The economic growth forecasts for India seem to be stabilizing as per recent reports of global financial institutions. The proposed personal data protection law saw progress this month with hopes of the same being introduced in Parliament in August. The Government’s focus on ease of doing business was reflected in the extension of validity of industrial licenses.
Asian Development Bank – The Asian Development Bank (ADB) recently released its Asian Development Outlook (ADO) July 2023 report. As per this report, the Indian economy, supported by upbeat domestic demand, is set to meet earlier projections. In fiscal year 2023 (FY2023, ending 31 March 2024), consumption demand in India is expected to recover with improvement in both rural and urban demand as reflected in such indicators as consumer confidence, urban unemployment, and motorbike sales. Investment growth will remain robust, underpinned by strong bank credit growth and demand for housing, and supported by fewer interest rate hikes by the central bank. However, the global economic slowdown has suppressed merchandise trade, which will be a drag on growth. On the supply side, growth will be buoyed by manufacturing as input prices cool. The service PMI has remained above 60, indicating resilient growth in the sector. Assuming normal rainfall and other weather factors, and no further geopolitical shocks, India is expected to grow by 6.4% in FY2023 and 6.7% in FY2024, as projected in ADO April 2023 (as reported by Asia Law Portal here).
International Monetary Fund – The International Monetary Fund (IMF) recently released its World Economic Outlook (WEO) July 2023 update. The report titled ‘Near-Term Resilience, Persistent Challenges’ mentioned that growth in India is projected at 6.1 percent in 2023, a 0.2 percentage point upward revision compared with the April WEO projection (as reported by Asia Law Portal), reflecting momentum from stronger-than-expected growth in the fourth quarter of 2022 as a result of stronger domestic investment. The growth projection for 2024 remains unchanged at 6.3%. In the Press Briefing at the launch of the WEO July Update, Mr. Daniel Leigh, Division Chief, Research Department, mentioned that ‘India is a country with growth — very strong and continuing to be strong. It’s about — 1/6 of total global growth is accounted for by India right this year, and inflation is back inside the target range in our estimates.’ The WEO report mentioned that global growth is projected to fall from an estimated 3.5 percent in 2022 to 3.0 percent in both 2023 and 2024. While the forecast for 2023 is modestly higher than predicted in the WEO April Update, it remains weak by historical standards. The rise in central bank policy rates to fight inflation continues to weigh on economic activity.
Personal Data Protection Bill – The Union Cabinet approved the Digital Personal Data Protection Bill, 2022 earlier in the month. At that time it was reported that the proposed legislation is likely to be tabled during the ongoing monsoon session of Parliament which commenced on July 20, 2023. In a recent development reported by the media, the Parliament Standing Committee on Communications and Information Technology adopted the report on the Digital Personal Data Protection Bill.
Foreign Portfolio Investors – Foreign portfolio investors (FPIs) continue with their buying spree in July with a net infusion of Rs 45,365 crore in Indian equity markets on stable macroeconomic fundamentals and steady earnings growth. This figure includes investment through bulk deals and primary markets, apart from investment through stock exchanges. Also, this figure marks the third straight month, when the net flows have surpassed Rs 40,000 crore mark. It was Rs 47,148 crore in June and Rs 43,838 crore in May. During the last three months, from May to July, FPIs invested Rs 1.36 lakh crore in Indian equity markets. Before March, overseas investors pulled out Rs 34,626 crore collectively in January and February.
Industrial Licensing – The Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce and Industry, Government of India recently issued Press Note No.1 (2023 Series) for streamlining the procedure for grant of industrial licenses. This Press Note mentioned that in supersession of all earlier Press Notes, the period of validity of industrial license is being extended from three years to fifteen years for all kind of licenses henceforth to be granted under Industries (Development and Regulation) Act, 1951 in line with the validity of licenses being issued for defence items as a measure for ease of doing business. Further, these guidelines are applicable for extension of validity of industrial license in cases where the existing license holder has not commenced production of the items within 15 years of issue of license subject to the terms and conditions mentioned in the Press Note.