September , 2022
22:27 pm

Dr. H. P. Kanoria

We celebrated Diwali festival of light paying our devotion to Lord Ganesha, and Goddess Lakshmi, Lord Narayana seeking their blessings for happiness, prosperity, sustainable and inclusive growth of all.

Economy: The World Bank substantially scaled down its projection on India growth to just 6.5% from 7.5% predicted earlier. The forecast by IMF is now around 6.8% down from 7.4 % for India for the FY23, due to slowing global economy, inflation, rising interest rates and oil price. However, Indian economy remains robust. Global economy’s future health rests on successful calibration of monetary policy. As external environment is deteriorating, export growth will be moderate, but India will still remain the world’s fastest growing major economy. Several credit rating agencies have also revised down their India growth forecast. Global economy is at increasing risk of recession as reported by IMF. RBI governor Shaktikanta Das said, “The world is in the eye of a new storm. There is nervousness in the financial market despite unsettling global environment; the Indian economy continues to be resilient. Inflation will be seen above 4% in FY23 and at an average of 5.2% in FY 24. To contain the inflation, RBI increased policy repo rate by 50 bps to 5.9%. Domestic inflation scenario and not currency movements should drive the monetary policy framing. Liquidity is not tight.

India’s foreign exchange reserves declined to USD 528.37 billion for the week ending Oct 14, the lowest since July 2020.The fall in reserves from a peak of USD 642 billion in October 2021 has been on account of continuous exit of FIIs from India and also due to higher American bond yields. US Dollar has appreciated all major currencies causing turmoil in currency market globally. Indian rupee is, in fact, faring better than several reserve currencies. RBI does not have any fixed exchange rate in mind. The aspect of adequacy of forex reserve is always in consideration. India’s external debt to GDP ratio is lowest among major EMEs (Emerging Market Economies).

Central government’s fiscal deficit is about 32.6% in the current financial year till August 2022.It was 31.1% a year ago.

Chief Economic Advisor V. Anantha Nageswaran said India may have to live with sub 7% economic growth in the near term.

OPEC (Organization of The Petroleum Exporting Countries) and non – OPEC alliance known as OPEC+ countries decided to cut oil production by two million barrels from November, 22. In view of that energy price will not come down and will add to the inflationary pressure. Prices of oil have already jumped by 4%.

FM Sitharaman said for the next 25 years government needs to have a facilitating policy. Regulators must play the role of hand holding rather than being a tough regulator. Indian youth needs to be wealth and job creators rather than job seekers. She further said that despite inflation, growth will be the top priority in Union Budget 23-24. RBI raising interest rate has not restrained the inflation, rather increased cost of production. For these reasons government has increased the MSP (Minimum Support Price). Fundamentals on Macroeconomics are not good. Foreign Direct Investment inflow is expected to remain steady.

Global Economy: IMF MD Kristalina Georgieva spoke of global economy heading towards recession because of shrinking real income and rising prices. Further, she said that the increasing risk of recession could lead to loss of USD 4 trillion in output through 2026. US may enter into recession for the coming 12 months as per majority of economists.

IBC: RBI has allowed Asset Reconstruction Companies (ARCs) with minimum net worth of Rs.1000 crore to take over business enterprises undergoing insolvency. This will / may help and also save a business enterprise passing into liquidation and help reinvigorate economic growth. The FM said that the wealth and job creators need to revive their animal spirit for investment. IIFCL MD Padmanabhan Raja Jaishankar said that animal spirit is returning to private infrastructure investments, but the same spirit is lacking among lenders to restructure moratorium and instead taking 80% haircut. Consultants and Auditors have been haunting even righteous actions of wealth and job creators.

Bankers need to be advised that they need to be accommodative in their approach and extend support to entrepreneurs by the way of moratorium and loan-restructuring when the default or delay in payment is due to external factors instead of declaring or terming as fraud and initiating criminal proceedings. 

Despite the effective, efficient and talented management, government enterprises are also making losses and are being affected by external factors. Thousands of Indians have built up capital by working overseas, returned to India in love of their Motherland, started enterprises, lost hard earned capital and are facing criminal proceedings along with other law breakers.

Ease of Doing Business: To bring back confidence among the wealth creators and job creators, government will decriminalize hundred and ten economic offences as said by FM Sithararaman.

As said by Swami Vivekananda in 1897, “India / Bharat will be one of the major economic Nation by spiritual strength which is infinite”.


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