Indian Economy : News,Discussions & Updates

  • In Mumbai, Delhi, How Once-Hot Property Market Has Tanked
Budget 2018 © 2018 Bloomberg L.PPooja Thakur, Upmanyu Trivedi and Dhwani Pandya, BloombergThe property developers are adding to a pile-up of bad loans in India's banking sector, which is already struggling to manage a spike in stressed assets across several industries.
Updated : January 31, 2018 15:31 IST


Unitech, once India's largest developer, has plunged to a fraction of its previous valuation

Story Highlights
  • Falling property sales have left many companies grappling with debt
  • Home sales have plunged to a seven-year low
  • Property prices dropped 3% on average in top 6 cities, says Knight Frank
Amit Khulve, a 34-year-old resident of the north Indian city of Noida, is still paying off the mortgage on an apartment he's never lived in.

The sales executive says he borrowed about Rs 5 lakh in 2012 and pulled another Rs 10 lakh from his savings to reserve a flat in a building planned by the property developer Unitech Ltd. Six years on, the project hasn't been built, and he's among hundreds fighting to recover their investments. Unitech's founders have been jailed on charges of cheating, which they deny. The Supreme Court in the coming months will review ways to protect the company's homebuyers and consider the founders' request for bail.
Across the metropolitan area that surrounds Delhi, a string of real-estate developers including Unitech, Jaypee Infratech Ltd. and Amrapali Group have been dragged to court by irate homeowners who shelled out payments for apartments that have yet to be completed. Many of these firms took money from a stream of buyers. As sales slumped and the once red-hot market cooled, their businesses unraveled -- leaving them grappling with debt.


The fallouts from the shakeup in the $126 billion property market are reverberating across companies, markets and the broader economy. Unitech, once India's largest developer, has plunged to a fraction of its previous valuation. Jaypee is in insolvency court. State-owned banks -- the lifeblood of the economy -- are grappling with a pile up of bad loans from the industry. Indian families, who have long poured their life savings into real estate, are now pulling back.
"Even projects that are compliant with the new rules are unable to find takers," said Ramakant Rai, a partner at Trilegal, a law firm representing some of the buyers suing developers. "Erosion of trust in the builder community appears to be a primary driver for the meltdown in the real-estate sector in India."


Home sales have plunged to a seven-year low and prices in some of India's biggest cities are tumbling, in stark contrast to booming property markets elsewhere in Asia.

The homebuilders deny any wrongdoing in court filings and statements, and contend constructions were postponed for reasons beyond their control.

Even so, the industry's troubles have significantly impacted the economy. That's because real estate and construction are a substantial portion of GDP and major sources of employment, according to Samantak Das, Mumbai-based chief economist at the consultancy Knight Frank LLP. "Real estate is no more the sought after investment avenue," Das said.

Homebuyers in India have been particularly vulnerable because they've historically had few laws to protect them. Families have faced the most delays around the National Capital Region, or the cluster of cities around Delhi. Firms there ended up highly leveraged after accumulating too much land and borrowing at very high costs, according to Ashutosh Limaye, India head of research at the real-estate services firm Jones Lang LaSalle Inc.

Indian real-estate businesses expanded as long as firms were able to draw new buyers for planned projects. But as the economy slowed and demand softened, many firms were left short of cash and struggling to manage their debt. The downturn only worsened last year after the government tightened regulations to protect homebuyers and separately introduced a new services tax across all industries. India's residential sector appears to have shrunk to a fraction of its size in less than a decade, according to Shishir Baijal, managing director of Knight Frank India.

Prices dropped 3 percent on average across the top six cities, according to Knight Frank, with some declining as much as 15 percent after accounting for developer discounts. And in the capital region, last year's prices were 9 percent below their 2015 peak. The outlook remains bleak.

"We can begin to see initiation of recovery in second half of 2018, not recovery," said Das. "Recovery will take much more time."

To add to builders' woes, the courts seem to be siding with the homebuyers. In 2016, responding to a complaint by one group over delays in Unitech's residential project in Gurugram, southwest of New Delhi, the country's top consumer court, called the National Consumer Disputes Redressal Commission, ordered Unitech to complete the project and to compensate buyers by paying 12 percent interest on their investments.

Justice V.K. Jain of the consumer disputes commission, in his May 2016 verdict, noted that the legal agreements between builders and home buyers were skewed in favor of developers, encouraging the diversion of homebuyers' money. Unitech is challenging that verdict in the Supreme Court.

In a bail hearing, the jailed Unitech founders, Sanjay Chandra and his brother Ajay, assured the court they would deliver the flats or repay consumers, and in court arguments their lawyers have denied any criminal behavior. The company and lawyers for its founders didn't respond to requests for comment.

Jaypee isn't facing a criminal case, but India's attorney general in November called for a financial audit of the business after homebuyers alleged that Jaypee had diverted funds.

Jaypee didn't divert any money to other projects and its accounts were fully audited, said Ajit Kumar, an advisor. He said delays in delivering the apartments were caused by labor shortages and regulatory setbacks due to its project's proximity to a bird sanctuary. The firm started 'massive' construction last May and will hand over about 5,000 apartments by March, Kumar said, adding that the company hopes to bounce back within a year's time.

Some of Amrapali's group companies are facing insolvency proceedings, and the group's lawyers have assured India's top court that the firm will deliver apartments it has committed to. The company couldn't be reached.

The property developers are adding to a pile-up of bad loans in India's banking sector, which is already struggling to manage a spike in stressed assets across several industries.

The government has stepped in to regulate the real-estate industry with new laws, including one that forces developers to use at least 70 percent of sale proceeds to complete residential projects, rather than funnel money to different jobs. Other measures prevent them from pre-selling apartments before all building approvals are obtained. The changes may wipe out thousands of small developers who can't comply, according to property consultancy Liases Foras Real Estate Rating & Research Pvt.

The pain hasn't been restricted to the North. Mumbai last year witnessed a decline in residential property prices for the first time in a decade.

Bhavesh Jain, an information technology professional living in the U.K., bought an apartment in Mumbai's Lower Parel area from Orbit Corp., a Mumbai-based developer of high-end apartments. He says he booked the apartment in 2010 by paying a 30 percent down payment on a Rs 2.6 crore home.

The builder ran out of funds to build the flat and now financial institutions have made claims on some of these apartments as collateral for money Orbit owes them.

Orbit expects to conclude discussions with lenders and home buyers by March about resuming construction on six stalled residential projects in Mumbai, Chief Executive Officer Pujit Aggarwal said in a phone interview. Aggarwal, who was jailed last year on allegations of cheating and misappropriation of funds, is now out on bail. He denies the allegations.

Aggarwal's bail application filed in July last year said that there had been no intention to cheat buyers and Orbit's project had been delayed due to circumstances beyond its control. His company has filed affidavits in court to show that its accounting is transparent and no money had been siphoned off, he said.

Still, Jain, the homebuyer, says he doesn't know when he will see his apartment or the money he invested. "I'm not going to touch any other property in India," he said. "I'll look to buy in the U.K. now."

In Mumbai, Delhi, How Once-Hot Property Market Has Tanked
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Chief executive officer Doug McMillon led a delegation that visited Flipkart's Bengaluru office early last week as part of this exercise, said the people cited above. The other members of the team included Walmart ecommerce CEO Marc Lore, founder of that was acquired by Walmart in 2016, and Judith McKenna, who will take over as president and CEO of Walmart International on February 1. She's currently chief operating officer of Walmart.

Walmart declined to comment. "As a policy, we don't comment on market speculation," a spokesperson said, adding that McMillon had been in the country to review its three units — the cash and carry business, global technology centre and global sourcing. Flipkart also didn't want to comment.

"As a company policy, we do not comment on rumours or speculations," a spokesperson said.

The people cited above said that if a deal takes place, Walmart may acquire a 15-20% stake in Flipkart, allowing them to combine synergies to compete with Amazon in India. The people cited above said the deal may involve primary and secondary sales by some longstanding investors.

The retail trade is increasingly adopting an omni-channel strategy, giving shoppers the choice of buying online or at brick and mortar stores. Amazon, Alibaba and Walmart are among those building such a model.

Amazon acquired the 400-store network of Whole Foods last year. Chinese online giant Alibaba is reportedly in talks with Krogers in the US to expand into grocery there.

Last week, Walmart teamed up with Japanese ecommerce company Rakuten. As part of the deal, Walmart will start selling Aura-branded e-readers made by Kobo, a division of Rakuten, in stores and online at Kobo is one of the Amazon Kindle's competitors.

In September, Walmart completed $3-billion acquisition of The deal followed a five-year ecommerce acquisition spree in which Walmart bought 15 startups, seeking talent and technology to make it a dominant player online and narrow the gap with Amazon. India is a key market where Amazon has committed to invest $5 billion. Flipkart has pledged to spend about half that.

"For Walmart, India is an exciting and priority market. Walmart is deeply committed and proud of creating shared value for local communities, kiranas, small farmers and our local supplier partners in India," the spokesperson said. Adeal could give Flipkart access to's pricing mechanism to help take on Amazon, said one of the persons cited above., with its ability to lower prices as customers add more items to shopping carts, could help Walmart and Flipkart reach more customers. After the acquisition, Walmart's online sales registered growth of more than 50%.

A deal could help Flipkart's push into grocery, a sector in which 100% foreign direct investment (FDI) is allowed, both online and offline. The thinking behind this is that grocery shoppers can easily be persuaded to buy other items too, experts said.

Flipkart has increased focus on the food and grocery business and a potential partnership with Walmart, which has extensive understanding of the segment, could be a game changer, said a person cited above.

"The common sourcing once the potential partnership goes through would lead to a win-win situation for all stakeholders in the value chain starting from Indian farmers, local suppliers and consumers," he said.

A grocery industry veteran said a deal would mean a cash infusion for Flipkart while Walmart would get access to the marketplace's database. But neither has online experience of grocery, the person said.

This requires the ability to deliver perishables quickly to the local doorstep. It's not easy to run a successful grocery business as a profit centre within a larger organisation as the margins are thin, the person said.

This isn't the first time that the two sides have held talks--ET had reported initial discussions between the two sides in September 2016.

Flipkart was valued at $14.2 billion in August last year, when Japanese telecom and internet giant Soft-Bank is said to have acquired around an 18% stake for $2.6 billion.

Flipkart: Walmart in talks to buy a significant minority stake in Flipkart - The Economic Times
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E-Way Bill to roll-out tomorrow: How it works and how transporters can generate the bill
Under the e-way bill system, a transporter is required to have online pre-registration of goods before transportation under the new GST regime. All goods worth Rs 50,000 will require pre-registration before they are moved for sale beyond 10 km.

E-way Bill to roll-out tomorrow: How it works and how transporters can generate the bill (Image: IE)

The roll-out of the e-way Bill has been advanced from April 1 and the new system is set to be implemented from tomorrow: February 1. The decision to implement the system of e-way Bill for the inter-state movement was done with the dual purpose; first to curb tax evasion and second, for seamless movement of goods. Under the e-way bill system, a transporter is required to have online pre-registration of goods before transportation under the new GST regime. All goods worth Rs 50,000 will require pre-registration before they are moved for sale beyond 10 km.

For now, the e-Way bill is only for the inter-state movement, while states can roll it out for intra-state movement voluntarily. The mandatory compliance of e-way bill for intra-state movement of goods from June 1. Karnataka, Rajasthan, Uttarakhand and Kerala have already rolled-out the e-way bill system.

According to the GST Network, the e-way bill will be valid all over India and transporters will not be required to visit any tax office or check post. It can be generated electronically and in self-service mode. Transporters can enable e-way bill generation on the official portal through mobile App, SMs and through offline tools as well. For generating the e-way bill, one will be required to visit the portal ‘’ and register themselves by giving the GSTIN.

Those who are not registered under the GST can register themselves using Aadhaar or PAN card. The transporter or trader can enter the vehicle number to generate the e-way bill. In case of vehicle breakdown or transhipment, the vehicle number can be updated. However, there is one demerit. Once the bill is generated, it cannot be cancelled for 24 hours.

The mandatory compliance of e-way bill is not for goods like fruits, vegetables, fish and water, and non-motorised conveyance. With the roll-out of the e-way bill, the government is hopeful of curbing the tax evasion. Arun Jaitley, after the latest GST Council meeting, said that there was a need to check tax evasion and the e-way bill could a big role. The GSTN also said that that tax officials can conduct random verification of the bill, but if any transporter faces detention for more than 30 minutes, he can file a report.

E-Way Bill to roll-out tomorrow: How it works and how transporters can generate the bill - The Financial Express
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With Roman law doctrine, Modi government moves to stub out tobacco industry rights
By Reuters | Updated: Feb 01, 2018, 10.32 AM IST


NEW DELHI: The Indian government is pushing the Supreme Court to apply a rarely used doctrine that would strip the $11 billion tobacco industry's legal right to trade, an effort aimed at deterring tobacco companies from challenging tough new regulations.

New Delhi has for the first time asked the top court to classify tobacco as "res extra commercium", a Latin phrase meaning "outside commerce," according to a Reuters review of previously unreported court filing by the Health Ministry on Jan. 8.

If applied, the doctrine - which harkens back to Roman law - would have far reaching implications: in denying an industry's legal standing to trade, it gives authorities more leeway to impose restrictions.

For example, the Supreme Court's application of the doctrine to alcohol in the 1970s paved the way for at least two Indian states to ban it completely and allowed courts to take a stricter stance while regulating liquor - something constitutional law experts say could happen with tobacco if a similar ruling was made.

"The effects of tobacco are much more than even alcohol ... It will be a fillip to this drive against tobacco," said government lawyer R. Balasubramanian, who is acting on behalf of the Ministry of Health in pursuing the designation.

Balasubramanian, however, said the government is not discussing banning tobacco and the goal of invoking the Roman law doctrine was only to curtail the industry's legal rights.

With an aim to curb tobacco consumption - which kills more than 900,000 people each year in India - the government has in recent years raised tobacco taxes, started smoking cessation campaigns and introduced laws requiring covering most of the package in health warnings.

But a court in southern Karnataka state last month quashed those labelling rules after the tobacco industry successfully argued the measure was "unreasonable" and violated its right to trade.

The government this month appealed the ruling in the Supreme Court which put on hold the Karnataka court order. The top court will next hear the case on March 12.

In its filing, the government included "res extra commercium" because it wants to stop the industry from pursuing such arguments again, said Balasubramanian.

Seeking to apply the doctrine to tobacco, the government argued it should have the power "to regulate business and to mitigate evils" to safeguard public health, the court filing showed.

Sajan Poovayya, a senior lawyer representing top Indian cigarette maker ITC Ltd and Philip Morris International Inc's Indian partner, Godfrey Phillips, said the industry's legal rights would be severely limited if the court applies the doctrine to tobacco.

Poovayya said he would fight the government's argument "tooth and nail" and make a case that taking away the industry's right to trade would imperil millions of Indian farmers who depend on tobacco for their living. The industry estimates 45.7 million people in India depend on tobacco for their living.

"India is a tobacco growing country and there's a need to look at the interest of those people who are already in the sector," Poovayya said.

"Tobacco is not destructive to health. If tobacco is, sugar is as well."

ITC and Godfrey Phillips, as well as India's health ministry, did not respond to requests for comment.

In a statement to Reuters, Philip Morris International said the company "is not a party to the lawsuit challenging India's warning labels" and that it complies with labelling rules in the country.

India's tobacco labelling rules, which mandate 85 percent of a cigarette pack's surface be covered in health warnings, have been a sticking point between the government and the tobacco industry since they were enforced in 2016.

That year, the industry briefly shut factories across the country in protest and filed dozens of legal cases challenging the rules.

The federal health ministry says stringent health warnings on packages help reduce consumption of tobacco by making people aware of its ill-effects. A government survey last year found 62 percent of cigarette smokers thought of quitting because of warning labels on the packets.

Mary Assunta, a long-time tobacco control advocate and a senior policy advisor at the Southeast Asia Tobacco Control Alliance, said she had never heard of a country applying the "res extra commercium" doctrine to tobacco, but hoped India would set a precedent.

"Such a classification will help protect tobacco control measures from being challenged, particularly for developing countries where the bulk of the smokers are," Assunta said.

The doctrine would open the door to an outright ban on tobacco sales if a state so wished, said Pratibha Jain, a partner at law firm Nishith Desai Associates and a specialist in Indian constitutional law.

"It gives the state autonomy to completely ban trade in tobacco," Jain said. "It gives governments the constitutional cover that will protect future litigation. The industry will lose significant ground as your protection of right to trade is gone."

Modi Government: With Roman law doctrine, Modi government moves to stub out tobacco industry rights - The Economic Times
UAE, India sign historic deal to trade directly in dirhams and rupee

New Delhi: The UAE and India have reached a historic agreement which will enable businesses on both sides to bypass the US dollar or any other foreign currency and trade directly in UAE dirhams and the Indian rupee.

The agreement will mean large savings for business communities on both sides as trade between the UAE and India soars to new highs.

The impact of US policies on the Indian rupee would be greater and favourable to trade with the UAE since the Indian currency’s value is not pegged to the US dollar but is determined by a basket of currencies.

The rationale for the currency swap agreement is evident from UAE-India trade figures. From a mere $182 million in 1982, the current level of bilateral trade amounted to about $53 billion (Dh194.5 billion), according to a joint statement released at the end of Modi’s visit.
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Finance Ministry puts out list of 9,500 high-risk finance companies

New Delhi: Financial Intelligence Unit (FIU) on Monday released a list of around 9,500 Non-Banking Financial Companies (NBFCs), which have been categorised as high-risk financial institutions by the Finance Ministry.

As per the Prevention of Money Laundering Act (PMLA), all NBFCs have to appoint a principal officer in the financial institutions and report all suspicious and cash transactions of over ten lakh rupees to the FIU.

But, these companies have been found not following these rules as on January 31,2018. The FIU released the list on its website showing the names of NBFCs which have been found non-compliant to the PMLA rules.

ADANI CAPITAL PRIVATE LIMITED, Anand Corporate Holdings Pvt. Ltd., Arihant Udyog Ltd., Asian Financial Services Ltd., AVON MONEY SOLUTION INDIA LIMITED, Bindal Finvest., Bombay Gas Co Ltd., CELLO CAPITAL PRIVATE LIMITED, Dlf Finvest Limited, Eros Merchants (P) Ltd, and Indigo Fincap Pvt Ltd are few of the companies listed by FIU.

After demonetisation in 2016, NBFCs and several other rural and urban cooperative banks had come under the scanner of the Income Tax Department and the Enforcement Directorate (ED) for illegally converting banned currency notes.

Finance Ministry puts out list of 9,500 high-risk finance companies | Companies News
GST collection dips marginally in January to Rs 86,318 crore

New Delhi: The collection of Goods and Services Tax (GST) slipped marginally to Rs 86,318 crore in January, from Rs 86,703 crore in December.

According to a Finance Ministry statement, "The total revenue received under GST for the month of January 2018 (received in January/February up to February 25, 2018) has been Rs 86,318 crore."

Total collections under the GST had registered an increase in December 2017 after declining in the two previous months of November and October following the decision of the GST Council to cut rates on more than 200 items.

The Finance Ministry said that 1.03 crore taxpayers have been registered under GST till February 25, of which 17.65 lakh are composition dealers who are required to file returns every quarter.

Of the total, 1.23 lakh composition dealers have opted out of the scheme and have thus become regular taxpayers, it said, adding that "till February 25 there are 16.42 lakh composition dealers which are required to file returns every quarter and the rest of 87.03 lakh taxpayers are required to file monthly returns."

The Finance Ministry further said that as many as 57.78 lakh GSTR 3B returns have been filed for the month of January till February 25, 2018. This is 69 percent of total taxpayers, who are required to file monthly returns.

Of the Rs 86,318 crore collected during the month, Rs 14,233 crore has been collected as CGST, Rs 19,961 crore as SGST, Rs 43,794 crore as IGST and Rs 8,331 as compensation cess.

The ministry further said that Rs 11,327 crore is being transferred from IGST to CGST account, and Rs 13,479 crore to SGST account by way of settlement of funds on account of cross utilisation of IGST credit for payment of CGST and SGST respectively or due to inter-State B2C transactions.

A total amount of Rs 24,806 crore is being transferred from IGST to CGST/SGST account by way of settlement.

(With agency inputs)

GST collection dips marginally in January to Rs 86,318 crore | Economy News
India to grow 7.6% in calendar year 2018: Moody's

Moody's Investors Service today estimated that India will grow 7.6 per cent in calendar year 2018 and 7.5 per cent in 2019, amid signs of economic recovery from impact of demonetisation and GST.

"There are some signs that the Indian economy is starting to recover from the soft growth patch attributed to the negative impact of the demonetisation undertaken in 2016 and disruption related to last year's rollout of the Goods and Service Tax," it said.

The Budget for 2018-19 includes some measures that could stabilise the rural economy that was disproportionately hit by the demonetization policy and is yet to recover, it said.

"As we have said before, the bank recapitalisation plan should also help credit growth over time, thereby supporting growth," Moody's said.

Economic growth: India to grow 7.6% in calendar year 2018: Moody's - The Economic Times
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Q3 GDP data out today. Will India beat China as world's fastest growing economy?
India's Gross Domestic Product (GDP) data for the third quarter - October-December 2017 - will be released by the Central Statistics Offices (CSO) today in a short while.

After the Quarter 2 results, when the GDP revived to 6.3 per cent from a three-year low of 5.7 per cent in the first quarter, the Quarter 3 GDP figures are expected to bring some respite to the Indian economy.


  1. The Indian economy has not fully recovered from the twin shocks of demonetisation, announced in November 2016, and the launch of the Goods and Services Tax (GST) in July last year.
  2. But if a Reuters poll of over 35 economists is to be believed, the GDP in Quarter 3 could be the best growth rate recorded in the country in a year. It would also help India regain the status of the world's fastest-growing major economy.
  3. Reuters said last week that India might have regained the status of the world's fastest-growing major economy in the October-December quarter, driven by higher government spending and a pick-up in manufacturing and services.
  4. If the GDP figures match Reuters' 6.9 per cent GDP growth forecast, India would top China's 6.8 per cent annual pace for October-December. The last time India had a faster growth rate was in the final three months of 2016.
  5. Reuters said India's expected improvement on its 6.3 per cent growth in July-September comes as its manufacturing and services sector have been overcoming teething troubles rooted in thebumpy launch of the GST in July last year.
  6. A strong GDP reading could lift domestic shares, and boost the rupee, which has been Asia's second weakest currency this year, losing about 1.6 percent against the dollar.
  7. A recovering GDP would also help Prime Minister Narendra Modi, who is facing criticism over mounting bad loans of state banks and a $1.77 billion fraud at the Punjab National Bank, the biggest scam in India's banking history.
  8. There have been signs of recovery. In November, Moody's raised India's investment grade rating one notch, the rating agency's first upgrade in nearly 14 years. India also jumped 30 places to break into the top 100 for the first time in World Bank's Doing Business report 2018.
  9. The International Monetary Fund forecasts India's growth could reach 7.4 per cent in 2018 and 7.8 per cent in 2019, overtaking rates projected for China of 6.5 per cent and 6.4 per cent, respectively.
  10. On Tuesday, addressing the India-Korea Business Summit, Finance Minister Arun Jaitley had said that the Indian economy has the potential to achieve a GDP growth rate of more than 7-8 per cent in view of policy changes, accompanied by a supportive global environment. Jaitley said that over the next 10-20 years, India will continue to remain one of the fastest growing economies in the world.
Q3 GDP data out today. Will India beat China as world's fastest growing economy?
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GDP Growth Rises To 7.2%, India Outpaces China To Be Fastest Growing Economy
For the fiscal year ending March 31, 2018, the government revised its GDP growth forecast higher to 6.6 per cent from 6.5 per cent earlier.
Business | NDTV Profit Team | Updated: February 28, 2018 18:14 IST


Economists widely expect India's GDP growth to accelerate further this year.

India regained the status of the world's fastest-growing major economy in the October-December quarter, driven by higher government spending and a pick-up in manufacturing and services. Gross domestic product or GDP grew 7.2 per cent in in the October-December quarter from a year earlier, according to government data released today. The growth rate is higher than what the Street had expected. A Reuters poll of more than 35 economists estimated the economy to grow 6.9 per cent in the October-December quarter. China had recorded a growth of 6.8 per cent in the December quarter.

India's GDP or gross domestic product growth had fallen to a three-year low of 5.7 per cent in the April-June quarter due to destocking in the run-up to the July 1 launch of the goods and services tax (GST) and a lingering impact of demonetisation. But in July-September quarter, the economic growth picked up to a revised 6.5 per cent annually, a return to a faster growth trajectory after five consecutive quarters of slowdown.

Meanwhile, for the fiscal year ending March 31, 2018, the government revised its GDP growth forecast higher to 6.6 per cent from 6.5 per cent earlier.

Separately, infrastructure output grew by a strong 6.7 per cent in January from a year ago, government data showed today. The growth in output compares with an upwardly revised 4.2 per cent year-on-year growth in December. Infrastructure output, which comprises eight sectors such as coal, crude oil and electricity, accounts for nearly 40 per cent of industrial output.

COMMENTSEconomists widely expect India's GDP growth to accelerate further this year. Moody's Investors Service estimates India to grow at 7.6 per cent in calendar year 2018 and 7.5 per cent in 2019, amid signs of economic recovery from impact of demonetisation and GST.

The International Monetary Fund projects India's GDP to grow at 7.4 per cent in 2018 as against China's 6.8 per cent. The IMF's update, released last month, projects a 7.8 per cent growth rate for India in 2019.
10 questions answered by Q3 GDP data
These are the questions:

1) Is the economy recovering from the slowdown?

The numbers certainly show a pickup. Growth in gross value added (GVA) at constant prices is up 6.7% for the December 2017 quarter, well above the 6.2% growth in the three months ended September. Sure, there’s a favourable base effect, because demonetisation lowered growth in the December 2016 quarter, but even so, growth has improved.

That said, the economy is yet to achieve the growth rates it had before the twin blows of demonetisation and the introduction of the goods and services tax (GST). Real GVA growth in the three months ended September 2016, the quarter before demonetization, was 7.2%. But we’re getting there, slowly.

What’s more, private sector growth in real GVA, that is leaving out the government contribution via “public administration, defence and other services”, was at 6.6% year-on-year in the December 2017 quarter, a bit more than the 6.3% in the September quarter. The economy is growing even without government support.

2) Which sectors contributed how much to GVA growth?

The highest contribution came from the “Trade, hotels, transport, communication and services related to broadcasting” sector, which accounted for 24.7% of total year-on-year real GVA growth. Manufacturing contributed 20.7% and “Financial, real estate and professional services” 18.6%. Even the government sector contributed 14.1%, which is why, at the end of December 2017 the Union government’s fiscal deficit was already 113.6% of the budgeted figure for the full fiscal year. But the data does show that the recovery has been broad-based. Agriculture’s contribution was 12% and construction’s 8%.

3) Has the manufacturing sector recovered from the pain of GST introduction?

It certainly has—real GVA growth in manufacturing in the December quarter was 8.1%, well above the September quarter’s 6.9% and this was despite an unfavourable base effect. Of course, the strong growth was expected, as Centre for Monitoring Indian Economy data on corporate results shows year-on-year growth in net profits after exceptional items was 15.6% in the December quarter, compared to 2.35% in the September quarter. After a long time, we’re seeing a recovery in the manufacturing sector.

4) Has the slowdown in private services growth been overcome?

Yes, private sector services too are showing a pickup. Unfortunately, despite a very favourable base effect, the “Financial, real estate and professional services” sector saw tepid growth, no doubt weighed down by the problems in the real estate sector. The growth rate has slowed in the “Trade, hotels, transport, communication and services related to broadcasting”. The construction sector, however, has seen a smart pickup in growth.

5) What implications does the GDP data have about job growth?

The rise in growth in the construction sector to 6.8% is very good news, as it is one of the main sources of jobs for the masses. Similarly, the better-than-expected growth of 4.1% for agriculture is also good news, especially in view of widespread reports of rural distress. The only worry is that, as Madan Sabnavis, chief economist at CARE Ratings Ltd, says, “The present revelation of high fiscal deficit up to January could be a risk factor in terms of continued support for construction.”

6) Has investment growth gained momentum?

Real growth in gross fixed capital formation has been an astonishing 12% year-on-year, up from 6.9% in the September quarter. This column had said that a rise in corporate new orders had pointed to increased brownfield investment.

The rise in investment demand, if it holds, is very good news, as investment in fixed assets is essential for a sustainable recovery.

7) How has private consumption growth fared?

Real growth in private final consumption expenditure has slowed to 5.5% in the December quarter, from 6.6% in the September quarter. That this has happened despite the pickup in the farm sector and in manufacturing is a concern.

8) Has the external sector been a drag on growth?

The trade deficit jumped in the December 2017 quarter. Export growth was 2.5%, while imports were up 8.7%, in real terms. The widening trade deficit is perhaps the single biggest concern for the Indian economy at the moment.

It isn’t clear, for instance, why exports haven’t grown much despite the rebound in global trade. On the other hand, as IndusInd Bank Ltd chief economist Gaurav Kapur points out, clearly domestic consumption is leaking into imports. Perhaps that is why the government raised import duties on a variety of items in the latest budget.

9) What do the GDP numbers mean for the markets?

In the currency markets, the widening trade deficit is adding to pressures for a lower rupee. This will likely be reinforced by lower portfolio flows into India, as well as a tightening of monetary policy in the US.

The bond markets will see the confirmation of the recovery as buttressing the case for firmer interest rates. However, this is more or less baked into bond yields, which have already gone up sharply.

The better-than-expected GDP print will be welcomed by the stock markets, although they are at the moment bogged down by the fallout of the Punjab National Bank fraud.

10) What implications does this have for monetary policy?

The news of the ongoing recovery and especially the improvement in investment demand will be welcomed by the monetary policy committee, which had been worried about growth. The Reserve Bank of India had projected GVA growth at 6.6% for 2017-18, which is not very different from the Central Statistics Office’s estimate of 6.4%. The central bank can therefore lay its growth concerns to rest and focus instead on inflation.

10 questions answered by Q3 GDP data
It's often said NDA is no better than UPA without providing any facts and figures. So thought of starting posts with actual performance comparisons of both governments in different sectors.

This one is about highway construction. In first quarter of 2013-14, highway construction was 13 km/day and 20 km/day was considered an impossible task admitted by minister Kamal nath himself!!

From 13 km/day it increased to 26.6 km/day for first two months of financial year 2017-18. So it's the same ministry, same staff, same organisation, yet performance increased by 100% in a matter of 4 years.

These are the links from which I got the data. Any corrections in the posted data are welcome.

Building 20 km of roads per day is too good to be true

India constructs 30 km/day highway under Modi's roadways push
Make in India fails to quench nation's dependence on made in China goods

When 'Make in India' was launched more than three years ago in September 2014, one of the hopes was it would diminish, or at least dampen, India's increasing reliance on imports of Chinese machinery and equipment, which makes up a huge chunk of India's trade deficit.

But three years on, new numbers suggest this hasn't been the case. In fact, India's reliance on Chinese made goods has only grown.

While India's imports of Chinese machinery have risen by as much as 25 per cent in the three years since, it's exports to China have alarmingly remained stagnant- and in fact fell slightly - in the period from 2014 to 2017.

In 2017, India imported $68 billion worth of goods from China, a 16.5 per cent year-on-year rise, according to numbers released on January 12 by China's General Administration of Customs.

In 2014, the year Make in India was launched, India's imports were $54 billion. Since then, imports, mainly of Chinese machinery and equipment as well as pharmaceuticals, have risen 25 per cent.

So has India's trade deficit with China, which has risen from $37.8 billion in 2014 to $51.6 billion last year.

Two-way trade is up from $70 billion in 2014 to $84.4 billion, but the rise in trade has been entirely led by India's hunger for imports from China. Worryingly, in this time, India's exports to China have actually fallen.

India exported $16.4 billion worth of goods 2014, mainly low-end exports such as ores and yarn. Over three years, India's exports have registered no growth and in fact fell slightly to $16.3 billion last year, even as the deficit crossed $50 billion in China's favour.

Make in India fails to quench nation's dependence on made in China goods