As 2022 came to a close, there were renewed fears of Covid 19 causing disruptions in view of the sudden surge in certain countries and the Government sent out advisories and actions. The year-end economic growth forecasts by global financial institutions were improved compared to previous estimates. India is working hard to establish trade pacts with key countries.
The author wishes the esteemed readers of Asia Law Portal a very happy, healthy, memorable and successful new year.
World Bank – The World Bank recently issued a press release titled ‘India Better Positioned to Navigate Global Headwinds Than Other Major Emerging Economies: New World Bank Report’. India’s economy has demonstrated resilience despite a challenging external environment, says the World Bank in its latest India Development Update, a World Bank flagship publication. The report titled “Navigating the Storm”, finds that while the deteriorating external environment will weigh on India’s growth prospects, the economy is relatively well positioned to weather global spillovers compared to most other emerging markets. The World Bank has revised its 2022-23 GDP forecast upward to 6.9 percent from 6.5 percent (in October 2022, as reported by Asia Law Portal), considering a strong outturn in India in the second quarter (July-September) of the 2022-23 financial year. The report forecasts that the India economy will grow at slightly lower rate of 6.6 percent in the 2023-24 fiscal year. A challenging external environment will affect India’s economic outlook through different channels. The report states that rapid monetary policy tightening in advanced economies has already resulted in large portfolio outflows and depreciation of the Indian Rupee while high global commodity prices have led to a widening of the current account deficit.
Asian Development Bank – Asian Development Bank (ABD) recently published its Asian Development Outlook (ADO) 2022 Supplement: Global Gloom Dims Asian Prospects. As per this report, despite recent global headwinds, the Indian economy is expected to grow by 7.0%, as projected in the Update, supported by a strong domestic base. While some recent high-frequency indicators are more favorable than expected—notably consumer confidence, electricity supply, and purchasing managers’ indexes—others are a little less favorable, in particular exports, largely textiles and iron ore, and the index of industrial production of consumer goods. The growth forecast for FY2023 is unchanged at 7.2% (as per the ADO in October 2022 reported by Asia Law Portal here), sustained by positive effects from structural reform and from public investment catalyzing private investment.
International Monetary Fund – The International Monetary Fund (IMF) recently published a press release stating that the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with India. Growth is expected to moderate reflecting the less favorable outlook and tighter financial conditions. Real GDP is projected to grow at 6.8 percent and 6.1 percent in FY2022/23 and FY2023/24 respectively. Growth has continued this fiscal year, supported by a recovery in the labor market and increasing credit to the private sector. New COVID cases have fallen to low levels, supported by high vaccination rates. The free administration of booster shots and broader booster eligibility criteria should help improve vaccine coverage. The authorities have responded with fiscal policy measures to support vulnerable groups and to mitigate the impact of high commodity prices on inflation. Monetary policy accommodation has been gradually withdrawn and the main policy rate has been increased by 190 basis points so far in 2022.
India-Australia Trade Pact – The India Australia Economic and Cooperation Trade Agreement (IAECTA) has come into force on December 29, 2022. The IAECTA was signed in April 2022, as reported by Asia Law Portal. The IAECTA provides an institutional mechanism to encourage and improve trade between the two countries. It covers almost all the tariff lines dealt by India and Australia. India will benefit from preferential market access provided by Australia on 100% of its tariff lines, including all the labour-intensive sectors of export interest to India, such as gems and jewellery, textiles, leather, footwear, furniture, food, and agricultural products, engineering products, medical devices and automobiles. On the other hand, India will be offering preferential access to Australia on over 70% of its tariff lines, including lines of export interest to Australia, which are primarily raw materials and intermediaries such as coal, mineral ores and wines. It is estimated that an additional 10 lakh jobs would be created in India under IAECTA. Indian Yoga teachers and chefs are set to gain with the annual visa quota. Over 1 lakh Indian students would benefit from post-study work visa (for 18 months to 4 years) under the IAECTA. The agreement is also likely to increase investment opportunities, promote exports, create significant additional employment and facilitate strong bonding between the two countries.