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India may lose credibility if PM Modi fails to rein in BJP members: Moody’s

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Chennai: Cautioning Prime Minister Narendra Modi, Moody’s Analytics on Friday said that the country may lose domestic and global credibility if he does not rein in the members of the ruling BJP.

The research firm, whose parent runs global rating agency Moody’s, said controversial comments from various party members amid the raging beef controversy is not helping the government.

“While PM Modi has largely distanced himself from the nationalist gibes, the belligerent provocation of various Indian minorities has raised ethnic tensions,” said Moody’s Analytics.

The ruling BJP does not have a majority in the Rajya Sabha, where crucial reforms bills have been met with an obstructionist opposition, it noted.

In a report titled ‘India Outlook: Searching for Potential’, Moody’s Analytics, a division of Moody’s Corporation, said:

“Along with a possible increase in violence, the government will face stiffer opposition in the upper house as debate turns away from economic policy.”

Moody’s Analytics, a top economic policy research and analysis institution, said the politics need to improve and the government’s reform agenda needs attention to achieve long-term growth.

While the government met with obstructionist opposition in the upper house with regard to crucial reform measures, the ruling party also hasn’t helped itself with controversial comments by its members, Moody’s Analytics said.

The Indian economy is likely to grow at 7.6 percent this year and in 2016 while closing of negative output growth is going to be difficult due to external headwinds and the government failing to deliver on reforms, it added.

“Overall, it’s unclear whether India can deliver the promised reforms and hit its growth potential. Undoubtedly, numerous political outcomes will dictate the extent of success.”

According to the report, the Indian economy is expected to grow around 7.3 percent year-on-year in September quarter which is below the expected potential of around nine or 10 percent.

Expecting the gross domestic product (GDP) to grow at 7.6 percent this year and 2016, Moody’s Analytics said key economic reforms like goods and service tax, revamped labour laws and land acquisition bill would improve India’s productivity.

According to the report, low interest rates will help the economy in the short term and the financial market sentiment has faded. Further rate cuts in 2015 are unlikely, but there is room for more next year.

The Indian stock market and the foreign inflows are down while the strong external headwinds-slowdown in global growth are hurting Indian exporters.

Moody’s Analytics expects Indian exports continue to fall in 2016 while the newfound stability in India’s current account balance could come under renewed stress if global growth slows more.

“So far, lower oil prices have buttressed the trade balance. But a rebound in prices if oil supply re-balances could see the trade balance deteriorate,” the report adds.

According to Moody’s Analytics, indications are there on foreign investors turning less optimistic about India’s economic prospects.

“Net financial flows into equity were around $16 billion in 2014. However, they are unlikely to reach those highs this year. The same can be said about financial flows into India’s debt market,” the report said.

A move towards full capital account liberalisation is inevitable in India and this may happen in the next two to four years.

“A freer capital account will give Indian companies greater access to overseas markets, lower borrowing costs, and facilitate credit growth – a key ingredient to increasing investment,” Moody’s Analytics said.

(With inputs from agencies)

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HP Considering India as a Key Focus Area

India is key focus area, 3D printers next big thing

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HP India
HP unveils 65-inch gaming display with soundbar at CES 2019. Flickr

India is a very attractive market with high brand recognition for a computer hardware producer like HP, said HP Inc’s President for Asia Pacific and Japan, Tian Chong Ng.

The Asia Pacific region — in which India is a key focus area — has been the fastest growing for HP and provided 16 per cent revenue growth last year.

In Q1 of FY2019 it registered 8 per cent growth year-on-year, said Ng in the course of the HP Reinvent 2019 conference, the company’s largest global partner event.

One reason for that is — India – and also the Asia Pacific region — tick marks on demographics trends which provide clear wins for HP: rapid urbanisation and more millennials are joining the work force.

While HP is very positive on India and recognises its potential, there are no plans yet for setting up a manufacturing base in India. Ng said it already has a manufacturing base in China apart from others in Vietnam, Thailand and Japan.

HP
HP. (IANS)

“There is an existing ecosystem in China and we don’t have plans for setting up a manufacturing base in India, he said.

One focus area is the 3D printer, which offers HP great opportunity. Construction and automotive sectors are the focus areas here. Meanwhile, an MoU has been signed with the Andhra Pradesh government.

“To be successful in India demands that we understand it,” he said.

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HP is also pushing gaming in a big way. However, this has not led to any thinking for manufacturing mobile phones in India, despite the high number of gamers in the country spurred by affordable android phones and cheap data.

“Our strength is the PC business and we offer a whole family of products in that space,” Ng said. (IANS)