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

by | posted in: Corporate Updates, Economy, Business Updates, Corporate Affairs, Income Tax,e-Filing- Individuals, Firms, Companies, India & International - Corporate updates | 0
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

 

ADB trims developing Asia growth forecast; India on track

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ADB today marginally cut economic growth projection for Asia and Pacific region for 2016, though India is likely to meet 7.4 per cent and 7.8 per cent growth forecast for this and the following year.

Asian Development Bank said it has cut its 2016 growth projection for developing economies in Asia and the Pacific to 5.6 per cent from earlier forecast of 5.7 per cent.

“South Asia, meanwhile is expected to be the fastest growing subregion, led by India, whose economy has shrugged off global headwinds and is on track to meet ADB’s March fiscal year 2016 (year to March 2017) projected growth target of 7.4 per cent, supported by brisk consumer spending and an uptick in the rural economy”, ADB said in a supplement to its Asian Development Outlook 2016 report.

“Although the Brexit vote has affected developing Asia’s currency and stock markets, its impact on the real economy in the short term is expected to be small,” said Shang-Jin Wei, ADB’s Chief Economist.

However, in light of the tepid growth prospects in the major industrial economies, policy makers should remain vigilant and be prepared to respond to external shocks to ensure growth in the region remains robust,” Wei said.

ADB said it now forecasts 2016 growth for the developing economies at 5.6 per cent, below its previous projection of 5.7 per cent. For 2017, growth is seen unchanged at 5.7 per cent.

Growth in 2016 and 2017 is led by South Asia, and India in particular, which continues to expand strongly, while China is on track to meet earlier growth projections, it said.

In Southeast Asia, growth projections for the subregion in the 2016 and 2017 remain unchanged at 4.5 per cent and 4.8 per cent, respectively with solid performances by most economies in the first half of 2016 driven by private consumption.

The exception was Vietnam where the economy came under pressure from a worsening drought that caused a contraction in the agriculture sector, it added.

ADB said growth in Asia and the Pacific’s developing economies for 2016 and 2017 will remain solid as firm performances from South Asia, East Asia and Southeast Asia help offset softness from the US economy, and near-term market shocks from the Brexit vote.

It has projected inflation for developing Asia at 2.8 per cent for 2016 and 3 per cent or 2017- a 0.3 percentage point rise for each year from the previous forecasts.

“The rise is largely due to a recovery in oil and food prices,” it added.

The Manila headquartered ADB is owned by 67 members – 48 from the region. In 2015, ADB assistance totalled $27.2 billion, including co-financing of $10.7 billion.

Source :
http://economictimes.indiatimes.com/articleshow/53263953.cms

No World Recession From Brexit But Risks High, Says IMF’s Lagarde

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International Monetary Fund chief Christine Lagarde said that Britain’s shock vote to quit the European Union has injected significant uncertainty into the global economy but is unlikely to cause a world recession.

But in an exclusive interview with AFP, she also said that Brexit underscores the need for the EU to do a better explaining how it benefits Europeans, amid “disenchantment” with the institution.

And she said that Britain’s move to cut corporate taxes to counter the expected economic fallout from its choice to break with the EU was just a “race to the bottom” that could hurt everyone.

Two weeks after the British referendum on cutting its EU ties, Ms Lagarde, speaking in her Washington offices at the beginning of her second five year term as IMF managing director, called the event a “major downside risk” for the world.

“We don’t think that a global recession is very likely. The immediate effects will be on the UK,” with some spillover into the euro area, she said.

Yet the longer the process for Britain’s withdrawal remains unclear, the worse the effects could be, she said. “The key word about this Brexit affair is uncertainty and the longer the uncertainty, the higher the risk,” she said.

“The sooner they can resolve their timeline and the terms of their departure the better for all. It needs to be predictable as soon as possible.”

But Ms Lagarde, who during her first five years leading the Fund has already endured a substantial amount of turmoil in Europe, said she remained positive over the outcome.

“There will be spillover effects on the euro area. But my optimistic approach of life tells me that Brexit could be a catalyst that could push the EU to deepen its economic integration.”

Source: http://profit.ndtv.com/news/global-economy/article-no-world-recession-from-brexit-but-risks-high-says-imfs-lagarde-1429092

What’s India’s strategy to beat Brexit? Here’s a sneak peak

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India is considering recalibrating its strategy, including renegotiating its tariff offers, for the proposed free trade agreement (FTA) with the EU following Brexit, with demands from key sectors for a separate trade pact with the UK gathering pace, sources said. But with both the EU and the UK busy grappling with Brexit, serious trade negotiations are unlikely to start anytime soon.

Textiles secretary Rashmi Verma told FE: “Britain continues to be an important market for us, as it makes up for around 23% of the EU demand for Indian textiles and garments. We have requested the commerce ministry to look into the possibility of a bilateral preferential trade agreement (PTA) with the UK.”

The UK accounts for over a half of India’s software services exports to the EU, 23% of key engineering and electrical goods exports and 16% of jewellery, precious metal and stones exports. So, senior industry executives from these sectors endorse an FTA or PTA with the UK. Britain alone accounted for 3.4% of India’s goods exports in 2015-16, while the EU – including the UK – made up for 17%.

Nasscom president R Chandrashekhar said once the current storm settles down, the UK will also be looking to compensate itself for no longer being part of the EU trade bloc.

“At that time, a special trade arrangement or relation with India will become crucial to them. And for India, it will perhaps be a tad easier to negotiate with one nation instead of the entire EU,” he said. He, however, added that much will depend on the exact terms and conditions of Britain’s exit from the EU.

Meanwhile, sources said the government is open to a trade pact with the UK, but India also remains committed to taking the proposed EU FTA talks to its logical end. “The EU isn’t ignorable just because Britain has decided to be out of the bloc,” said one of the sources.

However, the Brexit has added to the workload of Indian negotiators as they have to deal with the UK separately now. As such, the FTA with the EU is still a work in progress, so there is a scope for renegotiation of offers in view of the Brexit reality, said the source. The government is closely monitoring the situation and a final call will be taken at an appropriate time, the source added.

With the depreciation of the pound, euro and Chinese yuan following the Brexit referendum, India’s export competitiveness to these regions has come under strain. If the situation persists, a trade pact with the UK or the EU will come handy, as fears of China pegging its currency to its advantage loom, said analysts. The pound, euro and the Chinese yuan have depreciated almost 12%, 2.3% and 1%, respectively, against the dollar while the rupee has appreciated 0.1% between the closing of June 23 and July 1.

But a foreign diplomat posted in New Delhi said: ”Their (the EU’s) job is already cut out. They have to first finalise the terms of the British exit, which is a mammoth and complex task. Both the parties have to recalibrate their strategy even at the WTO. In such a situation, starting another front of negotiations (with India) could take some time,” he said.

As such, differences already persist on the broad contours of the proposed FTA, including on EU’s insistence that India cut import duties on auto parts and wine and strengthen intellectual property rights regime and Indian demand for greater liberalisation in services.

Anwarul Hoda, a former deputy director general at the WTO and current chair professor for trade policy at Icrier, said the Brexit holds some potentially good news for India, apart from the obvious shocks. “The UK is more liberal than the rest of the EU. So, it could still be easier for India to clinch an FTEU-FTAA with the UK than with the EU.”

There is a fair amount of chance that an FTA with the UK, if talks are initiated simultaneously, will be sealed before such a deal with the EU, he said. In fact, Britain doesn’t have the same baggage as the EU. For instance, the UK may not stubbornly insist on the removal of tariff barriers in automobiles as the EU, as the former isn’t a major auto player.

The EU hasn’t yet given the dates for a resumption of the FTA talks, said the source mentioned earlier. Recently, commerce minister Nirmala Sitharaman had written to her EU counterpart, asking for dates to resume the negotiations.

Source: http://www.financialexpress.com/article/economy/after-brexit-vote-india-to-tweak-eu-fta-strategy/309181/