Connect with us
Friday,21-January-2022

Business

Barclays again lowers India’s FY22 growth forecast

Published

on

GDP

As India battles the severe second wave of Covid-19 and the states undergo lockdowns, Barclays has cut its growth estimate for India for the current financial year to 9.2 per cent.

Its earlier estimate was 10 per cent.

“We reduce our baseline FY2021-22 GDP growth forecast again, lowering it to 9.2 per cent y/y from 10 per cent earlier, and 11 per cent before the outbreak of the second wave,” it said in a report.

It noted that although India’s second Covid-19 wave has started to recede, the related economic costs have been larger owing to the more stringent lockdowns implemented to contain the outbreak.

Parts of the country are still experiencing an increase in new cases. However, the overall situation appears to be coming under control, reducing burden on the country’s healthcare infrastructure, it said.

“In our view, this bodes well for a gradual reopening, but only with a lag,” it said.

According to the brokerage the economic costs of the recent surge in cases are rising rapidly. After a reasonably stable April, the economy experienced a sharp decline in activity in May, as is evident in high frequency data.

“While we continue to believe the lockdowns will last only until end of June 2021, in our new base case, we now estimate economic losses of $74 billion, all of it contained in Q2 21 (April-June).”

At the same time, it observed that India’s vaccination programme has slowed significantly, given persistent supply constraints and logistical challenges. Although the government has provided greater flexibility for states to set their own vaccine strategies, problems persist and supply is only expected to improve in Q3 21.

The slow vaccination drive may pose medium-term risks to growth, especially if the country experiences a third wave of Covid-19 cases, said the brokerage report.

In a more pessimistic scenario in which the country is hit by a third wave of Covid-19, Barclays estimates that the economic costs could rise by at least a further $42.6 billion, assuming another round of similarly stringent lockdowns are imposed for eight weeks.

Under this pessimistic, “bear case” scenario, it estimates that the GDP growth would be lowered by a further 150 basis points, dragging FY2021-22 growth down to 7.7 per cent on a year-on-year basis.

Business

Toyota launches lifestyle utility vehicle Hilux

Published

on

By

Automaker Toyota Kirloskar Motor (TKM) on Thursday , launched “Hilux” lifestyle utility vehicle.

According to the company, the Ex-showroom prices of the new vehicle will be announced in March 2022 before the start of the deliveries in April 2022.

“Today, as India continues to make larger economic strides, many customers are seeking a sophisticated lifestyle vehicle that delivers exceptional on and off-road prowess and fulfil their daily urban mobility needs be it work or pleasure,” said Masakazu Yoshimura, Managing Director, TKM.

As per the company, the Hilux is loaded with features like a heavy-duty turbo engine and diamond-like carbon coating on the piston rings for maximised frictional efficiency.

“The result is a whopping 500Nm of Torque which is by far the best in the segment,” the company said.

“The Variable Flow Control’ to the power steering has boosted drivability making the steering lighter at low speed in city traffic condition and heavier at higher speeds cruising on a highway.”

Besides, the Hilux comes with an unmatched water wading capacity of 700mm.

It features the same platform (body-on frame chassis construction) that underpins the Innova Crysta and Fortuner.

Globally, the Hilux sales has surpassed 20 million units.

Continue Reading

Business

India’s FY23 GDP to witness ‘meaningful’ growth; to rise by 7.6%: Ind-Ra

Published

on

By

GDP

 India’s FY23 GDP is expected to grow 7.6 per cent year-on-year basis, said India Ratings and Research (Ind-Ra).

As per the ratings agency, after a gap of two years, the Indian economy will show a “meaningful expansion”, as the real GDP in FY23 will be 9.1 per cent higher than the FY20 (pre-Covid) GDP level.

“However, the size of the Indian economy in FY23 will be 10.2 per cent lower than the FY23 GDP trend value,” the agency said.

“A continued weakness in private consumption and investment demand is estimated to contribute 43.4 per cent and 21.0 per cent, respectively, to this shortfall.”

However, it pointed out that if the impact of Omicron on 4QFY22 growth turns out to be greater than the estimate then there could be some upside to the FY23 growth originating from the base effect.

“Nonetheless, there are risks to the ongoing recovery.”

Notably, the agency cited that National Statistical Organisation’s (NSO) advanced estimate (AE) of FY22 showed that private final consumption expenditure (PFCE), grew by only 6.9 per cent YoY in FY22, despite a low base and sales data of many consumer durables showing robust growth.

“This indicates that the consumption demand is still weak and not broad based. In fact, the slowdown in PFCE had begun even before the Covid-19 pandemic had hit the Indian economy.”

“Robust PFCE growth is a must for a sustained growth recovery.”

Besides, it said that wage growth both in the rural and urban areas is facing significant headwinds and has been declining since mid-2020.

“More importantly, real (inflation-adjusted) wages are indicating an erosion of household’s purchasing power. Another factor that has impaired the consumption demand lately is an abrupt rise in the health expenditure of households.”

“These trends may be cyclical in nature, but the picture even at the structural level is not healthy for households.”

Consequently, household savings have declined and their leverage has gone up significantly since FY12, the agency said.

In addition, it estimated that investments, as measured by gross fixed capital formation (GFCF), to grow 8.7 per cent YoY in FY23.

“However, private investments have been down and out over the past several years and Ind-Ra believes the revival of private investment demand will be a slow and drawn-out process.”

“The two developments that can, however, hasten this process are merchandise exports which have shown a surprise turnaround in FY22 and the Production-Linked Incentive Scheme announced by the union government in April 2020.”

Continue Reading

Business

Higher standard deduction for salaried may be part of tinkering

Published

on

By

The Union Budget 2022 may include a higher standard deduction for salaried taxpayers and tax incentives related to affordable housing.

Emkay Global Financial Services said in a report that on the revenue front, gross tax/GDP ratio is expected to increase to 10.7 per cent amid healthy tax buoyancy across segments. Though we do not see any major changes in taxes, we do not rule out minor tinkering in the form of higher standard deduction for salaried taxpayers; tax incentives related to affordable housing; or marginally higher customs duties on PLI-related finished/semi-finished products. Separately, lower non-tax revenue will be led by lower RBI dividends.

The spending focus will likely be on welfare, rural, health and MSMEs. We will also watch for financial sector initiatives (resolutions, higher FPI limits to facilitate divestment in select PSBs on sale, etc.), which could improve the efficacy of the financial sector’s ability to fund the recovery better, the report said.

Amid various push and pull, FY22 GFD/GDP could just about balance at 6.8 per cent. Positive buffers such as bumper RBI surplus, robust tax collection, and higher nominal GDP could get offset by higher payouts than budgeted on food, fertiliser subsidy, health, NREGA, Air India SPV; and possible miss on ambitious divestment targets (despite possible mega LIC IPO in March 2022).

Asset-sale execution will undeniably become the key balancing aspect, especially with a healthy NMP pipeline. We pencil in a modest divestment of Rs 800 billion, and do not account for any major 5G spectrum windfall amid limited clarity on the reserve price, the report said.

The upcoming Budget faces acute policy trade-offs between nurturing a nascent growth recovery and diminishing fiscal space with challenging debt dynamics. The uneven recovery post the pandemic raises questions about the sustainability of demand, especially as the labour market is also potentially divided. For targeted policy responses, fiscal policy tends to be more effective than monetary policy. Thus, a delicate balance needs to be maintained, ensuring the fiscal impulse is maximized to boost potential growth, even as policy adherence to medium-term fiscal sustainability is signalled, the report said.

This would require the expenditure-to-GDP ratio remaining healthy, front-loaded investment-focused stimulus, especially amid its larger multiplier effect on growth and employment. This necessitates innovative reforms, better resource allocation, and possible fiscal funding by aggressive asset sales in the form of existing functional infrastructure monetisation, disinvestments, and strategic sales, among others.

Continue Reading

Trending