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The economic forecast continues to remain slightly weak with lower growth forecast by leading financial agencies. The impact of external factors continues to influence the current local situation as the Government makes attempts to improve economic conditions. India has now assumed the prestigious presidency of the G-20 group. The dawn of the digital rupee has been a very exciting development with the pilot initiatives of the Reserve Bank of India (RBI) commencing this month. One of the most keenly watched items in the digital space is the data protection law, which was published recently by the Government and is now being considered for public consultation.
Moody’s Reduces Growth Forecast – Moody’s cut India’s growth projections for the current and next calendar year due to higher inflation, high interest rates and slowing global growth that, it believes, will dampen economic momentum more than it had expected. Moody’s said it now expects India’s GDP growth to slow to 7% in 2022 versus its previous estimate of 7.7% (as reported by Asia Law Portal here), and then decelerate to 4.8% in 2023, before recovering to around 6.4% in 2024. “We expect the RBI to raise the repo rate by another 50 bps (basis points) or so as part of its objective to anchor inflation expectations and support the exchange rate,” economists at Moody’s wrote in the note. “Eventually, the RBI will likely shift from inflation management to growth considerations, provided that the rate increases have the desired effect of taming inflationary pressures.” Moody’s said the weakening Indian rupee and high oil prices will continue to exert upward pressure on inflation. The rating agency, however, said India’s underlying growth dynamics are fundamentally strong on the back of a rebound in services activity. “While these domestic strengths will continue to support the domestic growth narrative, global financial tightening and slowing external demand will pose downward pressure on growth in 2023.”
G-20 Presidency – As the G20 Summit in Bali ended earlier in the month, Indonesia handed over the presidency for the coming year to India. Prime Minister Narendra Modi, who took over the “key” from Indonesian president Joko Widodo extended the invitation to all the member countries. India will officially assume the presidency on December 1, 2022. He added that digital transformation is the “most remarkable change” of this era, and its benefits should reach everyone. “During its G-20 Presidency next year, India will work jointly with G-20 partners towards this objective. The principle of ‘Data for development’ will be an integral part of the overall theme of our Presidency ‘One Earth, One Family, One Future’,” Modi said. “Digital solutions can also be helpful in the fight against climate change – as we all saw in the examples of remote-working and paperless green offices during the Covid-19 pandemic,” he added. Prior to that Prime Minister Narendra Modi unveiled the Logo, Theme and Website of India’s G20 Presidency.
RBI Digital Rupee – RBI commenced the pilot launches of Digital Rupee (e₹) for specific use cases. Accordingly, the first pilot in the Digital Rupee – Wholesale segment (e₹-W) commenced on November 1, 2022. The use case for this pilot is settlement of secondary market transactions in government securities. Use of e₹-W is expected to make the inter-bank market more efficient. Settlement in central bank money would reduce transaction costs by preempting the need for settlement guarantee infrastructure or for collateral to mitigate settlement risk. Going forward, other wholesale transactions, and cross-border payments will be the focus of future pilots, based on the learnings from this pilot. The first pilot in Digital Rupee – Retail segment (e₹-R) is planned for launch in December 2022 in select locations in closed user groups comprising customers and merchants.
Data Protection Bill – Further to the reporting by Asia Law Portal last month, the Government of India, through the Ministry of Electronics and Information Technology has now drafted the Digital Personal Data Protection Bill, 2022. In the Explanatory Note to the Bill, it is stated that The Digital Personal Data Protection Bill is a legislation that frames out the rights and duties of the citizen on one hand and the obligations to use collected data lawfully of the Data Fiduciary on the other hand. Further, the Government considered the global best practices, including review of the personal data protection legislations of Singapore, Australia, European Union and prospective federal legislation of the United States of America. The Government has also considered our 1 trillion-dollar Digital Economy goals and the rapidly growing innovation and startup eco-system. The Bill will establish the comprehensive legal framework governing digital personal data protection in India. The Bill provides for the processing of digital personal data in a manner that recognizes the right of individuals to protect their personal data, societal rights and the need to process personal data for lawful purposes. The Ministry has invited feedback from the public on the draft Bill which can be submitted on https://innovateindia.mygov.in/digital-data-protection/ by December 17, 2022.
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