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

In the report's India section, the World Bank said tighter credit conditions in the non-banking sector are contributing to a substantial weakening of the domestic demand in the country.

The 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.

In the report's India section, the World Bank said tighter credit conditions in the non-banking sector are contributing to a substantial weakening of the domestic demand in the country.

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Why isn't manufacturing coming to India? Deficient reforms, says World Bank

Rigid land and labor laws and protectionist trade policies are hindering investment in India even though the government has made strides in improving the ease of doing business, according to the World.

It’s going to take more than low corporate taxes to lure investors to India.

Rigid land and labor laws and protectionist trade policies are hindering investment in India even though the government has made strides in improving the ease of doing business, according to the World Bank.

“What inhibits are restrictive regulations which affect its land, labor, logistics and also its policies which affect trade and goods and services,” said Aaditya Mattoo, an economist with the World Bank and co-author of the World Development Report 2020 on global value chains.

That’s why the production that has relocated from China due to the trade war “has not gravitated toward India,” he said in New Delhi on Tuesday.

India jumped 14 places to 63rd in the World Bank’s latest rankings on ease of doing business, but logistics costs are still three times higher in India than in China and two times higher than in Bangladesh.

With its 1.3 billion people, India is the biggest consumer market in Asia after China, yet businesses are overlooking India in favor of manufacturing powerhouses like Vietnam amid the trade war.

Companies operating in India have little flexibility in hiring and firing workers, while acquiring land is not easy. The labor laws are something Prime Minister Narendra Modi wants to address in new legislation as he ramps up reforms to bolster a slowing economy.

Mattoo said the trade war is weighing on growth prospects, and if increased global policy uncertainty curbs investment, India’s income and exports would both decline by about 1 percentage point.

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Half the world's banks are too weak to survive a downturn: McKinsey

Banks allocate just 35% of their information-technology budgets to innovation, while fintechs spend more than 70%, McKinsey said.

Business Standard : More than half of the world’s banks are too weak to survive a downturn, according to a survey from consultancy McKinsey & Co.

A majority of banks globally may not be economically viable because their returns on equity aren’t keeping pace with costs, McKinsey said in its annual review of the industry released Monday. It urged firms to take steps such as developing technology, farming out operations and bulking up through mergers ahead of a potential economic slowdown.

“We believe we’re in the late economic cycle and banks need to make bold moves now because they are not in great shape,” Kausik Rajgopal, a senior partner at McKinsey, said in an interview. “In the late cycle, nobody can afford to rest on their laurels.”

The decade since the global financial crisis has seen a wave of innovation in financial services, bringing new competitors from fintech startups to giants like Apple Inc. and Alphabet Inc.’s Google. Banks have pondered whether to compete with, partner with or acquire some of these newcomers. Some established firms have sought to rebrand as technology companies, in part to attract hard-to-get talent.

McKinsey, whose clients are some of the biggest corporations in the world, consults on topics ranging from strategy and technology to mergers & acquisitions, outsourcing and stock offerings. In its report, the firm said banks risk “becoming footnotes to history” as new entrants change consumer behavior. Most recent attempts by banks to boost efficiency have been “business-as-usual,” it said.

Banks allocate just 35% of their information-technology budgets to innovation, while fintechs spend more than 70%, McKinsey said. Combined with regulatory factors lowering the barrier to entry -- like open banking and looser requirements for startups -- the environment is increasingly conducive for newer firms to take share from banks.

The report points to Amazon.com Inc. in the U.S. and Ping An in China as examples of technology firms that are capturing financial-services customers. To make matters worse for the old guard, the new players tend to go after the business areas that create the highest returns at banks -- credit cards, for example.

India registers fastest growth in fish production in more than two decades

Data showed that at 8.90 million tonnes, inland fisheries was the main production contributor.

India’s fish production in 2017-18 grew at its fastest pace in more than two decades, driven largely by a 14.05 per cent increase in inland farming, data showed on Thursday.

The handbook for fisheries statistics for 2018 said the average fisherman earned Rs 4,411.16 per month in 2016-17, indicating the rise in production may not have improved incomes. The average income in 2011-12 was Rs 3,124.76 per month. Numbers for income in 2017-18 weren't mentioned.

Data showed that at 8.90 million tonnes, inland fisheries was the main production contributor. Its output rose by 14.05 per cent between 2016-17 to 2017-18. At 3.69 million tonnes, marine fish production grew by just 1.73 per cent in the same period.

The share of inland farming in total production has been rising since 2000-01, as high-value marine fisheries declines due to climate change, mechanised trawling and dwindling catch.

Giriraj Singh, union minister for fisheries, animal husbandry and dairying, said the government will invest Rs 25,000 crore in the next five years to promote fisheries.

Singh said investments will be done through three components: about Rs 10,000 crore will be spent through the newly launched Pradhan Mantri Matsya Sampada Yojana, about Rs 12,860 crore through the World Bank, and Rs 7,532 crore will be sanctioned through the Fisheries and Aquaculture Infrastructure Development Fund (FIDF).

Seven harbours and 181 fish landing centres have been set up as part of measures to improve post harvesting infrastructure, he said.

Singh said the government aims to achieve fish and related products export worth Rs 1,00,000 crore in the next five years from the current level of Rs 45,000 crore.

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India highest recipient of remittances at $79 billion in 2018: World Bank

India was followed by China (USD 67 billion), Mexico (USD 36 billion), the Philippines (USD 34 billion), and Egypt (USD 29 billion), the global lender said.

India retained its position as the world's top recipient of remittances with its diaspora sending a whopping USD 79 billion back home in 2018, the World Bank said in a report Monday.

India was followed by China (USD 67 billion), Mexico (USD 36 billion), the Philippines (USD 34 billion), and Egypt (USD 29 billion), the global lender said.

With this, India has retained its top spot on remittances, according to the latest edition of the World Bank's Migration and Development Brief.

Over the last three years, India has registered a significant flow of remittances from USD 62.7 billion in 2016 to USD 65.3 billion 2017.

"Remittances grew by more than 14 percent in India, where a flooding disaster in Kerala likely boosted the financial help that migrants sent to families, the Bank said.

In Pakistan, remittance growth was moderate (seven per cent), due to significant declines in inflows from Saudi Arabia, its largest remittance source. In Bangladesh, remittances showed a brisk uptick in 2018 (15 per cent).

According to the report, remittances to low-and middle-income countries reached a record high of USD 529 billion in 2018, an increase of 9.6 per cent over the previous record high of USD 483 billion in 2017.

Global remittances, which include flows to high-income countries, reached USD 689 billion in 2018, up from USD 633 billion in 2017, it said.

The Bank said, remittances to South Asia grew 12 per cent to USD 131 billion in 2018, outpacing the six per cent growth in 2017.

"The upsurge was driven by stronger economic conditions in the United States and a pick-up in oil prices, which had a positive impact on outward remittances from some GCC countries," it said.

The Gulf Cooperation Council (GCC) is a regional inter-governmental political and economic bloc of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.

However, the Bank in its report rued that the global average cost of sending USD 200 remained high, at around seven per cent in the first quarter of 2019.

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India to continue growing fastest; be second-largest economy by 2030: PM

He also said that India has made rapid strides in achieving COP21 targets and are on way to achieve those.

Prime Minister Narendra Modi exuded confidence on Monday that India would continue to be the fastest-growing large economy, and could be the second-largest economy in the world by 2030.

"Leading agencies such as IMF and World Bank project the same trend to continue in the coming years. In an uncertain global economic environment, India has shown tremendous resilience as an anchor of the world economy," Modi said addressing inaugural address of Petrotech 2019 here.

Modi said, currently, India is fastest-growing large economy in the world... and it "recently became the sixth-largest economy in the world. According to a recent report, by 2030 India could be the second-largest world economy."

As per a Standard Chartered report, India is likely to pip the United States to become the world's second-largest economy by 2030. China will on the top spot surpassing US, which will be at the third place, the report said.

On the roller coaster movement of crude oil and pricing of petroleum, he said, "We need to move to responsible pricing which balances interests of both producers and consumers. We also need to move toward transparent and flexible market for both oil and gas, only then we can serve energy needs of humanity in optimal manner."

He also said that India has made rapid strides in achieving COP21 targets and are on way to achieve those.

He said, "India has the fourth-largest refining capacity in the world. This will further grow up by about 200 million metric tonnes by 2030. Our national bio fuel policy has enacted last year... research on second and third generation bio fuel is being promoted. 12-second generation bio refineries are being set up in 11 states."

Talking about energy policy of India he said, "We have adopted an integrated approach in energy planning. During the last Petrotech Conference in 2016, I mentioned four pillars for India's future - energy access, efficiency, sustainability and security."

He was of the view that energy justice is also key objective for him and a top priority for India.

"Toward this end, we have developed and implemented many policies. The results of these efforts are now evident. Electricity has reached all our rural areas. This year, we aim to achieve 100 per cent electrification of households in India through a targeted programme called Saubhagya. As we raise production, we also aim to reduce losses in transmission and distribution," he added.

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