Business and Economic Environment

(ECO201)

Term Assignment

NLP ARTICLES & ANALYSIS

On

FIVE TRILLION US DOLLAR ECONOMY TARGET OF INDIA

Under the Supervision of

Dr. Ritika gugnani

Submitted by

Srishti Joshi

PGFC1934

JAIPURIA INSTITUTE OF MANAGEMENT

A-32 A, Sector 62, Institutional Area, Noida- 201309 (U.P.)
 NEWS ARTICLE 1

SOURCE- livemint

India slips to 7th position in global GDP ranking

 Updated: 02 Aug 2019, 05:47 PM ISTShreya Nandi

 India is the seventh-largest economy (GDP of $2.72 trillion) with the UK ($2.82 trillion) and
France ($2.77 trillion) ahead in the pecking order
 The top economies in the list include the US ($20.5 trillion), followed by China ($13.6 trillion),
Japan ($4.9 trillion) and Germany ($3.9 trillion)

Topics
India GDPGlobal GDP
New Delhi: India has slipped one notch in the World Bank’s Gross Domestic
Product (GDP) rankings in 2018, and is now the seventh-largest economy with the
United Kingdom and France ahead of India, data from the international lending
institution said.
In 2018, India’s GDP was $2.72 trillion, while that of the United Kingdom was
$2.82 trillion and France was $2.77 trillion. The world’s top four economies in the
World Bank list in 2018 were the United States, with a GDP of $20.5 trillion,
followed by China ($13.6 trillion), Japan ($4.9 trillion) and Germany ($3.9
trillion).The data comes at a time when India has set the target of becoming a $5
trillion economy in GDP terms by 2024, and a $3 trillion economy in the current
financial year.
In 2017, India had overtaken France as the sixth largest economy. According to
news reports, India had also overtaken the United Kingdom for a short while.
 In 2017, India’s GDP was $2.65 trillion, the UK’s was $2.64 trillion and France
was at $2.59 trillion. But the UK and France seem to have overtaken India again in
2018.
Earlier this year, India lost the fastest growing economy tag, falling behind China.
The country grew at its slowest pace in five years at 5.8% during January-March
quarter in financial year 2018-19. Growth during 2018-19 declined to 6.8% from
7.2% a year ago. Currency fluctuations and a slowdown in GDP growth were the
key reasons behind the fall in global GDP rankings, said D.K. Srivastava, chief
policy adviser at E&Y. “The main reason is that the (GDP) growth slowed down
last year and there are clear signs of continuity in the slowdown. India’s exports
have also fallen and remained negative. Domestic demand is subdued. A
significant fiscal stimulus is needed right now to revive growth."

NEWS ARTICLE 2
SOURCE- THE ECONOMIC TIMES

India's aim of being a $5 trillion economy 'challenging' but 'realisable':

Nirmala Sitharaman
PTI|
Oct 16, 2019, 11.13 PM
HIGHLIGHTS
 The finance minister emphasised that a $5 trillion economy will make India a global
economic powerhouse moving it from the 7th to 3rd position in terms of current dollar exchange
rate
 Sitharaman stressed that fixed investment rate needs to increase from 29 per cent to 36
per cent in the course of the next five years, with some depreciation of the rupee

NEW YORK: Prime Minister Narendra Modi's vision of making India a $5 trillion
economy and a global economic powerhouse by 2024-25 is "challenging" but
"realisable", finance minister Nirmala Sitharaman has said, underlining that more
reforms are on the anvil before the close of the fiscal year.

Delivering a lecture on 'Indian Economy : Challenges and Prospects' at prestigious

Columbia University's School of International and Public Affairs on Tuesday,
Sitharaman indicated that Indian economy has been on growth trajectory even
since the Modi government came to power in 2014.

She emphasised that a $5 trillion economy will make India a global economic
powerhouse moving it from the 7th to 3rd position in terms of current dollar
exchange rate.

"To become a $5 trillion economy, India's GDP needs to go faster than what we
grew at an average of 7.5 per cent in the last five years. That's a matter of fact
statement. Inflation needs to be at 4 per cent to ensure commensurate increase in
purchasing power,” she said, adding that inflation in the last five years was 4.5 per
cent and has been on a declining path to reach 3.4 per cent in 2018-19.

She stressed that fixed investment rate needs to increase from 29 per cent to 36 per
cent in the course of the next five years, with some depreciation of the rupee.

"However our ambition to become economically strong has been driven more by
our desire to become a less poorer nation,” she said.

She said India has just entered the second half of fiscal year 2019-20 and already
implemented a series of reforms, with more on the anvil before the close of the
year.

In September this year, government slashed the income tax rate for companies by
almost 10 percentage points to 25.17 per cent and offered a lower rate to 17.01 per
cent for new manufacturing firms to boost economic growth rate.

Citing figures by the International Monetary Fund, she said it has projected a
growth for India at 6.1 per cent for the year 2019-20 with the world growth revised
downwards at 3.2 per cent.

"We continue to remain one of the fastest growing economies in the world,” she
said. She stressed that in an emerging economy, poised for higher growth, “some
increase in income inequality is inevitable. India is no exception to this trend.”

She underlined that India's growth story is not hostage to performance in some
quarters alone.
 NEWS ARTICLE 3
SOURCE- THE ECONOMIC TIMES

Can India become a $5 trillion economy?

To reach the $5 trillion mark by 2024, the economy would have to grow at
over 12% a year.
By Mihir Sharma

A few days ago, when talking to an the assembled chief ministers of India’s states,
Prime Minister Narendra Modi declared that he wanted India to be a “$5 trillion
economy” by 2024, when he once again faces reelection. This would, he said, be
“challenging, but achievable.”

Modi could never be accused of lacking ambition, but the fact is that getting
India’s GDP to $5 trillion in five years will be far more challenging than
achievable. India is, currently, a $2.8 trillion economy; to reach the $5 trillion mark
by 2024, the economy would require nominal growth in dollar terms of over 12% a
year. To put this in context, in the last quarter for which data is available, India
grew at slower than 6% in real terms — and, if you believe the Modi government’s
own former top economist, that data is flawed and India may well be growing a
few percentage points less than that.
India could and should aspire to double-digit growth. Without sustained growth at
that level it has little hope of employing the roughly one million young people who
join its workforce every month. And unless it takes advantage of its current,
favorable demographics it is never likely to emerge as an upper-middle-income
economy with a prosperous and thriving middle class.

But the prerequisites for the kind of growth that transformed the fortunes of the
Asian tigers and then China have not yet been put into place. Supportive markets
for land and labor simply do not exist. Energy supply and infrastructure are far
better than they were, but still not up to the standards required to build a world-
class manufacturing sector. And although successive governments have paid lip
service to the need to educate young Indians and provide them with the vocational
skills they need to succeed in a modern economy, the outcomes of various attempts
to do so have been frankly disappointing.
If India does very little — a “business-as-usual” scenario — it will, indeed,
continue to grow. Growth, if the skeptics are right, will be moderate by Indian
standards. If it grows closer to 6% a year in dollar terms, then the Indian economy
will only hit $5 trillion in output a decade from now, far longer than Modi wants.
It will also be a very different economy — and country — from others of that size.
The India of 2029, if it is still growing at 6%, will be vastly unequal not just in
terms of personal income and wealth, but between regions. Some parts of India —
the southern peninsula, the national capital of Delhi, and the coastal regions of
Gujarat and Maharashtra — may by then have achieved relatively well-off,
middle-income status.
But the vast hinterland of India — which is also, incidentally, where population
growth is highest — will remain poor.

NEWS ARTICLE 4
SOURCE- THE ECONOMIC TIMES

View: India needs $1 trillion exports to become a $5 trillion economy

India needs $1 trillion exports for a $5 trillion economy. But the pathway is
bumpy and patchy.
ET CONTRIBUTORS|

Updated: Nov 01, 2019, 06.06 AM IST

By Ram Singh

High export growth rate is crucial for India’s goal of becoming a $5 trillion
economy by 2025. To achieve this objective, the economy will have to grow at an
average rate of 8% during the next four years. India’s exports will have to grow at
an even higher rate.

The current slowdown has made the objective more challenging, with India’s
exports having shrunk 6.57% in September. Moreover, GoI has to take a call on
whether to join the Regional Comprehensive Economic Partnership (RCEP), the
free trade grouping of 10 Asean members and their six allies. The group continues
to pressure India on finalising the deal by November 4, even though several
industry and trade organisations have increased the pitch of their opposition to the
agreement.
Free Up Trade Agreements
The report of the high-level advisory group (HLAG) set up by the ministry of
commerce presents a roadmap to double India’s exports to $1 trillion by 2025 from
about $500 billion at present. To achieve this, it suggests a slew of measures, some
of which have been much talked about in the past. These include reducing the cost
of capital by further lowering repo rates.

However, the main focus is on raising competitiveness of Indian exports.

In principle, by promoting exports, free trade agreements (FTAs) can help the
country move up the value chain. That, in turn, can provide India an edge vis-à-vis
non-member countries. However, the fact remains that we have not gained from
existing FTAs. The main culprits are the non-tariff barriers and administrative
hurdles faced by Indian exporters such as difficulty in quality and specification
certificates, and time-consuming custom clearances, just to name a couple. They
have prevented Indian exporters from exploiting markets of trading partners.
Unsurprisingly, the partner countries have gained more.
Moreover, due to corruption and lax quality control, several cheap but poor quality
goods, especially from China, have flooded the market. These are bad for India’s
health, environment and balance of trade.

Export Hard, Bargain Harder

Reportedly, many companies are considering moving out of China, since the start
of the US-China trade war. However, not many are keen to relocate to India. To
overcome this hurdle, the HLAG report proposes a centralised authority for issuing
licences, and to empower it to grant incentives for companies meeting pre-defined
criteria.

While the Insolvency and Bankruptcy Code (IBC) has helped fix part of the mess
from the past, contract enforcement in India still leaves much to be desired.
Judicial delays, coupled with the lack of appreciation of the economic
consequences of delayed decisions, call for a clear and consistent legal and
regulatory framework to guide judicial decision-making. Moreover, GoI would
need to negotiate hard on non-tariff barriers that restrict Indian companies from
accessing markets of trading partners, such as the requirement of local experience
by China.
 NEWS ARTICLE 5
SOURCE-Business Standard

Service sector can help govt achieve target of $5 trn economy: Goyal
He emphasised that these two sectors need to work together, as without services, manufacturing cannot
succeed and without manufacturing, services cannot grow

Press Trust of India  |  Bengaluru Last Updated at November 26, 2019 23:37 IST

Union minister Piyush Goyal on Tuesday said India’s service sector can help
achieve the Central governments target of $ 5 trillion GDP.

The service sector has the potential to be the largest job creators in the country and
over the next five years it has the potential to contribute $ 3 trillion out of the $5
trillion GDP target set by the government, Goyal, the minister of Railways,
Commerce and Industry, said.

At the inauguration of the fifth Global Exhibition on Services-2019 at the Palace

Grounds here, he said it is the manufacturing and services industry that will be the
growth engines of the Indian economy.

He emphasised that these two sectors need to work together, as without services,
manufacturing cannot succeed and without manufacturing, services cannot grow.

According to Goyal, India needs to move beyond Business Process Outsourcing

and work towards adopting new age technologies such as artificial intelligence,
block chain, machine learning and engage with the rest of the world on equal
terms.
The three-day event has been organised by the Ministry of Commerce and
Industries, Karnataka government, Services Export Promotion Council and the
Confederation of Indian Industry.

NEWS ARTICLE 6

SOURCE- Business Standard

$5 trillion economy: MSME sector has crucial role to play, says

Assam CM
Sonowal also appealed to the entrepreneurs to take benefits of the National SC/ST hub to add
capacity building.
Press Trust of India  |  Guwahati Last Updated at November 22, 2019 20:41 IST

Assam Chief Minister Sarbananada Sonowal on Friday said the Micro, Small and
Medium Enterprises (MSME) sector has a crucial role to play in making India a
five trillion dollar economy by 2024.

The sector is a prime driver of growth with their contribution to output and
employment in all economies, the chief minister said while inaugurating a two-day
North East MSME Summit for SC and ST entrepreneurs here.

"The MSME sector is a critical component of India's growth story, making

significant contributions to GDP, employment and exports. Its total contribution to
the GDP is around 38 per cent," Sonowal said.

With around 95 per cent of all industrial units forming a part of this sector, they
constitute a cornerstone for economic prosperity in our society, he added.
He also thanked the Ministry of MSME and CII for organising the summit which
would help the youth of North East empower themselves and create avenues for
themselves and others.sR

Sonowal also appealed to the entrepreneurs to take benefits of the National SC/ST
hub to add capacity building.
On the occasion, Union Minister of State for MSMEs Pratap Chandra Sarangi said,
"Entrepreneurs associated with food processing, handloom, tea, bamboo, fishery,
organic farming hold immense potential as value addition to the products from
these sectors can create good avenues of industrialisation."

After agriculture, MSME is the second most important sector where maximum
number of people are involved, he said.

NEWS ARTICLE 7

SOURCE- Business Today

Top 5 payment challenges faced by SMEs, the growth engines of

Indian economy
The key problem that has always plagued the SMEs has been the money flow; both on receipt
and payout as well as the access to formal credit
Deena Jacob        Last Updated: November 21, 2019  | 13:23 IST

SMEs are not always equipped with the resources to put together ideal
solutions for their varied payments needs
SMEs are the backbone of the Indian economy, and key contributors to the $5
trillion Indian economy target. Unprecedented action-oriented focus on the issues
faced by the sector in the recent past stands testimony to the seriousness with
which we view this segment to drive growth.
That being said, the key problem that has always plagued the segment has been the
money flow; both on receipt and payout as well as the access to formal credit. In
this regard, it is relevant to discuss the payment challenges faced by the sector
today, which is a critical factor for their thriving or even survival in some regions.
Multi-channel payment facilities: In the era of high internet penetration and the
millennial consumers' preference towards online payments, it is imperative to have
omnichannel payment tools available for every SME. Gone are the days when
cash, cheque and bank transfers were the only mode of payments.
Today, UPI and QR channels have become a preferred way of day to day
transactions at most retail businesses and the online modes, be it cards, net-banking
or wallets are equally popular in digital India amongst the users. Nevertheless, the
small businesses find it a challenge dealing with multiple service providers,
interfaces and expensive solutions, beyond their ability to understand and afford,
adding to the complexity of them doing business, both for collections and for
payouts in the business.
Reconciliation challenges: All payments, through whichever mode the collection is
made, or payment is done, hits the business account like rivers joining an ocean.
Cost of transactions: Cost of transaction for both offline as well as online still
remains high for small businesses which does not generate high volumes for the
service providers including the banks. The businesses end up paying a per-
transaction cost, except for limited digital channels, which has a major impact on
their profitability.
This pushes them into a vicious circle of lack of capital due to lack of credit
history. With a humongous gap of ~$240 billion in the SME segment, access to
formal channels of credit in India poses both payments and business challenges for
SMEs.
Lack of tailormade and integrated solutions by the service providers: SMEs are not
always equipped with the resources to put together ideal solutions for their varied
payments needs. Hence, the reliance on ready-made solutions or ease of integration
is extremely critical for their functioning and success.
Despite that fact, this segment is the most underserved today with respect to the
existence of integrated service providers catering to their consolidated payment
needs. SMEs have to approach and use on an average 3 service providers to cover
minimum required payment solutions.
To conclude, the remedy to overcoming payment challenges faced by SMEs is to
bring under a single cost-effective intuitive interface.
NEWS ARTICLE 8
 SOURCE- Business Standard

GDP growth seen slipping under 5% in Sep quarter; may be in 4.2-4.7%

range
A look at six indicators shows all of them have collapsed from positive growth in April to
contraction in Sept
Abhishek Waghmare  |  New Delhi Last Updated at November 28, 2019 00:47 IST
4

Finance minister Nirmala Sitharaman told the Rajya Sabha on Wednesday the

country was not in recession yet, and won’t ever be.

The actual data could be more serious as the lowest-ever quarterly growth clocked
since 2012-13 (when the new GDP series began) was 4.3 per cent, in the March
quarter of FY13, when India was battling high inflation and political turmoil, in
addition to pressures from the global economy.

Representative data for the July-September quarter proves their point to a great
extent. A look at six indicators — imports, exports, rail freight earnings, electricity
and diesel consumption, and overall industrial production — shows that all of them
have collapsed from positive growth in April to contraction in September.

These indicators are a collage of manufacturing and services sector indicators in

the country, encompassing a substantial part of the economy.

While the growth in Q1 was 5 per cent with positive leading indicators, Q2 has
been characterised by all indicators in red. Port traffic too has stagnated, growing
0.4 per cent in the April–October period, entirely brought down by a severe
contraction in coal imports.

Growth in consumption of fast-moving consumer goods, such as shampoo sachets

and coconut oil, has weakened to 2 per cent in Q2FY20, with the stress
concentrated in north Indian states.

Shubhada Rao, chief economist at YES Bank, told Business Standard that except
services propelled by the government’s budgetary funding, all the sectors of the
economy are a drag on growth in the September quarter.
But she also said that the Indian economy is going through a transition phase, and
some near-term impact was expected.

Meanwhile, Sitharaman reiterated in the Rajya Sabha that the efforts to recapitalise

public sector banks have paid off, and it is evident in the good liquidity available to
finance needy micro, small and medium enterprises.

However, bank credit growth, which had reached 12.2 per cent at the end of FY19,
has now fallen back to 8.2 per cent at the end of September.

While observers maintain that the slowdown is mainly cyclical in nature, they
admit that there are structural reasons too.

NEWS ARTICLE 9

SOURCE- THE ECONOMIC TIMES

States to be key drivers of growth for making India USD 5 trillion economy: Niti CEO

The govt has announced and initiated several steps to make India a $5 tn
economy over the next few years.
PTI|

Updated: Sep 08, 2019, 06.14 AM IST

NEW DELHI: States will have to become key agents of growth to help achieve
India's target of becoming a USD 5 trillion economy, Niti Aayog Chief Executive
Officer Amitabh Kant said on Saturday.

Speaking at an event organised here by industry chamber PHDCCI, Kant said

states have to work together and learn from each other to radically transform India.

Kant said one of the things which PM Narendra Modi has been focusing on in
recent times is the target of becoming a USD 5 trillion economy by 2024 and
subsequently a USD 10 trillion economy by 2030.

"...therefore, our challenge really is that it will not be possible for India to achieve
this till states do not aim to double and triple their GDPs. And this would require
major structural reforms and structural reforms over a vast range of sectors," he
said.
He underlined sectors like agriculture and labour where structural reforms are
required.

The current size of the Indian economy is estimated at USD 2.7 trillion. The
central government has announced and initiated several steps to make India a USD
5 trillion economy over the next few years.

PHD Chamber of Commerce and Industry (PHDCCI) organised the 'States' Policy
Conclave 2019' conceptualised with the mission of empowering states to
strengthen India's federal structure of governance and contribute in making India a
USD 5 trillion economy.

NEWS ARTICLE 10

SOURCE- Business Today

Collaboration With ASEAN To Play An Important Role In India's

$5 Trillion Economy
Capital Market Last Updated at November 11, 2019 17:04 IST

The Union Minister of State (I/C) Development of North Eastern Region

(DoNER), MoS PMO, Personnel, Public Grievances & Pensions, Atomic Energy
and Space, Jitendra Singh said that India will soon achieve the target of 5 trillion
USD economy target with the optimistic environment that has been created under
the leadership of Prime Minister Shri Narendra Modi. He said that collaboration
with ASEAN countries will play an important role in meeting the target of 5
trillion economy in India and the contribution of North eastern states can also not
be underestimated in it. He was addressing at the Inaugural Session of 2-day India-
ASEAN Business Summit.

Jitendra Singh said that for ease of doing business, there are three essentials, which
are:i). Connectivity, ii). Communication and iii). Ease of regulations.Giving the
example of North East, the Minister said that connectivity in NE has been the main
focus of the current Government, with Sikkim getting its first airport last year. He
said that that Itanagar will also soon get an airport. He also mentioned about train
connectivity in Arunachal Pradesh and Meghalaya. He further said that we are in
the process of flagging off first train to Bangladesh from Agartala. The Minister
also mentioned the Inland waterways developed by the government down the
Brahamputra river, which is one of the largest rivers of the world. While quoting
the importance of waterways in the economy, the Minister said that the cost of
cargo transportation by waterways is one fourth of the cost by train.

NEWS ARTICLE 11

SOURCE- FINANCIAL EXPRESS

Fiscal architecture for a $5 trillion economy

By: Akhilesh Tilotia | 

Published: November 29, 2019 1:28:37 AM

The evolution of India’s tax-to-GDP ratio will require significant political and social
consensus—a strategic modelling and planning of tax POLICIES is required

As India works its way towards a $5 trillion economy, or double its current size, in
the next few years, it is worth considering what the fiscal landscape could look
like. As Esteban Ortiz-Ospina and Max Roser note in ‘Our World in Data’, “total
tax revenues account for more than 80% of total government revenue in about half
of the countries in the world”. Also, “developed countries collect a much larger
share of their national output in taxes than do developing countries; and they tend
to rely more on income taxation to do so. Developing countries, in contrast, rely
more heavily on trade taxes, as well as taxes on consumption.”
As India’s economy doubles in size and tax-to-GDP ratio rises, government tax
revenues could more than double. India has various forums to opine and act on
fiscal policy. India has made—and kept—some long-term promises on reducing
the rate of taxation on corporate income. The Direct Tax Code report has proposed
some changes in the tax structure.
Deep-diving into the drivers of tax revenue
A progressive taxation structure requires that the ratio of direct taxation in total tax
collection is more than half.
Direct taxes:  Rs 51 lakh crore of income was offered for taxation in AY19. The
GDP in FY18 was Rs 170 lakh crore. The income from salaries offered to tax
amount to rS 20 lakh crore, business income Rs 24 lakh crore, other sources Rs 6
lakh crore, and house property and capital gains make up the rest. This implies that
only 30% of GDP (income) was offered to tax. The total direct taxes collected
amounted to Rs 11 lakh crore, implying an average tax-incidence of 22% on the
incomes offered to tax.
Factors which could impact direct taxes as a percentage of GDP are: (a)
proportions of taxpayers-to-citizens rising significantly beyond 5% as the average
incomes in India increase, (b) the incomes offered to tax rising beyond 30% of
GDP as the rising middle-class citizens breach threshold incomes, and
consequently (c) governments being in a position to alter the marginal and average
rates of taxation.
Indirect taxes: GST now forms the largest component of indirect taxes, even as
customs and excise continue to remain important in international trade and for
states, respectively. The total GST collection was Rs 13 lakh crore in FY19.
Consumption, at 58% of GDP, amounted to Rs 100 lakh crore—this implies that
the average rate of GST on overall consumption is ~13%.
Various factors that could impact indirect taxes as a percentage of GDP
are: (a) consumption as a percentage of GDP could rise back to the 60%+ levels,
(b) more goods and services could be offered to taxation under GST and/or (c) the
rates of taxation could materially change.
Expenditure: The committed revenue expenditure of the central government is Rs
18 lakh crore in FY20. To make it easy to understand and remember, just think of
this as 3-4-5-6. The central government is committed to spending Rs 3 lakh crore
on subsidies (food subsidy being the largest, followed by fertiliser), Rs 4 lakh crore
is spent on social development (agriculture, rural development, health and
education), Rs 5 lakh crore goes in pay and pensions (and the latter is increasingly
a larger share of the total pie), and Rs 6 lakh crore is the interest paid on the loans
outstanding against the government.

NEWS ARTICLE 12

SOURCE- THE TIMES OF INDIA

Attracting foreign capital is crucial to Modi’s $5 trillion economy goal. Here

are four steps that will help

The vision is a $5 trillion economy by 2024, twice its current size and profoundly
recast to leverage its rare scale and opportunity. I share the prime minister’s faith
in the potential of foreign capital. For many years this has been the key source of
investment and a motor of India’s transformation.

For global investors, India’s improved ranking in the World Bank index is a
meaningful step towards economic reform.  Recently in New York with business
leaders – I was there – and earlier with the Indian diaspora in Houston, Modi
reminded investors and admirers that India must make itself a safe, secure and
predictable destination for foreign capital.

There are four broad themes that arguably will aid India’s climb on any ranking of
growth and self-improvement – and ensure it stays near the top.

First, India’s economy is now wrapped around the global marketplace and so its
adherence to a rule-based regime, predictable regulations and due process must
remain unshakeable. The rule of law, consistency and independent oversight – will
bring in investment. India’s Insolvency and Bankruptcy Code is an example of the
creation of a rule-based marketplace, in this case for distressed assets, with
independent oversight. No surprise, then, that despite a few challenges, foreign
investors still see it as an attractive way to access India’s marketplace.
Second, a $5 trillion economy implies a larger economic base of an order of
magnitude unknown in India’s history. This structural expansion is, realistically,
only achievable with the support of world-class advisory services firms able to
accompany and sustain the maturing economy. In any global and mature economy,
businesses work with these advisors for trade facilitation and the due diligence that
contributes to decisions on FDI. Among them are firms with global reach that also
create large direct and indirect employment opportunities in India. They are
investing in infrastructure, technology, innovation and skilling of people. They are
also one of the largest exporters of services from India that bring in foreign
exchange.

This is an ecosystem that enhances, not diminishes, the India growth story in
overseas markets, with a ripple effect on confidence and reassurance among a
larger pool of investors. Anything less will reduce the community of established
and trusted trade facilitators for investors, ultimately inhibiting the passage to a $5
trillion ambition.

Third, with the preceding two factors embedded, India can in time step forward as
an alternative for global manufacturers reassessing operations in the wake of trade
uncertainties elsewhere. ‘Make in India’ is a dynamic idea and can be even more
compelling if, as is increasingly the case, India builds better highways, improves
turnaround at ports, consolidates labour laws into a single code that actually
encourages employment – these are the factors that hasten the movement of
finished goods from factories in the hinterland to ports, airports and export
markets. China and Vietnam have set a high benchmark for India.

Finally, there is the universal belief that the next decade and beyond belongs to
Asia as the balance of economic power tilts in its favour. At its heart is the rise of a
new middle class with the elevation of millions of more people out of poverty and
into a higher consuming class in India.  Global companies’ capital allocations will
reflect this economic rebalancing.

NEWS ARTICLE 13

SOURCE- THE ECONOMIC TIMES

ETMGS: Go local to realise $5 trillion economy, say D-Street
experts
The day we realise ‘Be Indian, Buy Indian', most problems will be solved, says Nilesh Shah.
ETMarkets.com|
Updated: Nov 22, 2019, 09.26 PM IST

Mumbai: Going local may be the key that could remove the hurdles and chart the
path for India to reach its target of $5 trillion economy, say industry stalwarts.

Narendra Modi government soon after assuming office for the second term had set
a target of taking the economy to $5 trillion over the next five years.

While speaking at ETMarkets Global Summit in Mumbai on Friday, Nilesh Shah,

Managing Director of Kotak Mahindra Asset Management said that India had the
third-largest reserves of coal, but yet it imported the fuel.
He also pointed out the irony of Indians spending far more money to travel
overseas for holidays instead of opting for Indian destinations.

“The day Indians realise ‘Be Indian, Buy Indian’, most problems will be solved,”
said Shah.

Vaibhav Sanghavi, Co-CEO of Avendus Capital said the Indian economy was in a
transit period as far as conducting business was concerned.

“You need to give money to public for formalisation of the economy. You cannot
just work on the supply side, you also need to work on the demand side,” he
asserted.

Radhika Rao, Senior Vice President and Economist at DBS Bank pointed out that
much of the consumption argument was focused in tier-I and tier –II cities, and that
needed to change. Expressing his concerns, Salil Pitale, JMD & Co-CEO of Axis
Capital said: “There was an imbalance of labour and GDP contribution.
Agriculture, which employs most, has low contribution to the GDP.”

“We need services and industry to go deeper into Bharat. We need to bring better
quality of life to villages,” argued Pitale. Panelists at the event were in agreement
that deadlines can be a big motivator

Nilesh Shah, citing an example said that CommonWealth Games in New Delhi --
which was held in 2010 -- led to a massive infrastructure development in the
capital city. “If there is a time-bound delivery, we as a nation will figure out a
way,” said Shah.
“If $5 trillion is Mr Modi’s target, it is difficult. But, if it is yours and mine, then
will get there by 2025,” the industry expert said.

Emphasising that there was a need to understand that there is a huge amount of
skill development to elevate everyone, Vaibhav Sanghavi said that this can bridge
the gap between rural and urban India.

NEWS ARTICLE 14

SOURCE- FINANCIAL EXPRESS

US thumbs up for $5 trillion economy goal: India will meet target much faster
than expected
By: FE | 
Published: November 1, 2019 7:19:01 PM
US Treasury Secretary Steven Mnuchin on Friday said that India will meet its $5 trillion
economy goal faster than expected.

In the global trade war, Steven Mnuchin said that the US is continuing to make
progress on the trade deal with China.

US Treasury Secretary Steven Mnuchin on Friday said that India will meet its $5
trillion economy goal faster than expected.  Adding he said that the US is also
focussing on the structural changes made by the Indian government. India has
announced a slew of economic reforms in recent weeks to boost the slowing
economy. Speaking at the event, Finance Minister Nirmala Sitharman said that a
wide range of discussions over a host of issues happened in the meeting.
Other members of the US delegation include undersecretary for international
affairs Brent McIntosh and assistant secretary for terrorist financing and financial
crimes Marshall Billingslea.
Nirmala Sitharaman in October this year said that the negotiations between India
and the United States on a trade deal are going on in “full speed” and expressed
hope that it will conclude soon. The ongoing trade deal negotiations briefly came
up for discussion during a pull-aside between Sitharaman and US Treasury
Secretary Steven Mnuchin at the IMF headquarters.
NEWS ARTICLE 15

SOURCE- THE MINT

Reserve Bank of India is also poised to cut rates further. Photo: Mint

PM Narendra Modi brings India’s economy into focus amid privatisation

push
 India has jumped 14 places to 63rd in the World Bank’s annual rankings
for ease of doing business
 PM Modi is seeking to raise a record ₹1.05 trillion from asset sales
 India’s Prime Minister Narendra Modi is putting the flagging economy back
on center stage after announcing the biggest privatisation drive in more than
 a decade and making renewed attempts to ring fence the crisis-ridden
shadow banking sector.
Steep Target
 Modi is seeking to raise a record 1.05 trillion rupees from asset sales. He has
so far has resisted big-ticket privatisation and restricted sales of its holdings
to other state companies, including the 369.2 billion-rupee ($5.14 billion)
sale of Hindustan Petroleum Corp. to the biggest explorer Oil & Natural Gas
Corp. last year. Now his administration is selling the government’s entire
stake in Bharat Petroleum Corp. and Shipping Corp. of India Ltd.
 “The government’s steep $15 billion — 5% of its total revenues —
disinvestment target in FY’ 20 may in our view need to be higher given the
recent cut in the corporate tax rate and policymakers’ focus on macro
stability," said Gautam Chhaochharia, head of India research at UBS
Securities India Pvt Ltd, Mumbai.
 The administration’s focus on getting the economy back on track comes as it
plans to offer 324 companies including Tesla Inc.and GlaxoSmithKline Plc
incentives to set up factories in a bid to capitalize from the trade war
between China and the US.
 The Reserve Bank of India is also poised to cut rates further after having
delivered 135 basis points of rate reductions so far this year. On Wednesday,
it moved to seized control of a second non-bank lender, Dewan Housing
Finance Corp., stepping up efforts to contain the economic fallout from the
nation’s shadow banking crisis. The year-long crisis in the shadow banking
sector has snowballed to become a drag on consumption and pulled down
overall growth.

ANALYSIS
The Trillion dollar club is an unofficial classification of the world's major
economies with a gross domestic product (nominal GDP) of more than
US$1 trillion per year.  It currently includes 16 countries. The U.S. has retained its
position of being the world's largest economy since 1871. The size of the U.S.
economy was at $20.49 trillion in 2018 in nominal terms and is expected to reach
$21.35 trillion in 2019 followed by China ($13.6 trillion), Japan ($4.9 trillion) and
Germany ($3.9 trillion).
With the country’s unemployment rate rising to a 45-year high at 6.1% in 2017/18
fiscal year, slowdown in the agriculture growth rate, and declining GDP growth
rate, India has envisioned the great Indian dream of a 5 trillion US dollar economy
by 2024.
Reports of slowdown in the global economy cast a shadow on the government’s
target. Whereas the Annual Report 2018-19 of the Department for Promotion of
Industry and Internal Trade (DPIIT), states that India has received the highest-ever
FDI inflow of $64.37 billion during the fiscal ended March 2019 and FDI worth
$286 billion in the past five years. This presents India as a bright spot for
investment and vindicates the governments target of USD 5 trillion economy by
2024.
Economists and subject matter experts termed the target as ambitious but
achievable with reforms and a higher growth rate.India should aspire to double-
digit growth to achieve it’s target for a 5 trillion US dollar economy. Without
sustained growth at that level it has little hope of employing the roughly one
million young people who join its workforce every month.

Investments and the GDP growth of 8% per annum would be the key driver in
reaching the $5 trillion economy by 2024. India took 55 years to reach the first
trillion economy mark and then grew rapidly and reached $ 2.7 trillion in the last
five years (2014-2019).  With an anticipated GDP growth rate of 8% India can
achieve the five trillion dollar target even if we take into account the inflation rate
of 4%. The logic behind this is the government’s announcement of spending INR
100 lakh crore on infrastructure over the next five years. Infrastructure spending
produces a multiplier effect on economic growth and enhances GDP growth by
1%. For better results, the government needs to spend INR 20 lakh crore on
infrastructure each year over the next five years.

On agriculture slowdown, the prospects are positive and hopeful that the agro
sector would revive and increase its contribution in GDP. The government is
working on supply chain and developing infrastructure facilities; with a check on
wastage and development of irrigation facilities, farmers’ income will increase in
the coming years.

The Commerce Ministry has formulated India’s first ever Agricultural Export
Policy with a focused plan to boost India’s agricultural exports to USD 60 billion
by 2022 thereby assisting the Agriculture Ministry in achieving its target of USD
100 billion and to integrate Indian farmers and the high quality agricultural
products with global value chains and to double India’s share in world agriculture.

The vision of the Agriculture Export Policy is to harness the export potential of
Indian agriculture through suitable policy instruments and to make India a global
power in agriculture and raise farmers’ income.

Services started being support systems of the industrialised economies of the

world. Since productivity per unit labour time is highest in the services sector, the
challenge is to enhance labour-value addition from services, reduce employment-
dependency on agriculture and boost manufacturing.
This will again boost services through multiplier effect. This long-run strategy will
make services the main employment and growth generator of the Indian economy,
translating to higher growth.

 The government has to encourage exports and open more sectors for foreign
investment. High export growth rate is crucial for India’s goal of becoming a $5
trillion economy by 2025. To achieve this objective, the economy will have to
grow at an average rate of 8% during the next four years. The agriculture and allied
sectors’ growth rates have to be doubled over the next five years. The government
needs to attract foreign investment in the infrastructure sector and encourage
investments.
The model of equi-focus on both large as well as small enterprises should be the
recipe of development in the coming years. SMEs is to bring under a single cost-
effective intuitive interface, all kind of payment solutions aiding them to achieve
ease of money flow, both domestic and cross border. This is the fundamental need
to conduct business profitably and effectively. Micro, small & medium enterprises
(MSME) play a substantial role in generating employment and contribute to GDP.

The Indian government should concentrate on UN sustainable development goals

(SDG) as these are major enablers of business competitiveness.
The SDGs create enabling business conditions by reducing long term risks,
bringing transparency in sustainability risks and impacts, creating new business
opportunities and bringing business competitiveness. At a policy level, SDGs
address the seeming irreconcilable trinity of equity, efficiency, and sustainability.

India has made a leap of 23 ranks in the World Bank’s Ease of Doing Business
Ranking this year to be ranked at 77. Upward move of 53 ranks in the last two
years is the highest improvement in 2 years by any large country since 2011. India
now ranks first in Ease of Doing Business Report among South Asian countries
compared to 6th in 2014.
Improvement in Ease of Doing Business ranking have been possible because of the
transformative measures taken by the Government of India which includes
legislative and regulatory reforms which is further going to boost its growth.

Unless it takes advantage of its current, favorable demographics it is never likely to

emerge as an upper-middle-income economy with a prosperous and thriving
middle class.