India’s status as fastest growing economy to be short-lived

[Bilal9]

Reuters, Bengaluru​

India likely recorded strong double-digit economic growth in the last quarter but economists polled by Reuters expected the pace to more than halve this quarter and slow further toward the end of the year as interest rates rise.

India is grappling with high unemployment and inflation, which has been running above the top of the Reserve Bank of India's tolerance band all year.

​

Growth this quarter is predicted to slow sharply to an annual 6.2 per cent from a median forecast of 15.2 per cent in Q2, supported mainly by statistical comparisons with a year ago rather than new momentum, before decelerating further to 4.5 per cent in October-December.

The median expectation for 2022 growth was 7.2 per cent, according to an August 22-26 Reuters poll, but economists said that the solid growth rate masks how rapidly the economy was expected to slow in coming months.

"Even as India remains the fastest-growing economy, consumption will not be strong enough to drive growth as unemployment remains high and real wages are at a record low level," said Kunal Kundu, India economist at Societe Generale.

"By supporting growth through investment, the government has only fired on one engine while forgetting about the impetus which domestic consumption provides. This is why India's growth is still below its pre-pandemic trend."

The economy has not grown fast enough to accommodate some 12 million people joining the labour force each year.

Meanwhile the RBI, a relative laggard in the global tightening cycle, is set to raise its key repo rate by another 60 basis points by the end of March to try to bring inflation within the tolerance limit.

That follows three interest rate rises this year totaling 140 basis points, and would take the repo rate to 6.00 per cent by end-Q1 2023.

While the central bank's mandated target band is 2 per cent-6 per cent, inflation was expected to average 6.9 per cent and 6.2 per cent this quarter and next, respectively, before falling just below the top end of the range to 5.8 per cent in Q1 2023. That is roughly in line with the central bank's projection.

"Despite signs of a cool-off in price pressures ... it is premature to go easy on the inflation fight given considerable uncertainties from geopolitical risks and hard landing risks in major economies," said Radhika Rao, senior economist at DBS.

The economy is also enduring inflation pressure from a weak rupee, which for months has been trading close to 80 to the US dollar, a level the central bank has been defending in currency markets by selling dollar reserves.

The latest Reuters poll also showed India's current account deficit swelling to 3.1 per cent of gross domestic product this year, the highest in at least a decade, which may put further pressure on the currency.

 

[Turingsage]

Meanwhile the naysayers can continue to google any titbit of negative news regarding India.
Meanwhile

 

[Maula Jatt]

Meanwhile the naysayers can continue to google any titbit of negative news regarding India.
Meanwhile

 

[Baba_Yaga]

Situation currently in the world is so volatile that growth could literally be anywhere from 4% to 10%. If oil prices continue to remain like this, then no doubt growth will be about 4-5% at best. On the other hand, if things turn out to be well, 7-8% might be possible. Double digit growth is a pipe dream ive known that from the beginning, until there are massive structural reforms including land, judicial, labour etc. Why would a foreign company invest in a country where simple cases like clear cut murders take 10-15 years to resolve, let alone complex cases related to bankruptcys etc,

4.5 crore pending cases, 50% judges missing - Why justice in India takes so long | India News - Times of India

India News: A study by PRS Legislative Research says that there are 4.5 crore pending cases across all courts in India, with nearly 9 out of 10 pending cases stuc

timesofindia.indiatimes.com

Even if Modi is sincere, i doubt he or his ministers have the intellect or the vision for long term growth, most educated BJP leaders like Swami, Gadkari etc have been sidelined in favor of fanatic "yes men" who suck up to Modi - thus we have debacles like unplanned lockdown or demonetization. Moreover, those hoping for radical change conveniently forget the fact that almost all BJP recruits are "lotas" from other parties, Many benefits come about for being a lota, for once, you get an immediate cash handout of 10-20 crores and all your past criminal cases, no matter how big they were are "forgiven" by the magical hand of Modi ji. About 50% of indian mps and mlas have criminal cases, most of them from BJP, and these are the people expected to deliver double digit growth https://www.financialexpress.com/in...ainst-them-bjp-tops-list-with-83-adr/2315943/

The only silver lining currently is large spending on infrastructure and some good news of investments in sectors like solar and chip, but these can only take one so far. if all it took was highways to get double digit growth everyone would have it.

 

[Kyusuibu Honbu]

Why would a foreign company invest in a country where simple cases like clear cut murders take 10-15 years to resolve, let alone complex cases related to bankruptcys etc,

4.5 crore pending cases, 50% judges missing - Why justice in India takes so long | India News - Times of India

India News: A study by PRS Legislative Research says that there are 4.5 crore pending cases across all courts in India, with nearly 9 out of 10 pending cases stuc

timesofindia.indiatimes.com

FDI investors have little concern on murder cases, unless FDI investors themselves are specifically targeted by it.

They are more concerned about Ease of doing business, protectionism, terrorism, war and red tape

Goal here is getting quick ROIs on their investment, also long-term safety for the investment (no regime change etc)

 

[Turingsage]

Every country except the primary energy producers are going to see a very difficult economic outlook. Its not like Bangladesh will escape these pricy energy headwinds.
But then this is Bilal who assures me that every Bangladeshi drives a Lamborghini and Rolls Royce unlike the Indians who he believes can barely afford a TATA nano
He is basically deranged by his oozing hate of Indians.

 

[Kyusuibu Honbu]

Every country except the primary energy producers are going to see a very difficult economic outlook. Its not like Bangladesh will escape these pricy energy headwinds.
But then this is Bilal who assures me that every Bangladeshi drives a Lamborghini and Rolls Royce unlike the Indians who he believes can barely afford a TATA nano
He is basically deranged by his oozing hate of Indians.

LDCs lack an understanding of economic growth sustainment

Era of high GDP was already achieved in last decade by India, even reaching double digit at one time
India clocked 10.08 per cent growth under Manmohan Singh's tenure: Report

Current objective is increasing FDI inflows

India received the highest annual FDI inflows of $84,835 mn in FY 21-22 overtaking last year's FDI by $2.87 bn

FDI in India: Foreign Direct Investment Policy of India

Even made its 9th position in 2019
WORLD INVESTMENT REPORT2020

Shonorland in same period saw a 55% drop in FDI

 

[Baba_Yaga]

FDI investors have little concern on murder cases, unless FDI investors themselves are specifically targeted by it.

They are more concerned about Ease of doing business, protectionism, terrorism, war and red tape

Goal here is getting quick ROIs on their investment, also long-term safety for the investment (no regime change etc)

Well inability to resolve simple cases like rape and murder on time demonstrates that indian court system is incapable of dealing with complex cases in corporate law like corporate disputes, bankrupcies etc etc, and an fdi investor definitely cares a lot about this stuff. Also the current Kangaroo court under the BJP is also worrysome since investors can no longer trust it to past honest judgements in cases where company sues the govt or the govt comes up with some weird tax out of its ***. or in cases where the foreign investor is in legal battle against the govt's "preffered" companies like Ambani Adani. Why would i invest in India in a sector dominated by Adani or Ambani when i know that every court judgement will be passed against me , I am Indian I wouldnt do it myself and you are talking about foreign investors who only care about money.

I am not the only one saying this, several experts call the banana indian judicial system one of the biggest impediments to fdi and long term double digit growth

India needs to speed up judicial reforms to attract larger volumes of foreign investments

The Modi government has had success in its efforts to reform the Indian judicial system, but more reforms are needed to speed up the delivery of justice in India.

www.indiaglobalbusiness.com

The other impediment that has emerged now and didnt exist in the past is frequent communal clashes. Modi is hoping no one is noticing this crap but everyone is.

Reform is No Longer the Biggest Drag on India’s Economic Ambitions

Frequent communal clashes will deter global businesses from committing long-term investments in India.

thediplomat.com

 

[Indos]

LDCs lack an understanding of economic growth sustainment

Era of high GDP was already achieved in last decade by India, even reaching double digit at one time
India clocked 10.08 per cent growth under Manmohan Singh's tenure: Report

Current objective is increasing FDI inflows


FDI in India: Foreign Direct Investment Policy of India

Even made its 9th position in 2019
WORLD INVESTMENT REPORT2020
View attachment 882190

Shonorland in same period saw a 55% drop in FDI
View attachment 882191

Indonesian FDI calculation is not showing the real number since when government calculate investment they pull out the investment coming into financial and oil and gas sector.

Each nation has different calculation, for Singapore it is likely they include the investment going into their financial and oil and gas sector (refinery)

 

[Ajamal]

These ranking keeps changing but We are all set to grow at a very high rate for atleast 2 decades. All basics are put in place correctly. All possible economic measures for fast development are excercise. India is the only major country who will be having surplus skilled manpower. India has a very young demography and people with young age and high education.

 

[Turingsage]

A more recent FDI inflow chart from UNCTAD

“A return to positive GDP growth of 2.3% and the government’s targeted investment facilitation programme helped stabilise investment after the early lockdown,” noted the UNCTAD report. Per the research, China’s cross-border merger & acquisition activity jumped by 54%, largely focused in the IT and pharma sectors. FDI in high-tech industries was also up by more than 10%.
India saw a similar investment composition, with a heavy concentration in the IT sector. FDI inflows in the country grew by 13% to $57 billion for 2020 – making it the fastest growing FDI market in the world. A nearly $6 billion deal between Reliance Jio and Facebook was a big factor in this performance.
Strong inflows in India took FDI growth for all of South Asia up by 10%, which combined with China’s resilience to limit the damage to developing Asia as a whole. Southeast Asia was not as lucky – facing a 31% contraction led by crippling dips in Malaysia (68%) and Thailand (50%), with smaller declines in Singapore (37%), Indonesia (24%) and Vietnam (10%).

That said, the region still managed to draw $107 billion in FDI, while developing Asia as a whole leveled out at nearly $480 billion. The knock-on effect is that the developing economies globally drew more than $600 billion in FDI last year, feeling a relatively mild 12% contraction.
This – combined with dire investment figures across North America and Europe – has reshuffled the global trade flow so that developing economies now account for over 70% of global FDI. With China well on its way to economic recovery and other major economies still grappling with the crisis, the UNCTAD figures have tremendous significance when it comes to trade and FDI in the post-pandemic world.
Asia-Pacific already accounts for one quarter of global private equity investments according to Bain & Company, a position that might well be cemented by pandemic-induced economic trends.

Related links​

BCG outlines $170 billion FDI potential for Central Asia over next decade

AE now belongs to the world's 20 top economies for FDI
https://api.whatsapp.com/send?text=...a-passed-us-as-globes-top-destination-for-fdi

In 2020, China passed US as globe's top destination for FDI

China received more than $160 billion in foreign direct investment (FDI) last year – marking 4% growth and placing it as the largest FDI recipient in the world.

www.consultancy.asia

 

[REhorror]

The US is concern trolling India now?

Indianbros, watch out!