India accounted for the largest number of poor people in any country in 2012, but its poverty rate was lowest among countries having large number of poor population, a latest World Bank report has said. According to the report, the number of people living in extreme poverty around the world is likely to fall to under 10 per cent of the global population in 2015. "India was home to the largest number of poor in 2012, but its poverty rate is one of the lowest among those countries with the largest number of poor," the bank said. Giving fresh evidence that a quarter-century-long sustained reduction in poverty is moving the world closer to the historic goal of ending poverty by 2030, it said a new methodology applied to household surveys in India suggests that its poverty rate could be even lower. According to the report, the poverty rate in low-income countries averages 43 per cent in 2012, compared to 19 per cent in lower-middle-income countries. Yet lower middle-income countries are home to about half of the global poor, compared to a third for low-income countries. Part of the reason is that four nations with the largest populations were once classified as low-income but have moved into lower-middle-income category: China, India, Indonesia and Nigeria. Noting that connective infrastructure is a crucial means of linking the farms and firms where the poor live and work to markets, the bank said rural electrification in India has caused changes in consumption and earnings, with increase in the labour supply of both men and women, and promoted girls' schooling by reallocating their time to tasks more conducive to school attendance. Investment in integration and connectedness through railroads in India helped reduce the exposure of agricultural prices and real income to rainfall shocks, and helped diminish the famine and mortality risks associated with recurrent weather shocks, it said. In its report, the bank uses an updated international poverty line of $1.9 a day, which incorporates new information on differences in the cost of living across countries. The new line preserves the real purchasing power of the previous line (of $1.25 a day in 2005 prices) in the world's poorest countries. Using this new line (as well as new country-level data on living standards), the bank projects that global poverty will fall from 902 million people or 12.8 per cent of the global population in 2012 to 702 million people or 9.6 per cent of the global population this year. "This is the best story in the world today -- these projections show us that we are the first generation in human history that can end extreme poverty," World Bank Group President Jim Yong Kim said. Kim said the continued major reductions in poverty were because of strong growth rates in developing countries in recent years, investments in people's education, health and social safety nets that helped keep people from falling back into poverty. He, however, cautioned that with slowing global economic growth, and with many of the world's remaining poor people living in fragile and conflict-affected states, and the considerable depth and breadth of remaining poverty, the goal to end extreme poverty remained a highly ambitious target. "This new forecast of poverty falling into the single digits should give us new momentum and help us focus even more clearly on the most effective strategies to end extreme poverty. “But it remains within our grasp, as long as our high aspirations are matched by country-led plans that help the still millions of people living in extreme poverty," he said. In its regional forecast for 2015, the WB said poverty in East Asia and the Pacific would fall to 4.1 per cent of its population, down from 7.2 per cent in 2012; Latin America and the Caribbean would fall to 5.6 per cent from 6.2 in 2012. In South Asia, the poverty would fall to 13.5 per cent in 2015 compared to 18.8 per cent in 2012; Sub-Saharan Africa poverty would decline to 35.2 per cent in 2015 compared to 42.6 per cent in 2012. "Development has been robust over the last two decades but the protracted global slowdown since the financial crisis of 2008, is beginning to cast its shadow on emerging economies," said WB Chief Economist Kaushik Basu, a former Chief Economic Adviser to the Indian Government. "There is some turbulence ahead. “The economic growth outlook is less impressive for emerging economies in the near future, which will create new challenges in the fight to end poverty and attend to the needs of the vulnerable, especially those living at the bottom 40 per cent of their societies," Basu added. (PTI)
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India is set to face human capital challenge as its economic growth picks up and global corporations entering the world's fastest growing businesses poach the best brains from local institutions by offering premium wages, experts have warned. The Indian market of 1.25 billion people is getting more and more attractive with the government's pro-business reforms but state-owned enterprises with low-wage capacities built across the country would come under pressure, said delegates at two major conferences held in Singapore this week. Speaking at the Mint Asia Global Banking Conclave on Friday (2 October) night in Singapore, Arundhati Bhattacharya, chairman of the State Bank of India, conceded the ongoing mid-management poaching by new entrants in the country's financial sector. India's heavyweight enterprises, with operation spread across the country, are considered the best source of expertise poaching, said the delegates. They said these institutions are not only facing the challenge of retaining expertise as competition comes in from new global corporations entering the Indian market with offer of high remunerations, they are also restricted on hiring by official regulatory controls and tight fiscal policies while just about managing through a contract-based employment. Delegates at the Conclave pointed out that even such contract-based employment have become more attractive to new recruits who consider these assignments and opportunities as training grounds. "But this could lead to an expertise crunch in the coming years if Indian state enterprises continued facing difficulties in new hiring," said one official. The multi-national corporations entering India are set to offer "much more higher and attractive" remuneration on US dollar basis which would lead to salary discrimination and raise the cost of working in India within the coming few years. "The government must note the wage challenge and must address it along with national initiatives such as Skill India (still in an embryonic state) and Make-in-India," a leading banker strategising for Indian market told PTI requesting anonymity. He said that though global markets are slowing down, having plateaued, India must become attractive to mid-level international executives with world class pay slips which, though, would be hard for the multi-national corporations to digest, seeking low-cost business place. "It is a conundrum in the making," he added. "Going back home to India is not attractive at all when you have worked in high wage and safe heaven environments like Silicon Valley or Singapore," an executive at the summit said.(Agencies)
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Sutanu Guru analyses how auto sales trends in 2015 signal a weak economic recovery There is a raging debate going on about the extent and quality of economic recovery in India. Supporters of Prime Minister Narendra Modi throw around many sets of data to claim a strong economic recovery is gathering momentum. Critics of Modi throw around another set of data to claim that claims about a turnaround in the Indian economy are; well, just tall claims. The funny thing is that both set of data are credible and it is up to you to draw your own conclusions. But is it then a classic case of some people looking at a half full glass while others stare at a half empty glass? Economists and pundits can go in arguing. But for those who are not into seriously jargon laced debates, the automobile industry provides a clear picture of the health of the Indian economy. Even economists who violently disagree on everything else under the sun agree that a smart recovery in automobile sales is the most telling and effective indicator of an overall economic recovery. Recent historical data from India confirms this. We all know how the Indian economy, like most economies of the world, almost tanked after the 2008 collapse. This was reflected in the automobile industry where hitherto rapidly growing numbers slid into negative territory. But 2009-10 saw the Indian economy stage a smart recovery. What happened with automobile sales in the same period? Sales of passenger vehicles in 2009-10 amounted to about 1.9 million units. In 2010-10, they zoomed up to more than 2.5 million units. Something similar happened with commercial vehicles. Sales jumped from about 5.3 lakh units in 2009-10 to more than 6.4 lakh units in 2010-11. In fact, sales of commercial vehicles jumped spectacularly in the next year to about 8.4 lakh units in 2011-12 while passenger vehicle sales registered a modest growth to more than 2.6 million units. That was when optimistic industry analysts started forecasting that the passenger vehicle sales number would cross 3.5 million units by 2015-16 while commercial vehicle sales would comfortably cross 1 million units. We all know what happened after that. Thanks partly to a weak recovery and mainly because of disastrous policies of the UPA government, growth rates started plummeting and the marquee GDP growth rate had collapsed to just about 5 per cent by the time the UPA was punished by the Indian voter in 2014. Between 2012 and 2014, there was not a single month in which passenger or commercial vehicle sales topped the record figures registered in early 2012. Look at it this way. In March 2012, passenger vehicle sales touched 3 lakh units. The best achieved in a single month since then was 2.3 lakh units. As the Indian economy went into a virtual tailspin, so did the sales of the Indian automobile industry. Has there been a turnaround since Modi assumed power? If you look at GDP numbers, yes since growth rate for the current financial year is estimated to cross 7 per cent. But automobile sales do not project a rosy picture of a sustained turnaround. Even if declining interest rates propel consumers to buy more cars, the best that the passenger vehicle sales can register in the current financial year is a tad more than 2.5 million units, still lower than the sales registered in 2011-12. The story of commercial vehicles is even more depressing. Going by sales trends of the first six months of the current fiscal, the best that this segment will throw up for the whole year is about 7 lakh units. In 2011-12, sales had crossed 8 lakh units. Quite clearly, trends in the automobile industry sales do not suggest a spectacular or even a sustained recovery. Clearly, Modi and his team have their work cut out.
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Indian manufacturing activity slowed more than expected to a seven-month low in September due to softening demand and output, a business survey showed on Thursday. The Nikkei Manufacturing Purchasing Managers' Index, compiled by Markit, fell to 51.2 in September from 52.3 in August and against predictions of 52.0. A reading above 50 indicates expansion. "Despite having been supported by sustained increases in new work, growth of Indian manufacturing production in September was weighed down by a difficult economic climate," said Pollyanna De Lima, economist at Markit. Concerns of slowing growth in global economies, most notably China, showed in the new orders sub-index which fell to a three-month trough and dragged output to its lowest since May 2014. The output sub-index dropped to 52.0 in September from 54.5. In a bid to boost the economy, the Reserve Bank of India cut its benchmark repo rate by a larger than expected 50 basis points to a 4-1/2 year low of 6.75 percent on Tuesday. It also downgraded its growth estimates for this fiscal year to 7.4 percent from 7.6 percent. Weak inflation has helped the RBI ease policy aggressively this year and the survey showed price pressures could remain subdued in the months ahead. The input prices sub-index fell to its lowest since February 2009, owing to falling commodity prices, and manufacturers in turn passed on the lower cost to customers. "Input costs decreased for the second month running in September, a situation not seen since the financial crisis. This provided firms with more room for price negotiation and selling prices were lowered on average, improving manufacturers’ competitiveness," De Lima said. (Reuters)
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The growth of eight core sectors slowed down to 2.6 per cent in August, mainly due to contraction in steel output. The expansion in eight infrastructure sectors, which contribute about 38 per cent to the overall industrial production, was 5.9 per cent in the same month last year. The August output, however, was higher than the previous month when the core sectors had expanded by just 1.1 per cent. According to the data released by the Commerce and Industry Ministry today, the steel output in the month under review declined to 5.9 per cent, as against a positive growth of 9.4 per cent in August 2014. Coal, cement and electricity output slowed down to 0.4 per cent, 5.4 per cent and 5.6 per cent respectively during the last month, as compared to 13.2 per cent, 10 per cent and 12.9 per cent. However crude oil, natural gas, refinery products and fertilisers recorded healthy growth. In March and April this year, the eight industries witnessed contraction of 0.1 per cent and 0.4 per cent respectively. However, in May and June the core sectors expanded by 4.4 per cent and 3 per cent respectively. During the April-August period of the current fiscal, the core sectors’ output expanded by 2.2 per cent as against 5.6 per cent in the first five months of 2014-15. The overall growth of eight core industries in the entire 2014-15 fiscal stood at 3.5 per cent, as against 4.2 per cent in the previous fiscal. (PTI)
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Sumit Sharma In an announcement that could warm the hearts of the Indian government and its policy makers, the country’s position in Global Competitive Index (GCI) has improved by 16 notches, reversing five years of decline. The latest rankings were released by World Economic Forum (WEF). "This dramatic reversal is largely attributable to the momentum initiated by the election of Narendra Modi, whose pro-business, pro-growth, and anti-corruption stance has improved the business community’s sentiment toward the government,’’ said the report. ``The quality of India’s institutions is judged more favorably (60th, up 10), although business leaders still consider corruption to be the biggest obstacle to doing business in the country.’’ Yet, despite an improvement India’s ranking is still seven levels lower than its 2007 ranking. Switzerland, Singapore and the United States retained their positions as the top three. Germany improved its rank to No 4 from fifth position, while the Netherlands jumped from eighth to fifth position. Japan and Hong Kong retained their sixth and seventh ranks, while Sweden nudged the United Kingdom from the ninth to 10th place. Significantly, India remains one of the least digitally connected countries in the world with a rank of 120, the GCI report said. Fewer than one in five Indians access the Internet on a regular basis, and fewer than two in five are estimated to own even a basic cell phone, it said. India’s performance in the macroeconomic stability improved by 10 ranks, yet it remains worrisome to give India a rank of 91 among 144 countries on this parameter. India’s average inflation slowed to 6 percent in 2014 courtesy lower commodity prices from a double digit level in the previous year. While India’s fiscal deficit declined since its 2008 peak, it still amounts to 7 percent of the GDP and remains among the world’s highest. India is 131 on this parameter among 144 countries. Also, though infrastructure improved it still remains a major growth bottleneck, electricity in particular. Yet, the GCI highlights that most notable improvements are in the basic drivers of competitiveness and that bodes well for the future, especially in the development of manufacturing sector. Among the SAARC region, India was followed by Sri Lanka at 68. Others were all lower than 100, with Nepal at 100, Bhutan 105 and Bangladesh 107. Pakistan trailed at 126. Since 2007, Pakistan lost 34 notches, while India is lower by seven levels.
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Promising more reforms to push growth above 7.5 per cent this fiscal, the government on Monday (28 September) said a new scheme would be unveiled soon for floating rupee bonds abroad while a new framework is being readied to make it easier for foreign companies to open project offices here.Speaking here at the event to formalise merger of commodities regulator FMC with capital markets watchdog Sebi, Department of Economic Affairs Secretary Shaktikanta Das said that unleashing reforms is a continuous process and the government does not wait for the budget for the same.He also said that more regulation does not mean "it is intrusive, (and) it can be benign" too."Government is committed to unleash a series of reforms in various sectors to push growth. A draft of GST (Goods and Services Tax) is now ready to be presented before Parliament," he said.Das further said the biggest challenge for Finance Ministry is to ensure revival of demand in an uncertain global market."Given the global uncertainties, India is the single brightest spot at the world stage. But, we cannot be complacent. We will continue with reforms to push growth above 7.5 per cent this fiscal."We have taken steps for demand revival, but it can't be taken only through fiscal stimulus. We don't have the space The demand revival has to be investment-driven," he said.Das announced that the government is working on a scheme where opening of branch or project offices by foreign companies gets simpler."We will be announcing this scheme shortly," he said.He also said that RBI will announce a scheme for floating rupee-denominated bonds overseas shortly.(PTI)
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Simar SinghThe desire to emulate the success of China as a manufacturing hub among Indians is very real. Best emblematised by the government’s ambitious Make in India thrust to galvanise the manufacturing sector. However, according to competitiveness expert, Professor Michael Enright of the University of Hong Kong, India faces much tougher conditions than China did when it embarked on the path of manufacturing. Speaking at the National Competitiveness Forum in Gurgaon on Friday, he said, “When China started the growth rates were incredible. Rates like that are not there now.” The fundamental difference between China and India is that while the Chinese have traditionally focused on exports, the Indian economy has been based on domestic consumption. Now the roles are reversing as the Chinese have been looking at domestic consumption for the past few years, while India wants to boost its exports. “India faces a much tougher export market than China did,” said Professor Enright, adding that the reason the Chinese focused on exports much earlier was because their population did not have the right kind of purchasing power, a capability that they have now managed to build up. The success of Make in India, according to him, while taking longer will be completely dependent on which markets in India are attractive enough and general affordability.
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The CII-BCG survey highlights the declining attractiveness of China as a manufacturing base due to labour and Yuan challenges, reports CH UnnikrishnanA latest survey conducted jointly by Confederation of India Industries (CII) and Boston Consulting Group to assess progress of the government's 'make-in-India' thrust and other industry reforms among the leaders of Indian manufacturing industry found that only 20 per cent of the executives surveyed feel that there has been an improvement in 'ease of doing business'. While 42 per cent of the executives feel that the government's manufacturing drive has been effective, 21 per cent felt otherwise. The survey, which was conducted for developing key themes for report titled as 'Future of Indian Manufacturing: Bridging the Gap' released by CII on Thursday also compares states on their quality of manufacturing ecosystem and global trends. The report takes stock of the recent progress of the manufacturing sector and the Make-in-India initiative, an year down the launch. The outlook is broadly positive given the growth in IIP as well as clear uptick in the manufacturing FDI. The overall IIP grew 3.2 per cent in the first quarter and 14 of the 22 sub-sectors showed positive growth. "The overall buzz around make-in-India focus has been positive and many large ticket announcements have been made," the report said. The CII-BCG report highlights the declining attractiveness of China as a manufacturing base due to labour and Yuan challenges, and emergence of new destinations such as Ethiopia and Vietnam which are becoming competitive. In addition, the report notes that the adoption of advanced manufacturing technologies is disrupting the advantages of low labour cost. According to an analysis by CII-BCG, the cost of industrial robots will decrease by an estimated 20% by 2022, while their performance has been increasing at 5% per year. These developments point to a clear imperative for the Indian industry to focus on innovation. The survey responses also corroborate this focus as 75 per cent of the respondents indicated innovation as focus of their technology investments. Looking at the state level progress in the industry reforms, the report said that several states are now upping their game to attract manufacturing investments. But, the report calls for continuing action by the state and the central government on reforms, simplification and infrastructure build-out in addition to industry responsibility to invest in creating long term capabilities and shun the urge to adopt "jugaad" methods. "Strength of services sector combined with the strength of manufacturing is the future. To reach our full potential though, we need close co-operation among a vast number of agencies especially between people involved in complex system of manufacturing. We have to understand all connections and complexities of its working," said Jamshyd N Godrej, chairman and managing director of Godrej & Boyce Mfg Co Ltd and chairman CII Manufacturing Summit, while releasing the report. "We have some of the finest manufacturing companies based in India doing exemplary quality production. But the question is how do we build on those strengths and improve upon areas that need improvement," he added. According to BCG senior partner and managing director Arindam Bhattacharya, make in India initiative couldn't have been launched at a better time as global manufacturing is in turmoil with the low cost model of last 2 decades coming under pressure, China's competitiveness is eroding. Brazil, which was seen as one of the most competitive 10 years ago is becoming a high cost country. "In contrast India's relative competitiveness has remained constant. This turmoil provides a unique opportunity to become a top 3 manufacturing player in the world, becoming a top 5 country manufacturing exporting nation from current 15th position," Bhattacharya said. Make in India has changed the mindsets - both inside and outside the country. Accelerated implementation of reforms being implemented in the fundamental build blocks of Ease of doing business, power/coal, infrastructure build-out, labour laws, taxation could ensure that this is not another missed window of opportunity for India, added Bhattacharya.
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India's domestic air traffic grew by a healthy 18.66 per cent to 67.60 lakh passengers in August this year as against the year-ago period, even as airlines had less number of seats filled in their planes in the reporting month compared to July. Indian airlines together carried 67.60 lakh passengers in August 2015 as against 56.97 lakh flown by them in the same period last year, the latest data released by the Directorate General of Civil Aviation (DGCA) showed. The passenger load factor in August has, however, shown a declining trend compared to previous month, primarily due to end of tourist season, DGCA said. Private budget carrier IndiGo continues its domination in the domestic market, having flown over one-thirds (23.85 lakh passengers) of the total traffic during the period while another budget carrier, SpiceJet, clocked the highest seat factor or occupancy rate at 92.1 per cent. Among other carriers, full service airline Jet Airways along with its subsidiary JetLite -- which is in the process of getting merged with the parent company -- ferried 15.9 lakh passengers. SpiceJet and GoAir flew 8.30 lakh and 5.48 lakh passengers, respectively. National carrier Air India carried 11.25 lakh passengers in August 2015, around two lakh more than last year. In terms of the market share, while Jet and JetLite together cornered 22.8 per cent of the total traffic after IndiGo's 35.3 per cent, SpiceJet and GoAir carried 12.3 per cent and 8.1 per cent of the total passenger traffic. Air India's markets share during the month stood at 16.6 per cent with its seat factor at 79.3 per cent. Significantly, Jet Airways had the highest occupancy in its flights, after SpiceJet, as it clocked 80.6 per cent seat factor in August.(PTI)
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