World Bank clears $250-million loan to train India’s job seekers

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The loan is aimed at making Indian youth more employable through reskilling

The World Bank has cleared a USD 250-million loan for making Indian youth more employable through reskilling, in a move that is seen to aid the Skill India Mission.

The multi-lateral lender is keen to support the Indian government in its efforts to better equip the young workforce with employable skills. It said the support will help the youth contribute to India’s economic growth and prosperity.

“The USD 250-million Skill India Mission Operation (SIMO), approved by the World Bank board of executive directors, will increase the market relevance of short-term skill development programmes (3-12 months or up to 600 hours) at the national and state level,” the Bank said in a statement.

Under the programme, adults in 15-59 years of age, underemployed or unemployed, will get the skill training.

It will also include the 1.2 crore youngsters in the age group of 15-29 years who are entering the labour market every year.

The programme has a mandate to provide placement and entrepreneurship opportunities to women and increase their exposure to skill training.

The Washington-headquartered World Bank’s SIMO is a six-year programme in support of the Indian government’s National Policy for Skill Development and Entrepreneurship (2017-23).

SIMO will be implemented through the National Skill Development Mission and will specifically target labour market entrants.

According to an official skill gap analysis, India will require an additional 109 million skilled workers in 24 key sectors by 2022.

“This programme will support the government’s vision of investing in the human capital of India’s youth, enable greater off-farm employment and increase women’s participation in the labour market,” World Bank Country Director to India Junaid Ahmad said.

India continues to be on its path of structural reforms and a higher-skilled labour force can potentially serve as a catalyst in transforming it into a competitive middle income country, Ahmad said.

As per the Bank’s estimate, skill development capacity of the system would increase by the end of the programme so that at least 8.8 million youth with relevant training have an improved employment opportunity to raise their earnings.

The programme will benefit approximately 15,000 trainers and 3,000 assessors, it added.

Source: http://www.moneycontrol.com/news/india/world-bank-clears-250-million-loan-to-train-indias-job-seekers-2312081.html

World Bank projects 7.2% growth rate for India in 2017

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Even as the World Bank has revised India’s growth figures by 0.4 percentage points as compared to its January forecast, India remains the fastest growing major economy in the world, the World Bank officials said.

Noting that India is recovering from the temporary adverse effects of demonetisation, the World Bank has projected a strong 7.2 per cent growth rate for India this year against 6.8 per cent growth in 2016.

Even as the World Bank has revised India’s growth figures by 0.4 percentage points as compared to its January forecast, India remains the fastest growing major economy in the world, the World Bank officials said.

The growth projections for China remains unchanged at 6.5 per cent for 2017 and then 6.3 per cent for the next two years 2018 and 2019. The World Bank in its latest Global Economic Prospects, projects India’s growth to 7.5 per cent in 2018 and 7.7 per cent in 2019.

In both the years, the forecast has been downgraded by 0.3 per cent and 0.1 percentage points as compared to the January 2017 forecast.

“A downgrade to India’s fast pace of expansion,” the World Bank said, is “mainly reflecting a softer-than-expected recovery in private investment.”

In 2016, in India, activity was underpinned by favourable monsoon rains that supported agriculture and rural consumption, an increase in infrastructure spending, and robust government consumption, the report said.

“In India, recent data indicate a rebound this year, with the easing of cash shortages and rising exports. An increase in government spending in India, including on capital formation, has partially offset soft private investment,” it said.

“While manufacturing Purchasing Managers’ Indexes have generally picked up, industrial production has been mixed,” the Bank said in its latest report.

Observing that India’s growth is forecast to increase to 7.2 per cent in Financial Year 2017 and accelerate to 7.7 per cent by 2019, is slightly below previous projections, the Bank said this outlook mainly reflects a more protracted recovery in private investment than previously envisaged.

“Nonetheless, domestic demand is expected to remain strong, supported by ongoing policy reforms, especially the introduction of the nationwide Goods and Services Tax (GST),” it said.

“Significant gains by the ruling party in state elections should support the government’s economic reform agenda, which aims at unlocking supply constraints, and creating a business environment that is more conducive to private investment,” the Bank said.

M Ayhan Kose, Director of the World Bank Group’s Development Prospects Group, in response to a question, underscored the need of reforms in the banking sector.

“The government has especially taken steps to address the banking sector weakness, but that remains on the to-do list,” Kose told PTI.

“Second (to do list) of course is the initiative by the government to remove some of the public investments, exactly the right thing to do to stimulate – to try to reinvigorate -private investment, which has been weak,” the Bank official said in response to a question.

Source: http://indianexpress.com/article/business/banking-and-finance/world-bank-projects-7-2-growth-rate-for-india-in-2017-4689537/

World Bank says Indian economy to grow at 7.2% in FY18

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World Bank says Indian economy to grow at 7.2% in FY18

Having seen a “modest setback” due to demonetisation last fiscal, the Indian economy will claw back to 7.2% growth this financial year and rise further to 7.5% in 2018-19, says a World Bank report.

In its report on South Asian Economy, the World Bank said that “significant risks” to economic growth could emanate from fallout of demonetisation on small and informal economy, stress in the financial sector and uncertainty in global environment. Also, a rapid increase in oil and other commodity prices could have a negative implication for the economy, it added.

The country’s economic growth is expected to see an uptick at 7.2% this fiscal and further accelerate to 7.5% in 2018-19, the report said. The growth slowed down to 6.8% in 2016-17 due to a combination of weak investments and the impact of demonetisation, the World Bank said, adding that timely and smooth implementation of the GST could prove to be a significant “upside risk” to economic activity in 2017-18.

As per the report, the economic growth is projected to increase gradually to 7.7% by 2019-20, underpinned by a recovery in private investments, which are expected to be crowded in by the recent increase in public capex and an improvement in the investment climate.

“India’s economic momentum suffered a modest setback due to demonetisation, while the poor and vulnerable likely witnessed a larger negative shock. The economy is expected to recover and growth will gradually accelerate to 7.7 per cent by 2019-20,” it said.

The demonetisation, the World Bank said, caused an immediate cash crunch, and activity in cash reliant sectors was affected. The GDP growth slowed to 7% during the third quarter of 2016-17, from 7.3% during the first half of the fiscal. India’s fiscal, inflation and external conditions are expected to remain stable, the US-based multilateral lending agency said, adding that the centre will continue to consolidate modestly, while retaining the push towards infrastructure spending.

“Inflation will stabilise, supported by favourable weather and structural reforms. Normal monsoons have so far offset increases in petroleum prices,” it said. Referring to the external factor, it said exchange rate has appreciated, partly reflecting expectations of a narrowing inflation gap between India and the US and limited external vulnerabilities as the current account deficit is expected to remain below 2% of the GDP and fully financed by FDI inflows.

It said challenges to India’s favourable growth outlook could stem from continued uncertainties in the global environment, including rising global protectionism and a sharp slowdown in the Chinese economy, which could further delay a meaningful recovery of external demand. It said there is a great uncertainty about the extent to which demonetisation caused small, informal firms to exit and shed jobs. Also, private investment continues to face several impediments in the form of corporate debt overhang, stress in the financial sector, excess capacity and regulatory and policy challenges.

Source: http://www.livemint.com/Industry/KreF9rUByhFuQClcbJaRrM/World-Bank-says-Indian-economy-to-grow-at-72-in-FY18.html

World Bank CEO lauds demonetisation, says economy will see positive impact

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World Bank CEO Kristalina Georgieva pegs India’s GDP growth rate at 7% for 2016-17, says ongoing reforms, GST implementation augur well for the economy

The government’s decision to ban high-value banknotes as part of efforts to stamp out corruption will have a profound and positive impact on India’s economy, World Bank chief executive Kristalina Georgieva said.

Demonetisation may have caused some hardship to people living in the cash economy but in the long run the move will help foster a clean and digitized economy, Georgieva said.

“What India has done will be studied (by other countries). There hasn’t been such demonetisation in a country so big,” Georgieva told Hindustan Times in an interview late on Wednesday.

The World Bank CEO’s appreciation for the 8 November move which banned Rs500 and Rs1,000 bills, comes after the International Monetary Fund said in November that it supported India’s efforts to fight corruption through currency control measures.

Georgieva compared the move to that of the European Union, which is also phasing out high denomination bills but over a longer period of time.

“While demonetisation has, in the short term, created some impact on businesses dependent on cash, in the long term the impact will be positive… The reforms India is targeting are profound,” she said.

She also said the government’s financial inclusion programme along with the move towards digital payments and direct transfer of subsidies will help the poor.

Georgieva, who was in India for two days, travelled on a local train in Mumbai and visited the world’s biggest slum in Dharavi. She said she found that people were eager to get a better life and were willing to pay more for improved services. Georgieva also appreciated the competition among states to improve ease of doing business. “India is the bright spot in today’s global economy and it is visible in the country’s performance and more so in the aspirations of the people here,” she said.

“Our growth projection for India for this year is 7%. The signs are positive with the reform process underway and GST (goods and services tax) expected to be implemented soon.”

 

Source: http://www.livemint.com/Politics/dwHIa9twClc2ZNrHFgYBoL/World-Bank-CEO-lauds-demonetisation-says-economy-will-see-p.html

IMF sees growth cooling to 6% in second half of FY17

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India’s economic growth would slow to about six per cent in the second half of this financial year (October-March) due to demonetisation, against 7.2 per cent in the first half, the International Monetary Fund (IMF) said on Wednesday.

India’s representative in IMF Subir Gokarn said the growth projections came at a time when hard data was unavailable. He described the assessment as “unduly pessimistic”. In the medium term, however, the IMF is hopeful that implementation of the Goods and Services Tax could raise India’s growth rate to more than eight per cent.

The Fund said the cost of recapitalising public sector banks would be affordable even under a negative scenario. In a report on India, the IMF said growth would gradually rebound in 2017-18.

In January, it had cut India’s growth estimate to 6.6 per cent for 2016-17 due to the note ban, against 7.6 per cent estimated earlier. Growth was estimated to be 6.2 per cent in the fourth quarter of the financial year.

Taking both the estimates into consideration, the IMF said, third quarter growth might fall below six per cent.

The Central Statistics Office will come out with the third quarter gross domestic product (GDP) data and the revised advance estimates on the coming Tuesday. Its first advance estimates had shown economic growth at 7.1 per cent in 2016-17, against 7.6 per cent the previous year. The office had not taken into account the effect of demonetisation.

Commenting on IMF’s revision of growth rates, Gokarn said, “While we do not question the methodologies used to revise the estimates, the fact is that there isn’t very much hard data to base the revisions.” He said different assumptions about the impact would obviously lead to different conclusions. While virtually all forecasters have revised their projections for 2016-17 downwards, the range was relatively wide, he added.

To buttress his points, Gokarn said the World Bank and the Asian Development Bank have pegged growth at seven per cent, after accounting for change in the currency policy. The authorities’ estimate was 7.1 per cent. IMF directors supported India’s efforts to tackle illicit financial flows, but noted the strains that have emerged from the currency exchange initiative. They called for action to quickly restore the availability of cash to avoid further payment disruptions, and encouraged prudent monitoring of the potential side-effects of the initiative on financial stability and growth.
On tackling India’s $130 billion in stressed loans, the IMF said “recapitalisation costs should be manageable” at between 1.5 and 2.4 per cent of the GDP forecast, according to Reuters.

Of that, the government’s share would be between 1.0 and 1.6 per cent of GDP over the four years to March 2019, assuming 40 per cent of the loans have to be provided against. “It’s very positive that both the Reserve Bank of India (RBI) and the government are putting a shared focus on addressing the balance-sheet problem,” IMF Resident Representative Andreas Bauer told a conference call.

The chief economic advisor, Arvind Subramanian, on Wednesday backed a call by the RBI to set up an institution similar to “bad bank”, saying urgency was needed to address troubled loans weighing on the banking sector.

In a special report on corporate and banking sector risks in India, the IMF said recapitalisation costs would be “significantly higher if there is a policy shift to more conservative provisioning requirements”.

In case of a rise in the provisioning ratio to 70 per cent, cumulative recapitalisation needs would increase to 3.3-4.2 per cent of forecast GDP in the financial year to March 2019, with a government share of 2.2-2.8 per cent, the IMF said.

The IMF said with temporary demand disruptions and increased monsoon-driven food supplies, inflation was expected at about 4.75 per cent by early 2017— in line with the Reserve Bank of India’s inflation target of 5 per cent by March 2017.

The Fund said domestic risks flow from a potential further deterioration of corporate and public bank balance sheets, as well as setbacks in the reform process, including in GST design and implementation, which could weigh on domestic demand-driven growth and undermine investor and consumer sentiment.

On the upside, IMF said larger than expected gains from GST and further structural reforms could lead to significantly stronger growth; while a sustained period of continued-low global energy prices would also be very beneficial to India.

Source: http://www.business-standard.com/article/economy-policy/imf-sees-growth-cooling-to-6-in-second-half-of-fy17-117022300100_1.html

India ranks 130th in ease of doing business index

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India continues to rank low at 130th position in terms of ease of doing business, with the country seeing little or no improvement in dealing with construction permits, getting credit and other parameters.

In the World Bank’s latest ‘Doing Business’ report, India’s place remained unchanged from last year’s original ranking of 130 among the 190 economies that were assessed on various parameters. However, the last year’s ranking has been now revised to 131 from which the country has improved its place by one spot.

The government has been making efforts to further improve the ease of doing business and aims to bring the country in the top 50.

Expressing disappointment over no change in India’s ranking in the World Bank’s index on ease of doing business, Indian government regretted that the report did not take into consideration 12 key reforms undertaken by the government.

When it comes to ‘distance to frontier’ — a measurement of the gap between an economy’s performance and the best practice score of 100 — India’s score has improved to 55.27 this year from 53.93 last year.

India is the only country for which the report has a box dedicated to its ongoing economic reforms.

The list of countries in the Doing Business 2017 is topped by New Zealand while Singapore is ranked second. It is followed by Denmark, Hong Kong, South Korea, Norway, the UK, the US, Sweden and former Yugoslav Republic of Macedonia.

Neighbouring Pakistan is ranked 144th in the list.

On the basis of reforms undertaken, the top 10 improvers are Brunei Darussalam, Kazakhstan, Kenya, Belarus, Indonesia, Serbia, Georgia, Pakistan, United Arab Emirates and Bahrain.

A record 137 economies around the world have adopted key reforms that make it easier to start and operate small and medium-sized businesses, the report said.

Developing countries carried out more than 75 per cent of the 283 reforms in the past year, with Sub-Saharan Africa accounting for over one-quarter of all reforms, it added.

“What we have seen is a remarkable effort on the part of the government to implement business reforms. It looks like we are going to have to wait for another year or so. But the direction of change is fundamentally a very significant one,” Global Indicators Group Director Augusto Lopez-Claros told PTI in an interview.

The rankings are based on ten parameters — starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.

India has improved its ranking with respect to various areas. In terms of getting electricity, the country’s position has jumped to 26th spot from 51st place last year.

When it comes to trading across borders, the ranking has moved up one place to 143, and in enforcing contracts the rise is of six spots to 172nd position.

However, with respect to starting a business, the ranking has slipped four places to 155th spot and in the case of dealing with construction permits by one rank to 185th.

As per the report, India’s ranking in terms of protecting minority investors dropped to 13th place from 10th position last year.

With regard to getting credit, the ranking has fallen by two places to 44.

Explaining as to why India’s reform efforts is not being reflected in the ease of doing business report, Lopez-Claros said it very often takes some time for the reforms implemented by governments about the regulatory environment to be felt on the ground by the business community.

Rita Ramalho, Manager of the Doing Business project said that there were in fact improvements this year.

“There are four areas of improvement this year in India getting electricity, trading across border, enforcing contracts and paying taxes,” Ramalho told PTI.

India’s ranking is based on the study of the system in the two cities of Mumbai and New Delhi.

“The reason why there is no real movement in the ranking is more to do with the fact that other countries are also moving. In absolute terms India, does improve significantly.

There aren’t many countries that improved more than India in terms of absolute number,” Ramalho said.

The ‘Doing Business’ project provides objective measures of business regulations for local firms in economies and selected cities at the sub-national level.

The World Bank is emphasising that countries pay attention to what it calls “distance to frontier” which is an absolute metric, Lopez-Claros said.

“There has been actually substantial increase in the last 12 months in India by couple of percentage points, which is quite large,” he noted.

Source: http://www.businesstoday.in/current/economy-politics/india-ranks-130th-in-ease-of-doing-business-index/story/238944.html

Ease of doing business: India banks on ‘remarkable work’ to improve World Bank ranking

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A man is silhouetted against the logo of the World Bank at the main venue for the International Monetary Fund (IMF) and World Bank annual meeting in Tokyo October 10, 2012. REUTERS/Kim Kyung-Hoon

As the World Bank looks set to release its annual ranking of countries in the ease of doing business later this week, India expects to improve its position from last year’s 130 out of 189 economies. The optimism stems from the fact that, for a second straight year, the country expects its ranking in “getting electricity’’ to improve substantially on the back of some “remarkable work” done by states, a senior government official told FE.

Last year, India was placed at 70 of the 189 countries in “getting electricity”, compared with 99 in the previous year. This had helped the country improve its ranking in the overall ease of doing business by 4 notches.

The government also believes that its “targeted intervention” to improve performance in difficult parameters — including dealing with construction permits and enforcing contracts — where the country has been faring badly for years now will start to pay, the official said.

So while it will take some time to correct the course in certain legacy issues, especially in enforcing contracts, the DIPP believes the much-improved performance of states will be reflected in the country’s ranking for the years to come.

For instance, while only two states (Gujarat and Andhra Pradesh) had scored over 70% in a 98-point action plan for the ease of doing business — jointly decided by them and the Centre — last year, as many as 16 states have scored over 70% so far this year, that too on a 340-point action plan, showed the latest data by the Department of Industrial Policy and Promotion (DIPP). Importantly, 10 states have scored over 90% so far this year (Andhra Pradesh and Telangana top the charts in 2016, each scoring over 99%).

The latest ranking of the World Bank takes into account reforms done up to the end of May, except in case of taxation.

The performance in access to electricity has been impressive, the official said. For instance, in Mumbai, the time required for getting a new electricity connection has been reduced to an average of around 15 days from 67 days earlier. The number of procedures involved has been cut down to just 3 from 7. Similarly, in Delhi, people can get connections in just 15 days now from as many as 140 days a few years earlier. The number of document required has been reduced to just 2 from 7 earlier. Access to electricity is crucial as it also has bearing on performance in some other aspects of the ease of doing business.

In “dealing with construction permits”, where the country was ranked at 183 of the 189 countries, the performance has improved. For instance, in Delhi and Mumbai, common online application form has been adopted for seeking construction permits. People don’t have to get no-objection certificates from anyone, as municipal corporations will get these certificates for them online. Earlier, some 18 no-objection certificates from different departments were required to be obtained by individuals for getting construction permits.

Also, in a metro like Delhi which has traditionally fared badly in handling construction permits, the documents required for this purpose has now been cut to just 14 from 39 earlier. Nine departments involved in the process of the sanction of buildings have been integrated online. The drawing of the construction plan is “auto-checked” by a software and no site inspection is necessary. Reforms on this parameter have been even quicker in other parts of the country.

On enforcing contracts in which India was placed at 178, the government has decided to set up commercial courts in a big way after the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Bill was signed into a law on January 1.

Although the exact data on the formation of such courts are yet to be compiled precisely, roughly a dozen such courts are learnt to have been set up, especially in Delhi, Mumbai, Gujarat and Himachal Pradesh, to settle high-value business disputes.

All pending suits and applications on commercial disputes involving a claim of Rs 1 crore or more in high courts and civil courts will be transferred to the relevant commercial division or courts. The decision to set up such courts is in sync with the Narendra Modi government’s aim of making India a global arbitration hub. The government plans to introduce e-summon system and efforts are on to expedite the process of getting a verdict, said the official.

To boost cross-border trade, the number of documents required for trade has been restricted to just 2-3 from as many as a dozen in certain cases earlier. Importantly, the finance ministry is learnt to have sanctioned Rs 2,500 crore for the upgrade of the IT and some other systems of the Customs departments.

Source: http://www.financialexpress.com/economy/ease-of-doing-business-india-banks-on-remarkable-work-to-improve-world-bank-ranking/428887/