World Bank pegs India's FY20 GDP growth at 5% as credit weakness lingers

Current Affairs
he World Bank has projected a five per cent growth rate for India in the 2019-2020 financial year, but said it was likely to recover to 5.8 per cent in the following financial year.
The growth rate for Bangladesh has been projected to remain above seven per cent through the forecast horizon and, in Pakistan, it is projected to languish at three per cent or less through 2020 as macroeconomic stabilisation efforts weigh on economic activity, the bank said in its latest edition of the Global Economic Prospects.
"In India, where weakness in credit from non-bank financial companies is expected to linger, growth is projected to slow to five per cent in fiscal year 2019/20, which ends March 31, and recover to 5.8 per cent the following fiscal year," the World Bank said on Wednesday.The global economic growth is forecast to edge up to 2.5 per cent in 2020 as investment and trade gradually recover from last year's significant weakness, but downward risks persist, it said.

The US' growth is forecast to slow to 1.8 per cent this year, reflecting the negative impact of earlier tariff increases and elevated uncertainty. The Euro area's growth is projected to slip to a downwardly revised one per cent in 2020 amid weak industrial activity, the bank said in the report."With the growth in emerging and developing economies likely to remain slow, policymakers should seize the opportunity to undertake structural reforms that boost broad-based growth, which is essential to poverty reduction," World Bank Group Vice President for Equitable Growth, Finance and Institutions, Ceyla Pazarbasioglu, said."Steps to improve the business climate, the rule of law, debt management, and productivity can help achieve sustained growth," Pazarbasioglu said...Read More

Chiratae Ventures to raise $20 mn from International Finance Corporation

Current Affairs

Chiratae Ventures, previously known as IDG Ventures, will raise $20 million from the International Finance Corporation (IFC). Chiratae is an early stage venture fund focusing on Indian start-ups.
World Bank's investment arm said that the proposed transaction is an aggregate $20 million equity commitment in Fund IV.
"IFC's own account equity will provide patient risk capital to the GP, assisting the fund in achieving its first close. Investment from a lifecycle investor like the IFC will position the Fund to have better access to co-investment and follow-on capital for its investee companies," said IFC.
The company invests in consumer media and technology, health tech, software/ SaaS and fintech firms. The fund supported over 75 ventures, nearly $470 million under advisory. It participates in seed rounds, and early and expansion stages.
Chiratae Ventures International Fund IV LLC is a private limited liability company with limited life incorporated under the laws of Mauritius. Chiratae Ventures Master Fund IV is an India domiciled Category I Alternate Investment Fund (AIF) - collectively referred to as Fund IV. Chiratae Advisors Co. Limited. (Investment Advisor) will be the manager. The investment advisor is wholly owned by Chiratae Ventures India Advisors Private Limited (formerly IDG Ventures India Advisors Private Limited), an Indian private limited company.

The fund would help early state technology companies to access equity, increased investee growth, which will be supported by the fund's value creation strategies; and increased access to digitized products/services for investees' customers, particularly in non-tier 1 cities. In the context of a relative active VC fund market in India, the project's contribution to market creation is assessed as moderate and includes increased integration of the Indian VC market by bringing in more domestic and international LPs, said IFC.

Fastest growing economy? India to grow at 7.5% in FY20, says World Bank

Current Affairs

As Finance Minister Nirmala Sitharaman prepares her budget, the World Bank reports Indias economy grew by 7.2 per cent in 2018-19 in contrast to the recent Indian Central Statistical Office (CSO) estimate of only 6.8 per cent growth during the period.
The Bank's Economic Prospects Report released on Tuesday forecast India's economy to grow by 7.5 per cent during this and the next two fiscal years, retaining its top spot as the fastest growing major economy. It would be helped by a "more accommodative monetary policy" and low inflation, it said.
The report retained the forecasts it made in January for India.
India's growth forecast is the brightest spot in a grim forecast for the world economy. The report said that the global growth rate was estimated at 3 per cent last year and is forecast to dip steeply to 2.6 per cent this year, before edging up to 2.7 per cent next year and 2.8 per cent in 2021.
India "is estimated to have grown 7.2 per cent in fiscal year 2018-19, which ended March 31", the report said. "A slowdown in government consumption was offset by solid investment, which benefited from public infrastructure spending".
The Bank said that the cut-off dates for data used in the report was May 23.
On May 31, the CSO said that India's gross domestic product (GDP) growth during the 2018-19 fiscal stood at 6.8 per cent, lower than the previous year's 7.2 per cent.The CSO said the Indian economy grew by only 5.8 per cent in the fourth quarter. That dragged down the fiscal year's growth rate.

 Finance Secretary Subash Garg attributed the slowdown to "temporary factors like stress in non-banking financial company (NBFC) sector affecting consumption finance".

World Bank retains projections for India's economic growth at 7.5%

Current Affairs

After the weak gross domestic product (GDP) data, India has something to cheer about. The World Bank has retained projections for India’s economic growth at 7.5 per cent for the current fiscal year even as it cut global economic expansion by 0.3 percentage points.
In its Global Economic Prospects report, the World Bank, however, pegged the growth at the same pace of 7.5 per cent for the next two fiscal years.
For the current fiscal year, the growth is quite high, given the fact that India’s economy grew just 6.8 per cent in 2018-19, a five-year low. Also, the growth plunged to 5.8 per cent in the fourth quarter of the fiscal year, also a five-year bottom. Also, the International Monetary Fund (IMF) had earlier cut economic growth of India to 7.3 per cent from earlier projection of 7.5 per cent. The Asian Development Bank (ADB) pegged the growth at 7.2 per cent.
World Bank retains projections for India's economic growth at 7.5%
Without naming Pulwama terror attack and Balakot strike, the Bank made a reference to these incidents between India and Pakistan. “Skirmishes between India and Pakistan in February are a reminder that latent geopolitical tensions can flare up at any time," the Bank said. The Bank said investment rate in India was expected to grow at a slower pace in 2019 than in 2018. It, however, said investment growth was expected to remain robust as benefits of recent policy reforms further materialised.

 “Private consumption and investment will benefit from strengthening credit growth amid more accommodative monetary policy, with inflation having fallen below the Reserve Bank of India’s target," it said.

Explained: Impact of Donald Trump's attack on preferential trade with India

Current Affairs

United States president Donald Trump on Tuesday announced a plan to end preferential trade treatment for India, withdrawing benefits under a nearly 50-year-old programme for up to $5.6 billion worth of New Delhi’s exports to America.

The move comes after over a year of back-and-forth between the two countries, and pressure exerted upon the Trump administration by the American dairy export and medical devices lobbies.

“I am taking this step because, after intensive engagement between the United States and the government of India, I have determined that India has not assured the United States that it will provide equitable and reasonable access to the markets of India,” Trump said in a letter to Congress representatives on Tuesday early morning.

According to World Bank data, India is currently the largest beneficiary of the ‘generalised system of preferences’ (GSP) programme, a trade initiative that was first started back in the 1970s.

India’s commerce ministry, however, has downplayed the impact of the move, saying that withdrawal of GSP benefits will have a “minimal and moderate impact”.

“The total GSP benefits amount to about $190 million on overall exports of $5.6 billion between the two countries,” commerce secretary Anup Wadhawan said at a press conference on Tuesday morning.

 “We had worked out a meaningful package that covered the US’ concerns but they made additional requests which were not acceptable at this time,” he added. “The GSP system is envisaged as a non-reciprocal benefit to developing countries.”..Read More