Is worst behind us?

  • Editors Speak
  • Jan 01,20
With India facing longer-than-expected phase of economic slowdown, the International Monetary Fund (IMF) has urged the government to take urgent policy actions to address the current downturn.
Is worst behind us?

With India facing longer-than-expected phase of economic slowdown, the International Monetary Fund (IMF) has urged the government to take urgent policy actions to address the current downturn.
 
A combination of factors has led to subdued economic growth in India in the first half of 2019. 
 
While abrupt reduction in non-bank financial companies’ (NBFC) credit expansion and the associated broad-based tightening of credit conditions appear to be the main reasons, weak income growth (significantly affecting private consumption) has accentuated the situation. 
 
IMF has refused to refer the current situation as an economic crisis; however it believes that the recovery will be not as quick as one had thought earlier. 
 
According to the world body, on other parameters, India is still doing well. Reserves have risen to record level, current deficit has narrowed and inflation (although has jumped a little recently) has been under control for the last few years.
 
Goldman Sachs has more positive outlook for the third-largest economy in Asia. Though economic growth in India has slowed down significantly in 2019, it believes India should stage a rebound in 2020 as global conditions are set to improve.
 
An improving global economy and domestic policies such as corporate tax cuts should help to lift economic activity in India. Besides, some economic indicators in the country, such as the manufacturing Purchasing Managers’ Index, have improved. The IHS Markit India Manufacturing PMI rose to 51.2 in November 2019 from a two-year low of 50.6 in the previous month and beating market expectations of 49.8. Growth rates for new orders and production were modest, despite accelerating from October's recent lows.  
 
Understanding the gravity, the Ministry of Micro, Small and Medium Enterprises (MSMEs) made changes in the Interest Subvention Scheme for MSMEs to give fillip to the sector. Earlier, to avail the benefits of the scheme, Udyog Aadhar Number (UAN) and GST number (GSTN) were both mandatory. With the new changes announced, the government has done away with the requirement of UAN for units eligible for GST. Units that are not required to obtain GST may either submit Income Tax Permanent Account Number (PAN) or their loan account must be categorised as a MSME by the concerned eligible institutions.
 
To kick start the economic growth, revival of sectors like automotive, textiles, electrical & electronics, etc will be the key. World class exhibition can be a best bet to usher in industrial activities through deeper and direct engagement between buyers and sellers, and peer networking across the globe to explore investment opportunities in India.
 
This Edition of IPF provides in-depth details of ELECRAMA (for electrical & electronics) and IMTEX Forming (for metal forming) – the two global events that have potential to restart the growth cycle. 
 
IPF Team will look forward to see you at ELECRAMA 2020 (Hall 4, Stall D7A).
 
As another year comes to an end, one can expect 2020 to bring new hopes and opportunities.
 
Do write in with your suggestions at feedback@IPFonline.com

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