World Bank Sees FY21 India Growth at 1.5-2.8 % -- Slowest Since Economic Reforms Three Decades Back

India is likely to record its worst growth performance since the 1991 liberalisation this fiscal year as the coronavirus outbreak severely disrupts the economy, the World Bank said on Sunday.

India's economy is expected to grow 1.5 per cent to 2.8 per cent in the 2020-21 fiscal which started on April 1, the World Bank said in its South Asia Economic Focus report.

It estimated India will grow 4.8 per cent to 5 per cent in the 2019-20 fiscal that ended on March 31.

The COVID-19 outbreak came at a time when India's economy was already slowing due to persistent financial sector weaknesses, the report said.

To contain it, the government imposed a lockdown, shutting factories and businesses, suspending flights, stopping trains and restricting mobility of goods and people.

"The resulting domestic supply and demand disruptions (on the back of weak external demand) are expected to result in a sharp growth deceleration in FY21 (April 2020 to March 2021)," it said, adding that the services sector will be particularly impacted.

A revival in domestic investment is likely to be delayed given enhanced risk aversion on a global scale, and renewed concerns about financial sector resilience.

"Growth is expected to rebound to 5% in Fiscal 2022 (2021-22) as the impact of COVID-19 dissipates, and fiscal and monetary policy support pays off with a lag," the World Bank said.

The World Bank joins a chorus of international agencies that have made a similar cut in growth estimates in recent days on concerns about the COVID-19 outbreak.

The Asian Development Bank (ADB) sees India's economic growth slipping to 4 per cent in the current fiscal, while S&P Global Ratings has further slashed its GDP growth forecast for the country to 3.5 per cent from a previous downgrade of 5.2 per cent.

Fitch Ratings puts its estimate for India growth at 2 per cent, while India Ratings & Research has revised its FY21 forecast to 3.6 per cent from 5.5 per cent earlier.

Moody's Investors Service has slashed its estimate of India's GDP growth during 2020 calendar year to 2.5 per cent, from an earlier estimate of 5.3 per cent.

In its report released on Sunday, the World Bank saw the South Asian region, comprising eight countries, growing by 1.8 - 2.8 per cent this year, down from the 6.3 per cent it projected six months ago.

Its 2019-20 estimate for India at 4.8 - 5 per cent is lower by 1.2 - 1 per cent of the estimate made in October 2019. The 1.5 - 2.8 per cent growth estimate in 2020-21 is lower than 5.4 - 4.1 per cent estimated in October last year.

"The green shoots of a rebound that were observable at the end of 2019 have been overtaken by the negative impacts of the global crisis," the World Bank report said, adding India has set aside just over 1 per cent of GDP for programs to increase health sector spending and compensate the unemployed, with the bulk of the money going towards cash transfers, free food and gas cylinders, and interest-free loans.

In a conference call with reporters, World Bank Chief Economist for South Asia Hans Timmer said India's "outlook is not good."

And if the domestic lockdown is prolonged, then the economic result can be much worse than what the World Bank has in its baseline range of forecasts.

Among the steps that India can take to address this challenge, Timmer said the first is to focus on mitigating the spread of the disease, and to make sure that everybody has food.

"Then, it is very important to prepare for a rebound and that means there should be a focus on temporary jobs programmes, especially at the local levels. Those initiatives should be supported. And it is important to prevent bankruptcies especially of a small and medium sized enterprise," Timmer said in response to a question.

"In the longer run, this is really an opportunity to bring the Indian economy on sustainable path not just fiscally, but also socially," he said.

The World Bank is working with India to mitigate the challenge posed by COVID-19. It has approved USD 1 billion to India, of which the first tranche has already been released to deal with the emergency in the health care sector.

The first tranche aims at delivering civilian diagnostic equipment, put in place additional capacity to deal with testing and make testing available that benefits the entire population, said World Bank Vice President for South Asia Hartwig Schafer.

It is also working with India on two additional operations, which is anticipated to be ready in a matter of weeks.

These include, employment, banking and micro, small and medium enterprises sector.

In its report, the World Bank said that the COVID-19 outbreak has magnified pre-existing risks to India's economic outlook.

The government is undertaking measures to contain the health and economic fallout, and the RBI has begun providing calibrated support in the form of policy rate cuts and regulatory forbearance.

"Given significant uncertainties, there is a wide confidence interval around the baseline estimate. If a large-scale domestic contagion scenario is avoided, early policy measures payoff, and restrictions to the mobility of goods and people can be lifted swiftly, an upside scenario could materialize in FY21, with growth around four per cent," it said.

"However, if domestic contagion is not contained, and the nationwide shutdown is extended, growth projections could be revised downwards to 1.5 per cent, and fiscal slippages would be larger," it said. PTI LKJ ANZ

World has Entered Recession, Says IMF

The world is in the face of a devastating impact due to the coronavirus pandemic and has clearly entered a recession, the International Monetary Fund said on Friday, but projected a recovery next year.

"We have reassessed the prospects for growth for 2020 and 2021. It is now clear that we have entered a recession as bad or worse than in 2009. We do project recovery in 2021," IMF Managing Director Kristalina Georgieva told reporters at a news conference.

Georgieva was addressing the press after a meeting of governing body of the IMF, the International Monetary and Financial Committee. Representing 189 members, the body met virtually to discuss the unprecedented challenge posed to the world by COVID-19.

The key to recovery in 2021, she said, is only if the international community succeeds in containing the virus everywhere and prevent liquidity problems from becoming a solvency issue.

"The US is in recession, as is the rest of the advanced economies of the world. And in a big chunk of developed and emerging markets in developing economies. How severe? We are working now on our projections for 2020,” Georgieva said in response to a question.

The new projections are expected in the next few weeks.

Stressing that while containment is the main reason for the economy to stand still and get into a recession, she said containment is very necessary to come out of this period and step in to recovery. "Until the virus is not contained, it would be very difficult to go to the lives we love."

"A key concern about a long-lasting impact of the sudden stop of the world economy is the risk of a wave of bankruptcies and layoffs that not only can undermine the recovery. But can erode the fabric of our societies," the IMF chief said.

To avoid this from happening, many countries have taken far-reaching measures to address the health crisis and to cushion its impact on the economy, both on the monetary and on the fiscal side, she said.

The IMF chief said 81 emergency financing requests, including 50 from lower-income countries, have been received. She said current estimate for the overall financial needs of emerging markets is 2.5 trillion dollars.

"We believe this is on the lower end. We do know that their own reserves and domestic resources will not be sufficient," she added.

The G-20, a day earlier, reported fiscal measures totalling some 5 trillion dollars or over 6 per cent of the global GDP.

Responding to another question, Georgieva said the IMF is projecting recession for 2020.

"We do expect it to be quite deep and we are very much urging countries to step up containment measures aggressively so we can shorten the duration of this period of time when the economy is in standstill," she said.

"And also to apply well-targeted measures, primarily focusing on the health system to absorb that enormous stress that comes from coronavirus. And on people, businesses and the financial system, I am very pleased to say that when we went through countries' responses, that sense of targeted fiscal measures is there and are also very impressive to see the size of these measures," she added.

"Countries are doing all they can on the fiscal and on the monetary front. We have heard from our members' very impressive decisions taken over the last days," the IMF chief said.

"We also want to caution that as we are responding now, we want to make the recession as possibly short and not too deep. We also want to think about what is going to follow the recovery and make sure that we are putting forward measures that can be supportive in this regard," she said. PTI LKJ

Public Cloud Computing Can Add $100 Bn, 2.4 Lakh Jobs to Indian Economy by 2023: Report

Deployment of the public cloud computing system can add around USD 100 billion to the Indian economy and generate 2.4 lakh direct jobs by 2023, a report released on Wednesday said.

"Public cloud deployments in India have the potential to contribute approximately USD 100 billion in GDP (gross domestic product) cumulatively from 2019 to 2023. When annualised, this is equivalent to 0.6 per cent of GDP and 15 per cent of the GDP impact of the IT industry and 25 per cent of the textile industry in India," the Google Cloud-BCG joint report said.

According to the report, manufacturers and financial institutions are still in the early stages of public cloud adoption due to the perceived complexity of migrating legacy data and evolving government regulations around data and security.

"Traditional retailers are expanding into e-commerce to capture digital and omnichannel revenue growth, and they are turning to the public cloud to help them scale up quickly and handle peak loads during special sales like Diwali," Google Cloud Asia Pacific managing director Rick Harshman said.

He also said that access to cloud-based smart data analytics solutions also enables retailer customers to become more customer-centric and data-driven so they can optimise their spend across channels, plan inventory and manage their supply chains.

According to the report, the business efficiencies and growth resulting from public cloud deployments have the potential to generate up to 2.4 lakh jobs and impact another 7,43,000 jobs through second order effects from 2019 to 2023.

"Of the 2,40,000 direct jobs, around 1,57,000 will be in digital and technology-related roles such as data scientists, product managers, engineering, design, user experience and infrastructure management jobs with cloud service providers, IT service providers and across industry verticals," the report said.

The public cloud deployment will create another 83,000 direct roles that will be related to core business functions across industry verticals, the report said. PTI PRS

China's Baidu to Work with Indian Institutions on AI-led Intelligent Economy

China’s largest search engine Baidu is planning to work with Indian institutions on "intelligent economy", announced Baidu CEO and Chairman Robin Li, who is also the Co-Founder of Chinese search engine. An Intelligent Economy can be defined as economy driven by Artificial Intelligence (AI) or Human-Machine interaction such as using AI-based virtual assistant to open bank accounts or personal assistants for students.

According to estimates by a McKinsey report, AI could add around 16% or $13 trillion to global output by 2030.

Speaking at tech fest Shaastra 2020 event held at IIT Madras, in Chennai, on January 4, Li said "Baidu is looking to work with Indian institutions in future to make a better world through innovation".

Li was not very specific to Baidu's commitment in India, though he said -

India is one of the fastest growing smartphone markets in the world, and very large developing country, right next to China. Both the countries have been growing at a fast pace in the last few decades. “For the next decade, we will be more optimistic.

Once in the age of AI, search will be very different from what is seen today. Once we transform the search into a different product, we will be ready to launch that internationally

Li, who is also the creator of search technology Hyperlink Analysis, said that the previous decade was that of the Internet but the coming decade is that of intelligent economy with new modes of human-machine interaction. AI is transforming a lot of industries for higher efficiency and lower services. For instance, banks are finding it difficult to open branches but virtual assistant is used to open an account. Customers are more comfortable with virtual person than a real person.

In the education sector, every student can have a personal assistant while the pharma industry accelerate the pace of drug development with many start-ups already doing this. AI is also transforming transportation by helping reduction in traffic delays by 20-30 per cent, he said.

Founded in 2000, Baidu offers several Google-like services but uses Chinese-language search terms. Baidu had also led a US$12 billion worth of joint investment with Alibaba Group, Tencent, JD.com and Didi Chuxing in China Unicom, a Chinese state-owned telecommunications operator of China.

In 2016, Baidu open sourced its PaddlePaddle deep learning platform , which Baidu claims is a machine translation program that need less code when compared to other famously used deep learning platforms.

According to Li, AI Baidu helped in finding missing people in China and 9,000 missing people have been found already. Li said "AI can make one immortal. When everything about you can be digitised, computers can learn all about you, creating a digital copy of anyone."

The name "Baidu" was inspired by a Chinese poem written more than 800 years ago during the Song Dynasty. The poem compares the search for a retreating beauty amid chaotic glamour with the search for one's dream while confronted by life's many obstacles. The poem goes like -- "…hundreds and thousands of times, for her I searched in chaos, suddenly, I turned by chance, to where the lights were waning, and there she stood."

Baidu, whose literal meaning is “hundreds of times”, represents a persistent search for the ideal.

Via ~ Business Line

Use of AI in Different Forms can Help Achieve $5 Trn Economy Target: Goyal

Use of artificial intelligence (AI) in different forms can help achieve the target of making India a USD 5 trillion economy in the coming years, Commerce and Industry Minister Piyush Goyal said on Monday.

He said various departments are working to see how AI, space technology and other modern tools can be used to push economic growth of the country.

"We in the government believe that AI can, in different forms, help us achieve the USD 5 trillion benchmark, which we have set for over (next) five years," he said here at a function.

The minister added that AI can also help expand in a more cost- effective and outcome-oriented manner.

Goyal, who also has the railways portfolio, said in railways, a team is focusing to see how "we could benefit from AI" as the potential is humongous.

"AI can help in every sector to do our job better," he said adding it can hep improve ease of living and ease of doing business. PTI

Rising Hate-Crimes, Intolerance to Seriously Damage Economic Growth - Godrej

Noted industrialist Adi Godrej Saturday warned that the rising intolerance, hate crimes and moral policing can "seriously damage" economic growth of the nation.

Godrej, however, congratulated Prime Minister Narendra Modi for presenting a "grand vision" to build a new India and nearly double economy to a USD 5 trillion giant over the course of his second term in office.

He was quick to add that all is not well in the country and pointed out a slew of concerns on the social front, warning of their impact on growth as well.

"It's not all a rosy picture now. One must not lose sight of the massive impoverishness plaguing our nation which can seriously damage the pace of growth going forward and prevent us from realising our potential," Godrej warned while addressing a gathering to celebrate the 150th anniversary of his alma mater St Xavier's College.

The industrialist further warned that economic growth will be impacted if "rising intolerance, social instability, hate-crimes, violence against women, moral policing, caste and religion based violence and many other sorts of intolerance are rampant across the country," are not contained to ensure social harmony.

He said unemployment is at 6.1 percent, a four-decade high, and needs to be tackled at the earliest.

The "massive" water crisis, growing use of environment-damaging plastics and the crippling medical
facilities, courtesy the countrys healthcare spend is the lowest among its emerging market peers, are some of the other issues that need to be tackled on a war footing, he said.

Noting that many issues must be fixed at a fundamental level, he warned that without doing so, the country cannot achieve her true growth potential.

The remarks come amid a continuing spate of hate crimes like mob-lynching in the name cow or in the name of religion being reported from many parts of the country, including from a Mumbai suburb where a Muslim cab driver was assaulted recently because of his faith.

Godrej congratulated the prime minister for unveiling a vision to create a new India where "we dont live in fear and suspicion and can trust the political leadership for being accountable".

But he was quick to add that things on the ground are taking time to change when it comes to accountability, but exuded confidence that the many measures initiated will lead to significant changes in the times of come.

Exhorting the students not to shy from leadership, he reminded them that leadership is about telling the truth without worrying whether it is popular or not.

He also urged them to be compassionate and empathetic and at the same time level-headed.

India is World’s 40th Most Competitive Economy: World Economic Forum

In what could be considered as a worrying news coming in, the Indian subcontinent has been ranked the 40th most competitive economy on the World Economic Forum’s global competitiveness index. The rank is one down from the 39th rank that the country had proudly conquered and endorsed last year.

The Index which ranked the economy competitiveness of 137 economies saw Switzerland occupying the first spot, followed by the US and Singapore in second and third ranks, respectively.

According to the latest Global Competitiveness Report 2017, India has slipped from the 39th position to 40th while its neighbouring, rival economy China has demonstrated a much better performance and is ranked at 27th place.

The report states that, “India stabilises this year after its big leap forward of the previous two years.” It further adds that the country’s scores have improved significantly across most pillars of competitiveness, which can be considered a good sign for the developing economy.

These pillars includes infrastructure where the country was able to garner the 66th rank, higher education and training where India stood at 75 and technological readiness where the country was able to capture the 107th place. This spike in ranks reflect the recent public investments in these areas.

The report also highlighted that India has shown an impressive improvement in its ICT (information and communications technologies) indicators, especially when it comes to Internet bandwidth per user, mobile phone and broadband subscriptions, and Internet access in schools.

The report also highlighted the problems that are hindering the progress of India’s economy. According to the report, the private sector still considers corruption as the most problematic factor when it comes to doing business in the country. This was followed by problems such ‘financing’, ‘tax rates’, ‘inadequate supply of infrastructure’, ‘poor work ethics in national labour force’ and ‘inadequately educated work force.’

It mentioned, “A big concern for India is the disconnect between its innovative strength (29) and its technological readiness (up 3 to 107): as long as this gap remains large, India will not be able to fully leverage its technological strengths across the wider economy.”

At 40th rank, India topped the list in the South Asia region, and was followed by Bhutan (85th rank), Sri Lanka (85), Nepal (88), Bangladesh (99) and Pakistan (115).

The report further reflected that Improving ICT infrastructure and use still remain among the biggest challenges for the South Asia region as in the past ten years, technological readiness has stagnated the most in the region.

For the uninitiated, the Global Competitiveness Index (GCI) is prepared on the basis of country-level data covering 12 categories or pillars of competitiveness, which include: institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication and innovation.

[Image: CNN Money]