Dear Mem ber,
As predicted, India's Gross Domestic Product (GDP) grew at 7.2%, rebounding sharply from a three-year low just six months ago, and beating China to regain the fastest growing economy spot in the October-December period of the year 2017. Driven by government's final consumption expenditure, India recorded a higher Gross Fixed Capital Formation (GFCF) growth at 12% in Q3 FY18 as against 8.7% in the previous quarter, and a sizeable uptick was witnessed in different sectors including agriculture and real estate.
According to ICRA, India's GDP growth at 7.2% could be because of the double-digit expansion in production of capital goods, the sharp rise in the capital spending of the government and the modest pickup in the capital spending of the state governments in Q3 FY18.
The CPI inflation in the month February eased further to 4.44% from previous month's 5.1% on the back of lower food prices but continues to remain higher than the 4% target of the Reserve Bank of India. The inflation of the month of February has beaten ET Now poll prediction of 4.6%. Meanwhile, January IIP has also surged from December's 7.2% to 7.5%. The January IIP expanded on the back of higher manufacturing (8.7%) and electricity production (7.6%) output.
The latest decision by the government to allow commercial mining of coal will help India save Rs. 30,000 crore. By allowing private firms to mine coal, India will boost not only its production but also save Rs. 30,000 crore of imports. The decision by the Cabinet Committee on Economic Affairs (CCEA) to award the coal mining rights to the highest bidder without any restrictions on end use will boost both efficiency and production. The import will be substituted with domestic production. Currently, more than 90 percent of mining in the country is done by the government. The largest consumers of non-coking coal namely sectors such as power, cement and steel will gain the most out of the government's decision to commercialize coal mining.
The Economic Survey 2018 had rightly highlighted the immediate need of remodeling the social infrastructure for inclusive and sustainable growth. The education sector has a huge role to play in the government's development strategy to enhance human capabilities and make India a knowledge economy. Poor results and declining standards of education have been barriers to continuity of education for most students. A significant budgetary allocation to improve the education infrastructure augurs well for learners.
A "trade war" triggered by the US could be a defining factor that retards growth across the globe. Donald Trump proposes to impose a 25 per cent customs tariff on steel imports and a 10 per cent tariff on aluminium. In retaliation, the European Union (EU), Canada, Brazil, China, etc, have threatened to impose customs duties on US exports. In the meantime, India's budget has imposed higher customs duties on a variety of items, though this hasn't invited retaliatory action as of yet. Protectionism of this nature requires a balancing act, where important sector like steel, mining must flourish within the country to meet domestic demand.
ASSOCHAM felicitated visiting Head of States from Canada, Cambodia, Jordan & Vietnam during the month and is committed to support in further strengthening bilateral ties with global economic partnering countries.