Foreign direct investment jumps 77.5% to $5.15 billion in September

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With the government relaxing FDI policy and taking steps to improve ease of doing business, the Foreign Direct Investment in the country increased by 77.5 percent to USD 5.15 billion in September this year.

In September 2015, the FDI had stood at USD 2.9 billion, according to the data of the Department of Industrial Policy and Promotion (DIPP).

During April-September period of this fiscal, FDI in the country grew by 30 percent to USD 21.62 billion as compared to USD 16.63 billion in the same period last year.

Among the top 10 sectors, services received the maximum FDI of USD 2.29 billion during the first half of this fiscal, followed by telecommunications (USD 2.78 billion), trading (USD 1.48 billion), computer software and hardware (USD 1.03 billion) and automobile (USD 729 million).

During the period, India received the maximum FDI from Mauritius (USD 5.85 billion) followed by Singapore (USD 4.68 billion), Japan (USD 2.79 billion), the Netherlands (USD 1.61 billion) and the US (USD 1.43 billion).

During financial year 2015-16, foreign fund inflows grew at 29 percent to USD 40 billion as against USD 30.93 billion in 2014-15.

The government relaxed FDI norms in various sectors, including defence and civil aviation to boost FDI in the country.

Foreign investments are considered crucial for India, which needs around USD 1 trillion to overhaul its infrastructure sector such as ports, airports and highways to boost growth.

Growth in foreign investments helps improve the country’s balance of payments (BoP) situation and strengthen the rupee.

Source: http://www.firstpost.com/business/foreign-direct-investment-jumps-77-5-to-5-15-billion-in-september-3101162.html

PM Narendra Modi, Shinzo Abe sign landmark India-Japan Civil Nuclear Deal

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Prime Minister Narendra Modi, today met with Japan Prime Minister Shinzo Abe and signed the Civil Nuclear Deal between India and Japan. PM Narendra Modi, after signing the deal said, “Our strategic partnership is not only for the good & security of our own societies. It also brings peace, stability & balance to region.” PM Modi added, “I wish to thank Prime Minister Abe for the support extended for India’s membership  of the Nuclear Suppliers Group.”

This move comes after six years of negotiation. After the Fukushima Nuclear Power Plant disaster, the nuclear deal negotiations were halted due to political resistance in Japan.

After many years, the deal was signed today on November 11. This nuclear treaty will bring Japan’s export nuclear technology to our country, and it will be a necessary step towards India’s nuclear deals with the US, France and other countries.

Soon after hitting the demonetization masterstroke in India, Prime Minister Narendra Modi left for his second visit to Japan in order to seal the civilian nuclear deal between the two countries. This is Modi’s fourth visit to Japan over the last decade (twice as PM and twice as Gujrat Chief Minister).

Soon after landing in Japan, Modi tweeted, “Reached Japan. Looking forward to fruitful deliberations that will boost economic and cultural ties between India and Japan.”

Statement from the Press:

Commenting on the issue, a top Japanese government official said, “Terrorism, which has been an outlier subject in Japan’s national discourse, was brought closer home in July, when seven of our own — five men and two women, who were associated with the Japan International Cooperation Agency — were killed in a terrorist attack in Dhaka.

Both the countries are expected to sign around 10 different agreements which highlight issues like skill development, culture etc. Nevertheless, the prime focus of this meet was the possible signing of the civilian nuclear deal that was initiated in June 2010 but got stuck after the Fukushima disaster in December 2015.

Commenting on the possible signing of the deal, Kumao Kaneko, a former Japanese diplomat and negotiator on nuclear issues, said that the NTP has been a treaty of “convenience and expediency”. Though India adheres to NPT principles, but has not inked the treaty yet. By signing the agreement, Japan is doing the correct thing, however, the Abe government will have to work hard in the Diet (Japan’s parliament) to get the naysayers on board.

Source: http://www.financialexpress.com/world-news/pm-narendra-modi-shinzo-abe-sign-india-japan-civil-nuclear-deal/443823/

Rs 500, Rs 1000 notes ban: A bonanza that can help govt to recapitalise banks

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If those with black money do not convert all their R500/1,000 notes to new ones for fear of the taxman discovering their hoards, the government could reap a rich bonanza.

 

Assume that, of the R14 lakh crore worth of R500/1,000 notes, R2 lakh crore are not converted, but are burned. With R2 lakh crore less of currency to redeem, RBI’s currency liabilities will reduce by this amount.

 

This effectively allows the central bank to print a broadly similar amount of fresh money without it affecting anything.

 

This can, theoretically, be parked in a contingency fund and later transferred to the profit and loss account and, over a period of time, given to the government — effectively then, the government can get a windfall to recapitalise banks.

 

This is what the chief economic advisor meant when he said, on Thursday, that the demonetisation could be seen as a transfer of black assets from private individuals to the government — the size of the transfer depends on how much currency is not converted and that, in turn, depends on the size of the black economy.

The accounting operation, of course, is a technical one and involves reducing the asset side of RBI’s balance sheet to match the reduction in the liabilities side — this is done by increasing the ‘net non-monetary liabilities’ which, since they appear on the assets side, will appear with a negative sign

(see graphic for details of RBI balance sheet).

 

 

Source: http://www.financialexpress.com/industry/banking-finance/rs-500-rs-1000-notes-ban-can-bonanza-help-govt-to-recapitalise-banks/443393/

Demonetisation move negative for near term economic activity: Goldman

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The government’s announcement to demonetise Rs 500, Rs 1,000 notes to curb black money is positive for banking system liquidity but is negative for near term economic activity, says a report.

“The announcement to curb informal circulation of money is likely to be positive for banking system liquidity as well as medium-term fiscal resources and financialization, but negative for near-term economic activity,” Goldman Sachs said in a report released today.

The report said from an economic standpoint, this reform is likely to have material implications across money supply, consumption spending, fiscal policy and eventually inflation.

The pace of increase in currency in circulation had risen significantly over the past year to 17.3 per cent yoy in October 2016, contributing to nearly 20 per cent of the overall increase in money supply over the same time period.

“With individuals depositing their cash at bank accounts, we think M3 growth is likely to switch away from currency into bank deposits over the next month,” it said.

Nearly 10 per cent of total household financial assets are held in currency, higher than those held in equities and debentures.

It said the reform is a positive step over the medium-term as it increases transparency, accountability and shifts more transactions through electronic mediums and the banking system.

The undeclared cash when exchanged at banks over the next few months with an associated identity card, may be tracked by tax authorities and help increase the tax base of the economy, which is currently running below the regional average.

“This could help the government bring the fiscal deficit down to 3 per cent in the financial year 2017-18 from the budgeted 3.5 per cent in in the financial year 2016-17.”

The report said over the medium term, as more transactions take place via the banking system, the RBI should be able to bring the banking system liquidity to net neutrality more smoothly and consequently improve the effectiveness of monetary transmission.

From the growth perspective, the reduction in currency in circulation is likely to be negative for short-term consumer discretionary spending.

In particular, cash-heavy sectors such as jewellery, restaurants, food and beverages, transport, among others are likely to witness a drop in sales.

These sectors account for nearly 50 per cent of overall household spending. This places some downside risks to near-term growth, in our view.

Gold import demand is also likely to be impacted as a result of reduced end-consumer jewellery demand.

It said from the markets perspective, these measures should be positive for the rupee bond market.

Source: http://economictimes.indiatimes.com/articleshow/55355362.cms

India, UK set to sign GBP 1 bn biz deals

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India and the UK are expected to sign business deals exceeding GBP 1 billion (Rs 83,00 crore) during the three-day visit of British Prime Minister Theresa May, who is here on her first bilateral visit outside Europe since assuming office in July.

Describing her talks with Prime Minister Narendra Modi as good and productive, May said as leaders, they both were working to improve the livelihoods of their citizens creating jobs, developing skills, investing in infrastructure and supporting technologies of the future.Talking about Modi’s vision of smart cities, May said they have agreed on a new partnership that will bring together government, investors and experts to work together on urban development, unlocking opportunities worth GBP 2 billion for British businesses over the next five years.

This will focus on the dynamic state of Madhya Pradesh with plans for more smart cities than anywhere else and the historic city of Varanasi.

Four rupee-denominated bonds worth a total of 600 million pounds ($748 million) are expected to be listed in London in the next three months, Theresa May said.

The latest four bonds will provide financing to expand India’s highway and rail networks and meet its plans to boost energy efficiency and renewable energy, the government said.

They will be issued by Indian government-backed corporates Indian Railway Finance Corporation, Indian Renewable Energy Development Agency, Energy Efficiency Services Limited, and National Highways Authority of India by the end of January 2017. May said since July, more than 900 million pounds rupee-denominated bonds have been issued in London, equivalent of more than 70 percent of the global offshore market.

“This government will continue to work closely with both India and our financial services sector to ensure our growing rupee bond market continues to help finance India’s ambitious infrastructure investment plans,” May said in a statement. These rupee-denominated or masala bonds as they are called, unveiled in 2015, are an opportunity for Indian firms to raise money, while giving international investors access to higher yields in a zero-yield world.

They are also a way to borrow overseas, they are also an attempt to make the tightly-controlled rupee more widely available in global markets, similar to the way in which China has moved to sell more yuan debt to overseas investors. Alongside this, the UK has agreed to invest GBP 120 million in a joint fund that will leverage private sector investment from the City of London to finance Indian infrastructure.

Source: http://www.businesstoday.in/current/economy-politics/india-uk-set-to-sign-gbp-1-bn-biz-deals/story/239538.html

With GST on its way, India rises to second spot on global biz optimism index

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India improved its ranking by one spot in a global index of business optimism, with policy reforms and Goods and Services tax (GST) expected to become a reality soon, says a survey.

According to the latest Grant Thornton International Business Report, India was ranked second on the optimism index during the third quarter (July-September 2016).

Indonesia took the top spot, with the Philippines coming in third.

India was ranked third during the April-June period after being on top for two consecutive quarters.

“The improvement in the optimism ranking in the recent past clearly reflects that the reform agenda of the government and its efforts on improving the climate for doing business are having an impact,” Grant Thornton India LLP Partner – India Leadership Team Harish H V said.

High business optimism was also complimented by the rise of employment expectations. India regained its top position on this parameter, from second position in the April-June period, while profitability expectations also moved up.

“…all the programs and initiatives of the government as well as its focus on building relationships with all major economic powers has made India a bright spot in the global economy,” Harish said, adding the recent push for GST augurs well and should give a further boost to business optimism.

While India continues to be amongst the top five countries citing regulations and red tape as a constraint on growth, for the first time in the year, the country’s ranking on this parameter has dropped from second to fourth.

As per the survey, 59 per cent of the respondents have quoted this as an impediment in the growth prospects compared to 64 per cent in the previous quarter.

The report is prepared on the basis of a quarterly conducted global business survey of 2,500 businesses across 36 economies.

Meanwhile, in terms of revenue expectations, India slipped to third position from top in the previous quarter.

In spite of the downturn, India is much ahead of China where only 30 per cent respondents expect an increase in revenue, whereas in India, 85 per cent respondents have voted in favour of increasing revenue.

The survey further noted that 68 per cent of respondents have voted for an upsurge in selling prices. On this parameter too, China lags India with only 10 per cent of respondents expecting an upsurge in selling prices. The global average is 19 per cent.

Globally, business optimism stands at net 33 per cent, rising 1 percentage point from the previous quarter but falling 11 percentage points over the year.

“Political events such as Brexit and the US presidential election understandably rattle the global economy and test the resilience and elasticity of businesses worldwide. In general, businesses do not like uncertainty, and that is what is happening,” Grant Thornton Global CEO Ed Nusbaum said.

Source : http://economictimes.indiatimes.com/articleshow/55277143.cms

 

With GST on its way, India rises to second spot on global biz optimism index

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High business optimism was also complimented by the rise of employment expectations. India regained its top position on this parameter

India improved its ranking by one spot in a global index of business optimism, with policy reforms and Goods and Services tax (GST) expected to become a reality soon, says a survey.

According to the latest Grant Thornton International Business Report, India was ranked second on the optimism index during the third quarter (July-September 2016).Indonesia took the top spot, with the Philippines coming in third.

India was ranked third during the April-June period after being on top for two consecutive quarters.

“The improvement in the optimism ranking in the recent past clearly reflects that the reform agenda of the government and its efforts on improving the climate for doing business are having an impact,” Grant Thornton India LLP Partner – India Leadership Team Harish H V said.

 

High business optimism was also complimented by the rise of employment expectations. India regained its top position on this parameter, from second position in the April-June period, while profitability expectations also moved up.

“…all the programs and initiatives of the government as well as its focus on building relationships with all major economic powers has made India a bright spot in the global economy,” Harish said, adding the recent push for GST augurs well and should give a further boost to business optimism.

While India continues to be amongst the top five countries citing regulations and red tape as a constraint on growth, for the first time in the year, the country’s ranking on this parameter has dropped from second to fourth.

As per the survey, 59 per cent of the respondents have quoted this as an impediment in the growth prospects compared to 64 per cent in the previous quarter.

The report is prepared on the basis of a quarterly conducted global business survey of 2,500 businesses across 36 economies.

Meanwhile, in terms of revenue expectations, India slipped to third position from top in the previous quarter.

In spite of the downturn, India is much ahead of China where only 30 per cent respondents expect an increase in revenue, whereas in India, 85 per cent respondents have voted in favour of increasing revenue.

The survey further noted that 68 per cent of respondents have voted for an upsurge in selling prices. On this parameter too, China lags India with only 10 per cent of respondents expecting an upsurge in selling prices. The global average is 19 per cent.

Globally, business optimism stands at net 33 per cent, rising 1 percentage point from the previous quarter but falling 11 percentage points over the year.

“Political events such as Brexit and the US presidential election understandably rattle the global economy and test the resilience and elasticity of businesses worldwide. In general, businesses do not like uncertainty, and that is what is happening,” Grant Thornton Global CEO Ed Nusbaum said

Source: http://economictimes.indiatimes.com/articleshow/55277143.cms