There has been cause for cheer as India scripted history by achieving administering 100 crore (one billion) Covid-19 vaccination doses in just about nine months of its rollout. The daily increase in new cases has remained on the lower all throughout the festive season. India is now towards the end of the festive season with its largest festival, Diwali round the corner. We see stable economic growth projections for India by global development organisations. The overall improvement has possibly prompted lifting of restrictions such as resumption of international commercial flights, reopening of schools for lower classes etc. India is now towards the end of the festive season and its largest festival, Diwali is round the corner. With most restrictions being lifted and attempts to return to pre-pandemic activities increasing, the critical consideration now is to see if we should go all out to celebrate the festival of lights or show restraint and continue to be cautious with Covid appropriate behaviour like social distancing and proper donning of masks.

Steady Forecast by IMF – The International Monetary Fund (IMF) has recently released its World Economic Outlook October 2021 report titled ‘Recovery During a Pandemic Health Concerns, Supply Disruptions, and Price Pressures’. The report provided that the global economy is projected to grow 5.9 percent in 2021 and 4.9 percent in 2022, 0.1 percentage point lower for 2021 than in the July forecast. The downward revision for 2021 reflects a downgrade for advanced economies—in part due to supply disruptions—and for low-income developing countries, largely due to worsening pandemic dynamics. This is partially offset by stronger near-term prospects among some commodity-exporting emerging market and developing economies. The report retained India’s growth forecasts mentioned in its July 2021 WEO, as reported by Asia Law Portal. The current GDP growth projections are 9.5% for the year 2021 and 8.5% for the year 2022, which has remained stable since the July 2021 forecast. This is a favourable factor considering that the Covid 19 pandemic is still there.

World Bank – the World Bank recently released its South Asia Economic Focus, Fall 2021 report titled ‘Shifting Gears : Digitization and Services-Led Development’. The report mentioned that regional growth is set to increase by 7.1 percent in 2021 and 2022, as the economic recovery in South Asia continues. Despite devastating COVID-19 waves in the second quarter of 2021, countries were able to minimize economic impacts, thanks to more targeted and localized containment measures and a rebound in global demand. India’s economy, South Asia’s largest, is expected to grow by 8.3 percent in the fiscal year 2021-22, supported by increase in public investment to boost domestic demand and incentives schemes to boost manufacturing. It is expected to grow by 7.5% in the fiscal year 2022-23.

A week later, World Bank president David Malpass, while interacting with reporters, stated “Indians were hard hit by the waves of COVID and that’s unfortunate. They responded with the huge production of vaccines and there’s been progress on the vaccination effort. But we have to recognise the hit that COVID caused on the Indian economy and especially on the informal sector of the Indian economy which is large,”.

Fitch Ratings Lowers ForecastFitch Ratings has cut India’s economic growth forecast to 8.7% for the current fiscal but raised GDP growth projection for FY23 to 10%, saying the second Covid wave delayed rather than derail the economic recovery. It had in June cut the growth forecast from 12.8%. In its APAC Sovereign Credit Overview, Fitch Ratings said India’s ‘BBB-/Negative’ sovereign rating “balances a still-strong medium-term growth outlook and external resilience from solid foreign- reserve buffers, against high public debt, a weak financial sector and some lagging structural factors”. High-frequency indicators point to a strong rebound in the second quarter of the current fiscal (April 2021-March 2022), as business activity has again returned to pre-pandemic levels. Fitch, however, saw a wider fiscal deficit. “We forecast a 7.2% of GDP (excluding disinvestment) Central government deficit in FY22,” it said. The government on June 28 announced a fiscal package worth about 2.7% of GDP. Much of this consists of loan guarantees, with only 0.6% of GDP in higher on Budget spending.

Review of FDI Policy – The Government of India recently issued Press Note 4 (2021 Series) providing for review of Foreign Direct Investment (FDI) Policy on telecom sector. As per this Press Note, the existing para containing provisions for FDI in the telecom sector was replaced and new para provides that foreign investment up to 100% under is allowed under the automatic route. This is increased from the FDI cap of 49% under the automatic route, beyond which approval from the government was required. Although the FDI cap is now increased to 100%, Press Note 4 specifies that licensing, security and any other terms and conditions as specified by the Department of Telecommunications shall be observed.

Ease of Doing Business Reforms Booklet – The Department for Promotion of Industry and Internal Trade (DPIIT) is the institutional anchor for the Ease of Doing Business program. DPIIT acted as a fulcrum and brought in a cohesive approach by breaking the silos and working in networks with all the government agencies. DPIIT has now issued a Ease of Doing Business Reforms Booklet to showcase the steps taken and improvements achieved over the years. The booklet provides a snapshot of significant developments in all areas of the Doing Business coverage.

Posted by Sourish Mohan Mitra

Sourish Mohan Mitra is an India-qualified lawyer from Symbiosis Law School, Pune and currently working as an in-house counsel with a global research firm in Delhi, India; views expressed are personal; he can be reached at sourish24x7@gmail.com; Twitter: @sourish247

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