India is world’s 40th most competitive economy: WEF

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The Global Competitiveness Index (GCI) is prepared on the basis of country-level data covering 12 categories or pillars of competitiveness.

India has been ranked as the 40th most competitive economy — slipping one place from last year’s ranking — on the World Economic Forum’s global competitiveness index, which is topped by Switzerland.

On the list of 137 economies, Switzerland is followed by the US and Singapore in second and third places, respectively.

In the latest Global Competitiveness Report released today, India has slipped from the 39th position to 40th while neighbouring China is ranked at 27th.

“India stabilises this year after its big leap forward of the previous two years,” the report said, adding that the score has improved across most pillars of competitiveness. These include infrastructure (66th rank), higher education and training (75) and technological readiness (107), reflecting recent public investments in these areas, it added.

According to the report, India’s performance also improved in ICT (information and communications technologies) indicators, particularly Internet bandwidth per user, mobile phone and broadband subscriptions, and Internet access in schools.

However, the WEF said the private sector still considers corruption to be the most problematic factor for doing business in India.

“A big concern for India is the disconnect between its innovative strength (29) and its technological readiness (up 3 to 107): as long as this gap remains large, India will not be able to fully leverage its technological strengths across the wider economy,” it noted.

Among the BRICS, China and Russia (38) are placed above India.South Africa and Brazil are placed at 61st and 80th spots, respectively.

In South Asia, India has garnered the highest ranking, followed by Bhutan (85th rank), Sri Lanka (85), Nepal (88), Bangladesh (99) and Pakistan (115).

“Improving ICT infrastructure and use remain among the biggest challenges for the region: in the past decade, technological readiness stagnated the most in South Asia,” WEF said.

Other countries in the top 10 are the Netherlands (4th rank), Germany (5), Hong Kong SAR (6), Sweden (7), United Kingdom (8), Japan (9) and Finland (10).

The Global Competitiveness Index (GCI) is prepared on the basis of country-level data covering 12 categories or pillars of competitiveness.

Institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication and innovation are the 12 pillars.

According to WEF’s Executive Opinion Survey 2017, corruption is the most problematic factor for doing business in India.

The second biggest bottleneck is ‘access to financing’, followed by ‘tax rates’, ‘inadequate supply of infrastructure’, ‘poor work ethics in national labour force’ and ‘inadequately educated work force’, among others.

The survey findings are mentioned in the report.

“Countries preparing for the Fourth Industrial Revolution and simultaneously strengthening their political, economic and social systems will be the winners in the competitive race of the future,” WEF founder and Executive Chairman Klaus Schwab said.

FPI inflows: India’s forex reserves all set to hit whopping $400 bn mark; here is how long it took and why

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The reserves are hitting the psychological threshold also because benign current account deficits over the last few quarters had allowed RBI to use less of the reserves to finance it.
India’s foreign exchange reserves have climbed tantalizingly close to the $400-billion mark on September 1 on the back of strong foreign portfolio investments into the Indian market, especially the debt segment

The reserves are hitting the psychological threshold also because benign current account deficits over the last few quarters had allowed RBI to use less of the reserves to finance it.

To be sure, the latest $100 billion addition to the reserves has taken close to 10s years. The $300 billion mark was reached in February 2008, while the previous $100 billion was accumulated in a span of just eleven months.

While the rupee remains strong against the dollar at levels of 64 having appreciated 6% so far in 2017, few would have anticipated this strength, especially after the free fall of the currency in mid-2013 when it slipped all the way to 68.85 against the greenback (the forex reserves had plunged by more than $17 billion during this period).

The other critical period for the reserves and currency was in 2008, during the financial crisis when the currency lost almost 25% of its value between May and November. In this period, the reserves fell by a little over $70 billion to $245.8 billion.

Currently, the reserves take care of approximately 12 months of imports; in the past the reserves have typically covered seven to eight months of imports. Interestingly, India has seen the third-highest reserves accretion globally after Switzerland and China, so far in 2017.

According to Indranil Sengupta, chief economist at Bank of India Merrill Lynch, RBI has been intervening fairly aggressively in the forex market and might continue to do so if the dollar weakens but perhaps less so if the greenback was to strengthen.

After a brief overnight pause, the rupee was again caught in a downward spiral and slipped by 12 paise to 64.12 against the US dollar on Thursday on fresh demand for the American currency from banks and importers amid persistent foreign capital outflows. Foreign portfolio investors sold shares worth a net Rs 827 crore on the day.

Meanwhile, India’s CAD, which stood at 0.7% in the fourth quarter of last fiscal is expected to widen sharply to 3% in Q1FY18 due to a sharp deterioration in the merchandise trade deficit. According to Sonal Varma, chief economist at Nomura, the low commodity prices in the last two years have resulted in the CAD narrowing to about 1% of GDP. “With commodity prices marginally higher and a cyclical recovery expected in coming quarters, we expect the current account deficit to widen to a steady state of around 1.5-2.0% of GDP (for FY18),” Varma said.

Currently, as the central bank continues to shore up the reserves, it appears to be depending more on forward purchases than the spot market. This is due to the abundant liquidity in the system which prevents excessive action in the spot market.

MV Srinivasan, vice-president, Mecklai Financial Services believes the RBI is attempting to prevent any appreciation of the rupee beyond 63.80 levels. “The central bank is trying to rein in the excess liquidity in the system through OMO sales and dollar purchases in the spot will counter these measures,” he says.

Srinivasan believes that if the US Federal Reserve begins to reduce its balance sheet size, there could be forex outflows following which the RBI might intervene to stabilise the markets. Net portfolio inflows to the India’s bond and stock markets have been to the tune of $26.7 billion so far in 2017.

Source: Financial Express

Modi impact! Switzerland to ease tax info exchange norms on stolen data

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Switzerland today said it will relax norms for providing information to foreign nations seeking banking details about their citizens on the basis of ‘stolen data’, a move that would benefit India in its fight against the black money menace.

 

In the case of stolen data, Swiss authorities would extend assistance on tax matters to other countries provided such information was procured through normal administrative assistance channels or from public sources.

 

The proposal, which has been adopted by the Swiss Federal Council, also comes at a time when India is making efforts to bring back unaccounted money stashed by its citizens overseas. The issue of black money also figured during the discussions between Prime Minister Narendra Modi and Swiss President Johann Schneider-Amman earlier this week.

 

The Swiss government today said the practices with regard to “stolen data are to be eased”.

 

“It should become possible to respond to requests if a foreign country obtained the stolen data via normal administrative assistance channels or from public sources,” it said in a release.

 

However, administrative assistance is still not possible if a country actively acquired the stolen data outside of administrative assistance proceedings.

 

In this regard, the Federal Council today adopted the dispatch on amending Tax Administrative Assistance Act.

The Bill is expected to be discussed by the Swiss Parliament this year.

 

Known for its banking secrecy practices, Switzerland has been facing international pressure as countries step up efforts to curb illicit fund flows.

 

In 2013, the Federal Council had suggested easing administrative assistance practices in the case of stolen data but at that time, the proposal was rejected by majority of the cantons, parties and business associations.

 

Since then, international practice has established that exceptions to the exchange of information would be tolerated only on a very restricted basis, the release said.

 

“For instance, the exchange of information could be refused if it is incompatible with public policy, such as in the case of requests motivated by racist, political or religious persecution,” it added.

 

The Swiss government emphasized it intends to respond to future requests that are based on data obtained by the requesting state from another state through normal administrative assistance channels or from public sources.

 

“The consultation revealed that the cantons are virtually all rallying behind the proposal, while the numbers of advocates and opponents in the political parties and organisations appear broadly balanced.

 

“The Federal Council is adhering to the proposal in view of this outcome, as it believes that the proposal is necessary to safeguard Switzerland’s interests,” it noted.

 

Last month, Switzerland started the process for an ordinance to put in place a mechanism for automatic exchange of tax information.

 

During Modi’s visit to Switzerland earlier this week, Swiss government assured India of stepped up cooperation with regard to black money issue.

 

“Combating the menace of black money and tax evasion is also our shared priority. We discussed the need for an early and expeditious exchange of information to bring to justice the tax offenders.

 

“An early start to negotiations on the Agreement on Automatic Exchange of Information would be important in this respect,” Modi had said at a joint media interaction with Schneider-Amman.

 

Under the bilateral treaty for administrative assistance and exchange of information with Switzerland, India has sought details about numerous individuals and companies from the Alpine nation as part of its crackdown against those stashing illicit funds there.

 

Source :http://economictimes.indiatimes.com/articleshow/52691230.cms