India, China together contribute 45% of global growth: IMF
and India, Asia’s first and third largest economies respectively, should aim for “growth-friendly” fiscal consolidation to promote sustainable, inclusive growth while enhancing resilience as the two countries together contribute 45% to global growth, the International Monetary Fund (IMF) said on Wednesday.
“Asia continues to be both the fastest-growing region in the world and the main engine of the world’s economy, contributing more than 60% of global growth (three-quarters of which comes from China and India),” IMF said in its Asia Pacific Regional Economic Outlook.
Finance minister Arun Jaitley paused fiscal consolidation in 2017-18 as the economy recovered from disruptions related to demonetization and the roll out of the new national goods and service tax (GST). The government has committed to bring down its fiscal deficit as a proportion of GDP to 3.3% in 2018-19 from a higher-than-anticipated 3.5% last year.
IMF said in India, given increased inflation pressure, monetary policy should maintain a tightening bias. “While India tends to have relatively high inflation expectations, they fall within its +/- 2% target range,” it added.
CPI inflation in FY2017/18 is estimated at 3.6%, close to the midpoint of the target band (4%±2%), reflecting low food price inflation in the first half of the year. Medium-term headline CPI inflation is forecast to remain within but closer to the upper bound of the Reserve Bank of India’s inflation-targeting band (4% ±2%).
The multilateral crisis lending body said Indian economy is recovering from temporary disruptions from the November 2016 currency exchange initiative and the July 2017 rollout of the new Goods and Services Tax (GST). Growth rebounded strongly to 7.2% in the third quarter of FY2017/18, up from 6.1% in the first half of the fiscal year.
IMF has projected India’s growth to recover to 7.4% in FY2018/19 from an estimated 6.7% in FY2017/18, a tad higher than 6.6% estimated by government’s statistics body, thus “making India once again one of the region’s fastest-growing economies”.
“The recovery is expected to be underpinned by a rebound from transitory shocks as well as robust private consumption,” IMF said.
IMF said India’s medium-term growth prospects remain positive, benefiting from key structural reforms, including the landmark national Good and Services Tax reform. “The current account deficit in FY2017/18 is expected to widen somewhat but should remain modest, financed by robust foreign direct investment inflows,” it added.
The National Company Law Appellate Tribunal (NCLAT) on Wednesday allowed the committee of creditors (CoC) for Bhushan Power and Steel Ltd to consider the resolution plans submitted before it and arrive at a decision with respect to a successful bidder.
An NCLAT bench headed by Justice S J Mukhopadhyay was hearing an appeal moved by Tata Steel, one of the bidders in the race to acquire debt-ridden Bhushan Power and Steel, against an National Company Law Tribunal (NCLT) order directing the CoC to consider UK-based Liberty House’s resolution plan and “take (an) appropriate commercial decision”.
The bench asked the committee of creditors to place the decision with respect to a successful bidder in a sealed cover.
This decision would, however, be subject to the final outcome of the appeal.
The appellate tribunal directed that it must give reasons for rejecting one resolution plan or the other and asked the CoC to ensure that whichever plan is approved has provisions for secured and unsecured creditors, government dues and the employees.
NCLAT also asked the committee of creditors to seek suggestions from the operational creditors of the corporate debtor before deciding upon a successful resolution applicant.
CoC was also directed to record any suggestions made by the board of directors of the corporate debtor.
Liberty House had moved NCLT on February 26 against the rejection of its “unopened” bid for the corporate debtor by CoC for late submission and failure to submit certain documents such as a confidentiality undertaking.
The last date for submission of bids was February 8, whereas the insolvency resolution professional received Liberty House’s proposal on February 20.
The case would be next heard on May 24.
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