India’s economic growth projected to slow to 7.1%
India’s economic growth was projected to slow to 7.1 percent this fiscal year in the first indicator of the impact of the government’s recent currency move.
The estimate released yesterday by the Indian Central Statistics Office for the fiscal year ending March 31 compared to 7.6 percent last year. The estimate is mostly based on data available through October, so likely it does not show the full impact of demonetization, which was announced on Nov. 8.
The GDP growth estimates will be key to India’s preparations to unveil the budget for the next fiscal year on Feb 1. Normally fullyear GDP estimates are released in February and factor in data until the end of December and the budget is announced at the end of February.
Prime Minister Narendra Modi’s surprise move to remove India’s highest-value banknotes, worth 500 and 1,000 rupees, from circulation has wiped out 86 percent of India’s currency. The intent was to fight tax fraud and corruption and push India toward digitization, but has caused massive disruption for the vast majority of India’s people, who earn and spend in cash.
Experts have said the move could push GDP growth to below 6.5 percent this year. “As was expected, demonetization has hurt activity across all corners of the economy,” Pranjul Bhandari Chief Economist, India HSBC Securities and Capital Markets (India) Private Limited, said in a research note Thursday.
Mistry ouster
Meanwhile, India’s salt-to-steel conglomerate Tata Sons yesterday cranked up its legal tussle with ousted chairman Cyrus Mistry by calling for a shareholders’ meeting to remove him from its board.
“Tata Sons has called for an EGM on February 6th to remove Cyrus Mistry as the director after receiving numerous complaints from shareholders,” Debashish Ray, a Tata Sons spokesman, told AFP.
Mistry was sacked as chairman of Tata Sons in October and the group sought his ouster from operating companies including Tata Steel, Tata Motors and TCS. Mistry resigned from the board of six companies last month and dragged Tata Sons and its interim chairman Ratan Tata to the National Company Law Tribunal (NCLT), saying that he had been unfairly sacked.
Tata Sons, the holding company of India’s sprawling $103 billion Tata Group, retaliated with a legal notice last week accusing him of causing “irreparable harm and damage” to the company by making public sensitive documents. The increasingly acrimonious battle saw a fresh twist yesterday with Tata’s call for an EGM to remove Mistry as director of the board of Tata Sons, his last remaining foothold within the group. Tata said its ex-chief’s decision to go public with minutes from board meetings had caused harm to Tata group companies and its shareholders.
“The board of Tata Sons Ltd is of the view that the integrity of the board proceedings is being jeopardized by Mistry’s continuation as a Director and the confidentiality of the board decisions and proceedings cannot be ensured as the documents presented to the board have been leaked and made public in a distorted and untruthful manner,” Tata Sons said in a note, according to the Press Trust of India news agency.
Mistry’s dismissal shocked India’s business community and saw family patriarch Ratan Tata take interim charge of the sprawling conglomerate that he led for more than two decades.