India sees 23% surge in FDI Inflows

India is attracting record level of foreign investments supported by the market size, investment reforms, and economic growth rates. The Indian economy stands as the right mix of openness and opportunity for the foreign investors.

According to India’s Department of Industrial Policy and Promotion releases, India witnessed a 23 per cent growth in foreign direct investment (FDI) at $12.75 billion during the April-June quarter of 2018-19. The foreign fund inflows in April-June 2017-18 stood at $10.4 billion.

FDI in India is expected to grow notably following the implementation of initiatives, such as Goods and Services Tax (GST) related reforms, enactment and implementation of the Insolvency and Bankruptcy Code (IBC), demonetisation, and other ease of doing business reforms rolled out recently by the central government. These reforms have boosted India’s image as a preferred destination for foreign investment, with many sectors being fully available to foreign investors for making investments without any restrictions.

The sectors which witnessed the maximum inflow of FDI included services, trading, telecommunications, computer software and hardware and power, that comprise around 33 per cent of all inflows.

Among the countries, Singapore emerged as the largest source of foreign investment during April-June 2018-19 with $6.52 billion. Mauritius, Japan, the Netherlands, United Kingdom and United States made up the other sources of investment.

A growth in FDI inflows augurs well for the Indian economy especially in light of the widening Current Account Deficit (CAD) caused due to a surge in crude oil prices. According to a report by SBI Research, the CAD could touch 2.8 per cent of the Gross Domestic Product (GDP) for the fiscal year 2018-19.

An uptick in FDI inflows helps the country bridge the growing CAD deficit and the growth seen in the last quarter is especially heartening considering the 3 per cent growth in inflows witnessed last fiscal year. A decreased inflow of foreign investment has negative implications for Balance of Payments (BOP) and the value of rupee, therefore, the figures for the last quarter should bring cheer to the economic policymakers.

Latin Manharlal Group

On India’s 71st Independence Day, Let Us Salute the Real Heroes of India

INDIA’S UNIQUE ACHIEVEMENTS IN AGRICULTURE

Needar Jawan, Surakshit Bharat

Saksham Kisan, Samriddh Bharat 

§  Agriculture plays a vital role in India’s economy.

§  54.6% of the population is engaged in agriculture and allied activities (census 2011) and it contributes 17.4% to the country’s Gross Value Added for the year 2016-17 (at current prices).

§  Steps have been taken to improve soil fertility on a sustainable basis through the soil health card scheme, to provide improved access to irrigation and enhanced water efficiency through Pradhan Mantri Krishi Sinchai Yojana (PMKSY), to support organic farming through Paramparagat Krishi Vikas Yojana (PKVY) and to support for creation of a unified national agriculture market to boost the income of farmers.

Milestones in Indian Agriculture

§  Green Revolution (1968)

A large increase in crop production in developing countries achieved by the use of artificial fertilizers, pesticides, and high-yield crop varieties.

§  Ever- Green Revolution (1996)

Swaminathan is an advocate of moving India to sustainable development, especially using environmentally sustainable agriculture, sustainable food security and the preservation of biodiversity, which he calls an "evergreen revolution."

§  Blue Revolution (Water, Fish)

Blue Revolution, the Neel Kranti Mission has the vision to achieve economic prosperity of the country and the fishers and fish farmers as well as contribute towards food and nutritional security through full potential utilization of water resources for fisheries development in a sustainable manner, keeping in view the bio-security and environmental concerns.

§   White Revolution (Milk)

White Revolution was one of the biggest dairy development movements, by the Indian Government, in India in 1970. It was a step taken by the Indian Government to develop and help the dairy industry sustain itself economically by developing a co-operative, while providing employment to the poor farmers.

§  Yellow Revolution (Flower, Edible)

Yellow revolution defines increase in the oil production. The growth, development and adoption of new varieties of oilseeds and complementary technologies nearly doubled oilseeds production from 12.6 mt in 1987-88 to 24.4 mt in 1996-97, catalyzed by the Technology Mission on Oilseeds, brought about the Yellow Revolution

§  Bio Technology Revolution

Biotechnology is the application of scientific and engineering principles to the processing of materials by biological agents to provide goods and services. From its inception, biotechnology has maintained a close relationship with society.

§  ICT Revolution

ICT is short for information and communications technology. It refers to a broad field encompassing computers, communications equipment and the services associated with them. It includes the telephone, cellular networks, satellite communication, broadcasting media and other forms of communication.

§ Indian Army

India has the second largest army in the world with about 1.2 million soldiers. It has the complete spectrum of weaponry required to fight any type of war from nuclear to low intensity/sub-conventional. For reasons that will be discussed later (when India’s military industrial complex is examined), most of the equipment, especially combat equipment, is imported and is largely of Soviet origin due to historic political conditions. Only in the last decade or so has the Indian Army diversified its import sourcing. 

Latin Manharlal Group

IMF Projects India’s GDP to post Robust Growth in FY20

India is on the path to hold its position as one of the world’s fastest-growing economies as reforms start to bear fruit. India’s economy is constantly gaining momentum as the growth reached the fastest pace, in seven quarters, in January through March.

According to International Monetary Fund (IMF) report, India’s GDP is poised to grow by 7.3 per cent in the 2018-19 fiscal and 7.5 per cent in 2019-2020 on strengthening of investment and robust private consumption.

The report stated that the near-term macroeconomic outlook for India is broadly favourable. The Indian economy has made a robust recovery from the two shocks that started from late 2016 which were demonetisation and implementation issues related to the GST. The November 2016 currency exchange plan and the July 2017 Goods and Services Tax (GST) rollout, resulted in sluggish growth to 6.7 per cent in fiscal year 2017-18, but a recovery is underway supported by an investment pickup. Generally, India is getting assistance from good macroeconomic policies, stability-oriented policies as well as some vital reforms that have been introduced in recent years.

On the other hand, the report flagged some risks including higher oil prices, tightening global financial conditions and tax revenue shortfalls. Headline inflation is pegged to grow at 5.2 per cent in fiscal year 2018-19, as demand conditions tighten, along with the recent depreciation of the rupee and higher oil prices, agricultural minimum support prices and housing rent allowances. The report projects current account deficit to amplify further to 2.6 per cent of the GDP on soaring oil prices and strong demand for imports, offset by a slight increase in remittances.

As per the IMF report, financial sector reforms have been undertaken to address the twin balance sheet problems, as well as to revive bank credit and enhance the efficiency of credit provision by speeding up the cleanup of bank and corporate balance sheets. Stability-oriented macro-economic policies and progress on structural reforms continue to bear fruit in the country, the report said.

The government is due to release gross domestic product data on August 31, 2018 for the three months ended June. A robust growth rate may not necessarily reverberate with voters in elections next year as they continue to face issues such as unemployment and farm distress.

There are other risks too. The rupee has slipped 7 per cent against the dollar this year, the worst performer among major Asian currencies, threatening the inflation outlook. The Reserve Bank of India delivered its second straight interest rate hike last week as policy makers seek to maintain economic stability against a global backdrop of trade tensions and high oil prices.

Latin Manharlal Group