[ecis2016.org] The World Bank has projected a 5% growth rate for India in the 2019-2020 fiscal but said it was likely to recover to 5.8% in the following financial year
In India, where weakness in credit from non-bank financial companies is expected to linger, growth is projected to slow to 5% in fiscal year 2019/20, which ends on March 31 and recover to 5.8% the following fiscal year, the World Bank said, on January 8, 2020, in its latest edition of the Global Economic Prospects. The global economic growth is forecast to edge up to 2.5 per cent in 2020 as investment and trade gradually recover from last year’s significant weakness, but downward risks persist, it said.
You are reading: India’s GDP projected to decelerate to 5% in 2019-2020: World Bank
In the report’s India section, the World Bank said tighter credit conditions in the non-banking sector, are contributing to a substantial weakening of the domestic demand in the country. “In India, activity was constrained by insufficient credit availability, as well as by subdued private consumption. Key risks to the outlook include a sharper-than-expected slowdown in major economies, a re-escalation of regional geopolitical tensions, and a setback in reforms to address impaired balance sheets in the financial and corporate sectors,” the report said.
In India, economic activity slowed substantially in 2019, with the deceleration most pronounced in the manufacturing and agriculture sectors, whereas government-related services sub-sectors received significant support from public spending, the bank said. GDP growth decelerated to five percent and 4.5 per cent in the April-June and July-September quarters of 2019, respectively, the lowest readings since 2013, it said. Sharp slowdowns in household consumption and investment offset the rise in government spending. High-frequency data suggest that activity continued to be weak for the rest of 2019, the World Bank said. The Bank, in the report, however, praised India’s efforts to gradually eliminate subsidies on LPG.
“With the growth in emerging and developing economies likely to remain slow, policymakers should seize the opportunity to undertake structural reforms that boost broad-based growth, which is essential to poverty reduction,” World Bank Group vice-president for equitable growth, finance and institutions, Ceyla Pazarbasioglu, said. “Steps to improve the business climate, the rule of law, debt management, and productivity can help achieve sustained growth,” Pazarbasioglu said.
India moves up 14 spots to rank 63 on the World Bank’s Ease Of Doing Business list
In a development that has surprised many analysts, India has moved up 14 spots to 63, in the World Bank’s Ease Of Doing Business rankings
October 24, 2019: India jumped 14 places to the 63rd position, on the World Bank’s Ease Of Doing Business ranking, riding high on the government’s flagship ‘Make in India’ scheme and other reforms attracting foreign investment. The country also figured among the top 10 performers on the list for the third time in a row.
The rankings come at a time when the Reserve Bank of India (RBI), World Bank, International Monetary Fund (IMF) and various rating agencies have slashed the country’s growth forecasts amid a slowdown in the global economy. In its ‘Doing Business’ 2020 report, the World Bank commended the reform efforts undertaken by the country ‘given the size of India’s economy.’
“This is the third year in a row that India makes to top 10 in Doing Business, which is a success which very few countries have done over the 20 years of the project. Without exception, the other countries that have done this are very small, population-wise, and homogeneous,” Simeon Djankov, director of Development Economics at the World Bank, told PTI in an interview.
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One of the main reasons for the improvement in India’s ranking this year is the successful implementation of the Insolvency And Bankruptcy Code, the World Bank official said. “Before the implementation of the reform, it was very burdensome for secured creditors to seize companies in default of their loans,” the report said. “Since its implementation, more than 2,000 companies have used the new law. Of these, about 470 have commenced liquidation and more than 120 have approved reorganisation plans, with the remaining cases still pending,” it added.
New Zealand, Singapore and Hong Kong topped the list this year. Apart from India, the other countries on this year’s ‘top 10 performers’ list are Saudi Arabia (62), Jordan (75), Togo (97), Bahrain (43), Tajikistan (106), Pakistan (108), Kuwait (83), China (31) and Nigeria (131).
India slips 10 places on Global Competitiveness Index topped by Singapore
India has slipped 10 places, to rank 68th out of 141 countries, in the World Economic Forum’s latest Global Competitiveness Index
October 10, 2019: India has moved down 10 places to rank 68th on an annual global competitiveness index, largely due to improvements witnessed by several other economies, while Singapore has replaced the US as the world’s most competitive economy. India, which was ranked 58th in the annual Global Competitiveness Index compiled by Geneva-based World Economic Forum (WEF), is among the worst-performing BRICS nations, along with Brazil (ranked even lower than India at 71st this year).
Announcing its latest index, the WEF, on October 9, 2019, said India ranks high in terms of macroeconomic stability and market size, while its financial sector is relatively deep and stable, despite the high delinquency rate, which contributes to weakening the soundness of its banking system. India is also ranked high at 15th place, in terms of corporate governance, while it is ranked second globally for shareholder governance, the WEF study showed. In terms of the market size, India is ranked third, while it has the same rank for renewable energy regulation. India also punches above its development status when it comes to innovation, which is well ahead of most emerging economies and on par with several advanced economies, the report said.
However, these positive metrics contrast with major shortcomings in some of the basic enablers of competitiveness in case of India, the WEF said, while flagging limited ICT (information, communications and technology) adoption, poor health conditions and low healthy life expectancy. The WEF said the healthy life expectancy, where India has been ranked 109th out of total the 141 countries surveyed for the index, is one of the shortest outside Africa and significantly below the south Asian average. Besides, India needs to grow its skills base, while its product market efficiency is undermined by a lack of trade openness and the labour market is characterised by a lack of worker rights’ protections, insufficiently developed active labour market policies and critically low participation of women. With a ratio of female workers to male workers of 0.26, India has been ranked very low at 128th place. India is also ranked low at 118th in terms of meritocracy and incentivisation and at 107th place for skills.
In the overall ranking, India is followed by some of its neighbours including Sri Lanka at 84th place, Bangladesh at 105th, Nepal at 108th and Pakistan at 110th place. China is ranked 28th (the highest-ranked among the BRICS) while Vietnam is the most improved country in the region this year at 67th place. Singapore has become the world’s most competitive economy in 2019, pushing the US to second place. Hong Kong SAR is ranked 3rd, the Netherlands is at 4th and Switzerland is ranked 5th. Klaus Schwab, founder and executive chairman of WEF, said, “The report shows that those countries, which integrate into their economic policies an emphasis on infrastructure, skills, research and development and support those left behind, are more successful compared to those that focus only on traditional factors of growth.”
India leaps 23 places on World Bank’s ease of doing business ranking
India leaped 23 places to the 77th position on the World Bank’s ‘ease of doing business’ ranking as GST, the insolvency framework and tax reforms made the country more investor-friendly
November 1, 2018: India has jumped 23 places to the 77th position, on the World Bank’s ‘ease of doing business’ ranking. In its annual ‘Doing Business’ 2019 report, the World Bank said India improved its rank on six out of the 10 parameters relating to starting and doing business in a country. Grant of a construction permit, trading across the borders, starting a business, getting credit, getting electricity and enforcing contracts, showed improvement.
Buoyed by the improvement, finance minister Arun Jaitley said the country can break into the top 50, if it made it easier to start a business and improved on contract enforcement. India was ranked 142nd among 190 nations when prime minister Narendra Modi took office in 2014. At that time, the country was battling perceptions of excess red-tape and policy paralysis. Four years of reform pushed up India’s rank to 100th in World Bank’s ‘Doing Business’ 2018 report. It was 130th in 2017, when it was ranked lower than Iran and Uganda.
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In the 2019 ranking, New Zealand tops the list, followed by Singapore, Denmark and Hong Kong. The United States is placed eighth and China ranked at 46th. Neighbouring Pakistan is placed at 136.
In New Delhi, Jaitley said a focussed approach, would ensure getting within ‘the 50th rank target is not out of reach’. “The obvious area and target for improvement are registering property, starting a business, insolvency and taxation and the fifth one is enforcement of the contract. Legislation is already in place, with regard to enforcement of contract, taxation, and insolvency. Starting a business, central government and state governments have to work together,” he said.
Jaitley also said the impact of GST has not been entirely accounted for in the ranking, due to an early cut-off date.
Commerce and industry minister Suresh Prabhu, said the improvement in rank was due to a combination of several factors, including administrative changes and legislative reforms like GST and the Insolvency and Bankruptcy Code (IBC). “As we go on, we will continue to improve more. The structural reforms, which have not yet been captured fully, will be reflected,” he said.
The World Bank put India among the top 10 economies to make the most improvements, saying it focused on streamlining business processes. India, it said, made starting a business easier by integrating multiple application forms into a general incorporation form. “India also replaced the value-added tax with the GST (Goods and Services Tax), for which the registration process is faster,” it said. Also, “India made paying taxes easier by replacing many indirect taxes with a single indirect tax, the GST, for the entire country. India also made paying taxes less costly, by reducing the corporate income tax rate and the employees’ provident funds scheme rate paid by the employer,” the World Bank said.
Stating that a well-designed insolvency framework is a vital determinant of debt recovery, it said the establishment of debt recovery tribunals in India ‘reduced non-performing loans by 28 per cent and lowered interest rates on larger loans, suggesting that faster processing of debt recovery cases cut the cost of credit’.
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Further, India reduced the time and cost of export and import through various initiatives, including the implementation of electronic sealing of containers, the upgrading of port infrastructure and allowing electronic submission of supporting documents with digital signatures, it said. The World Bank said India has further streamlined the process of obtaining a building permit and made it faster and less expensive to obtain a construction permit. It also improved building quality control, by introducing decennial liability and insurance.
Prabhu said India’s leap of 23 ranks in the ease of doing business ranking is significant, considering that last year India improved its ranking by 30 places, a rare feat for any large country the size of India. The country, he said, has improved its ranking by 53 positions in the last two years and 65 positions in four years since 2014. The World Bank ranks 190 countries based on 10 parameters, including starting a business, construction permits, getting electricity, getting credit, paying taxes, trade across borders, enforcing contracts and resolving insolvency.
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