India continued to maintain momentum on economic recovery as projected forecast for growth was reduced by some global agencies. This is linked to the Covid 19 related situation prevailing in India currently. There has been a marginal rise in daily reported cases since the Omicron variant was identified here. The Government has issued advisory in this regard and has rescheduled reopening of international commercial flights to January 31, 2021. Pursuant to last month’s updated relating to the personal data protection law, the report of the joint parliamentary committee has now been submitted.
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Marginally Reduced Forecast by ADB – The Asian Development Bank (ADB) recently released its Asian Development Outlook (ADO) Supplement, December 2021. As per the report, in India, a strong 20.1% growth rebound in Q1 of fiscal year 2021 (FY2021, ending 31 March 2022) was followed in Q2 by growth moderation to 8.4%, marginally below expectations as a chip shortage hindered the production and sale of automobiles and many electronic goods. GDP growth nevertheless remained strong, driven by growth in private consumption at 8.6% and in investment at 17.2%. On the supply side, growth was broad based driven by strong expansion in services, particularly public administration and defense, and in mining. Agriculture remained resilient at 4.5% growth, while manufacturing growth moderated to 5.5%. Supply chain factors such as chip shortages and rising semiconductor prices will continue to suppress economic growth, as reflected in double-digit contraction in motor vehicle sales in October and in e-way bills in November 2021. Notwithstanding this slowdown toward the end of Q2, the Indian economy is expected to rebound strongly in FY2021 as a whole, albeit marginally slower than expected in the previous ADO September Supplement (as reported by Asia Law Portal) and grow by 9.7%. New Covid-19 cases remain at about 11,000 a day as of the end of November, but the government aimed to have vaccinated the entire population with at least one dose by the first week of December. In 2022, growth is still expected to moderate to 7.5% as domestic demand normalizes.
Fitch Cuts Growth Forecast – Fitch Ratings recently cut India’s economic growth forecast to 8.4 per cent for the current fiscal year ending March 31, 2022, saying the rebound after the second wave of Covid infections has been subdued than expected. Fitch, which had previously forecast a GDP growth of 8.7 per cent in 2021-22 (April 2021 to March 2022), however, raised the economic growth projection for the next financial year (FY23) to 10.3 per cent from previously forecast 10 per cent. The economy had contracted by 7.3 per cent in the 2020-21 fiscal as restrictions imposed to curb spread of coronavirus pummelled business activity. “India’s economy staged a strong rebound in 3Q21 (July-September 2021) from the Delta variant-induced sharp contraction,” Fitch said in its Global Economic Outlook (GEO). The GDP rose a sharp 11.4 per cent when compared to the preceding April-June quarter when it had slumped 12.4 per cent. “However, the bounce was more subdued than we expected in our September GEO (as reported by Asia Law Portal). The rebound in the services sector was weaker than hoped for,” it said. Nevertheless, business surveys and mobility data point to activity growing robustly in 4Q21 (October-December 2021). Growth in the manufacturing sector is constrained by ongoing supply shortages, but the supply bottlenecks are expected to ease in the coming months.
Personal Data Protection Bill – The Joint Parliamentary Committee on Personal Data Protection Bill, 2019, which had adopted its draft report last month (as reported by Asia Law Portal), presented its report to the Parliament recently. The 542 page report contains two parts. Part-I consist of General descriptions and 12 recommendations on Data Protection and Privacy in connection with provisions made in the Bill. Part-II relates to clause by clause examination of the Bill and contains 81 recommendations making modifications and more than 150 Drafting corrections and improvements in various clauses of the Bill. The report also records the dissent and comments of some of the committee members together with the discussion in each of the sittings of the committee and motions passed. The report also contains markings/amendments on the original bill.
Foreign companies in India – The government recently informed the Parliament that that 10,756 foreign companies have registered with liaison/ branch office/project office in India and with their subsidiaries from 2014 till November 2021. Commerce and industry minister Piyush Goyal said in a written reply that in the same time period, 2,783 foreign companies registered with liaison/branch office/project office and their subsidiaries closed their operations in India for various reasons such as completion of business objectives/ projects, restructuring by parent company, amalgamation, and other management decisions. There are 12,458 active subsidiaries of foreign companies as on November 30.