Category: Growth

Leaders Speak | April-June GDP — good report card in quarter one, but difficult to sustain

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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We at Acuité Research estimates a solid GDP growth of 7.7 percent year-on-year in the first quarter of financial year 2024. While continued traction in contact-intensive services, steady growth in ITeS exports and a step up in construction activity through Government’s consistent capex push have driven the services sector, a delayed start to this year’s monsoon and deflation in input prices have also buoyed the industrial sector in the first quarter. These apart, the favourable base factor will also help to pull up the figure.

Acuité Research, nevertheless, forecasts GDP growth at 6.0 percent for the full FY24 implying therefore that the first quarter will mark a peak for the fiscal. Further ahead into the current and subsequent quarters, we expect growth outcomes to moderate with slower momentum in exports and increased uncertainty on consumption growth.

Although global growth has held up better than envisaged at the start of the year, there is no denying an impending slowdown vis-à-vis 2022. IMF’s latest forecasts indicate global growth is expected to moderate to 3.0 percent in 2023 from 3.5 percent in 2022. US GDP growth has held up well so far, but it stands countered somewhat by the downside in Eurozone, India’s other key export partner. Both, US and EU together account for nearly 35 percent of India’s export basket. Trade is expected to be the primary drag on global growth; as per WTO, world merchandise trade volume is expected to grow at 1.7 percent  in 2023, 100 bps lower when compared to 2022.

India is unlikely to remain insulated from such adverse trade spillovers. Growth in Indian exports has remained in contraction mode in the current year (-14.4% YoY in April-July 23 period), led by traditional sectors in which India enjoys global competitiveness and higher income elasticity such as gems & jewellery, plastic & rubber, textile and leather in addition to petroleum products. Of the 100 bps slowdown in India’s GDP growth in FY24 vis-à-vis last year, nearly 50 bps can perhaps be explained by moderation in exports.

In respect of domestic demand, transmission of higher interest rates may pull down urban consumption growth. Hopefully, this should be offset by an uptick in rural demand. The recent improvement in terms of trade for farm producers, higher cash flows post last rabi output and higher procurement prices along with continued support to the agricultural sector ahead of elections are some factors that lend credence to this view.

Southwest monsoon, while reeling under a 7 percent  deficit vs LPA on a cumulative basis, is expected to pick-up pace in September the year.  Fortunately, bountiful rainfall in July this year had ensured that Kharif sowing achieved same levels as last year, but the substantial rainfall deficit in August may weigh on crop yields. Pulses has been a laggard in terms of area sown and has emerged as a point of worry from an inflation perspective along with cereals. With Rabi output contributing as much share towards annual agricultural production as Kharif, El Nino and any subsequent climate risks will be an important determinant of agricultural growth and rural demand particularly in the second half of the fiscal.

Countering the global headwinds, support to growth is expected from the twin engines of investments and consumption of services. Government driven capex could find incremental support from private sector capex, at a time when capacity utilisation levels have improved significantly. Economy wide capacity utilisation level at around 76 percent as of March, 2023, as measured by RBI’s OBICUS survey, stands at a 40 quarter high and well above LPA of 73.3 percent.

Contact-intensive services in post Covid times, continue to remain in a ‘rebound’ mode

While a part of it is pent-up demand financed by Covid induced savings, some upside can perhaps be attributed to structural shift as Indian economy matures reflected in rapid growth of sectors such as trading, distribution, transport, logistics along with penetration of financial services. Further, export of services especially in IT/ITeS found support from cost minimisation efforts seen globally.

Financial year 2024 will be a year of pulls and pressures for India. There is considerable uncertainty with respect to the FY24 GDP growth outlook, as depicted by the wide forecast range of 5.5-7.0 percent in RBI’s recent survey. Notwithstanding an unsupportive global economic milieu and the moderation in growth (vis-à-vis FY23), India will still be one of the fastest expanding large economies globally. China has disappointed in emerging as a tailwind to global growth, giving India the opportunity to underpin its economic might in the current year and beyond.

This has well coincided with the about-to-conclude G20 presidency, which India has leveraged adeptly to enhance its global influence in most spheres. The growth prospects backed by reforms in areas of public digital infrastructure, green investments, space/defence etc. combined with macroeconomic stability offer a perfect backdrop for India to sustain its attractiveness as the global destination for investments and fostering economic partnerships.

—The author, Suman Chowdhury, is Chief Economist and Head – Research, Acuité Ratings & Research Limited. The views expressed are personal. 

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Unlocking Financial Success: The Importance of Investing and How SIPs Can Help You Thrive

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Investing is a powerful tool that can pave the way for financial success and long-term wealth creation. In this article, we will explore the significance of investing, focusing on Systematic Investment Plans (SIPs) as a popular and effective investment approach. We will also delve into the process of investing in SIPs, offering guidance to help you embark on your investment journey with confidence.

The Importance of Investing

Investing is crucial for several reasons. Firstly, it allows your money to grow and outpace inflation, preserving and increasing your purchasing power over time. Secondly, investments offer potential returns that can generate additional income, helping you achieve financial goals such as retirement or education funding. Moreover, investing allows you to diversify your assets, reducing risks associated with keeping all your funds in one place. Lastly, investing instills valuable financial discipline and encourages long-term thinking, helping you build a solid foundation for your future.

Unveiling SIPs – A Winning Investment Strategy

Systematic Investment Plans (SIPs) are an excellent option for individuals seeking a disciplined and convenient investment approach. SIPs enable you to invest a fixed amount regularly in mutual funds, providing benefits such as:

• Rupee-Cost Averaging: SIPs help mitigate the impact of market volatility by buying more units when prices are low and fewer units when prices are high. This strategy lowers the average cost of investment over time.
• Flexibility: SIPs offer the flexibility to start with small amounts and increase investments gradually as your financial capacity grows. You can also modify the investment amount or pause/resume investments as per your convenience.
• Professional Management: SIPs invest in professionally managed mutual funds, where experienced fund managers handle the selection and monitoring of investments, reducing the burden of individual stock picking.

How to Invest in SIPs – A Step-by-Step Guide

Investing in SIPs is a straightforward process that can be accomplished in a few simple steps:

• Set Investment Goals: Define your financial objectives, such as wealth accumulation, retirement planning, or education funding. This will help determine the investment horizon and risk tolerance.
• Choose a Mutual Fund: Research and select a mutual fund that aligns with your investment goals, considering factors like historical performance, fund manager expertise, and investment philosophy.
• Determine Investment Amount: Decide the amount you want to invest in SIPs, keeping in mind your financial capability and long-term objectives.
• Select SIP Frequency: Choose the frequency of your investments, such as monthly, quarterly, or annually, based on your financial planning and cash flow.
• Complete the Application: Fill out the necessary application form, providing relevant details and documents as required by the fund house.
• Provide Bank Mandate: Set up a bank mandate for automatic deduction of SIP installments from your bank account. Ensure sufficient funds are available at the chosen SIP frequency.
• Monitor and Review: Keep track of your SIP investments periodically, reviewing the performance of the mutual fund and making adjustments if necessary.

Investing in SIPs empowers individuals to secure their financial future through a disciplined and effective investment approach. Regardless of market conditions, whether bullish or bearish, SIP investments can continue uninterrupted. Investors need to avoid the common mistake of halting SIPs during market downturns. Instead of ceasing investments, it is advisable to increase contributions during market declines. The decision to discontinue SIPs should only be contemplated when markets are deemed overvalued. Additionally, investors should recognize the importance of adjusting SIP amounts to align with income growth over time. An SIP initiated 14 years ago, when income levels were lower, may no longer be sufficient in meeting current financial needs. Additionally, tax advantages can be gained by investing in tax-saving mutual funds such as the Equity-Linked Savings Scheme (ELSS). Whether you are a novice or experienced investor seeking to strengthen your portfolio, exploring SIP mutual funds is highly recommended. Start investing today and unlock your financial potential.

This is a Partnered Post

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Peeping through the keyhole into the confidential world of leadership coaching

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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If you are someone who dismisses leadership coaching as effete, Unfiltered: The CEO and the Coach is the book for you.

Essentially a leadership development guide written with remarkable candour, it highlights the transformational impact that effective top-tier coaching can have on companies. Through the book, authors Saurabh Mukherjea (the CEO) and Ana Lueneburger (the coach) shed light on the process, the need, the caveats, the psychological models, the constructs, the unique insights, and the complexities by focusing on their journey together over the course of five years.

A first of its kind, this book is a treasure trove for executives, entrepreneurs, up-and-coming coaches, and anyone who is tasked with managing people or is interested in becoming the best version of themselves.

Mukherjea is the founder of Marcellus Investment Managers, a capital-allocating firm that aims to simplify wealth creation. He is also the bestselling author of three books—The Unusual Billionaires, Coffee Can Investing: The Low-Risk Road to Stupendous Wealth, and Diamonds in the Dust: Consistent Compounding for Extraordinary Wealth Creation. Meanwhile, Lueneburger is a Master Certified Coach (MCC) with the International Coaching Federation. She holds a PhD in business from the University of St Gallen, Switzerland, and has a global coaching and advisory career of over 15 years

In this exclusive interview, the two talk about their book, why they think of executive coaching as a partnership, why it is not necessary for a coach to have the same profile as the client to be of value, how Unfiltered is Lueneburger’s gift to emerging coaches, and why Mukherjea thinks hiring her was the best mistake he has made in his career.

1. Why write this book? And why write it together?

Ana: We believe this is truly a pioneering book. To the best of our knowledge, the coaching relationship, explored in this way from both sides of the figurative ‘boardroom desk’, has not been written about in a book before. The nature of leadership coaching is highly confidential. The sensitivity of the issues that executives discuss with their coaches makes it hard to open the doors and pull back the curtains to reveal the process of executive coaching. As co-authors, we are striking out to change this. We plan to go against the tide by sharing our individual narratives as leaders and coaches and disclosing our development through our professional partnership. By providing both sides of the ‘story’, we hope to offer a well-rounded account of the coaching partnership.

Above all, we are keen to ensure that readers understand that executive coaching is a partnership, and that only by studying both versions of the ‘story’ can we truly appreciate the multiple layers of analysis that make for effective coaching. What makes this book unique is that this is not a sanitised case study where the client remains anonymous. This is a real account of a real coaching journey – one that hopes to let others test drive as to whether coaching is for them. And it hopes to offer beginner as well as seasoned coaches ways to benchmark and expand their practices.

2. How did the two of you first meet each other?

Saurabh: In the closing months of 2016, I requested my erstwhile employer to let me run the entire firm rather than just the brokerage-cum-wealth management subsidiary. They appointed an executive search firm to assess me. To my chagrin, the executive search firm suggested that I hire a coach to address the deficits in my skill sets. Among the coaches that I met, Ana Lueneburger came across as the most easygoing — I hired her thinking she would give me the least homework. A month into the coaching relationship, however, I realised that I was wrong — Ana is highly perceptive, focused, and driven, and she made me work hard on becoming a better leader. As I explain in the book, hiring Ana was the best mistake I have made in my career.

3. How has the experience of working together on this book been?

Ana: When Saurabh convinced me to collaborate on this book, I was all in. First, my dream all those years ago as a rookie coach was to be a fly on the wall in a professional coaching room. So, this would be my invitation to give emerging coaches what I once wished to have. Of course, not all the decisions we make in life are entirely altruistic, especially those that take away a large portion of our time, like writing this book.

In daring to write alongside Saurabh, I felt that I would also learn more about myself and my practice. This ‘indirect education’ would help me grow as a coach and maybe even become wiser as a person. The book’s final chapter reflects on what we have produced. We decided to save it for last and only to write it once we had read each other’s preceding chapters. On reading Saurabh’s observations of me, joy and gratitude filled my heart.

There was also a part of me that dreaded for him to find out that I am not the perfect sage who has all the answers but a fallible human prone to some of the same anxieties that she addresses in her clients. I wondered if the revelation of this ‘other side’ of my character might affect our working relationship forever. The short answer is: it has not. Saurabh and I continue to partner and writing the book has deepened our connection as well as our ability to do good work together.

Saurabh: It was in the summer of 2021 post the third or fourth set of COVID-19 lockdowns when after an invigorating chat over a cup of coffee in a café in London, we decided to write Unfiltered. We wanted to write a book that did not yet exist (although we wished for it to have existed when we started out decades ago), a book that opened the doors shielding leadership coaching conversations and better informed our decisions on where to spend our time, what gives us purpose, and how to be the best version of ourselves.

Openly sharing our real-life journey rather than staying at the level of sanitised and, often anonymised case studies, we set out to answer the questions we know leaders ask themselves in making the decision to be coached. These are questions such as “What does a coaching process actually feel like?”, “What really happens in a coaching session?”, and “Is this truly worth my time?” An unexpected side bonus of pushing our personal boundaries was that we emerged from the experience with several new insights.

4. How does a session typically pan out?

Saurabh: The penultimate chapter of Unfiltered takes you inside a typical coaching session in which Ana poses a series of probing, Socratic questions and I try my best to answer them. As I answer these questions, new mental pathways open up for me and I discover both blind spots in my persona and missing skill sets in my armoury. We then discuss both of these and identify areas for further reading and thinking. Ana also gives me practice assignments that require me to go out in the real world and apply the new skills I am learning.

5. How difficult was it to open up your inner worlds to the reader?

Ana:  This book could not have been written had it not been for Saurabh’s courage as the client who openly shared his journey. As for myself, I cherish authenticity and generosity. When I first started out as a coach 15 years ago, I was yearning for an honest account of what it looks like behind the closed doors of confidentiality that shield the coaching room. We have tried to pry those doors open. Yes, there were moments that felt highly uncomfortable, such as sharing my cardiac arrest at 27 or a moment of self-doubt when I offer a given intervention to the client. But what I have shared has ultimately felt liberating and joyful. After all, I have shared with the intent of supporting learning and growth, and we hope it is received in this spirit.

6. Why do you think it is important for leaders to have a coach?

Saurabh: I have benefited from coaching in three different ways:

A) It has helped me identify blind spots in my persona, i.e., issues with me that I wasn’t aware of.

B) It has helped me identify weaknesses in my skillsets and with Ana’s help, I am also able to develop toolkits to rectify those weaknesses.

A) It has made me more self-aware of the conversations that are taking place not just inside my head but also in the minds of other counterparties that I am dealing with in business life.

7. What are the essentials to keep in mind when looking for a coach?

Ana: Coaching is a high-stakes matter—it is costly, time intensive, requires for a leader to open up, and can emotionally be challenging if it goes wrong. Not only for the leader since leaders are multipliers and their actions impact their teams, the organization, and the bottom line.

Understanding how to select the right coach and what good looks like when it comes to coaching is crucial for its impact. In the book, we devote the entire first chapter to help get that choice right. So as caveats, make sure that the coach you engage is experienced, trained, and has integrity. Most important of all, be certain that there is ‘chemistry’ between you and the coach, as your relationship is core to coaching success. After your first analytic screening of the coaches you interviewed, ask yourself—in your gut, which coach feels right to you?

8. Any myths around leadership coaching that you’d like to dispel? 

Ana: Here are the top five:

Myth 1: We are enlightened Buddhas who know it all.

Like all human beings, we are works in progress. The key is to not lose sight of that and to remain curious, admit when we don’t know something, also to our clients, and embrace growth which brings uncertainty and change.

Myth 2: We only ask questions.

In the executive coaching space, my clients also want to hear what I think, how I might approach a certain problem, and what I advise them to do. If done in a non-prescriptive fashion, this can be a real value-add to clients, and sometimes, affirm them in their own views.

Myth 3: You have to have the same profile as the client to be of value.

The opposite is often the case. If we have the same profile, we risk having the same views, we look to inspire from a place of sameness which is challenging and we tend to share the same blind spots. What clients often want and deserve is a fresh perspective, someone who quickly spots and points out what they can’t see, and someone who challenges so they can grow.

Myth 4: It’s about the credentials, tools, and shiny objects.

Credentials and a good reputation are table stakes in my opinion. Tools are useful, but they cannot replace the impact that comes from establishing a trusting, strong rapport between client and coach. With that as a foundation, anything is possible.

Myth 5: We are here to fix people.

I do not see myself in the business of fixing people. I am here to help leaders become the best version of themselves, starting out from a place of possibility. This is where leaps happen.

Read other pieces by Sneha Bengani here.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India jumps 6 places on World Bank’s Logistic Performance Index

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India has climbed six places on the World Bank’s Logistic Performance Index (LPI) 2023, now ranking 38th in the 139 countries index, as a result of significant investments in both soft and hard infrastructure as well as technology.

India was ranked 44th on the index in 2018 and has now climbed to 38th in the 2023 listing. India’s performance has drastically improved from 2014, when it was ranked 54th on the LPI.

Prime Minister Narendra Modi-led government had announced PM Gati Shakti initiative, a National Master Plan for multimodal connectivity, in October 2021 to reduce logistics cost and boost the economy by 2024-25.

In 2022, the prime minister had launched the National Logistics Policy (NLP) to ensure quick last-mile delivery, end transport-related challenges, save time and money of the manufacturing sector and ensure desired speed in the logistics sector.

Also read: Mission LiFE: PM Modi calls for mass movement in global fight against climate change

These policy interventions are fructifying, which can be seen in India’s jump in LPI and its other parameters. According to the report, India’s rank moved up five places in infrastructure score from 52nd in 2018 to 47th in 2023. It climbed to 22nd spot for international shipments in 2023 from 44th in 2018 and moved four places up to 48th in logistics competence and equality.

In timelines, India witnessed a 17-place jump in rankings, whereas it moved up three places in rank in tracking and tracing to 38th. The report quotes modernisation and digitalisation as a reason for emerging economies, like India, to leapfrog advanced countries.

The report said: “Since 2015, Government of India has invested in trade-related soft and hard infrastructure connecting port gateways on both coasts to the economic poles in the hinterland.” Technology has been a critical component of this effort, with implementation under a public-private partnership of a supply chain visibility platform, which contributed to remarkable reductions of delays.

Also read: World Bank lowers India’s FY23-24 GDP growth forecast to 6.3% from 6.6% earlier

NICDC Logistics Data Services Limited applies radio frequency identification tags to containers and offers consignees end-to-end tracking of their supply chain, it added.

According to the report, the average dwell time for containers between May and October 2022 was three days for India and Singapore, much better than some of the industrialised countries. The dwell time for the US was seven days and for Germany it was 10 days.

The report said: “The emerging economies with the shortest delays have gone beyond these packages and have implemented bold tracking and tracing solutions. India’s very low dwell time (2.6 days) is one example” .

Further the report said: “With the introduction of cargo tracking, dwell time in the eastern port of Visakhapatnam fell from 32.4 days in 2015 to 5.3 days in 2019.” Dwell time is how long a vessel spends at a specific port or terminal. It may also refer to the amount of time that a container or cargo spends at a port or terminal before being loaded onto a vessel or after being unloaded from a vessel. Shipping container vessels operate on schedules and delays in any particular port are felt across the service.

Also read: Recoveries in Asian economies losing steam: World Bank

The shorter the dwell time, the lower the vessel and marine-terminal operating costs. The LPI covers 139 countries, measures the ease of establishing reliable supply chain connections and the structural factors that make it possible, such as the quality of logistics services, trade and transport-related infrastructure, and border controls.

”End-to-end supply chain digitalisation, especially in emerging economies, is allowing countries to shorten port delays by up to 70 per cent compared to those in developed countries. Moreover, demand for green logistics is rising, with 75 per cent of shippers looking for environment-friendly options when exporting to high-income countries,” the report said.

“While most time is spent in shipping, the biggest delays occur at seaports, airports, and multimodal facilities. Policies targeting these facilities can help improve reliability,” said Christina Wiederer, senior economist, the World Bank group’s macroeconomics, trade & investment global practice and the report’s co-author.

Also read: Pandemic fund vastly oversubscribed, more money required: World Bank

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

From the rich history to football fever, discover the excitement of Manchester

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Manchester, located in the northwest of England, is a city known for its rich history, vibrant culture, and exciting nightlife. It’s the perfect destination for a wild weekend away. Here’s a guide to spending a wild and unforgettable weekend in Manchester.

Day 1: Exploring the City

Upon arrival in Manchester, take some time to explore the city’s rich history and culture. Visit the famous Manchester Cathedral, a beautiful medieval church with a rich history. Then, head to the Museum of Science and Industry, where you can learn about the city’s industrial past and see the world’s first railway station. In the evening, take a stroll along the famous Canal Street, known for its gay nightlife and lively atmosphere.

Day 2: Indulging in Local Cuisine

Manchester is known for its diverse food scene, with a wide range of restaurants and cafes to choose from. Start the day with a traditional English breakfast at one of the many local cafes, then head to the famous Albert Square, where you can find international cuisine. In the evening, indulge in some of the city’s famous fish and chips or try some of the local pub grub.

ALSO READ | Unleashing the wilds of Hungary: Enjoying the most beautiful natural landscapes in Europe

Day 3: Football fever

Manchester is home to two of the most famous football clubs in the world, Manchester United and Manchester City. If you are a football fan, a visit to the city would not be complete without catching a match at one of the stadiums. If you’re lucky enough to be in town on a match day, grab a ticket and join the locals in cheering on their team.

Day 4: Shopping

Manchester is a shopper’s paradise, with a wide range of high-street and designer stores to choose from. Take a stroll down the famous King Street, home to some of the city’s most exclusive shops. Or, head to the famous Arndale Centre, one of the largest shopping centres in the UK, for a range of high-street favourites and department stores.

Overall, Manchester is a city that offers something for everyone. From its rich history and culture to its vibrant nightlife and delicious food, you’ll have an unforgettable time in this exciting city. So, pack your bags and head to Manchester for a wild weekend adventure!

ALSO READ | How to explore India’s rich cultural heritage through its best sites The Taj Mahal and Khajuraho

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India’s struggle with exports to Europe has an important lesson for policy makers

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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US and Europe, cumulatively accounting for one-third of India’s merchandise exports, have equally influenced growth of India’s exports in the past decade. Crisil, in its report titled ‘Rider in the storm’ analyses past 90 quarters of exports to the US and EU27, which suggests India has a tendency to gain share in the US market during both economic downturns and upturns. However, India tends to gain share in the European market mainly during upturns. Why India is more sensitive towards EU (European Union) trade is due to its higher share of commoditised products, at up to 40 percent even in the downturn years, as against US which is slightly lower. Commoditized products such as petroleum, dairy, petrochemicals, metals, gems and jewellery are more sensitive to economic downturns, compared with value added articles like computer hardware, textiles, automobiles and components, medical devices, etc.

With slower growth expected in GDP of both US and EU27 in 2023, exports from India are expected to be impacted in FY24. In the same period, exports of nearly Rs 2 lakh crore are likely to be supported by commissioning of PLI-linked capacity.

An analysis of past two fiscals reveals that PLI has provided support for Rs 1.9 lakh crore of exports during the initial stages of capacity commissioning. For example, for mobile phones India has been a net exporter for the past several years and over a period of time, the average export-to-import ratio has improved substantially and is likely to improve further due to a push from PLI. Ashwini Vaishnaw, Minister of Electronics and Information Technology in Feb 2023, said mobile exports from India will exceed $10 billion this year. Crisil expects mobile phones, telecom, IT hardware to aid 63 percent of the PLI-driven exports in FY24, while the remaining would be led by textiles, specialty steel, white goods, and food processing.

Multiple corporates in their interaction with CNBC-TV18 have highlighted the benefits of the PLI scheme. Blue Star is one such which recently said it has invested about Rs 156 crore in plant machinery through the PLI scheme and are expecting about Rs 73 crore by way of a PLI benefit. Further, NITI Aayog CEO interacted with CNBC-TV18 in February 2023 and said with the introduction of PLI schemes, there is a huge increase in investment in capex and Rs 800 Cr of incentives are already approved.

India’s top exported products include petrochemicals, petroleum, gems and jewellery, plastic and footwear, pharma, auto and components, textiles, metals, agri, meat and sea food. Of these, PLI has been launched for the latter six which is likely to propel incremental exports. Further, verticals such as electronics, which currently are not in the top 10, should get good support from the PLI scheme. PLI-driven exports are seen growing  about 5 percent in FY24, compared with 2 percent between FY21 and FY23.

Furthermore, in FY23, value-added verticals such as electronic components and computer hardware contributed to 33 percent of incremental exports to the US, where the PLI scheme provided a fillip to exports of these segments, particularly electronic components. Continuing with this trend, Crisil expects value-added exports and PLI to support incremental growth in exports to the US in FY4 as well.

In case of EU, recently, the exports of petroleum products to EU27 have increased due to the geopolitical crisis, which has made EU27 dependent on oil imported through the sea route. However, geopolitical developments could aid exports of key commodities to EU. The share of value-added products stands at nearly 35- 40 percent in case of EU compared with around 30 percent for other key nations, which puts India in a favourable position during a downturn. Furthermore, continued exports of petroleum products amid geopolitical uncertainties, as well as strong growth in exports of electronic components, medical devices and computer hardware given the PLI-driven policy push, will support incremental growth. However, the growth will be slower to EU than that of exports to the US, due to its relatively sharper slowdown in the GDP growth.

For India, new-age verticals such as consumer electronics and computer hardware saw sudden jump in FDI in past five fiscals. Meanwhile, traditional sectors such as petroleum products and machine tools saw lower FDI, suggesting India is expanding its manufacturing base of high-growth value-add verticals. The PLI scheme’s continued push across major sectors is likely to enhance India’s position as a trade partner with the US and EU, resulting in market share gains over the medium term.

Currently we are witnessing aggressive rate hikes by major central banks to fight inflation. Policy rates are at decadal highs across the advanced world. Slowing global growth is expected to put the brakes on India’s exports. Hence, policy makers have an important role to play here through their fiscal and monetary policy support to banking and financial sector. The full-blown impact of RBI’s tighter monetary policy, which typically plays out with a lag of 3-4 quarters, will show up in the coming months.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Recession is here: A look at what these global experts are saying

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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A murmur about a global recession had started early in the year, and now the warnings are growing louder by the day. While there are concerns that the United States may tip the global economy into a recession by the middle of the next year, experts believe major parts of the world are already in recession.

US President Joe Biden has downplayed the risk of recession saying that possibility is very slight. He also added that Saudi Arabia will face action after OPEC decision for oil production cut.

Here is a look at the top 10 economic experts who have warned about a global recession.

JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon has warned that ‘serious’ headwinds will likely push the US and global economies into recession in the next 6-7 months by the middle of next year.

In an interview with CNBC, Dimon said, “I mean, Europe is already in recession and they’re likely to put the US in some kind of recession six to nine months from now.”

Despite the US economy doing well now, a number of indicators and global issues such as the impact of surging inflation, rising interest rates, the effects of the Federal Reserve ending quantitative easing and Russia’s war on Ukraine are ringing the alarm bells, Dimon said.

Former director of the US Congressional Budget Office, Dr Douglas Holtz-Eakin also expects a modest recession to hit by the middle of 2023. He believes that due to the Federal Reserve hiking rates, rising inflation and uncertainty ahead with China and with Russia’s war on Ukraine are the significant factors that can tip the US economy into recession.

“We’re going to see the Fed lean real hard on housing markets, it’s going to be a centrepiece of their efforts to tame inflation. So, will this cause a recession? Good chance of that,” said Holtz-Eakin during his keynote at the XChange Best of Breed 2022 conference, reported CRN News.

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He also mentioned that it appears China is in recession currently, and there’s always the possibility of another new COVID-19 variant springing up, disrupting the economy further.

Billionaire hedge fund manager Paul Tudor Jones believes the US economy is either near or already in the middle of a recession.

“I don’t know whether it started now, or it started two months ago,” Jones said on CNBC’s ‘Squawk Box’.

According to the famed investor, as most recessions last about 300 days, he expects the economic turmoil to hit in the initial days. “The stock market is down, say, 10 percent. The first thing that will happen is short rates will stop going up and start going down before the stock market actually bottoms,” Jones said in the CNBC report.

He also said it is challenging for the Fed to bring inflation back to its 2 percent target.

Campbell R Harvey, a professor at Duke University’s Fuqua School of Business who pioneered the use of US bond market yields to predict recessions, has also said that the US Fed’s actions can “easily push the economy into recession and a recession would be very effective in reducing inflation,” in an Al Jazeera report.

Trinh Nguyen, a senior economist at Natixis who tracks emerging Asian countries in Hong Kong, believes Asian economies will not be spared from the economic fallout.

“We think Asian growth will decelerate. For economies more exposed to the trade cycle, the impact of weakening external demand will feel worse, such as South Korea and Taiwan,” Nguyen told Al Jazeera.

She believes that in emerging Asian countries, excluding China, the tightening of financial conditions will hinder investment and consumption is also expected to decelerate.

Jonathan Garner, chief Asia and emerging market strategist at Morgan Stanley argues that chances of a recession are already assured in China, Europe, and the US and the debate over if the recession will hit the global economy is over.

“This debate to some extent is over. We are in some kind of a global recession as of the third quarter,” Garner told Bloomberg.

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Earlier in June, Morgan Stanley analysts predicted a recession to hit the Eurozone by the end of this year.

IMF Managing Director Kristalina Georgieva has warned that the US labour market is losing momentum because of the impact of higher borrowing costs during the IMF and World Bank’s annual meeting, Bloomberg reported. She added that the Eurozone is slowing as natural gas prices soar, the same as China’s due to Covid-19 disruptions and volatility in the housing sector.

The IMF has forecast that about one-third of the world economy will have at least two consecutive quarters of contraction this year and next, with a lost output $4 trillion through 2026.

World Bank President David Malpass also warned that there’s a “real danger” of a worldwide contraction and the US dollar is weakening the strength of currencies of developing nations, increasing their debt to ‘burdensome’ levels.

Noted economist Nouriel Roubini, who correctly predicted the financial crisis in 2008, feels that the US and the rest of the world are on the brink of a long recession.

Roubini warns that recession will trip the global markets down as debt levels worldwide rise, and it will be impossible for the US Fed to keep inflation down to 2 percent.

Credit rating agency Fitch has also warned that the UK is facing a deeper recession than previously forecast.

The agency cut the outlook on the UK to ‘negative’ and has predicted that the UK GDP will shrink by 1 percent in 2023, following the “extreme volatility in UK financial markets and the prospect of sharply higher interest rates,” the Guardian reported.

According to a KPMG survey of 400 leaders of large US companies, a whopping 91 percent of leaders are predicting a recession in the next 12 months. This means more than eight out of 10 CEOs anticipate a recession in the US.

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Paul Knopp, chairman and CEO of KPMG US, said, “There has been tremendous uncertainty over the past two and a half years, and now, we have another looming recession,” Al Jazeera reported.

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These global companies are looking to expand and invest big in India

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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At a time when China is hit by a real estate crisis, the US is grappling with inflation, and several major European nations have been impacted by the Russia-Ukraine war, the Indian economy has remained relatively stable. In fact, India is likely to remain the world’s fastest-growing major economy with a growth forecast of almost 8 percent in FY2023. Several global companies are investing or have pledged to invest in India.

Here are a few major businesses that are making major investments in India

Google: The tech giant has invested nearly $1 billion in India’s second-largest mobile phone operator Bharti Airtel. Google wants to increase its presence in the only billion people plus market open to foreign companies. Previously, Google bought a $4.5 billion stake in billionaire Mukesh Ambani’s Jio platform.

Blackstone: After securing massive profit on its seed investment, Wall Street major Blackstone is planning to invest more in India. Its $25 billion investment in India is worth over $50 billion at present. The leading private market investor has invested more than $22 billion in the country in the past decade. In the first four months of 2021, Blackstone invested $5.5 billion. It has invested in several companies, including Piramal Glass, Mphasis, Nexus Malls, edutech player Aakash, and Prestige among others.

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Airbus and Boeing: The world’s two biggest airline manufacturers are fighting for a share as the country is the world’s fastest-growing air travel market. These two companies are closing in deals to earn a good return bounce over COVID-19 gloom. Besides, US-based Delta Airlines, Emirates, and VietJet Air are also looking to expand. They already operate flights from India.

Microsoft: Earlier this year, Bill Gates-founded Microsoft announced that it would be investing Rs 15,000 crore over the next 15 years in Hyderabad to set up its largest Data Centre in the country. This would be the second largest Foreign Direct Investment (FDI) in the IT sector after Amazon Web Services in Telangana.

Oracle: The US-headquartered Cloud Infrastructure company has been clocking over 100 percent growth for the third year in India. To keep this momentum going and expand its penetration, Oracle wants to reach out to more MSMEs in India in the coming months.

Apple: Among the world’s most valuable companies, Apple intends to invest heavily to develop its operations in India and engage with more suppliers. Last year, Apple CEO Tim Cook said that the company had doubled its business in India. Apple was the fastest growing brand in the quarter ended September 2021 with a 212 percent growth in sales in India. Significantly, Apple said it had achieved a record revenue of $83 billion, up 2 percent year-over-year while announcing financial results for its fiscal 2022 third quarter ended June 25.

Petronas Hydrogen and Continental Automotive: A Memorandum of Understanding (MoU) for a 32,000 crore investment in Karnataka has been inked by Petronas Hydrogen and Continental Automotive Components India. Petronas has committed to investing Rs 31,200 crore in order to build a renewable energy facility in Mangaluru which is expected to create employment opportunities for 3,000 people. Additionally, Continental Automotive is proposing a direct foreign investment of Rs 1,000 crore for a Research and Development Centre that will generate 6,000 jobs.

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Indian economy recovered strongly despite 3 COVID waves, says US Treasury report

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Indian economy has rebounded strongly despite three significant COVID-19 waves, the US Treasury has said in a report to Congress.

India’s acute second wave weighed heavily on growth through the middle of 2021, delaying its economic recovery, the Treasury said in a semi-annual report.

“However, economic activity rebounded strongly in the second half of the year as India’s vaccination rollout accelerated,” the Treasury said on Friday, as it praised India’s vaccination efforts.

As of the end of 2021, about 44 per cent of India’s population was fully vaccinated, it said.

After contracting seven per cent in 2020, the output returned to pre-pandemic levels by the second quarter of 2021, with full-year 2021 growth of eight per cent, it added.

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Since the beginning of 2022, India faced a third major outbreak driven by the Omicron variant, but the number of deaths and broader economic fallout has been limited, it said.

The Indian government continued to provide fiscal support to the economy against the backdrop of the pandemic in 2021, it said. The authorities estimate that the overall fiscal deficit will reach 6.9 per cent of GDP for the 2022 fiscal year, which is higher than deficits prior to the pandemic, it said.

According to the Treasury, the Reserve Bank of India kept its key policy rates unchanged at four per cent since May 2020, but in January 2021 it began to gradually unwind the extraordinary liquidity measures designed to support growth during the early part of the coronavirus pandemic.

After recording a current account surplus of 1.3 per cent of GDP in 2020, its first surplus since 2004, India returned to a current account deficit of 1.1 per cent of GDP in 2021.

The return to a current account deficit was driven by a sharp deterioration in India’s trade deficit, which widened to $ 177 billion in 2021 from $95 billion the previous year, it said.

Further, goods imports rose particularly sharply in the second half of 2021 amid the economic recovery and rising commodity prices, particularly energy prices, leading imports to increase 54 per cent year-on-year in 2021.

India’s exports also rose in 2021, though at a lower rate than imports, increasing 43 per cent, it said.

It said India’s services trade surplus (3.3 per cent of GDP) and income surplus (1.3 per cent of GDP) partially offset the wider goods trade deficit.

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Remittances grew around five per cent in 2021, reaching $ 87 billion, or 2.8 per cent of GDP, it said, adding the Treasury assesses that in 2021, India’s external position was broadly in line with economic fundamentals and desirable policies, with an estimated current account gap of 0.3 per cent of GDP.

According to the report, India’s bilateral trade surplus with the United States has expanded significantly in the past year. Between 2013 and 2020, India ran bilateral goods and services trade surpluses of about $30 billion with the United States.

In 2021, the goods and services trade surplus reached $ 45 billion, a material increase from $34 billion in the four quarters through December 2020. India’s bilateral goods trade surplus reached $ 33 billion (up 37 per cent), while the bilateral services surplus grew to $12 billion (up 29 per cent) in 2021.

The expansion has been driven primarily by elevated US demand, particularly for goods, as the US economy recovered strongly in 2021, the Treasury said.

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World Oceans Day 2022 — How India is faring with its blue economy plans?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The term blue economy has come to signify the multitude of ocean resources available in a country, its contribution to the economy, environmental and ecological sustainability of oceans, and how the ocean economy can be harnessed by developed and developing countries.

For India, the blue economy is a vast socio-economic opportunity. Keeping this in mind, the Ministry of Earth Sciences rolled out the draft blue economy policy last year, outlining the government’s vision and strategy to use oceanic resources.

Significance of India’s blue economy

With vast maritime interests, the blue economy has a massive potential to push India’s economic growth.

India boasts of a coastline of nearly 75,000 km. Nine states in India are coastal and 1,382 islands are part of the country.

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Of the 199 ports in India, 12 major ports handle approximately 1,400 million tonnes (MT) of cargo annually. The country also has an Exclusive Economic Zone (EEZ) spread over 2 million square km with significant recoverable resources of crude oil and natural gas.

More than four million fisherfolk and coastal communities draw their sustenance from the coastal economy.

Draft blue economy policy

The government has envisaged the draft blue economy policy to give a framework that will help unlock the country’s potential for economic growth and welfare. As per the draft policy, there are seven areas to focus on — marine fisheries, aquaculture, and fish processing; national accounting framework for the blue economy and ocean governance; manufacturing, emerging industries, trade, technology, services, and skill development; coastal marine spatial planning and tourism; logistics, infrastructure and shipping including transhipment; security, strategic dimensions, and international engagement; and coastal and deep-sea mining and offshore energy.

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What is India doing?

Even as India taps into its vast coastline, the full potential of its ocean resources is yet to be harnessed.

At the second India-Nordic Summit held in May, Prime Minister Narendra Modi invited Nordic companies to invest in India’s blue economy, especially in the Sagarmala project, highlighting its potential to deliver economic growth, improved nutrition, increased food security and add new jobs. The Nordic countries include Denmark, Iceland, Finland, Norway and Sweden.

The Sagarmala project is the centrepiece of India’s push for the blue economy. Launched in 2015, the project includes augmenting coastal infrastructure, constructing ports, developing inland waterways, promoting tourism, intensifying fishing, and creating special economic zones.

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There has been significant progress in the Sagarmala project in terms of capacity augmentation of major ports. The installed capacity of major ports has gone up 79 percent to 1,561 MT per annum from 871.5 MT in 2014-15. At the same time, waiting time for inbound and outbound cargo has also come down. At present, the overall turnaround time is 52.80 hours, compared with 96 hours in 2014-15. The government is also developing inland waterways to reduce the cost of transporting cargo.

Despite these achievements, the overall progress of the Sagarmala programme has been sporadic at best, as a result of inadequate fund mobilisation, land acquisition problems and limited private sector investments, The Financial Express reported.

Focus on sustainable future

Even as the Indian government promotes the growth of the blue economy, it has also recognised the importance of preserving sensitive ecosystems in the ocean and contributing to sustainable use of maritime resources. In future, India plans to become one of the largest contributors to the ‘Blue Growth,’ that supports sustainable growth in the marine and maritime sectors, The Daily Guardian reported.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow