Endorsing the government's labour law reforms, National Institution for Transforming India Aayog Vice-Chairman Arvind Panagariya on Friday (21 August) said India Inc needs to step up to create jobs and offer inputs to the government on boosting employment at good wages. "They should say what the government should do so that employment increases at good wages," Panagariya said in New Delhi at the 18th JRD Tata Memorial Lecture. "Where is the passion for hiring workers in the industry here? . . you need to lobby to the government to bring more employment." He admitted that (the industry) has talked a lot about the rigidities in labour laws. The industry has been pushing for relaxing the labour law framework to boost ease of doing business in the country. The government, in turn, has taken a host of initiatives to amend labour laws, but all have run into stiff opposition from trade unions. Trade unions have called for a nation-wide strike on September 2 and are expecting 40 crore (400 million) workers from organised and unorganised sectors to join the call. "What are those conditions (for creating more jobs) only entrepreneurs can tell. What is keeping them from employing more workers?" Panagariya wondered. Expressing concern over the industry promoting more capital-intensive businesses, he said, "I fear that entrepreneurs will simply look the other way, hire more and more machinery and go into capital-intensive industry. “Even within the industry they operate, they choose most capital intensive one. That is ultimately not good from the employment perspective." He cited an example of labour-intensive industry like ready-made garments where India has been left behind by smaller countries. "If you look only at India's clothing exports, we are about 1/10th of China even today. . . in absolute terms, we are less than Bangladesh and even a bit behind Vietnam." He also stressed on the need for phasing out trade barriers to boost growth. India has a labour force of around 50 crore (500 million), with 1.2 crore (12 million) joining the workforce every year.(PTI)
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The Foreign direct investment (FDI) in the country increased by about 6.5 per cent, to USD 2.05 billion in June this year, according to official data. In June 2014, the FDI stood at USD 1.92 billion. However, in May this year the country had received USD 3.85 billion in FDI. During April-June period of this fiscal, FDI in the country grew by 31 per cent to USD 9.50 billion, as compared to USD 7.23 billion in the same period last year, according to the data of the Department of Industrial Policy and Promotion (DIPP). Among the top 10 sectors, computer software and hardware received the maximum FDI of USD 2.55 billion during the first quarter of this fiscal, followed by automobile (USD 1.09 billion), trading (USD 897 million), services (USD 636 million) and power (USD 271 million). During the period, India received the maximum FDI from Singapore (USD 3.67 billion) followed by Mauritius (USD 2.08 billion), the Netherlands (USD 652 million) and the US (USD 627 million). During financial year 2014-15, foreign fund inflows grew at 27 per cent to USD 30.93 billion, as against USD 24.29 billion in 2013-14. The government relaxed FDI norms in various sectors, including insurance, railways and medical devices to boost FDI in the country. Foreign investments are considered crucial for India, which needs around USD 1 trillion in the next five years, to overhaul its infrastructure sector such as ports, airports and highways to boost growth.(PTI) Growth in foreign investments helps improve the country’s balance of payments (BoP) situation and strengthen the rupee.
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A confluence of factors, including increasing household income, urbanization, and fragmentation of Indian households, low penetration of branded goods, burgeoning middle class and favorable demographics should lead to sustained long-term growth of fast moving consumer goods (FMCG). At the current GDP per capita (of c.$1,500), S-curve analysis suggests that consumption should accelerate from current levels, be it for categories like deodorants, tobacco, skin care or oral care. However, low single-digit volume growth in 2013 and 2014 is in sharp contrast to mid-teen levels of volume growth witnessed by the FMCG sector in 2010. Growth rates of several discretionary categories tapered down. Slowing GDP growth, negative real wage inflation and lack of employment opportunities were some of the reasons that led to a consumption slowdown. Question that investors often ponder is when would the growth rates revive? We, at Société Générale, believe that green shoots are visible for consumption recovery, which could be gradual. After hitting a trough in September 2013, Indian consumers have become progressively optimistic about future prospects as reflected in Reserve Bank of India (RBI) consumer confidence surveys. RBI recently also highlighted that consumption demand, especially in urban areas, is picking up while rural wage growth is showing signs of moderation. Monster Employment Index, which presents a snapshot of employer online recruitment activity nationwide, is up 32% YoY. As consumer increase confidence in future income, they will increase consumption. Challenges PrevailVolume growth for consumer companies has stabilized, but is nowhere close to the double-digit level that was witnessed in 2010. Companies are presenting mixed signals pertaining to rural growth though. While Hindustan Unilever and Emami stated that rural growth rate is in-line with urban growth rate, Godrej Consumer and Marico flagged that rural continues to grow faster than urban. Low penetration of branded consumer goods in rural should offer long term growth opportunity to companies. The oil price correction is a wild card as commodity tailwind benefits is resulting in gross margins expansion for companies. Onus is on companies now to either invest this amount in terms of increased advertising and sales promotion (A&P), or to pass it on through price cuts to reduce the gap with regional competition. The author, Nitin Mathur is Research Analyst – Emerging Markets Consumer, Société Générale
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Republican presidential frontrunner Donald Trump has sounded death knell to the H-1B visas by proposing to raise the minimum wage for this most popular work visas for Indian technology professionals as he released his policy of putting American workers first. Such a move, Trump argued, would force companies to give IT jobs to unemployed Americans and not cheaper workers from overseas, including India. Releasing his much awaited immigration policy, the New York based real-estate tycoon lashed out at Facebook founder Mark Zuckerberg and Florida Senator Marco Rubio, who has introduced a bill to triple the H-1B visas. Rubio is one of the Republican presidential candidates. "Increase prevailing wage for H-1Bs," said a position paper on immigration reform released by the Trump Campaign as it came out in strong opposition to the Zuckerberg's move to increase the number of H-1B visas, which at present is mandated to 65,000 per annum every year by the US Congress. We graduate two times more Americans with STEM degrees each year than find STEM jobs, yet as much as two-thirds of entry-level hiring for IT jobs is accomplished through the H-1B programme," the position paper said. STEM stands for science, technology, engineering and math. More than half of H-1B visas are issued for the program's lowest allowable wage level, and more than 80 per cent for its bottom two, the Trump campaign said. "Raising the prevailing wage paid to H-1Bs will force companies to give these coveted entry-level jobs to the existing domestic pool of unemployed native and immigrant workers in the US, instead of flying in cheaper workers from overseas," it said. "This will improve the number of black, Hispanic and female workers in Silicon Valley who have been passed over in favor of the H-1B programme. Mark Zuckerberg's personal Senator, Marco Rubio, has a bill to triple H-1Bs that would decimate women and minorities," the Trump campaign said. According to the campaign, when politicians talk about "immigration reform" they mean: amnesty, cheap labour and open borders The Schumer-Rubio immigration bill was nothing more than a giveaway to the corporate patrons who run both parties, it alleged. "Real immigration reform puts the needs of working people first - not wealthy globetrotting donors. We are the only country in the world whose immigration system puts the needs of other nations ahead of our own. That must change," the position paper said. (PTI)
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Moody's Investors Service cut its forecast for India's economic growth to around 7 percent this year from 7.5 percent because of lower-than-expected rainfalls in the ongoing monsoon season, the ratings agency said on Tuesday. Moody's maintained its forecast of around 7.5 percent increase in gross domestic product (GDP) for 2016, but pointed to risks ahead that include delays to the government's reform plans. Moody's rates India at its lowest investment grade rating of "Baa3" with a "positive" outlook.
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India's merchandise exports contracted for the eighth straight month in July, government data showed on Friday (14 August), marking a 10.3 per cent drop year-on-year because of continuing weak global demand. The trade deficit widened to $12.8 billion last month from $10.8 billion in June, the data released by the Ministry of Commerce and Industry showed. Imports fell 10.3 per cent from a year earlier to $35.95 billion in July, while exports stood at $23.1 billion, the data showed. (Reuters)
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India's wholesale prices fell at a faster-than-expected annual rate of 4.05 per cent in July, their ninth straight decline and their lowest in at least a decade, mainly driven by weak food and fuel prices, government data showed. The data, released on Friday, compared with a 2.8 per cent year-on-year fall forecast by economists in a Reuters poll and a provisional 2.4 per cent annual decline in June. The wholesale food prices fell 1.16 per cent year-on-year, while fuel prices fell 12.81 per cent from a year ago. India's retail inflation has cooled to a record low of 3.78 per cent in July, adding pressure on the central bank chief Raghuram Rajan to cut interest rates after China devalued its currency this week. The Reserve Bank of India (RBI) kept rates unchanged at 7.25 per cent this month even though the government and industry have been urging for lower cost of borrowing. Rajan after the monetary policy announcement on August 4 had said the central bank may cut interest rate even out of the policy cycle depending on how macroeconomic indicators play out. "We are waiting for information. There was more need to move fast in the early stages of the turnaround. We will take all information into account and decide whether at times it warrants moving in between policy cycle or it does not," he had said after the policy meet. RBI mostly tracks the consumer price inflation for its policy decision, and its next review is due on September 29. (Agencies)
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Boeing's latests market outlook projects a worldwide demand for 38,050 new airplanes over the next 20 years. C.H. Unnikrishnan reportsAircraft maker Boeing Commercial Airplanes has projected a demand for 1,740 new airplanes, valued at $240 billion, over the next 20 years in India. The company in its latest India market outlook report released on Thursday (13 August) said that the South Asia region will have among the highest traffic growth around the world at 8.6 per cent. “India’s economy and the country’s potential for air travel growth – both for leisure and business – continues to be strong and we remain confident in the Indian commercial aerospace market.” said Dinesh Keskar, senior vice president of Asia Pacific and India Sales, Boeing Commercial Airplanes, while releasing the report in Mumbai. The Boeing market outlook 2015 forecasts that the largest demand from airlines in India will be for single-aisle airplanes such as the Next-Generation 737 and new 737 MAX, while twin-aisle airplane demand, such as the 777 and 787 Dreamliner families will also continue. The number of low cost carriers is projected to grow to more than 30 percent of the total Indian market, the report says. "The Indian market is highly competitive and airlines are adapting with added capacity, moderate pricing discipline and new business models, such as the growing number of low cost carriers,” Keskar said adding that the company continue to believe that its comprehensive airplane family meets the customers’ needs with superior economics and fuel efficiency, improved environmental performance and a great passenger experience. Referring to the future demand for specific models, the company claimed that Next-Generation 737's market success has been confirmed by investors who consistently rank it as the most preferred single-aisle airplane due to its wide market base, superior performance efficiency and lowest operating costs in its class. While, the 737 MAX will build on the strengths of today's Next-Generation 737 by incorporating the latest-technology to deliver the highest efficiency, reliability and passenger comfort in the single-aisle market. The aeroplane maker also said that its 777 family currently provides the most payload and range capability and growth potential in the medium-sized airplane category along with low operating costs. While, building on the passenger-preferred and market-leading 777 family of airplanes-- 777-8X and the 777-9X, are designed to respond to market needs and customer preferences. Boeing's 787 Dreamliner is a new super-efficient family of commercial airplanes that brings big-jet ranges and speed to the middle of the market. It had also designed the 787 family with superior fuel efficiency, which allows airlines to profitably open new routes to fly people directly where they’d like to go in exceptional comfort. "Since entering service in 2011, the 787 family has already opened more than 50 new non-stop routes around the world," Boeing said. Boeing's latests market outlook projects a worldwide demand for 38,050 new airplanes over the next 20 years, with India carriers needing more than 4.5 per cent of the total global demand during the forecast period. Boeing's Current Market Outlook is the longest running jet forecast and regarded as the most comprehensive analysis of the aviation industry, the company claimed.
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India's retail inflation cooled to a record low in July and annual growth in industrial production hit a four-month high in June, bringing cheer to investors fretting that gridlock in Parliament is stalling reforms. Consumer prices rose 3.78 per cent year-on-year in July, their slowest pace on record, compared with a 4.42 per cent rise predicted by analysts. The sharp cooling, however, was in large measure due to a favourable base effect. Also, the good data could not hide the weakening investment conditions in the country, especially in the capital goods sector.Growth in manufacturing sector is a positive development and shows that the economy is firmly on the growth path, said Finance Minister Arun Jaitley. He was commenting on the Index of Industrial Production (IIP) data, which showed that factory output grew at 3.8 per cent in June, its fastest pace in four months. "The growth is boosted by 4.6 per cent increase in manufacturing, while mining and electricity sectors continue to need attention," Jaitley said. "The growth in manufacturing lead by consumer durables and basic goods is a positive development for the economy. It shows that the economy is firmly on the growth path," he said. IIP figures are consistent and need to be read with the growth in indirect tax receipts, the Finance Minister said. Indirect tax revenue rose over 37 per cent to over Rs 2.1 lakh crore in the April-July period this year on the back of higher excise duty collections. The Finance Minister also said: "It is especially notable that simultaneously inflation has declined to 3.8 per cent, with food inflation being only 2.2 per cent." Wednesday's economic data comes as a political logjam in Parliament has stalled Prime Minister Narendra Modi's reform agenda, putting in doubt the fate of a major tax overhaul that will create one of the world's largest single markets. A crash in global commodity prices has helped inflation slip below the Reserve Bank of India's (RBI) medium-term target of 6 per cent, giving it room to cut interest rates by 75 basis points this year. The central bank left the policy repo rate on hold last week, leaving the door open to ease further depending on the inflation outlook. The latest inflation data, coupled with China's move to devalue its currency, has bolstered hopes of further monetary easing. "The number is a big downside surprise," said A. Prasanna, an economist at ICICI Securities Primary Dealership. "This increases chances of RBI cutting interest rate one more time in this fiscal year ending March."Dr Devendra Kumar Pant, Chief Economist, India Ratings & Research, said: “CPI inflation at 3.78% in July 2015 was much below the expectation and was mainly due to sharp fall in food inflation. It is contradictory to daily price data released by the government. July vegetable prices has declined by nearly 8%. This will have a favourable impact on bond pricing and increase in probability of monetary easing. IIP growth was led by manufacturing. Mining and electricity performed poorly in June. Consumer durable grew by 16% due to base effect (June 2014 it contracted by 23.25%). Capital goods output contracted after seven months. This points towards a weak investment conditions.”Chandrajit Banerjee, Director General, CII said that the rise in industrial production numbers, albeit moderate, at the close of the first quarter of this fiscal indicates that the industrial recovery is gathering pace based on the improved performance of the manufacturing sector. What is encouraging is the turnaround in the consumer goods particularly the consumer durables sector which has entered a positive terrain after showing negative growth last month. The rise in IIP corresponds with the surge in indirect tax collections during the month indicating some pick-up in demand in the economy. However, he expressed concern about the steep decline in the output of the capital goods sector which has slipped to the negative territory after showing positive growth over the last few months. This indicates that new investments are still not happening and the firming up of the investment cycle is still some distance away. The subdued growth of mining and electricity sector is also disconcerting. Currency ConcernsChina's yuan has fallen almost 4 per cent in two days since the central bank announced the devaluation on Tuesday to help resuscitate a slowing economy. This is bad news for Indian exports, which have fallen for seven straight months. Exporters are already complaining about a relatively stronger rupee that has appreciated by 10 per cent on a real trade-weighted basis since the middle of last year. Indian companies are worried the yuan's devaluation will flood the local market with cheaper Chinese imports, worsening the bilateral trade deficit. "Along with the yuan devaluation move, I think there is a case for more (and) not less accommodation," said Jyotinder Kaur, principal economist at HDFC Bank. "The sooner the Reserve Bank of India steps on the easing pedal, the better it is." The RBI, however, is worried about entrenched high inflationary expectations which are feeding into higher wages and other prices. A central bank survey last week showed households expect consumer inflation to hit 10.1 per cent within three months.
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India's retail inflation cooled to a record low in July and annual growth in industrial production hit a four-month high in June, bringing cheer to investors fretting that gridlock in Parliament is stalling reforms. Consumer prices rose 3.78 per cent year-on-year in July, their slowest pace on record, compared with a 4.42 per cent rise predicted by analysts. The sharp cooling, however, was in large measure due to a favourable base effect. Output at factories, utilities and mines expanded an annual 3.8 per cent in June, helped by a sharp rebound in demand for consumer goods. Wednesday's economic data comes as a political logjam in Parliament has stalled Prime Minister Narendra Modi's reform agenda, putting in doubt the fate of a major tax overhaul that will create one of the world's largest single markets. A crash in global commodity prices has helped inflation slip below the Reserve Bank of India's (RBI) medium-term target of 6 per cent, giving it room to cut interest rates by 75 basis points this year. The central bank left the policy repo rate on hold last week, leaving the door open to ease further depending on the inflation outlook. The latest inflation data, coupled with China's move to devalue its currency, has bolstered hopes of further monetary easing. "The number is a big downside surprise," said A. Prasanna, an economist at ICICI Securities Primary Dealership. "This increases chances of RBI cutting interest rate one more time in this fiscal year ending March." CURRENCY CONCERNSChina's yuan has fallen almost 4 per cent in two days since the central bank announced the devaluation on Tuesday to help resuscitate a slowing economy. This is bad news for Indian exports, which have fallen for seven straight months. Exporters are already complaining about a relatively stronger rupee that has appreciated by 10 per cent on a real trade-weighted basis since the middle of last year. Indian companies are worried the yuan's devaluation will flood the local market with cheaper Chinese imports, worsening the bilateral trade deficit. "Along with the yuan devaluation move, I think there is a case for more (and) not less accommodation," said Jyotinder Kaur, principal economist at HDFC Bank. "The sooner the Reserve Bank of India steps on the easing pedal, the better it is." The RBI, however, is worried about entrenched high inflationary expectations which are feeding into higher wages and other prices. A central bank survey last week showed households expect consumer inflation to hit 10.1 per cent within three months. (Reuters)
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