Dear Mem­ber,

Assocham Bulletin - - NEWS -

Over the past three and half years, the Gov­ern­ment of In­dia has im­ple­mented a hostof re­forms to make it eas­ier for busi­nesses to start, op­er­ate and exit, which were not re­flect­ing in Ease of Do­ing Busi­ness, 2017 rank­ings.

The re­port, cov­er­ing the pe­riod from June 2 last year to June 1 this year, In­dia took a gi­ant leap in Word bank's ' Do­ing Busi­ness-2018' rank­ing from 130 to 100. In­dia ranked top among the South Asian Na­tions. In­dia's dis­tance to fron­tier ra­tio, which tells how sim­i­lar a coun­try's eco­nomic prac­tices has im­proved in nine out of 10 cat­e­gories. Also, it is now amongst the top 30 na­tions in three cat­e­gories- get­ting elec­tric­ity, se­cur­ing credit and pro­tect­ing mi­nor­ity in­vestors. How­ever, In­dia lagged in ar­eas such as start­ing busi­ness, en­forc­ing con­tracts and deal­ing with construction per­mits.

How­ever, it is im­per­a­tive for In­dia to move into the top 50 in the World Bank's Ease of Do­ing Busi­ness rank­ing in next cou­ple of years. This would re­quire: cut­ting down as many points of hu­man in­ter­face as pos­si­ble; putting pro­cesses on­line, and; in­te­grat­ing the pro­cesses and pro­ce­dures across dif­fer­ent de­part­ments.

The global up­swing in eco­nomic ac­tiv­ity is strength­en­ing. Global growth, which in 2016 was the weak­est since the global fi­nan­cial cri­sis at 3.2 per­cent, is pro­jected to rise to 3.6 per­cent in 2017 and to 3.7 per­cent in 2018. The growth fore­casts for both 2017 and 2018 are 0.1 per­cent­age point stronger com­pared with the April 2017 World Eco­nomic Out­look (WEO) fore­cast.

The latest In­dex of In­dus­trial Pro­duc­tion (lIP) in In­dia has come down to 3.8% in September, 2017 vis-a-vis 5% in September, 2016 and 4.5% in Au­gust, 2017 ow­ing to poor show­ing by man­u­fac­tur­ing sec­tor cou­pled with de­cline in con­sumer durables out­put. lIP grew a mea­gre 2.5% for April-September, 2017 in com­par­i­son to 5.8% last year for sim­i­lar pe­riod.

None­the­less, In­dian Eco­nomic growth is pro­jected to re­main strong and may re­main the fastest- grow­ing G20 econ­omy. The in­crease in pub­lic wages and pen­sions will sup­port con­sump­tion. Pri­vate in­vest­ment will re­cover grad­u­ally as ex­cess ca­pac­ity di­min­ishes, and the Goods and Ser­vices Tax and other mea­sures to im­prove the ease of do­ing busi­ness are be­ing im­ple­mented. How­ever, large non-per­form­ing loans and high lever­age of some com­pa­nies are hold­ing back in­vest­ment. r

Mone­tary pol­icy is pro­jected to re­main tight as in­fla­tion ex­pec­ta­tions have still not fully ad­justed down. The need to re­duce the rel­a­tively high pub­lic-debt-to-GDP ra­tio leaves lit­tle room for fis­cal stim­u­lus.

Trade open­ness has in­creased, partly driven by a com­pet­i­tive ser­vice sec­tor. Man­u­fac­tur­ing has lagged be­hind, with limited con­tri­bu­tion to ex­ports and job cre­ation, leav­ing many work­ers in low-paid jobs. Pro­mot­ing qual­ity job cre­ation in man­u­fac­tur­ing would re­quire re­duc­ing fur­ther re­stric­tions on FDI and trade, mod­ern­iz­ing labour reg­u­la­tions and pro­vid­ing bet­ter education and skills. Bet­ter in­fra­struc­ture, trans­port and lo­gis­tic ser­vices would fa­cil­i­tate man­u­fac­tur­ing firms' ac­cess to global mar­kets, par­tic­u­larly from re­mote and poorer re­gions.

We have vir­tu­ally com­pleted four months of GST and the feed­back that we re­ceived in the Cham­ber is that the large units have been able to ad­just them­selves but the smaller tax pay­ers are find­ing ex­tremely ex­pen­sive and dif­fi­cult. GST coun­cil has come up with re­duced tax struc­ture for 171 items from 28% to 18% or lower, which is a wel­come move and cer­tainly draw ap­plause from the industry.

I would like to men­tion that AS­SOCHAM con­tin­ues to hold high pro­file events reg­u­larly which are ex­tremely in­for­ma­tive and use­ful for the stake­hold­ers.

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