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India's public debt ratio, which remarkably remained stable at around 70 per cent of the GDP since 1991, is projected to jump by 17 percentage points to nearly 90 per cent because of increase in public spending due to COVID-19, the <keyword id="6355408" type="DEFINITION" weightage="20" keywordseo="imf">IMF</keyword> said on Wednesday. "In our projections, the increase in public spending, in response to COVID-19, and the fall in tax revenues and economic activity, will make public debt jump up by 17 percentage points to almost 90 per cent of GDP," Vitor Gaspar, Director of the IMF's Fiscal Affairs Department told . "Going forward it is projected to stabilise in 2021, before slowly declining up to the end of the projection period, in 2025. Broadly speaking the pattern of public debt in India is close to the norm around the world," he said. According to Gaspar, India's public debt ratio has been remarkably stable since 1991. It is interesting to note that the debt ratio has been stable at around 70 per cent of GDP over the past decade, he said. Responding to a question about his assessment of the fiscal situation of India, Gasper said India has been an important source of growth in the world since the 1991 economic liberalisation reforms. Real GDP growth averaged 6.5 per cent between 1991 to 2019, and real GDP per capita was multiplied by four over that period. This impressive growth performance helped lift millions of people out of extreme poverty, he said. The extreme poverty rate, measured as the proportion of people whose income is less than USD 1.90 a day at purchasing power parity (the international poverty line), fell from 45 per cent in 1993 to 13 per cent by 2015 (date of the latest full extrapolation by the World Bank available - last full evaluation, based on household surveys, goes back to 2011), he said. India achieved the millennium development goal of halving poverty by 2015 (from its 1990 level), he said. "India has made astonishing progress in other areas. Education enrollment is nearly universal for primary school. Infant mortality rates have been halved since 2000. Access to water and sanitation, electricity, and roads has been greatly improved," said the IMF official. According to Gasper, in the near-term, additional fiscal action can and should be deployed as needed to support the poor and the vulnerable. "This should be accompanied by a credible medium-term fiscal consolidation plan that can reinforce market confidence and structural reforms that boost India's growth potential," he added. "Going forward, public finances should continue to support growth and development in India. The effects of COVID-19 on health, education, poverty and nutrition render progress towards the Sustainable Development Goals even more urgent. Macroeconomic and financial stability are important necessary conditions for sustainable development," he said. Responding to a question about the handling of the COVID-19 crisis, the IMF official said that comparisons among countries are inherently complex, particularly in this highly uncertain and volatile pandemic environment. Each country's response has reflected their pre-COVID positions, the capacity of their institutions, and many other factors that may be unique to each country, he noted. "In China, the authorities reacted strongly to the outbreak. The COVID-19 seems contained. Fiscal policy focused initially on improving the public health care system, providing financial relief to the most-affected households and firms, and increasing infrastructure investment," he said. The economy has quickly returned to growth. That was possible in part through substantial monetary, financial and fiscal support. But growth is imbalanced and the pandemic has brought old structural challenges to the fore by spreading social safety nets thin and adding to financial vulnerabilities, he added. "In order to facilitate rebalancing of the economy, fiscal policy should shift its focus from infrastructure towards household support and green investment. This would mitigate the risk of scarring, and make growth more resilient," Gasper said. "Structural fiscal reforms would also make policy support more effective. Important examples include improving the macro-fiscal framework and intergovernmental coordination while leveraging digital technologies to deliver support to vulnerable groups," he said. SEE ALSO: <a href="https://www.businessinsider.in/careers/news/infosys-to-reinstate-wage-hikes-promotions-and-hiring-will-impact-margins-over-the-next-six-months/articleshow/78660576.cms">Infosys to reinstate wage hikes, promotions and hiring — will impact margins over the next six months</a> <a href="https://www.businessinsider.in/science/space/news/india-has-signed-250-documents-on-space-cooperation-with-59-countries-says-isro-chief-k-sivan/articleshow/78658045.cms">India has signed 250 documents on space cooperation with 59 countries, says ISRO chief K Sivan</a> <a href="https://www.businessinsider.in/science/space/news/jeff-bezos-blue-origin-gets-one-step-closer-to-sending-tourists-into-space/articleshow/78656520.cms">Jeff Bezos' Blue Origin gets one step closer to sending tourists into space</a> <a href="https://www.businessinsider.in/stock-market/news/wipro-share-price-dips-after-earnings-report-analysts-believe-it-will-take-a-while-to-catch-up-to-tcs-and-hcl-technologies/articleshow/78654023.cms">Wipro’s share price dips by over 6% after earnings — analysts believe it will take a while to catch up to TCS and HCL Technologies</a>

IMF projects India's public debt ratio to hit 90% of GDP because of COVID-19 expenditure

The Indian economy, severely hit by the coronavirus pandemic, is projected to contract by a massive 10.3 per cent this year, the <keyword id="6366068" type="ORGANIZATION" weightage="20" keywordseo="international-monetary-fund">International Monetary Fund</keyword> said on Tuesday. However, it would be well placed to start recovering from the "horrible crisis" with the government making efforts on both the fiscal and monetary side in addition to putting in place structural elements, a top <keyword id="6355408" type="DEFINITION" weightage="20" keywordseo="imf">IMF</keyword> official has said. The International Monetary Fund in its annual World Economic Outlook significantly downgrades India's growth for the fiscal year 2020 to minus 10.3 per cent. At the same time, IMF said that India is likely to bounce back with an impressive 8.8 per cent growth rate in 2021, but for this New Delhi needs to ramp up its efforts in various fields. In terms of what can be done going forward, clearly on the fiscal side, the IMF believes there is more that can be done to provide support to households and firms that have been affected by the pandemic, Malhar Shyam Nabar, Division Chief, Research Department, IMF, told reporters on Tuesday at a news conference here on the eve of the annual meetings of the IMF and the World Bank. He further said there is a need to tilt the composition of the fiscal support towards more of the direct spending and tax relief measures and to rely slightly less on the liquidity support measures, the credit guarantees, which are clearly important to support the provision of credit in the economy. "But if you look at the approach that was taken, there was more of an emphasis on that type of measure. We think that there is room to recalibrate and to provide more direct relief and spending support, which could have a first order impact on preventing even worse outcomes, Nabar said. On the monetary policy side, the RBI had come in very aggressively early on, he said. "It has paused recently with its interest rate cuts, looking through this inflation, the spike in inflation that they have had recently, but we believe there is more that the RBI can do, too, in terms of there is room to cut if needed, and we think that should be done once this inflation spike is more under control," he added. "And together with these efforts, both on the fiscal side and the monetary side, we think that would put India on a path to recovery going forward," Nabar said. There has also been some efforts recently on the structural side to improve medium-term growth prospects, he said. "We have had progress on labour reform bills and the farm bills. We think that this will advance their structural reform agenda in an important way, remove supply-side constraints in the agricultural sector and in the labour market, also allow for a better matching of workers with firms, provide firms with a little bit more flexibility in terms of hiring options, but at the same time also provide more social security and safety net options for workers as well," he said in response to a question. "So, with those structural elements in place as well to reinforce the cyclical support, the Indian economy would be well placed to start recovering from this horrible crisis that it is experiencing right now," Nabar said. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/wipro-share-price-dips-after-earnings-report-analysts-believe-it-will-take-a-while-to-catch-up-to-tcs-and-hcl-technologies/articleshow/78654023.cms">Wipro’s share price dips by over 6% after earnings — analysts believe it will take a while to catch up to TCS and HCL Technologies</a> <a href="https://www.businessinsider.in/tech/mobile/news/apple-new-iphone-12-series-with-5g-launched-starting-at-rs-69999-along-with-side-homepod-mini-debut/articleshow/78647779.cms">Apple's new iPhone 12 series with 5G launched starting at ₹ 69,999 along with HomePod Mini debut</a> <a href="https://www.businessinsider.in/science/space/news/jeff-bezos-blue-origin-gets-one-step-closer-to-sending-tourists-into-space/articleshow/78656520.cms">Jeff Bezos' Blue Origin gets one step closer to sending tourists into space</a>

IMF pegs India's economic growth to dip by 10.3% this year — will recover from coronavirus crisis with right policies

India would now be joining the US, Japan, Germany and France at the <keyword id="6366068" type="ORGANIZATION" weightage="100" keywordseo="INTERNATIONAL-MONETARY-FUND">International Monetary Fund</keyword>'s top table. The world’s largest democracy would also be joined with three other emerging markets; this has happened after the multilateral institution said yes to the much-delayed quota reforms on Wednesday. 
 These changes, which were pending since 2010, has made India stand among the top largest 10 members of the <keyword id="6355408" type="ORGANIZATION" weightage="100" keywordseo="IMF">IMF</keyword>, along with Italy and the UK, as well as fellow newcomers, Brazil, China and Russia. 
 
In the last IMF-World Bank meeting which was held at Lima, Peru, in October last year, India’s finance minister Arun Jaitley had strongly asked for early implementation of these changes. 
 
The reforms recommended that in order for developing countries to be better represented, they needed a 6% shift in quotas in their favour. These changes would raise India's vote share to 2.69% from the current 2.34%. 
 
"These reforms will ensure that the Fund is able to bet-ter meand represent the needs of its members in a rapidly changing global environment," IMF managing director Christine Lagarde said in his official statement. "Today marks a crucial step forward and it is not the end of change as our efforts to strengthen the IMF's governance will continue." 
 
As per the IMF, the changes aim to make better the governance and reflect the increasing role that dynamic emerging markets and developing countries have in the world economy. 
 
"The entry into force of these reforms will reinforce the credibility, effectiveness, and legitimacy of the IMF," said the release. "For the first time, four emerging market countries (Brazil, China, India, Russia) will be among the 10 largest members of the IMF." 
 
<a href="http://fm.cnbc.com/applications/cnbc.com/resources/img/editorial/2014/10/06/102064081-RTXYQYK.1910x1000.jpg">Image source</a>

India gets more voting rights as IMF reforms quota

Consumer spending in India is soaring during the festive season, with people splurging on cars, smartphones, TVs and other items, boosting the country's economic growth, media reports said. Sales at e-commerce platforms like <keyword id="18635" type="General" weightage="80" keywordseo="amazon" source="Orion">Amazon</keyword> and <keyword id="6354742" type="General" weightage="80" keywordseo="flipkart" source="Orion">Flipkart</keyword> surged by almost a fifth in the first week of the festive season, compared to the same period last year. Digital payments made via Unified Payments Interface (<keyword id="6358921" type="General" weightage="100" keywordseo="upi" source="Orion">UPI</keyword>) also increased by 40# in October from a year earlier. Economists see easing inflation and rising wages, especially in rural areas. Consumer confidence hit a four-year high in September, according to the latest figures by the central bank, and demand for bank loans is near a 12-year high despite interest rate hikes this year. According to the International Monetary Fund (IMF), India's GDP will grow at the fastest rate among major economies in 2023 and 2024, at 6.3% in both years. Aside from the festive season, the Cricket World Cup and the forthcoming wedding season are likely to boost consumption. Online sales from Amazon, Flipkart and others reached 47 billion rupees ($565 million) in the week through October 15, said the report by the market research firm Redseer Strategy Consultants. High average selling price (ASP) items such as mobiles, electronics and large appliances emerged as the largest contributor to the sales, driving 67# of the total sales, it mentioned. Flipkart Group continued to assert its leadership in week 1 of the festive season sale, further gaining market share over last year's sales to reach 63# in terms of Gross merchandise value (GMV). Amazon, Flipkart, Myntra and others began the festive season sales from October 7 which is expected to reach Rs 90,000 crore worth of online GMV in the festive month -- up 18-20# from last year's festive month sales.

Indians spent big on festive season sales, UPI transaction up 40% in Oct: Report

This year’s World Environment Day theme – ‘Only One <keyword id="6359982" type="General" weightage="100" keywordseo="earth" source="Orion">Earth</keyword>’ – was also the slogan for the 1972 Stockholm Conference – the world’s first conference on the environment. Fifty years down the line, as we face the climate emergency, the actions we take today will determine how our future generation will co-exist with nature. As we commemorate this day to emphasise the importance of conserving our planet, addressing climate challenges while keeping <keyword id="49089" type="General" weightage="20" keywordseo="sustainability" source="Orion">sustainability</keyword> in mind is the key to a better future. Today, natural disasters are occurring more frequently, displacing millions of people and causing significant economic losses. In 2020 alone, India <a href="https://www.livemint.com/politics/news/india-lost-87-bn-last-year-due-to-natural-calamities-wmo-11635269868365.html">reportedly</a> faced a staggering loss of $87 Billion due to natural disasters. Climate change is a reality that we are facing in our daily lives. For instance, March 2022 was India’s hottest March in the <a href="https://timesofindia.indiatimes.com/india/this-march-was-indias-hottest-in-122-years/articleshow/90599999.cms">last 122 years</a>. Therefore, today is a reminder for all of us to act on the climate emergency causing socio-economic disruptions globally. According to the International Monetary Fund (IMF), India is the world's fastest-growing major economy, and we must safeguard ourselves from future climate disruptions that can affect its growth prospects. This will only be possible through a strong climate action plan that will enable broader adoption of renewable energy, restore natural ecosystems, promote biodiversity and focus on water conservation and decarbonisation. <cmsannotation type="cmsannotation" annotationid="Safeguarding our natural resources" text="Safeguarding our natural resources">Safeguarding our natural resources</cmsannotation> As we experience a global shortage in raw materials, we need to rethink our approach toward using natural resources. Today, industrialisation and overpopulation are creating excessive demand for natural resources, threatening the balance of our ecosystem. The continued extraction of raw materials would disrupt the organic foundations of our ecosystems, which may undo the years of sustenance maintained between the planet and the life on it. An impactful alternative to the current linear method of consumption and production is a circular economy. A circular model can help contain the demand for newer materials and effectively utilise the available resources. This is where we design supply chains, products, manufacturing, and distribution for circularity and resource recovery, to reduce the amount of virgin raw materials in products and reclaim old products from the market to be refurbished and reused. Collective initiatives by organisations can help create a faster impact on restoring the planet, sharing ownership between every stakeholder of the planet. For instance, in cities like <keyword id="12864" type="General" weightage="80" keywordseo="chennai" source="Orion">Chennai</keyword>, which witness severe water scarcity, activities like waterbody restoration campaigns will offer long-term, sustainable solutions for better-nourished ecosystems. Multiple private, non-profit and academic organisations have <a href="https://www.grundfos.com/in/about-us/news-and-media/news/cognizant-and-grundfos-join-hands-to-restore-sembakkam-lake">come together</a> to restore the 100-acre Sembakkam Lake in Chennai. Such efforts can holistically enhance the resilience of the ecosystem while recharging groundwater and restoring essential resources. <cmsannotation type="cmsannotation" annotationid="A less carbon-intense economy" text="A less carbon-intense economy">A less carbon-intense economy</cmsannotation> Today, as businesses bounce back to pre-pandemic levels, supply chains are becoming stronger and more connected. There is energy and water consumption involved in various stages of the supply chain ecosystem, leading to increased carbon and water footprints across product lifecycles. To move towards an economic structure that is less carbon and water-intensive, we should implement policies that help businesses adopt green supply chain models, formulate material assessment strategies, and make a mandatory framework for sustainability finance to power their green initiatives. These should be included in the company policies related to materials purchasing, logistics and packaging. Technology can play a key role towards ushering in such a transition. For instance, a recent tech partnership to build a blockchain-based Circular System for Assessing Rare Earth Sustainability (<a href="https://www.constructionweekonline.in/business/grundfos-partners-with-four-organisations-to-develop-a-blockchain-based-circular-system-for-assessing-rare-earth-sustainability#:~:text=Grundfos%20has%20partnered%20with%20BEC,Rare%20Earth%20Sustainability%20(CSyARES)">CSyARES</a>) is expected to help companies improve the transparency and sustainability of their supply chains when it comes to critical and rare earth materials. <cmsannotation type="cmsannotation" annotationid="Preparing for the future" text="Preparing for the future">Preparing for the future</cmsannotation> As we strategize to build a sustainable future, it is essential to cultivate environment-friendly behaviours across various levels of society. Businesses need to understand the direct and indirect impact they are creating on the planet and need to shift to making their operations more sustainable. Customers need to be sensitized about the benefits of using products with longer lifecycles and how to responsibly handle them to reduce their footprint. There is no planet B, hence individuals, in their capacity, should start adopting sustainable living practices to make a difference. All stakeholders, public and private need to work together to help protect our ‘only one Earth’! George Rajkumar is the Country President at Grundfos India. Disclaimer: The opinions expressed are of the author/interviewee and do not necessarily reflect the views of Business Insider India. The article has been partly edited for length and clarity. This column is part of June 2022’s month-long awareness campaign on the theme “Only One Earth: Sustaining People, Planet and Prosperity” by <a href="https://www.businessinsider.in/sustainability">Business Insider India’s Sustainability Insider</a>.

OPINION: We only have one Earth! Let’s act together to safeguard resources, decarbonise economy, and transition towards sustainability

<ul><li>India has called out S&amp;P, Moody’s and Fitch credit ratings for being biased against its economy in the <keyword id="6354872" type="ORGANIZATION" weightage="20" keywordseo="Economic-survey">Economic Survey</keyword> 2020-21. </li><li>India’s current rating by S&amp;P, Moody’s and Fitch is a line in the sand away from uncertainty — the lowest rating in the investment grade of ‘adequate payment capacity’. </li><li>Any further downgrade would put India in the category of ‘likely to fulfill obligations, ongoing uncertainty’. </li></ul>It’s no secret that the COVID-19 pandemic has not been kind to the Indian economy, nor has it been easy for other countries around the world. However, India’s <keyword id="10672920" type="UNKNOWN" weightage="20" keywordseo="latest-economic-survey">latest Economic Survey</keyword> has dedicated an entire chapter on <keyword id="10672921" type="UNKNOWN" weightage="20" keywordseo="sovereign-credit-rating-agencies">sovereign credit rating agencies</keyword> being biased against the <keyword id="47445" type="PERSON" weightage="20" keywordseo="Indian-market">Indian market</keyword>. "Never in the history of sovereign credit ratings has the 5th largest economy been rated as the lowest rung of investment-grade (BBB -). India’s fiscal policy must not remain beholden to a noisy, biased measure of India’s fundamentals,” said the survey. India’s rating as per three major credit rating agencies: <table style="border-width: initial; border-style: none; width: 468pt; table-layout: fixed;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Agency </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Current rating </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">What it means </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">S&amp;P </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">BBB- </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Last rung in ‘adequate payment capacity’ grade of investment rating </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Moody’s </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Baa3 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Fitch </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">BBB- </td></tr></tbody></table>Source: Economic Survey — compiled from S&amp;P Global, Fitch and Moody’s, IMF India’s credit rating and what happens with it gets downgraded further The point of credit ratings is to quantify issuers’ ability to meet debt obligations — in this case, the ability of the Indian government to meet its debt obligations. When they are favourable, it can facilitate countries to access global capital markets and foreign investment. However, when downgrades occur, investors are dissuaded from making bigger investments. India’s current rating by S&amp;P, Moody’s and Fitch is a line in the sand away from uncertainty — the lowest rating in the investment grade. All three imply ‘adequate payment capacity’. However, any further downgrade would put India in the category of ‘likely to fulfill obligations, ongoing uncertainty’. “India’s forexchange reserves can cover an additional 2.8 standard deviation negative event. It is imperative that <keyword id="632287" type="PERSON" weightage="20" keywordseo="sovereign-credit-rating">sovereign credit rating</keyword> methodology be made more transparent, less subjective,” said the Economic Survey. The government’s GST collection may <a href="https://www.businessinsider.in/budget/news/glee-s-t-january-2021-gst-collection-may-have-beat-the-december-record/articleshow/80512714.cms">only be ₹11,000 crore short of meeting its target</a>, according to the State Bank of India’s (SBI) Ecowrap report. This means the government has more money in its pocket to allocate for the budget set to be announced on February 1. Nilesh Shah, the managing director of the Kotak Mahindra Asset Management Fund, pointed that in addition to the jump in GST collections, data from Google’s mobility index and RBI’s foreign exchange reserves combined show’s that India’s economy is on the road to recovery. “Put all of this data together, we are seeing a month-on-month improvement in the economy,” Shah, who is also a part-time mber of the Prime Minister Modi’s Economic Advisory Council, told Business Insider in an interview. This is similar to the point that the Chief Economic Advisor made in the Economic Survey 2020-21.

India’s Chief Economic Advisor trains his guns on global rating agencies

Today, Finance Minister, Arun Jaitley announced Union Budget for FY 2017-18 and there was almost nothing to further boost India as a manufacturing sector. 
 
He started his speech by quoting, “According to the IMF, India is expected to be one of the fastest growing economies of 2017. India has become the sixth largest manufacturing country in the world. Favourable price developments reflect prudent macroeconomic management. Current Account Deficit has gone down to 0.3 per cent of the GDP. Foreign Direct Investment has increased to Rs. 1.45 lakh crore.” 
 
Here’s what the Union Budget added to the manufacturing sector

FM
disappoints manufacturers in India, neglects the manufacturing growth in the
country

<ul><li>A report by <keyword id="4053635" type="ORGANIZATION" weightage="20" keywordseo="Transunion-Cibil">TransUnion CIBIL</keyword> found that out of 220 million people in India that are eligible for loans, only 72 million have active bank accounts. </li><li>This is a significant opportunity for banks to expand their retail lending.</li></ul>India has been lauded for its progress on <keyword id="107911" type="ORGANIZATION" weightage="20" keywordseo="Financial-inclusion">financial inclusion</keyword> in recent years. The <a href="https://globalfindex.worldbank.org/">World Bank</a> found that India’s flagship government schemes such as the Jan Dhan Yojana, under which nearly <a href="https://economictimes.indiatimes.com/industry/banking/finance/banking/deposits-in-jan-dhan-accounts-cross-rs-80000-crore/articleshow/63865987.cms">315 million</a> accounts have been opened, increased formal financial coverage from 53% of the population in 2014 to 80% in 2017. Even CRISIL, a homegrown analytics firm, said that India’s overall score on its <a href="https://www.livemint.com/Opinion/EYDsPA60qlvujdln9SJcdN/India-is-doing-well-on-financial-inclusion.html">district-wise financial inclusion index</a> has increased as a result of government efforts. However, the surge in account openings is not translating into <keyword id="6354680" type="UNKNOWN" weightage="20" keywordseo="credit">credit</keyword> penetration. A report by TransUnion CIBIL, a credit information agency, highlights that a lot more work needs to be done in expanding access to formal credit. The report found that out of 220 million people in India that are eligible for a loan -- based on the fact that they are between the age of 20 and 69 and earn at least ₹250,000 a year -- only 72 million, or 33%, had an active account at a bank or lending institution. A market opportunity Rather than bemoaning the lack of access to formal credit as a problem, however, TransUnion CIBIL says this represents a significant opportunity for banks to tap into. Following the massive pileup in non-performing loans, banks are becoming wary of lending to companies. They have relied on retail lending, that is loans given to individuals for housing, cars or investment purposes, to drive credit growth. Last month, Standard Chartered outlined plans to increase it share of retail loans in India <a href="https://economictimes.indiatimes.com/industry/banking/finance/banking/standard-chartered-to-grow-retail-lending/articleshow/63891090.cms">to 40%</a> from the current 29%. This untapped market is expected to sustain a rise in credit growth for the next five years. And the population of credit-worthy borrowers is only set to grow bigger as incomes rise and young Indians come of age, reaching 295 million in another five years. The expansion in access to credit can be facilitated through the uptake of online banking, which will require credit cards, and peer-to-peer lending through smartphones. What the government needs to do Account openings aren’t the sole determinant of financial inclusion. Financial literacy programmes are vital in enabling account holders to make proper use of their banking facilities and overcome their resistance to using phones for banking purposes. The government also needs to encourage the establishment of credit bureaus to underwrite individual loans - something that can be achieved by the continued linking of bank transaction information with Aadhar details. Additionally, it is precisely because of lack of access to formal credit that India’s household debt, as a proportion of GDP, is still very low compared to countries like China and the US. According to a <a href="http://www.imf.org/en/Publications/WP/Issues/2018/05/14/Global-Debt-Database-Methodology-and-Sources-45838">working paper by the IMF</a>, India’s household debt is a little less than 10% of the GDP compared to 150% in the US and 44% in China. As banks expand access to credit, the government will have to keep a watch on this statistic.

Just 33% of the Indians that are eligible for a loan have access to a bank account

<ul><li>As the markets are opening up gradually, brands across segments are working on addressing the pent-up demands. <keyword id="1549018" type="PERSON" weightage="20" keywordseo="consumer-sentiments">Consumer sentiments</keyword> are slowly changing.</li><li>The festive season is round the corner, and many brands are coming up with innovative campaigns to make sure they are relevant to consumers.</li><li><keyword id="6892713" type="PERSON" weightage="20" keywordseo="Saahil-Kumar">Saahil Kumar</keyword>, Head-Marketing, <keyword id="3451334" type="COMPANY" weightage="20" keywordseo="Sennheiser-India">Sennheiser India</keyword> talks to us about the brand's journey, and how it stayed connected with its consumers in the last few months.</li><li>He also says that along with demand from bigger cities, there is a lot of demand for their premium products from smaller towns too.</li></ul> The last few months have brought about a huge change in <keyword id="139079" type="PERSON" weightage="20" keywordseo="Consumer-behaviour">consumer behaviour</keyword>. With people stuck at home, and consumer sentiments generally being on the negative side, people have been careful about spending their money. When the pandemic hit, many industries came to a standstill, production was stopped and consumers were not buying anything. However, with restrictions being lifted gradually, some of the demand is coming back to the market and demand is going beyond just essential items. So how are brands that are non-essential products reaching out to their consumers and making themselves relevant in their lives at a time when consumers are frugal? We recently caught up with Saahil Kumar, Head-Marketing, Sennheiser India, who spoke to us about the changes in consumer behaviour during the past few months, and his expectation from and plans for the upcoming festive season. Excerpts: Q) The past few months have been difficult for organizations across the world. It has also brought about huge changes in consumer behaviour. What do you think are some of the biggest changes during the lockdown? The on-going pandemic has changed consumers’ buying behaviour within the matter of a few days. As per a report by McKinsey, consumer optimism in India has declined since COVID-19 progressed. As restriction begins to lift, consumers continue to be worried about family safety. However, there has been a 44% increase in spending on home entertainment gadgets and consumers are increasingly turning to OTTs and music streaming apps. There was a major shift from spending on discretionary products to spending on essentials and health and hygiene products. Consumers are cautious about spending on non-essential goods and are willing to pay more for a proper sanitation procedure in public places. Even the way of communication has changed drastically as digital solutions such as video conferencing and digital education has become the new norm. People are moving less yet being more efficient at work. Q) How are you preparing, as a brand, for the post COVID world? This pandemic has led to drastic changes in our lives. Coping with stress, anxiety, panic, running households and working ends up taking a heavy toll. Several brands are taking cautious measures before making any decisions in this dynamic market. The over planning of post COVID-19 decisions may turn out to be futile. What will become most important is how agile and resilient brands will be. This will play a huge role in determining how we move forward at the earliest and our ability to bounce back stronger. This is the time for putting efforts and see if a brand can provide truly meaningful experiences to serve people. It presents us with an opportunity to come up with innovative ways of marketing and engage with our consumers in the most creative ways. Q) Did marketing take a greater purpose during the last few months? Was there a change in your <keyword id="852798" type="PERSON" weightage="20" keywordseo="marketing-strategies">marketing strategies</keyword> during these past few months? Marketing has definitely taken a greater purpose during the last few months- considering the drastic changes in human behaviour owing to the on-going pandemic. During such unprecedented time, we have ensured to communicate with our consumers on quality, reliability and durability. Safety of the customers is of the utmost priority to us. Consumers have shifted their preference to online purchases; however, we are investing in omni-channel approach to provide customers on all the available choices for shopping. We are avoiding allocating spends for traditional BTL and events as consumers will avoid such gatherings and focusing more on engaging with customers digitally. Most of our planned events and other important announcements took place via digital platforms Currently, we are understanding consumer behaviour to evolve our long-term strategies and are pro-actively reaching out and identifying consumer needs while understanding emerging patterns. Q) What is the consumer demographics for your brand in terms of gender, geographies etc? Have you seen demand from smaller cities pick up in the last few years? On the consumer demographics front, our customers are those who understand the dynamics of sound quality, who consume digital content, are fitness enthusiasts, and love outdoor activities such as cycling, running etc. In terms of geographies, while our focus is on consumers in Tier I cities, we are seeing traction from small markets as well. As opposed to the contrary belief, the smaller markets have a huge appetite for premium segment products. Our premium range of products such as AMBEO Soundbar and Sennheiser MTW-2, have witnessed an overwhelming response from these markets. Consumers in India are developing the taste of good sound and are ready to invest and experience the unparalleled sound quality we provide. Q) How are you looking at the festive season from a marketing perspective? The market is opening gradually and brands are rushing to address the pent-up demand and are looking to incentivize both offline as well as the online channels. As per a report by IMF, India is expected to grow at 1.9% in 2020 before jumping to a 7.4% growth next year. There have been some early signs that show quick recovery for premium and luxury brands. Hence, brands are optimistic about recovery. Even consumer spending and consumption is expected to surge, however, the preference for buying can shift to online or stores in clean and sanitised areas like malls. During the festive season sale, brands will promote special festive promotions to recover from business losses in early 2020 and to stimulate buying. Additionally, they are being careful but not pessimistic while forecasting for stocks and preparing the supply chain for the festive season. To continue with the supply chain for the festive season, Sennheiser came up with a special edition wireless headphone- HD 458BT with a special price and our stock sold out within two days during Amazon Prime Day sale. We also leveraged Amazon Freedom sale which received an overwhelming response on other products from the consumers. We are optimistic about the upcoming festivals as well. Q) What were the challenges you faced as a marketer during the lockdown months? Like any other brand, the pandemic led to dynamic changes at Sennheiser. Even the way of working and conducting businesses drastically changed. We started engaging with our customers via our social media platforms to keep them motivated in this challenging time. As a marketer, the major challenge for us was to reduce spending on ATL activities while continuing to engage with consumers. Like any other industry, Sennheiser too has been navigating through the challenges. Every industry is impacted due to these unforeseen circumstances. However, in these challenging times, Sennheiser gave paramount importance to education. To support our customers, partners and stakeholders, we initiated a campaign called #DontStopTheEducation. Under this campaign, we had conducted more than 100 webinars (locally and globally put together). Our product managers are doing a brilliant job of training professionals in Hindi as well as regional languages. We also conducted local Round Tables involving prominent personalities from India- sharing their journey, career progression, learnings and experiences over the years, challenges faced, their workflow, approach, strategy, tips and tricks. Q) What have some of your biggest learnings from this experience been? The COVID-19 has disrupted how the world functions. We are currently dealing with a grappling health crisis which has impacted the economy radically. The biggest learning according to me is to never stop learning and upskilling yourself. This is the right time to learn a new hobby, follow your passion and enhance your skills which will not only be beneficial for you but will add to the overall productivity of your company. Another important learning experience is to constantly innovate. With the latest technology and AI in place, we can analyse the consumer consumption pattern in the new normal. With that analysis brands should be agile and resilient enough to evolve and meet consumers’ needs. Sennheiser has given paramount importance to education. The company encouraged its employees to enhance their skills through various available online courses and even gratified those who completed their course. Small steps and initiatives like these will prove to be useful in the future.

We’re witnessing an overwhelming response for our premium offerings from smaller markets: Saahil Kumar, Sennheiser India

It appears that the reformist role played by the Modi-led government will propel India’s economic growth to surpass China’s in 2015, and the country would become the world's fastest-growing major <keyword id="34412" type="ORGANIZATION" weightage="20" keywordseo="economy">economy</keyword>. And the gap would further widen in 2016, the <keyword id="6366068" type="ORGANIZATION" weightage="20" keywordseo="INTERNATIONAL-MONETARY-FUND">International Monetary Fund</keyword> (IMF) and the <keyword id="6354424" type="ORGANIZATION" weightage="20" keywordseo="World-Bank">World Bank</keyword> have said in separate forecasts, mentions an Economic Times report. 
 According to the financial daily, both IMF and World Bank see India's growth rising to 7.5% in 2015 from 7.2% in the preceding year, but have different assessments for 2016. IMF, which last January forecast 2015 growth at 6.3% and 2016 growth at 6.5%, has pencilled in 7.5% growth next year while World Bank has the 2016 figure higher at 7.9%. The bank had last January pegged the growth rates at 6.4% this year and 7% in 2016. The Centre had budgeted 8.1-8.5% <keyword id="35050" type="CITY" weightage="20" keywordseo="gdp">GDP</keyword> growth in the year to end-March 2016. 
 
The ET report also added the IMF and World Bank have predicted that India’s economic growth likely to outrun China in 2016 too. 
 In terms of economic potential, the <keyword id="6356076" type="UNKNOWN" weightage="20" keywordseo="indian-economy">Indian economy</keyword> has never managed to surpass its giant neighbour China's growth rate, the business daily said, adding that even with a higher growth rate, the $2-trillion GDP of India will remain much smaller compared with China's $10-trillion economy. 
 The ET also stated that these estimates were released on Tuesday ahead of the <keyword id="362810" type="COMPANY" weightage="20" keywordseo="IMF-World-Bank">IMF-World Bank</keyword> spring meetings in Washington. <keyword id="6355261" type="POSITION" weightage="20" keywordseo="Finance-minister">Finance Minister</keyword> <keyword id="42575" type="PERSON" weightage="20" keywordseo="Arun-Jaitley">Arun Jaitley</keyword> is leading the Indian delegation, which includes <keyword id="64190" type="POSITION" weightage="20" keywordseo="RBI-Governor">RBI Governor</keyword> <keyword id="6358908" type="PERSON" weightage="20" keywordseo="Raghuram-Rajan">Raghuram Rajan</keyword>, to the meetings. 
 
The latest numbers, which are a significant upgrade on earlier assessments, take into account the much-debated and questioned new national accounts numbers of the Central Statistics Office (CSO) as also reforms by the central government, the business daily added. 
 
IMF's World Economic Outlook has pegged China's growth at 6.8% in 2015 and 6.3% in 2016. On the other hand, World Bank sees China growing at 7% in the next two years. 
 
According to IMF, "India's growth is expected to strengthen from 7.2 per cent last year to 7.5 per cent this year and next. Growth will benefit from recent policy reforms, a consequent pickup in investment, and lower oil prices." 
 The strong growth in India has already made <keyword id="52011" type="CITY" weightage="20" keywordseo="South-Asia">South Asia</keyword> the fastest-growing region in the world, World Bank noted. As per the World Bank noted in its twice-yearly South Asia Economic Focus report, India's expected growth acceleration is being "driven by business-oriented reforms and improved investor sentiment" and that growth could reach 8% in fiscal year 2017-18 on the back of significant acceleration in investment growth, the ET concluded. (Image: Magazine3.com)

India likely to outstrip China in economic growth race

NEW DELHI: India has displaced <keyword id="6355311" type="COUNTRY" weightage="60" keywordseo="Japan">Japan</keyword> to become the world’s third biggest <keyword id="34412" type="ORGANIZATION" weightage="40" keywordseo="economy">economy</keyword> in terms of purchasing power parity (PPP), according to a <keyword id="6354424" type="ORGANIZATION" weightage="40" keywordseo="World-Bank">World Bank</keyword> report released on Tuesday. 
 
The 2011 round of the bank’s International Comparison Program (ICP) ranked India after the US and China. The last survey in 2005 had placed the country on 10th place. 
 
PPP is used to compare economies and incomes of people by adjusting for differences in prices in different countries to make a meaningful comparison. India’s share in <keyword id="524625" type="UNKNOWN" weightage="40" keywordseo="world-GDP">World GDP</keyword> in terms of PPP was 6.4% in 2011 compared with China’s 14.9% and the US’ 17.1%, the latest ICP showed. The survey covered 199 economies. 
“The United States remained the world’s largest economy, but it was closely followed by China when measured using PPPs. India was now the world’s third largest economy, moving ahead of Japan,” the report said. 
 Despite high inflation in India in recent years, prices in the country are still well below those in advanced economies, explaining the higher raking for India on the PPP measure. But according to the <keyword id="6366068" type="ORGANIZATION" weightage="40" keywordseo="INTERNATIONAL-MONETARY-FUND">International Monetary Fund</keyword> (IMF), India’s economy is 12th largest and only about a third of Japan’s in terms of absolute unadjusted dollars. “The economies with the lowest prices are either in Africa or Asia and the Pacific and include India, which has the third-largest economy,” the report noted. 
 “Because economies estimate their <keyword id="35050" type="CITY" weightage="40" keywordseo="gdp">GDP</keyword> at national price levels and in national currencies, those GDPs are not comparable. To be compared, they must be valued at a common price level and expressed in a common currency,” the report said, giving out the rationale for the PPP adjustments. 
 
 
 
For example, people in a country with higher average per capita income may not necessarily have a better quality life than a country with lower average per capita income. 
 
This makes it a good tool to compare poverty levels across countries. 
 
“One major use of PPPs is poverty assessment using the World Bank’s international poverty threshold of $1.25 per day per person. National poverty assessments differ because the purchasing power of national currencies differs from one economy to another,” the report said. 
In terms of per capita GDP, even in PPP terms, India ranks very low at 127 in the 199-country ranking. 
 
“The largest economies were not the richest, as shown in the ranking of GDP per capita. The middle-in­come economies with large economies also had large populations, setting the stage for continued growth,” the report noted. 
 
In the latest ranking, India’s economy was 37.1% of the US economy compared with 18.9% in 2005. 
The report said in terms of spending power, the differences have come down. 
 
“The spread of per capita actual individual consumption as a percentage of that of the United States has been greatly reduced, suggesting that the world has become more equal,” it said but cautioned some of this could be due to changes in the methodology.

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