Modi, Putin agree to expand nuclear power plant, push defence ties

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India and Russia signed five pacts, including a crucial agreement on setting up two more atomic power plants at Kudankulam

India and Russia on Thursday reaffirmed their “special and privileged strategic partnership” and signed five pacts, including a crucial agreement on setting up two more atomic power plants at Kudankulam in Tamil Nadu, as Prime Minister Narendra Modi and President Vladimir Putin discussed ways to smoothen bilateral relations.

The pacts were signed in St Petersburg on the third leg of Modi’s four-nation, six-day tour of Europe. Modi is in St Petersburg for the 18th India-Russia annual summit as well as the St Petersburg International Economic Forum.

The two countries are also marking 70 years of the establishment of diplomatic relations between them this year.

“Met President Putin. We had a wonderful meeting during which we discussed India-Russia relations,” Modi wrote in a Twitter post after a one-to-one meeting with the Russian leader.

The highlight of the day was India and Russia concluding a much-awaited pact for setting up the last two units of the Kundankulam nuclear power plant with Moscow’s help. The general framework agreement (GFA) and credit protocol for units 5 and 6 of the Kudankulam nuclear plant was among the five pacts signed on Thursday.

The reactors will be built by Nuclear Power Corporation of India Ltd (NPCIL) and Russia’s JSC Atomstroyexport, a subsidiary of Rosatom, the regulatory body of the Russian nuclear complex. Each of the two units will have a capacity to produce 1,000 megawatt (MW)of power. One 1,000MW nuclear power plant in Kudankulam is operational while another 1,000MW capacity plant is expected to go on stream later this year. Two others of equal capacity are under construction. India’s current nuclear power generation capacity is about 7,000MW.

A joint statement noted that the economies of India and Russia complemented each other in the energy sector and both countries will strive to build an “energy bridge”. It said the future of Indian-Russian cooperation holds great promise across a wide spectrum covering nuclear power, nuclear fuel cycle and nuclear science and technology.

Traditionally, India and Russia have shared a close relationship that dates back to the days of the Cold War, when the US tilted toward India’s neighbour and arch rival Pakistan. Much of India’s military hardware is still of Russian origin though India has diversified its defence procurement with major purchases of military hardware from the US, Israel and France.

On its part, Russia has been concerned at the rapidly warming ties between India and the US including the recent signing of a military logistics agreement.

India’s concerns vis-à-vis its once “trusted strategic partner” include its present tilt towards China with which India has a difficult relationship mainly due to an unsettled border dispute and Beijing’s close ties with Pakistan. Last year, Russia held its first ever military exercises with Pakistan, raising concerns in India.

Once seen as on the same page vis-à-vis concerns on terrorism emanating from Pakistan and Afghanistan, currently there are divergences between New Delhi and Moscow on that issue as well with Russia favouring a role for the rebel Taliban in a future Afghanistan against the rise of the Islamic State in the war-torn country. That Russia did not back India’s demand to name two Pakistan-based terror groups as perpetrators of terrorism against India last year at the Goa Brics (Brazil-Russia-India-China-South Africa) summit did not go down well with India.

In an interview to PTI on Thursday, Putin tried to assuage some of India’s concerns. “Russia is respectful toward all Indian interests,” Putin said. “Russia does not have any tight military relations with Pakistan.”

Putin added: “No matter where terror threat comes from, it is unacceptable and Russia will always support India in fight against terror.”

“There is no other country in the world that Russia has “deep cooperation” in delicate areas such as missiles,” Putin said adding Russia’s “trust-based” ties with India will not be diluted by Moscow’s growing ties with Pakistan and others.

The statement also said that India and Russia were looking to expand trade from the current $ 7.7 billion level to $ 30 billion by 2025.

Source: http://www.livemint.com/Politics/sengcF8LFc2QxVWk75r4wK/Modi-visit-India-Russia-ink-pact-to-expand-Kudankulum-nucl.html

India’s consumer confidence highest among emerging markets: Credit Suisse

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India’s buoyant consumer sentiment was supported by consumers’ greater confidence in their current and future finances, as well as relatively lower inflation expectations.

India’s consumer confidence is highest compared to other emerging market peers despite the near-term sentiment being adversely impacted by the Centre’s demonetisation move, says a survey.

According to the Credit Suisse Emerging Consumer Scorecard, India has the highest consumer confidence score among the eight emerging markets surveyed — Brazil, China, India, Indonesia, Mexico, Russia, South Africa and Turkey — while China slipped to third place.

India’s buoyant consumer sentiment was supported by consumers’ greater confidence in their current and future finances, as well as relatively lower inflation expectations.

India saw strong improvement in personal finances expectations; a net 47 per cent of the respondents expect the state of their personal finances to improve over the next six months, up from 27 per cent in last year’s survey.

However, only 57 per cent of respondents thought it was a good time to make a major purchase, a sharp drop compared to 80 per cent last year.

“A further 10 per cent of surveyed households have succeeded in entering middle income territory in last three years. This creates a consumer base of 1.25 billion people across eight countries covered, confirming the significance of emerging consumer story and growth opportunity for investors,” said Richard Kersley Head of Global Equity Research Product and Thematic Research at Credit Suisse.

The report said combined effect of demonetisation and GST will help to drive the adoption of non-cash payment modes by consumers and will likely lead to acceleration in the switch to consumption of branded goods.

The government in November last year had announced the demonetisation of Rs 500 and 1,000 currency notes to crack down against black money and terror financing.

The survey also said, as the emerging market consumer has developed, local brands are increasingly  gaining leading market share in lucrative consumer segments previously the preserve of large global brands owned by Western multinational companies.

Source: http://economictimes.indiatimes.com/articleshow/57920862.cms

India knocking at rare club of fast, steady growth economies says Edelweiss

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There are only 28 episodes ever when countries grew at over 6 per cent for 8 years or longer, Edelweiss Securities said in a research note, adding India is entering this rare club.

Indian economy is becoming more efficient through five broad themes — fast and steady rate of growth, market reforms, expanding digital footprint, revival in rural growth and creation of modern infrastructure, says a report.

 

Indian economy is becoming more efficient through five broad themes — fast and steady rate of growth, market reforms, expanding digital footprint, revival in rural growth and creation of modern infrastructure, says a report. “India is growing at a fast pace, largely driven by efficiency gains in doing business, tax collections, infrastructure and rural economy,” it added. There are only 28 episodes ever when countries grew at over 6 per cent for 8 years or longer, Edelweiss Securities said in a research note, adding India is entering this rare club. On landmark reforms, the report said while GST can increase highly productive formal organised employment, bankruptcy code can enhance liquidation and better utilisation of assets. Moreover, there has been a marked improvement in global competitiveness among major emerging markets and 90 per cent of FDI is now coming through the automatic route, replacing hot money, it added.

Regarding digital India, it said that apart from gains from extinguished liability, the real effect of demonetisation has been a repair of banks’ balance sheets and an increase in digital transactions.

An efficient rural India means higher rural income, which in turn would lead to large increase in discretionary spend hence stronger growth in India.

Edelweiss Securities further noted that equities are cheap relative to bonds.

“A comparison of Nifty’s earning yield vs the 10-year government bond yield shows that equities are currently very cheaply priced as compared to debt instruments and we should expect a shift in the allocation of funds from debt to equity,” it said.

The broader market is also showing bullish prospects.

“The number of stocks hitting 52-week highs are rising steadily and the total market cap of all NSE listed stocks (above 200 cr MCAP) is also at a new all-time high; suggesting strong momentum in broader market,” it said.

Source: http://www.financialexpress.com/economy/india-knocking-at-rare-club-of-fast-steady-growth-economies-says-edelweiss/552425/

RBI relaxes cash withdrawal rule

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The Reserve Bank of India (RBI) has now said people depositing money with banks in legal tender (meaning, not in the now-banned Rs 500 and Rs 1,000 notes) on or after Tuesday are allowed to withdraw the equivalent amount without any restriction, preferably in high-value denomination.

It said it took this decision on careful consideration, as certain depositors were “hesitating to deposit their monies into bank accounts in view of the current limits on cash withdrawals from accounts”.

This would mean, for instance, that business owners who deposit cash at the end of a day can now go to a bank and withdraw money as they did before demonetisation, to the extent they had deposited in existing legal tender. All business owners, small or big, handle huge cash on a daily basis and typically operate through current accounts on which banks don’t offer any interest rate but put no restriction in withdrawal.

On November 14, the central bank had said banks should maintain a separate record for deposits done in old notes and the valid notes, customer-wise.

Source: http://www.business-standard.com/article/economy-policy/rbi-relaxes-cash-withdrawal-rule-116112801294_1.html

India rises to 66th rank in innovation

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India had been faring poorly for several reasons over the years, largely related to poor infrastructure, performance in education, intellectual property and so on.

Reversing a trend of declining rankings every year, India rose by 15 positions to become the 66th most innovative nation in the world. India’s neighbour China also improved its ranking slightly and broke into the club of 25 top innovative nations in the world.

The Global Innovation Index has been created and reported every year by the Paris-based business school Insead, Cornell University and the World Intellectual Property Organisation, a United Nations agency. The Gobal Innovation Index is positioned as resource for policy makers, to identify areas of possible improvement in innovation. It is based on 82 variables across seven areas, grouped into two divisions — inputs and outputs for innovation.

India had been faring poorly for several reasons over the years, largely related to poor infrastructure, performance in education, intellectual property and so on.

This year it has done well largely based on good performances on information technology services exports and creative goods exports.

Source : http://economictimes.indiatimes.com/articleshow/53716047.cms

US, Europe combined infra spending less than China’s

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Despite a crying need for better infrastructure, investment in it has actually fallen in 10 major economies since the financial crisis, including the US, according to a new study by the McKinsey Global Institute. Meanwhile, China is still going gangbusters on roads, bridges, sewers, and everything else that makes a country run.

“China spends more on economic infrastructure annually than North America and Western Europe combined,” according to the report published Wednesday.

Economists around the world have been arguing that now is a great time to invest in infrastructure because interest rates are super-low and the global economy could use the spending jolt. “Is anyone proud of Kennedy airport?” Harvard University economist Lawrence Summers likes to ask.

The MGI report cites 10 countries where infrastructure spending fell as a share of gross domestic product from 2008 to 2013: the US, UK, Italy, Australia, South Korea, Brazil, India, Russia, Mexico, and Saudi Arabia. The study counts 11 economies, but that’s because it lists the European Union as a separate entity.

In contrast to the widespread declines, the institute says, infrastructure spending grew as a share of GDP in Japan, Germany, France, Canada, Turkey, South Africa and China. The chart from the MGI report shows China’s strength in infrastructure spending. Its bar is the highest. There’s such a thing as too much infrastructure spending, of course. At current rates of investment, China, Japan, and Australia are likely to exceed their needs between now and 2030, the McKinsey & Co-affiliated think tank says. To fund more public infrastructure, the report favours raising user charges such as highway tolls, among other measures.

To encourage more private investment in infrastructure, MGI argues for increasing “regulatory certainty” and giving investors “the ability to charge prices that produce an acceptable risk-adjusted return.”

 

Source:  http://www.business-standard.com/article/international/us-europe-combined-infra-spending-less-than-china-s-116061600030_1.html

India records 10-year low in public-private investments: World Bank

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India recorded a 10-year low in investments in public-private sector in the year 2015, adding to contraction that pulled down the global investment to below its five-year average of $124.1 billion, the World Bank has said.

In its latest annual report, the World Bank said global investment in 2015 decreased to $111.6 billion, below the five-year average of $124.1 billion from 2010 to 2014.

“This contraction resulted from lower investments in Brazil, China and India,” the World Bank said on Monday in its latest report on Private Participation in Infrastructure Database.

“India recorded a 10-year low in investments, as only six road projects — usually a rich source of PPI over the past 10 years – reached financial closure,” the World Bank said.

In South Asia, there were 43 deals for a combined total of $5.6 billion that closed in the region, representing 5 per cent of the total investment — a decline of 82 per cent from the five-year average of $30.5 billion.

“Consistent with historical trends, India generated a majority of the projects (36 out of 43); Pakistan had four; Nepal, two; and Bangladesh, one. Notably, 26 of the 36 projects in India, amounting to $2.0 billion, targeted renewable energy, while all of Pakistan’s projects, totalling $749.9 million, solely focussed on renewables,” the Bank said.

Solar energy investments climbed 72 per cent higher than the last five year average, while renewables attracted nearly two-thirds of investments with private participation, it said.

Global private infrastructure investment in 2015 mostly remained steady at $111.6 billion when compared to the previous year, it said.

Among the most notable, commitments in Brazil were only $4.5 billion in 2015 — a sharp decline from $47.2 billion the previous year, reversing a trend of growing investments, it said.

“Investment in China also fell significantly below its 5-, 10-, and 20-year averages, as the average transaction dropped to $63 million,” it said.

By number of projects, however, these three historical heavyweights took the lead, with 131 of the 300 global deals, or 44 per cent of all projects.

Still their combined investment of $11.6 billion only made up 10 per cent of the global total, compared to 54 per cent in 2014, which was also the annual average over the previous four years.

According to the World Bank, global private infrastructure investment in 2015, though on par with the previous year, was 10 per cent lower than the previous five-year average because of dwindling commitments in China, Brazil, and India.

“The data finds that investments in other emerging economies increased rapidly to $99.9 billion, representing a 92 per cent year-over-year increase,” said Clive Harris, Practice Manager, Public-Private Partnerships, World Bank Group.