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As coronavirus cases continue to surge in India, restricting several economic activities, the <keyword id="6354424" type="DEFINITION" weightage="20" keywordseo="world-bank">World Bank</keyword> may project a steeper contraction of the Indian economy for the current financial year, revised from the previous estimate of 3.2 per cent. In its report 'India Development Update' for July 2020, the World Bank said that amid rapidly evolving conditions, projections made in May are likely to be revised as new information is incorporated, especially as the daily number of cases continues to increase resulting in several states and districts re-imposing lockdowns, and available high frequency indicators show that the economy has not yet reverted to baseline. In May, the World Bank had projected the Indian economy to contract by 3.2 per cent in FY 2020-21, and predicted rebound slowly in the next fiscal. In its report released on Wednesday, the World Bank said that in the current, rapidly evolving context these projections are likely to be revised as new information is incorporated. "In our revised projections, which would be available in October 2020, we would likely project a steeper contraction in the economy," it said. It noted that although a rebound is expected in FY 2021-22, it will take place "very slowly, reflecting the impact of the crisis not only on India's current growth but also on potential output, which is expected to return to trend only over the next several quarters". Junaid Ahmad, World Bank Country Director in India, said: "While the government of India, with the support of the Reserve Bank of India, is continuing to take action to limit the impact of the COVID-19 pandemic, there is a recognition of both the uncertainty of the nature of the economic revival globally and the emergence of opportunities opened by the current crisis." He noted that the countries that invest in sectoral reforms -- infrastructure, labour and land, human capital -- and ensure that their national systems are connected to the global value chains, are more able to respond to uncertainties and are better placed to take advantage of any global shifts. "Investing in these areas will give India the ability to navigate these uncertainties and be more competitive as the world emerges from the pandemic," Ahmad said. On the government disinvestment plans, the World Bank report said that given unprecedented financial market volatility, planned disinvestment is expected to proceed more slowly in the near-term. As a result, the fiscal deficit and debt of the central government are likely to increase sharply over the next two years, it said. SEE ALSO: <a href="https://www.businessinsider.in/policy/economy/news/difference-between-narendra-modi-make-in-india-and-atma-nirbhar-and-why-the-latter-may-work-better/articleshow/77629449.cms">The difference between Narendra Modi’s ‘Make In India’ and ‘Atma Nirbhar’ programmes⁠— and why the latter may work better</a> <a href="https://www.businessinsider.in/business/ecommerce/news/walmart-ceo-defends-flipkart-valuation-says-learnings-from-india-helped-double-their-e-commerce-sales/articleshow/77626799.cms">Walmart CEO defends Flipkart's valuation, says learnings from India helped double their e-commerce sales</a> <a href="https://www.businessinsider.in/science/news/who-we-are-nowhere-close-to-having-the-herd-immunity-needed-to-stop-the-coronavirus/articleshow/77621705.cms">WHO: 'We are nowhere close' to having the herd immunity needed to stop the coronavirus</a>

World Bank's 'likely' to project steeper contraction in the Indian economy than before

Confidence returned amongst YPO CEOs in India in the first three months of 2016. The World Bank stated that India was the fastest growing economy in the world last year, with 7.3% GDP growth, and the rate of expansion is forecast to increase to 7.5% this year. 
 
The YPO Global Pulse Index for India rose 5.6 points to land at 66.4, putting it far ahead of the Asia composite score of 60.0 and ahead of all of the other leading economies in the world. 
 
<a href="http://bit.ly/1W2P7vW">YPO</a>, a network of global business leaders and chief executives, said that economic sentiment for Asia remained steady at an optimistic 60.0 in the first quarter of this year, despite significant fluctuations in confidence within the region. 
 
The YPO Global Pulse reported that business leaders in the region are now the second most confident in the world, trailing their counterparts in the European Union. 
 
Sentiment in China, the region’s largest economy, improved by 2.0 points in the first quarter of 2016 to 64.0, representing a higher than the average confidence level for the country. 
 
India, in particular, witnessed a rebound in confidence level, surging 5.6 points from 60.8 in the last quarter of 2015 to 66.4 in the first quarter of this year. Economic growth in India is being fueled by a vibrant service sector, as India has become a major exporter of business outsourcing services. 
 
 
 
“The general feeling seems to be that there are strong opportunities for growth and expansion, but CEOs will be cautious about taking on too much risk in the current economic environment,” said Paul Tao, managing director of New Heritage Investments Limited and network officer in YPO Hong Kong Chapter. "Increased confidence seems to be returning in the major economies of China and India, which would bode well for the entire Asian region going forward." 
 
Meanwhile, sales, employment and fixed investment outlooks were unchanged in first quarter. There was little movement from the previous quarter across the three major indexes in the survey, tracking sales, employment and fixed investment. The Employment Index for Asia slipped 0.3 point to 56.7, with 30% of CEOs forecasting an increase in headcount in the next 12 months. 
 
However, the ASEAN CEOs were less optimistic as emerging economies struggled. Confidence within the ASEAN countries fell away in the first quarter of 2016, as emerging economies in the region continued to feel the full effects of the Chinese economic slowdown. 
 
The YPO Global Pulse Index for ASEAN countries — Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Myanmar (Burma), Cambodia, Laos, Vietnam — fell 3.3 points to 56.9 in the first quarter 2016.

Confidence of CEOs in India surges after World Bank predicts 7.5% growth this year

<ul><li>The <keyword id="6366068" type="COMPANY" weightage="20" keywordseo="international-monetary-fund">International Monetary Fund</keyword> (<keyword id="6355408" type="DEFINITION" weightage="20" keywordseo="imf">IMF</keyword>) revised the it’s growth projection for <keyword id="3658" type="LOCATION" weightage="20" keywordseo="India">India</keyword> to 7.3% from the original forecast of 7.4%.</li><li>This is in reaction to how the increase in oil prices will affect future consumer demand.</li><li>Also, considering the current level of inflation in the economy, IMF expects India’s monetary policy to tighten further.</li></ul> The International Monetary Fund (IMF) has <a href="http://www.imf.org/en/Publications/WEO/Issues/2018/07/02/world-economic-outlook-update-july-2018">revised</a> its growth projection for India by 0.1 percentage point for 2018-19. Instead of the original estimate of 7.4%, the revised estimate now stands at 7.3%. Though the initial 0.1% doesn’t seem like that big a deal, its effect follows the projection of 2019-20 where it culminates into a 0.3 percentage point decline from the original 7.8%. The reasons why According to the IMF, the revised estimates took the hike in oil prices and monetary policy parameters into consideration. Any increase in the price of oil has an adverse effect on the fiscal and current deficit since oil is India’s largest import commodity. That, in turn, has an effect on the monetary policy, consumption and investments. The monetary policy is an instrument at the disposal of a country’s monetary authority to maintain price stability in the country. And, considering the hike in global crude prices, the Reserve Bank of India (RBI) increased the policy rate by 25 <a href="https://www.moneycontrol.com/news/economy/policy/rbi-monetary-policy-mpc-hikes-repo-rate-by-25-bps-to-6-25-maintains-neutral-stance-2583555.html">basis points</a> just last month to counter inflation. A hike as huge as this hasn’t been seen in four years. And, it might not be the end. The IMF actually expects the monetary policy to tighten further, considering that the wholesale price index is facing a <a href="http://eaindustry.nic.in/home.asp">four-year high</a>. Even the consumer price index inflation rate is at a <a href="https://tradingeconomics.com/india/consumer-price-index-cpi">five-month high</a>. But, they also added that the disruption caused by implementing the goods and services tax (GST), and the exercise in demonetisation, is over. Alignment The revised estimate of the growth rate is in sync with what other agencies has put forth as their forecast for the Indian economy. The <a href="http://www.worldbank.org/en/publication/global-economic-prospects">World Bank</a> and the <keyword id="50190" type="COMPANY" weightage="20" keywordseo="Asian-Development-Bank">Asian Development Bank</keyword> (<a href="https://www.adb.org/publications/series/asian-development-outlook">ADB</a>) had already predicted a 7.3% growth rate of India in 2018-19. 
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 Does it matter? The rates for most emerging economies, including Argentina and <keyword id="6355226" type="LOCATION" weightage="20" keywordseo="brazil">Brazil</keyword>, have been revised. Even so, India will still be the fastest growing economy among the larger nations for both years. It should be noted that though economic forecasts send a message of predictability and certainty, they are, at the end of day, based on human behaviour. Regardless of whether that’s consumption patterns or export behaviour. Weather forecasts are based on physics, and even they get it wrong a lot of the time.

Why the IMF revised India's growth projection and why it doesn't matter

The recent <keyword id="203626" type="COMPANY" weightage="20" keywordseo="World-Bank-Report">World Bank report</keyword> ‘Ease of Doing Business’ placed <keyword id="3658" type="COUNTRY" weightage="20" keywordseo="India">India</keyword> at the 134th position in a list of 189 economies. The report, which evaluated countries on various parameters relating to business and regulatory environment, amply reflected how the country is perceived across the globe when it comes to regulatory and infrastructural ambience for setting up companies and doing business. 
 
While Singapore, Hong Kong, New Zealand, the US and Denmark bagged the top five positions, India even lagged countries that have hitherto been considered ‘less civilised’ for enabling business environment due to autocratic and repressive regimes, debilitating internal strife and haunting hunger and famines like Uganda, Ethiopia, Honduras, Mongolia and Nepal. Despite tall claims of being a counterforce to a resurgent China and one among the world’s top economies, being ranked behind some of the most impoverished African nations in terms of business ambience is a tag that will mar the country’s image among global peers for years to come. 
 Why India is perceived so unfriendly when it comes to facilitating business and attracting companies? The country inherited a huge colonial baggage of red-tapism that got entrenched in its social fabric during the socialist era under Jawaharlal Nehru. Over the years, a litany of harsh regulations, niggling rules and serpentine reporting structure meant that doing <keyword id="1190222" type="UNKNOWN" weightage="20" keywordseo="business-in-India">business in India</keyword> is a humongous challenge. Consider these: companies need to get dozens of clearances to operate; complying with labour law requires employers to maintain 16 separate types of worker registries; starting a business requires an entrepreneur to follow 12 procedures which would take at least 30 days. This is in addition to the need for lavishly greasing the palms of politicians and bureaucrats to get things done in a system that is neck deep in corruption. The existing land law that makes acquiring land for industrial purposes virtually impossible adds to the can of worms. The unsurpassable clout of labour unions that can any time throw a spanner in companies’ operations is another thorny hurdle that entrepreneurs have to live with. 
 
Prime Minister Narendra Modi’s vision of cutting the red tape assumes importance against this backdrop. His recent visit to Japan is remembered—among other things like the $33 billion investment he managed to elicit—for the clarion call ‘come make in India’ he made to Japanese companies and investors. It was an extension of his Independence Day speech when he exhorted global firms to come and manufacture anything from electronic items to chemicals, satellites and submarines in India. 
 
The ‘make in India’ campaign, which is expected to do for investment sentiment what the ‘Incredible India’ campaign has done for tourism, is aimed at reviving the manufacturing sector and taking the economy on a sustainable high growth path. As part of the campaign, which is expected to lift manufacturing growth to 10 per cent over the long term, thousands of global companies from across the globe including the US, the UK, Japan, Korea, Sweden, Poland, Australia, China, Italy, Germany and France, are expected to be invited to explore investment possibilities in India and set up manufacturing units in the country to supply to the rest of the world. An eight-member panel under the Department of Industrial Policy and Promotion will help redress grievances and handle queries of global and domestic investors within 24 hours. In addition to interacting with investors, the panel is also given a mandate to coordinate with central and states departments to resolve infrastructural bottlenecks and issues related to policy. Indian embassies around the world too are expected to join the campaign, which is reminiscent of Modi's ‘Vibrant Gujarat’ summits each of which resulted in investments worth billions of dollars in Modi’s home state. 
 
The campaign is seen as the first step to reform the bureaucratic and policy-related machinery to revive the job-generating manufacturing sector by attracting huge investments. But to extend it to a fruitful level, the government has to tackle a host of issues including reforming land laws, revamping infrastructure including constructing bigger ports and better roads, ensuring uninterrupted power for industrial activities and doing away with an uncertain tax regime. 
 
Going by the way ISRO scientists succeeded in putting the fully home-grown Mangalyaan into Mars' orbit, making India the first country to be successful on its maiden Mars mission, the Modi government is on the right path to transform ‘the world’s back office’ to ‘the world’s factory’ too.

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World Bank's 'likely' to project steeper contraction in the Indian economy than before

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Confidence of CEOs in India surges after World Bank predicts 7.5% growth this year

BI India Bureau

Why the IMF revised India's growth projection and why it doesn't matter

Prabhjote Gill

Transforming India: From ‘The World’s Back Office’ To ‘The World’s Factory’

Preetam Kaushik

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