1. India’s External debt grew by 8.2% year on year ending March 2022
Tags: National Economy/Finance
Releasing the 28th edition of the Status Report on India’s External Debt 2021-22 the Department of Economic Affairs (DEA), Ministry of Finance, said that India’s external debt is being managed prudently and is sustainable. There is no fear of any Sri Lanka type situation.
According to the report, from a cross-country perspective, India’s external debt is modest, occupying 23th position globally.
Total External Debt of the country
The total external debt of the country at the end of March 2022 was USD 620.7 billion as compared to USD 573.7 billion in the same time period.
It grew by 8.2% as compared to the same time period last year.
Long and short term debt share in total external debt
The long-term debt was estimated at USD 499.1 billion. Long term debt means loans which have a duration of one years or more.
The share of the long term debt in the total external debt was 80.4 per cent. Higher the ratio of the long term debt in the total debt is a good sign for a country.
The short-term debt was at USD 121.7 billion. The share of the short term debt in the total external debt was 19.6 percent of the total debt. The short-term trade credit was predominantly in the form of trade credit (96 per cent) financing imports.
Short term debt means it has a maturity period of less than one year.
Favourable debt indicators
External Debt as a ratio to GDP fell to 19.9 per cent as at end-March 2022 from 21.2 percent a year ago.
Foreign currency reserves as a ratio to external debt stood slightly lower at 97.8 per cent as at end-March 2022 than 100.6 per cent a year ago. It means that India has enough foreign exchange to pay off its entire debt.
The share of the sovereign borrowing (money borrowed by the Government of India) was USD 130.7 billion. It increased by 17.1 percent over the same period last year mainly due to additional allocation of Special Drawing Rights (SDR) by the International Monetary Fund (IMF) during 2021-22.
The non-sovereign debt (borrowed by companies), on the other hand, grew 6.1 per cent to USD 490.0 billion over the level as of end-March 2021.
Commercial borrowings, NRI deposits and short-term trade credit are the three biggest constituents of the non-sovereign debt, accounting for as much as 95.2 per cent.
While NRI deposits declined by 2 per cent to USD 139.0 billion, commercial borrowings at USD 209.71 billion and short-term trade credit at USD 117.4 billion rose by 5.7 per cent and 20.5 per cent, respectively,
While 53.2 percent of the total external debt is denominated in US dollar, Indian rupee denominated debt, estimated at 31.2 per cent, was the second largest.
The debt service ratio fell to 5.2 per cent during 2021-22 from 8.2 per cent during 2020-21 due to buoyancy in current receipts and a decline in debt service payments.
2. India's Longest Railway Tunnel of 14.57 Km to be built in Uttarakhand
Tags: Economy/Finance State News
The Indian Railways is going to construct the longest railway tunnel in India. It will be 14 kilometres long between Devprayag and Janasu in Uttarakhand, and will be part of the ambitious 125km Rishikesh-Karnaprayag broad gauge line.
It will be the longest railway tunnel surpassing the under construction Tunnel T-49 which is 12.758 km long and is being built on the Udhampur Srinagar Baramulla Rail Link Project in Jammu and Kashmir.
A 125.20 km railway line connecting Rishikesh and Karnaprayag will stretch across five districts of the state: Dehradun, Tehri Garhwal, Pauri Garhwal, Rudraprayag and Chamoli.
Government of India owned Rail Vikas Nigam Ltd (RVNL) is executing this 125 km long railway line
The total cost of the project is Rs 23,000 crore and it is expected to be completed by December 2024.
Longest Railway Tunnel :
At present, the 11.2 km long Pir Panjal Tunnel on the Banihal-Qazigund section in Jammu and Kashmir is the longest functioning railway tunnel in India.
3. India set to become third largest economy in the world by 2029: SBI
Tags: Economy/Finance
State Bank of India (SBI) in its latest research report Ecowrap published on 3 September 2022 has projected the Indian economy to become the third largest economy by surpassing Japan in 2029.
Quoting IMF data, a recent Bloomberg report has said that the Indian economy overtook the United Kingdom economy at the end of December 2021 to become the 5th largest economy in the world.
At present the world’s largest economy is the United States followed by China, Japan and Germany and India.
Main points of the report :
The Indian economy grew by 13.5% in the first quarter of the financial year 2022-23. India is still the fastest growing economy amongst the major economies in the world .
The SBI research paper assumes that the Indian economy will grow at an average growth rate of 6 per cent to 6.5 percent in the foreseeable future .
If it happens then the Indian Gross Domestic Product( GDP) share in the world GDP which is now at 3.5 per cent, is likely to cross 4 per cent in 2027, the current share of Germany in global GDP.
With this growth rate the Indian economy will become the third largest economy in the world by 2029. In 2014 India was ranked the 10th largest economy in the world .
It will surpass Germany in 2027 and Japan in 2029.
Note :
SBI has assumed Nominal GDP while making this forecast.
India’s Transition since 2014 :
Rank in the world | Year |
10 | 2014 |
7 | 2015 |
6 | 2019 |
5 | 2022 |
4 | 2027 (provisional) |
3 | 2029 (provisional) |
Source IMF, SBI research
4. India becomes the second largest market for wearable watches in the world
Tags: Economy/Finance
India has surpassed China to become the second biggest smartwatch market in the world. According to the United Kingdom based market research company, Counterpoint, at the end of June 2022 quarter, the Indian market grew by 347% as compared to the same period last year. During the June 2022 quarter the global market grew at just 13%.
Main Points of the report
North America remains the largest smartwatch market in the world with a shipment of 26% of the global market.
India was the second largest market in the world with a shipment of 22% of the global market.
China remained the third largest market with a shipment of 21% of the global market.
Smartwatch Brand in the world
The world's largest smartwatch company was Apple accounting for 29.3% of the overall shipments, followed by Samsung (9.2%), Huawei (6.8%).Fire-Boltt (6.3%) and Noise (5.9%).
Fire-Bolt and Noise are Indian companies and they have been included in the top five companies of the world for the first time.
5. IndusInd Bank with ADB sets up partial guarantee to finance MSME in supply chains
Tags: Economy/Finance
IndusInd Bank has signed an agreement with the Asian Development Bank (ADB) for a partial guarantee programme with an initial outlay of $70 million (Rs 560 crore), for supply chain financing.
Under this agreement ADB will provide partial credit guarantees to lenders.
It means that if the customer defaults on loan repayment which is covered under the partial guarantee then ADB will pay the guaranteed portion of the principal and interest to the bank.
The IndusInd bank hopes to increase its business in the Micro Small and Medium Enterprise (MSME) financing through this partnership.
IndusInd Bank
It is a scheduled commercial private sector bank .The bank was set up by the Hindujas group in 1994.
Headquarters: Mumbai
Managing Director and Chief Executive Officer: Suman Kathpalaia
Tagline of the Bank: We Care Dil Se : We Make You Feel Richer
Asian Development Bank
- It was set up in 1966.
- Its headquarters is at Mandaluyong City, Manila, Philippines
- Total member countries : 68
- President of ADB : Masatsugu Asakawa of Japan
6. RBI gives lenders time till end-November to comply with new digital loans guidelines
Tags: Economy/Finance
The Reserve Bank of India (RBI), has given lenders until the end of November to put in place systems and processes to ensure existing digital loans are in compliance with the regulator's rules issued on 10 August 2022. This direction was issued by the RBI on 2 September 2022.However, for new and existing customers availing fresh loans, these norms will be applicable immediately.
The Reserve Bank of India on 10 August issued detailed guidelines that will increase scrutiny and supervision over digital lending apps and lenders who engage with them on 10 August 2022. This was done by RBI after receiving many reports of malpractices by the digital lending apps and lenders who engage with them.
Digital lenders are those entities which provide loans online. The entire process takes place online and there is no physical interface between the lender and the borrower.
Working Group on Digital lending
RBI had set up a working group on ‘digital lending including lending through online platforms and mobile apps’ (WGDL) on January 13, 2021, with Jayant Kumar Dash, Executive Director, RBI as the Chairman.
The working group was set up by the RBI after there were several complaints of malpractices by the online lending apps.
Main points of the RBI Guidelines
Classification of online lenders
RBI has classified the online lenders into three categories;
- entities regulated by the RBI and permitted to carry out lending business;
- entities authorized to carry out lending as per other statutory/regulatory provisions but not regulated by RBI; and
- Entities lending outside the purview of any statutory/ regulatory provisions.
Guidelines applicable on which category of entities
RBI has said that its guidelines will be applicable on entities (Banks, NBFC) that are regulated by the central bank and the lending service providers (LSPs) engaged by them. Lending service providers are the intermediary between the regulated entities and the borrower. In simpler terms it is an online platform which brings the lender and the borrower online.
Guidelines of RBI
- All loan disbursals and repayments are required to be executed only between the bank accounts of the borrower and the regulated entities. It shall not be routed through any LSP or third party.
- Any fees, charges, etc., payable to LSPs in the credit intermediation process has to be paid directly by the regulated entity and not by the borrower.
- The all-inclusive cost of digital loans in the form of Annual Percentage Rate (APR) is required to be disclosed to the borrowers.
- There cannot be an automatic increase in the credit limit without explicit consent of the borrower.
- Any lending sourced through DLAs (Digital Lending Apps) have to be reported to Credit Information Companies (CICs) by regulated entities irrespective of its nature or time period. This is particularly important given a number of 'buy now, pay later' players were not reporting the loans they were offering to CICs.
- RBI has said the data collected by Digital lending Apps (DLAs) has to be need based, they should have clear audit trails and should be only done with prior explicit consent of the borrower.
7. GMR Group to sell its entire 40% stake in Philippines' Cebu airport
Tags: Economy/Finance International News
The New Delhi based Multinational GMR Group, on 2 September 2022, has said that it will divest its entire 40 per cent stake in Cebu international airport in Philippines for a payment of Rs 1,330 crore.
However the GMR will continue to provide consultancy service to the Airport till 2026 and will earn revenue for it.
According to GMR, the company will now focus on high growth opportunities. It will now use the capital to invest in the Kualanamu International Airport at Medan, Indonesia. The Kualanamu International Airport is being developed and operated by GMR Airports International.
Mactan Cebu International Airport
It is the second largest Airport of the Philippines after the Ninoy Aquino International Airport Manila.
In 2014, GMR Infrastructure in partnership with Megawide Construction Corporation of Philippines won the bid to operate and develop the Mactan Cebu International Airport.
Both the Megawide Construction Company and GMR are selling their stake to Aboitiz InfraCapital Inc. of Philippines.
Currency of Philippines: Philippine pesos
GMR Airports International
GMR Airports International is a subsidiary of GMR Infrastructure Ltd
GMR Group operates the IGI Delhi International Airport, Rajiv Gandhi Hyderabad International Airport and Bidar Airport in (Karnataka).
It is building a Greenfield airport at Mopa in North Goa and an International Greenfield Airport at Bhogapuram, Vizianagaram, and Andhra Pradesh.
It is the only Indian company to develop and operate foreign International airport. It is developing airports in Indonesia, Greece.
The GMR group was founded by Grandhi Mallikarjuna Rao. It is in the business of Infrastructure, Energy, transportation etc.
8. The Indian economy grew by 13.5% in the first quarter of the financial year 22-23
Tags: Economy/Finance
The Indian economy grew by 13.5% in the April to June (2022-23) as compared to the same period last year. However it was below the Reserve Bank of India 16.2 % forecast for the first quarter.
The data regarding the performance of the Indian economy in the first quarter of the fiscal year 20222-23 was released by the National Statistical Office (NSO), Ministry of Statistics and Programme Implementation on 31st August 2022.
India still remains the fastest growing major economy in the world. The Chinese economy grew by 0.4% during April -June 2022.
The growth rate of the Indian economy in 2021-22 was 8.7%.
GDP growth rate at constant price (2011-12 base year)
Sector of Economy | Growth rate of Q1(April-June) GDP in 2022-23 |
Agriculture | 4.5% |
Industry | 8.5% |
Service sector | 17.6% |
GDP | 13.5% |
Gross value Addition (GVA) | 12.7% |
GVA=GDP + subsidies on products – taxes on products.
Nominal GDP
The Nominal GDP at Current Prices in Q1 2022-23 is estimated at Rs 64.95 lakh crore against Rs 51.27 lakh crore in Q1 2021-22, showing a growth of 26.7 per cent compared to 32.4 per cent a year ago.
While calculating the nominal GDP the market price of goods and services are included. It makes no adjustment for inflation
GDP at Constant Price or Real GDP
The Real Gross Domestic Product (GDP) at Constant Price (2011-12) in Q1 2022-23 is estimated at Rs 36.85 lakh crore, as against Rs 32.46 lakh crore in Q1 2021-22, showing a growth of 13.5.
While calculating the GDP at constant price the price rise in the goods and services due to inflation is not counted. Prices are fixed to a base year (2011-12). It measures the actual increase in the production of goods and services.
GDP at constant price is the best indicator to measure the growth of an economy.
Expected GDP growth rate in fiscal year 2022-23
The Reserve Bank of India expects the Indian Economy to grow by 7.2% in 2022-23.
The Union Finance Secretary T V Somanathan said that the Finance Ministry expects the growth rate of the economy to be 7-7.5% in the current fiscal year (2022-23).
9. RBI to launches pilot project to digitize Kisan Credit Card In MP and Tamilnadu
Tags: Economy/Finance State News
The Reserve Bank of India has decided to launch pilot projects to digitize Kisan Credit Cards (KCC) in Madhya Pradesh and Tamil Nadu to transform rural credit delivery systems and to improve the quality of credit delivery in the rural areas.
The Digitisation Project
- RBI will launch a pilot project for end-to-end digitalisation of Kisan Credit Card (KCC) lending, developed by the Reserve Bank Innovation Hub (RBIH) Bengaluru.
- The pilot project would entail automation of various processes within banks and integration of their systems with the service providers.
- The proposed digitalisation of the KCC lending process will make it more efficient, reduce costs for borrowers and reduce Turn Around Time (TAT) from loan application to disbursement significantly.
Where it will be launched
The pilot project will commence in September 2022 in select districts of Madhya Pradesh and Tamil Nadu with Union Bank of India and Federal Bank, respectively, as partner banks and with active cooperation of the state governments.
Kisan Credit Cards (KCC)
- It was introduced in India by banks in August 1998 to meet the agricultural credit needs of the farmers.
- The model of KCC scheme was prepared by NABARD (National Bank for Agriculture and Rural Development) on the recommendations of RV Gupta Committee.
- RBI set up a High Level Committee on Agricultural Credit through Commercial Banks in 1997. The committee was headed by RV Gupta.
10. India overtakes United Kingdom to become fifth largest economy in the world: Bloomberg
Tags: Economy/Finance
According to a news report published by Bloomberg, India has overtaken the United Kingdom to become the 5th largest economy in the world.
India is now ranked behind the United States, China, Japan and Germany.
Main highlights of the Bloomberg Report :
- According to Bloomberg, the Indian economy overtook the United Kingdom economy at the end of December 2021.
- According to Bloomberg at the end of March 2022, the Indian Gross Domestic Product (GDP) was $854.7 billion while the United Kingdom GDP was $$816 billion.
Gap between Indian and United Kingdom economy to grow :
Bloomberg expects the gap between the Indian and United Kingdom economy to grow in future.
The United Kingdom is facing the fastest inflation in four decades and rising risks of a recession that the Bank of England (Central Bank of the United Kingdom) says may last well into 2024.
The United Kingdom economy has contracted by 0.1% in the second quarter (April-June) of 2022.
On the contrary, India's economy is likely to grow by over 7% this year and it is expected to be one of the fastest growing economies in the world.
The International Monetary Fund (IMF) own forecast show India overtaking the UK in dollar terms on an annual basis this year.
A decade ago, India ranked 11th among the largest economies, while the United Kingdom was 5th.
Basis of Bloomberg calculation :
Bloomberg has used the GDP figures of both the countries from the International Monetary Fund database and converted them into US dollars using the latest exchange rate.
What is recession ?
When there is a negative growth in the economy for the two consecutive quarters then the economy is in recession.
Recession leads to large scale closure of factories, loss of employment, and increase in unemployment, poverty and spread in social and political unrest in the country.
Bloomberg :
Bloomberg is an American based global media and financial data and Analytics Company. It provides data service and news to financial companies and organizations.
Its Headquarters is in New York, United States of America.
What is the Difference between United Kingdom and Great Britain
United Kingdom
It is an empire consisting of England, Wales, Scotland, and Northern Ireland
Great Britain :
It includes England, Wales and Scotland.
The Queen of England is the Head of both United Kingdom / Britain
The capital of the United Kingdom/Great Britain is London.
