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15 Nov, 2017

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Today’s Top Economy News

1. Household wealth rises 10% to US$ 5 trillion

2. Index to rank states on on startup ecosystem likely next month

3. Indian companies create 113K jobs in US: Report

4. India to drive energy demand growth: IEA

5. NCAER pegs India’s FY’18 GDP growth at 6.2 per cent


Household wealth rises 10% to US$ 5 trillion

Business Standard:  November 15, 2017

India’s household wealth increased 10 per cent to $5 trillion in the one-year period to mid-2017, says a Credit Suisse report. 


Aggregate global wealth for the period increased by 6.4 per cent to $280 trillion. “Fluctuations in asset prices and exchange rates account for much of the change in household wealth across regions and countries in the short run,” the report said. 

India’s market capitalisation has risen 30 per cent, house prices by around 10 per cent and the rupee has appreciated by four per cent against the dollar during the period under consideration. As a result, India’s wealth grew by $451 billion, the eighth largest wealth gain globally.

Since 2000, wealth in India has grown 9.2 per cent per annum, faster than the global average of six per cent even when taking into account population growth of 2.2 per cent annually, said the brokerage.

Credit Suisse forecasts domestic household wealth to grow by 7.5 per cent annually to reach $7.1 trillion in 2022. Wealth per adult was estimated at $5,980 in mid-2017, an increase of 7.9 per cent, and averaging seven per cent growth over 2000–2017. 

Personal wealth in India is dominated by property and other real assets, which make up 86 per cent of estimated household assets. Personal debts are estimated to be just nine per cent of gross assets. Overall household debt as a proportion of assets in India is lower than in most developed countries. 

“While wealth has been rising in India, growth remains uneven, with 92 per cent of the adult population having wealth below $10,000. Due to the large population, 4.4 million adults or 0.5 per cent have net worth over $100,000,” said Credit Suisse in its Global Wealth report.

“The number of millionaires grew 21.3 per cent to reach 245,000 in mid-2017, owning $988 billion in wealth; among them, UHNWIs (ultra high net worth individuals) grew by 41.5 per cent to 1,820, ranked 14th globally, while the number of billionaires increased by 56 per cent to 42.” The report forecast India’s millionaires to reach 372,000 in 2022, an increase of more than 50 per cent, or 8.7 per cent annually in the next five years.


NCAER pegs India’s FY’18 GDP growth at 6.2 per cent

PTI:  November 15, 2017

New Delhi: Indian economy is projected to grow at 6.2 per cent in 2017-18, a report by economic think- tank NCAER said.

In its mid-year review of the economy, NCAER said it forecasts a growth of 6.2 per cent for 2017-18 for both GVA (gross value added) at basic prices and gross domestic product (GDP) at market prices.

The economic think-tank also said real agriculture GVA is would grow at 3 per cent, real industry GVA at 4.5 per cent, and real services GVA at 7.6 per cent in 2017-18.

“The Wholesale Price Index (WPI) inflation is projected at 6.7 per cent for 2017-18,” it said.

The National Council of Applied Economic Research (NCAER) said the growth rates in exports and imports, in dollar terms, are estimated at 10.7 per cent and 24.4 per cent, respectively in 2017-18, adding, “the current account balance and central fiscal deficit, as percentages of GDP, are projected at -2.5 per cent and 3.4 per cent, respectively for 2017-18.”

The think-tank also pointed out that with the southwest monsoon being close to its normal distribution, and achieving satisfactory spatial and temporal distribution as compared to last year, the current year is expected to be a year of normal growth for the agricultural sector.

“The estimated output of kharif rice is expected to witness an increase of 2.1 per cent to 3.3 per cent due to a combination of good rainfall and its somewhat better distribution in the rice-growing regions,” it said.

However, NCAER added that the output of kharif coarse cereals and pulses is likely to drop due to higher output being achieved last year and somewhat poor distribution of the monsoon rainfall in areas where these crops are cultivated.

It also said the projected output of sugarcane is also likely to be close to last year’s level of output.

The Economic Survey had projected a growth of 6.75 per cent to 7.5 per cent for 2017-18.

Recently, multilateral lending agency World Bank has also said that India’s GDP may slow from 8.6 per cent in 2015 to 7.0 per cent in 2017 because of disruptions by demonetisation and the GST.

The International Monetary Fund has also last month lowered India’s growth projection to 6.7 per cent in 2017, 0.5 percentage points less than its previous two forecasts and slower than China s 6.8 per cent.



India to drive energy demand growth: IEA

Business Standard:  November 15, 2017

New Delhi: The report says a resurgence of oil and gas production in the US, deep declines in the cost of renewables, and growing electrification are changing the face of the global energy system and upending traditional ways of meeting energy demand. Oil demand, it says, is slowing down, but it will not be reversed before 2040, even as electric-car sales rise steeply. 

“Electric vehicles are in the fast lane as a result of government support and declining battery costs, but it is far too early to write the obituary of oil, as growth for trucks, aviation, petrochemicals, shipping and aviation keeps pushing demand higher,” says Fatih Birol, executive director, IEA. 

“The US will become the undisputed leader in oil and gas production for decades, which represents a major upheaval for international market dynamics,” Birol adds.

The boom years for coal were over in the absence of large-scale carbon capture, utilisation and storage. Since 2000, coal-fired power generation capacity has grown by nearly 900 gigawatts (Gw), but net additions from today to 2040 are only 400 Gw and many of these are plants already under construction, the report says. In India, the share of coal in the power mix will drop from three-quarters in 2016 to less than half in 2040.

Over the next two decades, the global energy system would be reshaped by four major forces: the US, as it becomes the global oil and gas leader; rapid deployment of renewables; growing share of electricity in the energy mix; and China’s new economic strategy, taking it on a cleaner growth path. 

According to the IEA, China overtakes the US as the largest oil consumer around 2030, and its net imports reach 13 million barrels per day in 2040. But stringent fuel-efficiency measures for cars and trucks, and a shift that sees one-in-four cars being electric by 2040, mean that China is no longer the main driving force behind global oil use — demand growth is larger in India post-2025.

Over the next 25 years, the world’s growing energy needs are met first by renewables and natural gas, as fast-declining costs turn solar power into the cheapest source of new electricity generation. Global energy demand is 30 per cent higher by 2040 — but still half as much as it would have been without efficiency improvements. 

The developing countries in Asia account for two-thirds of global energy growth, with the rest coming mainly from the Middle East, Africa, and Latin America. The largest contribution to demand growth — almost 30 per cent —would come from India, whose share of global energy would rise to 11 per cent by 2040, it says. Solar photovoltaic would lead capacity additions, pushed by deployment in China and India, it adds.

In the new policies scenario, global energy needs to rise more slowly than in the past, but will still expand by 

30 per cent till 2040. This is the equivalent of adding another China and India to today’s global demand.



Indian companies create 113K jobs in US: Report

PTI:  November 15, 2017

Washington: Indian companies have created more than 113,000 jobs in the US and invested nearly USD 18 billion in the country, according to an annual report which gives state-by-state breakdown of the tangible investments made and jobs created by 100 Indian firms doing business in America and Puerto Rico.

The report titled ‘Indian Roots, American Soil’, which was released by Confederation of Indian Industry (CII) yesterday, states that Indian companies have also contributed USD 147 million towards corporate social responsibility and USD 588 million as research and development expenditures in the US.

Together, 100 Indian companies employ 113,423 people across 50 states, the District of Columbia and Puerto Rico, the report said, adding that the total value of tangible investments made by these companies exceeds USD 17.9 billion.

The top five states in which Indian companies have generated maximum employment are New Jersey (8,572 jobs), Texas (7,271 jobs), California (6,749 jobs), New York (5,135 jobs) and Georgia (4,554 jobs).

According to the report, the top five states in which Indian companies have contributed the highest foreign direct investment are New York (USD 1.57 billion), New Jersey (USD 1.56 billion), Massachusetts (USD 931 million), California (USD 542 million) and Wyoming (USD 435 million).

The average amount of investment received from Indian companies per state/territory is USD 187 million, the report said, noting that 85 per cent of the companies plan to make more investments in the US.

As many as 87 per cent of the companies plan to hire more employees locally in the next five years.

Indian industry and professionals are making significant contributions to the US economy, said Indian Ambassador to the US Navtej Sarna.

“The presence and reach of Indian companies continue to grow each year as they invest billions of dollars and create jobs across the United States,” he said.

Chandrajit Banerjee, CII director general said the story of Indian investment in the US is one that showcases how intertwined the two countries are that contribute to each other’s success.

Indian firms are among the fastest growing investors in the US, contributing to growth and job creation in the US economy, said Senator Chris Van Hollen.

As the world’s oldest democracy and the world’s largest democracy, a strong US-India partnership is vital for the 21st century, said Congressman Ami Bera.

The friendship between the United States and India has continued to grow under President Trump’s administration, said Congressman Pete Sessions.

Indian businesses have brought hundreds of millions of dollars and thousands of jobs to Texas and, at the same time, the reforms led by Prime Minister Modi have opened doors for American companies to expand their operations in India, he said.

“I am glad to see, as CII’s event today proves, bonds between our nations both commercial and strategic – continue to grow stronger,” Sessions said.

“According to CII’s survey, Indian companies in Virginia have invested over USD 37 million in my state, and I can only hope that they will continue to invest in Virginia and that our engagement with these companies will continue to grow,” said Congressman David Brat.

In addition to spurring economic activity, particularly in North Carolina, this type of investment serves to strengthen the bond between our two countries, said Congressman George Holding.

The report shows that Indian companies have invested over USD 195 million in the state of Illinois, and created over 3,800 jobs, said Congressman Raja Krishnamoorthi.

“I hope that Indian companies continue to put down roots and invest in our state, as our economy and community are strengthened by their engagement with us,” he said.

“As the largest India-headquartered multinational in North America, the Tata Group has had operations and investments in the US market for many decades,” said James Shapiro, resident director North America of Tata Sons Ltd.

Ravi Kumar, president and Deputy COO, Infosys said his company began working with its first US client over 35 years ago and, have worked to boost American innovation ever since.

“Earlier this year, we announced plans to hire 10,000 American workers over the next two years, partnering with local colleges and universities to shrink the IT skills gap in the US, and are focused on upskilling and reskilling workers seeking to grow their careers in computer science,” he said.

The work of Infosys Foundation USA has benefited over 4,700,000 students, 13,000 teachers and 21,000 schools across all 50 states in America since 2015, he asserted.



Index to rank states on on startup ecosystem likely next month

PTI:  November 15, 2017

New Delhi: The Department of Industrial Policy and Promotion (DIPP) is expecting to roll out by next month an index to rank states on the basis of measures being taken by them to promote startups, a top official said.

DIPP Secretary Ramesh Abhishek today said such an exercise would help states learn best practices.

To give a boost to startups, the department has initiated an exercise to rank states and union territories on the basis of measures being taken by them to promote budding entrepreneurs.

The DIPP has consulted the states for the ranking framework. “We are hoping that from December, we will be able to roll out an index for ranking of states on their support to startup ecosystem,” he said in response to queries on Facebook Live.

Several states like Odisha, Karnataka and Rajasthan are taking several measures to promote startup ecosystem. As many as 16 have also formulated their startup policies.

The government has launched the Startup India Action Plan to promote budding entrepreneurs in the country. The plan is aimed at giving incentives such as tax holiday and inspector raj-free regime and capital gains tax exemption.

Abhishek said that in the last about one year, the DIPP has helped over 14,000 startups in various ways.

“4,700 startups have been recognised by the department giving them host of services and incentives,” he said adding “we have been able to provide Rs 1587 crore of funds”.

The department, he said, is also documenting good practices of all the states.

On the proposal to set up a credit guarantee scheme for startups, he said the DIPP is awaiting cabinet’s nod for this.

For the scheme, a corpus contribution of Rs 2,000 crore is proposed keeping in mind the challenges faced by startups in accessing funds. There is a plan to support about 7,500 startups with this.

On the issue of access to funds, the secretary said he held a meeting with angle investors and discussed the problems they are facing to fund budding entrepreneurs.

“We are trying to see how angle investors can also take advantage of section 56 of Income Tax Act…Hopefully, there will be a change in regulations that will protect that investments. It is not the government intention to tax risky investments,” he said.

Going forward, the DIPP is working in the direction where access to funds gets easy for startups, he added.


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