India's investment failed to pick up despite Modi's 4 years' reforms, manufacturing hit by demonetisation, GST: Crisil

India's top consulting firm, Crisil, backed by its international partners, Standard & Poor, has regretted that four years after taking over the reins, and despite "a plethora of facilitations and reforms", the Modi government has "not been able to decisively push the investment cycle", insisting, "Investments have become the sore point of the Indian economy."

Crisil, in its report released last weekend, said, "The share of gross fixed capital formation, or fresh investment in the form of plant and machinery, dwellings and other buildings, etc., in GDP averaged 31% in the past four years (fiscals 2015 to 2018), compared with 33.6% in the previous five years (fiscals 2010 to 2014)."
Pointing out that the household sector "was the biggest contributor to investment in fiscal 2012 (share of ~45%)", Crisil said, "Since then, household investment has been on a consistent decline and its share in total investments was ~31% in fiscal 2017." It added, "Purchase of houses is generally the largest part (more than three-fourths) of household investment, so a slowdown in this factor is the key reason for the decline."

Underlining that "private corporate sector-led broad-based investment revival will have to wait", Crisil said, the immediate reason behind this is, being a "pre-election year, uncertainty can dampen/delay private investment." It added, "Election season is generally marked by uncertainties, both regarding change in regime and policy focus. Large investment commitments, especially by the private corporate sector, therefore, may be unlikely".
Pointing out that, because of slowdown in investment, manufacturing in India has failed to pick up, Crisil said, this has happened because of slowdown in domestic demand – both household consumption spending and investment spending – "in the four years through fiscal 2018 compared with the preceding five-year period."
Then, Crisil said, "Most of the slowdown post fiscal 2015 was seen after demonetisation. The cash crunch following demonetisation reduced private consumption growth. Within private consumption, rural consumption was particularly hit as farm realisations wilted during this period."

Slowdown in manufacturing, said Crisil, has also been caused by a fall in merchandise exports, which constitute about 14.4% of total merchandise export growth. It fell "significantly to 3.7% on-year on average in the four years beginning fiscal 2015 compared with 8.7% in the preceding five-year period. The drop came despite an improvement in world GDP growth and export volume growth in this period."
"In value terms", said Crisil, "The fall in India’s merchandise goods was sharper, with average growth between fiscals 2015 and 2018 at -0.2%, compared with 14% between fiscals 2010 and 2014. Within goods exports, manufacturing-related goods have also seen a slowdown in export growth. However, import growth of manufacturing related goods has increased during the Modi government."
Given this framework, suggested Crisil, the Modi government's target of manufacturing sector occupying 25% share in the economy by 2022, is unlikely to be met. To meet this target, it said, "manufacturing will have to grow at least 17.5% on-year, on average, between fiscals 2019 and 2022", while today the growth rate is less than half as much. "Even to raise the share to 20%, manufacturing will have to grow ast least 11% per year", it added.

Comments

When Pakistanis whispered: ‘end military rule’ — A Moscow memoir

During the recent anti-terror operation inside Pakistan by the Government of India, called Operation Sindoor — a name some feminists consider patently patriarchal, even though it’s officially described as a tribute to the wives of the 26 husbands killed in the terrorist strike — I was reminded of my Moscow stint, which lasted for seven long years, from 1986 to 1993.

A sector under siege? War and real estate: Navigating uncertainty in India's expanding market

I was a little surprised when I received an email alert from a top real estate consultant, Anarock Group , titled "Exploring War’s Effects on Indian Real Estate—When Conflict Meets Concrete," authored by its regional director and head of research, Dr. Prashant Thakur. I had thought that the business would wholeheartedly support what is considered a strong response to the dastardly terrorist attack in Pahalgam, Operation Sindoor.

Tracking a lost link: Soviet-era legacy of Gujarati translator Atul Sawani

The other day, I received a message from a well-known activist, Raju Dipti, who runs an NGO called Jeevan Teerth in Koba village, near Gujarat’s capital, Gandhinagar. He was seeking the contact information of Atul Sawani, a translator of Russian books—mainly political and economic—into Gujarati for Progress Publishers during the Soviet era. He wanted to collect and hand over scanned soft copies, or if possible, hard copies, of Soviet books translated into Gujarati to Arvind Gupta, who currently lives in Pune and is undertaking the herculean task of collecting and making public soft copies of Soviet books that are no longer available in the market, both in English and Indian languages.

A conman, a demolition man: How 'prominent' scribes are defending Pritish Nandy

How to defend Pritish Nandy? That’s the big question some of his so-called fans seem to ponder, especially amidst sharp criticism of his alleged insensitivity during his journalistic career. One such incident involved the theft and publication of the birth certificate of Masaba Gupta, daughter of actor Neena Gupta, in the Illustrated Weekly of India, which Nandy was editing at the time. He reportedly did this to uncover the identity of Masaba’s father.

Ahmedabad's civic chaos: Drainage woes, waterlogging, and the illusion of Olympic dreams

In response to my blog on overflowing gutter lines at several spots in Ahmedabad's Vejalpur, a heavily populated area, a close acquaintance informed me that it's not just the middle-class housing societies that are affected by the nuisance. Preeti Das, who lives in a posh locality in what is fashionably called the SoBo area, tells me, "Things are worse in our society, Applewood."

Environmental concern? Global NGO leads campaign urging banks to cut ties with Odisha steel project

A decade after the withdrawal of the South Korean multinational POSCO from Odisha following large-scale protests, questions remain about whether India-based JSW Steel, which took over the project, can successfully revive the 13.2 million tonnes per annum (MTPA) steel plant and coal-fired power plant. POSCO initiated the project in 2005 but exited in 2017 due to sustained local opposition.

Adani Group a key player in Indo-Israel defence cooperation: Tel Aviv daily

Said to be one of the most influential Israeli dailies, "Haaretz" (literally: News of the Land) has identified the Adani Group—known to be close to Prime Minister Narendra Modi—as one of the key Indian business houses engaged in defence cooperation with Israel. Pointing out that India supplied the Israeli military with Hermes 900 drones, the daily reported that this advanced aerial vehicle came off “the production line in a factory set up in Hyderabad, as part of the cooperation between the Israeli Elbit and India's Adani Group.”

Beyond Indus water treaty suspension: A 'nationalist' push despite harsh climate realities

The suspension of the Indus Water Treaty (IWT) appears to have pushed the middle classes, at least in Prime Minister Narendra Modi's home state, Gujarat, further towards what the powers-that-be would consider—a "positive" direction. As usual, during my morning walk, I tried talking with a neighbour about what impact it would have. Ignoring what is widely considered a "security lapse," this person, who had just returned after buying milk, compared the Modi move with Trump.

Despite Hindutva hold claim, 18% Hindus in US don't want to be identified with Hinduism!

Scanning through news items on the Google News app on my mobile — which is what I do almost every morning — I came across a story published on India.com, which I found somewhat misleading. The headline said, "Muslim population drops significantly in THIS country as over 25% Muslims leave Islam due to…, the country is…"

Search This Blog