Dear Mem ber,

Assocham Bulletin - - NEWS -

Re­vers­ing a five-quar­ter slide in GDP growth, In­dian econ­omy bounced back from a three-year low to ex­pand by 6.3 per cent in July-Septem­ber as man­u­fac­tur­ing re­vived up. It also in­di­cates dis­si­pat­ing im­pact of de­mon­e­ti­za­tion, and grad­ual sta­bi­liza­tion of the Goods and Ser­vices Tax (GST) regime. The GDP growth in the sec­ond quar­ter of 2017-18 com­pares to 5.7 per cent in April-June, the low­est growth rate since the Naren­dra Modi gov­ern­ment took of­fice, and 7.5 per cent in the Septem­ber quar­ter of the pre­vi­ous fis­cal.

We ex­pect the pace to quicken in the on­go­ing sec­ond half, which would crank up In­dia's GDP growth for this fi­nan­cial year to 6.8 per cent. The con­sumer con­tin­ues to be the pri­mary driver of the econ­omy, given that pri­vate con­sump­tion rose 6.5 per cent in the sec­ond quar­ter, com­pared with 4 per cent growth in in­vest­ment. De­spite the ef­forts of the gov­ern­ment to prop up pub­lic in­vest­ments and im­prove­ment in In­dia's' ease of do­ing busi­ness' rank­ings, the over­all in­vest­ment cy­cle re­mains de­pressed. A few seg­ments where in­vest­ment ac­tiv­ity is likely to stay rel­a­tively healthy in­clude roads; re­new­ables power T&D (Trans­mis­sion and Dis­tri­bu­tion), ur­ban in­fra­struc­ture, and af­ford­able hous­ing over the next cou­ple of quar­ters. The gov­ern­ment's bank re­cap­i­tal­iza­tion move would at least im­prove banks' abil­ity to lend.

While a pick-up in man­u­fac­tur­ing is wel­come from an em­ploy­ment per­spec­tive, over­all growth con­tin­ues to be driven by sec­tors with lesser abil­ity to ab­sorb labour. In the con­text, ane­mic growth in sec­tors such as con­struc­tion (with high po­ten­tial to cre­ate jobs) is wor­ri­some. The growth out­look for the re­main­ing part of the year is not with­out risks, though. If GST im­ple­men­ta­tion glitches take time to re­solve, pro­duc­tion and, par­tic­u­larly ex­ports, can take a beat­ing. Ex­ports have grown slower than im­ports in Q2. This acts as a drag on GDP. Ex­ports of goods and ser­vices have grown 1.2 per cent in the first half com­pared with im­port growth of 7.5 per cent.

De­clin­ing growth (1.7%) in agri­cul­ture and al­lied in­dus­tries puts into ques­tion the hope of the agri­cul­ture sec­tor see­ing four-plus per cent growth in 2017-18. It's also a re­ver­sal of the trend from the first quar­ter, when agri­cul­tural Gross Do­mes­tic Prod­uct (GDP) at con­stant prices was higher than that in cur­rent prices, point­ing to ad­verse terms of trade.

AS­SOCHAM has been ad­vo­cat­ing for Hy­dro power for long and have been con­tin­u­ously in­ter­act­ing with gov­ern­ment for re­vival of this sec­tor. We re­cently or­ga­nized a round ta­ble dis­cus­sion with Sri.R.K.Singh, Hon'ble Min­is­ter of State (1/ C), Min­istry of Power, New & Re­new­able en­ergy, Gov­ern­ment of In­dia and he as­sured that a Hy­dro Pol­icy would be in place soon. He also as­sured that all the rec­om­men­da­tions from the in­dus­try would be de­lib­er­ated and would be taken care while fi­nal­iz­ing the pol­icy.

AS­SOCHAM has rep­re­sented the Pre-bud­get meet­ing called by Min­istry of Fi­nance and sub­mit­ted their rec­om­men­da­tion to the Min­istry for their con­sid­er­a­tion in Union Bud­get 2018. We thank you all the mem­bers to share their in­puts for up­com­ing bud­get for FY 2017-18.

Now, that the New Year is round the cor­ner, I wish all our mem­bers and stake­hold­ers a HAPPY NEW YEAR 2018.

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