fastest growing economy, we have to take with a pinch of salt,” India’s former chief statistician and national statistical commission chairman, Pronab Sen told DNA Money in a wide-ranging interview. 
The over 7% growth is based on corporate sector data, where in companies are registered under the companies act. They form only 55% of the economic activity.

For non-corporate sector, which accounts for 27% of the economy activity, the figures will come by this year-end or early next year. These figures are available only once in five years and evidences so far indicate that this sector has not been doing well, particularly after demonetisation and rollout of GST.

Non-corporate sector includes partnership companies, MSMEs and informal activities. “We have no idea so far about the performance of non-corporate sector,’ Sen said indicating the GDP figures might have to be revised downwards, when the real picture of non-corproate sector is available.

The GDP calculated at the moment is through extrapolation of the performance of corporate sector to reflect non-corporate as well.

Going forward, the global scenario might result in a slowdown of India’s economic growth and Crisil in its recent report has painted a gloomy picture for the Indian economy.

Trade war, rising oil prices, widening trade deficit, surging inflation posed risks to the economy this year. Most of macro-ecnomic parameters have seen some strain lately and these are worrying signs. Nomura has already lowered growth to 7.2% from 7.4% this year.

Reserve Bank in its monetary policy on Wednesday too flagged off certain concerns on GDP growth going forward. 
There could be some slowdown in growth rate in second half of this fiscal, even though it retained its earlier forecast of 7.4% growth for the entire 2018-19

Sen said private investment in India is still substantial because of the corporate sector. Private investment at 30% is “still good” by any standards.

But, unfortunately, a lot of this private investment is happening in upgradation, automation and sophisticated technology acquisition, which is not good for job creation and in many cases will result in job reduction.&nbsp;Most of the labour-intensive and job creating industries are in non-corporate sector, whose date is not available at the moment, Sen said.

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The fact that household investments have fallen indicate that non-corporate sector is not doing well, Sen said adding after demonetisation and rollout of GST, the drop in household investments is more pronounced.

Source: DNA Money

For non-corporate sector, which accounts for 27% of the economy activity, the figures will come by this year-end or early next year. These figures are available only once in five years and evidences so far indicate that this sector has not been doing well, particularly after demonetisation and rollout of GST.


Centre gung-ho on India being fastest growing economy at 7.7%, but GDP growth feared to be not that good

<div>Buoyed by a pick-up in exports in April-June quarter this year, the central government may target $400 billion annual merchandise exports in two years. India clocked about $300 billion merchandise exports in 2017-18, rising from&nbsp; $275 billion in the 2016-17 - a near 10% annual growth. India achieved $313 billion exports in 2013-14 and in subsequent years, exports have shown a declining trend in the face of global slowdown.</div>

<div>&nbsp;</div>

<div>But in the first quarter of this fiscal, exports have seen a pick-up, with May witnessing a 20% growth and June 18%. This has prompted the Union commerce ministry to formulate a strategy in consultation with Federation of Indian Export Organisations (FIEO) to push annual merchandise exports to $400 billion in two years.</div>

<div>&nbsp;</div>

<div>A sustained 20% exports growth from now will easily push India’s merchandise exports to a little over $350 billion this year, and $400 billion in the next fiscal should be achievable, according to FIEO president Ganesh Kumar Gupta.</div>

<div>&nbsp;</div>

<div>A 20% exports growth is sustainable, Gupta told DNA Money emphasising that the strategy needed to be aimed at high potential markets such as Africa and Latin America. Indian textiles, handicraft, handlooms, leather, engineering goods, pharmaceuticals have huge potential.</div>

<div>&nbsp;</div>

<div>“Even China is importing from India a lot of items like handicraft and carpets, and the US-China trade war too has opened up a window of opportunity to push exports to both Beijing and Washington. However, this needed to be worked upon,” he said. The commerce ministry-FIEO joint strategy will be readied shortly, he said.</div>

<div>&nbsp;</div>

<div>India had prepared a strategy paper in 2013-14 after sustained high exports growth for almost a decade. At that time the target was to achieve $500 million exports in three years. But it was not implemented as exports slowed down due difficult global situation. Lately, global trade has started looking up.</div>

<div>&nbsp;</div>

<div>Widening trade deficit, which is expected to hover around $200 billion this financial year due to surging oil, gold and electronics exports, has “forced us to evolve this new strategy”, Gupta said.</div>

<div>&nbsp;</div>

<div>Economist H A C Prasad, who recently retired as senior economic advisor in the finance ministry, has come out with a study paper on the challenges and policy initiatives needed to take India’s merchandise exports to a new high.</div>

<div>&nbsp;</div>

<div>Prasad, who was earlier economic advisor in the commerce ministry, said in the paper that with green shoots in merchandise exports it is only appropriate to raise India’s share in world exports to a 5%.&nbsp;</div>

<div>&nbsp;</div>

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<div>At present, India’s share in world merchandise exports is a mere 2%&nbsp; as against China’s 14%. Global trade is cruising at 4.5% and it may remain at that level for the next couple of years, but for a temporary blip due to the trade war. It is time for India to try and cash in through sustained exports reforms.</div>

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<div>To reach the 5% share, merchandise exports should hit $882 billion by 2022, which means India’s export growth rate needed to be around 27% CAGR for five years. This is not impossible as India has had higher exports growth than this during 2004-09, Prasad said.</div>

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<div>To boost trade, India has to make its exports demand-based rather than supply-based as at present.</div>

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<div>In most of the top imports of the world, the presence of India’s exports is very small. In 2015, India’s exports share in the top 100 items was not that impressive, and only in five of those items the share was more than 5%.</div>

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<div>Source: DNA Money</div>

India clocked about $300&nbsp;billion merchandise exports in 2017-18, rising from&nbsp; $275 billion in the 2016-17 - a near 10% annual growth. India achieved $313&nbsp;billion&nbsp;exports in 2013-14 and in subsequent years, exports have shown a declining trend in the face of&nbsp;global&nbsp;slowdown.

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K R Sudhaman