Posts tagged ‘Economic growth’

27/02/2015

India in sweet spot of lower deficits, more growth – Economic Survey | Reuters

India can increase investment to drive economic growth without borrowing more, a key government report said on Friday, in an indication that Finance Minister Arun Jaitley will stick to debt targets in his maiden full-year budget on Saturday.

Labourers work at the site of a monorail project in Mumbai February 27, 2015. REUTERS-Shailesh Andrade

The Economic Survey, the basis for Jaitley’s budget for the fiscal year starting April 1, forecast growth of 8.1 percent to 8.5 percent under new calculations that make India the world’s most dynamic big economy. The forecast marks an acceleration from growth of 7.4 percent in the current fiscal year.

“India has reached a sweet spot and … there is a scope for Big Bang reforms now,” the report said, adding the country was on course to hit double-digit growth rates.

Indian stocks rallied, with the benchmark Sensex gaining 1.7 percent, on hopes that Jaitley would deliver a business-friendly budget.

At first glance the growth outlook appears impressive. But it follows a big overhaul of India’s economic data, which previously showed the economy struggling to recover from its longest growth slowdown in a generation.

Other indicators of India’s economy are not as rosy as GDP data suggests. Earnings of the country’s top 100 companies shrank by 6 percent in the last quarter, private investment and consumer demand are weak and merchandise exports are falling.

The author of the report, economic adviser Arvind Subramanian, even said he was “puzzled” by the new GDP figures and played down suggestions that India’s $2 trillion economy was on a roll.

“India’s economy is still recovering, and not surging,” Subramanian told a news conference.

Prime Minister Narendra Modi won a landslide general election victory last May, capitalising on dissatisfaction among Indians over their economic lot and promising ‘better days’ of more jobs, investment and growth.

The report by Subramanian, a renowned development economist lured away from a Washington think tank by Modi, suggested the economy was now building momentum.

That, above all, reflects a near halving in international prices of oil, India’s biggest import.

As a result, the report predicts the current account deficit will be below 1 percent of GDP in 2015/16, a far cry from a figure of 4.7 percent in 2012/13 that preceded a currency crisis in India.

via India in sweet spot of lower deficits, more growth – Economic Survey | Reuters.

25/02/2015

India to embark on rail investment splurge thanks to cheap oil | Reuters

India’s decrepit state-run train services stand to receive at least a 25 percent boost in investment to over $9 billion, funded solely by falling fuel costs, according to officials familiar with a railway budget set to be unveiled on Thursday.

A worker cleans a railway track at a railway station in Kolkata October 2, 2014. REUTERS/Rupak De Chowdhuri/Files

The world’s fourth largest rail network could get even more if Prime Minister Narendra Modi makes it a priority, as China did during its rapid economic growth over the past two decades.

There are high hopes that his nine-month-old government will plough money into investment in infrastructure needed to haul the economy out of a rut when it presents its first annual federal budget on Saturday.

The separate rail budget – a relic of the country’s British colonial past – could show how far Modi’s India is prepared to drive investment in a vital transport sector.

“The fall in diesel prices and a pick-up in freight earnings have given us a golden chance to raise investments,” said one government official.

Falling oil prices have saved billions of dollars in subsidy spending across the economy, but Finance Minister Arun Jaitley is under pressure to prevent the fiscal deficit from busting a target of 3.6 percent of gross domestic product.

Railway Minister Suresh Prabhu, according to the officials, has factored in savings from

via India to embark on rail investment splurge thanks to cheap oil | Reuters.

24/02/2015

Retail dilemma in India – nice malls are few and far between | Reuters

A severe shortage of attractive malls has made setting up shop in India easier said than done, crimping expansion plans for both foreign retailers such as Lacoste and domestic giants like department store chain Shoppers Stop (SHOP.NS).

A private security guard stands guard inside the premises of the MGF mall in New Delhi February 23, 2015.  REUTERS/Adnan Abidi

India’s searing heat, heavy traffic and cluttered pavements make malls the most popular option for urban middle class consumers looking for a day out. But many centres – despite having been built in the last decade – are struggling to draw shoppers or retailers because of poor design or because they are difficult to manage.

P.S. Puri, CEO of MGF Mall Management, which runs MGF Metropolitan, knows this all too well. Located in a posh district in the south of New Delhi, security guards and sales staff outnumbered shoppers last Tuesday evening in what was once a bustling mall.

It has restaurants but lacks popular attractions like a food court and a cinema. The sale of shop ownership piecemeal has made management difficult and now only one quarter of the space is occupied by fashion retailers – about the same amount that is vacant.

via Retail dilemma in India – nice malls are few and far between | Reuters.

12/02/2015

Racing the elephant against the dragon | The Economist

IN 1991 India’s finance minister presented a budget to India’s parliament that would change the economic history of his country. His reforms dispensed with mounds of the red tape that reined in Indian growth, and opened up many industries to foreign capital. But India was a late-comer to the liberalisation game; China had been opening its economy since the 1970s and accelerated its efforts in the 1990s. China’s reforms have been the more successful; except for a brief period in 1999, the Chinese economy has consistently outperformed its smaller neighbour. But that picture may soon reverse.

Official statistics published on February 9th revealed that India’s GDP rose by 7.5% in 2014, a shade faster than China’s over the same period. Later this month Narendra Modi, India’s prime minister, is likely to push new reforms. India also enjoys a demographic advantage. Whereas China’s workforce began to shrink in 2012, more than half of India’s current population is younger than 25. India, rather than China, may henceforth be the symbol of rapid emerging-market growth.

via Daily chart: Racing the elephant against the dragon | The Economist.

12/02/2015

India Passes China to Become World’s Fastest-Growing Economy – China Real Time Report – WSJ

Everyone from the World Bank to Goldman Sachs had predicted it wouldn’t happen for another two years but recent recalculations indicate that India has already dethroned China as the world’s fastest-growing big economy.

Late Monday, India’s statistics ministry surprised economists when it unveiled the new numbers for the growth of India’s gross domestic product. It ratcheted up India’s GDP growth figures using a new methodology that pegs expansion in Asia’s third-largest economy at 7.5% last quarter and 8.2% the quarter before that. Economists and the ministry, using the old methodology, had originally said growth was closer to 5.5% during those quarters.

While economists, investors and executives are still wondering how growth could have been so high during those quarters when other indicators suggested times were tough, the new official numbers mean that India outpaced China, taking the pole position as the fastest-growing major economy in the world.

India has been able to catch up because China’s growth has been slowing. The Middle Kingdom’s GDP expansion was 7.3% in both the third and fourth quarters of 2014. While there are smaller economies which may have had stronger growth, this puts India on top after decades driving in China’s slipstream.

Of course, China’s economy is still four times the size of India’s.

“There’s no comparison between these growth rates because of the size of the economy of China,” said Ashish Kumar, director general of the Central Statistics Office as he announced the new GDP growth numbers.  “If this kind of growth continues and China continues to perform at a lower level, then still it will take 20 to 30 years to catch up.”

Still, if it can keep up this pace at least India will be gaining some ground. More importantly, a return to high growth might mean India is following in China’s footsteps and entering a take-off phase.

The South Asian nation needs to revamp its economy to help create more manufacturing jobs and savings if it wants to become the next China, said Frederic Neumann, an economist at HSBC in a recent report.

“That’s a challenging transformation,” he said. “India may never quite match the rapid ascent of China, but even at a slightly slower speed it will start to make waves.”

via India Passes China to Become World’s Fastest-Growing Economy – China Real Time Report – WSJ.

10/02/2015

Pollution: The cost of clean air | The Economist

A DESOLATE scene surrounds Little Zhang’s Tyre Repair in the dusty rock-mining township of Shijing, in the northern province of Hebei. Zhang Minsheng, the owner, still gets some business from passing traffic. But the recent closure of nearby rock quarries, because of air-pollution restrictions, has taken its toll. He reckons his monthly income has fallen by 30-40% to around 4,000 yuan ($640). Next door a wholesale coal business has closed. So too have a small family-owned barbecue restaurant and an alcohol, tobacco and grocery store. Red characters posted by their entrances still forlornly proclaim their “grand opening”.

Last year on a typically smoggy day in Beijing, Li Keqiang, the prime minister, declared “war” on air pollution—a problem that has become a national fixation. Smog remains a grave danger in most Chinese cities, but environmental measures are beginning to show teeth. Regulators in the most polluted provinces are ordering mass closures of offending enterprises. In some areas officials are being punished for failing to control pollution. Policymakers are placing less emphasis on GDP growth—long an obsession of officials at all levels of government—and talking up greenness.

The transformation will be painful. China’s new toughness on polluting quarries, mills and factories coincides with an economic slowdown that will make it harder to create new jobs for those laid off. Slower growth is in line with the government’s efforts to curb wasteful investment, and with it a dangerous build-up of debt. The slowdown also happens to be helpful in curtailing pollution: China’s consumption of coal, a huge contributor to smog as well as to climate-change emissions, fell slightly in 2014 after 14 years of growth.

Mr Li’s war is especially bloody in Hebei, which is blamed for much of the smog in Beijing. Keeping the air of the capital clean is a political priority. Chinese leaders have been embarrassed by the damage caused to China’s international image by the city’s relentlessly grey skies. They worry that the smog could fuel dissatisfaction with the government and undermine stability in the capital, as well as affect their own and their families’ health. Dutifully, Hebei, which surrounds Beijing, has been trying to clean up. Since the beginning of 2013 it has reported closing down 18,000 polluting factories. In January Hebei Daily, a state-run newspaper, said that in Mancheng county, to which Shijing township belongs, 37 rock quarries and rubble pits had been shut.

via Pollution: The cost of clean air | The Economist.

03/02/2015

Shanghai’s economy: GDP apostasy | The Economist

IN AN officially atheist country, one form of worship actively encouraged by the Chinese government has been devotion to GDP. From village chiefs to national leaders, presiding over fast economic growth has been the surest path to career success. Targets for GDP have formed the centrepiece of annual budgets, with officials convinced that failure to achieve them would lead to soaring unemployment and even chaos. Officials fiddle the numbers—massaging them up when growth is too slow and down when it is too fast—but basic faith in GDP as the most powerful expression of their aims and accomplishments has been unwavering.

So the break with tradition was something akin to Vatican II, when on January 25th the Shanghai government announced its policy plans for 2015 and chose to omit a GDP target. While Yang Xiong, the mayor, pledged that the city would “maintain steady growth”, he gave no indication of what that might mean in numbers. In recent years China’s 31 provinces and mega-cities have steadily lowered their GDP targets as the economy has slowed. At least two-thirds missed their goals last year, a sign that such targets have become less important than in the past. But Shanghai is the first to dispense with a target altogether. The city’s Communist Party chief, Han Zheng, is a member of the ruling Politburo, so the omission was a powerful signal.

China’s leaders are still very keen on GDP. When growth slowed sharply early last year officials ramped up spending on infrastructure, a spending boost that helped the central government to come in just one-tenth of a percentage-point shy of its growth target of 7.5% last year. But leaders have been calling for more attention to economic quality rather than just quantity. They want to end an investment-heavy approach that has damaged the environment and led to a dangerous build-up of debt. Ending a fixation on GDP targets will be a great help.

With no such target to cling to, or to blush at when missed, Shanghai officials now have more scope to work on other things. Transforming the city’s free-trade zone, much hyped but little used, into a real testing ground for financial reforms, as was initially intended, is a priority. “Officials will feel less pressure to meet short-term investment objectives,” says Zhu Ning of the Shanghai Advanced Institute of Finance. Mr Yang, the mayor, says Shanghai wants to create 500,000 new jobs this year. That will only be possible if the economy remains strong. But quite what level of GDP is needed to foster such job creation is uncertain, especially as labour-intensive services come to dominate the city’s economy. So it is sensible to follow the example of other countries and focus more on employment levels than GDP.

For China as a whole, it is too soon to expect an end to GDP targeting. It will remain an important policy tool for guiding and evaluating officials, especially in poorer parts of the country where faster growth is needed to narrow the gap with coastal cities. Tibet is shooting for 12% growth this year, the same target as it set, and achieved, in 2014. But Shanghai’s example proves that, even in the grand temple of China, the cult of GDP is losing adherents.

via Shanghai’s economy: GDP apostasy | The Economist.

31/01/2015

China’s Provinces Lower Their Sights After Most Miss Economic Targets – China Real Time Report – WSJ

Most Chinese provinces missed their economic growth targets for last year, according to figures published Friday, in what would only recently have been an unthinkable event but is another sign of the economy’s rapid deceleration.

Out of 31 provinces and province-like administrative regions, 27 missed their marks, while one met its target and three have yet to report their performance, according to the Beijing News, a state-run newspaper.

Growth targets have been seen for decades as ironbound objectives, by Chinese officialdom, from Beijing on down. Provinces have typically competed to outdo the national target—which has ranged around 7% to 8%–setting their own goals higher and then making sure they exceed them, and with good reason: Growth factors heavily in the performance assessments for mayors, governors and other officials seeking promotions to higher office.

via China’s Provinces Lower Their Sights After Most Miss Economic Targets – China Real Time Report – WSJ.

28/01/2015

China plans to set 2015 growth target at ‘around 7 percent’ – sources | Reuters

China plans to cut its growth target to around 7 percent in 2015, its lowest goal in 11 years, sources said, as policymakers try to manage slowing growth, job creation and pursuing reforms intended to make the economy more driven by market forces.

The growth target, which is set to be announced by Premier Li Keqiang at the annual parliament session in March, was endorsed by top party leaders and policymakers at a closed-door Central Economic Conference in December, said a number of people with knowledge of the outcome of meeting who spoke to Reuters.

The target, which is in line with market expectations, has not been previously reported.

“This year’s economic growth target will be around 7 percent, but the 7 percent should be the bottom line,” said one of the sources, an influential economist who advises the government.

via Exclusive: China plans to set 2015 growth target at ‘around 7 percent’ – sources | Reuters.

26/01/2015

1.39 million Chinese receive legal assistance – Xinhua | English.news.cn

The Chinese government provided free legal aid services for nearly 1.39 million people in 2014 to help them safeguard their rights, the Economic Daily reported on Monday.

More than one-third of them are migrant workers who are vulnerable to job dismissal and withheld wages and know little about the legal system, the report said, quoting the Ministry of Justice.

The ministry’s statistics showed that about 10 percent more migrant workers than last year said they would like to seek legal assistance if their rights are violated.

Legal service centers have been springing up in streets, communities and prisons across China. The number of new legal service centers in 2014 totaled 70,000, the ministry said. The country will guide more legal service agencies to provide assistance to suspects and defendants in prisons.

It also promised to lower the eligibility standard for people to receive legal assistance and expand services for military personnel.

via 1.39 million Chinese receive legal assistance – Xinhua | English.news.cn.

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