The Indian economy did not have any recovery on the economic front as per data released by 2 global financial institutions. The Personal Data Protection Bill made the much-awaited comeback to the forefront when it was introduced in Parliament. India’s regional trade and growth potential remains largely untapped as it does not join the RCEP and suffers from concerns on cross-border e-commerce sales.
Personal Data Protection Bill.
The Union Cabinet recently cleared the Personal Data Protection Bill 2019 and it was introduced in the Lok Sabha by the Minister of Electronics and Information Technology, Mr. Ravi Shankar Prasad. The Bill seeks to provide for protection of personal data of individuals and establishes a Data Protection Authority for the same.
The Bill was being considered and changes were suggested by the concerned Union Ministry, as reported by Asia Law Portal in August 2019. The Lok Sabha then referred the Bill to a joint select committee. The panel will have 20 members from the Lok Sabha and 10 from the Rajya Sabha. The panel is expected to give its report before the end of the Budget Session which usually begins in the last week of January.
Moody’s Lowers its India GDP Forecast.
Moody’s Investors Service recently said that India’s weak household consumption will curb economic growth and weigh on the credit quality of Indian issuers in a range of sectors. Moody’s has lowered its GDP growth projection for India for the fiscal year ending March 2020 to 4.9 per cent from 5.8 per cent.
The major factors responsible for weakening economic growth were rural financial stress, low job creation and liquidity constraints, said Moody’s in a report. “What was once an investment-led slowdown has now broadened into weakening consumption, driven by financial stress among rural households on the back of stagnating agricultural wage growth and constrained productivity, as well as weak job creation due to rigid land and labour laws,”
said Deborah Tan, a Moody’s assistant vice president and analyst. Moody’s expects that government measures to stimulate domestic demand – including income support for farmers and low-income households, monetary policy easing and a broad corporate tax cut – will be limited in offsetting this slowdown.
The Executive Board of the International Monetary Fund (IMF) recently concluded the Article IV consultation with India. The report noted that India has been among the fastest-growing economies in the world over the past few years, lifting millions out of poverty. However, growth slowed to 5.0 percent in the April-June 2019 quarter (y/y), a six-year low.
The deceleration of consumption and investment was exacerbated by weaknesses in the non-bank financial sector and corporate and environmental regulatory uncertainty. The macroeconomic outlook is more subdued and uncertain than in recent years. Growth is projected at 6.1 percent in FY2019/20.
Investment and private consumption are expected to firm in the second half of the fiscal year. IMF’s chief economist Gita Gopinath had, in the week before the release of the report, said that India’s growth forecast is likely to revised down “significantly” in the upcoming January review.
“India is now in the midst of a significant economic slowdown…. Addressing the current downturn and returning India to a high growth path requires urgent policy actions,” Ranil Salgado of the IMF Asia and Pacific Department told reporters.
India decides not to join RCEP.
Union Commerce and Industry Minister Piyush Goyal recently told Parliament that India decided to stay out of the Regional Comprehensive Economic Partnership (RCEP) trade agreement as its concerns and outstanding issues were not being fully addressed in the pact.
Explaining that RCEP did not “adequately” address India’s concerns over issues like non-tariff barriers to trade and opaqueness in subsidy regime in some countries, he told Rajya Sabha that these forced the country to back out from the trade deal. India, he said, continued to focus on its core demand of level playing field, fair trade practices, transparency and market access during the trade negotiations.
RCEP was negotiated among sixteen Asia-Pacific countries including 10 countries of ASEAN (Brunei, Cambodia, Indonesia, Lao, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam) and their six FTA partners Australia, China, India, Japan, South Korea and New Zealand. Prime Minister Narendra Modi took the call of not joining the RCEP agreement last month. India’s negotiation on RCEP was reported by Asia Law Portal in October 2016.
Regional Barriers Affecting E-commerce growth in South Asia.
E-commerce can become a driver of growth across South Asia and boost trade between the region’s countries, but its potential remains largely untapped, says a new World Bank report. The report ‘Unleashing E-Commerce for South Asian Integration’ notes that although e-commerce has grown significantly in South Asia, online sales accounted for a mere 1.6 and 0.7 percent of total retail sales in India and Bangladesh, compared to 15 percent in China and around 14 percent globally.
Increasing the use of e-commerce by consumers and firms in South Asia could potentially help increase competition and firm productivity, and encourage diversification of production and exports, the report adds.
“E-commerce can boost a range of economic indicators across South Asia, from entrepreneurship and job growth to higher GDP rates and overall productivity,” said Sanjay Kathuria, World Bank Lead Economist and co-author of the report. A survey of over 2,200 firms in South Asia showed that the top concerns on cross-border e-commerce sales included e-commerce related logistics, e-commerce and digital regulations, and connectivity and information technology infrastructure.
These barriers are significantly higher when trading with other South Asian countries. The main international e-partners of firms in South Asia are China, the United Kingdom, and the United States, and not other South Asian countries. This regional business potential was reported by Asia Law Portal in its September 2018 article titled ‘India’s High Trade Potential in South Asia’.
As 2019 draws to a close and we eagerly await to usher in another exciting new year, the author wishes Asia Law Portal and its readers a very happy and memorable 2020!