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<ul><li>Foreign investors had pulled out billions from India's equity market ever since the tax surcharge was announced in the latest budget.</li><li>The Narendra Modi government also announced a slew of measures including tax reforms to revive a sluggish economy.</li><li><keyword id="7706673" type="UNKNOWN" weightage="20" keywordseo="finance-minister-nirmala-sitharaman">Finance Minister Nirmala Sitharaman</keyword> and her team addressed a press conference to restore the faith in the economy and the government.</li><li>Reform is a continuous process, she said in her opening remarks.</li></ul>In a bid to restore the faith in the Indian economy and the Narendra Modi government, Finance Minister Nirmala Sitharaman assured the investors that the government respects wealth creators and declared that the surcharge on foreign and domestic equity investors has been rolled back. The latest budget for the financial year ending March 2020 imposed an additional tax on the country's super rich and foreign portfolio investors (FPIs) got caught in the crossfire. The subsequent anger and market sell-off has wiped off billions of rupees in share market wealth since then as foreign investors rushed for the exit. Most foreign portfolio investors in India operate as non-corporate entities such as trusts and associations, which are taxed like individuals and therefore the additional tax would fall on them. The government will lose ₹1,400 crore by rolling back the additional surcharge imposed in the latest budget. Not just the surcharge on capital gains, there are other tax reforms too All pending tax notices in India will be cleared by October 1, Finance Minister Nirmala Sitharaman declared. If any case must continue, the notice will have to renewed once again after October 1 for it to be applicable. All refunds of the goods and services tax (GST) pending so far will be cleared within the next 30 days. All future refunds will have to paid within 60 days. "Reform is a continuous process," she said in her opening remarks adding that tax scrutiny will be 'faceless' from Vijaya Dashami day, the last day of the Indian festival of Dussehra. The idea is to ensure there is no physical interface between the taxman and the assessee to avoid any harassment of the taxpayer. "We are inclined to move from the prosecution route to more humane approach. I want companies and the media to see that at no point, the intention of the government is to take the prosecution route," Sitharaman said. "Issue of IT orders -- notices, summons, etc-- will go through a centralised computer system from October 1," she said. This would mean that any tax demand will be approved by a central authority. "Any notice issued with a computer generated unique document identification (DIN) number will not be valid," she said. India moves to make home loans cheaper and easier The National Housing Board will given additional ₹20,000 crore to be further lent to housing finance company. The government will release the ₹70,000 crore to state-owned banks, which will allow for more credit and lower lending rates. The banks have also been asked to pass on every fall in the cost of funds to the consumers. The government wants people to get cheaper loans for homes and cars as demand took a nosedive in recent months. Government wants to make more money to be available for credit The government will take steps to create a credit default swap market in India in consultation with the Reserve Bank of India and the Securities and Exchange Board of India. A credit default swap (CDS) is a way for a lender to hedge against a loan turning bad. "For example, if a lender is worried that a borrower is going to <a href="https://www.investopedia.com/terms/d/default2.asp" data-type="internalLink">default</a> on a loan, the lender could use a CDS to offset or swap that risk. To swap the risk of default, the lender buys a CDS from another investor who agrees to reimburse the lender in the case the borrower defaults. Most CDS will require an ongoing <a href="https://www.investopedia.com/terms/p/premium.asp" data-type="internalLink">premium</a> payment to maintain the contract, which is like an insurance policy," according to Investopedia. The government sets up a dedicated panel to make infrastructure development faster An inter-ministerial task force will be set up to expedite the proposed government investments in infrastructure. The government had announced earlier that it would invest ₹100 lakh crore in infrastructure projects in the next five years. Automobile sector "BS-IV vehicles purchased until March 30, 2020 will be allowed to run on the roads for the duration of the registration," the Finance Minister said. Any vehicle will bought from now until March 2020 will be eligible for 30% depreciation, double that of the current rate of 15%. "That will largely benefit commercial vehicle segment. In the case of cars, only companies buying cars will benefit and that doesn't affect us," RC Bhargava, Chairman, Maruti Suzuki, the country's largest car maker told CNBC-TV18. Government departments have been told to actively replace the old vehicles. Until now, there was a ban on the government offices from retiring their old vehicles as part of a cost control initiative. The stimulus hopes to boost India's sluggish economy Indian economy has slowed down sharply leading to millions of job As many as <a href="https://www.businessinsider.in/news/a-startup-that-bets-on-packaged-keto-snacks-and-chocolates-raises-seed-funding/articleshow/70784578.cms" data-type="tilCustomLink" target="_blank">30 million jobs in the textile sector</a> and 350,000 people in the automobile sector have lost their jobs. However, the Finance Minister started her address citing the slowdown in economies around the world and highlighting that India is faring much better than many others. The minister blamed the impact of <keyword id="3987248" type="PERSON" weightage="20" keywordseo="us-china-trade-war">US-China trade war</keyword> for the current sluggishness in the economy. The slowdown in India has raised questions about the government's ability to meet its fiscal targets. However, the Finance Minister denied any pressure. "I have met tax authorities in three different places and I do not get the feeling that the tax collection targets are unrealistic," she said adding that the taxmen have been specifically told not to overreach and harass the taxpayer in a bid to meet their targets . SEE ALSO: <a href="https://www.businessinsider.in/job-cuts-at-parle-and-britannia-sales-show-indian-economy-is-in-dire-straits/articleshow/70766429.cms" data-type="tilCustomLink" target="_blank">India’s biscuit crisis shows slowdown is hurting the poor more — and job losses are making it worse</a> <a href="https://www.businessinsider.in/epfo-wont-lend-money-to-private-companies/articleshow/70785890.cms" data-type="tilCustomLink" target="_blank">Indian pension fund says it won’t lend money to private companies</a>

India unveils economic stimulus-- from homes to cars to banks to infrastructure to equity markets

New Delhi, May 19 () The government's Rs 20.97 lakh crore COVID-19 package lacks in addressing immediate concerns of the economy as the actual fiscal impact of the additional stimulus is only about 1 per cent of GDP as opposed to the claim of 10 per cent, Fitch Solutions said on Tuesday. Prime Minister Narendra Modi on May 12 announced a stimulus package of Rs 20 lakh crore, or nearly 10 per cent of GDP, to deal with the economic fallout of COVID-19. The contents of the package were broad-based and announced in five tranches. "About half of the package amount covers fiscal measures that had previously been announced and also include the estimated economic impact of monetary stimulus from the Reserve Bank of India (RBI)," Fitch Solutions said in a note. The rating agency said a seeming reluctance for fiscal expansion by the central government amid the COVID-19 crisis in India also poses a significant downside risk to its 1.8 per cent growth forecast for 2020-21 fiscal. "India's economic crisis is growing increasingly dire due to surging COVID-19 infections and weak demand both domestically and externally. We believe that every delay to effective government stimulus will only deepen the downturn, which will eventually require even more spending to lift the economy out of the doldrums, which could see the deficit come in wider," it said. The new fiscal stimulus announced between May 13 and May 17 is "made up of the government loan guarantees, credit extensions to be led by banks, and regulatory amendments," it said. The new spending will only amount to about 1 per cent of GDP, which would take India's total central government COVID-19 fiscal response to-date to only 1.8 per cent of GDP, it said. "We see the package as being lacking in addressing the immediate concerns of the economy and have revised our central and combined deficit forecasts for FY2020/21 (April–March) to 7 per cent and 11 per cent of GDP respectively, from 6.2 per cent and 9 per cent previously," the rating agency said. The package, it said, will not have a major fiscal and economic impact, despite the government's claim of its '10 per cent of GDP' size. Of the host of new stimulus measures, only about six -- pension fund support, temporary tax cuts, farm infrastructure upgrades (if funds are quickly disbursed and projects rapidly executed), free food provision for migrant workers, funds to safeguard rural employment and an emergency fund for post-harvest activities -- can be quantified as a fiscal stimulus with a near-term impact. "Loan guarantees have been excluded as they will not have an immediate fiscal impact and will depend on other factors such as loan demand and bank propensity to lend," it said. Stating that it is skeptical of the efficacy of the announced measures despite the broad-based package, Fitch Solutions said the Government loan guarantees should technically aid credit flow to MSMEs through non-bank lenders. However, this will only aid to stem business closures in the economy rather than support an expansion at this point. Moreover, confounding new rules on MSME definition which have both an investment and a newly introduced turnover limit will also hamper credit flow as businesses may fail to meet one or the other, rendering them ineligible for the MSME stimulus credit. "Many of the announced schemes such as regulatory changes and vague reform plans also only target medium-term supply-side issues but fail to address immediate demand-side issues. As such, we expect further fiscal spending to be announced over the coming months, especially after India extended its nationwide lockdown by another two weeks to May 31, which would further impact economic activity," it said. The rating agency said central government revenues are likely to contract by 18.1 per cent in FY2020/21 due to repeated extensions to nationwide lockdowns amid a worsening COVID-19 outbreak domestically, and weak appetite for fiscal stimulus by the central government to lift the economic activity. With the unemployment rate at over 20 per cent and a weak economic outlook both domestically and externally, both personal income and corporate income tax revenues will remain under severe stress over the coming quarters, it said. While India is pushing to reopen its economy, Fitch said this is motivated by an urgent need to limit further economic hardship rather than an easing outbreak situation and infections could well accelerate after lockdowns are lifted, which would hamper the pace of economic recovery going forward. Also, India's debt-to-GDP will almost certainly surge as a result of this crisis as the government will have to fund its expenditures with increased domestic borrowing amid a revenue shortfall. India's combined government debt stands at about 70 per cent of GDP as of December 2019, of which central government debt is at 47 per cent of GDP. An increased debt load will entail higher interest payments and this would divert even more resources away from more productive economic spending, and thus constrain India's long-term growth potential, Fitch said. "As opposed to other fiscal stimulus packages in the region, India's package includes previously announced measures and also monetary stimulus, making the actual fiscal impact of the additional stimulus only about 1 per cent of GDP," according to Fitch estimates. The stimulus includes positive reform efforts, loan guarantees, and other measures that will be somewhat supportive of the Indian economy during the crisis and over the medium term. "The frugal fiscal crisis intervention will likely impede a rapid economic recovery and accordingly, tax revenues, and we are revising our FY2020/21 (April-March) central fiscal deficit forecast to 7.0 per cent of GDP and overall fiscal deficit forecast to 11.0 per cent of GDP," it added. ANZ ANU BAL

India's 'mammoth' COVID-19 package much smaller than it seems, says Fitch Solutions

New Delhi, Apr 17 () Finance Minister Nirmala Sitharaman on Friday said India will soon announce fresh relief measures and economic stimulus to help the poor and industry fight the impact of the COVID-19 pandemic. Participating in the 101st meeting of the Development Committee Plenary of the World Bank through video conference, Sitharaman also assured the global community that India would continue to supply critical medicines to needy countries for the treatment of COVID-19 patients. Sharing details of welfare measures announced by the government last month, the finance minister said support measures worth USD 23 billion (Rs 1.70 lakh crore) were provided, comprising free health insurance to health workers; cash transfers, free food and gas distribution; and social security measures for affected workers. To help companies, especially SME firms, cope with sudden loss of economic opportunity, the government has provided relief in statutory and regulatory compliance matters related to income tax, GST, customs, financial services and corporate affairs, she said. The central bank has also been accommodative, she said, adding regulators are taking steps to reduce market volatility. "Government is working extensively with stakeholders for providing additional relief in the form of humanitarian aid and to provide economic stimulus in the coming days," she said. In her intervention at the session, Sitharaman stated that given the size of population, India could have become a major COVID hotspot. Taking no chances, the government launched massive efforts to assist the health system respond effectively to the outbreak, she said. Important measures included social distancing, travel restrictions, work from and stay at home in public and private sectors, and direct health interventions centred on scaled up testing, screening and treatment have helped contain impact of the pandemic, she added. As responsible citizens of the global community, she said "we are supplying critical medicines to the needy countries and will continue to do so if the situation demands." India started shipment of critical drug hydroxychloroquine for treatment of coronavirus to various countries, including the US after a bit of diplomatic tussle between the two nations. She also commended the speedy response and efficiency of the World Bank Group in rolling out the Fast Track COVID-19 Response Facility. DP CS ABMABM

COVID-19: India to provide additional relief, economic stimulus soon, says FM

New Delhi, Apr 3 () Indian economy, which was already in slowdown phase for last six quarters, could register the lowest growth in the post-reform period in 2020-21 despite strong monetary and fiscal stimulus measures, an eminent economist said on Friday. N R Bhanumurthy, a Professor at National Institute of Public Finance and Policy, said that with the current lockdown, the state of the Indian economy has aggravated further. "With the current lockdown, the current situation in the Indian economy, which was already in slowdown phase for over six quarters, has actually aggravated further. "Assuming that the situation could improve in a quarter, in 2020-21, the Indian economy could register the lowest growth that was experienced in the post-reform period (since 1991). This is despite strong monetary and fiscal stimulus measures introduced since February 2020," he told in an interview. Multilateral agency ADB expects India's economic growth to slow down to 4 pc in FY2021 due to COVID-19 pandemic. Moody's Investor Service last month also slashed its estimate for India's GDP growth during 2020 calendar year to 2.5 per cent and said that coronavirus outbreak will cause unprecedented shock to the global economy. Asked whether under the current circumstances, India can achieve the target of becoming a USD 5 trillion economy by 2024-25, Bhanumurthy said that some of his studies have shown that achieving this target even in good times was difficult given the slowing economy. "Now that the world is expected to get into a recessionary stage and not sure when there could be some rebound, achieving a USD 5 trillion economy is going to be a distant dream. "Added to that the exchange rate also depreciated sharply," he noted. Bhanumurthy, however, added that based on NIPFP study to 15th Finance Commission," we strongly believe that with some prudent fiscal policies, we can still achieve such big targets. But that also means government (both centre and states) needs to sacrifice a lot, though not sure if politically feasible". On the need for large fiscal stimulus to boost growth, he said given the current conditions, there are fewer options on the policy front other than large fiscal stimulus as well as reprioritizing the government expenditures. "This has to happen even by printing more money. "While the government has come out with a stimulus of Rs 1.7 lakh crore, with other measures that are brought by monetary authorities, the actual (both direct and indirect) stimulus could be much more," Bhanumurthy emphasised. Earlier this year, the Economic Survey had projected India's economic growth at 6 per cent to 6.5 per cent for 2020-21 fiscal year. BKS MRMR

'India may post lowest growth in post-reform period in FY21'

New Delhi, Mar 17 () The negative impact of the coronavirus outbreak on the economy will be balanced to "a very large extent" by the decline in global oil prices, a senior government official said on Tuesday. The official further said he expects the economy to go on an upward trajectory in 2020-21, adding that a degree of fiscal stimulus may also be warranted to boost growth. "We had expected that the economy had bottomed out in the third quarter of fiscal 2019-20 and the last quarter of current fiscal will see an improvement, followed by further improvement in the fiscal 2020-21. "However, there is no denying the fact that the Covid-19's impact on the global economy will be significant. This is bound to affect Indian economic prospect as well," he told . On the other hand, a very bright silver lining has been provided by the collapse of oil prices, he added. "It is well known that a decline in global oil prices has a significant upward impact on economic growth in India. "Therefore, in my estimate the negative impact of the coronavirus will be balanced to a very large extent by positive impact of the decline in global oil prices," the official said. And hence, there will be likely decline in overall cost within the economy, he noted. Benchmark crude oil prices have halved since January to around USD 30 per barrel. However, the government had on Saturday hiked excise duty on petrol and diesel by a steep Rs 3 per litre each to garner about Rs 39,000 crore additional revenue. The official also pitched for fiscal stimulus to boost growth. "Always, there is a need to maintain a fine balance between fiscal prudence and fiscal stimulus. But in a situation where large segments of economy are being negatively impacted due to the global coronavirus crisis, a degree of fiscal stimulus may also be warranted. "I am sure, the actual calibration of this balance is presently being worked out in the government," he said. On the need to cut interest rates, the official said the RBI governor's announcement on Monday that the central bank will do whatever it takes to maintain growth momentum was impressive. "So I am sure, given this commitment on the part of the governor, the RBI will use monetary policy tools to accelerate growth at an appropriate time," he observed. India's economic growth slowed to 4.7 per cent in October-December 2019-20. The NSO has pegged economic growth at 5 per cent in 2019-20. The Reserve Bank had also estimated 5 per cent GDP growth for 2019-20. The Covid-19 pandemic has infected at least 126 people in India, and claimed three lives. Globally, more than 1,50,000 people have tested positive for the deadly virus. BKS ABM

'Oil slump to help offset coronavirus' impact on economy'

Mumbai, May 20 () The stimulus package announced by Finance Minister Nirmala Sitharaman "fails to involve" banks in the economic revival process, a member of the Reserve Bank of India's central board said on Wednesday. The stimulus package is "imaginative and forward looking, yet fails to involve banks as frontline warriors in revival of economy," Satish Marathe, a member of RBI's central board, said in a social media post. Sitharaman had announced a series of measures following Prime Minister Narendra Modi's announcement of a Rs 20 lakh crore stimulus package to help the economy. Marathe shared a viewpoint from analysts at rating agency Crisil's research wing, which is sceptical about the near-term benefits of the package to make his point. He said the three-month moratorium offered for loan repayments announced by Reserve Bank of India (RBI) is "not enough" and also listed out other expectations for the benefit of the banking sector. These include relaxations in non performing asset (NPA) and provisioning, he said. Marathe, who has been deeply associated with the cooperative banking sector, said all these "norms need to be part of the stimulus for putting India once again on the growth trajectory". It can be noted that industry bodies have also been pitching to the RBI for relaxations on aspects like moratorium, NPA recognition and provisioning. The package announced by Sitharaman has been termed as "maximum bang for the minimum buck" by an analyst for the very low impact on the fiscal math and dependence on other factors like guarantees to achieve the impact. According to estimates, its fiscal impact varies from 1-2 per cent of the GDP, while Modi had mentioned that the measures will entail a stimulus close to 10 per cent of the GDP. However, most of the analysts have welcomed the long-term potential of the moves, especially the long awaited reforms, but have been sceptical about its short-term impact on growth. Many analysts believe the Indian GDP will contract despite the stimulus package, with some pegging the decrease in the economy at as high as 5 per cent. AA DRR DRR

Stimulus package fails to involve banks as frontline warriors in economic revival: Satish Marathe

<ul class="summary-list"><li><keyword id="3658" type="COUNTRY" weightage="60" keywordseo="India">India</keyword>'s gross domestic product may rebound to 8.5% in 2022 before suffering a "deep contraction" in this fiscal year, according to <keyword id="30287" type="CITY" weightage="60" keywordseo="SP">S&amp;P</keyword> Global Ratings.</li><li>Despite India's $264 billion economic <keyword id="45304" type="COMPANY" weightage="60" keywordseo="Stimulus">stimulus</keyword>, or about 10% of its GDP, the country's migrant laborers and struggling communities are enduring critical troubles.</li><li>A direct cash-transfer benefit reform enabled Prime Minister Narendra Modi's government to deliver stimulus funds to the needy, but tens of thousands amongst those deprived do not have access to digital payments accounts.</li><li>Meanwhile, a forgotten social community has been wiped off of India's <keyword id="48933" type="PERSON" weightage="60" keywordseo="population">population</keyword> data and has failed to secure a government representative on the presumption that their numbers have dwindled to a mere 296.</li></ul>India's economy is likely to rebound by 8.5% in 2022 after suffering a deep contraction in the current fiscal year, according to S&amp;P Global. However, the world's fifth-largest economy is faced with both a migrant crisis of epic proportions and community distress as tens of thousands struggle to persevere during the pandemic in one of the world's most populous nations. The credit ratings agency affirmed a "BBB-" rating on India which represents a relatively low-risk investment and held its "stable" outlook.Real gross domestic product will shrink 5% by the end of fiscal 2021, S&amp;P said. In 2020, GDP fell to an 11-year low of less than 5%. Aspects that will support India's economic rebound include the country's "wide range of structural trends, including healthy demographics and competitive unit labor costs," S&amp;P said. If implemented efficiently, economic reforms could support the rebound.<h2>Downside risks</h2>On the other hand, India's recovery could be hampered by "a serious local epidemic, enduring financial and corporate distress in India, and long-lasting global economic malaise." A sharp rise in national debt is expected this year as the government reels out more stimulus to address the pandemic while dealing with weak revenue generation, but S&amp;P expects its fiscal position to return once a global recovery stabilizes.<h2>Focus on containment and mitigation </h2>In May 2020, the Indian government announced a <a href="https://www.businessinsider.com/goldman-sachs-india-economy-recession-gdp-decline-45-percent-q2-2020-5">$264 billion stimulus package</a>. Out of that, S&amp;P said direct government spending will be less than 1% of GDP, while maximum relief will be directed by India's banking sector through loan guarantees and credit support.S&amp;P expects India's trade position to remain unchanged in the next 12 months as the economy sees a collapse in exports, a steep fall in the central bank's foreign exchange reserves, and a sustained rise in the current account deficit. A direct benefit transfer reform enabled Prime Minister Narendra Modi's government to deliver stimulus funds to over 300 million at-risk individuals, but many more still struggle to avail of the benefits. Particularly so for migrant laborers who do not own digital payments accounts. Many villagers who migrated to cities for higher-paid jobs were <a href="https://www.bbc.co.uk/news/world-asia-india-52672764">forced to travel back home to rural areas</a> once the nationwide lockdown rendered their daily jobs redundant. More recent governmental measures are aimed at supporting non-bank financial institutions and small-and-medium enterprises, S&amp;P has said.<div type="image" title="GettyImages 1220015157" height="683" width="1024" msid="76492591" hostid="261"></div><h2>Social conditions dependent on labor <keyword id="31671" type="CITY" weightage="100" keywordseo="markets">markets</keyword></h2>S&amp;P says prominent incidents of social unrest related to "high-profile legislative decisions" in the past two years have not "materially" dented support for the ruling national political party.Laborers in the economy live and work in dense networks of people. For this reason, the government has addressed the threat of a widespread outbreak amongst these workers, but even if that's achieved, S&amp;P says both the informal and formal labor markets will find it arduous to restore swiftly. S&amp;P projects that if unemployment remains elevated for a long time, "pockets of social unrest could emerge" and dampen India's investment and growth. <h2>Crises persist for a social community left in the lurch</h2>In another troubling sign for India's employment numbers, one considerably-large social group in the country is noticeably unidentifiable on its population data: the Anglo-Indian community.With its distinct line of ancestry built during the time of colonial rule, the minority Anglo community is eliminated on paper and stripped of its identity within India's demographics.A sizable number of Anglos in North East India have been significant contributors to the oil, railways, and tea industries of the region. They also helped set up well-recognized academic institutions across the country.Over the decades, those who could afford to migrate to other countries did so and left behind thin numbers, leading to an almost hidden presence.Consequently, many remain homeless and rely on sundry charity for survival. A lack of government attention has made Anglo families perish. To make sure the community did not suffer harsh neglect post-independence, the government made a provision to nominate two members of the Anglo community to parliament. That came to an <a href="https://www.deccanherald.com/national/no-more-anglo-indian-to-be-nominated-to-ls-assemblies-784146.html">end in January 2020</a>. <div type="image" title="GettyImages 1216711988" height="681" width="1024" msid="76492592" hostid="261"></div><h2>Lack of political representation for the lost group</h2>Representing a mix of British and Indian heritage, the Anglo Indians no longer have a government representative on the assumption that their <a href="https://www.telegraphindia.com/india/anglo-indian-appeal-on-nominated-members/cid/1725605">numbers have dwindled to a mere 296</a>. Owing to their geographic dispersion all over the country and since the community has <a href="https://www.theguardian.com/world/2019/apr/16/the-two-mps-of-british-descent-who-do-not-have-to-stand-in-indian-election">never been counted separately</a> under the <keyword id="6372870" type="UNKNOWN" weightage="60" keywordseo="census">census</keyword>, no one is certain of the true number. A plea to count members of the Anglo community separately was earlier made, and ignored by a bureaucratic quirk. Census information is handy for when governments and health providers need to trace people that require help when disasters such as the coronavirus hit the economy.Anglo-Indian families have been uprooted and are left out of the "New India," according to Geoffrey Farnham, a member of a local Anglo community group in north-east India. Relief meant for welfare and upliftment never reached their community in the north-east region, he said.Their alienation by the central government is so complete, that members of the Anglo community in the North East had no idea they had political representation at all, said Farnham, whose grandfather fought in the 1916 Battle of the Somme as a major in the British Army.Although a bill for the extension of political representation exists, the plea has been held off on grounds of other pressing matters to be dealt with.<h2>Road ahead</h2>With the pandemic still in the early stages, the scale and duration of the crisis remain uncertain, S&amp;P said. Similarly, India's social, health, and economic progress is unpredictable. If containment measures against the virus prove successful, the country could solidify its political and social stability, according to the ratings agency. "In our view, India's economic outlook remains bright, so long as emerging weaknesses are addressed before growth rates fall much further," Andrew Wood, director of S&amp;P's Asia Pacific sovereign ratings said. "The course of India's pandemic will play an important role in determining the strength of its economic recovery."

India's GDP is likely to rebound to 8.5% in 2022, S&P says, but a forgotten community struggles to find any glimmer of hope

<ul><li>Before accounting for inflation, the slowdown in the pace of India’s economic growth would seem nearly seven times worse than it does right now</li><li>The corporate profit-to-GDP ratio for Nifty 500 companies dropped to a 15-year low of 2.8% in FY18, the Ambit report said. </li><li>Recent rate cuts and tax cuts may boost growth but the government will have to push through meaningful strategic disinvestment to fund the stimulus.</li></ul>India’s economic slowdown is real. A new research from Ambit shows that the country’s nominal GDP (Gross Domestic Product) growth ⁠— the pace of growth before deducting inflation ⁠— has seen the sharpest fall in twenty years. “Nominal GDP growth has fallen by 870 basis points, compared to Real GDP growth that is down 125 basis points,” Ambit’s November 2019 report said. This essentially means that before accounting for inflation, the slowdown in the pace of India’s economic growth would seem nearly seven times worse than it does right now. <keyword id="7706673" type="UNKNOWN" weightage="20" keywordseo="finance-minister-nirmala-sitharaman">Finance Minister Nirmala Sitharaman</keyword> has already ruled out a ‘quick recovery’ from the current slump. Hope floats that the emergency measures taken by the government as well as the <keyword id="6354335" type="ORGANIZATION" weightage="20" keywordseo="reserve-bank-of-india">Reserve Bank of India</keyword> will turn the tide. 
 
 
 
 
 
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 The missteps and the correction At the end of 2018, India had one of the highest lending rates in the world. If the real interest rate⁠— the rate of interest on loans minus the inflation rate ⁠— is too high, it may act as a disincentive for investors who look to raise money from the market or banks to set up or grow their business. The corporate profit-to-GDP ratio for Nifty 500 companies dropped to a 15-year low of 2.8% in FY18. the Ambit report said. 
 
 
 
 
 
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 The RBI’s push to bring lending rates down may set off investors who were sitting on the fence due to high cost of funds. Under Governor Shaktikanta Das, the RBI has cut the benchmark interest rates by 135 basis points this year alone. But much of it is yet to trickle down to the borrowing counters. The recently announced tax cuts have the potential trigger investments and kickstart a virtuous cycle of growth, employment and consumption. But the fund these stimulus measures, the government needs money and that will come only from strategic divestment. The budget has a goal of ₹ 1 trillion but so far, in recent years, stake sale by the government has been merely financial⁠— money has moved from one pocket of the government to another. SEE ALSO: <a href="http://businessinsider.in/policy/economy/news/raghuram-rajan-gave-ideas-on-how-to-revive-economic-growth-in-india/articleshow/71573594.cms" data-type="tilCustomLink" target="_blank">Raghuram Rajan’s recipe to revive India's economic growth</a> <a href="https://www.businessinsider.in/narendra-modi-pmeac-comments-on-indias-economic-slowdown/articleshow/70954078.cms" data-type="tilCustomLink" target="_blank">Here’s what Narendra Modi’s closest advisors have been saying about economic slowdown</a>

India's nominal GDP growth has seen the sharpest fall in 20 years

New Delhi, Apr 20 () Fitch Solutions on Monday cut India's economic growth forecast for the financial year 2020-21 to 1.8 per cent saying private consumption is likely to contract due to large-scale loss of income in the face of worsening domestic outbreak of COVID-19. "Over the past week, we have continued to adjust down our country-specific real GDP growth forecasts on the back of persistent low oil prices and the widening spread of COVID-19. Our forecasts remain fluid and, even despite the recent downward revisions, we believe that the risks remain skewed to the downside," the rating agency said. For India, it said the real GDP growth rate for 2020-21 (April 2020 to March 2021) has been revised down to 1.8 per cent from 4.6 per cent, previously. "We now expect private consumption to contract, versus a weak expansion previously, due to large scale loss of income across the economy in the face of a worsening domestic outbreak of COVID-19," it said. Fitch Solutions also anticipated a deeper contraction in fixed investments as businesses choose to cut back on capital expenditure to conserve cash amid elevated economic uncertainty. "The slow roll-out of fiscal stimulus by the central government will only exacerbate India's economic woes," it added. For China, it revised downwards its 2020 real GDP forecast to 1.1 per cent from 2.6 per cent previously, to reflect the impact of a worsening global economic outlook. "Real GDP (of China) contracted by a sharp 6.8 per cent y-o-y in Q1 2020, and our current forecast reflects our view that private consumption and net exports will continue to drag heavily," it said. "Meanwhile, targeted fiscal stimulus should see fixed investment growth come in relatively flat, while strong government consumption will provide the bulk of support and prevent a full-year contraction in 2020." ANZ HRS

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