By Jon Fredrik Baksaas, GSMA
There are a myriad of social and economic benefits made possible by bringing communication services to previously unconnected populations. This commitment to “Digital Inclusion” – the ability to extend connectivity to all corners of the globe – is driving internet access and usage, and providing access to vital services such as healthcare, education and commerce.
One barrier to digital inclusion is the availability of networks. To address this mobile operators have invested billions rolling out 3G/4G mobile broadband across the globe. Today mobile broadband networks cover 80 per cent of the world’s population, providing internet access to many markets where fixed access is either prohibitively expensive or non-existent. Read more
By Jon Harrison and Trey McArver of Trusted Sources
The prospects for structural economic reform in developing Asian nations is being significantly constrained by the problems political leaders are experiencing in implementing their agendas. Conversations over the past month with policymakers and analysts in China, India, Indonesia, the Philippines and Thailand have brought out common themes on the progress towards sustainable growth and structural improvement.
Governments across the region have had mixed success in boosting growth. All five countries have seen growth decline to levels below that of 2010. External factors have been a major driver of the economic slowdown but domestic conditions have played a part as well. China is slowing due to unavoidable economic rebalancing and is likely to remain a major drag on regional economies for at least the next two years. Read more
By Derek Scissors, American Enterprise Institute
Over the next few years, the Indian economy will seem to be doing well, if judged only by headlines. Real growth in gross domestic product (GDP) was just reported at 7.3 per cent in the final quarter of last year, which impresses some. GDP growth, however, is not translating into economic dynamism.
Despite improvements in the business environment under Narendra Modi, the prime minister, India’s development model remains state-led. The state is horribly inefficient, inhibiting prosperity, and modest reforms expected in the upcoming national budget will have little impact.
Counting on India as a market saviour is a mistake. Read more
Even Western executives who are good at geography may have a hard time picking out Surat, Foshan and Porto Alegre on a map. Yet over the next decade, each of these cities will contribute more to global economic growth than Madrid, Milan or Zurich.
While China’s move to cut interest rates this month has sparked some concern about emerging-market growth, , we see no let-up in one of the most disruptive trends of our time: the shift of the world’s center of economic gravity from advanced economies to the developing world, and in particular, to rapidly growing cities in Asia, Latin American and Africa. Even at 6 to 7 per cent growth, China is adding the equivalent of a Canada to the global economy every two years.
We are currently living through the biggest mass migration from countryside to cities in human history. The global population of cities is growing by 65m people annually – that’s the equivalent of 7 Chicagos a year, every year. Between now and 2025, we calculate that 440 cities in developing countries will generate nearly half of global GDP growth. Read more
A stark dichotomy has emerged between Indian economic data and the reality on the ground. In the latest example, the Reserve Bank kept interest rates unchanged at its last monetary policy review earlier this month and issued a dovish statement. Signs of an investment revival are meagre and consumption demand remains weak – in strong contrast with the GDP growth estimates of the government and the Central Bank.
Despite general optimism following the election of the Narendra Modi government last May, the pace of economic revival has been slow as both investment and consumer demand remain weak. Read more
By Rajeev Malik of CLSA
The general drift in the financial trenches is that Governor Raghuram Rajan of the Reserve Bank of India (RBI) will stay on hold at the bank’s April 7 policy meeting. After all, he just cut rates – in a second consecutive out-of-meeting action – in early March. What’s more, consumer price inflation moved up in February; this will constrain the RBI from easing. Finally, following the surprise rate cut in January, the RBI had stayed on hold at its February policy meeting; it will repeat this behaviour next month.
For these reasons, hardly anyone expects a rate cut next week. However, valid as these arguments are, they are overshadowed by factors that make a stronger case for another cut. Read more
Gulzar Ahmed is one small link in the human bridge between Dharavi, one of India’s largest shanty towns, and the fashion boutiques of Milan.
The master tailor in a small workshop run by Italian designer Viola Parrocchetti, Ahmed is one of thousands of skilled craftsmen that live and work in Dharavi, providing tailoring and embroidering services to India’s thriving fashion industry, much of it destined for export. Read more
Narendra Modi, India’s pro-business prime minister, swept to power last year offering a new efficient form of government and a crackdown on the high-level corruption that has weighed on growth for decades.
But in a new report, analysts at Ambit Capital, a Mumbai-based brokerage, suggest that this otherwise positive shift may be negative for India’s rural economy – if only in the short-term. Read more
By Sanjeev Prasad, Kotak Institutional Equities
The Indian government’s annual budget – to be announced on Saturday – will be intensely scrutinised for clues about the evolving policy priorities of Narendra Modi, the prime minister.
But while many will be focused on expenditure and revenue plans, Indian business will be looking in a somewhat different direction. It is hoping that the budget will further reforms to bring about a lower ‘visible’ role of the government in the economy, under which it relinquishes or reduces its multiple roles of financier, manager, owner, policy-maker and regulator.
The budget is an ideal opportunity for the government to re-evaluate its role in the economy at a time when the private sector, states and local governments are playing an increasingly larger role in economic and social development. A greater ‘invisible’ role of the government simply as a facilitator of private sector investment is required. Read more
By Bibhas Saha, Durham University Business School
When Narendra Modi, the India prime minister, assumed office in May 2014 everybody knew big changes were coming, but very few could foresee that labour reform would be one of them. Modi knows that if India wants to export more it has to take China on at its own game by creating a more flexible labour market and upgrading skills in a vast pool of potential labour supply.
India is far behind on both, with low literacy and complex labour laws. The laws are archaic (one dating back to 1926) and among the most rigid in the world. Of particular concern is the job security law, which was first introduced in 1976 and then further stiffened in 1982. At that time the objective was to improve job security in private sector firms so they were in line with the public sector. Read more
As global oil prices have crashed, central bankers around the world have had to deal with new disinflationary pressures. For some, like Thailand and Korea, this may be bad news but for Raghuram Rajan, the governor of the Reserve Bank of India (RBI) who has been battling with spiraling inflation, the recent trends are a welcome relief.
Rajan began loosening policy in the new year – but is there any risk, beyond rebounding oil prices, that inflation could pick up pace again in India? Read more
The Bric countries – minus India – embellished their growing reputation as laggards in the emerging market (EM) universe in January as manufacturing activity in Russia and China declined and Brazil turned in another subdued performance, data published on Tuesday shows.
The result is that, as a bloc, the Bric countries (Brazil, Russia, India and China) are diverging from the rest of the EM universe in manufacturing output and the trajectory of GDP growth. Other EM countries, meanwhile, are reaping the benefit of positive global demand and assuming a role as the key engines of developing world growth. Read more
Maruti Suzuki led a two-track recovery in India’s car industry last year, dragging up overall sales while local competitors such as Tata Motors floundered. But new figures out on Tuesday have disappointed analysts in the festive period.
The 32 year-old brand, with a reputation for churning out reliable and affordable cars, posted net profits of Rs8.02bn ($131m) in the quarter ended December, up 18 per cent year-on-year. That’s well below an average forecast for profits of Rs9.06bn in a poll by Thomson Reuters. Read more
By Vikas Pota, Varkey Foundation
By 2030, the economies of India and China together may contribute 65 per cent of global GDP and be home to the majority of the world’s working age population. India alone will possess the world’s biggest pool of potential employees.
But the giddy predictions of future growth seem more fragile when it is considered that this potential labour force is dependent on education systems that often fail to teach basic skills.
India has the largest number of illiterate adults of any country globally. Teacher absenteeism is the third highest in the world, and many teachers lack basic training. Some 12.8m young Indians enter the work force each year and, without adequate skills, will often struggle to find employment. Shanghai leads the rankings done by Pisa, the Programme for International Student Assessment, and has become a poster-child for education ministries around the word. But in rural China, many students still do not finish secondary school. Read more
By Frederic Neumann, HSBC
Things in China look a bit soggy. True, growth a touch above 7 per cent is nothing to sneer at. But it’s down sharply from days past. And as the Mainland matures, those double-digit growth rates seem even less likely to return. Where, then, to look for the next story of hyper-charged growth?
Plenty of promising places around: Sri Lanka will probably grow faster than China this year, and so could the Philippines, Vietnam and Bangladesh at some point. But, from a global perspective, these will hardly make a dent; certainly, commodity markets will not get terribly excited about accelerating demand from these markets. Read more
A jump in gold imports to India since the scrapping of quantitative restrictions last November is fuelling questions over whether New Delhi may see fit to reimpose curbs to prevent the country’s current account deficit from ballooning again to risky proportions. Read more
Last year in India was remarkable not only for the resurgence in economic dynamism that followed the election of Narendra Modi, the prime minister. New data shows it was also a banner year for mergers and acquisitions.
In the calendar year to December 30, India saw deals worth $48.4bn, according to Dealogic, marking the highest value since 2010. Inbound deals were valued at $16.5bn, their highest level since 2011. Read more
By Saurabh Mukherjea of Ambit Capital
As I finish my two-week year-end trip to meet our western clients (around 40 of them), it is obvious that enthusiasm regarding investing in India is at record highs. Over the past fortnight, I have met at least 10 western-hemisphere-based funds that have either just started investing in India or have applied to the Indian securities regulator for Foreign Portfolio Investor (FPI) status (which allows them to access the Indian stockmarket directly). Even more interestingly, half a dozen of the clients I met have moved to larger, better-appointed offices in money centres like London, New York, Zurich and San Francisco. Read more
By Shumita Sharma Deveshwar of Trusted Sources
The Indian government’s sale of a 5 per cent stake in the Steel Authority of India Ltd (SAIL) was meant to serve as a gauge of investor sentiment towards public sector stocks before the bigger sell-offs of shares in Coal India and the ONGC oil & gas group. But it has left some doubts about the potential success of the record disinvestment programme and the consequent reduction of the fiscal deficit. Read more
By Amit Bhandari, Gateway House
Petroleum prices touched a new four -year low of $72.5 per barrel after the Organization of Petroleum Exporting Countries (OPEC) decided last week against reducing production . The 35 per cent price drop is a huge relief for India, where petroleum products comprise a third of the import bill. Cheaper oil means narrower current account and fiscal deficits, and reduced prices at the pump for consumers shopping for food-grains, vegetables, cement and steel.
Can this happy situation last? Will 2015 be the year in which high oil prices do not disadvantage India? Judging by history, it may be.
Before oil prices began to rise in 2003, a 20-year run of price stability fuelled global growth. But cheap oil killed off investments in exploration and production. OPEC gained market share, from 30 per cent of global production in 1983 to over 40 per cent by the end of 1990s. Read more