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IMF predicts 7.5 per cent growth rate for India in 2016

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Washington: The International Monetary Fund (IMF) has predicted that India’s growth is expected to strengthen from 7.3 per cent this year and last year to 7.5 per cent next year.

“Growth will benefit from recent policy reforms, a consequent pickup in investment, and lower commodity prices,” the IMF said in latest World Economic Outlook (WEO) released on Tuesday ahead of the World Bank-IMF annual meetings in Lima (Peru).

The WEO foresees lower global growth rate compared to last year, with modest pickup in advanced economies and a slowing in emerging markets, primarily reflecting weakness in some large emerging economies and oil exporting countries.

Global real GDP grew at 3.4 per cent last year, and is forecast to grow at only 3.1 per cent this year. Growth is expected to rebound to 3.6 per cent next year and increase beyond 2016.

One of the key factors in this is the gradual increase in the global weight of fast-growing countries such as China and India, which further increases their importance as drivers of global growth, the WEO said.

In India, near-term growth prospects remain favorable, and the decrease in the current account deficit has lowered external vulnerabilities, it said.

Inflation is expected to decline further in 2015, reflecting the fall in global oil and agricultural commodity prices.

The faster-than expected decline in inflation has created space for considering modest cuts in the nominal policy rate, IMF said.

But the real policy rate needs to remain tight for inflation to decline to the inflation target in the medium term, given upside risks to inflation, it said.

Continued fiscal consolidation is also essential, but it should be more growth friendly, WEO said suggesting tax reform and reduction in subsidies.

With balance sheet strains in the corporate and banking sectors, financial sector regulation should be enhanced, provisioning increased, and debt recovery strengthened, it suggested.

Structural reforms should focus on relaxing long-standing supply constraints in the energy, mining, and power sectors, WEO said.

Priorities include market-based pricing of natural resources to boost investment, addressing delays in the implementation of infrastructure projects, and improving policy frameworks in the power and mining sectors.

In advanced economies, growth is expected to remain robust and above trend through 2016 and contribute to narrowing the output gap.

The growth recovery in the euro area is projected to be broad-based. Growth prospects in emerging markets and developing economies vary across countries and regions.

But the outlook in 2015 is generally weakening, with growth for these economies as a group projected to decline from 4.6 per cent in 2014 to 4 per cent in 2015.

The WEO underscores that raising actual and potential output must remain the policy priority. This will require a combination of demand support and structural reforms, it said.

(Arun Kumar, IANS)

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A Machine Built By a Group of Egyptian Students can Produce Fuel from Worn-Out Vehicle Tires

Egypt raised fuel prices by up to 50 percent in June as a condition of a $12 billion International Monetary Fund program the country signed last year

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Engineering student Mohamed Amr carries car tires to be used in extracting fuel in Cairo, Egypt, Aug. 23, 2017.
  • A group of 12 students worked on this machine as a graduation project
  • The machine first heats the tires until they reach evaporation point after which the vapor enters a condenser
  • The product created has similar properties to pure diesel

A group of Egyptian students has built a machine they say can produce fuel from worn-out vehicle tires.

The device heats the tires until they reach evaporation point. The vapor then enters a condenser. The result is a product “very similar in properties to pure diesel, and the carbon or black coal is just left inside the container,” said Mohamed Saeed Ali, one of 12 students who worked on the machine as a graduation project.

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The students are searching for investors for their project.

“Instead of polluting the environment, we recycle them [the tires] properly in an eco-friendly manner,” Saeed said.

Egypt raised fuel prices by up to 50 percent in June as a condition of a $12 billion International Monetary Fund program the country signed last year. (VOA)

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Key Pointers before investing in Plots of Land

Apart from constructing a house, a plot of land is a great investment

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Land Plots (Representational Image), Pixabay

March 10, 2017: Building a home from brick to brick and having the sovereign choice of the floor plan is a dream that many of us harbor but only a few accomplish.

Apart from constructing a house, a plot of land is a great investment. There are many who like to invest in land instead of a flat and argue that buying a flat is high maintenance and does not give good returns on investments when compared to a plot for sale in Chennai.

It is generally the second home buyer or investor who invests in land or a plot for sale in Chennai or any other flourishing city. Investment in both land and apartment has its own merits and demerits.

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The few important merits of investing in a plot of land are:

  1. There is a lot of freedom to design and shape a plot, which is not possible in an apartment.
  2. With space availability vanishing quickly in the city, the rate of land is expected to appreciate very quickly.
  3. Flexibility to build as per the city’s future requirement helps the cost of land and property to appreciate very fast.
  4. The land is always in demand. The value normally appreciates due to zero depreciation of land.
  5. There is little or no competition for raw land, so being the only prospective purchaser is a huge negotiating advantage.

But, there are some demerits to investing in a plot.

  1. Land generates very low income if rented sometimes. It is difficult to reoccupy a land if tenant pushes it into litigation.
  2. Banks do not provide finance for buying a land/plot.
  3. It is essential to make legal checks on ownership history.

The key to a good investment is research and complete knowledge about the investment. Some of the things to keep in mind before buying a property are:

  1. Clear land title with no outstanding loans, taxes or mortgages must also be investigated. A buyer must ensure that the land parcel is not reserved for any government projects and does not belong to the agricultural category.
  2. Investigation on infrastructural development around the area should be made. Inquire availability of proper roads and Infrastructure in the area, also amenities within the projects and other developments coming up around the property needs to be researched.
  3. Landlocked properties or oddly shaped properties should be avoided. Required building setbacks could make a narrow plot worthless.

In the recent times, the southern state of Chennai has emerged as one of the top destinations for investing in land/ plot. Chennai is more appealing than other metros of the country, as it is a rapidly expanding manufacturing hub of India.

The state houses manufacturing units of top carmakers, as well as, other industries like IT industries, Telecom, etc. All these establishments are creating a big investment opportunity in the city with high growth and shooting prices.

The ideal destinations for investment in the city include:

  1. Gandhi Salai and Oragadam: They are the hubs of activities for the IT and manufacturing sectors. While Rajiv Gandhi Salai is an attractive choice due to its proximity to the various IT Parks and IT-SEZs, plots near Oragadam are ideal for investment, as it is an automobile hub. These locations are well connected by road and rail, and the presence of various multinational companies has triggered the real estate growth.
  2. Vandalur-Kelambakkam Road is one of the future growth corridors of the city, as it connects two important arterial roads Grand Southern Trunk Road (GST) with Rajiv Gandhi Salai. Easy connectivity and presence of many educational institutions in the vicinity have positively impacted the real estate sector in this area.

The land prices in these areas range between INR 500-2,500 per sq ft. The buyers have a variety of options to choose what can fit their budget.

In a city whose demographic is changing constantly with apartments becoming the norm rather than the exception, a plot as a mode of investment is becoming highly lucrative. The severe space crunch in the city has resulted in land prices going through the roof, sending plot developers and buyers scout for land on the outskirts. It has resulted in a spurt of real estate development in these localities.

 

 

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Korea is Emerging as an Important Economic Partner for India

Fast growing economic relations between Korea and India

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Representational Image, Source-pixabay

Feb 28, 2017: When India liberalized in 1990s, international companies were reluctant to invest in India. Korea was the first country which dared to invest in India when other countries were reluctant to take the economic risk of investing in the 1990s. Korea subsequently became the 4th largest investor during the 1990s.

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Bilateral economic relation between India and Korea is important for both India and Korea, Korea’s Trade Minister Joo Hyung-hwan had said last year, “Fostering close economic ties with India is the top priority for Korea.” Further, the Federation of Korean Industries (FKI) had said last September,  “Korea needs to deepen economic ties with India and Vietnam for its economic growth,” reported Korea Times

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Economic relations with India is important for Korea as its relation with its 3 important trading partners- US, Japan and China is declining. Relations with US are fast declining due to America’s policy of protectionism and the new policies of Trump. Historical issues with Japan and Japan’s economic stagnation, as well as Korea’s decision to deploy US missile system, has soured Korea’s relation with both these two countries, hence relations with all 3 countries have become precarious.

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In January last year, a Memorandum of Understanding (MoU) was signed between the India and Korea for establishing the platform “Korea Plus” a joint initiative of Ministry of Commerce and Industries of both countries, a platform established to promote and facilitate Korean investments.

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Few of the Korean startups are also doing business with Indian companies. Bangalore based real estate portal NoBroker had announced that it has raised $7 million (Rs 50 crore) in one round led by KTB Network, a Seoul-based VC firm in December last year. Softbank of South Korea had had led one round of funding for the Gurgaon-based True Balance, the CEO of True balance is Cheolwon (Charlie) Lee, a Korean.

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Prepared by Upama Bhattacharya. Twitter @Upama_myself