The Hindu, Business Line, The Economic Times , 4 April 2019
Asian Development Bank (ADB) lowered India’s growth to 7.2 per cent in fiscal year 2019-20. The growth rate in FY 2020-21 likely to be 7.3 per cent.
ADB projection is slightly higher than projections made by other agencies which estimated growth rate between 7 to 7.1 per cent.
Recent policy measures by the Government to improve the investment climate and boost private consumption and investment will help India to lift economic growth in the next two fiscal years.
The following factors will help India to remain one of the fastest-growing major economies in the world this year:
• strong household spending and corporate fundamentals;
• the country’s young workforce, an improving business climate, and a renewed focus on export expansion;
• income support to farmers, hikes in procurement prices for food grains, and tax relief to tax payers earning less than Rs 5 lakh will boost household income;
• declining fuel and food prices, to provide an impetus for consumption;
• an increase in utilization of production capacity by firms, along with falling levels of stressed assets held by banks; and
• easing of credit restrictions on certain banks.
Areas of concern are:
• a higher-than-expected moderation in global demand;
• a potential escalation of trade tensions;
• lower-than-targeted tax revenues; and
• a delay in strengthening bank and corporate balance sheets.
Consumer price inflation is expected to rise as food costs increase slightly and domestic demand strengthens.
Imports are expected to rise mainly due to stronger domestic demand while a growth slowdown in India’s key export destinations would dent export growth.
The current account deficit is expected to widen a bit of GDP. The deficit is expected to be financed comfortably by capital flows, given that India has emerged as an attractive destination for foreign investment.
The Ministry of Finance has agreed to pay the principal and interest for Rs 5,000 crore that the Indian Railways has raised through Extra-Budgetary Resources (EBR) to finance strategic railway projects in 2018-19.
It will be a one-time arrangement to finance strategic projects and Rs 5,000 crore may be reduced from the revised budgetary support of Rs 53,060 crore for 2018-19.
Steel Authority of India Ltd has produced 16.3 million tonnes of crude steel in the current financial year showing an increase of 8% over the last year. It was the company’s best ever saleable steel output during the year.
SAIL has marked highest ever total steel despatches at 14.86 million tonnes during FY’19 due to recently created dedicated logistics set-up by SAIL.
Almost all the major segments of the company like Hot Metal, Crude Steel, Saleable Steel and Sales have reported a growth of 10%, 8%, 14% and 13% respectively.
During the year 2018-19, SAIL had the highest ever production of 985,000 tonnes of higher grade Rails.
The increased demand from infrastructure and construction segments led to rise in domestic steel consumption. Thus, the challenge for next year is much higher with a plan of 21% increase in both production and sales of crude steel .
National Investment and Infrastructure Fund (NIIF) and PSP Investment owned ROADIS will jointly set up a platform to invest upto $2 billion in road projects in India.
The platform will target Toll Operate Transfer (TOT) models, acquisitions of existing road concessions and investment opportunities in the road sector with the aim of creating a large roads platform in the country.
ROADIS currently manages 1,892 kilometres of highways, divided among ten concessions in Mexico, Brazil, Spain, Portugal and India. In India it manages 710 KM of highways.
The road network is a key enabler for the Indian economy to grow and sustain its position as the fastest growing major economy in the world, and this provides significant upside potential for investments, while creating value for users.
Operational road assets in India offer a steady cash-flow option to private investment firms- both Indian and global- with no construction risks to factor for.
The planned platform, which looks to invest in existing projects, will have a huge pool of assets to choose from.
Leading non-integrated steel players like Jindal Steel & Power Ltd (JSPL) and JSW Steel Ltd are set to profit from the muted hike in domestic iron ore prices.
The subdued iron ore prices would also benefit Tata Steel as Bhushan Steel (a company Tata Steel took over in insolvency resolution) sources ore from Odisha.
There has been a marked dichotomy in international and domestic prices of iron ore, driven by surge in production by Odisha’s merchant miners and lukewarm pellet prices as China’s steel makers have shown appetite for lower grade ore.
It is expected that domestic iron ore prices may remain under pressure, which will primarily benefit non-integrated steel players such as JSPL and JSW Steel. In NMDC’s case, notified prices could remain under pressure, though e-auction premium in Karnataka and exports realization are expected to remain robust in the wake of international prices remaining high.
The National Restaurant Association of India (NRAI) has appealed to the government to consider introducing a dual goods and services tax (GST), on the lines of what has been done for real estate, for the organised restaurant sector.
The withdrawal of input tax credit (ITC) under revised GST rate of 5% for restaurants have hit the businesses.