Business Today 26-Jan-20

Economy 2020 will bring uncertainties and surprises galore. Exports uptick will depend on whether – if at all – the US-China tariff war stabilises and whether the world economy will head towards recession as many economists predict; domestic private corporate investment into new capacities will depend on consumption and demand uptick in the economy; and demand, in turn, will depend not just on whether new jobs are created by fresh private investment but also on regaining consumer confidence. In short, we’re in a vicious cycle of a deep, deep slowdown. Our fate will depend on how we deal with the crises coming our way, how we minimise the collateral damage to businesses, jobs, banks, even lives. So, how should India tackle a wobbly economy? We approached two experts – one…

THE FUND FLOOD PE/VC investments have risen more than four-fold since 2008 FINANCE LEADS Financial services got the most funds, followed by life sciences, in November 2019 INFRA GETS A HELPING HAND THE SIZE GAME The number of large deals – above $100 million – saw a sharp spike 12 Large deals in November 2019, aggregating $3.8 billion, compared to five worth $950 million in November 2018 SLOW EXIT PE/VC exits declined sharply in value, likely due to subdued market and low valuations in most market segments 15 Exits worth $1.4 billion in Nov 2019, twice the value in Nov 2018 46% Share of technology sector in all exits FOOD PRICES DRIVE UP CPI INFLATION Retail price inflation, measured by the Consumer Price Index (CPI), shot up to 5.5% in November 2019,…

Budget 2020 will be presented in the shadow of one of the longest spells of slowdown — six quarters so far — in more than two decades. That poses a host of challenges for Finance Minister Nirmala Sitharaman as slowing tax collections have left practically no leeway for fiscal stimulus out of the government’s balance sheet. On top of that, exports have stagnated, private investment has ground to a halt and consumption is still reeling under the effect of demonetisation, GST, lack of jobs and public sentiment. Just public expenditure seems to be driving the economy for now. Business Today hosted a Pre-Budget Panel Discussion to debate how to steady a wobbly economy. The panelists were Gopal Krishna Agarwal, National Spokesperson of BJP on Economic Affairs; Sumant Sinha, Chairman and…

What is your diagnosis of the problems the Indian economy is facing? My overall assessment of the Indian economy is on the same lines as (former Chief Economic Adviser) Arvind Subramanian’s paper jointly with (IMF’s former India head) Josh Felman, which was published in December 2019. The economy faces serious problems, both structural as well as cyclical. The structural problems are deeper and more serious. This government believes that the problems are entirely cyclical and therefore they come up with what they consider solutions to the cyclical nature of the problems. As a result, the crisis has worsened. Let me just tick off a few heads where the crisis has deepened — non-food credit, exports, NPAs, stalled projects, fiscal deficit, revenue collection, and expenditure constraints. In each of these heads,…

How bad is the economic slowdown? Is the lack of structural reforms the root cause? This year we are going to have GDP growth of about 5 per cent. I expect next year to be about 6 per cent. If one is talking about structural reforms, there are all kinds of people, particularly from my fraternity, who keep coming up with an agenda for structural reforms. If you look at those items, they have been on the reform agenda since 1991 or 1993. So, no one is denying the importance of those structural reforms. They have been pending, and there are reasons for that. Most of the pending reforms are actually state subjects, and there are legislative issues with some others. There was a period when India grew 9 per…

• Punjab National Bank, India’s second-largest public sector bank, has gross NPAs of 22.71 per cent in small Mudra loans in September-end 2019• State Bank of India’s agriculture NPAs have risen from 5 per cent three years ago to 14 per cent in the first half of 2019/20• The telecom sector, which has seen two bankruptcies in as many years, is staring at another big liquidation after the Supreme Court ruling on payment of ₹92,641 crore AGR dues in January• The RBI has warned about the possibility of rising defaults in unsecured retail loans as growth slows For the banking sector, just looking to come out of the NPA crisis – gross NPAs fell after seven years, from 11.2 per cent in 2017/18 to 9.1 per cent in 2018/19 –…