India's exports slumped for the fifth straight month in April from a year earlier, dragged down by fall in global demand that has cast a shadow over Prime Minister Narendra Modi's goal of achieving over 8 per cent growth in 2015/16 fiscal year. The ongoing weakness in merchandise exports, which account for about 16 per cent of India's roughly $2 trillion economy, will weigh on January to March economic growth numbers due to be released on May 29. Modi sees manufacturing and export-led growth as the best way to create jobs for the millions of young people who helped him gain power last year. He aims to almost double goods and services exports to $900 billion in the next four years. But merchandise exports contracted 14 per cent in April. The trade deficit narrowed to $10.99 billion as oil imports declined by more than 42 per cent from a year earlier, data released by Ministry of Commerce and Industry showed on Friday. Exporters said falling global commodity and crude oil prices had so far partly offset their lower overseas sales, but they fear more gloom - as demand is falling further, particularly in oil exporting and Latin American countries. "There is a fall in order booking for coming months, particularly from buyers in the Middle East, Africa and Latin American countries," said Ajay Sahai, a senior executive at the Federation of Indian Export Organisations. He warned that exporters could be forced to lay off workers if sales orders continued to decline over the next 4-5 months. Some relief could come from the Reserve Bank of India, which has cut policy rates twice this year to 7.5 per cent because of slower consumer inflation, and is expected to make borrowing cheaper again when it meets for a policy review on June 2. To counter slack global demand, Modi has vowed to modernise overloaded roads, ports and railways in a bid to make India's exports more competitive. This week, he is visiting top trading partner China, hoping to invigorate exports. India's economy expanded 7.5 per cent year-on-year during the three months ending in December, higher than China’s 7.3 per cent growth recorded in that quarter. (Reuters)
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India has slipped further in an annual survey analysing the world's best places to be a mother, ranking 140th behind countries like Zimbabwe, Bangladesh and Iraq. Save the Children's 'State of the World's Mothers' report for 2015 ranked India at 140, down from last year's 137th, on an index of four indicators that measure risk of maternal death, under-five mortality rate, expected number of years of formal schooling, the gross national income per capita and participation of women in government. Researchers compiled the index of 179 countries by using data from UN agencies to show where mothers and children fare best and where they face the greatest hardships. According to Save the Children, Indian children on average spend 11.7 years in formal schooling and 52.7 out of 1,000 children in India die before their fifth birthday. The report found that children living in Delhi were among the most unequal with large gaps between health provision for the poorest and the richest. "It’s a tale of two cities: the wealthy who are doing well and then the marginalised who are largely living in slum-like conditions," Robert Clay, vice-president for global health at Save the Children, said. He said the Indian capital represents "the survival of the richest" as wealthy people "have the advantage and the poor are not getting access to essential services." "While private high-quality sector health facilities are more plentiful in urban areas, the urban poor often lack the ability to pay for this care," the authors said. "Public sector health systems are typically under-funded, and often fail to reach those most in need with basic health services. In many instances, the poor resort to seeking care from unqualified health practitioners, often paying for care that is poor quality, or in some cases, harmful," researchers said. This year, as last, the top of the table was dominated by European countries and Norway replaced Finland at pole position. The US ranked 33rd and the UK 23rd. (Agencies)
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Indian manufacturing growth eased in April as domestic demand softened, despite factories cutting prices for the first time in nearly two years, a business survey showed on Monday. Falling inflation and a slowing manufacturing industry would reinforce expectations that the Reserve Bank of India will again cut interest rates soon from the current 7.5 percent. "The data supports a rate cut… they will continue cutting rates but slowly, perhaps waiting until the upcoming meeting," said Pollyanna De Lima, economist at Markit. The RBI has already cut rates twice this year. Both times it surprised markets by announcing the cuts a few days prior to its scheduled policy reviews and there is a 60 percent chance it will move ahead of the next one on June 2, a Reuters poll found last week. The HSBC Manufacturing Purchasing Managers' Index, compiled by Markit, fell to 51.3 in April from March's 52.1 but marked its eighteenth month above the 50 level that separates growth from contraction. Manufacturers reduced selling prices for the first time since May 2013, taking advantage of a weaker rise in the costs of their raw materials, but that failed to attract new orders. An index monitoring new business, which highlights underlying demand, fell to 51.9 in April from 53.2. Firms also reduced staffing levels last month. A revamp of the way India measures its economy has resulted in India's growth overtaking China's, restoring it to rank among the fastest growing in the world. Lower interest rates and long-awaited economic reforms could spur growth further. Data to be released at the end of this month is expected to show the economy grew 7.4 percent during the January-March quarter, slightly slower than the 7.5 percent reported in the last three months of 2014.(Agencies)
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According to a survey by American Express, carried out in partnership with CFO Research across the globe, employment prospects appear the brightest in India as 78 per cent of respondents predict greater rise in employment. Finance leaders believe that growth in existing businesses will add to the creation of jobs. This is a welcome news for the Indian youth. In the US, 61 per cent of respondents said they believe so and for China the figure stood at 50 per cent."As with the economic outlook, India is at the top of the list of countries anticipating rising employment. However, the survey points to the shortage of skilled positions," American Express Country Business Head, Global Corporate Payments Saru Kaushal said.As per the report, 22 per cent of respondents from India pointed to shortage in skilled positions."We are confident that with the government's increased focus to make India Job Ready, this gap will be bridged soon," Kaushal added.According to 29 per cent of those polled from India, headcount in their companies has increased at a faster clip than their revenues while 48 per cent said that the two had increased at about the same pace. About 37 per cent of executives in Asia and Australia region expect employment to improve while 23 per cent expect it to worsen. In Japan, 29 per cent respondent expect employment to improve. Around 39 per cent of respondents from Australia and 31 per cent from Hong Kong expect a decline in jobs, the survey said.India Leader in Economic Confidence, China’s Confidence Drops More than two-thirds of financial executives in Asia/Australia (67 per cent, down from 70 per centa year ago) predict expansion in their economy. India leads the world in economic confidence (94 per cent, up from 86 per cent in 2014 and 78 per cent in 2013). On the other hand, China’s confidence has dropped significantly since 2013 to 78 per cent (down from 94 per cent) and Singapore has also experienced a decline (70 per cent, down from 82 per cent last year and 78 per cent in 2013). Executives from Hong Kong and Japan were each nearly evenly split between those anticipating economic expansion (50 per cent and 52 per cent respectively) and those expecting no change or expecting contraction in their economies (50 per cent and 48 per cent respectively). India is also planning increase in investment by 12 per cent. This is by far the biggest increase in the Asian region.(Agencies)
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Chief Executive Officers in India are more confident about the growth prospects of their business than global peers and a majority of them are looking at alliances to enter new markets, a PwC study said on Thursday (19 March).According to PwC's 18th Annual Global CEO Survey, 62 per cent Indian Chief Executive Officers are very confident of their growth prospects in the short term (12 months) - higher than their global peers and up from 49 per cent last year."The optimism in India may be more than just the euphoria following a majority growth-oriented government being voted to power at the Centre," the report said, adding that 84 per cent of Indian CEOs see more "opportunities" while only 41 per cent see more "threats".Further, 71 per cent of CEOs are very confident of growth in the next three years."CEOs in India seem to be benefiting on both counts - developments within and outside the country. Our survey reflects this exuberance of CEOs about growth of their businesses as also of the economy," PwC India Chairman Deepak Kapoor said.According to the report, CEOs are ready to collaborate for access to new geographic markets, technologies and customers with 63 per cent planning to enter into new strategic alliances or joint ventures over the next year - the highest percentage since 2010.The key concern for CEOs in India continues to be inadequate basic infrastructure, while global CEOs are more concerned about over-regulation, increasing tax burden, geo-political uncertainty and government response to fiscal deficit and debt burden.The only threat common to both global as well as Indian CEOs is the unavailability of key skills, PwC said.An interesting point is that threat perception in China is much higher than in India across various parameters from increasing tax burden to pandemics to supply chain disruption.Global CEOs rate India as the sixth most important place for their growth prospect, while for CEOs in India, important market is the US, followed by China, UK, Japan and Indonesia.Moreover, around 82 per cent of the CEOs surveyed in India said they have a strategy to promote diversity and inclusion as against the global 64 per cent, it added.(PTI)
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Persistent deflationary pressures pulled down the rate of price rise to a record (-)2.06 per cent in February - keeping inflation in the negative zone for the fourth straight month - on account of cheaper food, fuel and manufacturing products, raising industry clamour for further cuts in interest rate.Inflation measured on wholesale price index (WPI) was at (-)0.39 per cent in January, (-)0.50 per cent in December and (-)0.17 per cent in November.It was 5.03 per cent in February 2014.With inflation dropping to record lows, industry demanded further easing of interest rates to boost industrial growth.Experts cautioned however that unseasonal rains this month could be a dampener and the decline in food inflation may be short-lived, prompting the Reserve Bank to avoid lowering rates immediately."There is a low likelihood of a rate cut in the April monetary policy review, notwithstanding the lower-than- expected WPI print for February. We expect further repo rate cuts to be limited to 50 basis points in the remainder of 2015," ICRA Senior Economist Aditi Nayar said.As per official data released today, inflation in food articles category stood at 7.74 per cent, and the in manufactured products category, it was 0.33 per cent.Fuel and power inflation saw significant cooling at (-)14.72 per cent in February.In the food basket, while inflation in onions, pulses and protein-rich items like egg, meat and fish inched upwards, vegetables, fruits and milk saw the rate of price rise decline during the month.Inflation in vegetables stood at 15.54 per cent in February, lower than 19.74 per cent in the previous month.Rate of price rise in potato was (-)3.56 per cent as against 2.11 per cent in January."The decline in food inflation will be short lived as unseasonal rains have already started to have an effect on production. We expect the government to act pro-actively as food inflation is likely move up from the next month onwards," Deloitte (India) Senior Director Anis Chakravarty said. Negative inflation is largely driven by price trends in the fuel and manufactured goods segment. Besides, subdued global commodity prices have aided softening of inflation.Industry chambers pitched for further measures to strengthen the demand and urged RBI to continue with its rate cutting cycle in the coming months."Government and RBI should also engage with the banks to ensure that the lowering of policy rates already effected is passed on to the investors and consumers in the form of lower lending rates," Ficci said.As per the data, inflation in non-food articles was (-)5.55 per cent, while in egg, meat and fish it was 1.27 per cent. However, the rate of price rise was high in onion at 26.58 per cent in February, against (-)1.90 per cent in January.Commenting on WPI, Assocham said: "The situation demands urgent action to boost industrial and consumer demand.Lowering of interest rates and easy credit availability should be the top priorities of the Government and the RBI".The WPI inflation numbers would be taken into account by the Reserve Bank for formulating its next monetary policy announcement, scheduled on April 7.The RBI has lowered policy rates by 0.50 per cent between January and March to prop up growth as it saw inflationary pressures easing.(Agencies)
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The International Monetary Fund lowered its forecast for global economic growth in 2015, and called on Tuesday for governments and central banks to pursue accommodative monetary policies and structural reforms to support growth. Global growth is projected at 3.5 per cent for 2015 and 3.7 per cent for 2016, the IMF said in its latest World Economic Outlook report, lowering its forecast by 0.3 percentage points for both years. "New factors supporting growth - lower oil prices, but also depreciation of euro and yen - are more than offset by persistent negative forces, including the lingering legacies of the crisis and lower potential growth in many countries," Olivier Blanchard, the IMF's chief economist, said in a statement released by the Washington-based lender. The IMF also cut projections for Brazil and India. India is expected to grow at 6.3 per cent this year and 6.5 per cent in 2016 by when it is likely to cross China's projected growth rate, the IMF said while terming the new government's reforms as "promising" but insisted that their implementation is key. In 2014, India's growth rate was 5.8 per cent against China's 7.4 per cent. India's growth rate in 2013 was five per cent as against China's 7.8 per cent. "I think the reform plans of the new Prime Minister are promising. We are going to have to see the speed of the implementation," said Gian Maria Milesi-Ferretti, deputy director in the IMF's Research Department. The IMF advised advanced economies to maintain accommodative monetary policies to avoid increases in real interest rates as cheaper oil increases the risk of deflation. If policy rates could not be reduced further, the IMF recommended pursuing an accommodative policy "through other means". The United States was the lone bright spot in an otherwise gloomy report for major economies, with projected growth raised to 3.6 per cent from 3.1 per cent for 2015. The United States largely offset prospects of more weakness in the euro area, where only Spain's growth was adjusted upward. Projections for emerging economies were also broadly cut back, with the outlook for oil exporters Russia, Nigeria and Saudi Arabia worsening the most. The IMF predicts that a slowdown in China will draw a more limited policy response as authorities in Beijing will be more concerned with the risks of rapid credit and investment growth. Lower oil prices will give central banks in emerging economies leeway to delay raising benchmark interest rates, although "macroeconomic policy space to support growth remains limited," the report said. Falling prices will also give countries a chance to reform energy subsidies and taxes, the IMF said. The prospects of commodity importers and exporters will further diverge. Oil exporters can draw on funds they amassed when prices were high and can further allow for substantial depreciation in their currencies to dull the economic shock of plunging prices. The report is largely in line with remarks by IMF Managing Director Christine Lagarde last week, in which she said falling oil prices and strong U.S. growth were unlikely to make the IMF more upbeat. The euro zone and Japan could suffer a long period of weak growth and dangerously low inflation, she said. Both Laggard and the report indicated that money flowing back to the US as it tightens monetary policy could contribute to volatile financial markets in emerging economies. The US Federal Reserve is widely expected to begin raising interest rates some time this year. (Agencies)
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India's trade deficit shrank to a 10-month low in December as global oil prices tumbled and demand for gold fell, auguring well for Indian current account balance and the rupee.The deficit narrowed by 44 percent from the previous month to $9.43 billion, its lowest since February 2014. The cost of oil imports, at $9.94 billion, fell 15 percent from November.Oil accounts for nearly a third of India's imports. Global crude prices have plunged more than half since last June, promising windfall gains for Asia's third-largest economy.The oil-price slide, estimated by the finance ministry to shave 1 to 1.5 percent off India's current account deficit, was a key factor in making it possible for the Reserve Bank of India to announce a surprise interest rate cut on Thursday.RBI Governor Raghuram Rajan ordered the quarter-point cut between meetings, in a key boost for Prime Minister Narendra Modi's government as it prepares to present its first full budget next month.A lower external deficit would also buoy the Indian rupee amid signs of increasing volatility in emerging-market currencies in anticipation of higher interest rates in the United States."With lower external vulnerabilities, interest rates do not need to stay as high to continue attracting foreign capital," said Shilan Shah, India Economist at Capital Economics. "This further supports our view that the RBI will follow up today's rate cut with more monetary easing over the coming months."Gold imports also dropped by 76 percent from the previous month to $1.34 billion. Buyers were deterred by price volatility during the month after a prolonged decline in the value of the precious metal.In signs of growth worries, weak global demand pulled down merchandise exports to $25.4 billion from nearly $26 billion in the prior month. Year-on-year, exports fell 3.77 percent in December.Exports account for nearly a fifth of India's $2 trillion economy, which is struggling to break out of its longest spell of sub-par growth since the 1980s.(Reuters)
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