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Ahead of the union <keyword id="19936553" type="General" weightage="20" keywordseo="budget" source="keywords">budget</keyword> 2024, which is set to be presented on the 22nd July, finance minister Nirmala Sitharaman kicked off pre-budget consultations on 19th June. In their pre-budget memorandum to the <keyword id="19900485" type="General" weightage="20" keywordseo="finance-ministry" source="keywords" meta.keywordsubtype="org" meta.entityname="finance ministry" meta.hostid="261" meta.entityid="finance ministry">finance ministry</keyword>, the <keyword id="20366533" type="General" weightage="20" keywordseo="PHD-Chamber-of-Commerce-and-Industry" source="keywords" meta.keywordsubtype="org" meta.entityname="PHD Chamber of Commerce and Industry" meta.hostid="261" meta.entityid="PHD Chamber of Commerce and Industry">PHD Chamber of Commerce and Industry</keyword> proposed 10 reforms it deemed essential for <keyword id="19895063" type="General" weightage="20" keywordseo="India" source="keywords">India</keyword>’s journey towards <keyword id="19916816" type="General" weightage="20" keywordseo="Viksit-Bharat" source="keywords" meta.keywordsubtype="org" meta.entityname="Viksit Bharat" meta.hostid="261" meta.entityid="Viksit Bharat">Viksit Bharat</keyword>. Amongst the proposals submitted were introducing reforms to enhance the share of the manufacturing sector in India’s <keyword id="19904293" type="General" weightage="20" keywordseo="GDP" source="keywords">GDP</keyword> to 25% by 2030, and the expansion of the <keyword id="19981334" type="General" weightage="20" keywordseo="PLI-scheme" source="keywords">PLI scheme</keyword> beyond its existing scope of 14 sectors. In addition to this, <keyword id="20366532" type="General" weightage="100" keywordseo="PHDCCI" source="keywords" meta.keywordsubtype="org" meta.entityname="PHDCCI" meta.hostid="261" meta.entityid="PHDCCI">PHDCCI</keyword> also emphasised on rationalising direct taxes for the middle class, infrastructure enhancement and smart village development, with special focus on tier-2 and 3 cities. As per Sanjeev Agrawal, President, PHDCCI, “In order to strengthen the share of the manufacturing sector in the country's GDP, we recommend the status quo on the corporate tax rate at 22% for existing companies and 15% for new manufacturing companies incorporated after October 1, 2019. The middle class must be spared from the 30% tax rate and this rate must be applicable only to those with taxable income above Rs. 40 lakh, this will support consumption demand in this country”. In addition to this, PHDCCI also emphasised on strengthening linkages between universities and industries for bettering research and development activities in the country, and also appealed for reducing cost of doing business. Here’s a snapshot of some prominent demands placed forth by the PHDCCI ahead of the budget : <ol><li>Change in NPA classification limit from the present 90 days to 180 days</li><li>Fostering AI education, skill development and competitiveness in the service sector</li><li>Increase agricultural exports to US$100 billion in the next 3 years via increased public investments in infrastructure,</li><li>Ensure the presence of schools within a radius of 1 km, colleges within a 10 km radius and universities within a 25 km radius in the next five years.</li><li>Make health centres available within the radius of 1 km and hospitals within the radius of 10 km.</li><li>Propose a Voluntary Disclosure Scheme (VDS) for legal cases older than 10 years, offering settlement opportunities at a nominal 15% penalty. </li></ol>

Bolster manufacturing sector, consumption this budget: PHDCCI to FinMin

Boost in domestic <keyword id="19914449" type="General" weightage="20" keywordseo="manufacturing" source="keywords">manufacturing</keyword> due to PLI (production linked incentive) schemes and increase in <keyword id="19916774" type="General" weightage="20" keywordseo="exports" source="keywords">exports</keyword> on account of free trade agreements are expected to bridge the country's <keyword id="20201391" type="General" weightage="20" keywordseo="trade-deficit" source="keywords">trade deficit</keyword> further, <keyword id="20613906" type="General" weightage="100" keywordseo="Economic-Survey" source="keywords">Economic Survey</keyword> said on Monday. However, it said that fluctuations in <keyword id="19936629" type="General" weightage="20" keywordseo="commodity-prices" source="keywords">commodity prices</keyword>, especially for critical imports like oil, metals, and agricultural products, can impact India's trade balance and inflation levels. The Survey said that though ongoing geopolitical headwinds impacted India's merchandise exports, lowering international commodity prices ensured a lower trade deficit in FY24 than in FY23. The country's merchandise trade deficit narrowed to USD 240 billion in 2023-24 from USD 265 billion in 2022-23. It added that changes in trade policies by major trading partners or geopolitical developments can affect India's export opportunities and market access. "In the coming years, India's trade deficit is expected to decline further as the <keyword id="19981334" type="General" weightage="20" keywordseo="PLI-scheme" source="keywords">PLI scheme</keyword> is expanded and India creates a globally competitive manufacturing base in several product categories," the Survey said. It added that the recently signed FTAs (free trade agreements) are expected to increase the <keyword id="22374533" type="General" weightage="20" keywordseo="global-market-share" source="keywords">global market share</keyword> of the country's exports. The PLI scheme for sectors like mobile manufacturing, information technology (IT) hardware, pharmaceutical, telecommunications, and food product are helping to increase manufacturing and cut imports. India has implemented <keyword id="20000557" type="General" weightage="20" keywordseo="FTA" source="keywords">FTA</keyword> with Mauritius, Australia and the UAE. It added that a narrowing merchandise trade deficit and rising service exports have improved the CAD (<keyword id="20054874" type="General" weightage="20" keywordseo="current-account-deficit" source="keywords">current account deficit</keyword>), ending with a surplus of 0.6 per cent of GDP in Q4 of FY24. However, the risks to the performance of India's external sector are on the downside due to the persistence of current <keyword id="19955176" type="General" weightage="20" keywordseo="geopolitical-tensions" source="keywords">geopolitical tensions</keyword> and policy uncertainty, it said. Some of the challenges listed by the survey includes fall in demand from major trading partners like the US, rise in trade cost, and volatility in commodity prices. Attacks on shipping in the Red Sea and drought in the Panama Canal have resulted in trade flows being re-routed, increasing journey time and costs. India's merchandise trade relies heavily on maritime trade, so disturbances in major shipping routes can impact its economy. "It is critical to explore what these changing paradigms mean for India. Policies need to be a mix that straddles security concerns with economic considerations," the survey said, adding India's push towards manufacturing in complex and niche sectors through schemes such as PLI and Make in India aims to balance these goals. Further, the survey emphasised on the need to focus on improving India's competitiveness in many product areas. For example, it said, India has tremendous potential in becoming a large global exporter in agricultural commodities. Fostering stronger regional trade ties and adding more markets for Indian goods will help mitigate global demand fluctuations. "In an era when global economic growth is likely to be buffeted by geopolitical tensions and protectionism, growing India's exports of goods and services will be a stiffer challenge than before," it cautioned. Commenting on this, Rumki Majumdar, Economist, Deloitte India, said that despite global uncertainties, India's exports are recording positive growth rates. "That shows the resilience of our exports amidst global uncertainties," she said, adding, "by transforming our export basket and focusing on higher margins and value addition across various sectors, India will easily achieve its ambition of USD 2 trillion in exports by 2030-31."

India's trade deficit expected to decline further: Economic Survey

<ul><li>The hospitality sector saw 23 <keyword id="142429" type="General" weightage="20" keywordseo="credit-rating" source="Orion">credit rating</keyword> upgrades, with no downgrades at all in FY24, says ICRA.</li><li>Auto, financial sector, power, realty and transport infrastructure also saw several upgrades.</li><li>Agriculture, chemicals, construction and apparel sectors saw the most downgrades. </li></ul> The fiscal year of FY24 continued the ‘upgrade momentum’ that was set into motion in FY22, said the credit rating agency ICRA. Two entities had been upgraded for every entity downgraded during the year, the rating agency said in a report released on Monday. The biggest winner for the year is the hospitality sector — with 23 upgrades and an upgrade rate of 37%. And, there were no downgrades at all. ICRA maintains a positive outlook on the Hospitality sector for FY2025 as well. The other sectors which saw the most number of upgrades include auto and auto components, finance, power, realty and transport infrastructure. On the other hand, sectors which saw the most number of downgrades are — agricultural food and other products, chemicals and petrochemicals, construction, textiles and apparel. Company-specific factors While entities in aviation, hospitality, auto &amp; auto components, and banks gained from the industry tailwinds in FY24 – that’s not the only factor behind most upgrades. “A large majority of rating upgrades were driven by company-specific factors such as expansion in market share or order book, improvement in the cost structure, reduction in project risk, or fresh equity infusion that strengthened the balance sheet,” says K Ravichandran, chief rating officer at ICRA said. Overall, credit profiles continued to improve last year. The number of instances of defaults dipped to five in FY24, compared with 22 in FY23 and 42 in FY22. “Corporate India has shown a high resilience to withstanding the rise in borrowing costs over the past two years and is seen to have the capacity to bear the current level of interest rates before the rate cut cycle likely begins in the latter part of the year,” said Ravichandran. Banks &amp; NBFC asset profiles at decadal best The financial sector has also been one of the best-performing sectors for the year in terms of credit profile. It saw an upgrade rate of 13%, next only to auto. Its downgrade ratio is also low at 2%. “The asset quality of banks and NBFCs has also been at its decadal best with the profitability and the capitalisation indicators expected to remain healthy in the near term. The series of proactive actions taken by the regulators (RBI and SEBI) in recent years would work to further strengthen the financial system and the capital markets,” opines Ravichandran. He, however, added that the key downside factors that could derail progress in multiple sectors are the monsoons and complicated geopolitical landscape. Two wars, the Red Sea crisis and sluggish exports had been weighing on India in FY24. “Yet, these did not feel heavier as domestic consumption demand across several sectors, government spending on public infrastructure, and healthy balance sheets lent support to the credit profiles of entities,” says ICRA. In FY25, the rating agency expects India’s GDP to expand by 6.5%, with the average retail inflation estimated to be moderate at 4.6%.

Two entities upgraded for every downgrade in FY24, hospitality sector records 23 upgrades: ICRA

<ul><li>Rise in investments in residential real estate coincides with a rise in the aggregate <keyword id="16695918" type="General" weightage="20" keywordseo="disposable-income-of-households" source="Orion">disposable income of households</keyword>, says a report by ICICI Securities.</li><li>For every square foot that’s built, the realty sector helps generate income anywhere between ₹2,000-6,000, depending on the type of building.</li><li>The average income of a construction worker in rural India as per the Labour Bureau statistics is around ₹500-600 per day while for those in the urban areas it is usually higher.</li></ul>There is a direct correlation between growing household incomes and a vibrant <keyword id="6543013" type="General" weightage="20" keywordseo="real-estate-sector" source="Orion">real estate sector</keyword>. The signs of recovery in the real estate industry are expected to support aggregate <keyword id="386349" type="General" weightage="20" keywordseo="household-income" source="Orion">household income</keyword> considering it is the second-largest employer in India after <keyword id="6355165" type="General" weightage="20" keywordseo="agriculture" source="Orion">agriculture</keyword>, says a report by ICICI Securities. The sector generates a variety of jobs including for construction workers and other informal jobs for masons, plumbers, concrete workers, electricians, carpenters, painters, drivers, helpers, loaders, etc. For every square foot that’s built, it helps generate income anywhere between ₹2,000-6,000, depending on the type of building — ranging from basic to high-rise luxury skyscrapers. “Incremental value additions done to the builder-finished construction by end-users can go up to several thousand rupees per square foot depending upon the taste and capability of the end-user,” ICICI Securities says. <div type="image" title="Real estate report 2" msid="98390920" hostid="261" sizebytes="52976"></div> How much does construction pay? The <keyword id="6462448" type="General" weightage="20" keywordseo="construction-sector" source="Orion">construction sector</keyword> is also a better paymaster than agriculture, the report adds. The average income of a construction worker in rural India as per the Labour Bureau statistics is around ₹500-600 per day. In urban areas, it gets higher. “Anecdotal evidence for larger cities indicates the wages are at least 30-40% higher for construction workers with higher skills and experience,” the report says. Another group of professions to benefit from real estate development are mortgage lenders, material suppliers, contractors, architects, designers, engineers, lawyers, real estate brokers, etc. In addition, allied sectors involved in labour-intensive manufacturing activity in the unorganised segment — such as furniture, ceramics, glassware, lightings and other decorative products – also benefit from an upcycle in real estate. Large-scale organised manufacturing like cement, steel, ceramics, plywood, paints, adhesives, etc are also beneficiaries. “Household real estate investment cycle is rising after a decade of stagnation during which its share in gross fixed capital formation (GFCF) dipped from 37% in FY12 to 25% in 2021. The cyclical recovery in residential real estate will boost income growth of related stakeholders mentioned above. Workers involved in the leisure segment, which again is dominated by the unorganised segment, are also likely to see buoyant income growth,” said the report. However, the report mentions that agriculture wages remain a key risk to aggregate income growth, given its large weight within the aggregate workforce. And the prospects of it will depend on how monsoon and agriculture output pans out in FY24. <div type="image" title="real 3" msid="98390948" hostid="261" sizebytes="48628"></div> Wage bills to rise all across ICICI Securities also says that the aggregate wage bill of the private corporate sector has been expanding more than the nominal GDP growth over the past decade. “The trend is likely to continue in FY24 going by recent salary surveys and hiring trends in the formal segment although IT services, with its large weight, is expected to lag,” the report said. According to a survey by Aon, salaries in India are expected to go up by 10.3% in 2023, in spite of concerns around economic volatility. This could be in response to a high attrition rate of 21.4% in 2022. In 2022, the actual salary increase was slightly higher at 10.6%. The projected salary increase for India is the highest among major world economies like China, US and UK, Aon said. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/corporates/news/adani-group-stocks-rally-after-it-sells-stake-to-gqg-partners/articleshow/98384846.cms">Adani group stocks rally post GQG deal: group marketcap surges by ₹73,000 crore</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/auto/news/tractors-commercial-vehicles-drive-auto-sales-in-february-but-el-nio-threat-looms-large/articleshow/98386451.cms">Tractors &amp; commercial vehicles drive auto sales in February but El Niño threat looms large</a>

Recovery in real estate sector likely to boost household income, says ICICI Securities

Industry body <keyword id="6355001" type="ORGANIZATION" weightage="20" keywordseo="ficci">Ficci</keyword> on Sunday said its Economic Outlook Survey has projected the country's annual median GDP growth for 2020-21 at (-) 4.5 per cent. With the rapid spread of COVID-19 pandemic manifesting into an economic and healthcare crisis globally, the latest forecast marks a sharp downward revision from the growth estimate of 5.5 per cent reported in the January 2020 survey, it said. The pandemic outbreak has severely impacted the economic activities as the country had to go through a lockdown to check spread of the virus. However, the restrictions are being gradually eased. While addressing SBI Banking and Economics Conclave on Saturday, RBI Governor Shaktikanta Das said the Indian economy has started showing signs of getting back to normalcy in response to the staggered easing of restrictions. "It is, however, still uncertain when supply chains will be restored fully; how long will it take for demand conditions to normalise; and what kind of durable effects the pandemic will leave behind on our potential growth," he said. In May, the Reserve Bank had said the GDP growth during 2020-21 is likely to remain in the negative territory. Releasing details of the survey, Ficci said the present round of 'Economic Outlook Survey' was conducted in June 2020 and drew responses from leading economists representing industry, banking and financial services sector. "The latest round of Ficci's Economic Outlook Survey puts forth an annual median GDP growth forecast for 2020-21 at (-) 4.5 per cent - with a minimum and maximum growth estimate of (-) 6.4 per cent and 1.5 per cent respectively for 2020-21," it said. As per the survey, the quarterly median forecasts indicate GDP growth to contract by (-) 14.2 per cent in the first quarter of 2020-21, with a minimum estimate of (-) 25 per cent and a maximum estimate of (-) 7.4 per cent. Economic activity-wise annual forecast indicated a median growth of 2.7 per cent for agriculture and allied activities for 2020-21. "Agriculture seems to be the only sector with a silver lining right now. There is an apparent upside as far as the performance of monsoon is concerned this year and the water reservoir levels in the country stand at good levels," the industry chamber said. According to the survey, the rural sector supported by a steady agriculture performance and hopefully a contained number of COVID-19 cases will be a key demand generator for India this year. The survey further said that industry and services sector, on the other hand, are expected to contract by 11.4 per cent and 2.8 per cent, respectively in 2020-21. Weak demand and subdued capacity utilisation rates were already manifesting into a drag on investments and the COVID-19 pandemic has further extended the timeline for recovery, it said. Even though activity in sectors like consumer durables, FMCG is gaining traction, majority of the companies are still operating at low capacity utilisation rates. Labour availability and feeble demand remain as major issues for the companies, it added. "Therefore, fresh investments will be difficult to come by in the near to medium term. Also, a significant change in consumption patterns is expected on back of uncertainty with regard to jobs and income losses," Ficci said. It noted that absence of demand stimulus, a second wave of the pandemic and continuation of social distancing and quarantine measures will weigh heavy on growth prospects. "With demand and investment outlook muted, robust government expenditure has been the only saviour. Nonetheless, growth is likely to bottom out post the second quarter of current fiscal year," it said. According to the survery, some of the stimulus measures are reaching to the ground – especially through the credit guarantee scheme for MSMEs and support through MGNREGA – which is positive. During the survey, economists were asked to share their views on the fiscal stimulus package 2.0 and any additional measures that can be undertaken. Participants were of the view that government measures in stimulus focussed broadly on saving lives and undertaking deep structural reforms. "They, therefore, felt that while the quasi fiscal measures and structural reforms announced were undoubtedly steps in the right direction, on ground implementation and results will take a long time to work through in the present environment," it added. A majority of economists believed that the government could have undertaken "a more aggressive" fiscal stance than what has been announced in the two packages combined. Participating economists also highlighted that the measures announced by both the Reserve Bank of India and government focussed largely on addressing supply side constraints with limited support for creation of demand. Ficci said the surely participants unanimously believed that the RBI would undertake further cuts in the repo rate going forward to minimise the economic shock and stabilise financial markets. Nonetheless, a majority of the participants also opined that cutting interest rates would not pump economic growth given that the demand conditions have remained subdued from even before the COVID pandemic struck the economy. The fast-changing macroeconomic environment and deteriorating outlook for growth necessitated off-cycle meetings of the Monetary Policy Committee (MPC) of the RBI – first in March and then again in May 2020. The MPC decided to cumulatively cut the policy repo rate by 115 basis points over these two meetings, resulting in a total policy rate reduction of 250 basis points since February 2019. Ficci said economists were asked to suggest ways with which India could best utilise the present opportunity to expand its presence in the global value chains. Efforts towards liberalisation of FDI policy must be complemented with improving infrastructure and ease of doing business in the country, it added. RSN NKD BAL

GDP growth in 2020-21 likely to be negative, says FICCI survey

Mumbai, May 19 () Eight states most affected by the COVID-19 pandemic account for over 60 per cent of the GDP and the extended restrictions will slam the economy harder, a report said on Tuesday. The eight states, which include Maharashtra, Gujarat and Tamil Nadu, among others also account for 58 per cent of the employment, domestic rating agency Crisil's research wing said in the report. The lockdown has been extended till May 31 by the Centre for the third time with a liberty to states to decide the grading of the zones. Many of the affected states like Maharashtra have decided to continue with the restrictions. Analysts are estimating a contraction of up to 5 per cent in GDP despite the government's efforts of pumping stimulus. "With states continuing to see a rise in cases, the restrictions have been extended. This is bound to slam the overall economy harder," the report said. It noted that the top eight states have been selected as per the districts affected as of the end of the third lockdown on Sunday. "At the all-India level, the virus spread and lockdowns, and restrictions have pummelled economic activity. While all states were near- uniformly hit during the first and second lockdown phases, the third and fourth would impact them differently," it said. Maharashtra, Tamil Nadu and Gujarat, being most dependent on output from industry and services, are more vulnerable to output losses as they face restrictions, it said. Andhra Pradesh, Rajasthan and Uttar Pradesh are fiscally more vulnerable due to relatively higher debt ratios and also have high dependence on revenue sources from petroleum, liquor and stamp duty, it added. Output could be more affected in the eight most pandemic-hit states as they face restrictions, it said, adding that the share of gross state value added (GSVA) from these states is 64 per cent in agriculture, 63 per cent in industry and 53 per cent in services. Those with higher dependence on agriculture like Andhra Pradesh, Rajasthan, UP and West Bengal could fare better as a normal monsoon is expected to support it, it added. Among the relatively less-hit states, restrictions on economic activity could hurt Karnataka and Kerala, where share of industry and services is higher, while in others like MP, Punjab and Bihar, a higher share of agriculture could cushion the economy this year. AA ANU ANU

COVID-19: Eight most affected states account for 60 pc of GDP

(Eds: Minor edit in headline) Mumbai, Jun 29 () The gross state domestic product (GSDP) of all states is likely to contract up to 14.3 per cent in the current financial year due to the impact of COVID-19-induced lockdown on economic activities, says a report. States such as Assam, Goa, Gujarat and Sikkim are likely to witness a double-digit contraction in FY2021, India Ratings and Research said in a report on Monday. "We expect the gross state domestic product (GSDP) of all states in India to contract in FY21. The contraction will be in the range of 1.4 per cent-14.3 per cent," the report said. The top five major states where the impact of lockdown was the most pronounced are Karnataka, Jharkhand, Tamil Nadu, Kerala and Odisha. The five major states where the impact of lockdown was the least pronounced are Madhya Pradesh, Punjab, Bihar, Andhra Pradesh and Uttar Pradesh, the report said. Despite the nation-wide lockdown enforced on March 25, 2020, several economic activities defined as essentials remained operational. The impact of the lockdown on sectors namely agriculture, industry and services was differently, it said. "Since agricultural activities were less impacted, the states having a higher share of agriculture are expected to have suffered less compared to the one where the share of agriculture is low," the report said. Some sub-sectors especially in the services such as banking and financial services, IT and IT-enabled services were less impacted, because they were able to readjust their operations remotely owing to the high penetration of digital platform in their business operations, the report said. The states in which the share of these services is high are expected to have suffered less during the lockdown compared to the one where share of these services is low, the agency said. It said in FY2019, the proportion of agriculture in gross value added was 14.6 per cent for Haryana and 25 per cent for Punjab. The proportion of industry and services was 31.1 per cent and 54.3 per cent respectively in Haryana and 25.2 per cent and 49.8 per cent in Punjab during the year. "This means the overall growth performance of Haryana is more susceptible to the performance of the industrial and services sectors. Our estimate suggests that the proportion of Haryana economy that became dysfunctional during the lockdown is 64.3 per cent, higher than 47.9 per cent of Punjab," the rating agency said. The report further said state's own tax revenue (SOTR) is a function of the nominal GSDP of the state. Although the lockdown is going to adversely impact the revenue performance of all the states, the states that are likely to be impacted more in FY2021 are the states whose share of SOTR in the total revenue is higher and are also expected to witness a higher deviation in their nominal GSDP from the budgeted GSDP, the report said. "The most vulnerable states in this respect are Maharashtra, Gujarat, Tamil Nadu, Kerala, Telangana and Haryana," it said. The share of SOTR in the total revenue of these states has been budgeted in the range of 57 per cent-64 per cent in FY2021 and their FY2021 nominal GSDP is expected to deviate from the budged nominal GSDP in the range of 15 per cent-24 per cent, it said. HV BKS MR

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Bolster manufacturing sector, consumption this budget: PHDCCI to FinMin

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India's trade deficit expected to decline further: Economic Survey

PTI

Two entities upgraded for every downgrade in FY24, hospitality sector records 23 upgrades: ICRA

Katya Naidu

Recovery in real estate sector likely to boost household income, says ICICI Securities

Bhakti Makwana

GDP growth in 2020-21 likely to be negative, says FICCI survey

PTI

COVID-19: Eight most affected states account for 60 pc of GDP

PTI

States GDP to contract 1.4-14.3 per cent in FY21: Report

PTI

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