External factors continue to be adversely impacting India’s economic progress though the Government has taken adequate steps to steer the economy back on the growth path. Despite the individual performance factors being higher than the rest of the world, the overall growth forecast has gone down as macro economic uncertainties are playing a bigger role in dampening the efforts. On the brighter side, this year, Diwali was a glittering affair as celebrations returned to pre-Covid levels and the festive spirit fuelled significant consumer sentiments.
International Monetary Fund (IMF) – The International Monetary Fund (IMF) recently released its World Economic Outlook (WEO) October 2022 report titled ‘Countering the Cost of Living Crises’. The cost-of-living crisis, tightening financial conditions in most regions, Russia’s invasion of Ukraine, and the lingering COVID-19 pandemic all weigh heavily on the outlook. As per the report, The outlook for India is for growth of 6.8 percent in 2022––a 0.6 percentage point downgrade since the July forecast, reflecting a weaker-than-expected outturn in the second quarter and more subdued external demand––and 6.1 percent in 2023, with no change since July, 2022, as reported by Asia Law Portal here.
World Bank – The World Bank recently released its latest South Asia Economic Focus, Coping with Shocks: Migration and the Road to Resilience report. As per this report, India’s real GDP forecast for 2022-23 dipped by 1% to 6.5% as compared to the World Bank’s Global Economic Prospects June 2022 report, covered by Asia Law Portal here. The report mentioned that economic growth in India will slow down in the fiscal year ending March 2023, as the country is coming off a strong recovery in FY2022 (April 2021-March 2022). The spillovers from the Russia-Ukraine war and global monetary policy tightening will continue to weigh on India’s economic outlook: elevated inflation on the back of higher prices of key commodities and rising borrowing costs will affect domestic demand, particularly private consumption in FY2023/24, while slowing global growth will inhibit growth in demand for India’s exports. Private investment growth is likely to be dampened by heightened uncertainty and higher financing costs. The ongoing simplification of various business regulations will help ease the transition by creating new jobs and facilitating business transactions.
On the brighter side, the report captured that exports and overall economic activity in India have recovered more strongly than the rest of the world, and its ample foreign reserve buffers and cautiously calibrated monetary policy steps have afforded resilience to the country’s external sector. Further, both manufacturing and services activities have been expanding in India since at least January, and at faster speeds than the rest of the world.
UN Body – India’s growth will likely ease to just 5.7% in 2022 from 8.2% in the previous year, as economic activity is “being hampered by higher financing costs and weaker public expenditures”, the United Nations Conference on Trade and Development (Unctad) said in its Trade and Development Report 2022 on Monday. The country’s growth will further drop to 4.7% in 2023. With this, among all the agencies, Unctad has firmed up the most conservative forecast for India (although it’s on a calendar year basis). Various other agencies have projected India’s growth to be in the range of 6.7% to 7.4% in FY23. Unctad said, “Going forward, the government has announced plans to increase capital expenditure, especially in the rail and road sector, but in a weakening global economy, policymakers will be under pressure to reduce fiscal imbalances, and this may lead to falling expenditures elsewhere.” The report acknowledged that various PLI schemes is incentivising corporate investment. However, rising import bills for fossil energy are deepening the trade deficit and eroding the import coverage capacity of foreign exchange reserves.
Data Protection Bill – The revised data protection framework will be tabled during the budget session in the Parliament in February next year, the government said in a statement. The development comes months after the government withdrew the contentious data protection bill, 2021, stating that a new bill will be introduced soon. “The data protection is very critical, and the Data Protection framework is now formulated, and yet to be put up for public comments. Once we receive the comments then it will be tabled during the Budget session in the Parliament, early next year,” says Lt Gen (Dr) Rajesh Pant, national cyber security coordinator and special secretary to the Government of India. “We have now proposed a new National Cyber Security Strategy 2022 with a vision to ensure a safe, secure, trusted, resilient and vibrant cyberspace for India’s prosperity. It rests on three pillars of secure, strengthen and synergize in the existing environment and create an eco-system of safe cyberspace,” he adds. This comes months after Rajeev Chandrashekhar, minister of state for IT while withdrawing the data protection bill in August, said that the bill will be replaced by a comprehensive framework of Global standard laws including digital privacy laws will be introduced soon.
