Pres­i­dent Writes

Assocham Bulletin - - ASSOCHAM -

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.

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