Monday, 22 January 2018

We Walk our Talk

Compendium for the period 13th – 20th January 2018

During the last week, PHD Research Bureau, the research arm of PHD Chamber of Commerce and Industry focussed on various issues and challenges pertaining to the economic and business environment in the country.  PHD Research Bureau disseminated information to members of PHD Chamber & other stakeholders on various issues such as Readiness for the Future of Production Report 2018,CPI Inflation, IIP, WPI Inflation, Direct Tax Collections, growth in foreign tourist arrivals, draft directions on hedging of commodity price risk and freight risk in overseas markets released by RBI etc., apart from information on lead macroeconomic and socio-economic indicators.

India and World Economy
·         India ranks 30th out of 100 economies on Readiness for the Future of Production Assessment Results-- World Economic Forum’s report on Readiness for the Future of Production Report 2018 analyses development of modern industrial strategies and urges collaborative action. India has been ranked at 30th position on a global manufacturing index — below China’s 5th place but above other BRICS peers, Brazil, Russia and South Africa.
·         MoUs, Agreements signed during the visit of Prime Minister of Israel to India-- Hon’ble Prime Minister Mr. Benjamin Netanyahu’s visit to India from 14 to 19 January 2018 closes a momentous twenty fifth anniversary year of India-Israel relationship and its growing partnership. The summit level meetings between the Republic of India and the State of Israel that commenced with Hon’ble Prime Minister Shri Narendra Modi’s historic visit to Israel from 4 to 6 July 2017, have further strengthened the bonds between the two governments and peoples and have consolidated the foundation for their Strategic Partnership.
·         December 2017 CPI inflation grows at 5.2%-- The all India general CPI inflation (Combined) for December 2017 grows at 5.2% as compared to 4.9% in November 2017. The inflation rates for rural and urban areas for December 2017 are 5.27% and 5.09% respectively, as compared to 4.8% and 4.9% respectively, for November 2017. Rate of inflation during December 2017 for sugar and confectionery stands at 6.21%, pan and tobacco at 7.76%, cereals and products at 2.57%, milk and products at 4.37%, egg at 9.48%, spices at (-)2.21 %, pulses and products at (-)23.47% etc.
·         November 2017 IIP stands at 8.4%-- Growth in industry output, as measured in terms of IIP, for the month of November 2017 stands at 8.4 % as compared to 1.9% in October 2017. The growth in the three sectors mining, manufacturing and electricity in November 2017 stands at 1.1%, 10.2% and 3.9% respectively over November 2016.
·         Rabi Crops Sowing declined by 0.9% in 2017-18 as compared to the area sown during 2016-17-- As per preliminary reports received from the States, the total area sown under Rabi crops as on 12th January 2018 stands at 609.51 lakh hectares as compared to 615.09 lakh hectare this time in 2017. Wheat has been sown/transplanted in 295.53 lakh hectares, rice in 20.57 lakh hectares, pulses in 160.91 lakh hectares, coarse cereals in 53.88 lakh hectares and area sown under oilseeds is 78.62 lakh hectares.
·         December 2017 WPI inflation stands at 3.6%-- The WPI inflation grows at 3.6% in December 2017 as compared to 3.9% in November 2017, 3.7% in October 2017, 3.14% in September 2017, 3.24% in August 2017, and 1.88% in July 2017. The decline in WPI inflation in the month of December 2017 is attributed to fall in the prices of food articles (4.72%), eggs, meat & fish (1.67%), minerals (7.47%), LPG (21.14%) and petrol (8.80%).
·         India registers significant decline in under five child mortality rate, Rate of decline has doubled over last year --  As per the recently released SRS Bulletin 2017 for the Year 2016, India has registered a significant decline in under-five child mortality. According to the bulletin, under-five child mortality (U5MR) of India showed an impressive decline by 9%, a 4 points decline from 43 per 1000 in 2015 to 39 in 2016. The rate of decline has doubled over the last year.
·         Ministry of Water Resources signs MoU with Bihar and Jharkhand for completion of North Koel Reservoir Project-- A Memorandum of Understanding has been signed between Ministry of Water Resources, River Development and Ganga Rejuvenation, Government of India, State of Bihar and State of Jharkhand for completion of balance works of North Koel reservoir project at an estimated cost of Rs. 1622.27 crore.
·         RBI releases draft directions on hedging of commodity price risk and freight risk in overseas markets -- The Reserve Bank of India has released draft directions on hedging of commodity price risk and freight risk in overseas markets. As per the Statement on Developmental and Regulatory Policies dated December 6, 2017, the report of the Working Group on Hedging of Commodity Price Risk by Residents (Chairman: Shri Chandan Sinha) had been placed in the public domain for feedback and revised directions were to be issued by January 15, 2018. Considering the large number and wide variety of comments received by RBI, it has now been decided to place the draft directions in the public domain for seeking comments by RBI.
·         Interest rates for Small Savings Schemes for Q4 FY2018-- On the basis of the decision of the Government, interest rates for small savings schemes are to be notified on quarterly basis. The Government of India, had vide their Office Memorandum (OM) No.F.No.01/04/2016–NS dated December 27, 2017 advised the rate of interest on various small savings schemes for the fourth quarter of the financial year 2017-18 starting 1st January 2018 and ending 31st March 2018 , on the basis of the interest compounding/ payment built-in in the schemes.
·         Hon'ble Finance Minister launched the country's First Agri-commodity Options Contracts in Guar Seed-- The Union Finance Minister, Shri Arun Jaitley launched the country’s first agri-commodity options in Guar Seed on the occasion of Makar Sankranti in New Delhi. He said that National Commodity and Derivatives Exchange Limited (NCDEX) Agri-options are an important tool which will contribute to the Prime Minister’s vision of doubling the farmers’ incomes by 2022. The Finance Minister said that the Guar seed is a major contributor to revenue generation, hence making it a suitable commodity to start with for Options.
·         Reporting of U.S. Tax Identification Numbers (TINs) for pre-existing accounts by Financial Institutions-India and USA have signed the Inter-Governmental Agreement (IGA) under FATCA in 2015. To enhance the effectiveness of information exchange and transparency, both the sides committed to establish, by January 1, 2017, rules requiring their Reporting Financial Institutions (RFIs) to obtain the Tax Identity Number (TIN) of each reportable person having a reportable account as of June 30, 2014 (pre-existing account).The Income-tax Rules, accordingly, provide for reporting of U.S. TIN from the year 2017 onwards in respect of any pre-existing account.
·         Sharp increase in prosecutions of tax evaders by Income Tax Department-- Due to the decisive and focused action taken by the Department against tax evaders, the number of defaulters convicted by the courts has also registered a sharp increase during the current fiscal. 48 persons were convicted for various offences during the current year(upto the end of November, 2017) as compared to 13 convictions for the corresponding period in the immediately preceding year, marking an increase of 269%.
·         Direct Tax Collections grows by 18.7% uptil January 2018-- There has been consistent and significant improvement in the position of Direct Tax collections during the current fiscal across all parameters. The growth rate of Total Gross DT Collections has improved from 10.0% in Q1, to 10.3% in Q2, to 12.6% in Q3 and to 13.5% as on 15th January, 2018. Similarly, the growth rate of Total Net DT Collections has climbed up from 14.8% in Q1, to 15.8% in Q2, to 18.2% in Q3 and to 18.7% as on 15th January, 2018.
·         GST Council recommends changes in GST-- The Hon’ble Union Finance Minister Shri Arun Jaitley Chaired the 25th Meeting of the GST Council in New Delhi yesterday. The Council has recommended certain changes in Goods and Services Tax (GST)/ Integrated Goods and Services Tax (IGST) rate and clarifications in respect of GST rate on Goods specified below as per discussions in the 25thGST Council Meeting held yesterday. These decisions of the GST Council are being communicated for general information, and will be given effect to through Gazette notifications / circulars which only shall have the force of law. It is proposed to issue notification giving effect to the recommendations of the Council on 25th January, 2018 to be effective from 00 HRS on 25th January, 2018.
·         Policy changes and GST rate changes on services recommended by the 25th GST Council Meeting-- The Hon’ble Union Finance Minister, Shri Arun Jaitley Chaired the 25th Meeting of the GST Council in New Delhi yesterday. The Council has recommended many relief measures regarding GST rates on goods and services covering many sectors and commodities. The Council has also recommended issuance of certain clarifications on issues relating to GST rates and taxability of certain goods and services. It is proposed to issue notifications giving effect to these recommendations of the Council on 25th January, 2018.
·         Foreign Tourist Arrivals grows by 15.2% in December 2017-- The number of FTAs in December, 2017 was 11.76 lakh as compared to FTAs of 10.21 lakh in December, 2016 and 9.13 lakh in December, 2015. The growth rate in FTAs in December, 2017 over December, 2016 was 15.2%, compared to 11.9% in December, 2016 over December, 2015. FTAs in the year 2017 were 101.77 lakh with a growth of 15.6% over 2016, compared to FTAs of 88.04 lakh with a growth of 9.7% is 2016 over 2015.
·         Merchandize exports and imports grew by 12.36% and 21.12% during December 2017, respectively-- India’s merchandize exports have exhibited high positive growth of 12.36% in December 2017 to value at USD 27.03 billion compared to USD 24.05 billion during December 2016. On the other hand, India’s merchandize imports witnessed expansion, growing by 21.12% to value at USD 41.91 billion in December 2017 compared to USD 34.62 billion during same period previous year.

 Our Voice
IIP at 8.4% encouraging, growth is becoming visible- as the teething problem of GST have been almost over, the growth in industry has come with a strong rebound and we look forward the growth to become more strong in the coming quarters. All the use based segments have grown in a good trajectory such as consumer non-durables have shown an enormous 23% growth followed by a good growth of 13.5% in the infrastructure/construction goods whereas the growth in the capital goods at 9.4% is inspiring and indicative of a revival of investment cycle in the times to come. The dynamic reforms undertaken by the Government are becoming visible with fruitful results and we look forward to a new set up of economic reforms from the Government to improve further the ease of doing business, consolidation of the labour laws in a single uniform code across the country.
 Economy so far
·         India’s growth momentum gathered pace in December, says Morgan Stanley -  Economic indicators like PMIs, vehicle sales and steel demand suggest that growth momentum in India has gathered pace in December, says a report. However, prices are also on an uptrend with retail inflation likely to have firmed up further to 5.4 per cent in December owing to a lower base of comparison, according to the report by Morgan Stanley.
·         US envoy pitches for FTA with India -  India can seize the opportunity to provide "alternative investment hub" for the American companies which are downgrading their operations in China, US Ambassador Mr. Kenneth Juster stated while he pitched for bilateral FTA as the next big-ticket item.
·         Income Tax Department steps-up actions under Prohibition of Benami Property Transactions Act-Due to intensive efforts undertaken by the Income Tax Department, provisional attachment has been made in more than 900 cases of properties under the Prohibition of Benami Property Transactions Act (the ‘Benami Act’), which came into force w.e.f 1st November, 2016.  These attachments include plots of land, flats, shops, jewellery, vehicles, deposits in bank accounts, fixed deposits etc. The value of properties under attachment is more than Rs. 3,500 crore including immovable properties of more than Rs. 2,900 crore.
·         ISRO satellite launch LIVE: PSLV C40, Cartosat-2 take off from Sriharikota in 100th mission - In a pathbreaking feat, the Indian Space Research Organisation (ISRO) launched its 100th satellite on 12th January 2018. PSLV C40 was launched along with 31 others in a single mission, from the spaceport of Sriharikota, about 110 km from Chennai.
·         Revival of Indian economy; RBI data shows expansion in credit growth for first time in 14 months - For the first time in 14 months, the industrial sector saw an expansion in credit growth in November 2017 over the same period the previous year. Reserve Bank of India has released the data which shows gross bank credit expanded 8.3 per cent in November, and credit off-take by the industry by 1%.
·         India a top borrower from AIIB in 2017 - India has emerged as a top borrower from the China-sponsored Asian Infrastructure Investment Bank (AIIB) with $1.5 billion worth of loans last year and USD three billion more in the pipeline. India’s Ambassador Shri Gautam Bambawale met Mr. AIIB President Jin Liqun in Beijing and held in-depth talks on deepening India’s engagements with the bank.
·         India needs more inclusive, active social policies, says economist Mr. Jean Dreze - Noted development economist Mr. Jean Dreze has pitched for more inclusive and active social policies in India, saying even a high rate of economic growth has failed to improve the quality of life of a large section of people in the country. Mr. Dreze also expressed concern over widespread underemployment and stagnating wages, which according to him, reflected ‘lopsidedness of economic growth in India.
·         Commerce Ministry working on new support measures for next foreign trade policy - The commerce ministry is working on new schemes for the next foreign trade policy (FTP), to be released in 2019-20, with a view to boost exports, a senior government official said. The ministry has asked all the commodity boards and the concerned ministries to identify those “support” structures, which are compliant to global trade rules.
·         Doing business rankings based on hard data: World Bank - World Bank’s chief economist Mr. Paul Romer stated that the organisation changed the methodology of its ‘doing business’ rankings in ways that were unfair and misleading, and the organisation will recalculate the rankings for at least the past four years.the World Bank has said ranking indicators and methodology are designed with no single country in mind and rankings are based on “hard data”.
·         India to post average GDP growth of 7.3 per cent over 2020-22, says report - The Indian economy is expected to witness an average GDP growth of 7.3 per cent over 2020-22, says a Morgan Stanley research report. According to the global financial services major, the structural growth story in India remains strong from a medium term perspective.
·         Government will launch a clean air campaign for two-weeks in delhi next month - Union Minister for Environment, Forest & Climate Change, Dr. Harsh Vardhan stated that starting from February 10, the Union Government will launch a joint campaign for two weeks, with Delhi Government, NDMC, CPCB and other municipal agencies, for clean air in Delhi. The campaign seeks to sensitise ground-level functionaries and general public to enforce the habit of environmental protection.
·         Government is committed to advancing the Universal Health Coverage in the country- Shri J P Nadda, Union Minister of Health and Family Welfare expressed happiness over the just released SRS bulletin (2016) as India registered a significant decline in under-five child mortality. According to the bulletin, under-five child mortality (U5MR) of India showed an impressive decline by 9%, a 4 points decline from 43 per 1000 in 2015 to 39 in 2016.
·         India reclaiming place as growth leader, says IMF – Mr. David Lipton, Deputy Managing Director of the International Monetary Fund (IMF) stated that right now, the sun is shining on the global economy and capital-intensive investment and consumer demand are rising. India is reclaiming its place as a growth leader after a short slowdown. With strong consumption and investment, rising exports, and steady capital inflows, the outlook for Asian region remains bright, he added.
·         Trade deficit hits 3-year high -  Merchandise export growth slowed sequentially to 12.4% in December, while imports jumped 21.1% during the month, aided by a spike in crude oil prices and a favourable base.  Imports, in absolute terms, touched a three-year high of $41.9 billion in December, while exports touched $27 billion, driving up trade deficit to $14.9 billion, again a three-year peak.
·         West Bengal, Kerala, Odisha opt out of Centre’s aspirational districts scheme - Three opposition ruled states --West Bengal, Kerala and Odisha -- have opted out of the Centre's Transformation of Aspirational Districts scheme, thus reducing the total number of districts under the programme to 102 from 115.
·         India’s growing workforce at risk from robots, could lead to major social issues, says UBS -  Robots will eat into any economic boost India receives from its young population and markets aren’t pricing in these risks, says UBS Group AG. Stocks have been hitting fresh highs and while UBS predicts growth and jobs will increase over the next five years, it cautions that immediate risks are to the downside. A global shift toward automation could be a significant negative, leaving many underemployed or without a job.
·         Single GST form likely for service providers -  Service providers such as telcos, banks, insurers and airlines may need to file just one centralised form in respect of the goods and services tax (GST), which will substantially ease the compliance burden on service providers with a multi-state footprint. The GST Council is expected to consider on January 18 significant relaxation in the law and procedures, including a centralised registration facility to make compliance easier
·         Government cuts additional borrowing target from Rs 50,000 crore to Rs 20,000 crore for this fiscal - Government has reassessed additional borrowing requirements taking note of revenue receipts and expenditure pattern. Requirement of additional borrowing is being reduced from Rs 50,000 crore to Rs 20,000 crore stated  Shri Subhash Chandra Garg, Secretary Department of Economic Affairs, Finance Ministry.
·         Big move by government, over 50 lakh houses to be built under Pradhan Mantri Awas Yojana - With an aim to address agriculture distress, the Modi government is building over 51 lakh permanent houses under the Pradhan Mantri Awas Yojana-Gramin (PMAY-G). It has been learnt that of the 51 lakh houses slated for construction under the scheme in 2017-18, Madhya Pradesh, Chhattisgarh and Rajasthan — eight lakh, 4.5 lakh and four lakh — account for more than 30 per cent of the houses to be built.
·         5.5 million jobs created in FY18 - New data derived from Employees’ Provident Fund Organisation (EPFO) accounts suggest that, contrary to the jobless-growth narrative, India created at least 5.5 million jobs in the formal sector in FY18, on top of around 4.5 million in FY17 — that is, not only are the number of jobs created many times greater than that put out by organisations such as the Labour Bureau, even the growth is significantly higher than that suggested by them.The analysis, by Pulak Ghosh of IIM Bangalore and Soumya Kanti Ghosh of State Bank of India. The data are at variance with not just headline GDP data, it doesn’t jell with consumption or investment data either.
·         January-March business optimism index hits 14-quarter high, says Dun and Bradstreet report - The Dun & Bradstreet Composite Business Optimism Index stood at 91.0 during January-March 2018, an increase of 18.6 per cent as compared to October-December 2017. Business optimism has surged during the quarter ended March 2018 and is at its highest across the past 14 quarters.
·         Survey says more Indian consumers opting for fingerprints, face recognition for financial transaction - A survey conducted on 500 respondents by Visa says that as much as 99% consumers of a survey are personally interested in using at least one biometric method to verify their identity, and an equal percentage of the respondents are interested in using at least one biometric method to make payments.
·         Digital transactions pass 1 billion mark in December, 2017 - The rise in digital transactions by December 2017 which is 11 percent higher at 1.06 billion than compared to 957 million last year. The total transactions stand at Rs 125.53 lakh crore, 20 percent higher than Rs 104 lakh crore last year in value terms according to the data released by  National Payments Corporation of India (NPCI).
·         Make in India in defence sector: Centre simplifies procedure to attract greater participation - In an effort to further boost ‘Make in India’ in the sector, the Defence Acquisition Council (DAC) has cleared a simplified ‘Make-II’ (Make in India) procedure which will enable greater participation of industry in acquisition of defence equipment. The amended ‘Make in India’ procedure reduces the total time from in-principle approval to placing of order by 50 % and the estimated time to finish the whole process has come down to 69 from 103 weeks.
Markets so far
Oct 17
Nov 17
Dec 17
Source: PHD Research Bureau, complied from BSE, MCX and Bloomberg
Unemployment and Consumer Sentiments Indices
Unemployment Rate
Consumer Sentiments
Source: PHD Research Bureau, complied from BSE
    PHD Research Bureau, has released newsletter pertaining to a broad view of developments in Indian states.
Comprehensive Research Studies / Papers
PHD Research Bureau has released comprehensive research studies pertaining to India – China Trade Relationship.
·         India - China Trade Relationship_The Trade Giants of Past, Present and Future -- The report assesses how the trade relationship between the two giants of Asia, and the world, has progressed at a tremendous pace. The report has made an attempt to appraise the trade structure and dynamics, trade intensity, intra-industry trade, concentration level of exports and imports among others. In addition, tariff and non-tariff barriers are also briefly analyzed for India and China.

 PHD Research Bureau Subscription Opportunities
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